CAMILLE SCHUMACHER, Employee, v. PERSONAL STAFF SENIOR CARE and WEST BEND MUT. INS. CO., Employer-Insurer, and GOLDEN OAKS and VIRGINIA SUR. CO., Employer-Insurer, and MESABI REHABILITATION SERVS., INC., and JOHN WITZKE, QRC, Appellants/Petitioners.
WORKERS= COMPENSATION COURT OF APPEALS
JANUARY 27, 2006
File No. WC05-249
REHABILITATION - REHABILITATION REQUEST; PRACTICE & PROCEDURE - INTERVENTION. By properly filing a rehabilitation request seeking payment of outstanding rehabilitation bills pursuant to Minn. R. 5220.0950, subp. 1, and Minn. R. 5220.1900, subp. 8, the petitioners asserted a claim for payment independent of the employee=s claims, making a motion for intervention unnecessary.
VACATION OF AWARD - VOIDABLE AWARD. Where it should have been apparent - - based on a letter to the Department of Labor and Industry objecting to filing of the petitioners= rehabilitation request - - there was a dispute regarding the status of the petitioners, and where two rehabilitation requests were properly filed by the petitioners, and where the compensation judge failed to notify the petitioners and provide an opportunity to respond to the proposed stipulation prior to approval, the compensation judge=s dismissal of Aall other pleadings@ in the award on stipulation is voidable. Since there is a dispute regarding exclusion from participation in the settlement negotiations, the petitioners= assertion of a right to payment in full under Parker/Lindberg must be remanded for a hearing.
Award on stipulation partially vacated.
Determined by Johnson, C.J., Wilson, J. and Stofferahn, J.
Attorneys: Thomas J. Misurek, Jardin, Logan & O=Brien, Lake Elmo, MN, for Respondents Personal Staff/West Bend. Charlene K. Feenstra, Heacox, Hartman, Koshmrl, Cosgriff & Johnson, St. Paul, MN, for Respondents Golden Oaks/Virginia Surety. Mesabi Rehabilitation Services, Inc./John Witzke, QRC, by James Jackson, Appellants/Petitioners.
THOMAS L. JOHNSON, Judge
John M. Witzke, a qualified rehabilitation consultant (QRC), and his firm, Mesabi Rehabilitation Services, Inc., seek to partially set aside an Award on Stipulation served and filed June 15, 2005. While we conclude their notice of appeal was not timely filed, in the interest of judicial economy we treat the July 21, 2005 letter, notice of appeal and brief of QRC Witzke/Mesabi as a petition to vacate. Concluding the petitioners have established good cause, we vacate and set aside that portion of the award on stipulation dismissing Aall other pleadings@ and remand the matter to the Office of Administrative Hearings for a hearing.
The employee, Camille Schumacher, filed a claim petition on November 18, 2003, alleging a personal injury on December 6, 2002, while employed by Personal Staff Care Center, insured by West Bend Mutual Insurance Company. The employee sought temporary total disability from and after March 18, 2003, and retraining benefits. Personal Staff/West Bend admitted the injury, but asserted the injury was temporary and the employee had reached maximum medical improvement, had no need for further treatment and had no permanent effects from the injury. On August 23, 2004, the employee filed an amended claim petition alleging a personal injury on July 4, 2000, while employed by Golden Oaks, insured by Virginia Surety Company. No additional claims were made. Golden Oaks/Virginia Surety also denied liability, asserting their injury was temporary and the employee=s current condition was the result of a pre-existing, non-work-related condition or the 2002 injury.
QRC Witzke and Mesabi Rehabilitation Services began providing rehabilitation assistance to the employee in August 2003. Personal Staff/West Bend filed a Rehabilitation Request, on November 8, 2004, seeking assignment of a different job placement specialist and, on December 27, 2004, filed a second Rehabilitation Request, seeking termination of the rehabilitation plan. In the meantime, on December 16, 2004, the employee=s claim petition was referred to the Office of Administrative Hearings (OAH) for hearing. By motion, filed December 27, 2004, with the second rehabilitation request, the employer and insurer sought consolidation of the pending actions. A compensation judge at OAH issued an order on January 13, 2005, consolidating Aall of the issues presented by the claim petition and the two Rehabilitation Requests@ for hearing.
On January 25, 2005, QRC Witzke filed a Rehabilitation Request at the Department of Labor and Industry (DLI) seeking payment of outstanding QRC vendor bills. Mr. Witzke noted a consolidation order regarding continuing rehabilitation services to the employee had been filed, and requested the issue of unpaid bills for past rehabilitation services also be addressed. By letter addressed to DLI and received by the department on January 27, 2005, counsel for Personal Staff/West Bend objected, asserting:
It is the position of Personal Staff Senior Care and West Bend Mutual Insurance that the Department of Labor and Industry has clearly surrendered jurisdiction on vocational rehabilitation issues to the OAH.
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[QRC Witzke] stands in no better shoes than does the Employee on her claims for vocational rehabilitation benefits and his proper recourse is to formally intervene in and to appear and to prove his claims at the hearing of the employee=s claim petition at the OAH.
Consequently, we expect that Mr. Witzke=s Rehabilitation Request should be dismissed after just a Apaper review@ and he should be instructed to formally intervene in the matter.
DLI referred QRC Witzke=s rehabilitation request to the OAH on about February 7, 2005. We find no record of any order consolidating this rehabilitation request with the claim petition or the employer and insurer=s rehabilitation requests, nor any contemporaneous order for dismissal. (Letter Sept. 1, 2005, from DLI Commissioner=s representative to QRC Witzke; DLI/Duluth Dispute Intake Form, February 7, 2005.)
Sometime prior to the hearing scheduled for May 11, 2005, the employee and the employers and insurers reached an agreement to settle the case. QRC Witzke then filed a second Rehabilitation Request at DLI on June 13, 2005, seeking payment of outstanding bills for services provided to the employee through May 15, 2005. Asserting the case had been settled without addressing the issue of outstanding rehabilitation bills, QRC Witzke/Mesabi sought payment in full pursuant to Parker/Lindberg v. Friendship Village, 395 N.W.2d 713, 39 W.C.D. 125 (Minn. 1986).
The employee and employers and insurers submitted a Stipulation for Settlement to a compensation judge at OAH on June 14, 2005. The judge issued an Award on Stipulation on June 15, 2005, providing in pertinent part:
1. That due and adequate notice sufficient to inform the recipients thereof of the existence of a potential claim for intervention under Minn. Stat. ' 176.361 and Minn. R. 1415.1200 has been sent to the following potential intervenors:
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j. Mesabi Rehabilitation
2. That said potential intervenors have failed to respond or intervene in a timely manner as required by Minn. Stat. ' 176.361 and Minn. R. 1415.1200; and
3. That the failure of the potential intervenors to intervene herein has materially prejudiced the interests of the other parties in their conduct and settlement of this proceeding.
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IT IS FURTHER ORDERED that any rights of the above listed potential intervenors to intervene in this proceeding are hereby barred due to their failure to intervene after due and adequate notice pursuant to Minn. R. 1415.1200, subd. 6 and Minn. Stat. ' 176.361, subd. 7.
IT IS FURTHER ORDERED that when payment has been made . . . it shall constitute a settlement of the respective claims of the parties as provided for by the terms and provisions of the Stipulation for Settlement, at which time the Employee=s Claim Petition filed on August 20, 2004 and the Rehabilitation Requests filed on November 8, 2004 and December 24, 2004 herein are hereby dismissed A, along with all other pleadings.@
The italicized phrase was added to the dismissal order in handwriting by the compensation judge.
On June 20, 2005, a letter was received at DLI from Personal Staff/West Bend seeking dismissal of the June 13, 2005, rehabilitation request. Personal Staff/West Bend argued QRC Witzke/Mesabi did not have standing separate from that of the employee and had failed to properly intervene in the employee=s claims at OAH. On July 7, 2005, a letter was sent from DLI/Duluth to QRC Witzke and Mesabi Rehabilitation stating the June 15, 2005, Award on Stipulation barred any rights of potential intervenors, including Mesabi, and the department would take no further action on the rehabilitation request.
By letter dated July 21, 2005, addressed to the Chief Administrative Law Judge (ALJ) at OAH and the Commissioner of DLI, QRC Witzke asserted he properly filed a rehabilitation request seeking payment of outstanding bills, had expected the request would be forwarded to OAH and his claim included with the employee=s claims, but, with settlement of the claim, had been excluded from participation in a hearing. The QRC, accordingly, inquired Awhether there is any other recourse@ regarding his claim for payment of outstanding rehabilitation bills.
By letter dated August 17, 2005, Assistant Chief ALJ William Johnson replied the award on stipulation appeared to have been properly served on QRC Witzke/Mesabi at their Duluth, Minnesota, office, but was being re-served to their Embarrass, Minnesota, office address. Judge Johnson further stated the OAH had no jurisdiction to vacate the award on stipulation, but that the Workers= Compensation Court of Appeals would have jurisdiction over an appeal if QRC Witzke chose to appeal the dismissal of the rehabilitation request. The Commissioner of DLI also responded to QRC Witzke, by letter dated September 1, 2005, stating that since OAH had re-served the award Ayou could appeal the Award to the Workers= Compensation Court of Appeals . . . within 30 days after the Award was re-served on you.@ (Letter Sept. 1, 2005, from DLI Commissioner=s representative to QRC Witzke, p. 3.) QRC Witzke/Mesabi then filed, on September 14, 2005, a notice of appeal from re-service of the June 15, 2005 Award on Stipulation for failure to include their requests for payment of outstanding rehabilitation expenses. The employers and insurers object.
1. Notice of Appeal
The employers and insurers move to dismiss the appeal of QRC Witzke and Mesabi Rehabilitation Services on the basis that the notice of appeal was not timely filed. QRC Witzke and Mesabi argue the appeal was timely filed within 30 days after re-service of the award, relying on the letters received from OAH and DLI. QRC Witzke/Mesabi do not contend they were not properly served on June 15, 2005, by mail to the Duluth office address. Under these circumstances, re-service of the award to their Embarrass office could not revive the time for appeal. Compare, e.g., Roberts v. University of Minn. Hosp. and Clinic, 63 W.C.D. 41 (W.C.C.A. 2002).
One procedural remedy for QRC Witzke/Mesabi would be to file yet another Rehabilitation Request with DLI, then appeal to this court from an order dismissing the request. Alternatively, the appellants might file with this court a petition to vacate and set aside the award on stipulation. We see no practical reason to require the parties to go through the motions of filing new pleadings to obtain consideration by this court of the issues already presented to us. Accordingly, in the interest of judicial economy, we consider QRC Witzke/Mesabi=s July 21, 2005 letter, the notice of appeal and the brief and attachments filed by QRC Witzke/Mesabi as a petition to partially set aside the Award on Stipulation of June 15, 2005.
2. Void or Voidable Award
QRC Witzke/Mesabi assert they properly filed rehabilitation requests seeking payment of fees for rehabilitation services provided to the employee, and the compensation judge erroneously dismissed their pleadings in the June 15, 2005 Award on Stipulation. Accordingly, they seek to set aside the compensation judge=s dismissal of their claim for payment in the award.
In certain cases, an erroneous award on stipulation or one founded on some irregularity may be voidable. The petitioner must first make an initial showing of a voidable award and must then establish sufficient grounds to justify vacation of the voidable award. In determining whether a voidable award should be vacated, this court will consider whether the stipulation was reasonable, fair and in conformity with the Workers= Compensation Act at the time it was entered into; whether the stipulation appears to fairly reflect the intent of the parties; whether there is any prejudice to the parties; and the equities involved. Sondrol v. Del Hayes & Sons, Inc., 47 W.C.D. 659 (W.C.C.A. 1992).
a. Standing. We must first determine whether QRC Witzke/Mesabi have standing to bring a petition to vacate. As a general rule, an individual or entity not a party to a stipulation for settlement lacks standing to request vacation of an award on stipulation. However, a settlement may not be reached to the prejudice of a non-settling party in interest. The award on stipulation purports to bar the claim of QRC Witzke/Mesabi and to dismiss their pleadings. Both DLI and OAH have declined to take further action on their rehabilitation requests. QRC Witzke/Mesabi have demonstrated an immediate, direct and adverse effect on their interests and, therefore, although not a party to the stipulation, have standing to petition to vacate the award to the extent it affects their rights and interests.
b. Rehabilitation Requests, Intervention. QRC Witzke/Mesabi properly filed a Rehabilitation Request on January 25, 2005, seeking payment of outstanding rehabilitation bills. Although Personal Staff/West Bend take the position that QRC Witzke/Mesabi=s sole recourse was to formally intervene in the proceedings initiated by the employee, we see nothing in the statute or rules that mandates filing of a motion to intervene or restricts the filing of a rehabilitation request under Minn. R. 5220.0950 in such circumstances. Minn. R. 5220.0950 and Minn. R. 5220.1900 unequivocally permit filing of a rehabilitation request by a rehabilitation provider to resolve disputes involving fees for rehabilitation services. By filing the request, QRC Witzke/Mesabi asserted a claim for payment independent of the claims initiated by the employee=s claim petition and the consolidated rehabilitation requests. With the filing of the rehabilitation request, QRC Witzke/Mesabi became a party to the proceedings.
Personal Staff/West Bend also argue QRC Witzke/Mesabi=s claim is derivative of the employee=s claim and, since the employee is precluded by virtue of the settlement from further action against the employers and insurers, QRC Witzke/Mesabi are similarly precluded from pursuing their claim. We acknowledge case law holds a claim for contribution and/or reimbursement is derivative in nature. See, e.g., Wenderski v. John A. Dalsin & Son, Inc, slip op. (W.C.C.A. Dec. 18, 2003). The rules, however, clearly permit a rehabilitation provider to independently initiate a claim for payment of fees for rehabilitation services by filing a rehabilitation request, making a motion for intervention unnecessary. Compare Douglas v. Marc's Country Inn, 54 W.C.D.115 (W.C.C.A.1995), aff=d on other grounds (Minn. Mar. 13, 1996). Accordingly, the claim of QRC Witzke/Mesabi is direct and not derivative.
Moreover, despite the employer and insurer=s position, it does not appear QRC Witzke/Mesabi were served with a notice to potential intervenors meeting the requirements of Minn. R. 1415.1100. The Anotice@ attached to the stipulation for settlement is a letter directed to the DLI Workers= Compensation Division, copied to QRC Witzke, Mesabi Rehabilitation, in which Personal Staff/West Bend argued that DLI had surrendered jurisdiction on vocational rehabilitation issues to OAH and that QRC Witzke Ashould be instructed to formally intervene.@ (Letter rec=d Jan. 27, 2005 from Personal Staff/West Bend to DLI, p. 1.) DLI did, in fact, refer the request to OAH where no further action was taken to dismiss or consolidate the rehabilitation request. In any event, the properly served and filed rehabilitation request clearly placed the employee and employers and insurers on notice of QRC Witzke and Mesabi Rehabilitation Services interest in the proceeding and their claim for payment.
This court has previously held that an employee and an employer and insurer may not extinguish an existing claim to the prejudice of a non-settling party. Wolk v. Alliant Tech Sys. slip op. (W.C.C.A. July 18, 1997). It is the compensation judge=s responsibility to ensure that all interested parties potentially affected by a proposed settlement are notified and given an opportunity to be heard prior to approval or disapproval of the stipulation. Parker/Lindberg at 718-19, 39 W.C.D. at 135-36. Based on the January 27, 2005, letter objecting to the January 25, 2005, rehabilitation request, attached to the stipulation and described in the award as a Anotice . . . of a potential claim for intervention,@ it seems apparent there was a dispute regarding the status of QRC Witzke/Mesabi. The characterization of QRC Witzke/Mesabi Rehabilitation as a non-responding Apotential intervenor@ could not and did not change their status as a party based on the proper filing of two rehabilitation requests prior to the award on stipulation.
There is nothing to indicate, however, that notice or any opportunity to respond was provided to QRC Witzke/Mesabi prior to approval of the stipulation for settlement. Although the compensation judge apparently was aware of QRC Witzke/Mesabi=s pending rehabilitation request(s), the judge instead, on her own, dismissed Aall other pleadings.@ We conclude the compensation judge erroneously dismissed the properly served and filed pleadings of a party, not a party to the stipulation for settlement, and the award on stipulation is voidable. We further conclude QRC Witzke/Mesabi have established prejudice, and the equities involved require vacation of the award in this case.
QRC Witzke/Mesabi seek to vacate only that portion of the award on stipulation affecting their separate claim for payment, and it appears the employee has already been paid pursuant to the award on stipulation. We, accordingly, vacate solely the dismissal of Aall other pleadings,@ specifically QRC Witzke and Mesabi Rehabilitation Services=s rehabilitation requests.
3. Brooks and Parker/Lindberg
In a second rehabilitation request filed on June 13, 2005, QRC Witzke/Mesabi asserted they were excluded from settlement negotiations and from the proceedings resulting in approval of the settlement, and sought full payment of outstanding invoices pursuant to Parker/Lindberg, 395 N.W.2d 713, 39 W.C.D. 125. In Parker/Lindberg, the Minnesota Supreme Court held a party has the right to full reimbursement of a third-party claim, without further proceedings, only if the party was actually excluded from settlement negotiations. Whether a party has been excluded is a question of fact for determination by a compensation judge. Parker/Lindberg at 718, 39 W.C.D. at 134; see Brooks v. A.M.F., Inc., 278 N.W.2d 310, 31 W.C.D. 521 (Minn. 1979). The facts are disputed by the parties. QRC Witzke/Mesabi assert the settling parties failed to include or deal with their claim for payment in the settlement process. Personal Staff/West Bend assert, on the other hand, that a joint offer of a compromised settlement was made by the employers and insurers to Mr. Witzke before the stipulation for settlement was submitted to the compensation judge.
We remand the case to the OAH for assignment to a compensation judge and a hearing to determine (1) whether QRC Witzke/Mesabi were effectively excluded from meaningful settlement negotiations through lack of an offer of settlement or an unreasonable or bad faith offer of settlement. If the judge finds QRC Witzke/Mesabi were effectively excluded from the settlement negotiations and proceedings, full reimbursement of their claim must be ordered. If the compensation judge finds QRC Witzke/Mesabi were not excluded, a hearing must be held on QRC Witzke/Mesabi=s claim for payment for rehabilitation services provided to the employee. Compare, e.g., Minn. R. 1420.1850, subp. 3.
 Personal Staff/West Bend filed a Motion for Dismissal of the Appeal of John Witzke, Mesabi Rehabilitation Services, Inc., with this court on September 23, 2005. By letter received on September 29, 2005, Golden Oaks/Virginia Surety, joined in the motion for dismissal. This court denied the motion by order served and filed November 1, 2005. Personal Staff/West Bend filed a Renewal of Motion to Dismiss along with their Respondents= brief on November 4, 2005. Golden Oaks/Virginia Surety did not file a brief or further response.
 We note DLI did not issue a formal order dismissing the June 13, 2005, Rehabilitation Request, but instead advised QRC Witzke, by letter dated July 7, 2005, that no further action would be taken on the request due to the award issued by OAH barring their claim.
 Deutz v. Riley Bros. Constr., 63 W.C.D. 15 (W.C.C.A. 2002); Merrill v. Dale Elford, 52 W.C.D. 446 (W.C.C.A. 1995); Stoffel v. Rausch Mfg. Co., 46 W.C.D. 12 (W.C.C.A. 1991); Wolk v. Alliant Tech Sys., slip op. (W.C.C.A. July 18, 1997).
 Minn. R. 5220.1900, Rehabilitation Service Fees and Costs, provides:
Subp. 8. Disputes. In the event of a dispute about the reasonableness and necessity or cost of a rehabilitation service, . . . a rehabilitation provider may make a request for a determination by the commissioner or compensation judge of reasonable costs and necessity of services. Such a request may be made by filing a request for assistance according to Minnesota Statutes, chapter 176 or part 5220.0950.
Minn. R. 5220.0950, repealed effective May 31, 2005, provided:
Subp. 1. Request for assistance. Where issues exist about an employee=s entitlement to rehabilitation services, the appropriateness of a proposed plan, or any other dispute about rehabilitation, a party may request assistance to resolve the disputed issue by filing a form prescribed by the commissioner.
Minn. R. 5220.0950, Disputes, amended effective May 31, 2005, states:
Subp. 1. Rehabilitation request for assistance.
B. The assigned qualified rehabilitation consultant may file with the commissioner and serve on all parties a rehabilitation request to resolve issues involving elements of a rehabilitation plan or fees for rehabilitation services.
Subp. 1a. Rehabilitation response. If the employee or the qualified rehabilitation consultant has filed a rehabilitation request, the insurer must file a rehabilitation response form with the division and serve copies on the other parties no later than ten days after service of the rehabilitation request form. When an administrative conference is not scheduled, the insurer=s failure to file a timely rehabilitation response may result in a determination based solely on the written submissions of the requester.
 See, e.g., Morrisette v. Harrison Int=l Corp., 46 W.C.D. 707 (W.C.C.A. 1991); Jablonski v. City of Red Wing, slip op. (W.C.C.A. July 16, 1993).
 We find the argument that QRC Witzke/Mesabi=s claims are barred for Afailure to intervene@disingenuous, at the very least. If the employer and insurer=s letter to DLI was adequate Anotice@ to a potential intervenor, the rehabilitation requests of QRC Witzke/Mesabi were surely sufficient to provide notice to the employee and the employers and insurers of QRC Witzke/Mesabi=s Aintervention@ claim.
 Neither the supreme court nor this court has limited the principle of protection of third-party interests or the procedural protections afforded to interested third parties to such parties only after formal intervention. See Stoia v. Seagate Technology, 52 W.C.D. 417, n.14 (W.C.C.A. 1995).
 The employee and employers and insurers, in the Stipulation for Settlement, agreed to dismissal only of the employee=s claim petition, filed August 20, 2004, and the rehabilitation requests filed by Personal Staff/West Bend on November 8, 2004 and December 24, 2004.