RONALD W. BORGAN, Employee/Appellant, v. BOB HEGLAND, INC., and BERKLEY RISK ADM'RS CO., Employer-Insurer/Cross-Appellants, and FAIRVIEW HEALTH SERVS., Intervenor.
WORKERS= COMPENSATION COURT OF APPEALS
JULY 8, 2004
TEMPORARY PARTIAL DISABILITY - SUBSTANTIAL EVIDENCE. Substantial evidence supports the compensation judge=s findings that the employee did not substantiate his post-injury earnings with reliable corroborating evidence in order to support a claim for temporary partial disability benefits.
PENALTIES - ATTORNEY FEES. The compensation judge erred by denying the employee=s claim for a penalty for late payment of attorney fees where the employer and insurer did not pay fees as ordered by a findings and order and did not appeal the findings and order.
Affirmed in part and reversed in part.
Determined by Rykken, J., Wilson, J and Pederson, J..
Compensation Judge: Jennifer A. Patterson
Attorneys: David R. Vail, Soderberg & Vail, Minneapolis, MN, for the Appellant. Randee S. Held, Mahoney, Dougherty and Mahoney, Minneapolis, MN, for the Cross/Appellant.
MIRIAM P. RYKKEN, Judge
The employee appeals from the compensation judge=s denial of his claims for temporary partial disability benefits and penalties for late payment of attorney fees. The employer and insurer cross-appeal from the compensation judge=s finding that the employee has permanent restrictions related to his work injury. We affirm the denial of payment of temporary partial disability benefits and reverse the denial of penalties for late payment of attorney fees. As to the employer and insurer=s cross-appeal, we affirm the finding that the employee has permanent restrictions related to his work injury.
This claim relates to a right ankle injury that Ronald Borgan, the employee, sustained while working as a roofer on June 10, 2000. On that date, he fell off the roof of a residential project, while working with Lance Pearson, uninsured subcontractor, where Bob Hegland, Inc., was the general contractor. On that date, Bob Hegland, Inc., the employer, was insured by the Minnesota Assigned Risk Plan, with claims administered by Berkley Risk Administrators Company.
Following his injury, the employee continued to work for a brief time, and first sought medical treatment the following day, June 11, when he reported to the emergency room at Fairview University Hospital. The employee was diagnosed with a right talar dome fracture, with a small osteochondral fragment of the lateral portion of the talar dome. His ankle was splinted, he was provided with crutches and was advised not to bear weight on his ankle, and was referred to an orthopedic surgeon for additional treatment. He consulted Dr. Michael Nemanich, orthopedist, on June 19, 2000. A CT scan of the right ankle taken on June 30, 2000, confirmed the original diagnosis. By August 17, 2000, when the employee finally returned to Dr. Nemanich for follow-up recommendations, Dr. Nemanich stated that although the employee had been non-compliant with his medical treatment thus far, the employee felt as if he was improving. Dr. Nemanich recommended continued observation, and released the employee to sedentary work, recommending either excising or fixating the fragment in the employee=s right ankle, depending on whether the employee=s symptoms continued.
On December 21, 2000, the employee reported continued pain, and advised Dr. Nemanich that he was unable to return to all of his regular activities, and specifically that running was very difficult for him. Dr. Nemanich recommended surgery, and on January 9, 2001, performed arthroscopic surgery on the employee=s right ankle. Dr. Nemanich restricted the employee from work for six weeks; however, by January 30, 2001, Dr. Nemanich advised that he would gradually allow the employee to return to his regular activities as tolerated, and prescribed physical therapy.
By May 2001, the employer and insurer provided the employee with rehabilitation assistance and assigned a qualified rehabilitation consultant (QRC), Ronald Dederich, to work with the employee. On July 3, 2001, the employee consulted Dr. Nemanich, reporting continued soreness and pain in his ankle; Dr. Nemanich recommended additional therapy, since the employee reported some benefit from that treatment. On July 3 and again on July 31, Dr. Nemanich declined the employee=s repeated requests for narcotic pain medication for his chronic pain. He concluded that the employee would be unable to return to his regular job of roofing, and referred the employee for a functional capacities evaluation (FCE) to more specifically delineate the employee=s work restrictions. After three no-shows for FCE appointments, the employee finally attended an FCE on November 28, 2001, which demonstrated the employee=s restricted range of motion of the right ankle, his below-normal hand grip strength, and his ability to lift 50 pounds from floor to shoulder and 60 pounds from floor to waist, both on a frequent basis.
Dr. Nemanich referred the employee to his associate, Dr. Teresa Gurin, for chronic pain management. Dr. Gurin examined the employee on September 21, 2001, and diagnosed right ankle pain status post fracture with neuropathic pain problem. She prescribed MS Contin and Neurontin, after the employee agreed to discontinue use of alcohol and marijuana and after admonishing the employee that she would need to discontinue the pain medication if the employee resumed use of any controlled substances. When Dr. Gurin saw the employee again on December 11, 2001, she noted his difficulty ambulating but also noted that his neuropathic pain had slightly improved.
The employee next sought medical care for his right ankle condition in November 2002, when he reported to Dr. Gurin that his ankle pain was exacerbated by an altercation in October 2002. On February 28, 2003, Dr. Gurin advised that the employee had reached maximum medical improvement with zero percent permanent partial disability. The employee next consulted Dr. Nemanich on September 15, 2003, at which time the doctor advised that Dr. Gurin=s work restrictions on walking and lifting could be considered permanent. Dr. Nemanich also approved a permanent bus pass.
Following his injury, the employee remained off work for various periods of time and also periodically worked as a handyman on a self-employed basis. Between the date of his injury, June 10, 2000, and his surgery on January 9, 2001, the employee performed some work, including some unpaid construction work for his mother and limited paid construction work for one or two other employers. The employer and insurer paid temporary total disability benefits from June 10 through August 17, 2000, and again from January 9, 2001, through November 13, 2001. The employee began working with a placement vendor in September 2001, and searched for work with the assistance of his QRC and placement vendor from October 2001 until late May 2002, when job search assistance was placed Aon hold@ by the insurer due to the employee=s poor communication and lack of timely follow-up on job leads. Limited job search assistance was resumed approximately one month later.
By June 2002, the employee had received no job offers. He returned to work that month for his mother, performing various repair and general handyman duties on her rental real estate, such as painting, plastering, dry wall and plumbing. This work was light-duty and part-time. The employee testified that he earned $7,630 in 2002, averaging $223.10 per week. The employee=s QRC testified that the employee=s return to this particular work was Aa good idea,@ as it was Aa building block@ toward further employment. The employee continued to search for other work in June 2002, as well as in August and September 2002. The insurer again discontinued job placement assistance in September due to the employee=s alleged lack of cooperation with rehabilitation assistance.
After job placement assistance was discontinued in September 2002, the employee continued to look for alternative work with his QRC=s assistance, and testified that he sought cabinetry, light-duty maintenance and caretaking work. In June 2003, the employee worked two partial days for Pioneer Cabinet, at a job that was within the employee=s restrictions and that paid $12 per hour. However, following a disagreement between the employee and his supervisor about the way he was performing his job duties, the employee either resigned or his employment was terminated; the employee testified that he was not sure which happened. Since then, the employee has continued to work on a part-time basis for his mother, performing construction and repair work.
By petition filed on August 20, 2002, the employee sought an award of Roraff attorney fees. That petition, which encompassed fees for services rendered between July 5, 2000, and August 1, 2002, was addressed at a hearing on December 2, 2002. On January 15, 2003, the compensation judge issued her findings and order in which she determined that this was an appropriate case for Roraff attorney fees and ordered payment of $4,267.50 in fees for services between July 5, 2000, and July 8, 2002, as well as reimbursement of costs. No appeal was taken from that findings and order. The employer and insurer, following two letters from the employee=s attorney, finally issued payment on February 24, 2003.
On January 29, 2003, the employee filed a claim petition for temporary partial disability benefits continuing from June 1, 2002, based upon his self-employment wages earned during that period of time. The employee filed an additional claim petition on March 14, 2003, claiming entitlement to penalties for delayed payment of previously-ordered Roraff attorney fees. The two claim petitions were consolidated for a hearing set for October 31, 2003.
In findings and order issued on November 26, 2003, the compensation judge denied the employee=s claim for temporary partial disability benefits. She found that although the employee had permanent restrictions related to his right ankle injury, the work the employee performed since June 1, 2002, could not be considered as work in the competitive labor market that provided income representative of the employee=s earning capacity. She concluded instead that this work was self-employment providing only limited income, and that the employee provided no reliable, corroborating evidence of the amount of income he claims to have earned. As a result, the compensation judge concluded that the presumption concerning earning capacity was inapplicable, that is, she concluded that the employee=s post-injury earnings did not presumptively measure his residual earning capacity. The compensation judge therefore denied the employee=s claim for temporary partial disability benefits between June 1, 2002, to October 31, 2003. She also denied the employee=s claim for a penalty allegedly owed because the employer and insurer delayed payment of ordered Roraff fees, concluding that no statutory authority exists for payment of penalties for a delay in payment of attorney fees. The employee appeals from the denial of his claims. The employer and insurer cross-appeal from the finding that the employee has permanent work restrictions related to his work injury.
Permanent Work Restrictions
The employer and insurer appeal from the compensation judge=s finding that even though the employee has no ratable permanent partial disability under the rules in effect on his date of injury, he has permanent work restrictions as a substantial result of his work injury. Although the employee has been released to work on a full-time basis since approximately January 2001, he initially was limited to sedentary work and later was limited in his lifting capacity and the duration of walking and sitting he could tolerate. By July 31, 2001, Dr. Gurin advised that the employee would be unable to return to his regular roofing job, and on September 15, 2003, Dr. Nemanich assigned permanent lifting and walking restrictions. Although the employer and insurer=s medical expert, Dr. Paul Yellin, concluded that by at least the time of his examination in July 2003, the employee=s injuries did not require any restrictions on his activities, the compensation judge relied on the treating physicians= opinions and we will not disturb her choice between conflicting medical experts. Nord v. City of Cook, 360 N.W.2d 337, 37 W.C.D. 364 (Minn. 1985). The compensation judge=s determination, that the employee has permanent work restrictions as a substantial result of his work-related injury, is amply supported by the record. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984). Accordingly, we affirm that finding.
Temporary Partial Disability Claim
Although the compensation judge found that the employee is subject to permanent work restrictions as a result of his work injury, she denied his claim for temporary partial disability benefits on the basis that his earnings since June 1, 2002, were not earned from work in the competitive labor market that provided income representative of the employee=s earning capacity, but instead were earnings from self-employment that provided only limited income. The employee appeals from that denial, arguing that his self-employment income represents his retained earning capacity and therefore provides a basis for payment of temporary partial disability benefits.
To prove entitlement to temporary partial disability benefits, an employee must demonstrate a work-related physical disability and an actual loss of earning capacity causally related to the disability. Krotzer v. Browning-Ferris, 459 N.W.2d 509, 43 W.C.D. 254 (Minn. 1990); Arouni v. Kelleher Constr., Inc., 426 N.W.2d 860, 864, 41 W.C.D. 42, 48-49 (Minn. 1988); Dorn v. A.J. Chromy Constr. Co., 310 Minn. 42, 245 N.W.2d 451, 29 W.C.D. 86 (1976). To be entitled to temporary partial disability benefits, an employee must be gainfully employed, that is, the employee must show something more than Asporadic employment resulting in an insubstantial income.@ See Schulte v. C.H. Peterson Constr. Co, 278 Minn. 79, 83, 153 N.W.2d 130, 133-134, 24 W.C.D. 290, 295 (1967); Hubbell v. Northwoods Panelboard, 45 W.C.D. 515, 517 (W.C.C.A. 1991); compare Hansford v. Berger Transfer, 46 W.C.D. 303 (W.C.C.A. 1991). In addition, an employee claiming income from self-employment must substantiate this claim with reliable corroborating evidence. Senich v. Hibbing Rehabilitation, slip op. (W.C.C.A. July 21, 1999); Clasen v. Cub Foods, 47 W.C.D. 575 (W.C.C.A. 1992), summarily aff=d (Minn. Dec. 7, 1992).
Since at least June 1, 2002, the employee has worked on a part-time basis for his mother. Citing to LeMieux v. M.A. Mortenson, 306 Minn. 50, 234 N.W.2d 897, 28 W.C.D. 91 (Minn. 1975), the compensation judge concluded that the employee=s post-injury earnings from his work for his mother did not accurately reflect his earning capacity. More specifically, the compensation judge found that the evidence submitted by the employee to substantiate his claim provided insufficient documentation of his earnings on which payment of temporary partial disability benefits could even be calculated. The employee contends that the work he has performed since June 1, 2002, in the nature of construction and handyman chores, was the best he was able to procure, and that his earnings since then represent his reduced earning capacity. We are not persuaded.
The only competitive employment the employee has held since June 1, 2002, was for two days of part-time work in June 2003 for Pioneer Custom Cabinets, a job within the employee=s restrictions that paid $12 per hour. The other work the employee has engaged in since June 1, 2002, was limited to various repair and general handyman work on his mother=s rental real estate. The employee testified that he earned $7,630 in 2002; his mother testified as to the payments she made to her son. To support his claim, the employee submitted copies of checks signed by his mother, some made out to the employee, some made out to cash, and a letter and two summaries prepared by his mother that purported to document the hours and dates the employee worked. The employee also submitted bank records into evidence, which the compensation judge found to be irrelevant as they included a number of bank deposit tickets, checks made out to other payees, and checks with payees= names blacked out. The employee did not submit into evidence a W-2 or 1099 tax form substantiating the claim that his mother paid the employee $7,630 for work he performed in 2002.
The compensation judge reviewed the documentary evidence as well as the employee=s testimony, and concluded that the employee did not substantiate his claim with reliable corroborating evidence of his earnings and that his testimony alone was not sufficient to carry his burden of proving income from self-employment activities. She concluded that the checks made out to the employee by his mother between June and September 2002 did not correlate with the hours listed in documents prepared by the employee=s mother, that no detailed records of the employee=s hours and duties were put into evidence, and that
the employee=s earnings while self-employed and performing services for his mother between June 1, 2002, and the date of hearing are not a measure of his post-earning capacity. In the absence of credible business records, the testimony of the employee and his mother is not credible and does not support the claim that he earned $7,630 in 2002.
It is the trier of fact's responsibility to assess the credibility of a witness, Tolzmann v. McCombs-Knutson Associates, 447 N.W.2d 196, 198, 42 W.C.D. 421, 424 (Minn. 1989) (citing Even v. Kraft, Inc., 445 N.W.2d 831, 835, 42 W.C.D. 220, 225 (Minn. 1989)), and we will not disturb a finding based on credibility of a witness unless there is clear evidence to the contrary. In addition, a compensation judge may conclude that an employee=s testimony alone is not sufficient to carry his burden of proving income from self-employment activities. See Heine v. Apple Automatic Food Serv., 61 W.C.D. 850 (W.C.C.A. 2001); Maher v. Edward Kramer & Sons, 48 W.C.D. 598 (W.C.C.A. 1993), summarily aff=d (Minn. June 3, 1993); Novack v. Cowles Media, slip op. (W.C.C.A., Feb. 26, 1992). Based on the evidence submitted into the record, the compensation judge reasonably concluded that there was insufficient documentation of the employee=s earnings on which payment of temporary partial disability benefits could be calculated, and we affirm her denial of temporary partial disability benefits on that basis.
The compensation judge also based her denial, in part, on the employee=s lack of a diligent job search. Here, where we have concluded that no basis exists for payment of temporary partial disability benefits, we need not address the adequacy of the employee=s job search. Because substantial evidence of record supports the compensation judge=s denial of the employee=s claim for temporary partial disability benefits, we affirm. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).
Claim for Penalties for Delay in Payment of Attorney Fees
The employee claimed entitlement to a penalty against the employer and insurer, based on their late payment of the Roraff attorney fees earlier ordered through a findings and order. The compensation judge denied the employee=s claim, concluding that whereas case law to date has allowed for penalties for late payment and nonpayment of medical expenses, neither the statute nor the case law provides for a penalty due to late payment of attorney fees. She awarded interest, finding that the only Apenalty@ available for the delayed payment was statutory interest Aunder the general provisions of Minnesota law for late payment of bills.@ (Finding No. 25.)
The employee appeals, contending that penalties are not limited to late payment of an employee=s benefits and that the employer and insurer failed to timely issue payment required by the judge=s order. We review this issue de novo, as "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).
The Minnesota Workers= Compensation Statute and Minnesota Rules refer to penalties for failure to comply with an order or failure to make payments on a timely basis. Minn. Stat. ' 176.221, subd. 8, requires that A[a]ll payment of compensation shall be made within 14 days of the filing of an appropriate order by the division or a compensation judge, unless the order is appealed or if a different time period is provided by this chapter.@ Minn. Stat. ' 176.225 provides for a penalty for delayed payment, for example, where an employer or insurer has Aunreasonably or vexatiously delayed payment. Minn. Stat ' 176.225, subd. 1(b). We find no basis under the statute to deny a penalty where, as here, there has been a failure to pay within 14 days of an order, which is a clear violation of the statute. See Minn. Stat. ' 176.221, subd. 8. We also conclude that the term Acompensation@ is not as limited as the employer and insurer argue; Minn. Stat. ' 176.011, subd. 8, defines Acompensation@ as including Aall benefits provided by this chapter on account of injury or death.@ We see no reason to distinguish between a late payment of compensation or benefits and a late payment of attorney fees incurred to obtain statutorily-provided benefits, especially when fees were ordered to be paid following a hearing on attorney fees. See, e.g., Spawn v. Northern Castings, slip op. (W.C.C.A. Aug. 18, 1995). We therefore reverse the compensation judge=s denial of a penalty against the employer and insurer for failure to pay Roraff fees on a timely basis.
Minn. Stat. ' 176.225, subd. 1, provides for a penalty of up to 30% of the total amount of compensation awarded, and provides this court with the authority to issue penalties upon appeal. We have carefully reviewed the record in this matter, and we conclude that under these particular circumstances, a reasonable penalty under the statute is $500.00, payable to the employee.
 The employee=s employment status was the subject of earlier litigation. On January 24, 2001, a hearing was held to address, in part, whether Mr. Borgan was an employee of the subcontractor for whom he was performing roofing duties, Lance Pearson, and the general contractor, Bob Hegland, Inc. In findings and order issued on March 2, 2001, the compensation judge found that the employee was working as an independent contractor with respect to the subcontractor, and therefore that the general contractor, Bob Hedland, Inc., was responsible for payment of workers= compensation benefits. The compensation judge also found that the employee was entitled to a portion of the temporary total disability benefits claimed, but only for the time spans he was medically disabled and taken off work entirely by his physician, June 10 to August 17, 2000, and January 9 - 24, 2001, as well as an ongoing basis. The compensation judge denied payment of temporary total disability benefits for other periods of time, based on the employee=s lack of a diligent job search during those periods and also based upon the employee=s part-time employment during periods of time when he claimed entitlement to temporary total disability benefits.
This matter was also the subject of an earlier hearing on attorney fees. See Borgan v. Bob Hegland, Inc., 62 W.C.D. 452 (W.C.C.A. 2002).
 See Roraff v. State of Minnesota, Dep=t of Transp., 288 N.W.2d 15, 32 W.C.D. 297 (Minn. 1980).
 The findings and order awarding Roraff attorney fees were served and filed on January 15, 2003. The 14-day payment period expired on January 29, 2003, and payment was issued on February 24, 2003, 26 days beyond the 14-day deadline. See Valine v. Harbor City Masonry, 50 W.C.D. 296 (W.C.C.A. 1993).