In re Hughes, 245 N.C. App. 398

Background

Three estates (Hughes, Redmond, Smith) filed claims under North Carolina's 2013 Eugenics Asexualization and Sterilization Compensation Program after their relatives had been involuntarily sterilized; each decedent died before June 30, 2013.
The Compensation Program defines a "claimant" as an individual who was alive on June 30, 2013, so the Industrial Commission denied the estates' claims.
Claimants exhausted the administrative appeals to deputy commissioners and the Full Commission and then appealed to the North Carolina Court of Appeals, raising facial and as-applied constitutional challenges to N.C. Gen. Stat. § 143B-426.50(1).
After 7 August 2014, the General Assembly enacted N.C. Gen. Stat. § 1-267.1 and Rule 42(b)(4), creating a procedure requiring transfer of facial challenges to a three-judge panel in Wake County Superior Court.
The Court of Appeals majority held § 1-267.1 and Rule 42(b)(4) apply to these Compensation Program proceedings (because the Industrial Commission acts as a court under the Tort Claims Act and the Commission’s enabling statute incorporates Article 31 procedures), and therefore the Court lacked jurisdiction to decide the facial constitutional claims.
The Court dismissed the appeals and remanded to the Industrial Commission to transfer the facial-challenge portions to the three-judge Wake County Superior Court panel; Judge Dillon dissented, arguing the Court of Appeals retains appellate jurisdiction to decide the constitutional issues.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the June 30, 2013 "alive" requirement unlawfully denies equal protection/due process	Estates: no rational basis to deny compensation to victims who died before that date while allowing heirs of those who died after to recover	State: statute sets eligibility date; legislative prerogative to limit claimants	Court did not reach merits; dismissed appeals for lack of appellate jurisdiction and transferred facial challenges for three-judge review
Whether N.C. Gen. Stat. § 1-267.1 and Rule 42(b)(4) apply to challenges raised in Industrial Commission proceedings	Estates: Court of Appeals has jurisdiction to decide appeals from Industrial Commission; §1-267.1 shouldn’t bar appellate review	State/majority: §1-267.1 applies to facial challenges wherever raised; Industrial Commission functions as a court under Article 31, so transfer rule controls	§1-267.1 and Rule 42(b)(4) apply; facial challenges filed/amended after Aug 7, 2014 must be transferred to Wake County three-judge panel
Whether the Court of Appeals retains appellate jurisdiction over constitutional questions arising from Industrial Commission decisions	Estates (dissent): statutory grants (7A-26, 7A-29, 143B-426.53(f)) authorize appellate review of legal questions, including facial challenges	Majority: General Assembly limited initial-review path for facial challenges to three-judge panel; specific statutory scheme controls over general appellate grants	Majority: specific transfer scheme governs; Court of Appeals lacks jurisdiction to decide facial validity in first instance
Proper procedural disposition for unresolved facial-challenge claims raised after Aug 7, 2014	Estates: merits can and should be considered here or preserved on appeal	State/majority: procedural statute requires transfer; administrative body must transfer that portion to Wake County panel	Dismissed appeals and remanded to Industrial Commission to transfer facial-challenge portions to Wake County three-judge panel for resolution

Key Cases Cited

Ocean Hill Joint Venture v. N.C. Dep't of E.H.N.R., 333 N.C. 318 (1993) (administrative agencies are not "courts of justice" for certain Chapter 1 limitations)
In re Twin County Motorsports, 367 N.C. 613 (2014) (same principle on applicability of Chapter 1 provisions to administrative proceedings)
Meads v. N.C. Dep't of Agric., 349 N.C. 656 (1998) (administrative boards lack power to decide statutes' constitutionality)
Carolinas Med. Ctr. v. Employers & Carriers Listed In Exhibit A, 172 N.C. App. 549 (2005) (Industrial Commission cannot determine constitutional issues)
State v. Colson, 274 N.C. 295 (1968) (appellate review of substantial constitutional questions exists)
Steingress v. Steingress, 350 N.C. 64 (1999) (appellate residual power to decide significant public-interest issues)