TIMOTHY A. SUNDBY, Employee/Appellant, v. CITY of ST. PETER, SELF-INSURED, adm=d by BERKLEY RISK ADM=RS CO., Employer, and ROLCO, INC., and STATE FUND MUT. INS. CO., Employer-Insurer, and SPECIAL COMP. FUND.
WORKERS= COMPENSATION COURT OF APPEALS
MAY 10, 2004
CREDITS & OFFSETS - SOCIAL SECURITY OFFSET; STATUTES CONSTRUED - MINN. STAT. ' 176.101, SUBD. 4. Child=s insurance benefits are included in calculating the amount of the Social Security offset against permanent and total disability benefits under Minn. Stat. ' 176.101, subd. 4.
Determined by: Johnson, C.J., Rykken, J., and Stofferahn, J.
Compensation Judge: Paul V. Rieke
Attorneys: Jerold M. Lucas, MacKenzie & Gustafson, St. Peter, MN, for the Appellant. Richard Riemer, Erstad & Riemer, Minneapolis, MN, for the Respondent City of St. Peter. Andrew W. Lynn, Lynn, Scharfenberg & Assocs., Minneapolis, MN, for Respondent Rolco/State Fund Mutual. Thaddeus V. Jude, St. Paul, MN, for the Special Compensation Fund.
THOMAS L. JOHNSON, Judge
The employee appeals from the compensation judge=s determination that in computing the Social Security offset under Minn. Stat. ' 176.101, subd. 4, child=s insurance benefits must be included with the employee=s Social Security Disability benefits. We affirm.
On December 31, 1986, Timothy A. Sundby, the employee, sustained a personal injury while employed by the City of St. Peter. Because he was an apprentice, the employee was entitled to compensation benefits payable at the maximum compensation rate of $360.00 per week. The self-insured employer admitted liability for the employee=s injury and paid wage loss benefits, economic recovery compensation, and medical expenses. On June 27, 1992, the employee sustained a second personal injury while working for Rolco, Inc. Rolco and its insurer, State Fund Mutual Insurance Company, admitted liability for the employee=s personal injury and paid wage loss benefits, permanent partial disability benefits and medical expenses. The employee was then earning a weekly wage of $324.70.
From October 21, 1992, through November 30, 2002, the employee was totally disabled and was paid temporary total disability benefits by State Fund in the amount of $137,692.86. During the same period, the self-insured employer paid temporary partial disability benefits to the employee in the amount of $107,766.93. See, Kirschner v. County of Anoka, 410 N.W.2d 825, 40 W.C.D. 186 (Minn. 1987). The employee received $25,000.00 in weekly total disability benefits as of November 3, 1993. The 208 week threshold for entitlement to supplementary benefits was reached on December 31, 1990.
In 2001, the City of St. Peter filed a Petition for Reimbursement seeking an order directing the Special Compensation Fund to reimburse the City for supplemental benefits paid to the employee from and after October 21, 1992. The parties then entered into a settlement in which they agreed the employee became permanently and totally disabled on October 21, 1992, and agreed that all weekly workers= compensation benefits paid thereafter were deemed permanent total disability benefits. Effective November 3, 1993, the employers and insurer were entitled to reduce the weekly compensation benefits by the amount of any Social Security Disability Insurance (SSDI) benefits paid to the employee pursuant to Minn. Stat. ' 176.101, subd. 4. Since the employee had received his full workers= compensation benefit unreduced by any offset permitted under Minn. Stat. ' 176.101, subd. 4, the parties agreed the employee had received an overpayment of benefits. The employee agreed to repay the insurers for the overpayment of compensation benefits in a lump sum when he received his retroactive payment of SSDI benefits. The parties agreed, however, to reserve for a hearing the issue of whether the child=s insurance benefits payable to the Sundby children were includable in the offset provided by Minn. Stat. ' 176.104, subd. 4. An Award on Stipulation was filed on October 2, 2001.
In November 2002, the employee was retroactively awarded SSDI benefits effective June 1, 1993, at the initial rate of $619.10 per month. The payment to the employee was $66,957.00. The Social Security Administration also made a retroactive award of child=s insurance benefits at a rate equal to fifty percent of the employee=s monthly SSDI rate, or an initial rate of $309.55 a month. The benefit payment to the children was $33,537.00. From October 21, 1992 to the present, there has been no qualifying event entitling the employee=s children to Social Security benefits other than the employee=s disability.
The employee is the father of three children, Joshua H. Sundby, born March 23, 1986; Elizabeth A. Sundby, born March 5, 1984; and Leah M. Sundby, born April 12, 1981. Throughout the period of disability commencing on October 21, 1992, the employee was financially responsible for his minor children. Subsequent to a divorce, the employee had ongoing child support obligations. Under Minn. Stat. ' 518.551, subd. 5(l) (1998), if a child receives a child=s insurance benefit because the child support obligor receives Social Security Old Age or Disability Insurance benefits, the amount of child support the obligor must pay is offset by the amount of the child=s benefit. Effective December 1, 2002, the employee received an SSDI benefit of $807.70 a month and Joshua Sundby received a child=s insurance benefit of $403.80 a month. The child=s insurance benefits are paid through the employee into a direct deposit account in the name of the minor child, as the benefits accrue.
The parties agree that upon the employee=s receipt of the lump sum SSDI retroactive payment, the application of the Minn. Stat. ' 176.104, subd. 4, offset results in an overpayment to the employee of workers compensation benefits of $32,008.51. If the child=s insurance benefits are included in the offset, the overpayment is $47,158.33. The employee became eligible for supplementary benefits on December 31, 1990. The amount of the employee=s supplementary benefit depends on the amount of the offset under Minn. Stat. ' 176.104, subd. 4. If the statutory offset includes both the employee=s SSDI benefit and the child=s insurance benefit, the amount of the supplementary benefit owed by the Special Compensation Fund is greater than it would be if only the employee=s SSDI benefit is offset.
The case was heard before a compensation judge at the Office of Administrative Hearings on September 3, 2003, based upon stipulated facts. In a Findings and Order filed October 6, 2003, the compensation judge concluded the child=s insurance benefit must be included in calculating the offset under Minn. Stat. ' 176.101, subd. 4. The employee appeals.
The employee became entitled to permanent total disability benefits effective October 21, 1992, based upon the effects of the 1986 and 1992 personal injuries. Permanent total disability benefits,
. . . shall be paid during the permanent total disability of the injured employee but after a total $25,000.00 of weekly compensation has been paid, the amount of the weekly compensation benefits being paid by the employer shall be reduced by the amount of any disability benefits being paid by any government disability benefit program, if the disability benefits are occasioned by the same injury or injuries which give rise to payments under the subdivision. This reduction shall also apply to any old age and survivor insurance benefits.
Minn. Stat. ' 176.101, subd. 4 (emphasis added). The employee received $25,000.00 in weekly compensation as of November 3, 1993.
In November 2002, the employee was awarded SSDI benefits retroactive to June 1, 1993. There is no dispute these benefits may be offset against the employee=s permanent total disability benefits after $25,000.00 of weekly compensation was paid. Because, however, the employee had minor children, those children were entitled to, and received, child=s insurance benefits equal to one half of the employee=s benefit.
The issue in this case is whether the child=s insurance benefits paid to the employee=s children are includable in the offset contained at Minn. Stat. ' 176.101, subd. 4. The employee and the Special Compensation Fund assert the compensation judge incorrectly interpreted the Minnesota offset statute. They contend the legislative intent in enacting an offset provision was to reduce the employee=s workers compensation benefit only by disability benefits paid to the employee. They contend public policy is not served by further reducing the employee=s workers compensation benefits by benefits paid to his children. The respondents, on the other hand, argue the statute is unambiguous and provides for the offset of Aany@ disability benefits, not just those paid to the employee. Further, the respondents argue, the public policy of avoiding the payment of duplicate benefits supports the compensation judge=s decision.
AThe object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.@ Minn. Stat. ' 645.16. Where the language of a statute is plain and unambiguous, there is no room for statutory construction. A.C.E. Equipment Co. v. Erickson, 277 Minn. 457, 152 N.W.2d 739 (1967). A statute is ambiguous if it is reasonably susceptible to more than one interpretation. Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271 (Minn. 1995). If a statute is ambiguous, the legislature=s intent may be determined by examining the need for the law, the circumstances of its enactment, the purpose of the statute, prior law, including other laws on the same or similar subjects, the consequences of interpretation, and the legislative history and administrative interpretations of the law. County of Ramsey v. Wilson, 526 N.W.2d 384 (Minn. Ct. App. 1995). We conclude the statute is reasonably susceptible to more than one interpretation and is, therefore, ambiguous.
The Social Security Act was signed into law on August 14, 1935. The original act created a federal insurance program designed to pay workers age 65 years or older a continuing income after retirement. Extensive amendments in 1939 created a fundamental change in the Social Security program by adding dependants= and survivors= benefits. Title II of the act, entitled Old Age and Survivors=s Insurance Benefits, was then amended to include six categories of Aprimary insurance benefits@: (1) benefits to the insured worker, (2) wife=s insurance benefits, (3) child=s insurance benefits, (4) widow=s insurance benefits, (5) parent=s insurance benefits, and (6) lump sum death payments. Social Security Act Amendments of 1939, 53 Stat. 1360, 1362-67 (1939).
In a 1939 report by the Interdepartmental Committee to Coordinate Health and Welfare Activities, the committee concluded that wage earners and their families needed protection against loss of income during periods of temporary or permanent disability. From 1940 to 1950, annual reports of the Social Security Board, and its successor, the Social Security Administration, recommended payment of benefits to permanently and totally disabled persons. Monthly disability insurance benefits were first added in 1956, providing for payments to eligible disabled workers between the ages of 50 and 65. Amendments in 1958 broadened the protection of the disability program providing monthly benefits to dependants of disability insurance beneficiaries. ACommittee Staff Report on the Disability Insurance Program,@ House Ways and Means Committee (July 1974), accessed at < http://www.ssa.gov/history/reports/dibhistory.html >. Section 202 of the Act was amended by essentially inserting the words Aor disability insurance@ into the existing language establishing primary insurance benefit payments to beneficiaries of the OASDI (old age, survivors and disability insurance) program. The language providing for child=s insurance benefits was retained, but amended to include benefits to a child or children of a worker receiving disability benefits as well as children of workers eligible for old age benefits and survivors of eligible workers. Social Security Amendments of 1958, 72 Stat. 1021, (1958). Under current law, a child=s insurance benefit is payable until the eligible child has attained the age of 18 or the age of 19, if the child is a full-time elementary or secondary school student. Social Security Act, 42 U.S.C. ' 402 (d)(1)(B)(I) (2003).
Generally, if a beneficiary is under the age of 18, the payment will be made to a representative payee. 20 C.F.R. ' 404.2010(b). The first preference for a representative payee is the natural or adoptive parent. 20 C.F.R. ' 404.2021. The representative payee has the responsibility to use the payments received, Aonly for the use and benefit of the beneficiary in a manner and for the purposes he or she determines, under the guidelines in this subpart.@ 20 C.F.R. ' 404.2035. Benefits are used for the use and benefit of the beneficiary if they are used for the beneficiary=s current maintenance. ACurrent maintenance includes costs incurred in obtaining food, shelter, clothing, medical care, and personal comfort items.@ 20 C.F.R. ' 404.2040(a).
Under the Social Security Act, a disability insurance benefit is reduced if the disabled individual simultaneously receives a state workers= compensation benefit. The present Social Security offset provision requires that the disability benefit for any month be reduced to the point where the combined Social Security and periodic workers= compensation benefit does not exceed 80 percent of the individual=s average current earnings. 42 U.S.C. ' 424a. Thus, under the act, the Social Security Administration is allowed the offset and the federal benefit is reduced by the state workers= compensation payment. This offset applies both to disability and child=s insurance benefits. 20 C.F.R. ' 404.408(a). The offset is applied first to benefits payable to other family members and then to the disability benefits payable to the disabled employee. 20 C.F.R. ' 404.408(h).
Prior to 1981, a state was permitted, under the Social Security act, to offset workers= compensation benefits against Social Security Disability benefits. In 1953, Minnesota enacted an offset provision which provided:
This compensation [permanent total disability] shall be paid during the permanent total disability of the injured person but if the employee is eligible for old age, and survivors insurance benefits, such benefits shall be credited on the compensation benefits payable under this subdivision after a total of $18,000.00 has been paid.
Minn. Stat. ' 176.101, subd. 4 (1953). The intent of the legislature in providing for coordination of benefits was to Arelieve the employer who has met the burden of paying compensation to a totally disabled employee for a substantial period of time.@ Teske v. Young, 309 N.W.2d 753, 754, 34 W.C.D. 117, 120 (Minn. 1981) (citing Souden v. Hopkins Motor Sales, Inc., 289 Minn. 138, 182 N.W.2d 668, 25 W.C.D. 314 (1971)).
In Telle v. Northfield Iron Co., 278 Minn. 129, 153 N.W.2d 270, 24 W.C.D. 300 (1967), the employee was receiving both permanent total disability benefits and Social Security Disability benefits. The employer sought to reduce its total disability payments by the federal disability payments. The court concluded Minn. Stat. ' 176.101, subd. 4, as then written, limited the credit to Old Age and Survivor benefits and did not include Social Security Disability benefits. Thereafter, the statute was amended to provide that after payment of $25,000.00 of weekly compensation, the weekly benefits being paid by the employer Ashall be reduced by the amount of any disability benefits being paid by any government disability benefit program.@ Minn. Stat. ' 176.101, subd. 4 (1967). Thus, under the amended statute, the employer and insurer are entitled to an offset when an employee receives a Social Security benefit, whether Old Age and Survivor or Disability benefits, simultaneously with workers compensation benefits. Whether the employer and insurer are also entitled to an offset for child=s insurance benefits paid to the child of a totally disabled employee receiving SSDI benefits is a case of first impression.
Benefit coordination provisions are, in general, intended to eliminate a duplication of wage loss benefits. See, Lindell v. Oak Park Coop Creamery, 369 N.W.2d 505, 37 W.C.D. 735 (Minn. 1985). 9 Larson=s Workers= Compensation Law' 157.01 (2000) states:
Wage-loss legislation is designed to restore to the worker a portion . . . of wages lost to the three major causes of wage-loss: physical disability, economic unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. Now if a worker undergoes a period of wage loss due to all three conditions, it does not follow that he or she should receive three sets of benefits simultaneously and thereby recover more than his or her actual wage. The worker is experiencing only one wage loss and, in any logical system, should receive only one wage-loss benefit.
In Potucek v. City of Warren, 535 N.W.2d 333, 53 W.C.D. 88 (Minn. 1995), a totally disabled employee made an application to the Public Employee=s Retirement Association (PERA) for a disability benefit that was calculated on the basis of the employee=s election of a joint and survivor benefit pension plan. The employee also had the option to select a normal single life annuity which would have increased the monthly benefit. The compensation judge concluded the ' 176.101, subd. 4, offset was to be based on the amount of the joint and survivor benefit being paid by PERA to the employee. On appeal, this court reversed the compensation judge=s decision concluding the offset should be based upon the higher single life annuity. The Supreme Court reinstated the decision of the compensation judge and noted that by enacting Minn. Stat. ' 176.101, subd. 4, the legislature provided a means for coordinating workers= compensation benefits with Social Security benefits and state pension benefits. The court stated, however, Ait must be remembered that workers= compensation and retirement programs are based upon entirely different considerations so that offsets aimed at preventing duplicate benefits must be read with the basic purposes of each system in mind.@ The court then went on to quote from Professor Larson:
Some states put the beneficiaries to an election between their compensation and pension rights. But, in the absence of such express statutory election or offset provisions, and under the familiar provision forbidding reduction of compensation because of other income or benefits, the benefits of both a public pension law and a compensation act can be simultaneously drawn. Moreover, statutory offsets are to be confined to the exact recipients specified; thus, an offset applicable by statute to an employee will not reduce benefits to the employee=s spouse, and an offset applicable to a spouse will not reduce benefits to dependant children. 9 Larson=s Workers= Compensation Law ' 157.04 (1)(c) (2000) (footnotes omitted).
The Social Security benefits paid to the employee=s children were occasioned solely because the employee qualified for SSDI benefits. Absent his qualification for SSDI benefits, the employee=s children had no independent right to Social Security benefits. A child=s insurance benefit is generally paid to the child=s parent or guardian and is statutorily required to be expended for the maintenance of the minor child or children. The definition of maintenance under the Social Security Act includes all those expenditures which a parent must provide from the parent=s income to support a minor child. Thus, the child=s insurance payments inure to the benefit of the family. Under Minnesota law, a divorced parent=s child support obligation is reduced by the amount of the child=s insurance benefit received by the minor child. The Code of Federal Regulations treat both the employee=s benefit and the child=s insurance benefits as a family benefit. Under the federal offset statute, workers= compensation benefits are first offset against benefits payable to other family members and then against the SSDI benefits payable to the injured employee. These considerations support the conclusion that the child=s insurance benefits paid in this case are wage loss benefits.
The purpose of the offset provision of Minn. Stat. ' 176.101, subd. 4, is to reduce the duplication of benefits between the Social Security system and workers= compensation. Kloss v. E. & H. Earthmovers, 472 N.W.2d 109, 44 W.C.D. 530 (Minn. 1991). Both SSDI and child=s insurance benefits are for the purpose of replacing to the family the wage loss caused by the disability of a parent. Minn. Stat. ' 176.101, subd. 4, as originally enacted, allowed an offset of permanent total disability benefits only against Old Age and Survivors Insurance benefits paid to the employee. As amended, the statute broadened the categories of benefits against which the offset may be taken and eliminated the requirement that the Social Security benefit be paid to the disabled employee. Clearly, the legislative intent in amending the statute was to broaden the offset statute. We conclude a child=s insurance benefit payable solely because a child=s parent is entitled to SSDI benefits is based on the same considerations as are workers= compensation benefits paid to the employee. The decision of the compensation judge, including child=s insurance benefits in calculating the Social Security offset, is, therefore, affirmed.
 See, Minn. Stat. ' 176.132, subd. 1(b). An employee who has suffered a personal injury after October 1, 1983, and before October 1, 1992, is eligible to receive supplementary benefits after the employee has been receiving permanent total disability benefits for 208 weeks.
 The employee was awarded SSDI benefits and his children received child=s insurance benefits effective June 1, 1993. At the time of the settlement, however, the Social Security Administration was applying the federal offset statute and reducing the federal benefits by the employee=s workers= compensation payments. The employee agreed in the settlement to apply to the Social Security Administration for payment of the full federal benefits without offset.
 Subsequent to oral argument before this court, the employee submitted to the court an affidavit by a child support officer from Nicollet County, Minnesota. This affidavit was not in evidence before the compensation judge so this court may not consider it. Minn. Stat. ' 176.421, subd. 6; Gallop v. Gallop, 389 N.W.2d 202, 38 W.C.D. 757 (Minn. 1986).
 AThe supplementary benefit payable under this section shall be the difference between the amount the employee receives on or after January 1, 1976, under section 176.101, subdivision 1 or 4, and 65 percent of the statewide average weekly wage as computed annually.@ Minn. Stat. ' 176.132, subd. 2(a).
 The term Achild@ means the child or legally adopted child of an individual. 42 U.S.C. ' 416(e)(1).
 In 1981, the Social Security Act was amended to rule out any future adoptions of offsets by states. See, Pub. L. No. 97-35 (1981) amending 42 U.S.C. ' 424a(a).