PETER GRASHORN, Employee, v. BOISE CASCADE CORP., SELF-INSURED, Employer/Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
MARCH 6, 2002
PERMANENT PARTIAL DISABILITY - SCHEDULE; RULES CONSTRUED - MINN. R. 5223.0450, SUBPS. 1 AND 2. An employee is not precluded from receiving a permanent partial disability rating for a torn rotator cuff and a distal clavicle resection, despite the fact that a distal clavicle resection falls under an Aexclusive category,@ because the torn rotator cuff and the distal clavicle resection constitute separate Aimpairing conditions@ within the meaning of Minn. R. 5223.0450, subp. 1.
PERMANENT PARTIAL DISABILITY - SHOULDER. The compensation judge erred in awarding the employee permanent partial disability benefits for loss of range of motion in the employee=s shoulder, where the loss of range of motion was completely alleviated by surgery prior to hearing.
ATTORNEY FEES - CONTINGENT FEES. The compensation judge erred in ordering the employer to pay contingent fees to the employee=s attorney in the absence of findings concerning the existence of a dispute sufficient to give rise to entitlement to fees.
ATTORNEY FEES; CREDITS & OFFSETS - CREDIT FOR OVERPAYMENT. An employer that fails to withhold contingent attorney fees on disputed benefit payments may be ordered to pay those fees to the employee=s attorney but is entitled to a credit, pursuant to Minn. Stat. ' 176.179, against benefits payable to the employee for the same injury.
Affirmed in part, reversed in part and remanded.
Determined by Wilson, J., Rykken, J., and Johnson, J.
Compensation Judge: Donald C. Erickson.
DEBRA A. WILSON, Judge
The self-insured employer appeals from the compensation judge=s award of permanent partial disability benefits and attorney fees. We affirm in part, reverse in part, and remand the matter for further proceedings.
The employee has been employed by Boise Cascade [the employer] since about 1971, working initially as a laborer and later as a paper machine operator. On about September 12, 1995, the employee injured his right shoulder when he fell through a hole in the floor at work, catching himself with his right arm. He felt immediate pain in his shoulder and was eventually diagnosed as having a torn rotator cuff. Surgery was performed to repair a full-thickness tear on January 22, 1996, and the self-insured employer voluntarily paid the employee benefits for a 6% whole body impairment.
In October of 1997, the employee retained attorney Robert Falsani to represent him in connection with his September 1995 work injury. Shortly thereafter, on November 3, 1997, the employee filed a claim petition, alleging entitlement to benefits for a 25.74% whole body impairment relative to his shoulder condition, as rated by chiropractor Gordon Routier. Subsequently, the employee amended his claim to include permanency benefits related to a low back injury apparently sustained in the same incident. The employer ultimately paid the employee permanent partial disability benefits for his low back condition as well as benefits for an additional 3% whole body impairment relative to his right shoulder injury. At some point, in connection with these payments, the employer mistakenly paid the employee $562.50, money which had initially been withheld as contingent attorney fees from benefits for the additional 3% rating.
The employee continued to have pain and limited range of motion following his January 1996 shoulder surgery, but he rejected recommendations by physicians to have another operation, and he continued working for the employer without any wage loss.
On January 20, 2000, the employee injured his right shoulder again at work, necessitating a second surgical procedure, performed on March 16, 2000. During this operation, the surgeon repaired another full-thickness rotator cuff tear and also performed a distal clavicle resection, among other procedures. A month later, in mid April of 2000, the employer notified the employee that it would be commencing payment of benefits for an additional 6% whole body impairment, related to the January 20, 2000, injury, based on the fact that the surgical report had disclosed the second rotator cuff tear. No attorney fees were withheld, and Mr. Falsani was not notified of the employer=s decision to pay those benefits.
The employee had a good result from the second surgery and ultimately exhibited full range of motion in his right shoulder. However, at the hearing on his claim petition, held on April 25, 2001, the employee alleged entitlement to benefits for an additional 8% rating, relative to loss of range of motion following his September 1995 work injury, and he also claimed benefits for an additional 3% rating for the distal clavicle resection performed in the March 2000 surgery. In his post-hearing brief to the compensation judge, Mr. Falsani further asked the judge to order the employer to pay attorney fees, calculated on a contingent basis, due to the employer=s failure to withhold contingent fees when paying the employee benefits for the additional 6% impairment in April of 2000.
In his decision issued on July 23, 2001, the compensation judge awarded the employee the claimed benefits for loss of range of motion after the first injury and for the distal clavicle resection performed during the second surgery. The judge also ordered the employer to pay attorney fees to Mr. Falsani based on the benefits for the 3% permanent partial disability paid by the employer in 1998 -- from which the contingent fee was mistakenly released to the employee -- and on the benefits for the 6% whole body impairment paid to the employee beginning in April of 2000 -- from which the employer had failed to withhold any fees. In making these fee awards, the judge expressly denied the employer a credit for the resulting overpayment to the employee. The employer appeals.
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.
A[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers= Compensation Court of Appeals] may consider de novo.@ Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).
1. 8% for Loss of Range of Motion
Based on the employee=s medical records and the opinion of his treating physicians, the compensation judge concluded that the employee had a loss of range of shoulder motion following his first injury and surgery sufficient to qualify for an 8% rating pursuant to Minn. R. 5223.0450, subp. 4B(c). At the same time, the judge specifically found that, after the employee=s second surgical procedure in March of 2000, the employee no longer had any loss of range of motion. However, reasoning that the employee had reached maximum medical improvement from his September 1995 injury in March of 1999, when he declined additional surgery, the judge concluded that benefits for the 8% impairment were payable at that time and that the employer should not be allowed to avoid liability simply because the employee later sustained another work injury that led to surgery alleviating the impairment. The judge=s decision on this issue is clearly erroneous.
APermanent partial compensation is payable for functional loss of use or impairment of function, permanent in nature.@ Minn. Stat. ' 176.021, subd. 3; see also Fleener v. CBM Indus., 564 N.W.2d 215, 56 W.C.D. 495 (Minn. 1997). Whatever the sequence of events here, the simple fact is that the employee no longer has any work-related loss of range of shoulder motion, and nothing in the statute requires an employer to pay permanent partial disability benefits for an impairment of function that no longer exists as of the hearing date. The fact that the impairment resolved due to surgery to treat a second injury is irrelevant. We therefore reverse the judge=s decision on this issue.
2. 3% for Distal Clavicle Resection
The compensation judge concluded that the employee was entitled to a 3% rating, for the distal clavicle resection performed during the March 2000 surgery, in addition to the 6% rating applicable to the employee=s (second) full thickness rotator cuff tear, with both impairments attributable to the employee=s January 2000 work injury. The employer appeals, contending that, as a condition listed under an Aexclusive category,@ a distal clavicle resection rating is not combinable with any other rating under the express terms of the applicable rules and this court=s decision in Titera v. Clearwater-Polk Elec. Coop., slip op. (W.C.C.A. Apr. 13, 2000). As such, the employer argues that, given the employee=s 6% rating for the rotator cuff tear, the compensation judge erred as a matter of law in awarding the employee additional benefits for the distal clavicle resection. We concede that Titera appears to support the employer=s position. However, after careful consideration, we conclude that the compensation judge=s decision is not inconsistent with the applicable schedules.
Minn. R. 5223.0450 reads in pertinent part as follows:
5223.0450. Musculoskeletal Schedule; Shoulder and Upper Arm
Subpart 1. General. For permanent partial impairment to the shoulder and upper arm, disability of the whole body is as provided in subparts 2 to 4. The percent of whole body disability under this part may not exceed the percent of whole body disability for amputation of the arm at the shoulder. Each mutually exclusive impairing condition must be rated separately and the ratings must be combined as described in part 5223.0300, subpart 3, item E.
If an impairing condition is represented by a category designated as exclusive under subpart 2, it must be rated by that category only and that rating may not be combined with a rating under any other category of this part for that impairing condition.
If an impairing condition is represented by a category designated as combinable under subpart 8, it must be rated under that category and under the appropriate categories describing loss of function under subpart 4. The ratings obtained must be combined as described in part 5223.0300, subpart 3, item E.
If an impairing condition is not represented by a category designated either exclusive or combinable, it must be rated only under the appropriate categories describing loss of function under subpart 4.
Subp. 2. Exclusive categories. * * *
C. Resection distal end of clavicle, three percent.
* * *
Subp. 3. Combinable categories.
A. Chronic rotator cuff tear, demonstrated by medical imaging study, with or without surgical repair:
(1) partial thickness, two percent;
(2) full thickness, six percent.
* * *
Subp. 4. Categories describing loss of function. Function at the shoulder is measured by the available passive range of motion in three arcs at the shoulder: flexion or extension, abduction or adduction, and rotation. Examination with goniometer is performed to determine the limits of passive range of motion in each arc. If there is an impairment in more than one arc, the ratings for each arc are added to determine the final impairment for loss of function.
The fact that distal clavicle resection is designated as an Aexclusive category,@ which Amay not be combined with a rating under any other category . . . for that impairing condition,@ does not answer the question presented here. Minn. R. 5223.0450, subp. 1 (emphasis added). Rather, resolution of the employee=s claim hinges on just what is meant by the term Aimpairing condition.@ It is true that the employee underwent the distal clavicle resection -- involving removal of bone -- at the same time that he had his torn rotator cuff repaired. However, a distal clavicle resection is not a necessary part of all rotator cuff repairs, as evidenced by the fact that no distal clavicle resection was apparently performed when the employee underwent his first rotator cuff repair in 1996. Moreover, it seems obvious to us that removal of bone results in a different Aimpairing condition@ than injury to and/or repair of other tissues, such as the tendons and muscles involved in a torn rotator cuff.
After review of the rules as a whole, we conclude that the Aexclusive category@ designation of subpart 2 is intended only to preclude combining ratings under subpart 2 with ratings for loss of function under subpart 4, rather than precluding combination of ratings for the separate functional impairments listed under categories 2 and 3. That is, under the terms of the rules, an employee may not receive a separate rating under subpart 4 for any loss of function caused by a distal clavicle resection, but that the employee may receive a rating for both the distal clavicle resection and a torn rotator cuff, because they constitute separate impairing conditions. In Titera, this court did not focus on the concept of separate impairing conditions as it relates to interpretation of the rules, but, to the extent that Titera is inconsistent with our analysis here, that case is overruled.
As it is undisputed that the employee underwent a distal clavicle resection, and in that the judge did not err in assigning the employee a 3% rating for that procedure as well as a 6% rating for the full-thickness rotator cuff tear, we affirm his decision on this issue.
3. Attorney Fees
The employer paid the employee benefits for a 6% whole body impairment, beginning in April of 2000, without withholding attorney fees or notifying Mr. Falsani of the payments. In his decision, the compensation judge ordered the employer to pay contingent attorney fees to Mr. Falsani Aas he was representing the employee@ at the time, with no credit to the employer for the resulting overpayment to the employee, because the employer Adisregarded the representation of the employee and paid fees at its peril, knowing the employee was represented.@ The employer appeals, contending in part that payment of the benefits at issue was purely voluntary. We reverse and remand for further proceedings.
It appears to us, initially, that Mr. Falsani=s entitlement to these fees was not fully litigated, as we see nothing in the record specifically raising this issue prior to Mr. Falsani=s submission of his post-hearing brief to the compensation judge. Due process requires notice and reasonable opportunity to be heard before decisions on benefit entitlement may be made. See Kulenkamp v. Timesavers, Inc., 420 N.W.2d 891, 40 W.C.D. 869 (Minn. 1988). Moreover, pursuant to Minn. Stat. ' 176.081, subd. 1(c),
In no case shall fees be calculated on the basis of any undisputed portion of compensation awards. Allowable fees under this chapter shall be based solely upon genuinely disputed claims or portions of claims, including disputes related to the payment of rehabilitation benefits or to other aspects of a rehabilitation plan. The existence of a dispute is dependent upon a disagreement after the employer or insurer has had adequate time and information to take a position on liability. Neither the holding of a hearing nor the filing of an application for a hearing alone may determine the existence of a dispute.
Here, the compensation judge failed to make findings concerning the existence of a dispute over the employee=s entitlement to benefits for the 6% impairment paid by the employer in April of 2000; the mere fact that Mr. Falsani may have been representing the employee at the time does not by itself necessarily give rise to entitlement to fees. Finally, there is no provision in the law that would allow the compensation judge to deny the employer a credit, pursuant to Minn. Stat. ' 176.179, in the event of this kind of fee award. The employee received full payment for his permanent impairment, without deduction of contingent fees for which he otherwise might have been liable. To affirm the judge=s decision denying the employer a credit would penalize the employer in the absence of any legal authority to do so. For all these reasons, we reverse the judge=s decision and remand the matter for findings concerning the existence of a dispute sufficient to merit a contingent fee award, pursuant to Minn. Stat. ' 176.081, subd. 1, with directions to grant the employer a credit, for any fee award on remand, against benefits payable for the employee=s January 2000 injury, pursuant to Minn. Stat. ' 176.179.
The compensation judge also ordered the employer to pay Mr. Falsani the fees that were mistakenly released to the employee in connection with their payment of benefits for an additional 3% impairment in 1998, again with no credit. We affirm the award of fees, as it is uncontroverted that a dispute existed with regard to the employee=s entitlement to the additional 3% rating, and the employer concedes that it mistakenly released the fees to the employee. However, as was the case with the other fee issue, the employer is entitled to a credit, under Minn. Stat. ' 176.179, against liability for further benefits Afor the same injury.@ Minn. Stat. ' 176.179. Because we have reversed the judge=s award for the additional 8% rating attributable to the 1995 injury, there is no present benefit award against which to apply this credit, but the employer may take the credit against any future award relating to the 1995 injury, as specified by Minn. Stat. ' 176.179. The judge=s decision is therefore modified accordingly.
 The record is inconsistent as to the date of this injury. The employee=s claim petition specifies a date of September 12, 1995; the employer=s attorney indicated at hearing that the date of injury was September 25 or 26; and the compensation judge used both dates in his decision. The specific date is not important to the issues on appeal.
 The employee also claimed entitlement to an additional 1% rating, for a bicipital tendon tear, and he appeared to claim an additional 3% rating for a distal clavicle excision allegedly performed in the first surgery, in January of 1996. The employee=s claim for the bicipital tendon tear was denied as nonwork-related, and the judge made no award for distal clavicle resection in the first surgery, but the employee did not appeal from the judge=s decision on these issues.
 The 8% rating applies to range of abduction or adduction Ato between 81 degrees and 120 degrees.@ Minn. R. 5223.0450, subp. 4B(c).
 Subpart 4 goes on to provide specific permanency ratings for various kinds and degrees of range of motion loss.
 At least the surgical report from that operation makes no reference to a distal clavicle resection, whereas the surgical report from the employee=s March 2000 operation clearly describes that procedure.
 We would also note that it is not even clear that Mr. Falsani was representing the employee in connection with his January 20, 2000, injury. The only retainer agreement in evidence was signed by the employee in 1997.