JEAN B. TITEL, Employee, v. THERMOFORM PLASTICS, INC., and GENERAL INS. CO. OF AM., Employer-Insurer/Appellants.
WORKERS= COMPENSATION COURT OF APPEALS
JULY 17, 2000
WAGES - BONUS. Where the only evidence concerning an annual bonus paid to the employee included testimony that the bonus was primarily determined by subjective factors concerning the employee=s performance, the compensation judge was supported by substantial evidence in finding it to be included in the employee=s weekly wage.
WAGES - BONUS. Where the employee=s weekly wage calculation is based on a 26-week period prior to an injury, only one-half of the bonus may be included in the weekly wage calculation.
TEMPORARY PARTIAL DISABILITY - SUBSTANTIAL EVIDENCE. Where the employee and her chiropractor testified to her condition and her restrictions and a treating physician provided restrictions, the compensation judge was supported by substantial evidence in finding that the employee had restrictions on her ability to work and was entitled to temporary partial disability, even though the treating doctor=s restrictions were limited in time and there were no other written restrictions in evidence.
Affirmed in part and reversed in part.
Determined by Wheeler, C.J., Wilson, J., and Pederson, J.
Compensation Judge: Gary P. Mesna
STEVEN D. WHEELER, Judge
The employer and its insurer appeal from the compensation judge=s award of temporary partial disability benefits from December 14, 1998 through the date of hearing, December 23, 1999, and from the judge=s determination that the employee=s pre-injury weekly wage calculation should include an annual bonus payment received during the 26 weeks prior to her admitted injury on September 26, 1997. We affirm as to the award of temporary partial disability and reverse in part with respect to the calculation of the employee=s weekly wage.
The employee, Jean Titel, first started working for the employer, Thermoform Plastics, Inc., on April 18, 1994. Initially she worked as an assembly packer, but was promoted to assembly technician in 1995. On September 26, 1997, while carrying boxes, the employee tripped on a pallet and injured her low back, right buttock and right knee. At the time of the injury the employee was 37 years of age. During the 26-week period prior to the date of injury, the employee=s regular pay, shift differential and over-time pay totaled $12,880.06. (Resp. Ex. 1.) During July 1997 the employee also received a bonus payment in the amount of $625.00.
Following her injury, the employee initially sought care from the Aspen Medical Group on September 29, 1997. She was subsequently treated at the emergency room at HealthEast/St. John=s Hospital on November 6, 1997, with right buttock and leg pain. (Jt. Ex. H.) She began treatment at the Roseville Family and Occupational Health Clinic on November 10, 1997. She initially saw Dr. Norman Westhoff and Dr. Richard Hedenstrom, until January 8, 1998, when her treatment was thereafter exclusively under the direction of Dr. Hedenstrom. She last saw Dr. Hedenstrom on October 13, 1998. This course of treatment included a brief period of medication with prednisone, physical therapy during November and December 1997, and a prescription for 800 mg of ibuprofen, for pain. Referral to a pain clinic was under serious consideration toward the end of the employee=s treatment by Dr. Hedenstrom. Dr. Hedenstrom also referred the employee for evaluation by Dr. Paul D. Hartleben at Summit/Landmark Orthopedics and Dr. Richard Foreman at Neurological Associates of St. Paul. Dr. Hedenstrom=s basic diagnosis of the employee=s difficulty was low back strain and right sciatica. Throughout her care by Dr. Hedenstrom, he indicated that the employee was capable of working with restrictions on lifting and bending. On the occasion of each office visit, Dr. Hedenstrom issued a report of work ability which set forth a set of restrictions which were indicated to be in effect until a specific date, the date of the employee=s next scheduled office visit. On October 13, 1998, the last office visit the employee had with Dr. Hedenstrom, he issued a report of work ability indicating that she could work with limitations through November 10, 1998, the date of her next scheduled office visit. The limitations listed were no lifting over 50 pounds, occasional lifting of 40 pounds, no pushing or pulling over 50 pounds, occasional pushing between 26 and 50 pounds and frequent pushing of under 25 pounds. He stated that the employee should continue her same limitations on lifting and avoid repetitive bending. (Jt. Ex. C, records of the Roseville Clinic.) The employee testified that she missed the next scheduled appointment in November 1998 because her medical coverage had expired after having been terminated from her employment by the employer in early August 1998. (T. 73.) The employee next sought medical care from Dr. Kevin Quaas, a chiropractor, upon referral by her attorney, on November 19, 1998. She treated exclusively with Dr. Quaas from that date until the date of hearing below, December 23, 1999.
During the course of her treatment with Dr. Hedenstrom the employee had a number of diagnostic tests performed, including an MRI of her lumbar spine on April 7, 1998, an MRI of her pelvis and right hip on May 21, 1998, a CT scan of her abdomen and pelvis on June 29, 1998, and a bone scan on July 16, 1998. In addition, x-rays were taken early during her treatment program. All of these diagnostic tests appeared to be normal with the exception of the lumbar spine MRI and x-rays, which indicated that the employee had Abilateral lytic pars defects at L4 resulting in a Grade I, 5%, lytic spondylolisthesis of L4 on L5.@ (Jt. Ex. A.) Dr. Hartleben=s examination in May 1998 resulted in his opinion that he could find Ano serious findings on physical exam to identify pathologic diagnosis.@ He stated that the spondylolisthesis was asymptomatic on a clinical basis. (Jt. Ex. D.) Dr. Foreman=s neurological examination in July 1998 was essentially normal. He indicated that he could find no convincing evidence of any specific radiculopathy. (Jt. Ex. E.) Throughout her examinations by these physicians and by Dr. Quaas, the employee continuously complained of pain in her low back and particularly her right buttock into her right leg, which she described as being aggravated by work activities and by standing and walking. (Pet. Ex. A.)
Following the injury the employee did receive workers= compensation benefits, in the form of temporary total disability, for various periods between November 10, 1997 and October 18, 1998, and temporary partial disability benefits, for various weeks during the period from January 12, 1998 through July 12, 1998. (NOID filed 10/15/98.)
On October 15, 1998, the employer and insurer filed a notice of intention to discontinue workers= compensation benefits on the basis that the
employee has had extensive diagnostic testing which was all negative for any underlying etiology as the cause of her complaints. The attached medical report of Dr. Wyard notes the employee is at maximum medical improvement with no need for ongoing restrictions and no ppd. TTD discontinued due to MMI and no ongoing disability related to the work injury.
Dr. Gary Wyard, an orthopedist, had examined the employee on behalf of the employer and insurer on October 1, 1998. In his report of October 1, he indicated that the employee had a myofascial strain/sprain which had healed with no ongoing disability related to any work injury. (Resp. Ex. 2.) In a subsequent report, dated December 2, 1999, Dr. Wyard attributed the employee=s complaints to her pre-existing spondylolisthesis condition. (Id.)
The employee objected to the discontinuance of benefits and an administrative conference was held on November 18, 1998. In an order on discontinuance, served and filed November 25, 1998, a compensation judge indicated that the employee had reached maximum medical improvement and was released to return to work with no restrictions. As a result, he approved the employer and insurer=s discontinuance of benefits. The employee filed an objection to discontinuance on December 2, 1998, which was subsequently withdrawn in favor of the filing of a claim petition on January 28, 1999. Therein, the employee claimed entitlement to temporary total disability from October 19, 1998 through December 13, 1998, temporary partial disability benefits from December 14, 1998, and medical payments for treatment by Dr. Quaas.
The matter came on for hearing before a compensation judge at the Office of Administrative Hearings on December 23, 1999. In Finding and Order, served and filed February 1, 2000, the compensation judge determined that the employee=s weekly wage was $519.43, on the basis of the inclusion of the performance bonus of $625.00. He determined that the employee was not entitled to temporary total disability benefits and that Dr. Quaas= services were not reasonable or necessary. The compensation judge did award temporary partial disability benefits based on her actual earnings between December 14, 1998 and the date of hearing. The employer and insurer appeal from the weekly wage calculation and the award of temporary partial disability benefits.
STANDARD OF REVIEW
In reviewing cases on appeal, the Workers= Compensation Court of Appeals must determine whether Athe findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted.@ Minn. Stat. ' 176.421, subd. 1 (1992). Substantial evidence supports the findings if, in the context of the entire record, Athey 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 evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed. Id. at 60, 37 W.C.D. at 240. Similarly, A[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). Findings of fact should not be disturbed, even though the reviewing court might disagree with them, Aunless 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.
The issue before the compensation judge was whether the bonus paid to the employee in July 1997 should have been included in the weekly wage calculation. In including the bonus, the compensation judge made the following comments in his memorandum:
While bonuses based on individual performance are generally includable for purposes of the wage calculation, bonuses based mostly on overall company performance, such as profit sharing, are not includable. The only evidence on the nature of the bonus in this case was the employee=s testimony, which was not totally clear. She testified that while the overall amount available for bonuses in a given year was based on company profits, the amount given to an individual employee was based on individual performance. The Court realizes that her understanding of how the bonuses are determined may or may not be accurate, but it was the only evidence presented. Since the actual amount of the employee=s bonus was based on her individual performance, it appears that she had a great deal of control over the amount of her bonus. In other words, if she performed well, she would get a large bonus and if she performed badly, she would get little or no bonus. Because the amount of her bonus was based primarily on her individual performance, the bonus is includable in her average weekly wage.
The employer and insurer appeal this determination on the basis that the compensation judge was clearly erroneous in his factual finding with respect to the nature of the bonuses paid. The employer and insurer rely on the employee=s testimony, on cross examination, wherein she stated as follows:
Q So it=s not strictly tied to the number of hours you work in a particular year?
A Not to my knowledge, no.
Q So you don=t really have any control over whether you get the bonus or not. Is that correct?
A I thought that once you worked there, after your first year it said that you would receive a bonus depending on how the company did the year before, of course.
Q So the bonus is based on how the company does? Is that how the amount of money available for bonuses is determined?
A That was my understanding of it.
(T. 63-64.) Based on this testimony the employer and insurer argue that the employee acknowledged that the bonus was primarily determined by how well the company performed, was not based on her individual performance and should not be distinguished from the typical profitsharing situation.
In the alternative, if the bonus should be included, the employer and insurer argue that it should be pro-rated over the 52 weeks of the year in which it was earned. As a result, the employee=s weekly wage would be reduced from $519.43 to $507.36.
Minnesota case law is clear that as a general rule distributions from a profitsharing plan are not includable in an employee=s weekly wage calculation. In Stewart v. Ford Motor Co., 474 N.W.2d 162, 45 W.C.D. 175 (Minn. 1991), the Minnesota Supreme Court held that annual bonus payments resulting from company year-end profits are not includable where the profits from which the payments were made were not the result of the employee=s independent work activities as contrasted with her efforts as one of many employees. The court stated, in part:
Not all taxable income is considered Awages@ for purposes of computing workers= disability benefits. Wages, for those purposes, are compensation for labor and services which reflect an employee=s earning capacity. Backaus v. Murphy Motor Freight Lines, 442 N.W.2d 326, 327 (Minn. 1989). Conversely, profits which accrue independent of an employee=s own efforts generally are not includable in the average weekly wage calculation. See id. at 327-28 (income derived from capital and equipment not part of wages). See also 2A. Larson, The Law of Workmen=s Compensation § 60.12(e) (1989) (AGenerally, profits from a business, whether commercial or farm, are not considered as wages for purposes of establishing average wage.@)
Stewart, 474 N.W.2d at 164. The court further explained that profitsharing in Stewart=s case was Areflective of Ford=s annual financial status, not of the employee=s earning capacity, because whether Ford realized a profit depends largely on factors outside the employee=s control, e.g., interest rates, supply and demand, sales, and manufacturing costs.@ Id.
During her direct testimony, the employee indicated that her understanding was that the amount of money that was available for all bonuses was determined by how well the company was doing financially. She stated, however, that the actual amount of her bonus was determined by how well she had performed in her job. She testified that she received her annual performance review in June of each year and was then advised that she would be receiving a bonus as a result of how well she had performed. She stated that the amount of her bonus would be determined by subjective factors and not strictly tied to the number of hours that she worked in a particular year. (T. 32-33.)
The compensation judge was somewhat handicapped in this case because the employer and insurer did not provide any testimony with respect to how the company=s annual bonus program was administered. As a result, he was left with only the testimony of the employee, which, as he stated, was less than clear. Her testimony, however, would support the compensation judge=s determination that the $625.00 bonus paid in July was based primarily on the employee=s performance and not simply as a result of the efforts of all the employees and contingent solely on the profitability of the employer. As a result, there is substantial evidence in the record which supports the compensation judge=s factual determination and his inclusion of bonus payments in the weekly wage calculation.
However, the compensation judge=s inclusion of the entire bonus payment was inappropriate. The payment should be pro-rated and only half of the payment should be included in the 26 weeks of wages earned by the employee prior to her injury. Reilly v. Burns Int=l Security Servs., slip op. (W.C.C.A. Feb. 9, 1999).
Temporary Partial Disability
In awarding temporary partial disability benefits to the employee, the compensation judge made the following finding:
Since December 14, 1998, the employee has been employed with the earnings reflected in Petitioner=s Exhibit C. During this period she has had physical restrictions as a result of the work injury, she has been able to work subject to her restrictions, and has had reduced earnings. The reduced earnings are related to the work injury and she is entitled to temporary partial disability. The presumption that her actual earnings reflect her true earning capacity has not been rebutted. She is entitled to temporary partial disability benefits.
On appeal, the employer and insurer argue that there is no medical evidence in the record from any healthcare provider which supports the compensation judge=s determination that the employee was subject to any work restrictions during the period when temporary partial disability benefits were awarded. While they acknowledge that the employee testified that work activities provoked her symptoms and that she had been advised by Dr. Quaas, verbally, that she should avoid activities which aggravate her symptoms, and that Dr. Quaas testified that he verbally advised the employee to avoid such activities, they point out that there were no written restrictions from any doctors. They specifically note that the last set of restrictions, issued by Dr. Hedenstrom on October 13, 1998, were limited in duration until November 10, 1998. They also observe that Dr. Wyard released the employee to work without any restrictions and that neither Dr. Hartleben or Dr. Foreman provided any restrictions on the employee=s ability to work. They further note that all of the diagnostic tests concerning the employee were negative and that there is no basis, physiologically, for the employee=s complaints of pain, other than the employee=s preexisting spondylolisthesis condition. They primarily rely on the decision of Kautz v. Setterlin Co., 410 N.W.2d 843, 40 W.C.D. 206 (Minn. 1987), which states that an employee is not entitled to any disability benefits if she does not suffer from a work-related disability and is under no restrictions causally related to an injury.
In order to establish entitlement to temporary partial disability benefits, an employee must prove, first, that there is a physical disability, second, that the employee is able to work subject to the disability, and, third, that there is an actual loss of earning capacity causally related to the disability. Dorn v. A.J. Chromy Constr. Co., 245 N.W.2d 451, 454, 29 W.C.D. 86, 91 (Minn. 1976). The presence of physical restrictions and the effect of such restrictions on an employee=s ability to work is an important consideration in determining entitlement to temporary partial disability benefits. Kautz, 410 N.W.2d 843, 40 W.C.D. 206.
The issue before us is whether the compensation judge=s determination that the employee was under restrictions on her ability to work which were a result of her admitted work injury is supported by substantial evidence in the record and is not clearly erroneous. In this case, the compensation judge found that the employee had physical restrictions on her ability to work as set forth by Dr. Hedenstrom in his October 13, 1998 report of work ability. These restrictions included no lifting over 40 pounds and no repetitive bending. The compensation judge stated that, AAlthough these restrictions were issued over a year ago, they remain valid as there has been little improvement in her condition in the last year.@ (Finding 4.) The compensation judge=s finding with respect to the continuation of the employee=s need for restrictions was evidently based on the employee=s testimony and the testimony of her treating chiropractor that she continued to suffer aggravation of her condition associated with her work activities. The employer and insurer argue that extending these restrictions for a year after their expiration date was improper abuse of discretion by the compensation judge. We disagree.
We agree that Dr. Hedenstrom=s October 13, 1998 report of work ability states that the employee=s restrictions were extended until November 10, 1998, the date of the next scheduled visit. We note that Dr. Hedenstrom had a long and consistent pattern of issuing reports of work ability limiting the duration of any work restrictions for the employee until the next scheduled date for an office visit. Given this pattern and the employee=s inability to keep the November 10, 1998 appointment, the compensation judge was not unreasonable in concluding that, given the employee=s ongoing complaints of pain, that had the employee continued to treat with Dr. Hedenstrom that he would have continued to extend his restrictions. We also note that the apparent reason for the employee=s termination from employment was that her physical abilities did not permit her to perform the jobs that were available at the employer. (Pet. Ex. E.)
Based on this evidence we find that there is substantial evidence in the record to support the compensation judge=s determination that during the period of temporary partial disability from December of 1998 through the date of hearing the employee was subject to restrictions. It also appears that the compensation judge has properly applied the presumption that the employee=s actual earnings represented her earning capacity. The employer and insurer provided no evidence to the contrary.