When an Industrial Commission official began spreading the word that the agency would no longer accept motions filed by insurance adjusters to compel action in workers' compensation claims, the news caught many in the industry by surprise.

Attorneys said they hadn't expected it. The State Bar said it didn't see it coming, as it has not issued an opinion on whether adjusters filing certain forms, such as motions to terminate benefits, constitutes unauthorized practice of law.

Adjusters certainly hadn't seen it coming — and they weren't happy about it.

"I think they rushed to do this without really speaking to all the parties, and it's unfair," said Mary Douglass, who supervises claims at a North Carolina mutual insurance company that provides workers' compensation coverage to small businesses. "It's going to cost us a lot of money."

She asked that her company not be named.

The change caught so many by surprise because it came suddenly, without a trip through the rule-making process, and informally, through word of mouth rather than a formal announcement.

Brian Ratledge, the Industrial Commission's attorney, said the change does not constitute policy formation. He characterized it as a decision to begin enforcing laws such as § 84-4, which forbids anyone but a licensed attorney from preparing legal documents or appearing at a proceeding before the Industrial Commission. The commission did not need to formally announce that it had made the decision, he said.

"The courteous, heads-up notice we provided is not a 'policy' that the commission is putting forth, nor is this is a 'new' concept. What constitutes the practice of law in North Carolina is clearly outlined in our statutes," Ratledge said. He referenced § 84-2.1 of North Carolina law in a Thursday email to WorkCompCentral.

"The commission does not have — nor has it ever had — any discretion or authority to waive those legal requirements; therefore, there is no 'policy' that is being created or revised but, instead, we provided a professional reminder for all to make sure that their own works do not cross over into the unauthorized practice of law," Ratledge continued.

Nonetheless, a change has occurred. Before this week, adjusters were able to file applications to terminate benefits — and often did, Douglass said. Now, when they file a Form 24, they receive a version of this memo, telling them the Industrial Commission no longer accepts that form from anyone but licensed attorneys. Douglass' colleague Terri Vinson, a claims adjuster, has received two this week.

Now, if an adjuster isn't working with an attorney, he will have to hire one, give the attorney all of the documents to prove benefits should be terminated, cross his fingers that the attorney prevails in the telephonic hearing, pay the attorney for his time and then move to remove him from the claim. What would have been a short, simple process now has the potential to become complicated, time-consuming and costly, adjusters said.

It's standard for agencies to stop accepting forms from certain parties once the North Carolina State Bar decides that the parties aren't qualified. When asked, the bar issues opinions on whether certain activities constitute the unauthorized practice of law.

In 2005, it adopted an opinion stating that non-lawyers could represent Social Security claimants as long as the firm discloses in advertising that it is not providing services from an attorney. In 2009, the bar determined that non-lawyers may represent employers in unemployment hearings as long as a licensed lawyer is there to supervise.

What's different about the Industrial Commission's decision is that it did not come after the State Bar issued an opinion calling the adjusters' filings unauthorized practice of law. The State Bar has not weighed in on this issue.

Katherine Jean, the chair of the grievance committee at the State Bar, said Ratledge called the organization and said he had been researching whether adjusters were allowed to file Form 24s and similar motions. He had come to the conclusion that the law forbade this and wanted to know if the bar agreed.

Jean said Ratledge was directed to the committee that decides whether an action constitutes unauthorized practice of law.

"If someone wants to request an opinion from the Unauthorized Practice Committee, they'd be expected to send a written request," Jean explained. "That would be answered by the committee and not a member of my staff. It's not something that can be done over the telephone."

But Ratledge said he wasn't looking for an opinion; he simply wanted an attorney to corroborate his understanding of the law. Jean said he was put through to an attorney but advised that the attorney's opinion did not constitute an official unauthorized-practice-of-law determination from the bar.

"Our lawyer did not give an opinion. The State Bar has not interjected itself into this issue at all, but it was able to confirm his understanding of applicable case law and statutory law," Jean said. "Being a state agency, it's our responsibility to try to be helpful to people, within the limitations of our authority."

Jonathan Jones, the executive director of the North Carolina Open Government Coalition, said the commission should have waited until it had an official opinion from the State Bar to move forward with its decision.

"From a good government perspective, any time you're making a change that has the potential to dramatically affect the industry that relies on that agency's work, that should be communicated quite clearly, publicly and probably given opportunity for comment," Jones said. "Because we don't have an official determination that this is unauthorized practice of law, it's entirely possible that it's not."

In Ratledge's view, the law is clear enough on its own. He pointed to the provisions of § 84-4 and § 84-5 stating that corporations and non-lawyers cannot appear as attorneys before the Industrial Commission except as otherwise permitted by law. Filing a Form 24 often leads to a telephonic hearing in which adjusters discuss the reasons a claim should be terminated.

It doesn't always, though, adjusters say. When the injured worker doesn't respond to a Form 24 within 17 days, the deputy commissioner can make a decision on the motion.

Ratledge said that "there may certainly be the need for the commission to review additional scenarios as they arise," but he anticipates this "will be handled well."

Jones said he understands how the commission could view the decision to stop accepting certain forms as enforcement of § 84-2.1, 84-4 and 84-5, rather than a policy change. Nonetheless, he thinks the commission should have gone through a more formal procedure to do it, be that an announcement or rule-making.

"They'd be better advised to handle it in a public manner," he said. "That clear, upfront communication can resolve any confusion people are experiencing."

The commission spread the word about its decision to stop accepting motions from adjusters by contacting two attorneys' associations, telling defense attorneys to tell their clients.

The defense firm Teague Campbell sent out an email blast to its clients informing them of the change, which it heard about from the North Carolina Association of Defense Attorneys. The firm did not consult with the Industrial Commission directly before sending the email, Ratledge said.

Teague Campbell partner Bruce Hamilton said that some of his clients have reached out to him with questions about the new directive, and he doesn't really know what to tell them. The clients were told of the change this week with the understanding — based on a conversation Industrial Commission Secretary Meredith Henderson had with NCADA Workers' Comp Section Chair Melissa Walker — that it goes into effect on Monday.

"It was a fairly short turnaround time of a week's notice. Some of them have procedures in place and they have to scramble to let their people know," he said.

Amanda Reeder, a lawyer for the state who looks over Industrial Commission rules, said she could not speak to whether the commission's decision to start enforcing certain statutes needed to be made in public.

She said many agencies publish policies on their websites, and there has been "movement in the legislature to take things out of the policy domain and make them rules."

The governor's office did not respond to a request for comment.