CHRISTOPHER VILLELLA, Employee/Appellant, v. FORD MOTOR COMPANY, SELF-INSURED, Employer.
WORKERS= COMPENSATION COURT OF APPEALS
MARCH 25, 2008
TEMPORARY TOTAL DISABILITY - SUBSTANTIAL EVIDENCE. Where the employee had not conducted a diligent job search and had attended a full-time educational program outside of the rehabilitation process, the compensation judge did not err by denying the employee=s claim for temporary total disability benefits.
PENALTIES. Where substantial evidence supports the compensation judge=s finding that the employer presented viable defenses to the employee=s claim for temporary total disability benefits, as supported by expert opinion, the compensation judge did not err by denying the employee=s claim for penalties, under Minn. Stat. ' 176.225, related to his wage loss claim.
PRACTICE & PROCEDURE - REMAND. Where the compensation judge did not address the portion of the employee=s claim that was based on the employer=s denial of a rehabilitation consultation, the case is remanded to the compensation judge for consideration of whether the employee is entitled to payment of a penalty, under Minn. Stat. ' 176.225, for the employer=s denial of authorization for a rehabilitation consultation.
Affirmed in part and remanded in part.
Determined by: Rykken, J., Johnson, C. J. and Stofferahn, J.
Compensation Judge: Cheryl LeClair-Sommer
Attorneys: James M. Gallagher, James Michael Gallagher & Assocs., Minneapolis, MN, for the Appellant. D. Jeffrey Pricco, Aafedt, Forde, Gray, Monson & Hager, Minneapolis, MN, for the Respondent.
MIRIAM P. RYKKEN, Judge
The employee appeals from the compensation judge=s denial of his claim for temporary total disability benefits between January 3, 2007, and June 25, 2007, and from the denial of his claim for penalties pursuant to Minn. Stat. ' 176.225, subd. 1. We affirm in part and remand in part.
In April 1999, Mr. Christopher Villella [the employee] began working as an auto worker, in the assembly area, for Ford Motor Company [the employer]. By 2001, he began working as a spot welder. In 2003, while working as a welder in a Abattery tray@ job, he developed bilateral shoulder pain, which he attributed to the repetitive nature of his work. In August 2003, he sought medical treatment with Dr. Richard Hirt, in the employer=s in-house medical clinic, who restricted the employee from work until October 2003, when he released the employee to return to work at his regular duties.
In May 2004, the employee sought additional treatment for his bilateral shoulder symptoms. The employee is right-hand dominant, and it appears that his treatment and work restrictions originally concentrated on his right shoulder condition. On June 3, 2004, the employee consulted Dr. Hirt, reporting left shoulder pain resulting from using his left arm more to compensate for the limited use of his right arm. Dr. Hirt assigned restrictions on the use of the employee=s left arm, and referred him for physical therapy. A left shoulder MRI scan taken on June 17, 2004, showed mild to moderate bursitis and some mild anterior superior labral degeneration, but did not show evidence of a full thickness tear. Dr. Daniel Buss, who examined the employee at Dr. Hirt=s referral, diagnosed bilateral shoulder impingement syndrome, coracoid impingement, and labral degeneration, and assigned work restrictions for both shoulders. He recommended right shoulder surgery and therapy and conditioning for the employee=s left shoulder, acknowledging that the employee might need the same surgery on his left shoulder in the future, should conservative measures fail.
On July 20, 2004, the employee underwent surgery to his right shoulder. Following that surgery, he remained restricted from work until late August 2004, at which time he returned to work within restrictions. In late 2005, the employee reported worsening left shoulder symptoms which he attributed to his work activities in the battery tray job. He again consulted Dr. Buss, who scheduled him for left shoulder surgery, to be performed in October 2005. Shortly before the scheduled surgery, however, the employee injured his cervical spine as a result of a motor vehicle accident. His surgery was postponed and he evidently remained off work for approximately seven months, eventually returning to work for the employer.
The employee underwent continued evaluations and received treatment recommendations from medical personnel in the employer=s clinic. In November 2006, the employee voluntarily agreed to enter a termination of employment program offered by the employer in anticipation of the assembly plant closing in late 2007. Under the terms of that agreement, the employee accepted a lump sum payment in exchange for termination of employment, termination of his seniority rights, and termination of other employment benefits.
In December 2006, the employee reported to Dr. Hirt that his left shoulder pain continued, and Dr. Hirt again referred the employee to Dr. Buss for evaluation and treatment. The employee underwent another MRI scan of his left shoulder, which was interpreted as showing supraspinatus tendinopathy with a partial thickness surface tear, along with mild degenerative joint disease of the acromioclavicular (AC) joint, and subacromial bursitis secondary to the decreased subacromial distance. The employee remained employed by the employer until January 4, 2007, working with restrictions related to both shoulders. He also applied to be considered for rehire in a temporary position, although as of January 4, 2007, the employee was unable to bid on other jobs for this employer due to his functional restrictions related to his left shoulder injury.
The employee consulted Dr. Buss again, reporting continued left shoulder symptoms. At an examination on January 31, 2007, Dr. Buss recommended that the employee undergo left shoulder arthroscopic surgery, as his condition had not improved through conservative treatment. That surgery was scheduled for June 2007, delayed until then due to Dr. Buss=s work schedule.
In the interim, the employee sought alternative employment. He also consulted Dr. Thomas Walsh for a second opinion concerning his left shoulder condition. At an examination on February 6, 2007, the employee reported that his left shoulder had progressively worsened over the last two years. In view of the MRI scan results and examination findings, Dr. Walsh diagnosed a chronic left shoulder subacromial impingement with associated AC joint pain, and recommended arthroscopic evaluation and treatment. He discussed with the employee the option of surgery, including the procedure that might be required if a labral tear or rotator cuff tear were to be identified through surgery and the typical post-surgery recovery. Dr. Walsh advised the employee that Ahe [was] in very good hands with Dr. Buss@ and that, alternatively, he would be happy to provide to the employee treatment for his left shoulder, if the employee so wished.
The employee remained off work after January 4, 2007. Between April 1 and May 25, 2007, he attended a training course for commercial diving at the Brainerd Vocational Technical Institute. The employee testified that he chose this course of study with the belief that he could perform the physical requirements of diving work with lifting aided by the buoyancy of water. It apparently became evident to the employee that even with this buoyancy, the physical requirements of commercial diving exceeded his left shoulder capabilities, at least pre-surgery.
The employee filed a claim petition on February 2, 2007, on the basis of a left shoulder injury on June 3, 2004. He sought temporary total disability benefits from January 3, 2007, authorization for a rehabilitation consultation, and payment of out-of-pocket medical expenses he had incurred. In its answer to the claim petition, the self-insured employer denied liability for the claimed benefits, contending that the employee did not sustain a left shoulder injury culminating on June 3, 2004, or, alternatively that the injury was temporary in nature and had resolved. The employer also contended that the employee had been capable of working for the employer without a wage loss but had voluntarily terminated a suitable position for reasons unrelated to his work injury, and had not conducted a diligent job search for alternative employment.
In anticipation of the employee=s left shoulder surgery, the employer scheduled the employee for an independent medical examination on June 6, 2007, with orthopedist Dr. Thomas Nelson. The employee reported to Dr. Nelson that his left shoulder pain prevented him from falling asleep, that he took OxyContin three to four times per week at bedtime to aid in falling asleep, and that he had difficulty raising his left arm and rotating his left shoulder. In his report of June 22, 2007, Dr. Nelson diagnosed chronic left shoulder impingement syndrome caused by his work activities with the employer. Dr. Nelson opined that the surgery, as proposed by Dr. Buss, was not reasonable at the current time because the employee had not Acompleted a satisfactory rehabilitation program specifically designed for the left shoulder.@
Instead, Dr. Thomas recommended continued conservative management, including one or two cortisone shots, a formal physical therapy program for muscle strengthening, and a home exercise program. Dr. Nelson assigned work restrictions for at least six months, including a limitation on overhead work with no elevation of the left shoulder beyond shoulder level and no lifting over 15 pounds with the left shoulder. He concluded that the employee had not yet reached maximum medical improvement, and recommended that the employee be re-assessed in six months after completing the proposed treatment regimen. Dr. Nelson stated that AI do not feel that surgery will be necessary for Mr. Villella if he is compliant with the specific exercise program and treatment regimen as outlined above.@ Dr. Nelson also concluded that the employee would have been physically able to work, within restrictions, since January 3, 2007.
Relying on Dr. Nelson=s opinions, the employer determined that it would not authorize payment for the proposed left shoulder surgery. The employee proceeded with surgery, with payment apparently made through his health insurance.
The employee=s claim was addressed at a hearing on July 17, 2007. The issues at hearing were limited to the employee=s claim for temporary total disability benefits extending from January 3 through June 25, 2007, and his claim for a rehabilitation consultation. The employee also claimed he was entitled to penalties pursuant to Minn. Stat. ' 176.225, subd. 1, based upon the employer=s frivolous and unreasonable denial of benefits.
In her findings and order, served and filed on August 24, 2007, the compensation judge concluded that the employee had not, as alleged by the employer, voluntarily terminated a suitable position with the employer within the meaning of Minn. Stat. ' 176.101, subd. 1(I), and that he remained restricted as a result of his work injury. However, she denied the employee=s claims for temporary total disability benefits, based on a lack of diligent job search between January and June 2007, and based on his removal from the active labor market during a training course in April and May 2007. The compensation judge also denied the employee=s claims for penalties, concluding that the employer had a good faith basis to deny the claimed temporary total disability benefits.
As to the employee=s claim for a rehabilitation consultation, the compensation judge found the employee to be entitled to a consultation, as he remained subject to restrictions that may affect his employability, no waiver was introduced into evidence, and no rehabilitation plan was in place when the employee was employed in a light-duty position.
The employee appeals from the denial of disability benefits and penalties; the employer did not appeal from the award of a rehabilitation consultation.
STANDARD OF REVIEW
On appeal, the Workers' Compensation Court of Appeals must determine whether Athe 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 (2006). Substantial evidence supports the findings if, in the context of the entire record, Athey 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, 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.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
Temporary Total Disability
An employee=s voluntary termination does not bar the employee from temporary benefits, but his right to benefits is suspended until Ait has become demonstrable that the employee=s work-related disability is the cause of the employee=s inability to find or hold new employment.@ Marsolek v. George A. Hormel & Co., 438 N.W.2d 922, 924, 41 W.C.D. 964, 968 (Minn. 1989); see Johnson v. State, Dep=t of Veterans Affairs, 400 N.W.2d 729, 39 W.C.D. 367 (Minn. 1987). An employee seeking total disability benefits must prove total disability by showing unavailability of other employment after a diligent search for suitable work. Redgate v. Sroga=s Standard Serv., 421 N.W.2d 729, 733, 40 W.C.D. 948, 954 (Minn. 1988). A diligent job search is one that is reasonable under all the facts and circumstances peculiar to the case. Id. at 734, 40 W.C.D. at 956. The determination of whether or not an employee has performed a diligent job search is a question of fact for determination by the compensation judge. Kunferman v. Ford Motor Co., 56 W.C.D. 163 (W.C.C.A. 1996).
From April 1, 2007, through May 25, 2007, the employee attended a full-time program to be certified as a commercial underwater diver. The employee was required to attend the program 60 hours per week. The compensation judge found that the employee had withdrawn from the labor market and had not conducted a diligent job search during this time. The compensation judge also found that the employee did not conduct a diligent job search during the rest of the period between January 3 and June 25, 2007. The employee argues that he testified that he had looked for work, as noted on his job search records, and that the compensation judge had erred by refusing to admit his job search records into evidence.
The employee testified that he looked for work daily through phone calls and by stopping at establishments to apply in person. The compensation judge refused to admit job logs into evidence which the employee brought to the hearing but had not earlier provided to the employer when requested through discovery. The employee argues that the compensation judge erred by not admitting the employee=s job logs into evidence, considering the context of those job logs, the employer=s awareness of the employee=s job search activities, and the general scope of discovery in workers= compensation matters. A compensation judge, however, is not bound by the common law or statutory rules of evidence. Minn. Stat. '176.411, subd. 1. Generally, a compensation judge has broad discretion regarding the admissibility of evidence in a workers= compensation hearing. Minn. Stat. ' 176.411, subd. 1; Bey v. Oxford Properties, Inc., 481 N.W.2d 40, 46 W.C.D. 198 (Minn. 1992); Ziehl v. Vreeman Constr. Co., slip op. (W.C.C.A. Oct. 15, 1991) (evidentiary rulings are generally within the sound discretion of the compensation judge). To warrant reversal, the compensation judge=s ruling on the admissibility of evidence must be prejudicial as well as erroneous. See McGuire v. Merillat Indus., Inc., slip op. (W.C.C.A. July 27, 1993); see also Elling v. Cub Foods, slip op. (W.C.C.A. Feb. 24, 1994); Brecht v. General Mills, slip op. (W.C.C.A. Jan. 28, 1994).
In this case, it was within the compensation judge=s discretion to exclude the job logs. The employee testified at the hearing about his job search, so the compensation judge was able to consider information gleaned from that testimony. The compensation judge evaluated the employee=s testimony, and the record as a whole, and concluded that,
[The employee] testified to applying for employment daily mostly by driving to establishments and making phone calls. It is unclear what number of contacts represents his daily search. The evidence does not support that the employee conducted a full-time search for alternative employment; a reasonable inference can be made that the amount of time spent each day was minimal. Even though no vocational professional assisted in his job search, such general information without more details on the amount of time spent performing the job search activity, the number of contacts, and the quality of the contacts is insufficient to establish a reasonably diligent search for employment.
(Memo., p. 5.) Substantial evidence supports the compensation judge=s finding that the employee did not conduct a diligent job search between January 3 and June 25, 2007, and her corresponding denial of temporary total disability benefits between January 3 and June 25, 2007. We affirm.
The compensation judge found that the employer and insurer had raised viable defenses to the employee=s claims for temporary total disability benefits and denied the employee=s claim for an additional award of penalties for the employer=s denial of benefits. On appeal, the employee claims he is entitled to a penalty under Minn. Stat. ' 176.225, subd. 1, alleging that the employer=s denial of liability for his wage loss benefits was unreasonable and specious, and was asserted for the sole purpose of delay and for litigation purposes. The employee=s penalties claim is also based on the employer=s refusal to authorize a rehabilitation consultation. The employee contends that this refusal was unreasonable in view of his restrictions that still were imposed when he left his employment with the employer and that continue to impede his ability to obtain alternative employment.
Minn. Stat. ' 176.225, subd. 1, provides for a penalty for delays in payment of benefits, and outlines circumstances in which assessment of a penalty is appropriate, as follows:
Subdivision 1. Grounds. Upon reasonable notice and hearing or opportunity to be heard, the commissioner, a compensation judge, or upon appeal, the court of appeals or the supreme court shall award compensation, in addition to the total amount of compensation award, of up to 30% of that total amount 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.
For the purpose of this section, "frivolously" means without a good faith investigation of the facts or on a basis that is clearly contrary to fact or law.
Minn. Stat. ' 176.225, subd. 1.
The issue before us is whether the compensation judge erred by concluding that the employer=s denial of payment of temporary total disability benefits did not violate the provisions of Minn. Stat. ' 176.225 nor give rise to a penalty claim. Whether a penalty is appropriate under Minn. Stat. ' 176.225 normally rests within the sound discretion of the compensation judge. Maxfield v. Stremel Mfg. Co., slip op. at 5, 7 (W.C.C.A. Jan. 6, 1999). An employer cannot be penalized for refusing to pay benefits which are the subject of a real controversy. Grover v. City of St. Paul, 55 W.C.D. 397 (W.C.C.A. 1995). An award of penalties is not appropriate where an employer and insurer have interposed a good faith defense. See Heise v. Honeywell, Inc., 48 W.C.D. 523 (W.C.C.A. 1993).
In this case, both the employee=s treating surgeon, Dr. Buss, and the employer=s medical expert, Dr. Nelson, concluded that the employee=s left shoulder condition was work-related. Dr. Nelson, however, disagreed with Dr. Buss=s recommendation for surgery and suggested alternative conservative treatment, and also concluded that the employee had been physically able to work within restrictions since January 3, 2007. Based on Dr. Nelson=s opinion, therefore, the employer denied authorization for the proposed left shoulder surgery and maintained its denial of the employee=s claim for temporary total disability benefits since January 3, 2007, contending that the employee had the physical capacity to work since that date.
The compensation judge determined that the employer had presented viable defenses to the employee=s claims for temporary total disability benefits and that it was not appropriate to award a penalty based on an allegation of a frivolous defense. A defense is frivolous where it is unsupported by any substantial evidence. Jackson v. Eveleth Mining Co., 49 W.C.D. 591 (W.C.C.A. 1993). In view of the medical evidence in the record, including Dr. Nelson=s opinion on the employee=s ability to work and his recommendation for medical treatment, it was not unreasonable for the compensation judge to conclude that the defenses presented by the self-insured employer, on the issue of entitlement to temporary total disability benefits, were viable and that no penalty was owed. Under these circumstances, we conclude that substantial evidence supports the compensation judge=s finding that the employer did not offer a frivolous defense or unreasonable defense to the employee=s claim for temporary total disability benefits, and we affirm the denial of that portion of the penalty claim.
The compensation judge did not address the other portion of the employee=s claim for penalties that was related to the employer=s denial of the employee=s request for a rehabilitation consultation. The employee argues that the employer refused to authorize a rehabilitation consultation even though the employee would not be rehired by the employer following the termination of employment or Abuyout@ program, and even though the employee was constrained by physical restrictions that impede his efforts to obtain other employment. At the hearing, the employer contended that the employee had voluntarily resigned from his job with the employer, by participating in the employer=s termination of employment agreement, and therefore he was not entitled to either a rehabilitation consultation or rehabilitation services. The compensation judge concluded that the employee was entitled to a consultation, but did not address that portion of the employee=s penalty claim that related to the denial of a consultation.
A compensation judge must address all contested issues of fact and law that have been submitted at a hearing. See Costello v. Clay County Sheriff=s Dep=t, slip op., No. WC07-119 (W.C.C.A. June 7, 2007). Because the compensation judge did not address the portion of the employee=s claim that was based on the employer=s denial of a rehabilitation consultation, we remand the case to the compensation judge to consider whether the employee is entitled to payment of a penalty, under Minn. Stat. ' 176.225, for the employer=s denial of authorization for a rehabilitation consultation.
 His right shoulder surgery on July 20, 2004, was in the nature of an arthroscopic decompression of the subacromial space and arthroscopic distal clavicle excision, and arthroscopic bursectomy and decompression by an acromioplasty.
 The compensation judge limited her consideration of the temporary total disability claim to the period of time between the employee=s initial layoff/buyout date and his left shoulder surgery. The employer disputed the reasonableness and necessity of that surgery, and it appears that due to the relatively quick scheduling of the hearing, the intervenors did not have sufficient time to interpose an intervention claim in time for the hearing. Because litigation on the issue of surgery was postponed, the judge limited her consideration of the temporary total disability claim to the time period from January 3 through June 25, 2007.
 In an unappealed finding, the compensation judge concluded that the employee had Asigned the appropriate documents with the employer to be considered for rehire in a temporary position,@ that he had received a lump sum payment as part of the Abuyout@ agreement, and that A[a]s of January 4, 2007 as a result of the functional restrictions from the left shoulder injury, the employee was unable to bid on other jobs for this employer.@
 Minn. Stat. ' 176.371 requires, in part, that A[a]ll questions of fact and law submitted to a compensation judge at the hearing shall be disposed of. . . ,@ and that:
The compensation judge=s decision shall include a determination of all contested issues of fact and law and an award or disallowance of compensation or other order as the pleadings, evidence, this chapter and rule require.