THERESA A. BOSS, Employee/Appellant, v. TANDEM PRODS., INC., Employer-Insurer/Cross-Appellants, and PETERSON REHAB. SERVS., Intervenor/Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
MAY 23, 2005
REHABILITATION - ELIGIBILITY; REHABILITATION - FEES & EXPENSES. Because the compensation judge erred in concluding that the employee was not eligible for rehabilitation assistance and also erred in many of his other bases for denying the claim for rehabilitation expenses, remand was necessary for purposes of reconsideration and to allow the parties to submit additional evidence.
ATTORNEY FEES - SANCTIONS; STATUTES CONSTRUED - MINN. STAT. § 176.081, SUBD. 12. The record contained no basis for concluding that the rehabilitation firm committed fraud or any other conduct justifying imposition of sanctions pursuant to Minn. Stat. ' 176.081, subd. 12.
Affirmed in part, reversed in part, and remanded.
Determined by: Wilson, J., Johnson, C.J., and Pederson, J.
Compensation Judge: Ronald E. Erickson
Attorneys: Donaldson V. Lawhead, Lawhead Law Offices, Austin, MN, for the Appellant and the Intervenor/Appellant. Jeffrey A. Magnus, Law Offices of Joseph M. Stocco, Edina, MN, for the Cross-Appellants.
DEBRA A. WILSON, Judge
The employee and the intervenor Peterson Rehabilitation Services appeal from the compensation judge=s denial of payment for rehabilitation services and request penalties based on the employer and insurer=s allegedly frivolous cross-appeal. The employer and insurer cross-appeal from the compensation judge=s failure to award sanctions against Peterson Rehabilitation, pursuant to Minn. Stat. ' 176.081, subd. 12. We reverse the judge=s denial of rehabilitation expenses and remand that claim for further proceedings consistent with this opinion, deny the request for penalties on appeal, and affirm the denial of sanctions pursuant to Minn. Stat. ' 176.081, subd. 12.
On December 13, 2001, and March 22, 2002, the employee sustained work-related injuries to her upper extremities while employed by Tandem Products, Inc. [the employer], which was insured for workers= compensation liability by CNA Insurance Companies. The first injury was a Gillette-type injury to both wrists and the left elbow, the second, another bilateral Gillette-type wrist injury. The employee was ultimately diagnosed as having bilateral carpal tunnel syndrome and lateral epicondylitis of the left arm. At the time of these work injuries, the employee was earning between $420.00 and $451.50 per week. She eventually underwent carpal tunnel release surgery on both wrists.
In January of 2002, Kate Schrot, a QRC with the Stubbe & Associates rehabilitation firm, conducted a rehabilitation consultation and determined that the employee was eligible for rehabilitation services. Initial rehabilitation efforts focused on medical monitoring. In January of 2003, the employee underwent a Functional Capacities Evaluation [FCE] to ascertain her physical capabilities and need for restrictions. The employee=s treating physician, Dr. Thomas Walsh, later issued restrictions essentially consistent with the FCE results, indicating that the employee was limited to lifting 5 pounds with her left arm, 30 pounds with her right arm, and 24 pounds with both arms, that the employee should perform heavy grasping only occasionally, and that the employee should not operate power tools with her left arm.
The employee was unable to return to her usual pre-injury job due to the restrictions resulting from her work-related injuries, and the employer did not offer her alternate employment. Therefore, beginning in about March of 2003, the employee started looking for other work, with the assistance of QRC Schrot and a placement specialist.
In early April of 2003, the employee began a new job, with a different employer, paying $11.30 an hour, higher than her pre-injury wage. About two months later, on June 6, 2003, QRC Schrot completed an R-8, Notice of Rehabilitation Plan Closure. According to that form, the total cost of rehabilitation services provided through that date was $9,144.99, of which $1,595.98 was related to job placement and job development services. No actual billing statements from QRC Schrot or Stubbe & Associates are contained in the record.
On June 18, 2003, the employee saw Dr. Walsh, indicating that she had been using her right hand and wrist repetitively in her new job and had developed swelling in her right ring finger. Dr. Walsh concluded that the employee had sustained a right ring finger extensor mechanism injury, probably due to repetitive finger and wrist movement, and he predicted that the condition would resolve in three to six weeks with use of a splint or brace. Reiterating the Apermanent@ restrictions relating to the employee=s earlier work-related wrist and elbow injuries, Dr. Walsh indicated that the employee=s Aonly new work restriction is that she wear the brace when working.@ The employee=s new employer apparently concluded that the employee was not capable of performing her job subject to restrictions, and they terminated her.
The employee testified that she called QRC Schrot for assistance after her termination but that QRC Schrot said Athat she could not help [the employee] anymore.@ The employee=s attorney apparently then referred her to another rehabilitation firm, Peterson Rehabilitation Services, Inc., where she met with QRC Betty Rouse, on July 10, 2003, for an initial rehabilitation consultation. Just prior to that meeting, John Peterson, the head of Peterson Rehabilitation, had written the insurer, requesting medical and Aother pertinent information,@ to assist in the consultation.
After interviewing the employee and reviewing available records, QRC Rouse concluded that the employee was again eligible for rehabilitation services and arranged for the employee to meet with Candy Kriska, a placement specialist at the firm. QRC Rouse also administered vocational testing the following week, and a rehabilitation plan and Job Placement Plan and Agreement [JPPA] were completed.
The employee first met with placement specialist Kriska on July 14, 2003. By the end of that month, the employee had secured a part-time job at Burger King, but apparently not as a result of any leads provided by Ms. Kriska. Because the job did not provide an income close to the employee=s pre-injury wage, placement assistance was continued. Specific services provided by Ms. Kriska included providing the employee with job leads from lists of employer contacts made by Ms. Kriska, providing the employee with cover letters and resumes, and giving the employee advice about various employers, job search, and whether particular jobs might be within the employee=s restrictions.
In November of 2003, the employee obtained a second part-time job, as a cashier in a gift shop, after following up on a lead provided by Ms. Kriska. This job paid $8.87 per hour, and the employee=s two jobs together paid close to the employee=s pre-injury wage. Rehabilitation services by Peterson Rehabilitation were therefore terminated shortly thereafter, and another R-8 was filed on January 14, 2004.
Also in January of 2004, the employee and the employer and insurer entered into a settlement agreement, closing out all claims for benefits related to the December 2001 and March 2002 work injuries, except claims for certain future medical expenses. Peterson Rehabilitation, which had by this time intervened in the proceedings, declined to accept the employer and insurer=s offer of compromised payment for rehabilitation services, and it was agreed that Peterson=s claim would be set for a hearing pursuant to Parker/Lindberg v. Friendship Village, 395 N.W.2d 713, 39 W.C.D. 125 (Minn. 1986).
At the first phase of the hearing, it was agreed that the employer and insurer had negotiated with Peterson Rehabilitation in good faith and that Peterson Rehabilitation had not been excluded from negotiations. The second phase of the hearing dealt with Peterson Rehabilitation=s substantive claims for payment of rehabilitation expenses, in the amount of $5,173.18, for services provided to the employee from July of 2003 through the rehabilitation plan closure in January of 2004. The employer and insurer denied any liability for Peterson=s claim, contending that the services were not reasonable, necessary, or causally related to the December 2001 and March 2002 work injuries. Much of the employer and insurer=s defense centered on allegations that Peterson Rehabilitation=s billing practices resulted in inflated charges, amounting to fraud, and the employer and insurer asked the compensation judge to award sanctions against the rehabilitation firm under Minn. Stat. ' 176.081, subd. 12. The only witnesses to testify at hearing were John Peterson and placement specialist Kriska; however, the employee=s testimony was submitted by post-hearing deposition. A great deal of the hearing testimony concerned how much time had actually been spent by Ms. Rouse and especially Ms. Kriska on the file, in comparison to time billed, particularly with regard to Ms. Kriska=s practice of billing of .18 hours for every employer job development contact.
In a decision issued on October 18, 2004, the compensation judge denied Peterson Rehabilitation=s claim in its entirety, and he also denied the employer and insurer=s claim for sanctions.
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).
1. Rehabilitation Expenses
The compensation judge issued extensive findings and gave a number of reasons for his denial of payment for the disputed rehabilitation services. We conclude that the issue must be remanded for reconsideration.
The compensation judge concluded in part that A[i]t has not been established by a preponderance of the evidence that the employee was in need of further rehabilitation services.@ This finding is clearly erroneous and unsupported by substantial evidence. Pursuant to Minn. R. 5220.0100, subp. 22, an employee is Aqualified@ for rehabilitation assistance if the employee
A. is permanently precluded or is likely to be permanently precluded from engaging in the employee=s usual and customary occupation or from engaging in the job the employee held at the time of injury;
B. cannot reasonably be expected to return to suitable gainful employment with the date-of-injury employer; and
C. can reasonably be expected to return to suitable gainful employment through the provision of rehabilitation services, considering the treating physician=s opinion of the employee=s work ability.
It is undisputed that the employee in the present case is permanently precluded from returning to her pre-injury job due to restrictions resulting from her 2001 and 2002 work injuries and that the employer has no other work for her, satisfying subparts 22.A. and 22.B. As for subpart 22.C., both QRCs who evaluated the employee concluded that she was eligible for rehabilitation assistance, and the employer and insurer offered no evidence to the contrary. The fact that the employee may have had an additional restriction related to a finger injury sustained in her post-injury employment in no way diminishes the employer and insurer=s responsibility to provide rehabilitation services necessitated by the 2001 and 2002 work injuries. The judge=s decision that the employee did not establish entitlement to additional rehabilitation assistance is therefore reversed.
The compensation judge also apparently denied payment of the disputed expenses at least in part because neither the employee nor Peterson Rehabilitation had filed a request to change QRCs, which the judge believed was required by Minn. R. 5220.0710. However, because the employee=s previous rehabilitation plan had been closed by QRC Schrot with the filing of an R-8 in June of 2003, the employee no longer had a QRC, and, case law establishes that, under these circumstances, there was no need for a Achange@ of QRC as contemplated by Minn. R. 5220.0710. See McQuillen v. Jelan Prods., 64 W.C.D. 60 (W.C.C.A. 2003); Reaney v. Weyerhaeuser, 58 W.C.D. 426 (W.C.C.A. 1998); Volcke v. Stuarts, Inc., 55 W.C.D. 283 (W.C.C.A. 1996). The same case law clearly establishes that the employee had a right to a new rehabilitation consultation, see, e.g., McQuillen, 64 W.C.D. 60, and the judge therefore clearly erred in denying Peterson Rehabilitation=s claim for that specific service.
The judge also denied payment of the claimed rehabilitation expenses because he considered Peterson Rehabilitation=s work to be Alargely repetitive and duplicitous,@ having Acovered most of the same ground as had already been done with Ms. Schrot of Stubbe & Associates.@ The judge went on to criticize QRC Rouse=s decision to administer vocational aptitude tests, which the judge viewed as a Awaste of time and money as it was clear that the employee had limited educational skills and some learning disabilities,@ including dyslexia. We simply do not follow the judge=s reasoning in this regard; there is nothing in the record to support the conclusion that vocational testing is somehow inappropriate for workers with learning disabilities, such as the employee, who may in fact face the greatest difficulty in finding appropriate work. In any event, we note that, because no vocational testing had been conducted by Ms. Schrot, the testing conducted by Ms. Rouse cannot be considered Aduplicitous@ or redundant, and, as such, payment could not reasonably be denied on that basis. Similarly, we question the judge=s decision to characterize the job search skills training provided by Peterson Rehabilitation as redundant, having been performed by Stubbe & Associates, when even the Stubbe placement specialist had recorded the intention to provide Aongoing job seeking skills training@ throughout placement efforts. That is, even the previous rehabilitation firm had considered job search skills training to be appropriate on an ongoing basis, and there is, again, no evidence to the contrary.
It appears that the compensation judge also doubted the employee=s need for rehabilitation assistance based on the fact that the employee Ahad already been trained in job seeking skills and how to apply for work and how to keep job logs.@ In fact, the judge speculated that QRC Schrot had, for this reason, Aprobably concluded that there was nothing further that needed to be done to assist [the employee] in finding employment.@ However, the fact that an employee may be capable of looking for work without rehabilitation assistance has virtually no bearing on whether an employee is eligible for rehabilitation services, including job placement assistance. The issue is whether rehabilitation services will assist an employee in finding suitable gainful employment, not whether rehabilitation services are essential. See Minn. R. 5220.0100, subp. 22; cf. Nordby v. Arctic Enterprises, Inc., 305 Minn. 519, 521, 232 N.W.2d 773, 775, 28 W.C.D. 48, 50 (1975) (Anecessary@ retraining does not mean Aindispensable@ retraining). As for the compensation judge=s complaint that placement specialist Kriska Awasted@ the employee=s time by providing leads for employers with no job openings, we think that the compensation judge misinterpreted the evidence. It is clear Ms. Kriska gave the employee information about employers with no current openings in order to prevent the employee from spending any time contacting those employers.
One of the most serious criticisms leveled by the compensation judge concerns placement specialist Kriska=s practice of billing .18 hours for every employer contact made, despite telephone records indicating that Ms. Kriska actually spent much less time on many of these calls. We express no opinion here as to whether .18 hours constitutes a reasonable billing rate for calls of this kind. However, to the extent that the compensation judge implied that it is per se unacceptable for a rehabilitation provider to establish a minimum hourly billing increment, we disagree. It is not reasonable to expect any professional to keep track of services rendered on a minute-by-minute basis, and we see nothing in the rules governing rehabilitation service fees that specifically prohibits the establishment of minimum hourly billing increments. See Minn. R. 5220.1805 and Minn. R. 5220.1900. The only evidence in the present case bearing on the .18 increment indicates that that charge had been negotiated with a different insurer, a number of years ago, and that the Peterson firm had used it ever since. Moreover, the appropriate remedy for an excessive billing rate is to reduce the rate, not simply to deny payment altogether for all claimed services. Rehabilitation providers are entitled to reasonable compensation for necessary services rendered in connection with a work injury.
The dispute over the .18 billing rate for employer contacts made by Ms. Kriska illustrates a problem with the way this matter was litigated. The rehabilitation providers explained the basis for their rates and charges, as well as their reasons for providing certain rehabilitation services, at least to a point, and the employer and insurer disputed both the reasonableness and necessity of certain services and the reasonableness and accuracy of Peterson Rehabilitation=s billing, primarily through cross-examination. However, neither party offered any independent evidence on these issues, and, without such evidence, especially as to QRC billing rates and practices, it is difficult to see how the compensation judge was in a position to make a reasoned determination. Certainly Peterson Rehabilitation=s rates are not so obviously high as to mandate a finding of excessiveness even in the absence of other evidence on the issue, and, again, even if the rates were unjustifiably high, some payment is nevertheless due for at least some of the services rendered. Similarly, independent evidence on the reasonableness of the various disputed services would undoubtedly have aided the compensation judge in determining the compensability of those services.
For all of these reasons, we reverse the compensation judge=s denial of the rehabilitation expenses claimed by Peterson Rehabilitation and remand the matter to the judge for reconsideration, with specific direction to allow the parties to submit additional evidence on the issues of QRC billing rates and practices and the reasonableness of the services provided by QRC Rouse and Ms. Kriska. Again, for purposes of the remand, it is deemed established that the employee was a Aqualified employee,@ eligible for rehabilitation services, that the employee was entitled to the rehabilitation consultation conducted by Ms. Rouse, and that at least some, if not all, of the other services provided by Peterson Rehabilitation were reasonable and necessary as a result of the 2001 and 2002 work injuries.
The employer and insurer contend that the compensation judge erred by failing to award sanctions, payable by Peterson Rehabilitation, pursuant to Minn. Stat. ' 176.081, subd. 12, which provides as follows:
Subd. 12. Sanctions; failure to prepare, appear, or participate. If a party or party=s attorney fails to appear at any conference or hearing scheduled under this chapter, is substantially unprepared to participate in the conference or hearing, or fails to participate in good faith, the commissioner or compensation judge, upon motion or upon its own initiative, shall require the party or the party=s attorney or both to pay the reasonable expenses including attorney fees, incurred by the other party due to the failure to appear, prepare, or participate. Attorney fees or other expenses may not be awarded if the commissioner or compensation judge finds that the noncompliance was substantially justified or that other circumstances would make the sanction unjust. The department of labor and industry, and the office of administrative hearings may by rule establish additional sanctions for failure of a party or the party=s attorney to appear, prepare for, or participate in a conference or hearing.
We are not persuaded by the employer and insurer=s argument on this issue. The quoted provision is intended to ensure full participation by all parties at scheduled hearings and conferences. We see nothing in Minn. Stat. ' 176.081, subd. 12, to suggest any intent that it be applied to penalize parties solely on the basis of the relative merit, or lack of merit, of the underlying claim. At any rate, contrary to the employer and insurer=s argument, the record as a whole simply will not support the conclusion that Peterson Rehabilitation committed fraud in bringing its claim for payment for rehabilitation services. As such, we affirm the judge=s denial of sanctions.
On appeal, Mr. Lawhead has requested penalties pursuant to Minn. Stat. ' 176.225, subd. 1, arguing that the employer and insurer=s cross-appeal on the sanction issue is frivolous. We deny this request. This court has issued very few cases interpreting or applying Minn. Stat. ' 176.081, subd. 12, and we cannot conclude that the employer and insurer=s cross-appeal so obviously lacked merit as to warrant imposition of a penalty.
 Attorney Donaldson Lawhead represented both the employee and the intervenor Peterson Rehabilitation Services at the hearing below, but only the employee is listed as the appealing party in the notice of appeal. In their respondent=s brief, the employer and insurer contend that Peterson Rehabilitation is the real party in interest and that, because Peterson did not file a separate notice of appeal, the compensation judge=s decision should simply be affirmed. It is clear, under the particular circumstances of this case, that Mr. Lawhead is in fact representing Peterson=s interests on appeal and that Peterson should be added as an appellant in this matter. Workers= compensation courts are generally not bound by technical rules of pleading. See, e.g., Minn. Stat. ' 176.411, subd. 1. As the supreme court has noted, Athe Workers= Compensation Act appears to contemplate a certain informality of procedure.@ Scalf v. LaSalle Convalescent Home, 481 N.W.2d 364, 365, 46 W.C.D. 283, 284 (Minn. 1992).
 See Gillette v. Harold, Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 According to an unappealed finding by the compensation judge.
 There is some suggestion in the record that the new employer may not have been fully aware of the restrictions related to the employee=s prior wrist and elbow injuries. It is not clear exactly which of the employee=s restrictions were considered to be a problem in terms of the new job.
 In this regard, we would also note that the employee=s need to use a brace for the finger injury was merely temporary.
 Also, the employee testified that she asked for but was refused additional assistance from QRC Schrot.