DENNIS W. CHRISTIANSON, Employee, v. WAYNE TWEETEN, UNINSURED, Employer, and SPECIAL COMPENSATION FUND, Appellant.
WORKERS’ COMPENSATION COURT OF APPEALS
FEBRUARY 11, 2008
PENALTIES; SPECIAL COMPENSATION FUND. The compensation judge did not err by awarding a penalty under Minn. Stat. § 176.225, subd. 1, where the Special Compensation Fund did not pay medical expenses in a timely manner.
Affirmed as modified.
Determined by: Rykken, J., Wilson, J., and Stofferahn, J.
Compensation Judge: Gary Mesna
Attorneys: Sara J. Stoltman, Special Compensation Fund, St. Paul, MN, for the Appellant. Jeremy R. Stevens, Bird, Jacobsen & Stevens, Rochester, MN, for the Respondent Employee.
MIRIAM R. RYKKEN, Judge
The Special Compensation Fund appeals the compensation judge’s order that the Fund pay a penalty under Minn. Stat. § 176.225, subd. 1, for late payments to health insurer intervenors, to a medical provider, and to the employee for out-of-pocket expenses. We affirm, as modified.
On April 10, 2002, Dennis W. Christianson [the employee], sustained a work-related neck injury while employed by Wayne Tweeten [the employer], who was uninsured for workers’ compensation liability. As the employee worked on scaffolding to install siding on a house, the scaffolding collapsed and he fell about 24 feet to the ground, injuring his neck and sustaining significant nerve damage that affected all extremities. He later underwent four neck and thoracic spine surgeries, and was prescribed multiple pain medications to treat his ongoing symptoms.
On October 23, 2003, the employee filed a claim petition alleging a cervical injury resulting in a C2-T1 fusion with severe neuropathy and claiming permanent total disability, permanent partial disability, and medical expenses. Because the employer was uninsured at the time of the injury, the employee sought payment from the Special Compensation Fund [Fund] pursuant to Minn. Stat. § 176.183.
The parties eventually negotiated a settlement whereby the Fund agreed to pay the employee $150,000 in exchange for settlement on a full, final and complete basis, with the exception of the employee’s ongoing claims for medical expenses, which remained open. An award on stipulation was issued on September 1, 2004. As part of the settlement, the intervention claim asserted at that time by Blue Cross Blue Shield Blue Plus of Minnesota [Blue Cross Blue Shield], the employee’s health insurance carrier, was resolved by payment of $75,000, and the employee’s claim for reimbursement of out-of-pocket medication expenses was settled for $1500. Through a petition for reimbursement earlier filed, the Fund sought repayment from the uninsured employer for the benefits paid to and on behalf of the employee.
Following his injury, the employee continued to experience chronic pain, anxiety and depression. By October 2004, the employee was prescribed numerous medications to treat his conditions, many of which are commonly associated with drowsiness, dizziness, weakness, lightheadedness, or unsteadiness. Although the employee had no history of dizziness, fainting or blacking out before his April 2002 injury, after that injury he experienced drowsiness while taking prescribed medication. He also was observed with signs of dizziness and lack of balance. On October 15, 2004, the employee fell when he was working in a shed on his farm. The employee did not remember falling but presumed that he had blacked out. He regained consciousness when he hit the floor, and injured his right knee when it twisted as he fell. As a result of this knee injury, the employee has undergone extensive medical treatment and numerous right knee surgeries, developed sepsis, and continues to experience complications with his right knee.
On September 19, 2005, the employee filed a medical request, seeking payment for prescription medications of Zoloft, Neurontin and Ativan. On September 28, 2005, the Fund responded to the medical request, and agreed to pay that claim. On October 17, 2005, Blue Cross Blue Shield submitted a motion to intervene in the claim.
On November 8, 2005, the employee filed another medical request claiming that he had injured his right knee on October 15, 2004, after losing his balance and falling, and that the consumption of significant pain medications for his neck injury had adversely affected his balance and contributed to his fall. The Fund responded, denying payment for the claimed medical expenses as not being related to the neck injury.
An evidentiary hearing was held on June 7, 2006, on the issue of whether the employee’s October 14, 2004, right knee injury was causally related to the employee’s April 10, 2002, admitted neck injury. Also at issue was the employee’s contention that his chronic pain, depression and anxiety, for which he had received treatment since his 2002 injury, were causally related to that injury. The claims addressed at the hearing included claims asserted by two intervenors, Blue Cross Blue Shield and Noridian (on behalf of Medicare); and claims by two medical providers, including the Mayo Clinic and Slindee Pharmacy.
The hearing record remained open to allow submission of intervention claims and itemizations by Noridian, and to allow Slindee Pharmacy to provide an itemization of the employee’s outstanding balance. Mayo Clinic filed a motion to intervene on June 19, 2006. Noridian, on behalf of Medicare, filed a motion to intervene on June 26, 2006. The Fund objected to the motions to intervene by Mayo Clinic and Noridian, arguing that the expenses at Mayo Clinic and the treatment covered by Medicare were not causally related to the work injury and that the intervenors provided inadequate documentation of their claims, and requesting that the intervenors be required to attend any conferences or hearings.
In his findings and order served and filed July 14, 2006, the compensation judge found that the employee’s work injuries were a substantial contributing cause of the employee’s chronic pain, depression, and anxiety conditions and corresponding need for medication. He concluded that:
[T]he employee fell on October 15, 2004 as a result, or at least as a substantial contributing cause, of the numerous medications that he was taking. While not every medication may have been directly related to the neck injury, there were enough related medications that have known side effects of dizziness and drowsiness to constitute a substantial contributing cause of the employee’s fall.
(Finding 8, Findings and Order, July 14, 2006.) The compensation judge found that the intervenors had paid for or provided treatment related to the work injuries and were entitled to payment. He ordered the Fund to pay the outstanding medical bills, as delineated in a hearing exhibit, for treatment of the employee’s neck and left knee and for chronic pain, depression, and anxiety, subject to the applicable fee schedule. Included in his order were payments to the intervenors as reimbursement for medical expenses. The Fund did not appeal this decision.
On August 22, 2006, the employee submitted a claim to the Special Compensation Fund for medical mileage, prescription co-payments, and out-of-medical expenses. On September 8, 2006, the Fund paid the employee’s mileage claim, in the amount of $2,642.50, for mileage expenses incurred between January 3, 2005, and August 24, 2006, but did not pay the remainder of the employee’s claim for co-payments and out-of-pocket medical expenses. In addition, the Fund did not timely pay all medical expenses and intervention claims ordered in the July 14, 2006, findings and order. The employee continued to follow-up with the Fund, to request payment of his outstanding medical bills.
On October 17, 2006, the employee filed a claim petition for penalties related to delayed or unpaid medical expenses. At that same time, the Fund’s petition for reimbursement from the uninsured employer was pending at the Office of Administrative Hearings. On October 25, 2006, an evidentiary hearing was held to address the Fund’s petition. In his findings and order served and filed November 6, 2006, the compensation judge ordered the employer to pay full reimbursement to the Special Compensation Fund for all benefits it had paid to and on behalf of the employee. The compensation judge also assessed a 65% penalty against the uninsured employer, as required under Minn. Stat. § 176.183, subd. 2.
As to the employee’s claim for penalties, the Fund objected, and a hearing was held before the same compensation judge on May 22, 2007, to address that claim. Shortly before the hearing, the Fund began negotiations with the intervenor, Blue Cross Blue Shield, and evidently resolved its earlier claim. By the time of the hearing, however, the Fund had not paid all of the expenses ordered in 2006. At the 2007 hearing, the employee’s wife testified about the adverse effects caused by the Fund’s non-payment of medical expenses.
In his findings and order of July 19, 2007, the compensation judge found that the Fund had been ordered, following the 2006 hearing, to pay medical bills related to treatment for the employee’s knee, chronic pain, depression, and anxiety, and that most of those payments had been either delayed or unpaid. The judge also found that the Fund did not pay the remainder of the employee’s out-of-pocket expenses. The judge also ordered the Fund to pay a penalty based on 30% of the delayed payments, to withhold attorney fees, to pay reasonable costs and disbursements to the employee’s attorney, to pay partial reimbursement of attorney fees pursuant to Minn. Stat. § 176. 101, subd. 7, and to pay statutory interest. The Fund appeals.
Right Knee Injury
The Fund appeals from the award of penalties and related costs. It first argues that the compensation judge did not have valid legal and factual bases for his decision. The Fund in part contends that because the 2006 and 2007 findings and orders erroneously referred to a left knee injury in October 2004, as opposed to the employee’s actual right knee injury, and that because none of the bills submitted for treatment were related to a left knee condition, there was no basis for a claim for penalties associated with treatment expenses for a right knee condition. We conclude that there is no merit to this argument.
We acknowledge that the compensation judge’s July 14, 2006, findings and order refer to a left knee injury. It is clear from the record, however, that the treatment at issue in 2006 was related to the employee’s right knee, and that the judge’s reference to a left knee injury was a typographical error. The employee’s medical request, at issue in 2006, listed a right knee injury, the right knee injury was addressed at the hearing, and the extensive medical records submitted into evidence at the 2006 hearing by both parties documented right knee treatment. The Fund did not appeal the July 14, 2006, order, nor seek correction for any perceived error.
There is no indication in the record from the May 22, 2007, hearing that the parties disputed or were confused about which knee had been injured. That hearing addressed the penalties claim related to unpaid bills originally submitted at the 2006 hearing. At that hearing, no argument was made regarding the earlier reference to a left knee injury. The employee had not made a claim for a left knee condition; there is no dispute over which knee was involved in the 2006 claim. Although the compensation judge’s July 19, 2007, findings and order erroneously refers to a left knee injury, the underlying claim clearly was related to the employee’s right knee condition and treatment. The Fund did not object to the compensation judge’s reference to the left knee in its notice of appeal, and initially raised that discrepancy in its brief on appeal from the July 19, 2007, findings and order. Neither party earlier noticed the erroneous reference to a left knee injury, and because it appears there was no confusion as to which knee condition was at issue, the typographical errors represent harmless errors. We therefore modify the compensation judge’s 2007 Findings and Order to refer to a right knee condition.
The employee claimed penalties under Minn. Stat. § 176.225, asserting that penalties are owed by the Special Compensation Fund due to its late or non-payment of medical bills, medical intervention claims, prescription expenses, and out-of-pocket medical expenses. The Fund appeals, arguing that there is no legal or factual basis for the penalties imposed by the compensation judge. We review this issue de novo, as “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).
The Minnesota Workers’ Compensation Statute and Minnesota Rules refer to penalties for failure to comply with an order or failure to make payments on a timely basis. Minn. Stat. § 176.221, subd. 8, requires that “[a]ll payment of compensation shall be made within 14 days of the filing of an appropriate order by the division or a compensation judge, unless the order is appealed or if a different time period is provided by this chapter.” Minn. Stat. § 176.225, subd. 1, provides for a penalty for delayed payment or non-payment, for example, where an employer or insurer has
(a) instituted a proceeding or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay; or
(b) unreasonably or vexatiously delayed payment; or
(c) neglected or refused to pay compensation; or
(d) intentionally underpaid compensation; or
(e) frivolously denied a claim; or
(f) unreasonably or vexatiously discontinued compensation in violation of sections 176.238 and 176.239.
Minn. Stat § 176.225, subd. 1, states that in those instances described above, the compensation judge “shall award compensation, in addition to the total amount of compensation award, of up to 30 percent of that total amount.” The employee has the burden of proving by a fair preponderance of the evidence all of the elements necessary to establish entitlement to the claimed workers’ compensation benefits. Minn. Stat. § 176.021, subd. 1a; Sullivan v. Hagstrom Constr. Co., 244 Minn. 271, 60 N.W.2d 805, 18 W.C.D. 279 (1955).
In this case, the compensation judge assessed a penalty based on late payments or non-payments to the employee, to a medical provider (Slindee Pharmacy), to a health care insurer (Blue Cross Blue Shield of Minnesota) and to Noridian, administrator for Medicare. The Fund argues that Minn. Stat. § 176.225, subd. 1, does not apply to amounts ordered to be reimbursed to health insurers - - in this case, Blue Cross Blue Shield and Noridian. Although the Fund recognizes that Minn. Stat. § 176.011, subd. 8, defines “compensation” as “all benefits provided by this chapter on account of injury or death,” it asserts that health insurers have a different status than other types of intervenors under the Minnesota Workers’ Compensation Act. Minn. Stat. § 176.225 states that penalties are paid as a percentage of the “total compensation award.” The Fund argues that reimbursement of medical expenses should not be considered part of the total compensation award since “reimbursement of medical expenses to a health insurer is not a benefit awarded to an employee.” Harlis v. State, Minn. Veterans Home, slip op. (W.C.C.A. Mar. 3, 1986) (citing Johnson v. Blue Cross and Blue Shield of Minn., 329 N.W.2d 49 (Minn. 1983); Edquist v. Browning-Ferris, 380 N.W.2d 787 (Minn. 1986)). The Fund argues that the only “penalty” available to a health care insurer, for late payment, is an assessment of 12 percent interest under Minn. Stat. § 176.191, subbed. 3. We disagree.
The statutory definition of compensation includes all benefits provided by Minn. Stat. Ch. 176 on account of injury or death, not solely benefits awarded directly to employees. This court has held that penalties under Minn. Stat. § 176.225 are available to an employee for failure of an employer and insurer to pay medical expenses in a timely fashion. Spawn v. Northern Castings, 53 W.C.D. 167, 174 (W.C.C.A. 1995). “[A]n employee is not without standing to claim penalties for late payment of his medical expenses.” Roers v. Jennie-O Foods, 60 W.C.D. 54, 68 (W.C.C.A. 1999), summarily aff’d (Minn. Feb. 22, 2000). We see no reason to distinguish cases involving late payment to health insurers from cases involving late payment to medical providers or late payment to employees. See Borgan v. Bob Hegland, 64 W.C.D. 414 (W.C.C.A. 2004) (reversing denial of a penalty for late payment of attorney fees where fees had been ordered by a compensation judge). The compensation judge did not err by awarding a penalty for late payment to the intervenors.
The Fund also argues that the amounts owed were not ascertainable. The Fund contends that Noridian/Medicare could be entitled to future refunds related to expenses billed by the Mayo Clinic, that other payment adjustments might be made among the health providers and insurers, and that Noridian/Medicare did not provide proper documentation for its claim. We are not persuaded. In the July 2006 Findings and Order, the compensation judge ordered the Fund to pay the employee, the medical provider, and the intervenors. The Fund did not appeal this decision. By the time of the May 2007 hearing, the Fund had made no attempt to contact the parties to resolve any alleged confusion over the bills or to pay the parties, other than Blue Cross Blue Shield with whom the Fund had recently negotiated resolution of its claim. The compensation judge concluded that the Fund had all of the relevant medical records available to it because those records were submitted as exhibits at the 2006 hearing. The judge delineated, in his 2007 findings and order, the amounts that had been addressed and ordered to be paid in 2006. Whether there will be any future adjustments made to the intervenors’ or providers’ claims is speculative, and does not change the fact that the Fund was ordered to pay for the medical treatment and that it made no payment. The late payment is the basis for the penalty, and, as required by the statute, the penalty is based upon the amount of the delayed payments.
The Fund also contends that the order is not clear regarding whether interest was included in the amount used to calculate the penalty. The exhibit supplied by the employee demonstrates that no penalty was calculated on the accrued interest.
The Fund argues that there is a discrepancy between the amount of reimbursement claimed by the employee. The Fund claims that the amount submitted by the employee for reimbursement in August 2006 was $4,776.24. The amount listed in his exhibit at the 2007 penalty hearing was $6,491.99, which includes amounts for expenses dated after the claim petition for penalties was made. We agree with the Fund that the penalty calculation should not have included the additional $1,715.75, as the penalty applies solely to those benefits which were late as of the date of the claim petition for penalties. We therefore reduce the penalty award by 30 percent of that amount, which calculates to a reduction in the penalty of $514.73.
The Fund asserts that some payments were double-billed, although it only listed a June 1, 2006, invoice submitted by Slindee Pharmacy and the employee that totaled $84.81. Our review of the exhibits from the 2007 hearing shows that this bill was listed with others from the entire month of June 2006 as being paid by the employee and approved by the Fund’s medical invoice auditor to be paid to that medical provider. The hearing on the employee’s claim for medical expenses was held on June 7, 2006; Slindee Pharmacy’s intervention claim included expenses dated through April 2006. This June 2006 invoice was not part of Slindee Pharmacy’s intervention claim at the 2006 hearing and therefore was not part of the basis for calculating the penalty payable on the basis of late payment to that medical provider. The payment was not made to either the employee or Slindee Pharmacy in a timely manner but the penalty was calculated only on the basis of late payment to one party.
The Fund also argues that the compensation judge’s calculation of the penalty was not clear since the awarded penalty was $637.99 more than the amount claimed by the employee at the hearing. This difference is explained by the compensation judge; he used the amount listed in an intervenor’s claim itemization, contained in an exhibit at the 2006 hearing, as the basis for the total amount delayed or remaining unpaid by the Fund. The compensation judge’s calculation is clear.
In his memorandum accompanying his findings and order, the compensation judge outlined, in a detailed and thorough manner, the basis for his imposition of a penalty; his explanation is supported by the documents and testimony in the record. We therefore affirm the compensation judge’s penalty award as modified by a reduction of $514.73, and affirm his related findings and orders.
 The employee’s claim was for a right knee injury. As addressed further in the decision, neither party objected to this discrepancy in the findings and order.
 The four outstanding medical claims that were at issue at the May 22, 2007, hearing included claims by Blue Cross Blue Shield, Noridian/Medicare, Slindee Pharmacy, and the employee’s claim for reimbursement of medical expenses and mileage. By agreement of the parties and compensation judge at the hearing, Mayo Clinic’s intervention claim was not addressed.
 The employee apparently has developed left leg complications since the 2006 hearing, but they were not part of the 2006 claim for medical expenses or the 2007 claim for penalties.
 Minn. R. 5220.2760, subp. 1, provides that penalties shall be assessed for refusing to pay an order by a compensation judge unless the order is appealed. The penalty for payments over 60 days late is 30 percent. Minn. R. 5220.2760, subp. 2.E. The penalty is payable to the employee. Minn. R. 5220.2760, subp. 3.
 Penalties assessed by a compensation judge against an uninsured employer payable to the employee must be paid by the Special Compensation Fund. St. Martin v. KLA Enters., Inc., 269 N.W.2d 59 (Minn. 1978).