DEAN S. OTTERSON, Employee, v. ST. CLOUD HOUSING & REDEVELOPMENT AUTH. and MINNESOTA WORKERS= COMPENSATION ASSIGNED RISK PLAN adm=d by BERKLEY ADM=RS, Employer-Insurer/Appellants, and SPECIAL COMPENSATION FUND.
WORKERS= COMPENSATION COURT OF APPEALS
JULY 10, 2002
SPECIAL COMPENSATION FUND; CONTRIBUTION & REIMBURSEMENT. Under the facts of this case, it was reasonable for the compensation judge to conclude that the criteria set forth by Beson v. Carleton College, 271 Minn. 268, 136 N.W.2d 82, 23 W.C.D. 913 (1965), regarding extension of time to seek reimbursement from the second injury fund, had not been satisfied.
Determined by Wilson, J., Rykken, J., and Johnson, C.J.
Compensation Judge: Danny P. Kelly.
DEBRA A. WILSON, Judge
The employer and insurer appeal from the compensation judge=s denial of their claim for reimbursement from the Special Compensation Fund under the Asecond injury fund@ law. We affirm.
This matter was submitted to the compensation judge on stipulated facts and related exhibits. According to the parties= submissions, the employee sustained an admitted work-related low back injury on September 30, 1977, while employed by Columbia Heights H.R.A., which was insured by St. Paul Fire and Marine Insurance Company [St. Paul Fire and Marine]. Following the injury, the employee underwent several surgeries and other medical care. On August 9, 1979, the employee=s physical impairment of 20% of the back was accepted by the Special Compensation Fund [the Fund] for registration. A few years later, on December 1, 1982, the employee=s physical impairment of 35% of the back was accepted by the Fund for registration.
The employee sustained another work-related low back injury on January 19, 1989, this time while employed by St. Cloud H.R.A., which was insured by the Minnesota Workers= Compensation Assigned Risk Plan [Assigned Risk]. That same year, on November 14, 1989, a claims examiner for Assigned Risk wrote to Dr. Perry Severance, the employee=s treating physician, asking whether the employee=s disability after his January 1989 work injury was substantially greater as a result of his preexisting registered condition. In that letter, the claims examiner explained to the doctor that the question was relevant to Assigned Risk=s right to seek reimbursement from the state second injury fund and that such a reimbursement request would have to be made by January 1, 1990. By letter dated November 22, 1989, Dr. Severance replied that the employee had not yet reached maximum medical improvement [MMI] from his 1989 work injury and that a permanency rating was therefore premature. However, the doctor also wrote as follows:
It is my opinion that Mr. Otterson=s current problems are directly and solely related to the injury sustained on January 19, 1989, and are not in any way related to any previous back problems.
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Regarding your letters of October 30 and November 14, 1989, it would appear, from my understanding of the level of the injury sustained on January 19, 1989, that this is not related to his prior significant back injuries and is probably not substantially greater because of these pre-existing problems. I do not feel that it is a temporary aggravation or a permanent aggravation of the pre-existing condition.
Assigned Risk made no claim for reimbursement from the Fund at that time.
Assigned Risk continued to pay the employee various ongoing benefits until June of 1992, when the parties entered into a stipulation for settlement. By this time, Assigned Risk had paid nearly $190,000 in medical, rehabilitation, and indemnity benefits. Pursuant to the terms of the 1992 settlement agreement, the employee agreed to accept an additional $173,000, less attorney fees, in full, final, and complete settlement of his claims with regard to the 1989 injury, except for medical expense benefits. An award on stipulation was issued on June 3, 1992. The Fund was not a party to the agreement.
The employee later asserted claims for additional benefits as a result of other injuries allegedly sustained during his employment with St. Cloud H.R.A., and Assigned Risk eventually decided to seek reimbursement or contribution from St. Paul Fire and Marine, the carrier on the risk for the employee=s 1977 injury. On October 17, 2000, the attorney for Assigned Risk solicited an opinion from Dr. Jerry Reese as to whether the employee=s disability following the 1989 injury was substantially greater as a result of disability attributable to the employee=s preexisting registered condition. Dr. Reese replied by letter dated October 28, 2000, indicating that the employee=s Adisability following the 1989 injury was substantially greater as a result of this pre-existing disability stemming from the earlier 1977 injury.@
On November 20, 2000, less than a month after receiving the opinion from Dr. Reese, counsel for Assigned Risk filed a Notice of Intention to Claim Reimbursement from the Second Injury Fund. The Fund eventually denied the claim, taking the position that the employee=s disability after the 1989 injury was not substantially greater by virtue of the employee=s registered condition than it would have been as a result of the 1989 injury alone. The Fund also contended that Assigned Risk=s claim for reimbursement was not timely filed, precluding any second injury fund reimbursement.
In August of 2001, all parties to this matter arrived at a settlement. That settlement provided, in relevant part, that the employee would be paid $113,000, less attorney fees, in full, final, and complete settlement of his various claims, except certain medical expense claims; that the Fund would pay certain sums to each insurer as supplementary benefit reimbursement; and that St. Paul Fire and Marine would reimburse Assigned Risk for certain indemnity and medical benefits, as well as a 40% share of future low back treatment expenses, in satisfaction of Assigned Risk=s contribution claim. The Fund expressly agreed that the settlement with the employee was reasonable but maintained that Assigned Risk was not entitled to reimbursement from the second injury fund because the claim had not been made in a timely manner. An award on stipulation was issued on August 14, 2001.
Assigned Risk=s second injury fund reimbursement claim was submitted to the compensation judge on October 17, 2001. In a decision issued on December 31, 2001, the judge concluded that the claim was barred. Assigned Risk 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.
Assigned Risk is asking for reimbursement under what is commonly referred to as the Asecond injury fund@ law, which provided in relevant part as follows:
Subdivision 1. If an employee incurs personal injury and suffers disability from that injury alone that is substantially greater, because of a preexisting physical impairment, than what would have resulted from the personal injury alone, the employer or insurer shall pay all compensation provided by this chapter, but the employer shall be reimbursed from the special compensation fund for all compensation paid in excess of 52 weeks of monetary benefits and $2,000 in medical expenses, subject to the exceptions in paragraphs (a) and (b):
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Subd. 3. To entitle the employer to secure reimbursement from the special compensation fund, the following provisions must be complied with:
(a) Provisions of section 176.181, subdivisions 1 and 2.
(b) The employee with a preexisting physical impairment must have been registered with the commissioner prior to the employee=s personal injury.
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Subd. 6. When the employer claims reimbursement from the special compensation fund after paying compensation as prescribed by this section, the employer shall file with the commissioner written notice of intention to claim reimbursement in accordance with the rules adopted by the commissioner.
Minn. Stat. ' 176.131, subds. 1, 3, 6 (1988) (repealed 1992). The pertinent rules regarding notice of intention to claim reimbursement read as follows:
Subp. 5. Notice of intention to claim reimbursement. Notice of intention to claim reimbursement under Minnesota Statutes, section 176.131, subdivision 6, must be on forms prescribed by the division. In a claim under Minnesota Statutes, section 176.131, subdivision 1, forms must be filed within one year after the payment of sufficient weekly benefits or medical expenses to make claim against the special compensation fund. In a claim under Minnesota Statutes, section 176.131, subdivision 2, forms must be filed within one year from the first payment of weekly benefits or medical expense.
Subp. 6. Claim for reimbursement. Reimbursement will be made by an order of the division or workers= compensation court of appeals from the special compensation fund on a yearly basis upon application for reimbursement on forms prescribed by the division. The insurer must file the original and one copy with the division. The application must be verified, set out in detail expenditures made and expenditures for which reimbursement is claimed, and must be supported by medical reports, showing the nature and extent of disability and relationship to the injury and physical impairment for which reimbursement is claimed. The insurer must file the original and one copy of notice of intention to claim reimbursement and claim for reimbursement with the division.
Minn. R. 5220.2680, subps. 5 and 6 (1989). In the present case, it is undisputed that Assigned Risk failed to file a Notice of Intention to Claim Reimbursement until more than 10 years after the applicable deductibles had been satisfied. However, in the leading case on the issue, the Minnesota Supreme Court determined that otherwise late notice could be deemed timely, justifying reimbursement from the second injury fund,
(a) if the delay in filing notice within the time specified was not due to fault on the part of the employer-insurer; (b) if the employer-insurer gave notice to the special compensation fund promptly after it knew or had reason to know that a claim had been or was about to be filed against it; and (c) if no material prejudice to the special compensation fund will result from the time extension.
Beson v. Carleton College, 271 Minn. 268, 272, 136 N.W.2d 82, 86, 23 W.C.D. 913, 918 (1965) (footnote omitted). In reaching its conclusion, the court reasoned that the object of the second injury fund provisions -- to encourage employment of disabled workers -- would be advanced Aif an employer-insurer who has done everything reasonably possible to qualify for the relief this law affords is allowed reimbursement from the special fund.@ Id. at 275, 136 N.W.2d at 86, 23 W.C.D. at 919.
In the present case, the compensation judge applied the Beson factors and concluded, in material part, that the employer and insurer were at fault and that the Fund had in fact been prejudiced by the delay. More specifically, the judge found,
2. It is determined that the delay in filing the Notice of Intention to Claim Reimbursement from the Second Injury Fund within the specified time limits was due to the fault of the employer and insurer. The employer and insurer were well aware of the requirements necessary for reimbursement and the time limitations relating to a second injury fund reimbursement claim. The employer and insurer consciously decided to perfect a claim for reimbursement by soliciting an opinion from the treating physician, Dr. Severance, in 1989. Dr. Severance=s opinion did not support a claim for reimbursement against the Special Compensation Fund. Seeking evidence before one year had elapsed since meeting the indemnity and medical deductibles does not toll the time limit to file a Notice of Intention to Claim Reimbursement from the Second Injury Fund. The employer and insurer made a decision not to pursue a claim against the Special Compensation Fund after Dr. Severance=s unfavorable opinion. The employer and insurer could have pursued additional medical opinions to perfect their claim and/or filed their claim for reimbursement within the time limits, but chose not to pursue a claim against the Special Compensation Fund.
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4. It is determined that the Special Compensation Fund has been prejudiced by the employer and insurer=s delay in filing a claim for reimbursement. Under the employer and insurer=s theory, there exists a scenario that all reimbursement claims remain open against the Special Compensation Fund until the employer and insurer solicit a favorable opinion supporting their claim for reimbursement, and if they promptly file a reimbursement claim in a reasonable amount of time after receiving the favorable opinion that no material prejudice exists to the Special Compensation Fund. The passage of ten years is material prejudice.
The judge therefore denied Assigned Risk=s reimbursement claim.
On appeal, Assigned Risk makes two primary arguments: that, pursuant to Jorgenson v. Independent Sch. Dist. #492, slip op. (W.C.C.A. Jan. 13, 1998), the compensation judge erred in attributing fault to Assigned Risk and that, given the Fund=s agreement as to Asubstantially greater@ and the reasonableness of payments to the employee, no prejudice to the Fund was established. We are not persuaded that the compensation judge erred in denying Assigned Risk=s reimbursement claim.
In Jorgenson, a panel of this court determined that the employer and insurer=s delay in filing a Notice of Intention to Claim Reimbursement was excusable because the employer and insurer had reasonably relied on the report of the employee=s treating physician and filed promptly once a report supportive of reimbursement had been secured. However, it can be argued that Jorgenson is something of an anomaly in this area of law. See Rybus v Kruetzer Motor Exp., 298 Minn. 435, 215 N.W.2d 611, 27 W.C.D. 293 (1974) (affirming a denial of reimbursement, despite lack of prejudice to the Fund, where the employer simply overlooked the need to file a notice of intention to claim reimbursement within the specified period); Prax v. Chippewa Motor Freight, 36 W.C.D. 735 (W.C.C.A. 1983); Colianni v. Brothers, Inc., 39 W.C.D. 690 (W.C.C.A. 1986); Morse v. American Hoist & Derrick, slip op. (W.C.C.A. Nov. 5, 1987). Moreover, the 1989 report by Dr. Severance in the present case was issued prior to MMI, and, despite paying hundreds of thousands of dollars in benefits to the employee over the years, the employer and insurer never bothered to follow up with Dr. Severance after MMI or to try to solicit other evidence to support their reimbursement claim, even when settling with the employee for $173,000 in 1992 -- a settlement to which the Fund was not a party. We would also note that, by the time of the 1992 settlement, the employee was claiming substantial additional permanent partial disability, and Assigned Risk was contending that a significant portion of that disability was related to the employee=s preexisting condition. These facts provide an adequate basis to distinguish the present matter from Jorgenson.
Beson provides equitable relief from strict application of the reimbursement claim time limitations set by rule. However, in order to avail themselves of this relief, an insurer must have done Aeverything reasonably possible@ to qualify for reimbursement under the second injury law. Beson, 271 Minn. at 275, 136 N.W.2d at 86, 23 W.C.D. at 919. In the present case, the compensation judge reasonably concluded that Assigned Risk had not established that it was not at Afault@ for the 10-plus-year delay in seeking reimbursement. Because this criterion established by Beson was not satisfied, we need not consider the issue of prejudice to the Fund, and we affirm the judge=s decision.