FRANCES M. LUNDGREN, Employee, v. ST. LOUIS COUNTY, SELF-INSURED, Employer/Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
APRIL 19, 2002
PENALTIES - SUBSTANTIAL EVIDENCE. Where the employer presented no defense to the employee=s claim for benefits, nor arguments supporting any defense, the compensation judge=s finding that the employer=s denial of benefits was frivolous and his award of penalties pursuant to Minn. Stat. ' 176.225, subd. 1, were substantially supported by evidence.
PENALTIES. Where the employee did not assert a claim for penalties allowed pursuant to Minn. Stat. ' 176.225, subd. 5, the compensation judge lacked authority to determine this issue, and therefore the award of penalties pursuant to Minn. Stat. ' 176.225, subd. 5, is vacated.
Affirmed in part and vacated in part.
Determined by Rykken, J., Johnson, C.J., and Pederson, J.
Compensation Judge: Donald C. Erickson
MIRIAM P. RYKKEN, Judge
The self-insured employer appeals from the award of penalties pursuant to Minn. Stat. ' 176.225, subds. 1 and 5, based upon a frivolous defense and unreasonable delay in payment of benefits. We affirm in part and vacate in part.
Frances Lundgren, the employee, has been employed for approximately 31 years at Chris Jensen Nursing Home, owned and operated by St. Louis County, self-insured employer. The employee initially worked as a nursing assistant and later as an activity aide, organizing and directing recreational therapy activities for residents. The employee has sustained at least six work-related injuries in the course of her employment with the employer. On January 10, 1983, she sustained an admitted injury to her upper back, and, on December 11, 1985, the employee sustained an admitted injury to her upper back and neck. Following her 1983 injury, the employer paid limited workers= compensation benefits; there is no record of whether benefits were paid following the employee=s 1985 injury.
On June 28, 1990, the employee sustained an admitted low back injury in the course of her employment. On that date, she worked as an activity aide, earning a weekly wage of $348.00. Her medical records reflect an onset of low back symptoms resulting from a work-related incident which occurred while she pushed a patient in a wheelchair up a ramp. Following that injury in 1990, the employee continued to experience pain in her low back, upper back and neck associated with employment-related activities, and continued to receive medical treatment at the Duluth Clinic. Her treatment was overseen primarily by Dr. H. Chris Chapman, who had treated the employee since at least the 1970s. In September 1990, the employee was hospitalized with bed rest and neurological consultation for control of her severe low back pain. Her treating physicians referred her to physical therapy, initially restricted her from work, and later released her to return to work within physical work restrictions. She continued to consult the Duluth Clinic due to ongoing low back and shoulder/interscapular symptoms. On November 2, 1990, Dr. R. F. Donley issued a report in which he diagnosed a lumbosacral muscle strain, concluded that the employee had reached maximum medical improvement from her injury, and assigned a rating of 10.5 percent permanent partial disability to the body as a whole. The employer paid permanency benefits based on that rating.
The employee=s medical chart notes following her 1990 injury state that the employee=s low back and upper back symptoms were causally related to her work-related injuries, and that the employee=s work activities were an aggravating factor to her ongoing need for treatment. By May 1991, Dr. Chapman, referred the employee to Dr. Thomas (Skip) Silvestrini in the physical medicine and rehabilitation department of the Duluth Clinic, who she has consulted periodically since 1991. Dr. Silvestrini diagnosed lumbosacral strain with backward sacral torsion, and prescribed a minimum of three months= physical therapy to mobilize her low back and mid-thoracic back.
As a result of her 1990 injury, the employee was disabled from work for various periods of time. The self-insured employer paid temporary total disability benefits for 7.6 weeks in 1990 and 1991, and apparently thereafter charged the employee=s accumulated sick leave and vacation pay instead of paying her workers= compensation benefits. In 1992 and 1994, the parties litigated the employee=s entitlement to payment for temporary total disability benefits, permanency benefits, medical expenses and penalties for alleged unreasonable delay in payment of benefits. At the request of the employer, the employee was examined by Dr. Thomas Litman, who issued a report dated August 27, 1993, expressing an opinion that the employee had a documented herniated disc at the L4-5 level, that she had sustained 14 percent permanent partial disability of the body as a whole as a result of her June 28, 1990 injury, that she had been disabled for a period of time in September 1992 as a result of that injury and that she should work within certain physical work restrictions.
By award on stipulation served and filed June 17, 1994, the employer admitted the employee sustained an injury on June 28, 1990, and settled the employee=s claims on a to-date basis. The employer paid temporary total disability benefits for a period of time in September 1992, permanency benefits based on an additional 3.5 percent permanent partial disability of the whole body relative to her lumbar spine, medical expenses and medical mileage.
On December 2, 1996, the employee exacerbated her neck and low to mid-back pain while moving tables and pushing wheelchairs at the nursing home to make space for activities. On that date, she was working full-time as an activity aide, earning a weekly wage of $409.95. The employee timely reported this injury as reflected by a First Report of Injury filed by the employer. On December 9, 1996, she consulted Dr. Silvestrini by telephone, reporting difficulty with her low back the previous week and right shoulder and bilateral pain developing at work the past two days. Dr. Silvestrini restricted the employee from work, and examined her on December 11, 1996, when she reported marked numbness in her right upper extremity which had begun the previous week. The chart note states that she Adoesn=t remember a precipitating event or injury. This started at work with considerable numbness.@ Dr. Silvestrini diagnosed right C7 or C8 nerve irritation, and stated that he was uncertain as to the exact etiology. He prescribed physical therapy, an MRI scan if her symptoms did not subside, and restricted her from work until early January 1997.
In its Notice of Primary Liability Determination, the employer denied primary liability for an injury on December 2, 1996, asserting that no medical information substantiated the employee=s need for medical treatment or lost time from employment as a result of a work-related injury. However, we note that Dr. Silvestrini=s chart notes consistently stated that the employee=s work activities aggravated her back condition, and his Reports of Work Ability, completed to outline the employee=s work restrictions, consistently list the employee=s condition as work-related.
Between December 2, 1996 and July 14, 2000, the employee periodically missed time from work as a result of her ongoing symptoms. As it had done following the employee=s 1990 injury, the employer again charged those absences from work to the employee=s accumulated sick leave and vacation time. Medical bills related to the employee=s treatment for her low back were paid for through the self-insured employer=s group medical insurance plan. However, the employer denied payment of the employee=s claimed medical mileage, and the employee personally paid medical co-payments and prescription costs.
By January 17, 1997, the employee reported resolution of her arm symptoms, but experienced continued neck symptoms. Dr. Silvestrini detected limited range of motion in the neck, and diagnosed resolving C7 radiculopathy on the right. He prescribed continued physical therapy, and released the employee to return to work half days on a light-duty basis. The employee=s ongoing work activities aggravated her low back pain. In a letter sent to the employee on April 10, 1997, Dr. Silvestrini stated, in part:
I first saw you on July 3, 1991. At that time, you relayed history of an injury on June of 1990 involving injuring your lower back while pushing client in a wheelchair up a ramp and into a van.
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Clearly, your history of onset, the physical findings on exam and my impression were compatible, and in the absence of any additional history, there is very high probability and certainly probability within a reasonable degree of medical certainty that this incident was causal for your lumbar spine problems.
In following your lumbar spine over the years, there is also no question that you have developed progressive degenerative disc changes.
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Working in repetitive bending and lifting activity could certainly lead to disc dehydration and subsequent degeneration.
Thirdly, you have upper back and neck symptomatology which is, I believe, myofascial pain. This is a muscle tension phenomenon.
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Once again, the absence of additional history of trauma, your myofascial pain syndrome is most likely also work-related. Situational stress can also increase the symptom of myofascial pain and work place exposure has certainly, at times, been stressful for you as well as the ongoing difficulties with your lumbar spine.
Review of your outside records with regard to the nature of your previous  injury would be beneficial in clarifying the myofascial pain component with regard to workplace exposure, however, there is no question that your lumbar injuries are clearly directly related to work.
(Ee. Ex. C(A).) Dr. Silvestrini continued the work restrictions of six hours per day. He continued those same restrictions in June 1997.
On June 3, 1998, the employee reported increasing left leg symptoms and radiation of pain into her upper back and right scapular area. An MRI scan dated October 15, 1998, showed no significant change in the lumbar spine since the previous MRI taken on August 12, 1994. The MRI continued to show a small central disc protrusion at the L4-5 level with mild effect on the L5 nerve root, a disc protrusion at the L3-4 level without significant nerve root compression, and a mild broad-based disc bulge at the L5-S1 level. Dr. Silvestrini recommended consideration of an epidural injection due to the employee=s leg pain and residual numbness. By December 2, 1998, the employee reported a marked increase in her pain and intermittent numbness in her foot. Dr. Silvestrini diagnosed a Abackward sacral torsion with a left on right presentation causing some of her leg symptoms and trochanteric bursitis likely secondary to the SI joint dysfunction,@ and again recommended physical therapy. An EMG taken of the employee=s left lower extremity in March 1999 showed a possible presence of mild radiculopathy at the S1 vertebral level. By September 21, 1999, the employee reported increased pain in her mid back and pain radiating down her left leg, but reported no intervening injury. Dr. Silvestrini recommended further physical therapy to improve her symptoms.
On November 5, 1999, the employee reported continued pain at work by midday and difficulty with standing at work. Physical therapy notes reported significant tightness. Dr. Silvestrini concluded that the employee had a muscle-guarding phenomenon and muscle fatigue and confirmed that the employee had a significant amount of degenerative disc disease in her back. He recommended continued physical therapy and home conditioning and exercises for mobilization. His report of December 20, 1999, states that for eight years he had treated the employee for injuries she sustained in June of 1990, and that her symptoms had fluctuated throughout that time, but she had never become pain-free. By January 18, 2000, the employee reported to Dr. Silvestrini that she was Aholding her own@ without additional therapy, and advised that her work activities caused soreness. Dr. Silvestrini recommended cutting down the number of work days as opposed to the number of work hours, to Agive her a break to let her body recuperate.@
In March 2000, the employee underwent a rehabilitation consultation and was found eligible for rehabilitation services. Her qualified rehabilitation consultant (QRC) proposed a plan to formulate a return-to-work plan for the employee, and the employer provided the employee a position within her work restrictions and within her job classification as an activities aide.
On April 14, 2000, the employee consulted Dr. Chapman, on an emergency basis, reporting a two-week history of headache and pain in her right neck. Dr. Chapman diagnosed Aright-sided cervical neck pain, distribution compatible with post auricular neuritis.@ The employee reported to the emergency room with a severe headache on April 30, 2000, providing a history of chronic recurrent low back pain ever since an injury five years ago while pushing a wheelchair, as well as headache and neck pain. She reported that she underwent physical therapy one month earlier and that Athey were doing some stretching exercises to her neck and back and since then she has had neck pain.@ She reported severe neck pain radiating into her head, causing headaches, and bilateral shoulder pain. She was admitted to the hospital, and was discharged on May 2, 2000. Dr. Chapman=s hospital discharge summary states, in part,
The patient was seen by me starting on the 14th of April after a long absence. She previously had been seeing Dr. Skip Silvestrini and physical therapy off and on for the last ten years subsequent to a work related injury involving the upper neck. At that time she was at physical therapy, began having neck pain, worsening, and then subsequently developed pain in the occipital and now more recently in the bitemporal area. The patient now notes that these are incapacitating.
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PAST MEDICAL HISTORY
As stated, the patient was involved in a work related accident. She was pushing someone, came to a sudden stall and had a sudden jolt in her neck, upper trapezius, parascapular, and occipital area. Subsequently she intermittently had been seen by Dr. Silvestrini and physical therapy. She also has had intermittent low back pain and saw Dr. Stefan A. Konasiewicz in the past for nerve block for low back pain.
Severe headache, neck, bitemporal and upper trapezius pain of undetermined etiology. The patient has been incapacitated for the last two weeks due to her pain.
Long history of upper neck and chest and back pain secondary to work related injury followed by Dr. Skip Silvestrini.
(Ee. Ex. C(F).)
Dr. Silvestrini met with the employee and QRC on May 16, and recommended that the employee return to work within physical work restrictions. His chart note indicates that the QRC advised him that the employee was being asked to exceed the restrictions listed on a previous functional capacities assessment, and that the QRC agreed to work with the employer to ensure that the employee was working within her restrictions; Dr. Silvestrini stated that he thought Athat would go a long way to help her from a cervical standpoint as well.@ (Ee. Ex. C(A).) By May 26, Dr. Chapman diagnosed temporal arteritis, with right-sided head pain, and continued prescriptions of Prednisone for that condition. Dr. Silvestrini consulted the employee again on July 5, 2000, at which time she reported symptoms of low back and foot pain which Dr. Silvestrini identified as plantar fascitis, and neck symptoms, which he attributed to previous cervical disc disease with some secondary guarding. He recommended general conditioning exercises.
After she had exhausted her accrued vacation and sick pay by December 2000, the employer advised the employee that it was necessary for her to work on a part-time basis if she desired to retain her group medical insurance benefits. Her hours were reduced to a .7 position, whereby she worked three days the first week of each pay period and four days the second week of each pay period. The employee has continued to receive physical therapy and work on a light-duty, part-time basis, and she has received ongoing treatment for symptoms related to her work injuries as well as for her temporal arteritis.
On October 22, 1999, the employee filed a claim petition based on her 1983, 1990 and 1996 injuries, alleging entitlement to temporary total disability benefits in 1996 and 1997, temporary partial disability since 1997, permanency benefits and payment of medical expenses. In its answer filed on November 15, 1999, the employer denied primary liability for the claimed 1996 injury and denied liability for benefits.
A hearing was held before a compensation judge on April 3, 2001. The employee claimed entitlement to temporary total/temporary partial disability benefits for the equivalent of 103.8 days of time loss incurred between December 5, 1996 and July 14, 2000. At the hearing, counsel for the employer initially advised the compensation judge that the employer admitted primary liability for the employee=s 1983 and 1990 injuries, but denied primary liability for an injury on December 2, 1996. During pre-hearing discussions, however, the employer admitted that the employee sustained a consequential injury on December 2, 1996. The employer did not admit or deny liability for the specific days for which the employee claimed temporary total or temporary partial disability benefits. The compensation judge ordered the employer to review the employee=s benefit claim summary post-hearing and to advise the court of its position regarding that claim. By letter dated April 17, 2001, counsel for the employer admitted the employee=s entitlement to temporary partial disability benefits between April 8 through June 5, 1997, but denied liability for payment of temporary disability benefits on all other dates claimed by the employee, claiming that the medical records Awith respect to those periods of time consistently refer to pain and symptoms of unknown etiology.@
At the hearing, the employee testified and offered into evidence her medical records, rehabilitation records, itemizations of medical mileage, sick leave and vacation time charged to the employee, documents from the employee=s personnel file maintained by the employer, medical bills, and pay stubs. The self-insured employer did not cross-examine the employee and offered into evidence only medical records from the Duluth Clinic.
In Findings and Order served and filed June 25, 2001, the compensation judge found that the employee sustained a work-related Gillette injury to her cervical spine on December 2, 1996. The compensation judge found the employee=s 1983, 1985, 1990 and 1996 injuries were all contributing causes of the employee=s disability. The compensation judge found that between December 2, 1996 and July 14, 2000, the employee used 778.50 hours of vacation and sick pay, for a total of 103.8 days, and that the employee=s work-related injuries were a substantial factor in the employee=s lost time from work and her need to incur medical treatment. The compensation judge awarded medical mileage for travel between June 30, 1994 and February 1, 2001, and reimbursement of medical co-payments. The compensation judge awarded the employee=s claim for temporary partial and temporary total disability benefits by ordering the employer to restore, to the employee=s sick leave and vacation leave accounts, two-thirds of the sick leave and vacation pay used by the employee since December 5, 1996.
The compensation judge also awarded the employee penalties pursuant to Minn. Stat. ' 176.225, subd. 1, in an amount equivalent to 30 percent of the value of the awarded temporary disability benefits, medical co-payment reimbursement, and medical mileage, finding that the denial of benefits was Afrivolous and without a basis in the facts or the law.@ (Finding 15.) Pursuant to Minn. Stat. ' 176.225, subd. 5, the judge awarded an additional 25 percent penalty of the benefits awarded because the employee=s benefits were Aunreasonably delayed.@ (Finding 16.) The compensation judge explained in his memorandum that he found no substantial reason in the evidence of record for the employee=s claim to have been denied and delayed and therefore awarded the employee=s claims and imposed Amaximum penalties.@ The employer appeals from the award of penalties.
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] 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. Assertion of Frivolous Defense
The employee sought a penalty against the self-insured employer for Aunreasonable and vexatious delay in paying benefits@ and for Afrivolous delay.@ (T. 8.) Minn. Stat. ' 176.225, subd. 1 requires imposition of a penalty of up to 30 percent Aof the total amount of compensation awarded@ where the employer or insurer interpose a frivolous defense or unreasonable delay in payment. The compensation judge awarded the employee=s claim for a penalty pursuant to Minn. Stat. ' 176.225, subd. 1. He found that the employer presented no defense to the employee=s claim for benefits, nor arguments supporting any defense (other than to submit several medical records into evidence), and that the self-insured employer=s denial of benefits has been frivolous and without a basis in the facts or law. The compensation judge concluded that the evidence of record documented no substantial reason for the employee=s claim to have been denied and delayed.
The employer appeals, arguing that the employee=s medical records, upon which the employer=s denial of liability was premised, certainly gave rise to questions regarding whether the employee=s missed time from work was associated with a work-related injury or other problems. The employer alleged that the employee=s medical records since 1990 clearly raised issues with respect to liability for workers= compensation benefits, and that the difficulty the employee=s treating physicians had in assessing the cause of her pain and discomfort posed equal difficulty for the employer while it determined whether it was required to pay benefits pursuant to the workers= compensation statute. The employer argues that it did in fact review and conduct a good-faith investigation of the facts prior to denying the employee=s claim, and that since the employee=s treating physicians were unsure as to the cause and nature of the employee=s injuries, the imposition of penalties on the basis of a frivolous defense is inappropriate. We disagree.
The employee sustained admitted injuries in 1983, 1985 and 1990 to her neck and back. The employer paid the employee for a 14 percent permanent partial disability secondary to the 1990 injury. Dr. Thomas Litman, who examined the employee in August 1993 on behalf of the self-insured employer, placed significant restrictions on the employee=s work activities due to the 1990 injury. The employee=s medical records contain repeated references to symptoms that persisted since at least her June 28, 1990, admitted injury, and since the aggravation of those symptoms in December 1996. We acknowledge that there are references in the records to the unknown etiology of specific complaints, but we also note repeated references by the employee=s treating physicians of long-term symptoms following the employee=s admitted injuries and repeated verification in reports that the employee=s condition was work-related. The employee=s testimony corroborated the same. Despite the repeated references in the treating physician=s records of symptoms the employee experienced since her 1990 work-related injury, the employer continued to deny liability. The employer did not assert any other cause for the employee=s ongoing symptoms nor did it submit any medical evidence of any other cause of the employee=s condition.
There is more than adequate evidence to support the compensation judge=s determination that there is Ano substantial reason in the evidence of record for the employee=s claim to have been denied and delayed.@ (Memo. p. 6.) Whether a penalty is appropriate under Minn. Stat. ' 176.225 is a question of fact for the compensation judge. Maxfield v. Stremel Mfg. Co., slip op. at 5, 7 (W.C.C.A. Jan. 6, 1999). We, therefore, affirm the compensation judge=s finding that an award of penalties for the assertion of a frivolous defense, pursuant to Minn. Stat. ' 176.225, is appropriate in this case, and also affirm the finding that the evidence justifies a penalty based on 30 percent of benefits awarded.
2. Penalties Under Minn. Stat. ' 176.225, Subd. 5
The compensation judge also awarded a penalty against the self-insured employer pursuant to Minn. Stat. ' 176.225, subd. 5, which requires imposition of a penalty of 25 percent of the payments that are delayed when the employer is guilty of Ainexcusable delay in making payments.@ The compensation judge awarded such penalties, finding that the employee=s benefits were Aunreasonably delayed,@ and stating that he found no reason in the evidence of record for such delay. The self-insured employer appeals.
The compensation judge already addressed the Aunreasonably delayed@ benefits in his award of penalties under Minn. Stat. ' 176.225, subd. 1. There is no indication in the record that the employee made a separate claim for penalties under Minn. Stat. ' 176.225, subd. 5. Since the employee did not claim penalties under subdivision 5, the compensation judge lacked authority to determine that issue. Accordingly, we vacate Finding 16 and Order No. 5 relative to additional penalties of 25 percent pursuant to Minn. Stat. ' 176.225, subd. 5.
 The self-insured employer had previously paid the employee for a 10.5 permanent partial disability secondary to the 1990 injury.
 The employee calculated that 778.50 hours of vacation pay and sick leave pay equated to 103.8 days, based on work days of 7.5 hours in length.
 The employee=s exhibit documented the hours and days when she used sick leave and vacation leave for time lost due to her work-related injuries.
 Gillette v. Harold, Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 According to the Notice of Benefit Payment, filed on July 10, 2001, the employer restored hourly benefits to the employee=s sick leave/vacation account in the amount of $4,338.63 ($5,673.30 awarded minus attorney fees of $1,334.66).
 Minn. Stat. ' 176.225, subd. 1, provides as follows:
Subdivision 1. Grounds. Upon reasonable notice and hearing or opportunity to be heard, the commissioner, a compensation judge, or upon appeal, the court of appeals or the supreme court shall award compensation, in addition to the total amount of compensation award, of up to 30 percent of that total amount where an employer or insurer has:
(a)instituted a proceeding or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay; or
(b) unreasonably or vexatiously delayed payment; or
(c) neglected or refused to pay compensation; or
(d) intentionally underpaid compensation; or
(e) frivolously denied a claim; or
(f)unreasonably or vexatiously discontinued compensation in violation of sections 176.238 and 176.239.
For the purpose of this section, "frivolously" means without a good faith investigation of the facts or on a basis that is clearly contrary to fact or to law.
 Minn. Stat. '176.225, subd. 5, provides, in part, as follows: AWhere the employer is guilty of inexcusable delay in making payments, the payments which are found to be delayed shall be increased by 25 percent.@