RAYMOND H. WAGNER, Employee, v. CITY OF SAINT PAUL, SELF-INSURED, Employer/Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
NOVEMBER 21, 2003
CREDITS & OFFSETS - CREDIT FOR OVERPAYMENT; CREDITS & OFFSETS - SOCIAL SECURITY OFFSET; STATUTES CONSTRUED - MINN. STAT. ' 176.179. Where benefits have been mistakenly paid to an employee, Minn. Stat. ' 176.179 provides the only statutory method for recovery of the overpayment, including in situations where previously paid temporary total disability benefits are Areclassified@ as permanent total disability benefits pursuant to a judge's order, and an employer in the latter circumstances is obligated to pay weekly permanent total disability benefits subject to the statutory 20% offset and may not simply cease paying benefits until the overpayment is exhausted.
PENALTIES; STATUTES CONSTRUED - MINN. STAT. ' 176.179; STATUTES CONSTRUED - MINN. STAT. ' 176.225, SUBD. 1. Where reclassification of the employee=s temporary total disability benefits as permanent total disability benefits resulted in an overpayment to the employee, and where, contrary to this court=s and the supreme court=s affirmances of a compensation judge=s order, the employer failed to pay permanent total disability benefits subject to the 20% offset provided for in Minn. Stat. ' 176.179, choosing instead to cease payments entirely until the credit for the overpayment is exhausted, it was not unreasonable for the compensation judge to award a penalty pursuant to Minn. Stat. ' 176.225, subd. 1, on grounds that the employer had interposed a frivolous defense and vexatiously delayed payment.
Determined by Pederson, J., Rykken, J., and Wilson, J.
Compensation Judge: Paul D. Vallant.
Attorneys: Timothy S. Crom, Jardine, Logan & O'Brien, Lake Elmo, MN, appeared for Appellant. Lewis H. Seltz, Attorney at Law, Golden Valley, MN, appeared for Respondent.
WILLIAM R. PEDERSON, Judge
The self-insured employer appeals from the compensation judge=s determination that the employer was obligated to pay to the employee weekly permanent total disability benefits continuing from April 26, 2002, subject to a 20% credit in accordance with Minn. Stat. ' 176.179, and from the judge=s award of penalties under Minn. Stat. ' 176.225. We affirm.
The facts in this case are not in dispute. On August 28, 1979, November 26, 1985, May 24, 1993, and September 30, 1997, Raymond Wagner [the employee] sustained work-related injuries while employed by the City of Saint Paul [the employer], which was self-insured against workers= compensation liability on all of those dates. On his final date of injury, September 30, 1997, the employee was fifty-nine years old and was earning a weekly wage of $856.26. The employee eventually began receiving social security disability benefits [SSDI] in May of 1998 and was awarded PERA disability retirement benefits [PERA] beginning in March of 1999.
On November 19, 1999, the employee filed a claim petition, alleging entitlement to permanent total disability benefits continuing from August 14, 1998, as a result of his 1979, 1985, 1993, and 1997 work injuries. At the time of the employee=s petition, the employer was paying to the employee temporary total disability benefits at a compensation rate of $570.84. In its answer, filed December 13, 1999, the employer denied that the employee was permanently and totally disabled. On March 24, 2000, the employer served a Notice of Intention to Discontinue [NOID] the employee=s workers= compensation benefits on March 21, 2000, on grounds that the employee had reached the 104-week statutory limitation on temporary total disability benefits.
The employee=s claim for permanent total disability benefits was heard by a compensation judge on February 15, 2001, and the record closed on April 1, 2001. In a Findings and Order issued May 23, 2001, the judge found that the employee had been permanently and totally disabled as of August 14, 1998, and ordered the employer to pay permanent total disability benefits continuing from that date, Asubject to offsets allowed by law and attorney=s fees.@ The compensation judge=s decision and order were subsequently affirmed by this court on January 18, 2002, and this court=s decision was affirmed by the supreme court on April 25, 2002.
Following the supreme court=s order, the employer reclassified the payments made to the employee from temporary total disability benefits to permanent total disability benefits for the period of August 14, 1998, through March 21, 2000. With this reclassification, it was determined that the employer had paid $25,000.00 in weekly permanent total disability benefits as of June 14, 1999. In accordance with Minn. Stat. ' 176.101, subd. 4, the employer became entitled as of June 14, 1999, to reduce the amount of its workers= compensation payments to the employee by the amount of the SSDI and PERA benefits that the employee received. Application of the offsets in this case resulted in a documented overpayment of disability benefits by the employer, and the employer has not made payment of any further disability benefits to the employee.
On June 10, 2002, the employee filed a claim petition, alleging entitlement to permanent total disability benefits and for penalties for the employer=s failure to commence payment of permanent total disability benefits following the supreme court=s order of April 25, 2002. In its answer filed June 28, 2002, the employer asserted that the employee had been paid all benefits to which he was entitled, by way of advance payment of benefits in the form of temporary total disability benefits prior to their reclassification as permanent total disability benefits. It asserted further Athat the employee is not entitled to further benefits until such time as an overpayment created by his claims for benefits has been exhausted.@
The matter was submitted to a compensation judge on stipulated facts on March 12, 2003. It was agreed that the gross benefits claimed by the employee, following the offsets for SSDI and PERA through March 12, 2003, were as follows:
04/26/02 - 09/30/02
10/01/02 - 11/30/02
12/01/02 - 12/31/02
01/01/03 - 03/12/03
In a decision issued May 12, 2003, the compensation judge concluded that the employer was obligated to pay weekly permanent total disability benefits continuing from April 26, 2002, subject to offsets for SSDI benefits, PERA benefits, and also subject to attorney fees. The judge concluded also that the employer's failure to pay weekly benefits continuing from April 26, 2002, warranted penalties under Minn. Stat. ' 176.225, subd. 1. In his memorandum, the judge noted that the employer's entitlement to recoup its overpayment was governed by Minn. Stat. ' 176.179. 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.
1. Application of Minn. Stat. ' 176.179
In the AJoint Statement of Facts@ submitted to the compensation judge, the parties acknowledged that reclassification of the benefits paid to the employee from temporary total disability benefits to permanent total disability benefits Aresulted in an overpayment of disability benefits to the Employee by the self-insured Employer@ (emphasis added). Recognizing the employer's right to a credit for mistaken overpayments against future liability, the judge concluded that Minn. Stat. ' 176.179, which addresses recovery of overpayments, was applicable to this case. That statute provides in pertinent part as follows:
176.179. Recovery of overpayments
Notwithstanding section 176.521, subdivision 3, or any other provision of this chapter to the contrary, except as provided in this section, no lump sum or weekly payment, or settlement, which is voluntarily paid to an injured employee or the survivors of a deceased employee in apparent or seeming accordance with the provisions of this chapter by an employer or insurer, or is paid pursuant to an order of the workers' compensation division, a compensation judge, or court of appeals relative to a claim by an injured employee or the employee's survivors, and received in good faith by the employee or the employee's survivors shall be refunded to the paying employer or insurer in the event that it is subsequently determined that the payment was made under a mistake in fact or law by the employer or insurer. When the payments have been made to a person who is entitled to receive further payments of compensation for the same injury, the mistaken compensation may be taken as a partial credit against future periodic benefits. The credit applied against further payments of temporary total disability, temporary partial disability, permanent partial disability, permanent total disability, retraining benefits, death benefits, or weekly payments of economic recovery or impairment compensation shall not exceed 20 percent of the amount that would otherwise be payable.
The employer contends that the compensation judge erred when he found Minn. Stat. ' 176.179 applicable to the facts of this case. It argues that its payment of temporary total disability benefits was not made under a mistake in fact or law but in fact was made in accordance with the provisions of Minn. Stat. '' 176.021 and 176.101. It argues that application of Minn. Stat. ' 176.179 to these facts, where the character of the payment has simply been reclassified, requires the employer to pay the employee twice for the same disability. We disagree.
First of all, like the compensation judge, we view the facts of this case to be precisely the type of situation that Minn. Stat. ' 176.179 was intended to address. The employer simply does not approve of the statute's provisions for the recovery of its overpayment. Although the employer may have appropriately paid temporary total disability benefits to the employee through March 21, 2000, a compensation judge subsequently determined that the employee had been permanently and totally disabled during the period in question and that any overpayment of benefits consequent to that misconstruction was Asubject to offsets allowed by law.@ In effect, the compensation judge reasonably concluded that the overpayment that resulted after reclassifying the benefits represented payment under a mistake.
The purpose of Minn. Stat. ' 176.179 is to avoid hardship to the employee where the application of the credit, if permitted in full, would offset totally the periodic benefits designed to compensate the employee for lost earnings. Christianson v. Axel H. Ohman Constr. Co., 346 N.W.2d 654, 656, 36 W.C.D. 639, 641 (Minn. 1984). Application of the full credit in this case would offset totally the periodic benefits payable to the employee. By arguing that the statute does not apply and that the employee has already been compensated for his disability, the employer essentially seeks to circumvent the method provided by the legislature for recovery of overpayments. But for the provisions of the statute, every overpayment could be viewed as a prepayment of future benefits, consequently allowing in every case a cessation of benefits until the overpayment has been exhausted. The statute is clear in limiting the employer to a 20% offset against ongoing benefits. The employer has cited no statutory authority allowing a cessation of compensation until overpayment has been exhausted. We acknowledge that the employer may not have an opportunity in this case to fully recoup its overpayment under the statutory provisions before payment of benefits terminates under the law, but this court has no authority to modify the provisions of the statute based on the equities of each case.
When benefits have been mistakenly paid to an employee, Minn. Stat. ' 176.179 provides the sole statutory method for recovery of the overpayment. There is no reason to believe that the statute is inapplicable to circumstances in which benefits previously paid are Areclassified@ pursuant to a judge's order. Accordingly, we affirm the determination of the compensation judge that the employer is obligated to pay weekly permanent total disability benefits to the employee continuing from April 26, 2002, subject to the appropriate offsets for recovery of its overpayment in accordance with Minn. Stat. ' 176.179.
The compensation judge awarded a penalty against the employer under Minn. Stat. ' 176.225, subd. 1, on grounds that it interposed a frivolous defense, vexatiously delayed payment, and refused to pay compensation. The penalty award covered the period of permanent total disability benefits payable to the employee from April 26, 2002, through March 12, 2003. The employer contends that the judge's conclusion that its defenses were frivolous is completely without support. It argues that there is no case law interpreting the provisions of Minn. Stat. ' 176.179 and their application to the facts of this case, where the employee is ostensibly seeking payment of benefits that he has already received in hand. We disagree.
In her Findings and Order of May 23, 2001, the compensation judge ordered the employer to pay to the employee permanent total disability benefits from and after August 14, 1998, subject to offsets allowed by law and attorney fees. The judge's decision was affirmed by this court and the supreme court. Despite this order, the employer failed to pay permanent total disability benefits. The employer has paid no benefits to the employee since March 21, 2000. The judge found unpersuasive the employer's arguments that benefits have already been paid and that Minn. Stat. ' 176.179 is inapplicable to this case. While contending that the statute was somehow inapplicable, the employer cited no statutory authority supporting its refusal to pay compensation as ordered by the judge. Under the facts presented here, it was not unreasonable for the compensation judge to conclude that the employer's failure to make payment pursuant to the affirmed order subjects the employer to penalties pursuant to Minn. Stat. ' 176.225, subd. 1. The judge's award of a penalty is therefore affirmed. See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.
 See Minn. Stat. ' 176.101, subd. 1(k).