This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Security Financial Bank & Savings,



American Family Mutual Insurance Company, et al.,


Filed April 22, 1997


Harten, Judge

Benton County District Court

File No. C6-96-301

Charles E. Gillin, Karen R. Cote, Jardine, Logan & O'Brien, P.L.L.P., 2100 Piper Jaffray Plaza, 444 Cedar Street, St. Paul, MN 55101 (for Appellant)

Paul W. Godfrey, Brown & Holman, P.A., Ste. 200, 8085 Wayzata Blvd., Minneapolis, MN 55426 (for Respondent American Family)

Considered and decided by Harten, Presiding Judge, Short, Judge, and Mansur, Judge.[*]



Appellant Security Financial Bank & Savings challenges judgment on the pleadings in favor of respondent American Family Mutual Insurance, arguing that it raised a legally sufficient claim to recover from respondent workers' compensation benefits that it paid to an injured employee. We affirm.


A Security Financial Bank & Savings employee was injured in a collision with an uninsured vehicle while driving within the course and scope of her employment. As a result of injuries sustained in the accident, the employee received from appellant workers' compensation benefits totaling $110,055.74 for her medical expenses and lost wages.

The injured employee, who carried uninsured motorist coverage with respondent, entered an agreement that settled for $50,000 her uninsured motorist claim against respondent. This agreement expressly preserved the subrogation rights of appellant to recover workers' compensation payments made to its injured employee.

Subsequently, asserting its subrogation rights appellant brought an action against the uninsured motorist and respondent to recover its workers' compensation payments. The uninsured motorist could not be located and was never served; only respondent answered. On cross-motions for judgment on the pleadings, the district court ruled that appellant did not have an indemnification claim against respondent under Minn. Stat. § 176.061, subd. 5, 10 (1996). The district court concluded that (1) recent amendments to Minn. Stat. § 176.061 did not create a new cause of action against a new class of parties, and (2) appellant and respondent did not have identical duties to the injured employee. This appeal followed.


When we review cases dismissed for failure to state a claim on which relief can be granted, the only question is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980) (quoting Royal Realty Co. v. Levin, 244 Minn. 288, 290, 69 N.W.2d 667, 670 (1955)). The construction of a statute is a question of law subject to de novo review on appeal. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985).

Appellant contends that under Minn. Stat. § 176.061 (1996), it has a valid indemnity claim against respondent for workers' compensation benefits paid to its injured employee. Specifically, appellant maintains that when the legislature amended that section and added subdivision 10, it intended to create a right of indemnity against any party with "legal liability," including contractual liability. Appellant argues that the amendment partially overruled the supreme court decision in Janzen v. Land O'Lakes, Inc., 278 N.W.2d 67, 69-70 (Minn. 1979) (holding employer's subrogation right does not include contract liability and claim to contractual payments to deceased employee's wife based on uninsured motorist coverage). In the alternative, appellant urges us to overrule Janzen on the grounds that it was wrongly decided.

1. Appellant asserts that when the legislature in 1983 amended Minn. Stat. § 176.061 by adding subdivision 10, it intended to create a separate cause of action for indemnity. We disagree. Subdivision 10 provides:

Notwithstanding the provisions of chapter 65B or any other law to the contrary, an employer has a right of indemnity for any compensation paid or payable pursuant to this chapter, including temporary total compensation, temporary partial compensation, permanent partial compensation, medical compensation, rehabilitation, death, and permanent total compensation.

Minn. Stat. § 176.061, subd. 10.

Subsequent to the 1983 amendment, the supreme court interpreted subdivision 10 in Allstate Ins. Co. v. Eagle-Picher Indus., Inc., 410 N.W.2d 324 (Minn. 1987). In response to a certified question from the federal district court, the supreme court held that subdivision 10 does not afford an employer a separate cause of action for indemnity to recover workers' compensation benefits paid to an injured employee. Eagle-Picher, 410 N.W.2d at 327. In doing so, the supreme court reaffirmed its prior holding "that the traditional principles of indemnity were inapplicable in the workers' compensation setting." Id. at 327-28 (citing American Mut. Liab. Ins. Co. v. Reed Cleaners, 265 Minn. 503, 509-10, 122 N.W.2d 178, 182 (1963)).

The supreme court in Eagle-Picher explained that the amendment of section 176.061 was merely the legislature's response to the court's holding in Metropolitan Transit Comm'n v. Bachman's, 311 N.W.2d 852 (Minn. 1981). Id. at 328. In Bachman's, the supreme court held that a conflict between Minnesota's No-Fault Automobile Insurance Act and the Workers' Compensation Act prevented an employer from exercising its subrogation right to recover nonmedical compensation benefits from a third party. Bachman's, 311 N.W.2d at 854-55. In Eagle-Picher, the supreme court construed the legislature's amendment of section 176.061 and addition of subdivision 10 as "a sort of belt and suspenders legislation" that restored the employer's subrogation right to the extent that this right had been put in doubt by the No-Fault Automobile Insurance Act. Id. at 329. Thus, the supreme court determined that the amended section did not create an independent cause of action for indemnity, but merely substantiated the employer's subrogation right. Id.

Ten years have passed since the Eagle-Picher decision. If the legislature felt that the supreme court misinterpreted its amendment of section 176.061, it surely would have acted by now. In the absence of further legislative action, we must follow the supreme court's construction of subdivision 10. Accordingly, the district court's reliance on Eagle-Picher was proper, and it correctly concluded that section 176.061 did not give appellant an indemnity cause of action, independent of appellant's right of subrogation.

2. In the alternative, appellant urges us to overrule the supreme court's decision in Janzen, which held that an employer has no right of subrogation against proceeds from an uninsured motorist settlement. Notwithstanding appellant's urging, we cannot overrule a decision of the Minnesota Supreme Court. See Mueller v. Theis, 512 N.W.2d 907, 912 (Minn. App. 1994) (stating court of appeals has no authority to overrule supreme court), review denied (Minn. Apr. 28, 1994). Therefore, we conclude that appellant did not set forth a legally sufficient claim to recover workers' compensation benefits from respondent uninsured motorist coverage carrier.


[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.