RONALD L. MAGARINER, Employee, v. GENERAL CLEANING, and CNA COMMERCIAL INS., Employer-Insurer/Appellants, and KENWOOD PARK CORP., and STATE FUND MUT., Employer-Insurer, and MN DEP'T of LABOR & INDUS./VOCATIONAL REHAB. UNIT, SMDC HEALTH SYS., MN DEP'T OF ECON. SEC., and FIRST PLAN OF MINN., Intervenors, and SPECIAL COMP. FUND.
WORKERS= COMPENSATION COURT OF APPEALS
SEPTEMBER 6, 2005
CAUSATION - SUBSTANTIAL EVIDENCE. Substantial evidence, including the employee=s testimony, supported the compensation judge=s decision that the employee did not sustain a work-related injury while employed by a garbage and recycling firm.
CREDITS & OFFSETS; ESTOPPEL. The compensation judge erred in concluding that the employer and insurer were equitably estopped from asserting that the employee was an uninsured independent contractor at the time of an alleged second work injury, and remand was required for further consideration and findings regarding the employer and insurer=s credit claim pursuant to Narog v. Tony=s Ceramics, 36 W.C.D. 357 (W.C.C.A. 1983).
Affirmed in part, reversed in part, and remanded.
Determined by: Wilson, J., Johnson, C.J., and Stofferahn, J.
Compensation Judge: Cheryl LeClair-Sommer
Attorneys: Sean M. Quinn, Falsani, Balmer, Peterson, Quinn & Beyer, Duluth, MN, for the Respondent Employee. Thomas F. Coleman, Cousineau, McGuire, Anderson, Minneapolis, MN, for the Appellants. Kim D. Amundson, Lynn, Scharfenberg & Associates, Bloomington, MN, for the Respondents Employer and Insurer.
DEBRA A. WILSON, Judge
Employer General Cleaning and its insurer appeal from the compensation judge=s decision that the employee did not sustain a Gillette-type injury in 2002 while working for another employer and from the judge=s decision that estoppel or waiver preclude General Cleaning from asserting that the employee was an independent contractor while working as a newspaper delivery driver at the time of an alleged 1996 injury. We affirm the compensation judge=s decision that the employee did not sustain a work injury in 2002, but we reverse the judge=s application of estoppel and waiver, and we remand the matter for further proceedings consistent with this opinion.
On June 6, 1998, the employee sustained an injury to his low back in the course and scope of his employment with General Cleaning [General Cleaning], which was insured for workers= compensation liability by CNA Commercial Insurance. About six weeks after the injury, on July 18, 1998, the employee underwent surgery, performed by Dr. Robert Donley, to treat a ruptured L4-5 disc and associated left L5 radiculopathy. About a year after that, in August of 1989, the employee underwent a second surgical procedure, again performed by Dr. Donley, at the same lumbar level, due to a recurrent herniation.
Sometime in about 1990, the employee became a delivery driver for the Duluth News Tribune, working under contract to pick up newspaper bundles and deliver them to various businesses, such as convenience stores. The employee testified that he was a Asubcontractor@ for the paper and that his delivery routes varied depending on the particular contract. He also testified that he drove 180 to 200 miles on a typical delivery route, that he worked seven days a week, that he made perhaps 100 stops on certain routes, and that the newspaper bundles, which he carried into and out of his truck, weighed 25 to 35 pounds a piece. During the course of the hearing, the employee=s attorney stipulated that the employee was an independent contractor with regard to this work.
In late 1996, the employee experienced increased low back pain and other symptoms. Testing revealed a disc herniation at L5-S1, and the employee underwent a third low back surgery, again performed by Dr. Donley, on November 21, 1996. After recovering from the procedure, the employee resumed his work delivering newspaper bundles. Some physicians later expressed the opinion that the employee=s newspaper delivery activities had resulted in an injury, contributing to the need for this surgery and to the employee=s subsequent disability and need for later treatment.
The employee returned to see Dr. Donley in early 1999, complaining again of increased back and leg symptoms, which, according to the employee, had begun causing him to fall. On March 3, 1999, after additional diagnostic testing, including a discogram, Dr. Donley performed a fourth surgery, this time an anterior fusion, with BAK instrumentation, at L4-5 and L5-S1. Contemporaneous medical records indicate that the employee=s low back and leg symptoms improved significantly after the fusion procedure.
Within a few months of his fourth low back surgery, the employee developed a hernia, in his abdomen, at the site of his incision from the fusion. That incisional hernia was repaired by Dr. Jay Lenz on July 13, 1999. Within six months, the hernia recurred, necessitating a second hernia repair, performed on January 3, 2000. Not long thereafter, in about June of 2000, the employee stopped his newspaper delivery work. At his deposition, the employee testified that he left this employment because Duluth News had subcontracted all of the routes to another company. However, at hearing, the employee testified that he stopped the newspaper delivery job because Ait was getting too heavy.@
Sometime in 2000, the employee went to work as a bartender for the Keyboard Lounge. After beginning employment there, the employee had another recurrence of his incisional hernia, necessitating a third hernia repair, which was performed on June 19, 2000. Apparently later that same summer, the employee left the Keyboard Lounge to work for TGR, also known as Kenwood Park Corporation [hereinafter TGR], a small garbage and recycling firm. The employee was considered a manager, but his job duties included garbage and recycling pick-ups, separating recycled materials, and unloading recycled materials at the recycling facility. At his deposition, the employee testified that he always had help on this job; however, the work was often heavy.
Sometime in the summer of 2002, while he was working for TGR, the employee developed yet a fourth incisional hernia. That hernia was ultimately repaired on September 18, 2002. Early the next year, in January of 2003, the employee left his job with TGR due to lifting restrictions resulting from both his low back condition and his problem with incisional hernias.
General Cleaning and CNA apparently paid most or all of the medical expenses related to the employee=s four low back surgeries and the employee=s four incisional hernia operations. General Cleaning and CNA also paid various wage loss and permanent partial disability benefits to the employee over the years, including benefits paid pursuant to the terms of partial settlement agreements executed in 1994, 1997, 1999, 2000, and 2001. In the last several settlement agreements, General Cleaning and CNA alleged that a portion of the employee=s disability was attributable to injuries sustained by the employee in other jobs, and they specifically reserved the right to seek contribution or reimbursement, regarding an injury allegedly sustained by the employee Awhile working for . . . Duluth News,@ from Duluth News and its insurer Aor any other entity or individual.@
In 2003, the employee filed a claim petition seeking various benefits from General Cleaning and CNA as a result of the 1988 work injury. General Cleaning and CNA admitted liability for the 1988 injury but again alleged that the employee=s disability was due in whole or in part to subsequent work injuries, and they sought joinder of and contribution and/or reimbursement from Duluth News, Keyboard Lounge, and TGR. An order joining those additional parties was issued, and, apparently on the eve of the hearing, General Cleaning and CNA settled their contribution claims against Duluth News and Keyboard Lounge.
At the hearing, held on December 9, 2004, General Cleaning asserted, apparently for the first time, that the employee was self-employed as an independent contractor while delivering papers for Duluth News. As such, General Cleaning argued, General Cleaning was entitled to a credit for a portion of the benefits General Cleaning had paid to the employee from 1996, the date the employee allegedly sustained an injury while so self-employed, through the date of the hearing, pursuant to case law. The employee responded by contending, in part, that General Cleaning was estopped from asserting that the employee was an independent contractor for Duluth News, in that, up until the hearing, General Cleaning had taken the position that the employee was an employee of Duluth News at the time of the alleged 1996 injury. The employee also denied that he had sustained any injury while delivering papers; however, there was no claim of unfair surprise regarding the credit claim, and the employee did not object to litigating the issue. Also at issue was the employee=s underlying entitlement to the various benefits sought, including permanent total disability benefits, and whether the employee had sustained a Gillette-type injury, in August or September of 2002, while employed by TGR. Evidence submitted at hearing included the employee=s extensive medical records and the reports of independent examiners Drs. Paul Cederberg, Thomas Litman, Gary Wyard, and Paul Yellin, who offered causation and apportionment opinions regarding the various alleged injuries.
In a decision issued on February 22, 2005, the compensation judge determined, in relevant part, that the employee had not sustained a work-related injury while employed by TGR and that General Cleaning and CNA were barred, by waiver or estoppel, from asserting that the employee was an independent contractor while working as a delivery driver for Duluth News. Accordingly, General Cleaning and CNA were ordered to pay all benefits awarded by the judge, and their requests for contribution from TGR, for the alleged 2002 injury, and for a credit related to the alleged 1996 injury, were denied. General Cleaning and CNA appeal.
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).
"[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers' Compensation Court of Appeals] may consider de novo." Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993), summarily aff=d (Minn. June 3, 1993).
1. Alleged TGR Injury
General Cleaning and CNA maintain that the employee sustained a work-related injury, in August or September of 2002, while employed by TGR. There is evidence in the record that would support this claim. The employee did a substantial amount of lifting in this job that exceeded the lifting limit that had been recommended by Dr. Lenz, who had performed the employee=s prior hernia repairs. According to at least one medical record, dated September 12, 2002, even the employee had attributed his fourth hernia to Aa lot of heavy lifting at his new job for a sanitation company.@ In addition, Dr. Lenz was of the opinion that the employee=s recurring hernias were due to Aongoing heavy lifting,@ and Dr. Wyard reported that the employee=s work activities for TGR had resulted in a Gillette injury culminating in September 2002. However, there is also evidence to the contrary.
The employee=s testimony about his job duties and symptoms during his TGR job varied considerably between his deposition and the trial, at least on some points. However, it was reasonable for the compensation judge to conclude, based on the employee=s testimony overall, that the employee had noticed the fourth hernia at home, not at work. Furthermore, Dr. Cederberg related the employee=s hernias to the incision from the employee=s 1999 fusion surgery. In addition, the employee testified that he did not notice any permanent increase in back or leg symptoms during the course of his job for TGR.
The compensation judge rejected General Cleaning=s contribution claim, explaining in her memorandum as follows:
The evidence fails to prove the employee sustained an injury on September 18, 2002 while employed at Kenwood Park Corporation. With a 20 pound lifting restrictions as a result of three prior incisional ventral hernias resulting from the fusion surgery, the employee performed fairly heavy work at TGR Sanitation, also known as Kenwood Park Corporation. The evidence did not establish that the work activities at Kenwood Park resulted in an injury either in the nature of a hernia or low back aggravation. The hernia symptoms initially appeared while at home. Both prior to and subsequent to the incisional hernia, the functional limitations were to limit lifting to 20 pounds. Dr. Wyard and Dr. Lenz did not report a history of initial symptoms and pain in the abdomen while cleaning his workbench at home. The opinion of Dr. Cederberg is more convincing and persuasive.
The evidence fails to prove the employee sustained an aggravation of the low back while employed at Kenwood Park Corporation on September 18, 2002. The medical records reveal low back and leg symptoms both prior to and subsequent to September 18, 2002. The evidence does not establish the work activities for Kenwood resulted in an injury or disability as a result of the low back on September 18, 2002.
General Cleaning and CNA contend that the judge erred in accepting Dr. Cederberg=s opinion, in that Dr. Cederberg Adid not review any outside images or films,@ and Dr. Cederberg incorrectly assumed that the employee did not have to lift 90-gallon garbage containers in the course of his job with TGR. However, General Cleaning does not explain just why the referenced Aoutside images@ should be deemed crucial, and the employee=s testimony regarding his lifting at TGR varied between his deposition and the hearing. In any event, these alleged deficiencies in Dr. Cederberg=s opinion were for the compensation judge to weigh and provide insufficient grounds for reversal.
Where the record might reasonably support more than one decision, the decision of the compensation judge must be upheld. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984). Although it is a close question, especially with regard to the employee=s fourth hernia, we cannot conclude that the judge=s decision on this issue is clearly erroneous or unsupported by substantial evidence, given the employee=s testimony and the conflicting expert opinions. We therefore affirm the judge=s determination that the employee did not sustain a work-related injury in 2002 and the judge=s resulting denial of General Cleaning=s contribution claim.
2. Estoppel, Waiver, and General Cleaning=s Credit Claim
At hearing, General Cleaning and CNA alleged that the employee had sustained a Gillette-type low back injury in 1996, which had contributed to his ongoing disability, and that, because the employee was an uninsured independent contractor at the time of this injury, General Cleaning and CNA were entitled to a credit for a portion of the benefits paid or payable to the employee subsequent to the alleged 1996 injury, pursuant to Narog v. Tony=s Ceramics, 36 W.C.D. 357 (W.C.C.A. 1983). In response, the employee agreed that he was an independent contractor at the time of the 1996 alleged injury, but he denied that the alleged injury had occurred, and he asserted, in part, that waiver and/or estoppel should be applied to preclude General Cleaning and CNA from making the credit claim.
In Narog, this court relied on the Minnesota Supreme Court=s decision in Pearson v. Foot Transfer Co., 301 Minn. 49, 22 N.W.2d 710, 27 W.C.D. 535 (1974), to hold that, where a self-employed employee was uninsured at the time of a second work injury, the insurer on the risk for a preceding work injury could not be held liable for the portion of disability attributable to the employee=s second injury. This basic principle was reiterated by this court in Gabrielson v. Teri Constr. Co.., 57 W.C.D. 311 (W.C.C.A. 1997), and Mitchell v. GTE/Unitrust N. Constr., slip op. (W.C.C.A. May 20, 1988). In the present case, the compensation judge made no express decision as to whether the employee had in fact sustained an injury in 1996 due to his work as a newspaper delivery driver. However, the judge was persuaded that General Cleaning=s credit claim should be barred on equitable grounds, determining, in her findings, that General Cleaning was Aestopped,@ and explaining, in her memorandum, as follows:
The Petition for Joinder, filed November 21, 2003 by General Cleaning, CNA, asserts that the petitioner was an employee of the Duluth News and Tribune in 1996. The petitioner justifiably [relied] upon this admission of employment status at the Duluth News & Tribune to his detriment since he continued to receive workers= compensation benefits in the interim and could be responsible for repayment of those benefits through a future credit. General Cleaning/CNA has settled the claim for contribution and/or reimbursement with the Duluth News & Tribune. If now allowed to assert independent contractor status while working for the Duluth News & Tribune, General Cleaning/CNA would essentially be allowed to obtain a double recovery.
The inaction and delay by CNA in failing to assert a claim for a credit for an apportioned share of benefits from 1996 through the hearing in late 2004 results in a waiver of such a claim. In the interim, the case proceeded to hearing, an appeal to the Workers= Compensation Court of Appeals, and a determination by the Supreme Court. Since 1996, the parties have entered into four separate Stipulations for Settlement without assertion of this defense. Permanent partial disability and multiple medical expenses have been paid by CNA without assertion of this claim. Through their inaction and reasonable reliance by the employee, CNA has waived a claim for credit against the employee for an apportioned share of disability as a result of an injury in 1996 while employed delivering newspapers for the Duluth News and Tribune.
Equitable estoppel may apply if the party against whom estoppel is sought made an inducement or a misrepresentation of material fact on which the party seeking estoppel reasonably relied to its detriment. See Neuberger v. Hennepin County Workhouse, 340 N.W.2d 330, 36 W.C.D. 348 (Minn. 1983). In the present case, it is questionable whether General Cleaning=s previous assertion that the employee was an employee of Duluth News, rather than an independent contractor, can be characterized as a misrepresentation, as opposed to a litigation strategy. Moreover, there is no allegation or evidence that General Cleaning=s position as to the employee=s status with Duluth News induced the employee to act, or fail to act, in any way. That is, this is not a case in which, for example, an employer=s misrepresentation caused the employee to miss a deadline to assert his claim. Compare Neuberger, 340 N.W.2d 330, 36 W.C.D. 348; see also Sandnas v. Iron Range Lumber, Inc., 52 W.C.D. 392, 398 (W.C.C.A. 1994) (application of estoppel may be appropriate where the party against whom estoppel is sought made inducements that were relied upon to the harm of the other party). Furthermore, this court has expressly held that estoppel does not apply to bar an employer and insurer that voluntarily paid benefits from changing their position in order to assert defenses to continuing liability. Kingbird v. Anderson Fabrics, 63 W.C.D. 237 (W.C.C.A. 2002). We have also held that an employee=s receipt of benefits cannot be characterized as a Aloss,@ or harm, to the employee, id., whether or not future benefit payments might be subject to reduction through a credit for benefits previously paid but not actually due, see Good v. National Iron Co., slip op. (W.C.C.A. Apr. 16, 1984) (the employee was not prejudiced by the employer=s assertion of a credit claim; Amost assuredly the employee . . . received monies in excess of that authorized by statute and . . . was able to make use of said monies for a substantial period of time@). We therefore conclude that the compensation judge erred to the extent that she denied General Cleaning=s credit claim on equitable estoppel grounds.
We are similarly unpersuaded by the employee=s argument that laches should be applied to bar General Cleaning=s claim. Laches, like estoppel, requires prejudice to the party asserting the defense. Modjeski v. Federal Bakery of Winona, 307 Minn. 432, 140 N.W.2d 542, 28 W.C.D. 326 (1976). As we indicated in our discussion of estoppel, no prejudice has been shown here.
The employee also contends that General Cleaning may not claim a credit from the employee for the portion of disability arguably attributable to the alleged 1996 injury, in that General Cleaning settled all claims regarding this injury when they reached a settlement agreement with Duluth News. However, the employee was not a party to that agreement, and there is no evidence that he was an intended third-party beneficiary. As a Astranger@ to that agreement, the employee acquired no rights under it. See e.g., Forseth v. Kato Eng=g., slip op. (W.C.C.A. Oct. 7, 1999). General Cleaning did not settle with the employee, only with Duluth News. Any concerns about double recovery by General Cleaning can be remedied by allowing the employee credit for the money paid by Duluth News to General Cleaning under the pre-trial settlement.
Finally, we are unpersuaded by the employee=s argument that General Cleaning may not seek a credit in that the statute of limitations has run as to any claim for the alleged 1996 injury. The employee expressly stipulated that he was an independent contractor at the time of the alleged 1996 injury, so he had no claim against Duluth News in any event. Moreover, it is clear from Pearson, the case on which Narog was based, that the statute of limitations defense is not available to employees in cases in which a first employer and insurer=s credit or apportionment claim is based on the occurrence of a subsequent noncompensable work injury.
Having concluded that the judge erred in barring General Cleaning=s credit claim on estoppel or other equitable grounds, we remand the matter to the judge for further proceedings. On remand, the judge must first determine whether the employee sustained an injury in 1996 due to his work activities as an independent contractor delivering newspaper bundles for Duluth News. If the judge finds that such an injury occurred, the judge must then determine whether that injury substantially contributed to the employee=s subsequent disability, and, if so, she must make a decision as to apportionment. As previously indicated, any credit due General Cleaning and CNA, pursuant to Pearson and Narog, should be reduced to reflect the settlement payment made to General Cleaning by Duluth News. In addition, given the way the issue was raised at the previous hearing, with short notice to the employee of the potential for a credit claim, the compensation judge should allow the employee to raise any defenses to the credit claim that he might have, other than those defenses specifically addressed in this decision. To that end, the parties should be allowed the opportunity to submit additional evidence and argument relevant to General Cleaning=s claim for a credit pursuant to Narog.
 See Gillette v. Harold, Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 The employee is a poor historian and provided conflicting information about dates of employment and other events relevant to the issues at hearing.
 According to the employee=s brief on appeal.
 Primarily medical expenses. The employee=s claims for permanent total disability benefits and for permanent partial disability benefits for sexual dysfunction were denied. At hearing, General Cleaning and CNA agreed to pay for permanent partial disability and certain medical expenses related to the employee=s fusion surgery, subject to their contribution and credit claims.
 A cross-appeal filed by the employee was withdrawn.
 In their brief, General Cleaning and CNA contend that it is Aapparent that the employee noticed [the hernia] while working as a garbage collector lifting heavy garbage cans.@ This mischaracterizes the gist of the employee=s testimony on this point.
 In their brief, General Cleaning and CNA conceded the employee=s entitlement to this credit.
 In Pearson, the second work injury was not compensable because the time for the employee to give notice of injury had expired. Presumably, Pearson was decided as it was because the employee=s failure to give notice of injury to the second employer and insurer precluded the first employer and insurer from obtaining contribution. The fact that the notice period in Pearson had run did not preclude apportionment but rather was the very reason that apportionment was allowed. Notice of injury and the statute of limitations are analogous for this purpose.
 One issue may be the effect of the prior settlement agreements between the employee and General Cleaning. In her memorandum, the judge indicated that the agreements Aappear@ to allow General Cleaning=s apportionment or credit claim, but she made no specific finding. The employee had little opportunity to submit evidence bearing on how the stipulations should be interpreted.