NICHOLAS J. SANCHEZ, Employee, v. MCLANE MINN., and AMERICAN INT=L/AIG CLAIMS SERVS., Employer-Insurer, and BROWN PRINTING CO., and SENTRY INS. GROUP, Employer-Insurer, and SPHERION STAFFING, and SPECIALTY RISK SERVS., Employer-Insurer, and GEAR & BROACH, Employer/Appellant, and MAYO FOUND., Intervenor.
WORKERS= COMPENSATION COURT OF APPEALS
OCTOBER 11, 2006
APPEALS - SCOPE OF REVIEW; PRACTICE & PROCEDURE - SERVICE. Where the employer=s insurer at the time of the employee=s injury was never properly served with a claim petition, petition for contribution and/or reimbursement, nor with other pleadings related to ongoing litigation, and did not appear at hearing, the compensation judge=s findings and order are vacated.
Determined by Rykken, J., Pederson, J., and Johnson, C.J.
Compensation Judge: Gary M. Hall
Attorneys: Jackson S. Baehman, Woodbury, MN, for the Respondent. Timothy P. Jung and Adam D. Rosenfield, Rider Bennett, Minneapolis, MN, for the Appellant.
MIRIAM P. RYKKEN, Judge
The employer, Gear & Broach, appeals the compensation judge=s finding that Gear & Broach and its presumed insurer, Combined Specialty/Virginia Surety, had adequate notice of the employee=s claim. Gear & Broach also appeals from the findings that the employee=s work activities at Gear & Broach substantially aggravated his pre-existing hernia condition and substantially contributed to the employee=s need for medical treatment, including surgery in April 2004, and his wage loss following that surgery. We vacate the findings and order.
On October 7, 2002, Nicholas Sanchez, the employee, sustained an admitted groin injury while working for McLane Minnesota Company [McLane], which was insured for workers= compensation liability by American Home Assurance [American], administered by AIG Claim Services. McLane and American admitted liability and paid various workers= compensation benefits. The employee underwent an inguinal hernia surgical repair in October 2002, and remained off work for four weeks between October 21 and November 17, 2002, during which time McLane and American paid him temporary total disability benefits. The employee later returned to work for McLane, but continued to experience lower abdominal and right groin symptoms. The record is unclear as to when or why the employee left his employment with McLane, although evidently he was unemployed from June 20 through August 14, 2003, during which time McLane and American paid the employee temporary total disability benefits.
The employee worked on a part-time basis for Gear & Broach on August 12 and 13, 2003, and commenced his full-time work for Gear & Broach on September 8, 2003, performing assembly work. According to the employee=s testimony, he eventually noted symptoms in the same groin area as his earlier hernia and, as a result of his symptoms, he later was unable to continue working at Gear & Broach. The employee discontinued working for Gear & Broach as of November 6, 2003. It is unclear from the record where the employee worked after Gear and Broach; the pleadings refer to his employment at Brown Printing Company between November 9, 2003, and March 2, 2004.
On October 10, 2003, the employee filed a claim petition against McLane and American, seeking payment of temporary total and temporary partial disability benefits as well as payment of an undetermined amount of medical expenses. McLane and American denied liability for the claimed benefits.
On March 16, 2004, the employee reported to the emergency department at the Waseca Medical Center, complaining of lower abdominal and right groin pain. He reported that he had been doing well until three weeks before when he began performing heavy lifting at work. On April 7, 2004, the employee reported to Dr. James Dey, Waseca Medical Center, that he felt discomfort in this right inguinal region, and that he had had some difficulties for the past year. He later reported that he had been in pain Aoff and on@ since his 2002 surgery and that his pain had become worse. On April 19, 2004, the employee underwent a second hernia surgery in the nature of a right groin exploration, excision of a lymph node in the right groin area, removal of a mesh inserted during his initial surgery, and a repair of the right inguinal area. McLane and American denied liability for the surgical expenses.
The employee testified that he remained off work between April 19 and July 16, 2004. He then worked for Driessen Water/Culligan for a period of time. At the time of the hearing held in August 2005, the employee was working as a delivery driver for G & K Services.
On August 26, 2004, at the request of McLane and American, Dr. Howard Saylor conducted an independent medical examination of the employee. In his report of that date, Dr. Saylor concluded that the employee=s work injury of October 7, 2002, was a substantial contributing factor in the need for the employee=s second surgery in April 2004, and that the employee=s activities for three other listed employers following McLane Minnesota also contributed to his need for surgery. Dr. Saylor apportioned liability for the employee=s post-surgery benefits between the employee=s 2002 injury at McLane and his employment with the three other employers. On that basis, McLane and American filed various petitions for contribution and/or reimbursement against several other employers and insurers, including Gear & Broach. McLane and American, however, never served Gear & Broach=s correct insurer with the petitions for contribution.
In October 2004, the Mayo Clinic intervened for payment of $9,082.00 in medical expenses incurred by the employee at the Waseca Clinic and related to his April 2004 surgery. In January 2005, McLane and American filed a petition for a temporary order, agreeing to pay for the employee=s medical expenses related to his April 2004 surgery. The compensation judge issued a temporary order on January 24, 2005. Gear & Broach, but not its correct insurer, was served with the petition and the temporary order.
The employee=s claim petition and McLane and American=s petitions for contribution were consolidated for a hearing scheduled for August 17, 2005. Four employers and insurers were eventually joined as parties to the ongoing litigation. Prior to the scheduled hearing, the employee and three out of the four employers and their insurers reached a settlement on a full, final and complete basis. Evidently that settlement resolved McLane and American=s petitions for contribution and/or reimbursement, because McLane and American asserted no additional claim for contribution or reimbursement at the hearing held on August 17, 2005.
The employee=s claim proceeded to the hearing, at which time the employee advised the compensation judge that he had reached a full, final and complete settlement with all employers and their workers= compensation insurers, with the exception of Gear & Broach and its insurer. On that basis, the compensation judge noted that the only remaining issues were whether Gear & Broach and its (purported) insurer, Combined Specialty/Virginia Surety-AON, were liable for the employee=s claimed temporary total and temporary partial disability benefits as well as the medical expenses for which the intervenor, Mayo Clinic, claimed reimbursement. The employee sought payment of temporary total disability benefits between April 19, 2004, and July 16, 2004, and temporary partial disability benefits between July 17, 2004, and at least January 7, 2005.
No representative from either Gear & Broach or Combined Specialty/Virginia Surety-AON appeared at the hearing held on August 17, 2005. Only the employee and McLane Minnesota/American were represented by counsel at the hearing.
On October 17, 2005, the compensation judge issued his findings and order in which he found that AGear & Broach, and its insurer[,] Combined Specialty/Virginia Surety-AON, were provided with proper and adequate notice of these proceedings but did not appear.@ The judge also found that employee substantially aggravated his pre-existing hernia condition while working for Gear & Broach between September 8, 2003, and November 6, 2003, and that his employment with that employer was a substantial contributing factor to the employee=s wage loss and need for treatment. The judge awarded temporary total disability benefits, temporary partial disability benefits, and medical expenses as itemized in Mayo Clinic=s intervention claim.
On October 20, 2005, the parties submitted a partial stipulation for settlement to the compensation judge, confirming the terms of the employee=s settlement with three other employer and insurers, including McLane and American. On October 21, 2005, the judge issued a partial award on stipulation.
Gear and Broach appealed the compensation judge=s findings and order. While the appeal was pending, the parties discovered that Gear & Broach was not insured for workers= compensation liability by Combined Specialty/Virginia Surety-AON at the time the employee worked for that company, but instead was insured by American Compensation Insurance Company (RTW), which had never been served with any petitions, pleadings or other notices in this matter.
STANDARD OF REVIEW
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).
All parties agree that Gear & Broach=s insurer was never properly served throughout this litigation. Gear & Broach=s insurer in 2003, during the time when the employee worked for that employer, was improperly identified by the parties as being Combined Specialty/Virginia SuretyBAON. According to an insurance verification document, provided by the Minnesota Department of Labor and Industry to the office of counsel for McLane Minnesota and American in October 2004, the insurer for Gear & Broach was American Compensation Insurance Company (RTW), with its effective coverage dates of March 1, 2003, through March 1, 2004. At the oral argument held on July 24, 2006, the employee=s attorney advised this court that it was not until the appeal process that the parties realized that Gear & Broach=s insurer had been incorrectly identified throughout the litigation and therefore had not been served with any petitions, notices or other pleadings.
At Finding No. 2, the compensation judge found that the employee was employed by Gear & Broach from September 8, 2003, through November 6, 2003, and that Gear & Broach was insured during that period by Combined Specialty/Virginia SuretyBAON. In its notice of appeal, Gear & Broach did not appeal that finding. The employee argues that this court has no jurisdiction to review that particular finding since it was not appealed.
The scope of review by this court is limited to the issues raised by the parties in the notice of appeal. Minn. Stat. ' 176.421, subd. 6; Ruether v. State of Minnesota, 455 N.W.2d 475, 479, 42 W.C.D 1118, 1124 (Minn. 1990). Issues not raised in the notice of appeal may not be addressed in the brief. Minn. R. 9800.0900, supb. 1. The employer=s notice of appeal does not list Finding No. 2, which identifies the incorrect insurer. This court, however, generally looks to the notice of appeal to determine the extent and nature of the appeal. Atkinson v. Northern States Power Co., 55 W.C.D. 4347, 351 (W.C.C.A. 1996). In Atkinson, this court found that a technically deficient notice of appeal which failed to appeal the correct finding, but which appealed the corresponding order, was adequate to confer jurisdiction on this court. Id. In this case, not only did Gear & Broach appeal a separate finding that Gear & Broach and its insurer were provided with proper and adequate notice but did not appear, but it also appealed two corresponding orders for payment by Gear & Broach and an incorrect insurer. All parties agree that Gear & Broach=s correct insurer was never served with notice of the claims and proceedings and all agree that the judge=s finding concerning coverage was erroneous. In its notice of appeal, Gear & Broach sufficiently raised the issue of the lack of notice to the employer=s insurer to confer jurisdiction on this court to review the issue concerning the proper identification of Gear & Broach=s insurer.
Concerning the issue of lack of notice to the proper insurer, a petitioner, such as an employee or employer, who seeks adjudication of a claim related to a personal injury or occupational disease, is required to Aserve a copy of the petition on each adverse party personally or by first class mail.@ Minn. R. 1415.1000, subp. 2 (2003). The rules governing administrative procedures state that the term Aadverse party@ encompasses all employers, insurers, potential intervenors, and the director of the Special Compensation Fund if the employer is uninsured. Id. Because Gear & Broach=s insurer, as a necessary party to the litigation, was never properly served, the hearing should not have proceeded in the absence of that insurer.
The parties evidently misread the insurance verification form from the outset of the litigation, and neither they nor the compensation judge later noticed this error. As a result, the correct insurer for Gear & Broach was not provided an opportunity to conduct discovery, investigation, take the employee=s deposition, obtain an independent medical examination, participate in settlement negotiations, or defend the claim at the hearing. ABasic fairness requires that the parties in a workers= compensation proceeding be afforded reasonable notice and an opportunity to be heard before decisions concerning entitlement to benefits can be made.@ Kulenkamp v. Timesavers, Inc., 420 N.W.2d 891, 894, 40 W.C.D. 869, 872 (Minn. 1988). Because Gear & Broach=s correct workers= compensation insurer was never identified in nor served with the various pleadings, including the employee=s claim petition, McLane and American=s various petitions for contribution and/or reimbursement, McLane and American=s petition for a temporary order, nor any of the other notices and orders in this litigation, the hearing should not have proceeded as it did against Gear & Broach, in the absence of its proper insurer. We therefore vacate the compensation judge=s findings and order.
 The chronology of the employee=s employment for various employers is unclear in the record; portions of this background information were gleaned from pleadings, medical records, and limited testimony presented at the evidentiary hearing held on August 17, 2005.
 It is unclear from the record whether any medical expenses related to the 2004 surgery were paid by McLane and American under the temporary order issued in January 2005, nor is there any indication that Mayo Clinic was a party to the negotiations conducted between the parties before they entered into a partial stipulation for settlement. Mayo Clinic=s intervention claim was still pending at the time of the hearing held on August 17, 2005, and was raised as an issue by the employee=s attorney at the outset of the hearing.
 At the hearing, counsel for the employee advised the judge that the employee had reached a Pierringer settlement with McLane Minnesota and American Home Assurance/AIG Claim Services; Brown Printing and Sentry Insurance Company; and Spherion Staffing and Specialty Risk Services. In this type of settlement, an employee settles with one or more of the parties, reserving the cause of action against any remaining party, and also agrees to hold any settling party harmless from any claims for contribution or reimbursement. See Pierringer v. Hoger, 21 Wis.2d 182, 124 N.W.2d 106 (1963), and Frey v. Snelgrove, 269 N.W.2d 918 (Minn. 1978).
 The insurance verification document refers also to Virginia Surety Company, Inc., and Combined Specialty Insurance Company, the companies who repeatedly had been served with documents as if they had insured Gear & Broach during the pertinent time period, but states that those entities insured Gear & Broach for earlier periods of time. Both Virginia Surety Company, Inc., and United Fire & Casualty Company are listed as insurers for Gear & Broach between March 1, 2001 and March 1, 2002, and Combined Specialty Insurance Company is listed as insurer between March 1, 2002 and March 1, 2003. A hand-written note on the insurance verification document states that Combined Specialty Insurance Ais handled by Virginia Surety.@ McLane Exh. 3.