MYRA J. OREDSON, Employee, v. MESABI ELECTRONICS, and STATE FUND MUT. INS. CO., Employer-Insurer/Petitioners.
WORKERS= COMPENSATION COURT OF APPEALS
AUGUST 28, 2006
VACATION OF AWARD - MISTAKE. Where there was no showing that both parties had misapprehended a fact material to the proposed settlement, the employer and insurer did not establish good cause to vacate the award on stipulation covering the employee=s permanent total disability claim.
Petition to vacate denied.
Determined by: Rykken, J., Wilson, J., and Stofferahn, J.
Attorneys: Russell J. LaCourse, LaCourse Law Office, Duluth, MN, for the Respondent. Steven T. Scharfenberg, Lynn, Scharfenberg & Associates, Minneapolis, MN, for the Petitioners.
MIRIAM P. RYKKEN, Judge
The employer and insurer petition to vacate the award on stipulation served and filed June 28, 2001, based upon a mutual mistake of fact. We conclude that the employer and insurer have not shown good cause to vacate the petition, and therefore we deny the petition.
On October 7, 1998, Myra J. Oredson, the employee, sustained a work-related carpal tunnel injury to her arms while working as an assembler for NRI Electronics & Cables, Inc., otherwise known as Mesabi Electronics, Inc., which was insured for workers= compensation liability by State Fund Mutual Insurance Company. Following the employee=s injury, the employer and insurer paid temporary total disability benefits and medical expenses related to her injury.
On January 24, 2000, the employee filed a claim petition, seeking payment of permanent total disability benefits. At that time, the employer and insurer continued to pay temporary total disability benefits. By January 2001, the parties conducted settlement negotiations regarding the employee=s permanent total disability claim. In a letter sent to counsel for the employee on January 24, 2001, the former counsel for the employer and insurer proposed the terms of a settlement whereby the employer and insurer would stipulate to the employee=s permanent total disability status and would commence payment of periodic permanent partial disability benefits to the employee. Counsel stated that she calculated the employee=s permanent total disability rate to be $399.75, based on 65 percent of the statewide average weekly wage. Using that rate of $399.75, she calculated the permanent total disability benefits that would be payable to the employee and the credit due for temporary total disability benefits already paid. She also referred to an alleged overpayment of temporary total disability benefits resulting from payment of those benefits beyond the statutory maximum of 104 weeks.
Apparently after further settlement negotiations not documented in the record, the former counsel for the employer and insurer sent a letter to the employee=s attorney, dated May 16, 2001, confirming the settlement and advising that she was in the process of preparing a stipulation for settlement based upon those negotiations. In that letter, she confirmed her calculations of the employee=s entitlement to permanent total disability benefits based upon a compensation rate of $399.75, the contingency attorney fees payable as part of the settlement, and the agreement that the employer and insurer would commence permanent total disability benefits as of May 20, 2001.
Counsel for the employee responded by letter, dated May 17, 2001, in which he stated that he calculated the employee=s initial compensation rate to be lower than that listed by counsel for the employer and insurer. He asserted that as of the injury date of October 7, 1998, the employee=s rate was $377.00, and that the rate would be adjusted to $400.00 on the date of the first anniversary of the employee=s injury, October 7, 1999, and to $418.00 on the second anniversary date of October 7, 2000. Using those revised rates, the employee=s attorney outlined his calculations of the credit due to the employer and insurer for past temporary total disability benefits. He also stated, in his letter, that he understood that permanent total disability benefits would be paid at a rate of $418.00, with a deduction for attorney fees, ongoing after May 20, 2001.
In a letter dated June 6, 2001, counsel for the employee returned a draft of the stipulation for settlement to counsel for the employer and insurer along with an itemization of his costs and disbursements. In his letter he noted two changes that he made to the draft; he revised the listed compensation rate from $399.75 to $418.00 and revised the amount of attorney fees and costs to be listed in the stipulation. The revised, re-typed stipulation was signed by the parties in June 2001, and was filed with the Office of Administrative Hearings on June 27, 2001.
The stipulation for settlement signed by the parties indicated that the parties agreed that the employee was permanently and totally disabled as of October 7, 1998, and that the employee would be paid $32,925.11 for underpaid permanent total disability benefits through May 19, 2001. The employer and insurer also agreed to make Apermanent total disability payments to the employee from May 20, 2001, and continuing as the employee=s condition shall warrant and subject to an offset for social security payments and subject to the retirement presumption defense.@ The employee reserved her right to contest the retirement presumption. The parties specifically stipulated and agreed Athat the current permanent total disability weekly rate is $418.00." The employee agreed to apply for social security disability benefits, and to waive all claims for reimbursement of attorney fees under Minn. Stat. ' 176.081, subd. 7. In addition, the parties agreed Athat the employer and insurer reserved the right to obtain a credit against any future or past overpayment of permanent total disability benefits.@
An award on stipulation was served and filed by the Office of Administrative Hearings on June 28, 2001. The employer and insurer have continued to pay permanent total disability benefits under the stipulation for settlement.
In August 2004, a claims representative began using a lower compensation rate for the employee rather than the $418.00 rate - - and corresponding adjustments - - listed in the stipulation. The employee=s attorney requested a correction and an administrative conference to address this issue. A conference was scheduled for October 7, 2004, but in October 2004, the insurer reinstated payments based on the stipulated $418.00 rate, and requested that the conference be canceled.
On March 7, 2006, the employer and insurer petitioned to vacate the June 28, 2001, award on stipulation, on the basis of a mistake of law by the parties in calculating the employee=s permanent total disability benefits, and on the basis of a mutual mistake of fact. In their petition, the employer and insurer asserted that the correct permanent total disability rate at the time of the employee=s injury was $377.00, and that, pursuant to Minn. Stat. ' 176.645, the first escalation of her compensation rate would occur on the fourth anniversary date of her injury, October 7, 2002, to a rate of $384.54, and that her present adjusted weekly rate would be $408.07 as compared to the rate currently paid, $450.13. In their petition, the employer and insurer contended that it was the parties= intention to pay the employee benefits at the correct rate, in accordance with the statute.
The employee objected to the petition to vacate.
The employer and insurer petition to vacate the award on stipulation served and filed June 28, 2001. Minn. Stat. '' 176.461 and 176.521, subd. 3, govern this court=s authority over petitions to vacate awards. A party must show good cause in order for the court to grant a petition setting aside an award. For awards issued after July 1, 1992, Agood cause@ to vacate is limited to (1) a mutual mistake of fact; (2) newly discovered evidence; (3) fraud; or (4) a substantial change in medical condition since the time of the award that was clearly not anticipated and could not reasonably have been anticipated at the time of the award. Minn. Stat. ' 176.461; Franke v. Fabcon, 509 N.W.2d 373, 48 W.C.D. 520 (Minn. 1993).
At the time of the employee=s work injury, on October 7, 1998, her weekly wage was $275.60. Pursuant to Minn. Stat. ' 176.101, subd. 4, and the parties= agreement that the employee was permanently totally disabled on that date, the employee was entitled to a minimum weekly compensation rate of 65 percent of the statewide average weekly wage. On October 7, 1998, the minimum weekly permanent total disability rate was $377.00. Under Minn. Stat. ' 176.645, subd. 1 and subd. 2, in effect on the employee=s injury date, adjustments to that rate were limited to two percent per year, and the first adjustment would take place on the fourth anniversary of the injury date. The employer and insurer assert that, by now, the employee=s weekly compensation rate under the statutory calculation would be $408.07, instead of the $450.13 they are currently paying the employee under the terms of the stipulation.
Commencing on October 1, 1976, the Minnesota workers= compensation statute has provided for periodic adjustments of an employee=s compensation rate, at prescribed rates set by statute. Minn. Stat. ' 176.645. Between 1976 and 1991, adjustments commenced on the first year=s anniversary of the employee=s injury date. For injuries occurring on or after October 1, 1992, the first adjustment is deferred until the second anniversary date, at a rate not to exceed 4% annually. For injuries occurring on or after October 1, 1995, the first adjustment is deferred until the fourth anniversary date, and is not to exceed 2% per year.
Since the employee=s injury in this case occurred in October 1998, the annual adjustments to her compensation rate would have commenced in October 2002. It appears that the initial discrepancy in the parties= calculations, which then led to their negotiated agreement on a stipulated compensation rate, arose from calculations made by applying statutory adjustments on the first anniversary of the employee=s injury as opposed to the fourth anniversary date and from calculations based on a higher percentage than the statutory maximum increase of 2% per year.
The employer and insurer first argue that their agreement to the rates in the stipulation for settlement was a mistake of law since they understood the parties= agreement regarding the permanent total disability rate to be the amount owed under the statute. The employer and insurer acknowledge that a mistake of law is not one of the four grounds provided for in ' 176.461, but they contend that this court has the discretion to vacate an award where there has been a mistake of law resulting in an incorrect calculation of benefits, and cite to LaValle v. City of Circle Pines, 358 N.W.2d 652, 37 W.C.D. 276 (Minn. 1984), in support of their contention. In LaValle, the Minnesota Supreme Court granted a petition to vacate an award where a compensation judge made a mistake in calculating benefits. This court has also granted a petition to vacate an award where a compensation judge made an error in determining attorney=s fees. Collins v. Conwed Corp., 42 W.C.D. 905 (W.C.C.A. 1989) (subd. 7 fees erroneously awarded for date of injury before effective date of statute). In both cases, however, the mistake was made by the compensation judge resulting in an overpayment of benefits.
In this case, the alleged mistake was made by the parties in their calculations and application of statutory adjustments to the compensation rate. Although the correspondence between counsel for the parties outlines their assertions as to the employee=s compensation rate, the stipulation contains no explanation or basis for determining the compensation rate used by the parties, nor does it outline any rate calculations. The stipulation simply lists the rate negotiated or agreed to by the parties. We cannot conclude that there was a mistake of law.
The employer and insurer also argue that the parties made a mutual mistake of fact regarding the correct permanent total disability rate. A mutual mistake of fact occurs when opposing parties both misapprehend a fact material to their intended settlement of a claim or claims. Shelton v. Schwan=s Sales Enters., slip op. (W.C.C.A. May 18, 1995). The employer and insurer assert that the parties intended the employee to receive permanent total disability benefits as determined by the applicable statutes, and that the mistake of fact was the assumption that the rate listed in the stipulation was correct under the statute. The employee, however, asserts that each party claimed a different rate calculation as part of the negotiation process, and that the employer and insurer then agreed to use the employee=s calculations. The stipulation does not state that the parties intended to use the correct rate under the statute, only that the compensation rate to be used was $418.00. The employee also argues that other terms of the agreement, in addition to the compensation rate, were part of a global resolution of this matter. For example, the stipulation included an agreement that the employee would apply for Social Security disability benefits, a term negotiated by the parties despite no such requirement to do so in the statute. In addition, as part of the agreement, the employee agreed to waive her claims for reimbursement of attorney fees under Minn. Stat. ' 176.081, subd. 7.
In the absence of any clear mutual mistake of fact, we conclude that the employer and insurer have not shown good cause to vacate the award on stipulation. We therefore deny the petition to vacate.
 The pleadings on file list the employer=s name as either NRI Electronics and Cables, Inc., or Mesabi Electronics, Inc. There apparently is no dispute that these names refer to the same employer. The award on stipulation refers to the employer as Mesabi Electronics, and we have listed that name on the caption of our decision.