DAVID A. GRAHAM, Employee, v. I.S.D. No. 31, SELF-INSURED/BERKLEY RISK ADM’RS CO., Employer/Appellant.
WORKERS’ COMPENSATION COURT OF APPEALS
MAY 28, 2008
WAGES - OVERTIME. Where the employee earned overtime wages during at least one-half of the semi-monthly pay periods contained in the 26 weeks preceding his injury, under these particular circumstances, the compensation judge could reasonably determine that the employee’s overtime wages were “regular and frequent” wages and therefore should be included in calculation of the employee’s weekly wage.
CREDITS & OFFSETS - CREDIT FOR OVERPAYMENT. Where the employer made an overpayment of temporary total disability benefits based on a calculation of the employee’s weekly wage in excess of his actual wages, the employer can apply its overpayment as a credit against benefits that are deemed compensable in the future, pursuant to Minn. Stat. § 176.179.
PRACTICE & PROCEDURE - MATTERS AT ISSUE. Where the rehabilitation consultation originally was requested by the employee in November 2004, and, although the rehabilitation consultation likely was discussed by the parties and the employer was likely aware of the rehabilitation claim, there is no indication that the employer was advised, through the hearing notice issued by the Office of Administrative Hearings, that the issue was to be revived at the hearing in 2007, and the finding and order concerning this issue are therefore vacated.
Affirmed in part and vacated in part.
Determined by: Rykken, J., Pederson, J., and Johnson, C.J.
Compensation Judge: Harold W. Schultz, II
Attorneys: John P. Bailey, Bailey Law Office, Bemidji, MN, for the Respondent. Leslie M. Altman, Littler & Mendelson, Minneapolis, MN, for the Appellant.
MIRIAM P. RYKKEN, Judge
The self-insured employer appeals the compensation judge’s findings regarding the employee’s weekly wage on his injury date of July 23, 2003, and that he was eligible for a rehabilitation consultation. We affirm in part and vacate in part.
In October 1996, David A. Graham, the employee, began working as a bus driver for Independent School District No. 31, the self-insured employer. He initially worked exclusively as a bus driver for the employer, working an average of four hours each day, although his daily driving hours increased slightly throughout the years. During the summer months from 1996 to 1999, the employee worked additional hours for the employer, preparing buses for inspection and performing other duties in the employer’s garage.
In 2000, the employee began working for the employer as a part-time carpenter’s assistant, initially working approximately two hours during the mid-day, for a total of ten hours per week. By at least 2002, the employee also began performing part-time self-employment work as a carpenter.
On February 10, 2003, the employee was hired by the employer to work on the Paul Bunyan Center project, which was a conversion of an elementary school into new district offices. He was not guaranteed a specific number of hours on this project nor was there a specified termination date for this particular project, although this was not the only project on which he performed carpentry work in 2003. Between February and July 2003, the employee then worked in excess of 40 hours per week for the employer, working on the Paul Bunyan project and other carpentry projects and also as a bus driver. During those weeks he worked in excess of 40 hours, the employee was paid overtime. According to payroll records in evidence, from January 1, 2003, to July 15, 2003, the employee worked overtime in seven semi-monthly pay periods, and also worked overtime during the pay period between July 15 and July 31, 2003. He later worked some overtime hours in late 2003 and early 2004.
On July 23, 2003, the employee sustained a right knee injury while working as a carpenter’s assistant. He accidentally knelt on a screw at the district’s new high school site. He was treated for an infection and later was diagnosed with a minor tibial tubercle bursitis. He remained off work between July 28 and August 19, 2003, as a result of his injury. The self-insured employer accepted liability and paid the employee temporary total disability benefits for the approximately three weeks he was restricted from work, and also paid for medical expenses related to treatment for his right knee. The employer paid temporary total disability benefits based upon a weekly wage of $792.44, which evidently included his pre-injury overtime pay.
On August 4, 2003, the employee sought treatment from Dr. T. L. Johnson, of Lake Region Bone and Joint Surgeons, who initially restricted him from work and prescribed anti-inflammatory medication and a compressive knee sleeve. By August 19, 2003, the employee returned to work for the employer, with a work restriction of no kneeling. He resumed his bus driving duties and hours at the beginning of the 2003-2004 school year. The employer paid temporary partial disability benefits from September 1, 2003, through November 4, 2003, when the employee was released to work with no restrictions other than instructions to wear knee pads.
In late 2003, the employee worked some overtime hours. He also experienced increased problems with his right knee. In early 2004, the employee no longer had overtime work available to him; the school district’s business manager advised the employee that he would not be offered any more overtime because of budgetary constraints. (Finding No. 17.) The employee continued under the care of Dr. Johnson; on February 19, 2004, Dr. Johnson examined the employee and noted that he should continue to use his knee pads. At that time, Dr. Johnson advised that the employee could continue to work without restrictions, as long as he used knee pads. On May 10, 2004, Dr. Johnson advised that the employee should wear knee pads and should limit his kneeling, squatting, ladder climbing and stair climbing to one to three hours per day.
On April 15, 2004, the employer filed a Notice of Intention to Discontinue Benefits (NOID), contending that the employee had been released to return to work without restrictions. The employer also contended that the employee currently was earning reduced wages, with no overtime work available, because of economic factors and not because of any injury-related restrictions. In an administrative decision issued on May 24, 2004, a compensation judge concluded that reasonable grounds existed to discontinue the employee’s temporary partial disability benefits, as the reduction on the employee’s wage was unrelated to the employee’s injury and instead was related to the lack of available overtime hours due to the employer’s “budgeting reasons.”
Through an objection to discontinuance, filed June 24, 2004, the employee claimed temporary partial disability benefits from and after November 4, 2003.
By July 2004, Dr. Johnson noted that the employee’s symptoms were worse with activities and recommended that the employee resume his anti-inflammatory medications. In addition to his restrictions assigned in May 2004, Dr. Johnson prohibited the employee against any kneeling or squatting without knee pads. Following an independent medical examination, Dr. Larry Stern diagnosed the employee as having tibial tubercle bursitis and concurred with Dr. Johnson’s restrictions.
The employee continued to work for the employer, but, in late 2004 or early 2005, an issue arose concerning his restrictions and the number of work hours available to him. By letter to the employer, dated November 29, 2004, the employee also requested a rehabilitation consultation. The employer denied that request on the basis that the employee was no longer assigned work restrictions related to his right knee. Evidently as a compromise, the employer agreed to a limited intervention on the part of a rehabilitation consultant, QRC Ken Moberg. Following one meeting between Mr. Moberg and the employee, the parties evidently reached an agreement, as the employee was offered a summer casual position between June 3 and August 31, 2005, for eight hours per day, within his work restrictions. (Finding No. 24.) During the 2005-2006 school year, the employee continued his work as a bus driver but did not work as a carpenter for the employer. The employee has continued working as a bus driver for the employer.
The employee’s claims for temporary partial disability benefits eventually were addressed at a hearing on May 3, 2007. The employee claimed that he was working at a reduced wage, in comparison to his alleged weekly wage of $768.51 at the time of his injury. He based that wage rate on his pre-injury regular and overtime wages, earned both while working for the employer ($715.81 per week) and through his self-employment ($52.70 per week). The employer disputed the employee’s wage, arguing that he earned a weekly wage of $567.87 on July 23, 2003, which did not include his overtime wages or self-employment income, and also argued that the post-injury reduction in the employee’s wages was unrelated to his work injury.
At the hearing, the employee also claimed entitlement to a rehabilitation consultation. Over the employer’s objection to addressing that claim, the compensation judge agreed to address that rehabilitation issue.
Following submission of post-hearing memoranda, the compensation judge issued his findings and order on July 24, 2007. He determined that the employee earned a weekly wage of $715.81, based on his regular and overtime wages but excluding his self-employment income; the compensation judge found that the employee’s “money earned on the side jobs is not included in [the weekly wage rate], as the record stands now.” In a related finding, the judge found that the employee was not a casual employee in July 2003, within the meaning of the Minnesota Workers’ Compensation Act., Minn. Stat. § 176.041(1)(k).
The compensation judge determined that the employee continued to have restrictions on his activities as a result of his work injury, that his injury remained “a substantial contributing factor to the employee’s undetermined wage loss after that injury” and that the employee was entitled to a rehabilitation consultation. The compensation judge, however, denied the employee’s claim for temporary partial disability benefits “at this point,” concluding that it was impossible to determine the employee’s wage loss based on the current records submitted into evidence. The judge explained that the “employee may well have wage loss due to the effects of the personal injury, in all four years after that but at this point it is speculative. He did not prove the exact amount of the wage loss,” in part because he had earned income from his self-employment that apparently was not reported on his tax returns. The compensation judge commented that “Absent the filing of amended tax returns since 2003 (to include his self-employment income) he cannot prove his temporary partial disability claim.” (Memo., p. 6.)
The employer appeals from the compensation judge’s determination of the employee’s wage rate and from the award of a rehabilitation consultation. The employee did not appeal the denial of temporary partial disability benefits nor the exclusion of his self-employment wages in the calculation of his weekly wage rate.
STANDARD OF REVIEW
In reviewing cases 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 (1992). 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, “[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.” Northern States Power Co. V. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975). 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.” Id.
Calculation of Weekly Wage
The employer appeals the compensation judge’s finding that the employee’s weekly wage at the time of his injury was $715.81, which included his overtime wages. The employer argues that the employee’s overtime should not be included in his weekly wage calculation since the twenty-six week wage calculation includes a period of time when the employee worked an unusual amount of overtime that is not usually available. The employer argues that the employee’s wages instead should be calculated solely on the basis of his regular wages, and not on his pre-injury overtime pay nor his self-employment wages.
An employee’s weekly wage is calculated pursuant to Minn. Stat. § 176.011, subd. 3 and subd. 18, which provides:
Subd. 3. “Daily wage” means the daily wage of the employee in the employment engaged in at the time of injury . . . If the amount of the daily wage received or to be received by the employee in the employment engaged in at the time of injury was irregular or difficult to determine, . . . the daily wage shall be computed by dividing the total amount the employee actually earned in such employment in the last 26 weeks, by the total number of days in which the employee actually performed any of the duties of such employment . . . .
Subd. 18. “Weekly wage” is arrived at by multiplying the daily wage by the number of days and fractional days normally worked in the business of the employer for the employment involved . . . . Occasional overtime is not to be considered in computing the weekly wage, but if overtime is regular or frequent throughout the year it shall be taken into consideration . . . .
The employer argues that the employee’s overtime was not “regular or frequent throughout the year.” In the 26 weeks before the employee’s injury on July 23, 2003, the employee worked overtime hours in 7, and most likely 8, of the 14 semi-monthly pay periods included in those weeks. The overtime hours were available in 2003 in part because the employer was trying to expedite renovation on one of the school district’s buildings, the Paul Bunyan Center; the employee worked on this project and on various building projects during the 26 weeks preceding his injury. Following the employee’s injury, the employer offered very limited overtime to any of its employees due to financial constraints.
The compensation judge referred to the statutory provision for considering overtime hours when “regular or frequent throughout the year,” and found that the employee worked regular and frequent overtime during 2003. He concluded that the use of the employee’s wages in 2002 was not mandated by the statute, and determined that employee’s overtime wages in 2003 must be recognized when establishing the employee’s date-of-injury wage.
The employer argues that the employee’s overtime was not “regular or frequent throughout the year” since the employee worked only one overtime hour in 2002, he worked overtime hours during a concentrated period between February and July 2003, and worked very limited overtime hours after his injury. Relying on Bradley v. Vic’s Welding, 405 N.W.2d 243, 245-246, 29 W.C.D. 921 (Minn. 1987), the employer argues that the compensation judge erred by not determining whether the employee’s overtime pay was regular or frequent throughout the entire year preceding his work injury, as opposed to the approximately seven months preceding the injury.
The object of an employee’s wage determination is to arrive at a fair approximation of his probable future earning power that has been impaired or destroyed by the injury. Sawczuk v. Special School District 1, 312 N.W.2d 435, 34 W.C.D. 282 (Minn. 1981). The employee was and continues to be paid on a semi-monthly basis. If one considers the wages the employee earned in the 26 weeks preceding his 2003 injury, he earned overtime wages during 7, or most likely 8, pay periods out of 14 pay periods immediately preceding his work injury. If one considers the wages the employee earned in the entire year preceding his injury, he earned overtime wages during 7, or most likely 8, pay periods out of 24 semi-monthly pay periods. We recognize the merits of the employer’s arguments, but in these particular circumstances, we conclude that the compensation judge could reasonably determine that the employee’s overtime wages were “regular and frequent” wages that provided a fair approximation of the employee’s probable future earning capacity. We conclude that the evidence of record adequately supports the compensation judge’s determination of the employee’s wage rate. Accordingly, we affirm the compensation judge’s finding that the employee earned a weekly wage of $715.81 on July 23, 2003. Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).
On appeal, the employer also argues that the compensation judge did not address its claim for overpayment of temporary total disability benefits from July 28, 2003, through August 19, 2003, when it paid benefits based upon a weekly wage of $792.44. We also note that the compensation judge awarded an underpayment of temporary total disability benefits to the employee, based on the adjudicated wage rate. It appears that no underpayment is due, since benefits were paid on the basis of a weekly wage of $792.44, and therefore we vacate Order No. 1. We also conclude that any overpayment which exists, based on the temporary total disability benefits paid for that approximately three-week period in 2003, can be applied by the employer as a credit against benefits that are deemed compensable in the future. Minn. Stat. § 176.179.
The employer also appeals the compensation judge’s award of a rehabilitation consultation, arguing that the employee’s request for a rehabilitation consultation was not at issue at the hearing. Relying on Minn. Stat. § 176.238, subd. 6, which provides in part that “the hearing shall be limited to the issues raised by the notice or petition unless all parties agree to expanding the issues,” the employer argues that the compensation judge improperly expanded the issues to include a claim for a rehabilitation consultation.
Although the hearing was scheduled to consider the employee’s objection to discontinuance, at the beginning of the hearing the employee requested that his earlier request for a rehabilitation consultation also be addressed. The employee asserted that the employer was well aware of his request for a rehabilitation consultation, as he had originally requested a consultation in November 2004. The employee advised that although his request for a consultation seemed to be temporarily resolved in 2005, after he met with QRC Ken Moberg in early 2005 for a one-time consultation and after he returned to work on a short-term basis, he later reinstated that request when his employment circumstances changed. The employee contends that in view of the circumstances and ongoing litigation, the employer was not surprised by his ongoing request for a rehabilitation consultation.
Following discussions between counsel and the compensation judge at the outset of the hearing, and over the employer’s objection, the judge determined that he would address the employee’s claim for a rehabilitation consultation at the hearing, as there was adequate notice of the issue and also because the employee’s rehabilitation claim and the discontinuance issues would involve discussion of the same information and issues at the hearing.
Basic fairness requires that 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, 40 W.C.D. 869 (Minn. 1988). The rehabilitation consultation originally was requested by the employee in November 2004, and, while the rehabilitation consultation likely was discussed by the parties, and while it appears that the employer was well aware of the earlier rehabilitation claim, there is no indication that the employer was advised, through any hearing notice issued by the Office of Administrative Hearings, that the issue was to be revived at the hearing in 2007. Therefore, we vacate the compensation judge’s award of a rehabilitation consultation, and vacate Finding No. 36 and Order No. 3. The employee’s request for a rehabilitation consultation remains open.
 Although a hearing originally was scheduled for May 10, 2005, that hearing was continued for various reasons, and therefore was not held until May 2007.
 From January 1, 2003, to July 15, 2003, the employee worked overtime hours in 7 out of 13 full semi-monthly pay periods. From July 16, 2003, to July 31, 2003, which included the 14th pre-injury pay period, the employee worked 15 hours of overtime. The employer argues that the employee did not prove that the employee’s overtime hours during the last pay period occurred before his July 23, 2003, work injury. We note, however, that most of the employee’s work days in that particular pay period occurred before his injury, since he was injured on July 23 and remained off work from and after July 28, 2003, as a result of his injury.