LOUIS D. CANNATA, Employee/Appellant, v. BORCHERT-INGERSOLL, INC., and HOME INS. CO., Employer-Insurer.
WORKERS= COMPENSATION COURT OF APPEALS
JANUARY 28, 2005
JURISDICTION - FULL FAITH & CREDIT; PENALTIES. The State of Minnesota must give full faith and credit to the March 5, 2003 order of the New Hampshire Superior Court staying all judicial, administrative or other actions or proceedings including enforcement of judgments against Home Insurance Company or any act against the property of Home for 90 days. Although the Award on Stipulation and Minn. Stat.' 176.221, subd. 8, required payment to the employee within 14 days of the filing of the award on March 17, 2003, the compensation judge properly held that, under these circumstances, no payment could be made at that time and there was no legal basis for the imposition of a penalty.
Determined by: Johnson, C.J., Wilson, J. and Pederson, J.
Compensation Judge: Gregory A. Bonovetz
Attorneys: Louis D. Cannata, pro se Appellant. James S. Pikala and Aaron P. Frederickson, Arthur, Chapman, Kettering, Smetak & Pikala, Minneapolis, MN, for the Respondents.
THOMAS L. JOHNSON, Judge
The employee appeals the compensation judge=s denial of a penalty claim for late payment of workers= compensation benefits. We affirm.
On July 27, 1972 and October 27, 1972, Louis D. Cannata, the employee sustained personal injuries arising out of his employment with Borchert-Ingersoll, Inc., the employer, then insured by Commercial Union Insurance Company. The employer and Commercial Union accepted liability for the injuries and paid benefits to the employee. In 1975, the employee was registered with the State of Minnesota under Minn. Stat. ' 176.131 with a 40 percent permanent partial disability referable to the low back.
On March 22, 1983, the employee sustained a third admitted, personal injury arising out of his employment with the employer, then insured by Home Insurance Company. In March 1985, the parties entered into a settlement in which the Special Compensation Fund admitted appropriate registration of the employee, admitted the employee=s disability after March 22, 1983, was made substantially greater by reason of the registered physical impairment and agreed to reimburse Home Insurance Company for all benefits and expenses paid in excess of 52 weeks of monetary benefits and $2,000.00 in medical expenses. By virtue of the registration and the settlement, Commercial Union Insurance Company had no further liability. See Koski v. Erie Mining Co., 300 Minn. 1, 233 N.W.2d 470, 27 W.C.D. 121 (1973).
In 2003, the employee, Home Insurance Company and the Special Compensation Fund entered into a settlement in which the parties agreed to settle the employee=s claims for a lump sum payment of $175,000.00. An Award on Stipulation was filed on March 17, 2003. Pursuant to Minn. Stat. ' 176.221, subd. 8, payment was due within 14 days of the filing of the award. On March 5, 2003, a New Hampshire Superior Court Judge issued an order appointing a Rehabilitator for Home Insurance Company and staying all judicial, administrative or other actions or proceedings, including enforcement of judgments against Home or any act against the property of Home for a period of 90 days. The order further authorized the Rehabilitator, in her discretion, to pay claims for losses, including claims for losses which were previously settled and approved for payment in the normal course of business.
The payments under the terms of the award were due on or before March 31, 2003. Two checks payable to the employee were issued, one in the amount of $6,697.96 and the other in the amount of $162,000.00. These checks were mailed to the employee with postmarks dated April 30, 2003 and May 1, 2003. (Finding 3.)
A Compliance Service Specialist at the Minnesota Department of Labor and Industry served and filed a Notice of Penalty Assessment on May 20, 2003. The department imposed a $1,000.00 penalty under Minn. Stat. ' 176.221, subd. 3, and a penalty of $30, 365.63 payable to the employee under Minn. Stat. ' 176.225, subd. 1(b). In a memorandum attached to the penalty assessment, the specialist stated, AAn Award on Stipulation was served on all parties on March 17, 2003. Payment was due within 14 days or by March 31, 2003. Payment was made on April 30, 2003, 30 days late.@ At the hearing, the Compliance Service Specialist testified at the time he issued the penalty assessment, he was unaware of the March 5, 2003, order of the New Hampshire Superior Court.
The respondents filed an objection to the penalty assessment and the case was scheduled for an administrative conference following which a compensation judge dismissed the penalty claim. The employee appealed the judge=s denial of the penalty and by decision filed March 5, 2004, a panel of this court vacated the compensation judge=s order and remanded the case to the Chief Administrative Law Judge for assignment to a compensation judge for a formal hearing. The case was then tried before Compensation Judge Bonovetz. In a Findings and Order served and filed July 27, 2004, the compensation judge found the March 5, 2003, Order of the New Hampshire Superior Court prohibited the insurer from dispensing any funds unless authorized by the Rehabilitator. The compensation judge concluded the State of Minnesota must give full faith and credit to this order. Accordingly, the compensation judge found the insurer was precluded by court order from issuing a check to the employee by March 31, 2003, and was not, therefore, liable for a penalty. The employee appeals.
On appeal, the employee argues pursuant to Minn. Stat. ' 176.221, subd. 8, and the terms of the Award on Stipulation, the payment was due with 14 days of March 17, 2003. Minn. Stat. ' 176.221 and ' 176.225 provide for penalties for failure to make timely payment of benefits. The payment was late and thus, under Minnesota law, the employee contends the department properly assessed a penalty.
Article IV., Section 1., of the United States Constitution, requires that, AFull Faith and Credit shall be given in each State to the public Acts, Records and judicial Proceedings of every other State.@ 28 U.S.C. ' 1738 provides in part,
Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.
The purpose of the constitutional provision is to preserve rights acquired or confirmed under the public acts and judicial proceedings of one state by requiring recognition of their validity in other states. Pink v. A.A.A. Highway Express, Inc., 341 U.S. 201, 62 S.Ct. 241, 86 L. Ed. 152 (1941). Thus, the provision requires an obligation or right of action arising in another jurisdiction to be enforced within this jurisdiction precisely as if the obligation or right of action had arisen in this state. The State of Minnesota must, therefore, give full faith and credit to the March 5, 2003, order of the New Hampshire Superior Court.
The March 5, 2003, order of the New Hampshire Superior Court stayed, for 90 days, all actions, including enforcement of judgments or any act against the property of Home Insurance Company. Thus, despite the settlement, the employee had no legal right to proceed against Home Insurance Company for at least 90 days after March 5, 2003. The order of the New Hampshire Superior Court, however, authorized the Rehabilitator, in her discretion, to pay any and all claims for losses, including claims previously settled. Ultimately, the payment to the employee was authorized and received by the employee within 90 days of the court=s order. Accordingly, there is no legal basis for the imposition of a penalty. The compensation judge=s decision is affirmed.