FRANK MYERS, Employee/Appellant, v. MINNESOTA VIKINGS FOOTBALL CLUB, INC., and EMPLOYERS INS. OF WAUSAU, Employer-Insurer.
WORKERS’ COMPENSATION COURT OF APPEALS
SEPTEMBER 18, 2009
INTEREST. Pursuant to Hop v. Northern States Power Co., slip op. (W.C.C.A. Sep. 12, 1996), there can be no accrual of interest until the obligation to pay is both fixed and ascertainable by the obligor. Where no workers’ compensation benefits relative to the employee’s injuries were either paid or claimed at the time of the injuries and were not claimed thereafter until another twenty plus years had gone by, and where there was no appeal from the judge’s finding that the claim petition was sufficient notice of the employee’s claim, the judge’s determination that interest on indemnity benefits began to accrue from the filing of the employee’s claim petition was not clearly erroneous and unsupported by substantial evidence.
PENALTIES; STATUTES CONSTRUED - MINN. STAT. § 176.225, SUBD. 5. Where an employer or insurer is guilty of inexcusable delay in making payment of benefits to an employee, a penalty of 25% of the total amount of compensation awarded is mandatory under Minn. Stat. § 225, subd. 5. Where the judge found that the payment to the employee was delayed, and the employer and insurer offered no excuse for the delay, the judge’s denial of a 25% penalty under subdivision 5 of the statute was clearly erroneous and unsupported by substantial evidence.
PENALTIES; STATUTES CONSTRUED - MINN. STAT. § 176.225, SUBD. 1(b). When an employer or insurer has unreasonably delayed payment, a penalty of up to 30% of the total amount of compensation awarded is mandatory under Minn. Stat. § 225, subd. 1(b). Where the delay in payment was unreasonable, but where it was not lengthy and where the judge’s denial of also of the mandatory 25% penalty under subdivision 5 of the statute was already reversed, the compensation judge’s denial of a penalty under subdivision 1(b) was reversed, and the employee was awarded a penalty of $250.00 under subdivision 1(b) of the statute as well.
Affirmed as modified, in part, reversed in part, and vacated in part.
Determined by: Pederson, J., Rykken, J., and Johnson, C.J.
Compensation Judge: Gary M. Hall
Attorneys: Raymond R. Peterson, McCoy, Peterson & Jorstad, Minneapolis, MN, for the Appellant. Randee S. Held, Bakken, Robinson and Grove, Golden Valley, MN, for the Respondents.
WILLIAM R. PEDERSON, Judge
The employee appeals from the compensation judge’s denial of his claim for penalties and from the judge’s determination of the “due date” for purposes of calculating interest under Minnesota Statutes section 176.221, subd. 7. We reverse the judge’s denial of the employee’s claim for penalties, affirm with modification the judge’s award of interest, and vacate the judge’s contingent award of penalties based on a possible underpayment.
Frank Myers [the employee] played professional football as an offensive tackle with the Minnesota Vikings Football Club, Inc. [the employer], during the 1978, 1979, and 1980 football seasons. Until August 1, 1980, the employer was insured against workers’ compensation liability by Employers Insurance of Wausau. In the fall of 1978, the employee reported pain in the palm of his right hand to the team trainer and team doctor. He was treated with a cast and taping but continued to play football despite ongoing pain. On December 7, 1979, the employee fell and twisted his left hand and wrist, and he was again treated by the team doctor with a cast and taping. The employee used the casts and taping on both hands through the 1979 season.
In August and September 1980, the employee sustained injuries to his left knee. A dispute then arose between the employee and employer as to whether the employee’s knee injuries caused temporary or permanent aggravations of a previous left knee injury. On or about October 2, 1980, the employee was informed that the employer had placed him on waivers. Almost three years later, on July 27, 1983, the employee filed a claim petition, seeking temporary total and/or temporary partial disability benefits continuing from September 21, 1980, and compensation for permanent partial disability, all related to his left knee injuries of August 7, August 24, and September 18, 1980. The employer, self-insured against workers compensation liability on the dates claimed, admitted the employee’s injuries but denied that the employee was entitled to the benefits claimed. The parties eventually agreed to a settlement, pursuant to which the employer agreed to pay seventy-seven weeks of benefits in settlement of any claim by the employee for permanent partial disability benefits to the extent of 48% of the leg, together with an additional payment of $40,598.00 in return for full, final, and complete settlement of all remaining claims for benefits available under the Workers’ Compensation Act, with the exception of reasonable and necessary medical treatment for the employee’s left knee. An Award on Stipulation was issued by a compensation judge on January 22, 1985.
On March 6, 2003, just over eighteen years later, the employee filed a claim petition, alleging entitlement to unspecified benefits payable by the self-insured employer, based on an injury to his right hand in 1978 and to his left hand and wrist on December 7, 1979. About fifteen months later, on May 25, 2004, the employee amended his petition to allege the same unspecified claim for those same injury dates against the employer and its now insurer, Employers Insurance of Wausau [the insurer]. The employer and insurer denied liability for the alleged injuries, asserting in part that the employee had failed to provide notice as required by Minnesota Statutes section 176.141 and that the employee’s claims were barred by the six-year statute of limitations, Minnesota Statutes section 176.151. At some point during this litigation, the employee evidently clarified that he was seeking temporary total and/or temporary partial disability benefits continuing from January 1, 1982, together with benefits for 10% permanent partial disability to each hand and wrist.
The employee’s claims for benefits based on his bilateral hand and wrist injuries came on for hearing before Compensation Judge Gary M. Hall on September 14, 2006. The employee was the only witness at trial, but orthopedist Dr. Jack Kern of Fort Worth, Texas, who had examined the employee on behalf of the employer and insurer on January 6, 2005, testified by deposition.
In a Findings and Order issued November 13, 2006, Judge Hall found that the employee’s right and left hand and wrist conditions were consequences of injuries sustained in the fall of 1978 and December 7, 1979, as those injuries had aggravated or accelerated the employee’s predisposition to Dupuytren’s contracture. The judge concluded that the latter condition was progressive and had worsened over time, eventually requiring multiple surgeries. He determined that the employer had proper statutory notice of both injuries and that, based on the employee’s credible testimony, the team trainer and doctor were aware on a daily basis of the employee’s medical problems. The judge found that the employee was provided with medical attention and treatment in the form of casts and splinting and taping, and therefore he concluded that the employee’s claims were not barred by the statute of limitations. He found that the employee’s salary was $43,000 per year at the time of both injuries and that his bilateral hand and wrist conditions were a substantial contributing factor in his ongoing disability and wage loss for all but three years from January 1, 1982, to December 14, 2005. The judge found also that the employee had sustained a 10% permanent partial disability to each hand and wrist, as rated by Dr. Kern. The judge found that attorneys Raymond Peterson and John Lorentz had represented the employee pursuant to lawful retainer agreements, but he made no provision for the withholding or payment of attorney fees in his Order. The Order provided for the payment of wage loss and permanent partial disability benefits and for dismissal of the amended claim petition filed on May 25, 2004. The employer and insurer appealed from the judge’s Findings and Order on December 1, 2006.
James Brown, the insurer’s claims specialist, testified that the insurer closed its Minneapolis claims office about five months after the appeal was filed. Mr. Brown then received a number of new assignments, including the employee’s claim. He documented a review of the file for the first time with a computer journal entry on July 2, 2007, noting that the parties were awaiting a decision from this court. On July 25, 2007, Mr. Brown received this court’s July 20, 2007, decision, but he did not immediately perform the required payment calculations because, he testified, he “did not have the documentation that indicated the earnings on the TPD claims.” He testified that he requested the additional information form his attorney “on or about August 14th.”
On August 27, 2007, Mr. Peterson wrote to the employer and insurer’s attorney, Randee Held, providing her with his calculations of the benefits due, including his claim for interest and taxable costs. Mr. Peterson noted that he had used the “court-found average weekly wage of $826.92” and that his interest calculations “assum[ed] . . . that the award [would] be paid promptly.” In his letter, Mr. Peterson also indicated that he was discussing with his client the probability of a claim for excess fees, and he requested that the insurer withhold ten percent of the payments from the employee’s checks until a fee agreement had been reached with the employee. Mr. Brown testified that he did not receive Mr. Peterson’s August 27 letter and calculations from Ms. Held until September 11, 2007, at which time he performed the necessary computations on the file.
Two days later, on September 13, 2007, the insurer issued a check to the employee for accrued wage loss benefits, permanent partial disability benefits, and interest on the indemnity and permanency accruing from the date of Judge Hall’s 2006 Findings and Order. Also on September 13, 2007, the insurer issued a check to Mr. Peterson’s firm for the appellate attorney fee ordered by this court and for taxable costs evidently related to both the hearing before Judge Hall and the subsequent appeal. The following day, the employee filed a claim petition for penalties pursuant to Minnesota Statutes section 176.225, subdivisions 1(b) and 5, alleging that the employer and insurer had not yet made payment as required by the judge’s order. In an answer to the claim petition filed October 3, 2007, the employer and insurer denied liability for the claimed penalties, asserting that there had been an agreement with the employee’s attorney extending the time for payment following the decision of this court.
On October 12, 2007, Mr. Peterson wrote to Ms. Held requesting immediate payment of the $13,000 contingent fee “awarded by the court.” On October 17, 2007, the insurer issued a check for Mr. Peterson’s contingent fees but did not make payment of the related “subdivision 7” fees that would have been payable to the employee.
The employee’s September 2007 claim petition was heard by Judge Hall on December 30, 2008. Issues presented to the judge included (1) “the extent to which the employee is entitled to an award of interest on benefits previously awarded by this court,” and (2) “the extent to which those benefits were paid late and what, if any, penalties are appropriate under Minn. Stat. § 176.225, subd. 1(b) and subd. 5.” Evidence presented to the judge included Mr. Brown’s testimony and documents reflecting the parties’ calculations and payments.
In a Findings and Order issued January 21, 2009, the compensation judge denied the employee’s claim for penalties, concluding that the employee had not shown “that the delay in payment for those checks issued by the insurer on September 13, 2007, was unreasonable, vexatious or inexcusable under the facts of this case.” As to an alleged agreement to extend the time for making payments after July 20, 2007, the judge stated at Finding 7 as follows:
Based on oral arguments at hearing, and discussions on the record at the deposition of Mr. Brown, it appears clear that the parties had made some sort of agreement extending the due date until September 10th or 11th for at least some of the benefits owed (there was some dispute regarding whether it applied only to interest payments or to other benefits as well). No evidence was presented at hearing regarding the specific terms of that agreement.
With respect to the alleged late payment of attorney fees and “subdivision 7 fees,” the judge found no basis for an award of penalties because “[t]here was no evidence presented at hearing of any Order awarding [those] fees.” On the issue of interest, the judge found that the insurer had a good faith disagreement with the employee regarding the amount of interest due on this award. He found nothing in the record, however, establishing that the employer/insurer had any notice or knowledge of the employee’s claims prior to the filing of his claim petition. He then determined at Finding 16 that
[i]nterest on indemnity benefits (including attorney fees and “subdivision 7 fees”) awarded to the employee accrues from the date the Claim Petition was filed until the date the benefits were paid. The interest on indemnity benefits and “subdivision 7 fees” is payable to the employee less withholding for attorney fees. The interest on attorney fees is payable to Attorney Peterson.
At Finding 20, the judge awarded a provisional penalty, stating that
Given this court’s determination regarding accrual of interest, it is not clear whether a net underpayment of benefits was made on September 13, 2007 (independent of contingent attorney fees and “subdivision 7 fees” addressed separately in this Order). To the extent recalculation of benefits under this Order shows that a net underpayment (underpayment less overpayment) of temporary partial benefits, permanent partial benefits, and interest was made on September 13, 2007, the insurer is liable for 10% penalties under Minn. Stat. § 176.225, Subd. 1 (b) and 25% penalties under Minn. Stat. § 176.225, Subd. 5 for late payment of the net underpayment.
The employee appeals.
Minnesota Statutes section 176.221, subdivision 7, mandating the payment of interest on compensation awards, provides as follows:
Subd. 7. Interest. Any payment of compensation, charges for treatment under section 176.135, rehabilitation expenses under section 176.102, subdivision 9, or penalties assessed under this chapter not made when due shall bear interest from the due date to the date the payment is made at the rate set by section 549.09, subdivision 1.
For the purposes of this subdivision, permanent partial disability payment is due 14 days after receipt of the first medical report which contains a disability rating if such payment is otherwise due under this chapter, and charges for treatment under section 176.135 are due 30 calendar days after receiving the bill and necessary medical data.
If the claim of the employee or dependent for compensation is contested in a proceeding before a compensation judge or the commissioner, the decision of the judge or commissioner shall provide for the payment of unpaid interest on all compensation awarded, including interest accruing both before and after the filing of the decision.
Minn. Stat. § 176.221, subd. 7. Under subdivision 1 of that same statute, temporary total compensation is due ("shall commence") "[w]ithin 14 days of notice to or knowledge by the employer of an injury compensable under this chapter" and/or, normally, "[w]ithin 14 days of notice to or knowledge by an employer of a new period of temporary total disability which is caused by an old injury compensable under this chapter." Minn. Stat. § 176.221, subd. 1. In his memorandum, the compensation judge noted that, although the statute does not specify a “due” date for temporary partial disability benefits, “for those benefits that do not have specific statutory language defining when payment is due, the definitions all include some element of notice to or knowledge by the insurer of the claim.” Because there was no evidence in the record that the employer and insurer had any notice or knowledge of the employee’s benefit claims prior to the filing of his claim petition, the judge determined that the employee’s claim for interest “on indemnity benefits” did not begin to accrue until the filing of the claim petition.
On appeal, the employee argues that, under the judge’s 2006 Findings and Order, the employer had proper statutory notice of the 1978 and 1979 injuries. The statute, he contends, does not provide that compensation becomes due following notice of the claim but, instead, specifically identifies notice of the injury as the triggering date. Therefore, he argues, in the present case, interest is payable on the employee’s claims from 1982 to the present, as his wage loss was incurred. We are not persuaded.
The compensation judge concluded in his 2006 Findings and Order that the employer had received statutory notice of the employee’s 1978 and 1979 injuries. Following those injuries, however, the employer provided only medical treatment through the team trainer and team doctor. No workers’ compensation benefits relating to the employee’s bilateral hand injuries were either paid or claimed at the time of the injuries and were not claimed thereafter until another twenty plus years had gone by. The employer and insurer did not fail to make payments because they assumed they were not liable, but, rather, because they had no knowledge or notice of the claim.
Pursuant to this court's decision in the case of Hop v. Northern States Power Co., we affirm the decision of the compensation judge in this case as to the issue of interest. See Hop v. Northern States Power Co., slip op. (W.C.C.A. Sep. 12, 1996) ("there can be . . . no accrual of interest until the obligation to pay is both fixed and ascertainable by the obligor"), citing Lappinen v. Union Ore Co., 224 Minn. 395, 29 N.W.2d 8, 15 W.C.D. 19 (1947). Here, the parties appear to be in essential agreement as to the indemnity benefits due to the employee under the judge’s Order. Although it is unclear from the record when the employer and insurer were apprised of the nature of the employee’s claim, the judge found that the Claim Petition itself was sufficient notice in this case, and the employer and insurer did not appeal from this finding. We therefore affirm the judge’s determination that interest on indemnity benefits began to accrue from the filing of the Claim Petition, but clarify that the petition at issue here is the Amended Claim Petition filed on May 25, 2004, not the petition filed March 6, 2003. Because no Order awarding attorney fees or “subdivision 7” fees has been issued, w e also vacate that portion of Finding 16 that provides for payment of interest on “subdivision 7” fees and payment of any portion of the interest to Attorney Peterson.
Pursuant to subdivision 8 of Minnesota Statutes section 176.221, all payment of compensation must be made within 14 days of the filing of an appropriate order. Minn. Stat. § 176.221, subd. 8. Here, that order was the decision of this court on July 20, 2007, affirming Judge Hall’s Findings and Order served November 13, 2006. Accordingly, payment was due by August 3, 2007. Following the subsequent hearing on the employee’s penalty claim, the judge found that the parties had made “some sort of agreement” extending the payment due date until September 10 or 11, 2007. At Finding 18, the judge found that the employee had not shown that the delay in payment by the insurer for checks issued on September 13, 2007, was unreasonable, vexatious, or inexcusable. Consequently, he denied the employee’s claim for penalties under Minnesota Statutes section 176.225, subdivision 1(b) and/or subdivision 5. In his memorandum, the judge explained that
this claim involved unusually complex calculations of temporary partial disability benefits and interest on those benefits. The awarded benefits dated back about 25 years and required some documentation to compute. . . . . Although the initial payments were made two or three days beyond the agreed due date, given the complex nature of this case I cannot conclude that this delay justifies any penalty.
The employee argues that the judge’s finding on penalties is unsupported by substantial evidence in the record. We agree.
Penalties under subdivision 5. In his Findings and Order issued November 13, 2006, the compensation judge awarded the employee wage loss benefits from January 1, 1982, to December 14, 2005, as claimed, except those claimed for the years 1990, 1991, and 1992. Even if we were to agree that the judge’s award involved unusually complex calculations, the fact remains that the insurer had more than seven months between the filing of its notice of appeal and the issuance of this court’s decision to obtain whatever documentation it needed to make those calculations. In his 2009 Findings and Order, the judge found that the adjuster had realized on July 25, 2007, that wage information would be required to properly calculate the temporary partial disability benefits due. The judge also found the adjuster did not request that information until August 14, 2007, three weeks later, and there was no explanation for the delay. The judge found also that no explanation had been offered for the delay in forwarding Mr. Peterson’s August 27, 2007, letter to Mr. Brown.
Further, although the judge found that the parties had agreed to extend the time for payment until September 10 or 11, it remains undisputed that checks were not issued by the insurer until September 13, 2007. Minnesota Statutes section 176.225, subdivision 5, provides that “[w]here the employer is guilty of inexcusable delay in making payments, the payments which are found to be delayed shall be increased by 25 percent.” Minn. Stat. § 176.225, subd. 5. (Emphasis added). The statute gives no discretion to a compensation judge to award a greater or lesser penalty. Kjeldergaard v. Puringer Distrib., 62 W.C.D. 505 (W.C.C.A. 2002). The judge found that the payment to the employee in this case was delayed, and the employer and insurer have offered no excuse for that delay. We find nothing in the statute that allows additional time for payment in complicated cases. Given the record as submitted, we have no option but to conclude that the employer and insurer were guilty of “inexcusable delay” within the meaning of the statute.
Pursuant to our decision here, we reverse the compensation judge’s denial of penalties under subdivision 5 of the statute, and we order the employer and insurer to pay to the employee a penalty equal to 25% of the wage loss and permanent partial disability benefits ordered by the compensation judge, after subtraction of the $13,000 in contingent fees and the additional 10% that Mr. Peterson had requested withheld. We affirm the judge’s determination that the insurer had a good faith basis for its calculation of interest under the facts of this case and award a 25% penalty on the interest actually paid by the insurer on September 13, 2007, (the interest calculated less the 10% withholding). We affirm the judge’s denial of penalties for the alleged late payment of contingent fees and subdivision 7 fees to the employee, in that Judge Hall’s November 13, 2006, Findings and Order did not provide for payment of attorney fees, and t he insurer was not required to make payment absent the appropriate order. And, a s attorney fees were not payable at that time, neither were subdivision 7 fees then payable to the employee. Because we have ordered a penalty under Minnesota Statutes section 176.225, subdivision 5, we vacate Finding 20 assessing a provisional penalty.
Penalties under subdivision 1(b). When an employer or insurer has unreasonably delayed payment, Minnesota Statutes section 176.225, subdivision 1(b), provides that a compensation judge, or the Workers’ Compensation Court of Appeals, upon appeal, “ shall, ” “ as a penalty ,” “award additional "compensation” of “ up to 30 percent” of the total amount of compensation awarded. Minn. Stat. § 176.225, subd. 1(b). This subdivision, like subdivision 5, also is mandatory, affording no discretion as to the imposition of a penalty when the statutory grounds have been met. The court does have discretion, however, as to the amount of the penalty. We find some redundancy in the penalty provisions of subdivision 1 and subdivision 5 of the statute. However, as indicated above, the delay in payment here, while perhaps not lengthy, was unreasonable. Therefore, g iven the penalty already awarded under subdivision 5, and accepting the judge’s finding that payments were no more than two or three days late, the employee is awarded a penalty of $250.00 under Minnesota Statutes section 176.225, subdivision 1(b), in addition to that awarded under subdivision 5. The insurer is entitled to credit its initial overpayment of indemnity benefits against the award of penalties and interest allowed by this decision.
 Portions of this background have been adopted from this court’s earlier decision in Myers v. Minnesota Vikings Football Club, Inc., 67 W.C.D. 389 (W.C.C.A. 2007).
 In the claim petition, the employee alleged entitlement to temporary total disability benefits “to be determined,” to temporary partial disability benefits “to be determined,” to permanent partial disability benefits with “ratings to be determined,” and to rehabilitation/retraining benefits “to be determined.”
 “Dupuytren’s contracture” is a shortening, thickening, and fibrosis of the palmar fascia, producing a flexion deformity of the finger.” Dorland’s Illustrated Medical Dictionary, 398 (29th ed. 2000).
 The judge denied the employee’s claim for wage loss benefits for calendar years 1990, 1991, and 1992.
 On September 13, 2007, the insurer evidently miscalculated the employee’s indemnity benefits by using a higher weekly wage than had been determined by the judge in his 2006 Findings and Order. At the subsequent hearing, the insurer contended that it had overpaid the employee, while the employee asserted that he had been underpaid.
 The judge’s November 13, 2006, Findings and Order refers to the employee’s May 25, 2004, Amended Claim Petition as the petition being litigated. The Findings and Order of January 21, 2009, refers only to the earlier Claim Petition filed March 6, 2003.
 See also Youngner v. State of Minn., 275 Minn. 340, 147 N.W.2d 354, 24 W.C.D. 74 (1966).
 There is, however, no evidence regarding the specific terms of that agreement. Moreover, Attorney Peterson had contended that, while he may have agreed to extending the time for payment of disputed interest, he had never agreed to additional time for payment of the undisputed indemnity and permanent partial disability benefits.
 Presumably, the supporting documentation required by the adjuster was the same documentation offered as evidence at trial on September 14, 2006, and upon which the judge issued the November 13, 2006, award.
 In 1995, this subdivision was amended to provide that additional compensation “shall” be awarded in certain situations, rather than “may” be awarded, as was the language in the prior version of the statute, under which compensation judges had discretion to award or deny a penalty claim. See, e.g., Thomas v. Nelson Constr. Co., 50 W.C.D. 222 (W.C.C.A. 1993).