THOMAS RISDAL, Employee/Appellant, v. INDEPENDENT SCH. DIST. #146, SELF-INSURED, Employer/Cross-Appellant.
WORKERS' COMPENSATION COURT OF APPEALS
APRIL 6, 2000
THIRD-PARTY LIABILITY - NOTICE TO EMPLOYER; THIRD-PARTY LIABILITY - CREDIT. Where the employee failed to rebut the presumption that the employer was not prejudiced by the failure of the employee and the third-party tortfeasors to notify the employer of the third-party negotiations and settlement, the compensation judge properly awarded the employer a full credit pursuant to Easterlin v. State, Univ. of Minn., 330 N.W.2d 704, 35 W.C.D. 650 (Minn. 1983).
PERMANENT PARTIAL DISABILITY - SUBSTANTIAL EVIDENCE. Substantial evidence, including lay testimony, medical records and expert medical opinion supported the determination that the employee=s cervical permanency was causally related to the employee=s work injury.
Determined by Pederson, J., Rykken, J., and Wheeler, C.J.
Compensation Judge: Catherine A. Dallner
STEVEN D. WHEELER, Judge
The employee appeals from the determination that the self-insured employer is entitled to an $8,080.20 credit against permanent partial disability benefits awarded, pursuant to Easterlin v. State, 330 N.W.2d 704 (Minn. 1983). The self-insured employer appeals from the determination that the employee=s work injury resulted in a 7 percent permanent disability (PPD) attributable to his cervical spine. The self-insured employer also appeals from an award of the employee=s actual and necessary disbursements and from an order permitting the employee=s attorney to file a request for attorney fees related to the services rendered in obtaining the PPD award. We affirm.
Between 1984 and 1993 the employee, Thomas Risdal, worked for the employer, the Barnesville School District (ISD #146), as an instructor teaching farm business management to adult students. On February 8, 1990, the employee was assigned to attend a meeting at the University of Minnesota St. Paul Campus. In going to the meeting, the employee was a passenger in a car driven by Rick Morgan, who apparently was an employee of the Moorhead School District (ISD#152). Mr. Morgan=s car was making a left-hand turn at the intersection of Fairview Avenue and Highway 36 in Roseville, Minnesota, on the way to the meeting, when it was struck by another vehicle driven by Lisa Dubuque. As a result of the impact, the employee=s head struck the passenger side window. The employee felt very sore in the neck, upper back and right shoulder the rest of the day, and began to experience throbbing headaches. (T. 20, 24-27; Exh. I at 2; Exh. 3.)
The employee had previously treated with a chiropractor, Gary F. Hilliard, D.C., on a sporadic basis since 1984 for occasional symptoms of low and mid back pain, cervical pain and pain in the left shoulder and arm. On the day following the motor vehicle accident, February 9, 1990, the employee sought chiropractic treatment from Dr. Hilliard for pain in his right shoulder, neck and upper thoracic back which the employee had experienced since the automobile accident. After treating with Dr. Hilliard for a few weeks without noticing any great improvement, the employee began treating with a different chiropractor, Paul L. Shogren, D.C., on February 19, 1990. In an intake form the employee completed on that date, he marked the right arm at the shoulder joint, the right shoulder blade, the right side of the neck and the right ribcage as areas of pain. (T. 21-24, 28-29; Exh. 8.)
The employee continued to treat chiropractically with Dr. Shogren through the spring of 1992. During this period he consistently complained of cervical, thoracic and lumbar pain, bilateral headaches, and at times of right arm pain with numbness down to the fingers. The employee gained only short periods of relief from the chiropractic treatments and on June 1, 1992, Dr. Shogren referred the employee to a neurologist, Dr. Robert R. Ivers. Dr. Ivers saw the employee the same day. Based on his examination and the employee=s history he diagnosed a persistent post traumatic myofascial syndrome, with secondary headache, involving the neck and shoulders and to some extent the lumbosacral region with discomfort radiating down the right leg. Dr. Ivers eventually rated the employee=s permanent partial disability at 7 percent attributable to the cervical spine, 3.5 percent to the thoracic spine, 5 percent to the brain to represent the disability related to the employee=s headaches. (Exhs. D, F; T.30.)
The employee continued through the date of hearing to treat on a recurring basis with various chiropractors and medical physicians for short-term relief from his symptoms of neck and shoulder pain and headaches. (T. 33-41; Exhs. A, B, C, J.)
The employee was seen by Dr. Winfried Raabe on November 14, 1992 for a neurological evaluation on behalf of the Hartford Insurance Company, which apparently provided automobile insurance covering the Moorhead School District and driver Rick Morgan. Dr. Raabe opined that the employee had sustained a cervical and lumbar musculoligamentous sprain/strain syndrome as a result of the February 8, 1990 motor vehicle accident but was now fully recovered without any permanent disability or need for further treatment. (Exh. 1.)
The employee was also seen by another neurologist, Dr. John Davenport, on June 20, 1998 at the request of the attorney for the self-insured employer=s workers= compensation administrator, EBA/Berkley Administrators. Dr. Davenport concluded that the 1990 motor vehicle accident had resulted in a permanent myofascial limitation of neck motion, which the doctor rated as a 3.5 percent whole-body permanent partial disability. He further opined that while a previous cervical strain injury might have been a subtle, underlying mechanical stress contributing to the employee=s current situation, that underlying component was no more than 10 percent of the current 3.5 percent disability. (Exh. 2)
In 1990 and 1991 the employer=s workers= compensation administrator, Berkley Administrators, sent subrogation letters to ITT-Hartford. On July 11, 1991, ITT-Hartford sent a letter to Berkley requesting an itemization of workers= compensation benefits paid. At some point, the employee made claims against the third party tortfeasors Richard Morgan and ISD 152 (insured by ITT-Hartford Insurance Company) and Lisa Dubuque (insured by All Nation Insurance Company). The employee, however, never formally initiated a lawsuit, having reached a settlement with the third party tortfeasors on May 3, 1993. In a Naig type settlement, the employee received $18,000.00. None of the parties to this settlement gave prior or concurrent notice of the negotiations or settlement to the employer or to its workers= compensation administrator, who first learned of the settlement on May 6, 1998 in the course of discovery on the employee=s April 21, 1998 claim petition. The statute of limitations on the employee=s accident claims had previously expired on February 8, 1996, and the self-insured employer instituted no legal action on its subrogation claims prior to the running of the statute. (Finding 3.)
The employee filed a claim petition on April 21, 1998, seeking permanent partial disability compensation for 15.5 percent disability. The self-insured employer denied liability and asserted entitlement to a credit in the amount of $8,080.20 pursuant to Easterlin v. State, 330 N. W.2d 704 (Minn. 1983). The compensation judge found that the employee=s February 8, 1990 personal injury resulted in injuries to the right shoulder, neck and thoracic spine and in related headaches. The judge denied permanency to the thoracic spine or brain but awarded 7 percent permanent partial disability to the cervical spine. The judge further found that the employee had failed to provide notice to the employer of the Naig settlement of May 3, 1993, and that the employee had failed to rebut the presumption that failure to provide notice was prejudicial. Accordingly, the judge awarded the self-insured employer a credit in the amount of $8,080.20 against permanent partial disability benefits awarded. The employee appeals from the award of a credit. The employer and insurer cross-appeal from the award of permanent partial disability to the cervical spine.
STANDARD OF REVIEW
On appeal, this court must determine whether the compensation judge's findings and order are "clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted." Minn. Stat. ' 176.421, subd. 1(3) (1992). Substantial evidence supports the findings if, in the context of the record as a whole, they "are supported by evidence that a reasonable mind might accept as adequate." Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984). Where the evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings must be affirmed. Id. at 60, 37 W.C.D. at 240. Similarly, "[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975). Factfindings may not be disturbed, even though this court might disagree with them, "unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole." Id.
Question of law. The issues on appeal in this matter also involve the interpretation and application of case law to undisputed facts. While this court may not disturb a compensation judge's findings of fact unless clearly erroneous and unsupported by substantial evidence in the record as a whole, Minn Stat. ' 176.421, subd. 1(3) (1992), a decision which rests upon the application of the law to undisputed facts involves a question of law which this court may consider de novo.
The self-insured employer claimed a credit pursuant to Easterlin v. State, Univ. of Minn., 330 N.W.2d at 708, 35 W.C.D. at 657. In Easterlin, the Minnesota Supreme Court held that the employer must be notified of an injured employee's Naig settlement negotiations with a third-party tortfeasor, stating that
[N]otice of settlement negotiations for a Naig settlement must be given to the employer-insurer in a manner and at a time such that the employer-insurer has a reasonable opportunity to participate in the negotiations and to appear or intervene in any litigation to protect its interests. We further hold that lack of notice is presumptively prejudicial to the employer, and, if the presumption is not rebutted by the employee, the employer is entitled to a credit for future compensation payable against the employee=s Naig settlement recovery.
The Easterlin court explained that while in a Naig settlement, an employee settles only those claims not subject to subrogation by the employer, the employee=s settlement with the tortfeasors might lead to subsequent prejudice when the employer seeks to enforce its rights. In addition, the court believed such notice appropriate to encourage complete rather than piecemeal settlements. Accordingly, the court reasoned that A[T]he employer should not be denied whatever tactical advantage there might be in attempting to settle its subrogation claim at the same time the employee is settling his claim for non-workers' compensation damages. . . .@ It is Aimportant . . . that every reasonable effort be made to avoid a multiplicity of lawsuits.@ Id. at 707-08, 35 W.C.D. at 655-57.
As noted above, where an injured employee settles a third-party tortfeasor's lawsuit without notice to his or her employer, the employee has the burden to prove that the employer was not prejudiced. The employee does not dispute that such notice was not given in this case. Rather, the employee argues that the presumption of prejudice to the employer should have been held to have been rebutted, as a matter of law, by the fact that the self-insured employer did not in fact initiate any legal proceedings to enforce its subrogation rights prior to the running of the applicable statute of limitations in 1996. The employee=s logic appears to be that, as the self-insured employer no longer has the right to initiate an action to enforce its subrogation claims, the failure to give notice of the settlement negotiations cannot have prejudiced the employer.
We disagree. In our view, the notice requirement is to be judged in the light of the status of the parties at the time of the Naig settlement, that is, the time at which the notice should have been given, rather than at the time that the failure of notice is discovered. At the time of the settlement, the self-insured employer still had an enforceable subrogation claim. The employee=s failure to give notice at that time, so that the employer could participate in the negotiations, is presumptively prejudicial pursuant to Easterlin. The employee settled with the third-party tortfeasors without the necessity of filing an action and without notifying the self-insured employer either of the negotiations or of the settlement. That the employer, under these circumstances, failed to independently file a suit against the third party tortfeasors, does not demonstrate that the employer would have failed to assert its subrogation claims had it been aware of the third parties= willingness to enter into a settlement with the employee.
Here, the compensation judge took into consideration that the self-insured employer had taken steps to assert its subrogation interests by sending subrogation letters, suggesting that the employer was not disinterested in its subrogation claim. This case is clearly distinguishable from McDonough v. Muska Elec. Co., where a credit was denied because the evidence established that the employer therein A. . . would not have entered into the settlement negotiations and would have limited its participation to seeking a waiver from its employees of any claim for workers= compensation.@ 486 N.W.2d 768 at 771, 47 W.C.D. 93 at 97-98 (Minn. 1992). The judge properly found that the employee had failed to rebut the presumption of prejudice.
Finally, the employee argues that notice of a Naig settlement with a third party need not be provided to an employer or insurer unless "an action against the other party is brought by the injured employee," which the employee construes as requiring that a formal legal action has been filed. We do not construe the statutory or case law in this manner. A distinction between cases where a settlement is reached on a third-party claim without the necessity of first filing a complaint and those where a complaint has been filed prior to settlement is artificial and wholly irrelevant to the issue of the rights of the workers= compensation employer and insurer. We conclude that the employee=s binding settlement agreement with the third-party tortfeasors constituted "an action" for the purposes of triggering the employer=s rights to a credit under the workers= compensation act.
Providing the employer with notice of third-party settlement negotiations is "hardly an onerous chore." Easterlin, 330 N.W.2d at 708, 35 W.C.D. at 657. Under the factual circumstances of this case, we affirm the compensation judge=s award of a credit to the employer.
Permanent Partial Disability
The compensation judge found that the employee=s February 8, 1990 personal injury resulted in injuries to the right shoulder, neck and thoracic spine and in related headaches. The judge denied permanency to the thoracic spine or brain but awarded 7 percent permanent partial disability to the cervical spine. (Findings 4-7.) The self-insured employer appeals from the award of permanent partial disability to the cervical spine as unsupported by substantial evidence.
The employer points to the evidence that the employee had previously treated chiropractically for occasional symptoms of low and mid back pain, cervical pain, and pain in the left shoulder and arm. The employer contends that, in light of this evidence, the compensation judge erred in failing to make specific findings setting forth the causal relationship between each pre-existing condition and the employee=s disability. The employer further argues that as the medical opinions relied upon by the compensation judge failed to address prior chiropractic treatment, those opinions had insufficient foundation as a matter of law.
We note, first, that most of the employee=s prior treatment was for conditions not specifically relevant to the cervical condition for which permanency was awarded, such as low and mid back pain and pain in the left shoulder and arm. The employee=s symptoms subsequent to the work injury consisted of pain in the right arm and shoulder joint, the right shoulderblade, and the right side of the neck, as well as recurring headaches. With respect to his previously treated neck pain and headaches, the employee testified that these were sporadic and occasional aches and pains which were very different from the ongoing neck pain and recurrent headaches he has experienced since the date of the work injury. (T. 23-24.) The employee=s account was entirely consistent with the medical records in evidence. The only medical opinion to address the pre-existing neck symptoms was that of Dr. Davenport, who opined that while a previous cervical strain injury might have been a subtle, underlying mechanical stress contributing to the employee=s current situation, that underlying component was no more than 10 percent of the current 3.5 percent disability. (Exh. 2). There was no medical opinion attributing causation for the employee=s cervical disability solely to a pre-existing injury or condition.
It is well settled that injuries are compensable if the employment is a substantial contributing factor not only to the cause of the condition but also to the aggravation or acceleration of a pre-existing condition. Wallace v. Hanson Silo Co., 305 Minn. 395, 235 N.W.2d 363, 28 W.C.D. 79 (1975). An employee need not prove that the employment was the sole cause, only a substantial contributing cause of the disability for which benefits are sought. Swanson v. Medtronics, Inc., 443 N.W.2d 534, 536, 42 W.C.D. 91, 94‑95 (Minn. 1989). Under the circumstances in this case, the compensation judge was not clearly erroneous in finding that the employee=s cervical disability was caused or substantially aggravated by the work injury. The evidence of prior sporadic treatment for neck pain and headaches was not so compelling here as to render the medical opinions inadequate to sustain the compensation judge=s findings.
The self-insured employer also objects on appeal to Order 3, which provides that Athe issue of attorney fees for the employee shall be determined after Attorney Vaa serves and files his Statement of Fees and after the self-insured employer and/or the employee serves and files objections, if any.@ Specifically, the employer argues that the order improperly suggests that the employee is entitled to an award of attorney fees. We disagree. The order merely defers consideration of the fee issue until the appropriate fee petition and objections, if any, have been filed. Nothing in the order predetermines the issue, and we fail to find anything objectionable in it. The self-insured employer further argues on various grounds that attorney fees cannot be awarded in this matter. We do not reach these arguments. Until the fee issue has in fact been determined, appeal therefrom is premature.
The employer also objected to an award to the employee of actual and necessary disbursements. (Order 4.) A compensation judge has authority to award reimbursement of actual and necessary disbursements to a prevailing party. Minn. Stat. '176.511, subd. 2. The employer first reiterates its arguments against the award of permanent partial disability, and points out that if this court reverses that award, the employee will not have been a prevailing party below and will not be entitled to reimbursement for actual and necessary disbursements. That argument is moot in light of our affirmance of the award of permanency benefits. The employer next argues that even if the permanency award is upheld, the employee was not a Aprevailing party@ because the award of a credit to the employer fully offsets the amount of the permanency awarded. We disagree. In our view, the fact that an employer may prevail on another issue resulting in offsetting awards does not mean that the employee, who successfully claimed entitlement to benefits, was not a Aprevailing party@ for purposes of an award of disbursements. Finally, the employer argues that the award of disbursements is improper as the specific disbursements have not been delineated and only those directly related to the issue on which the employee prevailed should be awarded. We conclude that the objection to unspecified disbursements is premature. After the employee has itemized his claim for reimbursement of actual and necessary disbursements, the employer has the right to object to specific items as unrelated to the issue on which the employee prevailed below, and to seek factual findings from the compensation judge. Appeal may then be taken from the judge=s determinations by either party.
 Naig v. Bloomington Sanitation, 258 N.W.2d 891 (Minn. 1977). A Naig settlement is essentially one in which an injured employee settles with a third party for those claims which are not compensable under the workers= compensation act.
 The employee predicates this argument on his construction of the statutes governing the calculation of a credit from a third-party settlement or judgment, Minn. Stat. '176.061, subds. 5 and 8a. See employee=s brief at 11-15.