GARY ALINK, Employee, v. HORMEL FOODS, SELF-INSURED, adm'd by ALEXSIS/RSKCO., Employer, and MN DEP=T OF LABOR & INDUS., Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
MARCH 14, 2003
PENALTIES. The compensation judge=s denial of penalties pursuant to Minn. Stat. '' 176.221, subd. 3, and 176.225, subd. 1(b), is affirmed where the employer=s reliance on its medical expert=s permanent partial disability ratings was neither unreasonable or ill-founded.
Determined by Johnson, C.J., Rykken, J., and Stofferahn, J.
Compensation Judge: Bradley J. Behr.
THOMAS L. JOHNSON, Judge
The Department of Labor and Industry appeals from the compensation judge=s finding that the employer had a good faith basis for disputing the permanent partial disability rating proposed by the Department and from the judge=s denial of penalties. We affirm.
On March 7, 1993, Jerry D. Vlasaty sustained an injury to his left hand while employed by Hormel Foods, the employer, then self-insured for workers= compensation liability with claims administered by CompCost, Inc. The self-insured employer accepted liability for the employee=s injury and paid various workers= compensation benefits, including medical expenses.
On December 3, 1996, Gary Alink sustained an injury to his right hand while employed by the employer, then self-insured for workers= compensation liability with claims administered by Alexsis/RSKCo. The self-insured employer also accepted liability for Mr. Alink=s injury and paid workers= compensation benefits and medical expenses.
On October 13, 1997, Dr. Jeffrey Groner performed surgery on Mr. Alink=s right hand described as a Afirst CMC[] joint trapezium excision arthroplasty with reinforcement of intermetacarpal ligamentous support utilizing a slip of abductor pollicis longus tendon.@ (Ex. 1C.) On October 20, 1997, Dr. Groner performed the same surgery on Mr. Vlasaty=s left hand. On July 21, 1998, Dr. Groner opined Mr. Vlasaty had sustained a 17 percent permanent partial disability (PPD) of the whole body as a result of his hand surgery, citing Minn. R. 5223.0480, subps. 1.B.(2)(a)i. and 2.D. On August 4, 1998, Dr. Groner issued a similar opinion with respect to Mr. Alink.
Upon receipt of Dr. Groner=s reports rating permanent partial disability, the self-insured employer requested Dr. Christopher Tountas rate permanent partial disability for both employees. By report dated August 21, 1998, Dr. Tountas concluded the appropriate permanency rating for Mr. Vlasaty=s left hand surgery was 3.74 percent under Minn. R. 5223.0480, subps. 1.B.(2)(a)i. and 1.B.(1)(a). Alternatively, Dr. Tountas stated Rule 5223.0470, subp. 3.A.(4), might apply, which allowed a 6 percent permanent disability rating. By report dated September 11, 1998, Dr. Tountas also rated Mr. Alink as having a 3.74 percent whole body disability. The self-insured employer paid 3.74 percent PPD benefits to both employees.
By report dated December 14, 1998, Dr. Tountas revised his opinion regarding the PPD ratings for both employees. The doctor concluded each employee was entitled to a 6 percent permanent disability under Minn. R. 5223.0470, subp. 3. The self-insured employer apparently paid each employee the additional permanent disability rated by Dr. Tountas. Neither employee filed a claim petition seeking additional permanency benefits.
Mr. Vlasaty had prior surgery to his right hand performed by Dr. William P. Cooney on January 30, 1995. The doctor=s pre-operative diagnosis was Aright first carpometacarpal arthritis.@ In his surgical report, the doctor described the surgery as a Aligamentous reconstruction with tendinous interposition, right first carpometacarpal joint.@ (Pet. Ex. 1(b).) Thereafter, Dr. Cooney rated a 4.2 percent whole body disability under Minn. R. 5223.0480, subp. 1.B.(1)(a), and supb. 4.G.(2). At the request of the employer, Dr. Toth later reviewed Dr. Cooney=s rating and opined a 4.4 percent disability rating was appropriate, correcting a mathematical error made by Dr. Cooney.
By letters dated March 29, 1999, James L. Vogel, a compliance services specialist with the Department of Labor and Industry, DLI, wrote to CompCost advising the company the department believed the appropriate PPD rating for both employees was 17 percent. Mr. Vogel requested that CompCost pay the additional permanency owed within 14 days of the date of his letter and stated that failure to do so might result in penalties. No further PPD benefits were paid to either employee. On August 23, 1999, DLI served a notice of penalty assessment on the employer with respect to Mr. Alink and Mr. Vlasaty. The employer filed an objection to the penalty assessments. The cases were subsequently consolidated and came on for hearing before Judge Behr on June 20, 2002. In a Findings and Order filed July 10, 2002, the compensation judge found the employer had a good faith basis for disputing the permanent partial disability rating proposed by DLI. Accordingly, the compensation judge denied department=s request for penalties. DLI appeals.
1. Testimony of Dr. William Lohman
The Department of Labor and Industry apparently moved the court for an order permitting the testimony of Dr. William Lohman. The employer objected. Following a telephone conference, Judge Behr denied the motion for medical testimony. Counsel for the department renewed the motion for the medical testimony of Dr. Lohman at the hearing, and the motion was again denied by the judge. On appeal, DLI contends the testimony of Dr. Lohman was essential for an accurate determination of the issues. Accordingly, the department contends the compensation judge erred in disallowing Dr. Lohman=s testimony. We disagree.
To preserve the record on appeal, a party seeking to offer evidence rejected by a compensation judge must make an offer of proof placing on the record a summary of the expected testimony disallowed by the compensation judge. An offer of proof provides an evidentiary record such that this court may fully review on appeal the admissibility of the rejected testimony. See Balma v. Anoka-Hennepin Ind. Sch. Dist. #11, 59 W.C.D. 126 (W.C.C.A. 1999). DLI did not place on the record an offer of proof outlining the expected testimony of Dr. Lohman. In its brief, the department contends Dr. Lohman would have testified he was involved in drafting the permanent partial disability rules and would have testified about the processes and considerations underlying the permanent partial disability ratings. In addition, DLI contends Dr. Lohman would have testified the surgical procedure in question is automatically assigned a 17 percent PPD rating under the applicable rules and would have testified why that was the appropriate rating in these cases.
The issue in this case is not the amount of permanency benefits to which the employees may be entitled. Rather, the issue is whether the employer=s conduct was so unreasonable as to require the imposition of a penalty. On this issue, the intent of the drafters of the permanency rules is irrelevant. Equally irrelevant is Dr. Lohman=s opinion as to which rule applies in these cases. Whether a penalty is appropriate is generally a question of fact. It is the function of the compensation judge, not a medical expert, to resolve factual or legal disputes. The compensation judge=s denial of DLI=s motion is affirmed.
The compensation judge denied the request of the Department of Labor and Industry for penalties against the self-insured employer under Minn. Stat. '' 176.221, subd. 3, and 176.225, subd. 1(b). The department contends this denial was clearly erroneous. DLI argues the only proper PPD rating in these cases is the 17 percent rating of Dr. Groner, and the employer=s failure to pay the 17 percent rating was untimely and an unreasonable or vexatious delay of payment. Accordingly, DLI seeks a reversal of the compensation judge=s denial of penalties.
The self-insured employer relied upon the expert opinion of Dr. Tountas for its refusal to pay the 17 percent permanent partial disability rated by Dr. Groner. Whether the employer=s reliance on Dr. Tountas=s opinion was so unreasonable as to require the imposition of a penalty depends on whether Dr. Tountas=s opinion created a legitimate dispute. This is a question of fact for the compensation judge. A penalty under Minn. Stat. ' 176.225, subd. 1, may be justified Anot because the employer-insurer merely made a mistake, but because the reason for their neglect and refusal to pay compensation was patently ill-founded and unwarranted.@ Hines v. Kobiela, 308 Minn. 20, 241 N.W.2d 814, 28 W.C.D. 400 (1976). An employer cannot be penalized for refusing to pay benefits which are the subject of a real controversy. Grover v. City of St. Paul, 55 W.C.D. 397 (W.C.C.A. 1995). A defense is frivolous where it is unsupported by any substantial evidence. Jackson v. Eveleth Mining Co., 49 W.C.D. 591 (W.C.C.A. 1993).
Dr. Tountas stated Dr. Groner=s operative procedure was an excision of the trapezium, one of the carpal or wrist bones. Dr. Tountas rated permanent disability under Minn. R. 5223.0470, which provides ratings for permanent partial impairment of the wrist. Subdivision 3.A.(4) of the rule provides for a six percent disability for an arthroplasty of a single carpal bone. Dr. Groner rated PPD under the rule rating permanent impairment of the hand and fingers. Dr. Tountas, however, opined Dr. Groner=s 17 percent rating overstated the extent of the employee=s functional loss. Dr. Cooney and Dr. Toth rated less than 6 percent for essentially the same surgery performed on Mr. Vlasaty=s right hand in 1995. The compensation judge found the applicable permanent partial disability schedules were not absolutely clear or unambiguous, and concluded Dr. Tountas=s rating was not unreasonable. Substantial evidence supports this decision. The self-insured employer=s reliance on Dr. Tountas=s PPD ratings was neither unreasonable nor ill-founded. The compensation judge=s denial of DLI=s request for penalties is, therefore, affirmed.
 Carpometacarpal is defined as Apertaining to the carpus (wrist) and metacarpus (the part of the hand between the wrist and the fingers).@ Dorland=s Illustrated Medical Dictionary 291, 1094 (29th ed. 2000).
 Arthroplasty is defined as surgery of a joint. Dorland=s Illustrated Medical Dictionary 152 (29th ed. 2000).
 Minn. Stat. ' 176.221, subd. 3, provides a penalty if the employer and insurer do not begin payment of compensation within the prescribed time limit.
 Minn. Stat. ' 176.225, subd. 1(b), provides for a penalty when an employer or insurer has unreasonably or vexatiously delayed payment.
 There is no contention by DLI in this proceeding that the employer=s payment of the six percent PPD was untimely.