ROBERT NEURURER, Employee, v. JAMAR CO. and ST. PAUL COS., Employer-Insurer/Appellants, and DULUTH BLDG. TRADES HEALTH & WELFARE FUND, MINNESOTA DEP=T OF ECON. SEC., and ITASCA MED. CTR., Intervenors.
WORKERS= COMPENSATION COURT OF APPEALS
DECEMBER 21, 2004
PERMANENT TOTAL DISABILITY - SUBSTANTIAL EVIDENCE. In view of the entire record as submitted, including expert vocational testimony and the employee=s tax returns, substantial evidence supports the judge=s conclusion that the employee=s activities at his own business do not constitute gainful employment and that he is permanently and totally disabled.
Determined by: Pederson, J., Wilson, J., and Johnson, C.J.
Compensation Judge: Gregory A. Bonovetz
Attorneys: Eric W Beyer, Falsani, Balmer, Peterson & Quinn, Duluth, MN, for the Respondent. Edward Q. Cassidy and Timothy J. Pramas, Felhaber, Larson, Fenlon & Vogt, St. Paul, MN, for the Appellants.
WILLIAM R. PEDERSON, Judge
The self-insured employer appeals from the compensation judge=s award of permanent total disability benefits. We affirm.
Robert Neururer has worked as a journeyman sheet metal worker since the 1960s. Over the years, most of Mr. Neururer=s work has been in commercial construction and has involved considerable overhead installation of sheet metal duct work, together with heating, ventilation, and air conditioning equipment. Mr. Neururer received his work assignments out of the union hall in Grand Rapids, and he remained in the trade until November 1998, when he was laid off for the season. He has not returned to work as a sheet metal worker since that time.
In September 1998, Mr. Neururer [the employee] was assigned to work for the Jamar Company [the employer] at a project at the Blandin Paper Company in Grand Rapids. The employee=s job on the project was installing exterior building sheeting, and he alleges that he sustained an injury to his right foot and right shoulder while performing that job in the fall of 1998, after which he missed about two weeks from work. When he returned to the job, the project was evidently winding down, and the employee was placed on layoff status in early November. He did not pursue a workers= compensation claim at that time. At the time of the layoff, the employee was fifty-six years old and earning a weekly wage of $864.80, and the employer was self-insured.
The employee first sought medical attention for his right shoulder on March 31, 1999, when he obtained an evaluation by orthopedist Dr. William Schnell. The employee indicated to Dr. Schnell that he did not recall a specific injury to his shoulder but that he had had pain, cracking, snapping, and diminished range of motion in the shoulder for at least three years and had more recently been having trouble sleeping at night. On examination, Dr. Schnell found significantly restricted range of motion, which he associated with significant crepitus. X-rays of the employee=s right shoulder Ademonstrat[ed] end stage glenohumeral articular degenerative joint disease.@ The doctor advised the employee to Acontinue with a conservative course, as no doubt he is going to require a total shoulder replacement for relief of symptoms.@ At that time, the employee evidently planned on continuing to work and on undergoing the shoulder surgery when he retired. On May 26, 1999, however, the employee returned to Dr. Schnell to discuss total shoulder replacement. The doctor noted that the employee=s condition on examination was unchanged, with very little glenohumeral range of motion. His diagnosis remained end-stage degenerative joint disease of the right shoulder. As to causation, Dr. Schnell stated, AI believe his condition is work aggravated and not necessarily work caused exclusively.@
The employee sought a second medical opinion concerning his right shoulder from orthopedist Dr. Troy Berg. On August 13, 1999, Dr. Berg obtained a history from the employee of Aa crunching sensation@ in his right shoulder for one and one-half years. The employee reported an incident at work the preceding November after which he had noted a marked increase in his right shoulder pain. He also reported that both shoulders had been stiff for many years and that he had had difficulty with strenuous overhead activity. Dr. Berg concurred with Dr. Schnell=s diagnosis and opined that if the employee=s shoulder pain worsened he would be a candidate for a total shoulder arthroplasty.
The employee retained counsel on October 28, 1999, and on November 2, 1999, he provided the employer with written notice of a right shoulder injury, which Amay be due to repetitive trauma as a result of many years of sheet metal working.@ On December 16, 1999, the employee filed a claim petition, alleging a Gillette-type  injury to his right shoulder culminating on his last day of employment with the employer in November 1998. As a consequence of that injury, the employee claimed entitlement to temporary total or permanent total disability benefits continuing from November 8, 1998, permanent partial disability benefits, and medical benefits. In its answer to the claim petition, the self-insured employer denied that the employee had sustained such an injury, asserting also that the employee=s claim was barred by the employee=s failure to provide timely statutory notice of any injury.
The employee was examined at the request of the employer on March 24, 2000, by orthopedist Dr. James Schaffhausen. Dr. Schaffhausen diagnosed bilateral glenohumeral osteoarthritis, right greater than left. He noted that, on examination, the employee Aessentially has fused shoulders on both sides. He has very little motion in the glenohumeral joint and the motion of his shoulders is coming from the scapulothoracic region.@ Dr. Schaffhausen opined that the employee would have developed this condition eventually regardless of his occupation. He stated also, however, that the employee=s occupation, with repetitive use of the arms over his head, Acould, in fact, accelerate the osteoarthritic changes that are currently present.@ Dr. Schaffhausen attributed 60% of the employee=s condition to the natural degenerative process occurring in the employee=s shoulder and 40% to the repetitive use of his arms overhead at work. He agreed that a right shoulder arthroplasty was appropriate care and treatment for the employee=s condition and indicated that the employee in the future would most likely require the same procedure on the left side. As for restrictions following total shoulder replacement, the doctor opined that the employee should be restricted from performing overhead activities, should avoid ladder climbing and pushing or pulling greater than fifty pounds, and should not lift anything over twenty-five pounds.
The employee underwent total replacement of his right shoulder on March 30, 2000. In a letter to employee=s counsel dated October 17, 2000, Dr. Schnell, the employee=s treating surgeon, opined that the employee had reached maximum medical improvement as of October 1, 2000, having sustained an 18% whole body permanent impairment under Minn. R. 5223.0450, subp. 3B. Dr. Schnell also permanently restricted the employee from lifting over twenty pounds with the right arm and from performing any overhead work.
The employee=s counsel arranged for an examination with orthopedist Dr. Duane Person on April 17, 2001. Dr. Person diagnosed degenerative arthritis of the right shoulder, necessitating a total shoulder arthroplasty; severe degenerative arthritis of the left shoulder, with acromioclavicular joint degenerative arthritis; and degenerative arthritis of the right hip. Dr. Person opined that the employee=s work as a sheet metal worker with the employer was a substantial contributing cause of the employee=s right shoulder degenerative arthritis, necessitating the total shoulder arthroplasty. He opined also that the employee=s left shoulder condition was also related to the employee=s employment. Dr. Person restricted the employee from working with his arms above shoulder level, and he recommended against his lifting more than fifteen pounds with his right arm or five pounds with his left. He opined that the employee=s right shoulder condition was stable but that the left shoulder condition was as bad as it could get, perhaps improvable to the level of the right shoulder abilities only with a total shoulder arthroplasty. Dr. Person also assigned restrictions as a result of the employee=s right hip condition, and he expected that with the passage of time this condition would progressively worsen, rendering the employee a candidate for a total right hip arthroplasty.
The employee=s claim came on for hearing before Compensation Judge Donald C. Erickson on July 18, 2001. Issues at trial included the employee=s entitlement to benefits stemming from a work-related Gillette-type injury to his right shoulder and the extent of the employee=s disability.
The employee testified at hearing that, in addition to being a journeyman sheetmetal worker, he was the sole shareholder in a business enterprise known as RC Enterprises Corp. At the time of the hearing , RC Enterprises consisted of RC=s Silver Spur, [the Silver Spur] a combination convenience store/gas station/tavern that sells liquor both on-sale and off-sale. The employee had acquired the convenience store/tavern in 1981 and sometime later had added the gas pumps. The employee testified that he usually employs between six and eight workers at the Silver Spur on a full-time and part-time basis. According to tax returns received into evidence at the hearing, between 1997 and 2000 the Silver Spur had averaged annual gross receipts of over $640,000, while the cost of goods sold had averaged about $504,000. The employee estimated that gasoline sales at the store represented about 60% of the gross receipts and that the profit on gasoline was six to seven cents per gallon. Although the employee=s tax returns appear to reflect a substantial volume of business at the Silver Spur, losses, presumably due to salaries and other expenses, were reported for 1997, 1998, and 1999, with only a small profit realized in 2000. The employee testified that he has always performed managerial and supervisory activities at the Silver Spur, both before and after his injury. However, since he ceased working in the sheet metal trade, he is able to perform his duties at his leisure throughout the day, rather than before and after working his full day as a sheet metal worker. He described his duties as setting up the tills for the cash registers, counting the money, preparing bank deposits, going to the post office, doing some minimal bookkeeping, meeting with sales people, placing orders for the bar and convenience store, and possibly filling in for a bartender who was late for work. The employee testified that he has never paid himself for any work that he has performed over the years at the Silver Spur. The employee and his wife live in an apartment at the rear of the building owned by the Silver Spur, but they do not pay rent to the corporation for this apartment. No testimony was offered as to the value of this apartment to the employee.
Also testifying at hearing was Ms. Karen Strewler, a rehabilitation consultant who had conducted a vocational evaluation of the employee. As part of her evaluation, Ms. Strewler had obtained an education and employment history from the employee, reviewed his medical records, including the evaluations performed by Drs. Schaffhausen and Person, administered vocational testing, and performed a labor market survey of work available in the Grand Rapids area. In her report dated June 27, 2001, Ms. Strewler had noted that the employee was five feet eleven inches tall and weighed approximately two hundred eighty pounds. In addition to aching and burning in his shoulders bilaterally, the employee had reported to Ms. Strewler that he had a constant sharp burning pain his right hip that traveled down the outside of his leg to his knee. He had indicated that this pain was made worse with sitting and was relieved by walking and moving around. The employee had also reported aching in both knees and a tendency to avoid kneeling. Ms. Strewler testified that the employee=s work abilities were very industry specific and not transferable to other careers. She concluded that the employee was not capable of returning to work as a sheet metal worker and that, given his physical condition, in combination with his age, training, experience, and the type of work available in his community, he is unable to secure anything more than sporadic employment resulting in an insubstantial income. Ms. Strewler acknowledged that the employee does perform varied work activities in his own business, but she described those activities as self-paced, self-managed, and performed at his own level of comfort on a limited/sporadic basis for up to a few hours per day. She opined that, while he does oversee the operation at the Silver Spur, the skills that the employee employs in his own business would not translate to anything more than sporadic and insubstantial employment in the competitive labor market.
On March 7, 2003, after remand by this court, Judge Erickson denied the employee=s claim on notice of injury grounds, issuing no findings regarding causation or the extent of the employee=s disability. On appeal, this court reversed the compensation judge=s notice determination and again remanded the matter to the Office of Administrative Hearings, this time for findings on the issues of causation and entitlement to benefits. On March 26, 2004, Compensation Judge Gregory A. Bonovetz determined that the employee had sustained a Gillette injury to his right shoulder culminating on or about November 1, 1998, concluding also that the employee has been permanently and totally disabled since November 1, 1998, had sustained an 18% permanent partial disability of the whole body, and was entitled to payment of medical expenses incurred to cure and relieve him of the effects of his right shoulder injury. The employer appeals from the judge=s determination that the employee is permanently and totally disabled.
STANDARD OF REVIEW
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 (2004). 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, 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.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
Minn. Stat. ' 176.101, subd. 5(2) defines permanent total disability as any Ainjury which totally and permanently incapacitates the employee from working at an occupation which brings the employee an income.@ The statute further provides that Atotally and permanently incapacitated@ means that the employee=s physical disability in combination with the requisite level of permanent partial disability causes the employee to be Aunable to secure anything more than sporadic employment resulting in an insubstantial income.@ Id., subd. 5. APermanent total disability is primarily dependent on an employee=s vocational potential rather than his physical condition.@ Thompson v. Layne of Minn., 50 W.C.D. 84, 100 (W.C.C.A. 1993). AA person is totally disabled if his physical condition, in combination with his age, training and experience, and the type of work available in the community, causes him to be unable to secure anything more than sporadic employment resulting in insubstantial income.@ Schulte v. C.H. Peterson Constr. Co., 278 Minn. 79, 83, 153 N.W.2d 130, 133-34, 24 W.C.D. 290, 295 (1967). In Minnesota, a marginal income or a limited capacity to earn does not preclude a determination of permanent total disability. See Green v. Schmahl, 202 Minn. 254, 278 N.W.2d 157, 10 W.C.D. 209 (1938); Bertsch v. Varnum Lumber & Fuel Co., 303 Minn. 545, 228 N.W.2d 228, 27 W.C.D. 786 (1975). The essential issue raised in the current appeal is whether the compensation judge=s factual conclusion that the employee=s managerial involvement with the Silver Spur Adoes not constitute gainful employment and is more in the nature of sporadic employment@ is supported by substantial evidence in view of the entire record as submitted.
It is undisputed that the employee is permanently precluded from returning to the work that he has performed since the early 1960s--sheet metal work. Nor is it contended by the employer that other employment within the employee=s physical limitations is available to him in his community. Here, the employer contends that the employee is not permanently and totally disabled in that he is Aactually working@ and managing a very substantial business operation. It contends that the tasks routinely performed by the employee on behalf of his corporation are of considerable Avalue@ to the corporation and that a finding that the employee=s activities constitute sporadic and insubstantial employment is simply unsupported by the record. We are not persuaded.
At Finding 34, the compensation judge determined that A[a]s he had while fully employed as a sheet metal worker, the employee continues to oversee some of the financial aspects of the business operation and various other very light activities which, by their very nature, the employee is able to >dabble in= at his convenience.@ The judge=s characterization of the employee=s activities at the Silver Spur is supported by the testimony of the employee and Ms. Strewler. The employee testified that he has no deadline to meet in performing his chosen functions at the Silver Spur and that he does not work on any particular schedule. Ms. Strewler noted that the employee viewed his activities as more of a hobby than a job. She described his involvement in the business as self-paced, self-managed, and of a limited, sporadic nature for up to only a few hours each day. Such activities, she opined, would not compare to any employment in the competitive labor market.
The employer contends also that the employee=s managerial duties provide significant value to his corporation and that Ms. Strewler neither performed nor obtained any financial analysis of the employee=s business. Such an analysis, it argues, is foundationally necessary to support Ms. Strewler=s opinion that the employee=s efforts are essentially nominal and incidental to the successful running of the Silver Spur. We disagree.
First of all, the only evidence offered at hearing relative to the employee=s Aearnings@ at the Silver Spur were the employee=s tax returns. Neither party chose to obtain any expert analysis of those tax returns. The compensation judge noted in his memorandum that the tax returns reflected Arather insubstantial income.@ In fact, they reflect losses in three out of the four years represented by the exhibits. In view of such evidence, it was not unreasonable for the judge to conclude that the employee=s activities at the Silver Spur, performed at his convenience and essentially without income, do not constitute gainful employment. In other words, given the record as a whole, including the tax returns and vocational testimony, we cannot say that the evidence was insufficient, as a matter of law, to establish permanent total disability. Because substantial evidence supports the judge=s finding that the employee=s involvement with the Silver Spur was essentially sporadic employment resulting in an insubstantial income, we affirm the compensation judge=s award. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 37 W.C.D. 235 (Minn. 1984).
 The factual background in this case is based extensively on our previous decisions in Neururer v. Jamar Co., slip. op. (W.C.C.A. Aug. 16, 2002), and Neururer v. Jamar Co., 63 W.C.D. 534 (W.C.C.A. 2003).
 See Gillette v. Harold, Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 The record is unclear as to when the employee actually last worked for the employer. The employee testified that he did not recall working after injuring his right foot and right shoulder in the fall of 1998. Wage records from the employer indicate that a final paycheck was issued to the employee for the week ending November 1, 1998.
 In 1997 the employee reported a business loss of $11,915.00, in 1998 a loss of $11,635.00, in 1999 a loss of $1,688.00, and in 2000 a gain of $5,185.00.
 Judge Erickson was by this time no longer serving with the Office of Administrative Hearings.