ALAN L. BRADWELL, Employee, v. U.S. ROOF TECH CORP., and CNA COMMERCIAL INS., Employer-Insurer/Appellants.
WORKERS= COMPENSATION COURT OF APPEALS
OCTOBER 12, 2004
STIPULATION FOR SETTLEMENT; CREDITS & OFFSETS - CREDIT FOR OVERPAYMENT; CHILD SUPPORT PAYMENTS. The parties stipulated and agreed the employer and insurer would incur an overpayment and continue to pay full permanent total disability benefits until an SSDI lump-sum payment was received by the employee. If, upon receipt of the SSDI payment, the employee failed to reimburse the insurer within 30 days, the parties agreed the insurer could take a 100 percent credit against ongoing benefits until the overpayment was satisfied. In June 2003, the employer and insurer sought to discontinue the employee=s permanent total benefits to recoup the overpayment. At that time, the insurer was making payments from the employee=s workers= compensation benefits directly to the State of Minnesota and the State of Iowa under an attachment order for child support. The compensation judge erred in holding the minor children had an independent right to claim a portion of the employee=s worker=s compensation benefits by way of the child support attachment orders, and the employer and insurer are entitled to take a 100 percent credit in accordance with the Stipulation for Settlement until the overpayment is satisfied.
Determined by Johnson, C.J., Wilson, J., and Pederson, J.
Compensation Judge: Jennifer Patterson
Attorneys: Krista L. Twesme, Aafedt, Forde, Gray, Monson & Hager, Minneapolis, MN, for the Appellants. Raymond R. Peterson, McCoy, Peterson & Jorstad, Minneapolis, MN, for the Respondent.
THOMAS L. JOHNSON, Judge
The employer and insurer appeal the compensation judge=s decision denying their request to discontinue permanent total disability benefits in their entirety. We reverse.
On November 4, 1987, Alan L. Bradwell, the employee, sustained an admitted work-related injury while employed by U.S. Roof Tech Corporation, then insured by CNA Commercial Insurance. On February 4, 1989, the employee sustained a second admitted work-related injury while employed by John A. Dalsin & Company, then self-insured.
Following protracted litigation, the employee, the two employers and their insurers and the Special Compensation Fund entered into a mediation. An agreement was reached at the mediation and in March 2000, the parties executed a stipulation for settlement. The parties agreed the employee, as a result of both injuries, had been permanently and totally disabled since February 1, 1994. CNA, as paying agent, agreed to pay permanent total disability benefits to the employee from February 1, 1994, to the present and continuing so long as his condition warranted. The employee was determined to be totally disabled by the Social Security Administration on February 1, 1994, which thereafter commenced payment of Social Security Disability Insurance (SSDI) benefits. The parties stipulated the employee had been paid $25,000.00 in workers= compensation total disability benefits by February 5, 1995, and the insurers were, thereafter, entitled to reduce the permanent total disability (PTD) benefits for simultaneous receipt of SSDI benefits under Minn. Stat. ' 176.104, subd. 4. The parties stipulated that 208 weeks of disability benefits were paid by July 1, 1996, and that the employee was due supplementary benefits after that date.
At the time of the settlement, the employee was receiving a reduced amount of SSDI benefits because the Social Security Administration (SSA) was reducing the benefit to offset the temporary total disability benefits the employee was receiving. Based upon the retroactive determination of permanent total disability status, the parties understood the employee would be entitled to a retroactive lump sum payment from the SSA at some point in the future. As of the date of the settlement, the insurers would have been entitled to offset the PTD payments against the SSDI benefits the employee was receiving. Since, however, the SSDI benefits were temporarily reduced, to avoid financial hardship to the employee, the employers and insurers agreed to pay PTD benefits at the full compensation rate until the lump-sum retroactive reimbursement was paid to the employee by the SSA. Thus, the employer and insurers voluntarily agreed to incur an increasing overpayment of benefits with the understanding that they would receive a credit against the overpayment of the full amount of the retroactive lump-sum payment to be received from the SSA.
The parties further agreed in the stipulation that the employee was to advise the employers and insurer when he received the retroactive lump sum payment from the SSA. From that lump sum payment, the employee agreed to fully reimburse the employers and insurer for the overpayment that accrued from April 20, 1999, through the date the employee made payment to CNA. If the employee failed to reimburse the employers and insurer within 30 days of his receipt of the lump-sum retroactive payment from the SSA the employee agreed the employers and insurer could take a 100 percent credit against ongoing benefits until the overpayment was satisfied. An Award on Stipulation was filed on March 23, 2000.
In June 2002, the employee received the lump-sum payment of retroactive SSDI benefits but did not advise the insurers that he had received the payment nor did he make any payment to CNA. On June 18, 2003, CNA filed a NOID seeking to discontinue the employee=s permanent total disability benefits to recoup the overpayment. At this time, there were in effect two valid child support orders, one from the State of Minnesota and one from the State of Iowa attaching the employee=s workers= compensation benefits. At an administrative conference, a compensation judge allowed a discontinuance of the benefits being paid to the employee, but ordered CNA to continue the payments being made directly to the two state agencies.
The employer and insurer then filed a Petition to Discontinue Benefits seeking to also discontinue the payments to the state agencies. At the hearing before Judge Patterson, the parties agreed that for the period April 20, 1999, through June 8, 2003, the insurers had overpaid weekly disability benefits in the amount of $42,012.33. As of June 8, 2003, CNA was paying a weekly PTD benefit of $700.17 allocated as follows: to the employee: $397.07; to the State of Minnesota: $206.09; to the State of Iowa: $97.61. The employee agreed his share of the PTD benefit, $397.07 a week, could be credited against the overpayment.
In a Findings and Order, served and filed December 19, 2003, the compensation judge found that because the employee=s children were not parties to the settlement, they were not bound by its provisions. The judge determined the employee could not, by settlement, waive his minor children=s right to receive ongoing benefits. The judge concluded the children continued to be entitled to attach the employee=s PTD benefits based upon the child support attachment orders from Minnesota and Iowa. Accordingly, the compensation judge denied the requested discontinuance. U.S. Roof Tech and CNA appeal.
The compensation judge found no guardian ad litem was appointed to represent the interest of the employee=s minor children during the negotiations that led to the settlement in March 2000, nor were the minor children represented by an attorney. Because the employee=s children were not parties to the settlement, the compensation judge concluded they are not bound by the contractual obligations created by the settlement and are not bound by the settlement. In reliance on Johnson v. Hunter, 447 N.W.2d 871 (Minn. 1989), the judge concluded the children had the right to be separately represented during the employee=s settlement negotiations. Lacking such representation, the judge concluded the children=s right to child support payments may not be waived on behalf of the children unless the children are represented in the settlement. The appellants contend the compensation judge=s reliance on the Johnson case is misplaced, and contend the compensation judge=s conclusion that the employee=s minor children have an independent right to receive workers= compensation benefits is legally erroneous. We agree.
In the Johnson case, a paternity action was brought by a minor child=s mother and the State of Minnesota against the alleged father, which was ultimately dismissed with prejudice when the mother failed to appear at trial. The child then asserted a paternity claim against the alleged father which was dismissed by the court based on res judicata. On appeal, the Supreme Court reversed the dismissal, holding that based on the child=s paramount interest at stake, the child was entitled to the opportunity for an adjudication of parentage on the merits. In so holding, the court noted that at the time of the dismissal of the mother=s action, the child was six months old, without a guardian ad litem and was unrepresented by independent counsel. The court stated that the child=s interest in a paternity action was particularly significant since it included such rights as child support, inheritance, medical support, veteran=s education benefits and workers= compensation dependency benefits. The court further held that in paternity actions, a child=s interest are not the same as those of the mother and the child=s right to establish paternity may not be foreclosed by a dismissal of the paternity action brought by the mother and the state. Since the identity of interests in the two suits were not identical, the court held the child had an independent right to proceed with the paternity claim.
The rationale of the Johnson case is not applicable here. The claim of the minor children in this case is for child support. In the State of Minnesota, the right to child support may be secured by a support order requiring withholding by a payor of funds being received by the employee, including workers= compensation benefits. Minn. Stat. ' 518.6111, subd. 5. The fact that a lien was placed on the employee=s workers= compensation benefits does not, however, give the minor children an independent right to claim entitlement to workers= compensation benefits from the employers and insurer. A minor child=s right to receive workers= compensation benefits by reason of an injury to the child=s parent is limited to dependency benefits under Minn. Stat. ' 176.111. Absent a claim for dependency benefits, the sole contractual liability of an employer and insurer under Chapter 176 is to pay benefits to or on behalf of the injured employee. These employers and the insurer have no obligation under the workers= compensation law to pay any benefits directly to the employee=s minor children.
At the time of the settlement, the employee=s minor children had no entitlement to workers= compensation benefits by reason of the employee=s 1987 personal injury. The fact that the childrens= right to child support might be impacted by the settlement does not give the children an interest or right to be heard in the proceeding. Since the children had no interest in the settlement, there was nothing for an attorney or guardian to protect. The Johnson case is not, therefore, controlling here.
The stipulation of the parties provided that the employee would advise the employers and insurer when he received the retroactive payment from SSA. It further provided that if the employee failed to reimburse the employers and insurer within 30 days of receipt of the lump-sum payment from SSA, the employers and insurer could take a 100 percent credit against ongoing benefits until the overpayment was satisfied. We find no ambiguity in this language. The compensation judge=s decision is reversed. The employer and insurer may take a 100 percent credit against permanent total disability benefits being paid the employee until the agreed upon overpayment has been satisfied.
 The self-insured employer agreed to reimburse CNA for 40 percent of all payments and costs.
 The parties further agreed that the insurers could also take a 20 percent credit from ongoing permanent total disability payments to satisfy the overpayment from February 4, 1994 to April 19, 1999. There is no dispute regarding this overpayment.
 A payor of funds is any person or entity that provides funds to an obligor, including a payor of workers= compensation benefits. Minn. Stat. ' 518.6111, subd. 1 (b).
 A payor of funds in Minnesota shall also withhold income under court orders for withholding issued by other states. Minn. Stat. ' 518.6111, subd. 12.