TROY PATRICK, Employee/Cross-Appellant, v. CHRISTENSEN FAMILY FARMS and AON GROUP/CAMBRIDGE INTEGRATED SERVS., Employer-Insurer/Appellants.
WORKERS= COMPENSATION COURT OF APPEALS
OCTOBER 29, 2002
WAGES - IRREGULAR. When an employee=s hours and days of work are irregular, the employee=s employment on the date of injury may be included in computing the employee=s daily wage under Minn. Stat. ' 176.011, subd. 3. Under Minn. Stat. ' 176.011, subd. 3 (2000), if the employee earned less than a full day=s worth of wages and vacation or holiday pay, the total amount earned shall be divided by the corresponding proportion of the work day. It is not apparent whether the compensation judge considered this portion of the statute, and the case is remanded to recompute the employee=s daily wage.
WAGES - CALCULATION. Where the employee performed duties of his employment during the week in which he was injured, the compensation judge properly included that week in calculating the employee=s weekly wage under Minn. Stat. ' 176.011, subd. 18. A consistent application of Minn. Stat. ' 176.011, subds. 3 and 18, requires that an employee=s holiday and vacation pay be included in the weekly, as well as the daily, wage calculation.
PENALTIES - SUBSTANTIAL EVIDENCE. Substantial evidence supports the compensation judge=s denial of the employee=s claim for a penalty on the basis that the insurer=s July 3, 2001 letter provided the employee and his attorney with an adequate explanation of the reasons for the benefit reduction and contained as much information as would have been contained in a NOID, which the employer and insurer failed to serve and file.
ATTORNEY FEES - SUBD. 7. The compensation judge properly ordered payment of Minn. Stat. ' 176.081, subd. 7, attorney fees on future attorney fees ordered paid by the compensation judge arising from this particular dispute. Attorney fees may not be awarded on undisputed portions of compensation awards, Minn. Stat. ' 176.081, subd. 1(c), and benefits paid the employee based on the portion of a compensation rate that was undisputed may not be the subject of an award of attorney fees.
Affirmed in part, modified in part, and remanded.
Determined by Johnson, C.J., Pederson, J. and Stofferahn, J.
Compensation Judge: Jeanne E. Knight.
THOMAS L. JOHNSON, Judge
The employer and insurer appeal and the employee cross-appeals the compensation judge=s computation of the employee=s pre-injury wage. The employer and insurer further appeal the compensation judge=s award of attorney fees under Minn. Stat. ' 176.081, subd. 7. The employee appeals the compensation judge=s denial of penalties. We affirm the judge=s denial of the employee=s claim for a penalty, modify in part the judge=s wage calculation and remand the case to the compensation judge to recompute the employee=s wage on the date of injury. We also remand the issue of attorney fees to the compensation judge for clarification.
Troy Patrick, the employee, sustained injuries to his low back and right knee on January 9, 2001, while working for Christensen Family Farms. The employer and its insurer admitted liability for the employee=s injury.
Based upon the information contained in the first report of injury, the insurer commenced payment of temporary total disability benefits to the employee at a compensation rate of $288.00 per week. The employee was paid at this rate through July 2, 2001. Effective July 3, 2001, the insurer reduced the employee=s temporary total disability benefit to $145.88 a week. The insurer did not serve the employee nor file with the Department of Labor and Industry a Notice of Intention to Discontinue Benefits (NOID) prior to reducing the employee=s benefit.
Ms. Tracey E. Hartman, a senior claim representative of the insurer, by letter dated July 3, 2001, wrote to Paul M. Malone, the employee=s attorney. Ms. Hartman provided Mr. Malone a wage statement showing the employee=s wages from November 20 through December 30, 2000, and concluded the employee=s wage on the injury date was $273.52 entitling the employee to a compensation rate of $182.35. Ms. Hartman further stated:
He has been paid a total of 26 weeks at 288.00 for a total of $7488.00. He should have been paid 26 weeks at 182.35 for a total due of $4741.10. There is an overpayment of 2746.90. Therefore, I will be paying Mr. Patrick 145.88 per week, withholding 20% to recoup the overpayment. If an overpayment remains at the time a permanency rating is given, the remaining amount will be withheld from permanency.
The employee then filed a claim petition asserting a weekly wage on the date of injury of $650.75. The employee also sought a penalty for a claimed improper discontinuance of benefits. The case was heard by a compensation judge at the Office of Administrative Hearings on stipulated facts. In a Findings and Order filed May 16, 2002, the compensation judge concluded the employee=s earnings on the date of his injury should be included in the daily wage calculation, and found the employee=s daily wage was $83.92. The judge found the employee averaged 3.71 days of work a week, and determined the employee=s weekly wage was $311.34 ($83.92 x 3.71). Although the insurer failed to file an NOID when it reduced the employee=s benefits on July 3, 2001, the judge found Ms. Hartman=s letter of July 3, 2001 provided the employee and his attorney with a clear explanation of the basis for the benefit reduction and denied the employee=s claim for a penalty. The compensation judge ordered the employer to recalculate the employee=s benefits using a compensation rate of $207.80, taking a 20 percent offset until any overpayment is recouped. The judge further ordered the employer and insurer to pay to the employee=s attorney 25/20 percent of the ongoing benefits plus fees under Minn. Stat. ' 176.081, subd. 7. The employer and insurer appeal and the employee cross-appeals the compensation judge=s calculation of the employee=s date of injury wage. The employer and insurer also appeal the award of subdivision 7 attorney fees. The employee cross-appeals the judge=s denial of his claim for penalties.
1. Computation of Daily Wage
The parties stipulated the employee=s hours and days of work were irregular and the weekly wage should be computed as provided in Minn. Stat. ' 176.011, subds. 3 and 18. In computing the daily wage, the compensation judge included in the calculation the employee=s earnings on January 9, 2001, the date of the injury. The employer and insurer contend the employee=s earnings on the date of injury are not to be included in the daily wage computation. We disagree.
Minn. Stat. ' 176.011, subd. 3 (2000), defines daily wage as Athe daily wage of the employee in the employment engaged in at the time of the injury.@ If the amount of the daily wage received by the employee is irregular Athe daily wage shall be computed by dividing the total amount of wages, vacation pay, and holiday pay the employee actually earned in such employment in the last 26 weeks, by the total number of days in which such wages, vacation pay and holiday pay was earned.@ Id. It is unclear whether the statutory phrase Ain the last 26 weeks@ was intended to include or exclude the date of the injury. While not dealing with the issue directly, cases have both included and excluded earnings on the date of the injury.
In 2000, Minn. Stat. ' 176.011, subd. 3, was amended to include the following language: Aif the employee worked or earned less than a full day=s worth of wages, vacation pay, or holiday pay, the total amount earned shall be divided by the corresponding proportion of that day@. A principal argument for excluding earnings on the date of injury is that, where the employee works less than a full day, the wages earned on the injury date do not accurately reflect the employee=s earning capacity. The statute, as amended, however, rectifies this problem. Accordingly, it was not an error for the compensation judge to include in the daily wage calculation the employee=s earnings on the date of his injury. That decision is, therefore, affirmed.
In computing the daily wage, the compensation judge stated in her memorandum Athe employee worked 25 days during seven weeks and was paid for one day on which he did not work.@ (Memo at 4.) The 26 days counted by the judge include January 9, 2001, the date the employee was injured. Several of the days the employee worked, however, were fractional days. Minn. Stat. ' 176.011, subd. 3 (2000), provides that if Athe employee worked or earned less than a full day=s worth of wages, vacation pay, or holiday pay, the total amount earned shall be divided by the corresponding proportion of that day.@ We cannot determine whether the compensation judge considered this portion of the statute in computing the employee=s daily wage. Accordingly, the case is remanded to the compensation judge to recompute the employee=s daily wage consistent with this opinion.
2. Computation of Weekly Wage
The compensation judge found the employee performed duties of his employment during seven weeks. The employee cross-appeals this finding, contending the judge should not have included in the calculation the week of the injury, commencing Monday, January 8, 2001. We disagree. The weekly wage is determined by Amultiplying the daily wage by the number of days and fractional days normally worked in the business of the employer for the employment involved.@ Minn. Stat. ' 176.011, subd. 18. If, however, the employee works an irregular number of days per week, Athe number of days normally worked shall be computed by dividing the total number of days in which the employee actually performed any of the duties of the employment in the last 26 weeks by the number of weeks in which the employee actually performed such duties.@ Id. The employee did work on Monday and Tuesday, January 8 and 9, 2001. Accordingly, that week is included in the calculation because the employee performed employment duties during the week of January 8, 2001. See, Takemoto v. Lazer Communications, Inc., slip op. (W.C.C.A. Dec. 14, 2001). The compensation judge properly concluded the employee performed work for the employer over seven weeks.
In computing the weekly wage, the compensation judge included in the computation a day on which the employee earned holiday pay. The judge determined the employee worked 26 days during seven weeks which yields an average of 3.71 days per week. Including the date of injury, the employee physically worked only 25 days. He did, however, receive holiday pay on December 25, 2000, a day he did not work. The issue is whether December 25, 2000 is included in the weekly wage calculation.
Minn. Stat. ' 176.011, subd. 3, was amended in 2000. Prior to the amendment, holiday pay and vacation pay were includable in the daily wage calculation under subdivision 3, but the days for which those payments were made were not included in the calculation. Fougner v. Boise Cascade, 460 N.W.2d 1, 43 W.C.D. 281 (Minn. 1990). Thus, two equally paid workers injured on the same day might have a different date of injury wage where one of the workers received holiday or vacation pay prior to the injury and the other employee did not. To compute the daily wage under the amended statute, holiday and vacation pay are included in the calculation together with the days for which those payments were made. Presumably, a purpose of the statutory amendment was to treat all injured workers equally through a consistent application of the statute. Although subdivision 18 of the statute was not amended, a consistent application of that subdivision also requires the inclusion in the calculation of all days the employee received wages and vacation or holiday pay. We conclude, therefore, the employee=s holiday pay is includable in the weekly wage calculation. The employee worked on 26 days over seven weeks which yields an average of 3.71 days per week. The compensation judge=s calculation of the number of days worked a week is affirmed.
The employee appeals the compensation judge=s denial of his claim for a penalty. He contends the employer and insurer improperly reduced his temporary partial disability benefits without serving a NOID as required by Minn. Stat. ' 176.238 and Minn. R. 5220.2630. Relying on Webeck v. Mochinski General Contractor, 41 W.C.D. 1063 (W.C.C.A. 1989), the employee seeks a reversal of the compensation judge=s denial of a penalty. We are not persuaded.
In the Webeck case, the employer reduced by one-half the employee=s temporary total disability benefits without filing a NOID as required by Minn. Stat. ' 176.238, subd. 1. The employee sought a penalty. The employer argued that it complied with the statute by mailing a letter to the employee at the time it reduced the employee=s benefits. The compensation judge rejected this argument and imposed a penalty. On appeal, this court affirmed the compensation judge=s decision, concluding the insurer reduced a benefit without sufficient legal basis. The Webeck case does not stand for the proposition that a NOID is always required before benefits may be reduced or discontinued. Rather, the particular circumstances must be considered in each case.
In Woelfel v. Plastics, Inc., 371 N.W.2d 215, 38 W.C.D. 43 (Minn. 1985), the supreme court held the filing of a technically deficient NOID did not impose on the insurer an indeterminate liability to continue compensation payments. See also Barlau v. Prudential Ins. Co., 60 W.C.D. 426 (W.C.C.A. 2000). In other cases, this court has affirmed a compensation judge=s denial of a penalty where the judge concluded some communication to the employee other than a NOID fulfilled the purpose of the NOID, which is to inform the employee of the discontinuance and its reason and give the employee an opportunity to contest the employer=s action on an expedited basis. See, Nutter v. United Parcel Serv., 58 W.C.D. 183 (W.C.C.A. 1997), Mellema v. Tool Prods., 49 W.C.D. 487 (W.C.C.A. 1993).
In this case, the compensation judge found the insurer=s July 3, 2001 letter provided the employee and his attorney with a clear explanation of the calculation of benefits. The judge concluded that letter adequately outlined the reason for the benefit reduction and contained as much information as would have been contained in a NOID. The judge=s findings and conclusions are amply supported by the record, and the denial of a penalty is, therefore, affirmed.
4. Minn. Stat. ' 176.081, subd. 7, Attorney Fees
The compensation judge ordered the employer and insurer to recalculate the employee=s benefits using a compensation rate of $207.80 and permitted a 20 percent credit until any overpayment had been recouped. The judge further ordered that from ongoing benefits payable under the order, the insurer should withhold and pay to the employee=s attorney statutory attorney fees. The insurer was further ordered to reimburse the employee attorney fees pursuant to Minn. Stat. ' 176.081, subd. 7. The employer and insurer appeal the award of subdivision 7 attorney fees on any ongoing benefits. They argue the judge=s award of subdivision 7 fees based on attorney fees yet to be awarded is premature and without legal basis. We disagree.
Under Minn. Stat. ' 176.081, subd. 7, when an employer or insurer files an NOID or unsuccessfully resists the payment of compensation and the employee=s attorney successfully procures payment, the compensation judge Ashall award to the employee against the insurer or self-insured employer or uninsured employer, in addition to the compensation benefits paid or awarded to the employee, an amount equal to 30 percent of that portion of the attorney=s fee which has been awarded pursuant to this section that is in excess of $250.@ Thus, if as the result of a dispute an employee=s attorney is eligible for a fee under Minn. Stat. ' 176.081, subd. 1, subdivision 7 attorney fees must also be awarded. Contrary to the appellant=s assertion, subdivision 7 attorney fees are payable not just on those attorney fees payable to the date of the hearing but also on any attorney fees awarded in the future arising from the original dispute. We, therefore, reject the appellant=s argument. To the extent the employee=s attorney is entitled to a fee for benefits procured for the employee, the employer and insurer owe subdivision 7 fees.
The compensation judge ordered the insurer to pay the employee at a compensation rate of $207.80 less a 20 percent credit for an overpayment. The judge then ordered the insurer to withhold and pay statutory attorney fees Afrom the above payment of benefits.@ (Order 2.) Under Minn. Stat. ' 176.081, subd. 1(c), attorney fees shall not be awarded on Aany undisputed portion of compensation awards. Allowable fees under this chapter shall be based solely upon genuinely disputed claims or portions of claims.@ The employer and insurer admitted a weekly wage of $273.52 which yields a compensation rate of $182.35. Thus, benefits paid the employee at that compensation rate are undisputed and may not be the subject of an award of attorney fees. On remand, the compensation judge should reconsider the award of contingent attorney fees.
 The parties stipulated the employee=s weekly wage would be computed based on the employee=s work being classified as irregular employment.
 See Rios v. National Coatings, slip op. (W.C.C.A. April 8, 2002); Sawczuk v. Special School District No. 1, 312 N.W.2d 435, 34 W.C.D. 282 (Minn. 1981); Blight v. Harbor City Masonry, 60 W.C.D. 131 (W.C.C.A. 2000).