ARNOLD HELWICK, Employee, v. CHERNE CONTRACTING CORP. and EMPLOYERS INS. OF WAUSAU, Employer-Insurer/Appellants, and SPECIAL COMPENSATION FUND.
WORKERS= COMPENSATION COURT OF APPEALS
NOVEMBER 2, 2005
DISCONTINUANCE OF BENEFITS - SUBSTANTIAL EVIDENCE; EARNING CAPACITY. While the employee made misrepresentations about the scope and extent of his post-injury employment, the facts misrepresented were collateral rather than directly material to the issue of his earning capacity. Accordingly, the compensation judge was not required to find that the employee had misrepresented his earning capacity or that discontinuance of temporary benefits was warranted.
Determined by: Stofferahn, J., Pederson, J., and Johnson, C.J.
Compensation Judge: Paul D. Vallant
Attorneys: John G. Brian, Felhaber, Larson, Fenlon & Vogt, St. Paul, MN, for the Respondent. Richard L. Plagens, Lommen, Nelson, Cole & Stageberg, for the Appellants.
DAVID A. STOFFERAHN, Judge
The employer and insurer appeal from the compensation judge=s denial of their petition to discontinue temporary partial disability benefits. We affirm.
The employee, Arnold Helwick, sustained an admitted work injury to his back on June 19, 1987 while employed by the employer, Cherne Contracting, at a weekly wage of $691.60. He was unable to return to work for the employer and in 1992 began working for Tradewear, Inc., a business owned by his father, Dale Helwick. Tradewear sells a line of work clothing to the public from a location in Minneapolis and also by mail order and on the internet. The employee subsequently began receiving temporary partial disability compensation based on the difference between his pre-injury weekly wage and his weekly wage at Tradewear.
When the employee began working for Tradewear, his father maintained the business records, signed paychecks, and determined the employee=s pay, which was set at $220.00 per week. The employee regularly mailed copies of his paychecks to the insurer, Employers Insurance of Wausau Company, in connection with his ongoing receipt of temporary partial disability compensation.
In approximately August 2000, the employee=s father went into a nursing home and ceased his day-to-day management of Tradewear, leaving the operation of the business to the employee. The employee testified, however, that he still would have needed his father=s approval to change his own rate of pay.
Dale Helwick died on July 14, 2002. According to the employee=s testimony, his mother, who also was then residing in a nursing home, presumably became the owner of the business. However, she never had any active participation in the business. The employee continued to operate Tradewear as he had before his father died. He testified that he continued to pay himself at the same salary but that any profits from the business simply accumulated in the company checking accounts, since he felt that any profits were not his. He testified that he did not want to inform the insurer that his father had died Aout of fear of opening a can of worms.@ Accordingly, he continued to submit paychecks to the insurer as evidence of his weekly earnings, but, to conceal his father=s death, began forging his father=s name to the signature line.
In 2003 and again in 2004 the employee was visited at Tradewear by an investigator working for Liberty Mutual Insurance Company, which also owns the insurer, Employers Insurance of Wausau. The investigator asked the employee about his employment and whether he might receive a pay raise. The employee told the investigator that his father owned the business and set his salary, and that there was not enough money in the business to warrant a raise. The investigator also asked if he could see the business records. The employee testified that the investigator had not identified himself as working for Employers Insurance of Wausau, and that the employee did not think Ait was any of his business@ to see the records. The employee told the investigator that the records were in the possession of his father, who almost certainly would not allow them to be examined. There is no evidence to suggest that the insurer made any further effort to inspect the business records. No discovery motion was made nor was a subpoena requested to obtain the business records either from the employee or his father.
The employer and insurer eventually discovered that the employee=s father had died. On December 2, 2004, they filed a petition to discontinue workers= compensation benefits, alleging that the employee had Amisrepresented the nature and extent of his employment and may have fraudulently obtained workers= compensation benefits.@
The petition resulted in a hearing before Compensation Judge Paul Vallant on February 4, 2005. At the hearing, the employer and insurer contended that the employee=s misrepresentations were such as to provide a basis for discontinuance. The employee admitted at the hearing that he had intentionally misled the investigator in failing to tell him that his father had died, and that he was now in possession of the business records. He also admitted he had misled the insurer in failing to inform them of his father=s death and by signing his paychecks with his father=s name. However, he testified that the amounts of the checks he had received correctly set forth his earnings from Tradewear and that he had no other earnings.
In his Findings and Order of May 4, 2005, the compensation judge found that Aa preponderance of the evidence does not establish that the employee misrepresented his earnings from Tradewear.@ The compensation judge determined that the employer and insurer had failed to establish reasonable grounds to discontinue temporary partial disability compensation payments. The employer and insurer appeal.
An injured employee demonstrates entitlement to temporary partial disability benefits by showing that he has sustained a work‑related physical disability, an ability to work subject to the disability, and an actual loss of earning capacity that is causally related to the disability. Krotzer v. Browning‑Ferris/Woodlake Sanitation Serv., 459 N.W.2d 509, 43 W.C.D. 254 (Minn. 1990); Dorn v. A.J. Chromy Constr. Co., 310 Minn. 42, 245 N.W.2d 451, 29 W.C.D. 86 (1976). Once a disabled employee has returned to full-time work, his actual wages are generally presumed to be representative of his post‑injury earning capacity. French v. Minn. Cash Register, 341 N.W.2d 290, 36 W.C.D. 385 (Minn. 1983). This presumption may be rebutted with evidence indicating the employee=s earning capacity is greater than the post‑injury wage. Einberger v. 3M Co., 41 W.C.D. 727 (W.C.C.A. 1989). Earning capacity is a question of fact to be determined by a compensation judge. Noll v. Ceco Corp., 42 W.C.D. 553 (W.C.C.A. 1989).
The petition to discontinue in this case alleged that the employee had Amisrepresented the nature and extent of his employment and may have fraudulently obtained workers= compensation benefits.@ Since there was no contention that Tradewear was not a legitimate business or that the employee was not employed there, the compensation judge properly considered the issue as whether the employee had misrepresented his actual earning capacity in order to qualify for temporary partial disability benefits.
The employee=s misrepresentations, as admitted and proven in this case, were that his father continued to be in charge of the business and payroll and in sole possession of the business records. The employee also admitted having submitted paychecks to the insurer which he had falsely signed with his father=s name. However, the facts which the employee misrepresented are not necessarily inconsistent with a finding that his earning capacity remained the same as had previously been established. The fact that the employee misrepresented some facts concerning his employment to the insurer does not necessarily establish that he was misrepresenting the extent of his earnings from Tradewear. Accordingly, proof of the specific misrepresentations made by the employee did not, in and of itself, constitute a clear basis for a discontinuance of benefits.
The employer and insurer argue, however, that once the employee was in day-to-day control of the business, he had gained full discretion over the pay he received. They suggest that he self-limited his earning=s, and thus improperly received benefits, by failing to pay himself any excess profits made by company operations. However, the employer and insurer failed to show that there were profits from which the employee might have drawn higher wages. The employer and insurer simply infer this from the employee=s failure to provide the records. The employee also testified that he did not own the business and did not feel he was entitled to share in its profits without authority. The employer and insurer failed to show that the employee had taken any profit from the business or that he had done anything other then to allow profits to accrue in the business accounts. In the absence of actual records, the employer and insurer depend on inference from the circumstances of the case. Other inferences are also possible, however, and the compensation judge, was not required to reach the same inferences as did the employer and insurer.
The compensation judge could reasonably have concluded that the employee=s misrepresentations were motivated not by an intent to conceal a higher earning capacity, but by a desire to avoid having to deal with a variety of possible issues which could arise concerning the transfer, operation, valuation and control of a family business. That the employee may have improperly opted to continue the status quo does not necessarily indicate that he was earning or able to earn more money than he was reporting to the employer and insurer for the calculation of his benefits.
The employee introduced no records in evidence and depended entirely on his own testimony. The employer and insurer contend that by demonstrating the employee had made misrepresentations as to the extent and nature of his control of the business, they had Ashifted the burden of proof@ on the issue of the employee=s earning capacity, and the compensation judge erred as a matter of law by failing to put the employee to a stricter standard of proof of his earnings.
We disagree. The employer and insurer, by establishing that the employee had misrepresented certain aspects of the employment, did place the employee=s credibility at issue, casting doubt on the validity of his testimony about the pay available to him and about his earning capacity. But the issue thereby raised was essentially one of witness credibility and of the weight of the evidence, matters uniquely entrusted to the trier of fact. While the compensation judge could have expressly rejected the employee=s testimony about the pay available to him from Tradewear, he was also free to accept the employee=s testimony. Since the acceptance of that testimony was a matter of witness credibility, we cannot say that the compensation judge committed clear error in so doing, and we must affirm. Even v. Kraft, Inc., 445 N.W.2d 831, 42 W.C.D. 220 (Minn. 1989). Thus, it appears to us that the compensation judge=s decision did not rest not on improper application or shifting of the placement of the burden of proof, but on the weight of the evidence in the first instance.
This court must give due weight to the opportunity of the compensation judge to evaluate the credibility of witnesses appearing before him. Where the evidence is conflicting or more than one inference may reasonably be drawn from the evidence, the findings of the compensation judge must be upheld. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 37 W.C.D. 235 (Minn. 1984); Redgate v. Sroga's Standard Service, 421 N.W.2d 729, 734, 40 W.C.D. 933 (Minn. 1988). We therefore affirm the compensation judge=s finding that the preponderance of the evidence did not establish that the employee misrepresented his earnings from Tradewear and we affirm the compensation judge=s conclusion that there was no basis for discontinuing temporary partial disability compensation on the evidence presented on the record.