DAVID L. NELSON, Employee, v. BRISTOL PLACE CORP., SELF-INSURED/MEADOWBROOK INS. GROUP, Employer, and MN DEP=T OF LABOR & INDUS./WORKERS= COMP. DIV., Appellant.
WORKERS= COMPENSATION COURT OF APPEALS
MARCH 11, 2008
PENALTIES; STATUTES CONSTRUED - MINN. STAT. ' 176.84, subd. 2; RULES CONSTRUED - MINN. R. 5220.2570. Where the compensation judge failed to make specific factual findings regarding whether the denial of liability served by the employer=s claims administrator sufficiently specified the factual and legal basis for the denial as required by Minn. Stat. ' 176.84, subd. 2, and Minn. R. 52202570, the Findings and Order is vacated and the matter remanded for further findings.
Vacated and remanded.
Determined by: Johnson, C.J., Wilson, J., and Stofferahn, J.
Compensation Judge: Kathleen Behounek
Attorneys: Michael J. Koshmrl, Heacox, Hartman, Koshmrl, Cosgriff & Johnson, St. Paul, MN, for the Respondent. Mary E. Miller, Department of Labor & Industry, St. Paul, MN, for the Appellant.
THOMAS L. JOHNSON, Judge
The Minnesota Department of Labor and Industry appeals the compensation judge=s denial of a penalty imposed on the self-insured employer and its claims administrator. We vacate and remand for further findings.
On March 11, 2006, the employee reported to his employer an injury to his right knee while lifting a table at work. On March 24, 2006, Meadowbrook Insurance Group, the self-insured employer=s claims administrator, filed with the Minnesota Department of Labor and Industry (the Department) a First Report of Injury. The report stated David L. Nelson, the employee, injured his right knee on March 10, 2006, while working for Bristol Place Corporation, the employer. Also on March 24, 2006, the claims administrator filed with the Department a Notice of Primary Liability Determination (NOPLD) denying primary liability for the claimed injury. The reason given for the denial was,
The claimant has a long-standing pre-existing condition to his right knee. The claimant stated that he has been seen in the recent past for continuing pain in the knee. The insurer has no medical documentation that substantiates a new injury versus a continuation of his pre-existing condition.
Thereafter, Marion Halverson, a Compliance Officer with the Department, wrote to the administrator stating the denial of primary liability served in the case failed to meet the statutory requirements for specificity. Ms. Halverson asked the administrator to file an amended NOPLD Aciting a specific factual and legal reason for denying liability, including the medical documents used to make your determination. Failure to do so will subject you to a penalty of $500.00 per M.S. '176.84.@ (Jt. Ex. 3.) In response, the administrator filed an Amended NOPLD again denying primary liability for the claimed injury, stating,
There is conflicting information as to who and when the employee gave notice regarding his injury. The claimant has had 4 prior surgeries on his right knee and has intermittently complained of knee pain to the employer on an ongoing basis. The employee advised the insurer that he has seen his orthopedic doctor in the recent past, prior to the alleged date of injury. The employee was having performance issues prior to his reporting of the injury and was counseled 1 day prior to his alleged injury. The insurer has not been able to obtain the medical records for treatment prior to the alleged date of injury. Therefore, [p]ursuant to MN. Statute 176.011, subd. 15 and 176.011 subd. 16, the insurer is unable to determine whether alleged injury is a direct and proximate cause of employment. Per MN Statute 176.021, subd. 1 the burden of establishing causal connection between claimed injury and work activity rests with the employee.
(Jt. Ex. 4.)
In September 2006, the Department served on the employer and its administrator a Notice of Penalty Assessment assessing a penalty of $500.00 payable to the Assigned Risk Safety account pursuant to Minn. Stat. ' 176.84, subd. 2, and Minn. R. 5220.2570, subp. 11. The employer and administrator objected to the penalty assessment and the case was heard before a compensation judge at the Office of Administrative Hearings. In a Findings and Order, the compensation judge found the initial NOPLD filed March 24, 2006, was sufficiently specific to convey clearly, without further inquiry, the basis upon which primary liability was denied. Because the initial NOPLD was statutorily sufficient, the compensation judge concluded the issue of whether the amended NOPLD met the statutory requirements was moot. Accordingly, the compensation judge found there was no basis for a penalty under Minn. Stat. ' 176.84, subd. 2. The Department appeals.
At the hearing, counsel for the parties phrased the issue before the compensation judge as whether the two denials of liability filed by the employer=s claims administrator were in conformity with the statute and the rules. The applicable statute, Minn. Stat ' 176.84, subd. 1, provides:
Notices of discontinuances and denials of liability shall be sufficiently specific to convey clearly, without further inquiry, the basis upon which the party issuing the notice or statement is acting.
Subdivision 2 of the statute provides for a $500 penalty for each violation of subdivision 1. Following the filing of the initial NOPLD, the Department instructed the claims administrator to file an amended NOPLD. The administrator did so and the commissioner then assessed a penalty. In a Memorandum to the Penalty Assessment, the Commissioner=s representative stated, AAs the amended denial merely restates that the claim was denied because the claimant had prior injuries, and neither denial addresses why the claimed incident and injury was not within the course and scope of employment, this penalty is being issued due to the insurer=s failure to satisfactorily correct the non-specific denial.@
The penalty assessment was based on the commissioner=s determination that the Amended Notice of Primary Liability Determination failed to comply with the statutes and the rules governing denials of liability. The compensation judge failed to resolve this issue. Compare Seller v. Dura Supreme, Inc., No. WC07-243 (W.C.C.A. Feb. 25, 2008). Accordingly, the compensation judge=s findings of fact are vacated and the matter is remanded to the compensation judge for further findings.