KURT G. KUEHN, Employee, v. ST. LOUIS COUNTY, SELF-INSURED, Employer-Insurer/Appellants.
WORKERS= COMPENSATION COURT OF APPEALS
NOVEMBER 16, 2004
SETTLEMENTS - INTERPRETATION; PENALTIES. Where the stipulation for settlement was silent as to the employer=s right to a credit for sick leave paid during a period in which the stipulation provided for payment of temporary total disability benefits, and where the record indicated that the parties had expressly discussed the credit issue prior to executing the stipulation, the compensation judge properly concluded that the employer had intentionally underpaid compensation when it withheld amounts representing sick leave pay from the temporary total disability benefits specified by the stipulation, warranting an award of penalties.
Determined by Wilson, J., Johnson, C.J., and Pederson, J.
Compensation Judge: Gregory A. Bonovetz
Attorneys: Timothy O. Lee, Duluth, MN, for the Appellants. Michael J. Cuzzo, Cuzzo, Bradt & Envall, P.A., Duluth, MN, for the Respondent.
DEBRA A. WILSON, Judge
The self-insured employer appeals from the compensation judge=s imposition of penalties, arguing that the judge erred in concluding that the employer had not paid temporary total disability benefits in accordance with the terms of a stipulation for settlement. We affirm.
The employee filed a claim petition seeking various benefits as a result of a back injury allegedly occurring in the course and scope of his employment as a corrections officer for St. Louis County [the employer] on January 4, 1996. In its answer to the claim petition, the self-insured employer denied notice of injury and primary liability and alleged that the employee=s current condition was unrelated to his employment.
In October of 2002, the parties entered into a stipulation for settlement, pursuant to which the employer accepted primary liability for a back injury occurring on January 4, 1996, agreed to pay all related medical expenses, and agreed to provide the employee with the services of a QRC. With regard to wage loss claims, the stipulation provided as follows:
4. That the Employer will pay to the Employee temporary total disability for a period of 104 weeks, retroactively commencing April 6, 1999.
5. That the Employer agrees to pay to the Employee additional sums to make up the difference between his workers= compensation benefits and his regular net pay for a period of six months after April 6, 1999, pursuant to Article 21 of the Union Contract governing relations between the Employer and Employee.
The settlement agreement also provided for payment of contingent attorney fees, fees pursuant to Minn. Stat. ' 176.081, subd. 7, and reasonable costs and disbursements. Payments made under the stipulation were to Afully, finally, and completely settle any claims which the employee has for temporary total disability benefits through April 4, 2001,@ and the agreement specified that A[a]ll other claims shall remain open.@ An award on stipulation was issued on October 29, 2002.
The employer issued checks pertaining to the settlement on November 8, 2002. In a letter of that same date, the employer informed the employee as follows:
A deduction has been taken from your worker=s compensation check because of previously received sick leave/sick leave bank pay received for the same time period as your worker=s compensation pay.
The deducted amount is calculated as follows:
For a period covering 4/6/99 through 11/9/99
923.25 sick leave/sick leave bank hours at $17.2640 = $15,938.99
Your worker=s compensation payment will be $42,350.21 less the payroll buy back of $15,938.99 and attorney fees totaling $8,639.31. The net of your check will be $17,771.91.
A few days later, by letter dated November 11, 2002, the employee=s attorney wrote to counsel for the employer, explaining, in part, as follows:
As I indicated to you when I prepared the Stipulation for Settlement, I specifically did not make provision for a deduction from the temporary total disability benefits because Mr. Kuehn would be entitled to retain that sick pay in light of the fact he had ongoing sick time at the expiration of the 104 weeks of temporary total disability benefits which were being paid. Additionally, his sick pay could have been utilized by him to pay the difference between the workers= compensation rate and his regular rate of pay.
The Stipulation for Settlement which was approved by the judge specifically orders the County to pay 104 weeks of temporary total disability. Please see that this benefit is paid within fourteen days of the date of the Judge=s Order dated October 29, 2002.
When the employer declined to pay the employee the $15,938.99 that had been retained for repayment of sick leave/sick leave bank hours, the employee filed a claim petition for penalties, which came on for hearing before a compensation judge on April 13, 2004.
At hearing, counsel for the employer acknowledged that the credit issue had come up during settlement talks and that the employee=s attorney had indicated that Ahe would not put anything with respect to that credit in the stipulation.@ Counsel for the employer argued, however, that, because benefits payable to a public employee in these particular circumstances are limited by statute and case law, the employer had in fact made the appropriate payment.
In a decision issued on April 15, 2004, the compensation judge concluded that nothing in the stipulation allowed the employer to take any kind of a credit, that the employer was guilty of inexcusable delay in making payment, and that the employer had intentionally underpaid compensation. The employee was therefore awarded penalties, pursuant to Minn. Stat. ' 176.225, subds. 1 and 5, calculated on the $15,938.99 credit improperly taken by the employer against the temporary total disability benefit payment. The employer appeals.
STANDARD OF REVIEW
On appeal, the Workers' Compensation Court of Appeals must determine whether "the 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 (2004). Substantial evidence supports the findings if, in the context of the entire record, "they 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, findings of fact should not be disturbed, even though the reviewing court might disagree with them, "unless 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.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
"[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).
On appeal, the employer argues that the judge erred in imposing penalties based on the employer=s withholding of an amount representing the sick leave and sick leave bank pay that the employee had received during the same period for which temporary total disability benefits were awarded under the terms of the settlement. In support of this argument, the employer relies on Minn. Stat. ' 176.021, subd. 5, a provision concerning certain payments to public employees, and Ellingson v. City of Fergus Falls, 36 W.C.D. 788 (W.C.C.A. 1984), a case discussing reimbursement of sick leave and vacation benefits. According to the employer, because the cited statute precludes a state governmental agency from paying an employee benefits in an amount that exceeds the employee=s weekly wage, and because the stipulation in the present case must be interpreted in a manner consistent with the statute, there was in fact no underpayment and, therefore, no basis for penalties. The employer also argues that the stipulation is ambiguous with respect to the employer=s liability for temporary total disability benefits and that the ambiguity must be resolved against the employee, because the employee=s attorney drafted the agreement. These arguments are not persuasive.
Minn. Stat. ' 176.021, subd. 5, reads, in part, as follows:
Subd. 5. Accumulated credits, additional payments. If employees of the state or a county, city or other political subdivision of the state who are entitled to the benefits of the workers= compensation law have, at the time of compensable injury, accumulated credits under a vacation, sick leave or overtime plan or system maintained by the governmental agency by which they are employed, the appointing authority may provide for the payment of additional benefits to such employees from their accumulated vacation, sick leave or overtime credits. Such additional payments to an employee may not exceed the amount of the total sick leave, vacation or overtime credits accumulated by the employee and shall not result in the payment of a total weekly rate of compensation that exceeds the weekly wage of the employee. Such additional payments to any employee shall be charged against the sick leave, vacation and overtime credits accumulated by such employee. Employees of a county, city or other political subdivision entitled to the benefits of the workers= compensation law may receive additional benefits pursuant to a collective bargaining agreement or other plan, entered into or in effect on or after January 1, 1980, providing payments by or on behalf of the employer and these additional benefits may be unrelated to any accumulated sick leave, holiday or overtime credits and need not be charged against any accumulation; provided that the additional payments shall not result in the payment of a total weekly rate of compensation that exceeds the weekly wage of the employee.
(Emphasis added). This statute does by its terms limit what additional payments a state governmental entity may make to injured employees on top of workers= compensation benefits. However, the statute in no way limits, restricts, or defines a public employee=s eligibility for temporary total disability benefits, and it is the employee=s right to payment of temporary total disability benefits under the settlement that is at issue here. Moreover, it is well established that statutory rights, including rights available under the workers= compensation act, may be waived, except as limited by public policy. Stephenson vs. Martin, 259 N.W.2d 467, 30 W.C.D. 130 (Minn. 1977). Given the discussion between the parties, prior to execution of the stipulation, concerning the issue of a credit, and given the lack of any language in the stipulation allowing the employer to take any credit, we can only infer that the employer knowingly and intentionally waived its right, if any, to a credit against the temporary total disability benefit award specified in the settlement agreement. See id. The employer has raised no particular public policy considerations that would warrant negating that waiver. As for the employer=s reliance on Ellingson, we would note that that case did not involve a stipulation for settlement and therefore is not dispositive here. Finally, we agree with the compensation judge that the stipulation is not ambiguous as to the employer=s liability to pay and the employee=s right to receive 104 weeks of temporary total disability benefits. Because the stipulation is not ambiguous, the question of construing any ambiguity against the drafter need not be considered.
The employer may or may not have some other means to recoup the alleged sick leave and sick leave bank overpayments, if in fact overpayments were made here, but that is not for us to decide. Because the compensation judge properly concluded that the employer intentionally underpaid and unreasonably delayed payment of temporary total disability benefits clearly due under the express terms of the stipulation, we affirm the award of penalties.
 In his decision, the compensation judge referenced the filing of the employee=s claim petition on April 26, 1996, A[a]s reflected in the official judgment roll.@ We remind the parties that paper copies of all relevant documents, including pleadings, should be submitted as exhibits at hearing. See Beckwith v. Sun County Airlines, 63 W.C.D. 511 (W.C.C.A. 2003).
 Pursuant to Minn. Stat. ' 176.225, subd. 1, a penalty of up to 30% of the total award is allowable if the employer has Aintentionally underpaid compensation@; pursuant to Minn. Stat. ' 176.225, subd. 5, delayed payments are to be increased by 25% where the employer is Aguilty of inexcusable delay in making payments.@ There is no argument here concerning the specific amounts of the penalty awards.
 At oral argument, counsel for the employer appeared to concede the possibility that too large a credit may have been taken given the terms of the applicable employment contract. However, that contract was not submitted into evidence.