SARA POWELL, Employee, v. STEIN INDUS., INC., and CHUBB INDEMNITY INS. CO., Employer-Insurer/Appellants.
WORKERS’ COMPENSATION COURT OF APPEALS
MAY 11, 2010
DISCONTINUANCE - NOTICE OF INTENT TO DISCONTINUE. The compensation judge properly concluded the employer and insurer’s notice of intent to discontinue benefits (NOID) was legally deficient. However, on the facts peculiar to this case, we conclude the compensation judge erred in refusing to consider the employee’s objection to discontinuance and in ordering continuing payment of temporary partial disability benefits solely on the basis of the insufficiency of the NOID.
Vacated and remanded.
Determined by: Johnson, C.J., Wilson, J., and Stofferahn, J.
Compensation Judge: Gary P. Mesna
Attorneys: Steven H. Zupke, Krug & Zupke, St. Paul, MN, for the Respondent. Richard C. Nelson, Christine L. Tuft, and Noelle L. Schubert, Arthur, Chapman, Kettering, Smetak & Pikala, Minneapolis, MN, for the Appellants.
THOMAS L. JOHNSON, Judge
The employer and insurer appeal the compensation judge’s finding that their notice of intention to discontinue workers’ compensation benefits (NOID) was legally deficient, and the judge’s order requiring the employer and insurer to reinstate payment of temporary partial disability benefits to the employee. We vacate and remand for consideration of the employee’s objection to discontinuance on the merits.
Sara Powell, the employee, claimed a Gillette injury on October 31, 2008, in the nature of bilateral wrist tendonitis arising out of her employment with Stein Industries, Inc., the employer. The insurer, Chubb Indemnity Insurance Company, filed a primary liability determination on December 19, 2008, accepting the employee’s claim and reflecting payment of temporary total benefits to the employee. Temporary total disability benefits were discontinued upon the employee’s return to work on February 26, 2009, and payment of temporary partial disability benefits was initiated.
In June 2009, Dr. David P. Falconer examined the employee at the request of the employer and insurer. By report dated July 24, 2009, the doctor concluded the employee had mild joint restriction and mild extensor tenosynovitis consistent with a temporary symptomatic aggravation possibly due to rheumatoid arthritis. Dr. Falconer maintained the employee did not have a work injury but demonstrated only temporary symptoms at work due to her underlying rheumatoid arthritis. He also stated the employee’s job duties might cause a temporary symptomatic aggravation but it would not constitute “an injury per se.” Dr. Falconer further indicated the employee would likely have permanent restrictions if the diagnosis of rheumatoid arthritis was confirmed. The doctor additionally opined the employee had reached maximum medical improvement as of the date of his examination and had not sustained any permanent impairment.
The appellants filed a NOID on July 31, 2009, stating the employee’s temporary partial disability benefits would be discontinued effective July 29, 2009. The NOID stated that temporary partial disability benefits were being discontinued for “reasons other than return to work” and stated “No additional TPD will be paid as of 07/30/2009.” (Ex. 1, Brief of Employer and Insurer.) Attached to the NOID was Dr. Falconer’s July 24, 2009, medical report.
An administrative conference was held before a compensation judge pursuant to Minn. Stat. § 176.239. In an Order on Discontinuance served and filed August 28, 2009, the judge granted the requested discontinuance of temporary partial disability benefits. In the order, the compensation judge summarized the positions of the parties at the administrative conference. Counsel for the employer and insurer contended the employee’s symptoms and disability were not related to the work injury but were due to her underlying rheumatoid arthritis. Counsel for the employee agreed the employee’s rheumatoid arthritis was not work-related but argued the employee had tendonitis that was causally related to her work duties and contributed to her ongoing disability. The compensation judge concluded Dr. Falconer’s report provided a reasonable basis to discontinue temporary partial disability benefits and granted the employer and insurer’s request to discontinue payment of compensation to the employee.
The employee filed an objection to discontinuance and the matter was scheduled for a hearing before a compensation judge at the Office of Administrative Hearings. At the hearing, counsel for the employee moved the NOID be dismissed and benefits reinstated on the basis that the notice did not comply with Minn. Stat. § 176.238, subd. 1, and applicable rules. Counsel for the employer and insurer objected to the motion. The judge concluded he could not go forward with the hearing; no witnesses were called and no exhibits were offered or received into evidence. In a Findings and Order served and filed November 17, 2009, the compensation judge found the NOID was legally deficient because it did not set forth a statement of facts clearly indicating the reason for the discontinuance and did not state the legal reason for the proposed discontinuance in language easily read and understood by a person of average intelligence and education and in sufficient detail to inform the employee of the factual basis for the discontinuance. The court further found that because the employer and insurer did not provide a legally sufficient notice, benefits could not be discontinued and liability for temporary partial disability benefits was ongoing. The employer and insurer appeal.
1. Sufficiency of the NOID
The employee asserts the employer and insurer failed to provide adequate notice of the basis for the NOID as required by Minnesota statutes and rules, and the compensation judge properly found the NOID was legally deficient. The appellants acknowledge the NOID form filed on July 31, 2009, did not include a description of the factual and legal basis for the discontinuance. They argue, however, that the attached report of Dr. Falconer fulfilled this requirement. The employer and insurer assert the basis for the discontinuance was clearly set forth, in detail, in the doctor’s report and provided the employee with sufficient information to convey the reason(s) for the the proposed discontinuance.
Minnesota Statutes § 176.238, subd. 1, provides that an employer may not discontinue payment of benefits until the employee is provided with a notice in writing of its intention to do so. The notice must “set forth a statement of facts clearly indicating the reason for the action.” Copies of medical reports relied on by the employer must be attached to the notice. Minnesota Statutes § 176.84, subd. 1, additionally provides that “[n]otices of discontinuance . . . shall be sufficiently specific to convey clearly, without further inquiry, the basis upon which the party issuing the notice or statement is acting.” Pursuant to Minn. R. 5220.2630, subp. 4.B., items (5) and (12), a notice of intention to discontinue benefits must contain the “legal reason or reasons for the proposed discontinuance or reduction, stated in language which may be easily read and understood by a person of average intelligence and education, and in sufficient detail to inform the employee of the factual basis for the discontinuance or reduction,” along with copies of relevant medical reports.
The purpose of the form and filing requirements is to ensure the employee is aware the employer and insurer intend to stop paying benefits before the discontinuance, and on what basis, and to notify the employee of the procedures available to protect any entitlement to continuing benefits. Woelfel v. Plastics, Inc., 371 N.W.2d 215, 38 W.C.D. 43 (Minn. 1985); Mellema v. Tool Prods., 49 W.C.D. 487 (W.C.C.A. 1993). Minnesota Statutes § 176.239 provides for an informal, expedited proceeding - - an administrative conference - - in disputes over discontinuance of wage loss benefits. A discontinuance under § 176.239 is limited to the reasons specified in the NOID. The specificity requirements of the statutes and rule are an integral part of the statutory scheme, necessary to clearly identify and limit the issues that may be considered by the compensation judge in an administrative conference. The requirements of Minn. Stats. §§ 176.238 and 176.84 and Minn. R. 5220.2630, subp. 4. B., are there for a purpose and we cannot simply ignore these very specific provisions.
Even if the employer and insurer’s medical report, the attachment of which is separately required by the statutes and rules, could provide sufficient notice of the factual and legal basis for the NOID, the compensation judge considered and rejected the appellants’ argument, noting in his memorandum that the doctor’s opinion might raise more questions than it provided answers. The medical report of Dr. Falconer is not easily understood and could encompass a “multitude of possible legal defenses to a claim for temporary partial disability benefits.” Without further inquiry, the NOID provided the employee little guidance as to the specific factual or legal basis for the requested discontinuance. Compare Meemken v. Circuit Science, slip op. (W.C.C.A. July 24, 1998).
In this case, the employer and insurer’s NOID did not include a statement of facts clearly indicating the reason for the proposed discontinuance; neither was it sufficiently specific to convey clearly, without further inquiry, the basis for the discontinuance; nor did the NOID set forth the legal reason for the proposed discontinuance. We cannot, therefore, conclude that the employer and insurer’s NOID was in compliance with the statutes or the rule.
2. Dismissal of Objection to Discontinuance
The employer and insurer, nonetheless, maintain the compensation judge erred in refusing to hear the merits of the case before him on the employee’s objection to discontinuance. They assert that in virtually every case addressing the issue of the sufficiency of a NOID, the judge also addressed the merits of the employee’s claimed entitlement to ongoing wage loss benefits. Here, the judge dismissed the objection to discontinuance and ordered reinstatement of the employee’s temporary partial disability benefits solely on the basis of his finding that the NOID was legally deficient.
The supreme court in Woelfel v. Plastics, Inc., 371 N.W.2d 215, 38 W.C.D. 43 (Minn. 1985), recognized that application of the notice statute, in the context of the workers’ compensation act as a whole, may present conflicting considerations. In Woelfel, the employer and insurer filed a NOID that did not comply with Minn. Stat. § 176.241, subd. 1. The employee argued that because the employer and insurer’s notice was deficient they were legally obligated to pay wage loss benefits until a proper NOID was provided.
The supreme court acknowledged “[t]he statute . . . was designed to ensure that employers and insurers do not discontinue payment of compensation without giving the employee notice of their intended action and an adequate explanation of the reasons for it.” The court, however, rejected the employee’s argument finding “nothing in [the statute] to suggest that the legislature intended to impose an indeterminate liability to continue making compensation payments” on an employer and insurer who filed a deficient notice. The court observed that “imposing continuing liability for compensation to an employee no longer disabled by his work injury is inconsistent with the Workers’ Compensation Act as a whole” and could not “ascribe to the legislature an intent to require an employer who has attempted to comply with [the statute] . . . a continuing liability to pay compensation to an employee who is found to be no longer disabled or to be no longer disabled because of his work injury.” Id. at 217-18, 38 W.C.D. at 45-46. Although the notice did not fully comply with the requirements of the statute, the court stated the notice was sufficient to inform the employee of the intent to discontinue benefits, thus enabling the employee to file an objection to discontinuance and protect any entitlement to ongoing benefits.
Following the analysis in Woelfel, this court has held that even though statutorily deficient, a NOID is not fatally defective so long as the employee and her attorney have sufficient notice to allow them to take the necessary steps to protect the employee’s claim to ongoing wage loss benefits. See, e.g.,. Hernandez v. Bergerson Caswell, Inc., slip op. (W.C.C.A. Sept. 6, 2001); Barlau v. Prudential Ins. Co., 60 W.C.D. 426 (W.C.C.A. 2000); Mellema v. Tool Products, 49 W.C.D. 487 (W.C.C.A. 1993).
In this case, upon service of the NOID, the employee requested an administrative conference. The conference was conducted on August 26, 2009, attended by the employee with her attorney and counsel for the employer and insurer. In her order on discontinuance, the compensation judge clearly stated the positions taken by the parties. The employer and insurer argued the employee’s symptoms, disability, and work restrictions were causally related to her underlying rheumatoid arthritis rather than the work injury. The judge further stated the doctors disagreed concerning the cause of her current, ongoing disability, and the employee contended her work-related tendonitis continued to contribute to her ongoing disability. Following issuance of the administrative decision, the employee’s attorney promptly filed an objection to discontinuance. Under Minn. Stat. § 176.238, subd. 4, an employee may file an objection “if the employee disagrees with the commissioner’s decision issued under [section 176.239].” Filing of an objection entitles the employee to a de novo hearing before a compensation judge to determine the right of the employee to further compensation. Issues at the hearing are limited to the issues raised by the notice. Minn. Stat. § 176.238, subds. 4, 6. The issues raised by the notice were clearly defined by the compensation judge’s administrative order in this case.
A hearing was held before a compensation judge at the Office of Administrative Hearings on November 4, 2009. The issues identified by the compensation judge included whether the employee’s current disability was causally related to the work injury and whether the work injury was temporary or permanent in nature. This case, as in Woelfel, clearly presents the question of whether the employee continues to be disabled due to her work-related condition or is “no longer disabled because of [her] work injury.”
Basic fairness requires notice and a reasonable opportunity to be heard before decisions with respect to benefit entitlement may be made. Kulenkamp v. TimesSavers, Inc., 420 N.W.2d 891, 40 W.C.D. 869 (Minn. 1987). On these facts, we see no prejudice to the employee in considering the merits of the objection. The employee and her attorney acted promptly upon receipt of the NOID to request an administrative conference, and subsequently to file an objection to discontinuance. There is no reason to believe the employee was not fully aware of the basis for the proposed discontinuance by the time of the November 2009 de novo hearing. The employee and her attorney had sufficient notice of the reasons for the proposed discontinuance and time to prepare for the hearing before the compensation judge. Based upon the facts peculiar to this case, we conclude the compensation judge erred in dismissing the employee’s objection to discontinuance based on the defective July 31, 2009, NOID. The case is remanded to the compensation judge for a hearing on the merits.
 Gillette v. Harold Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 Minn. Stat. § 176.241, repealed effective July 1, 1987, was the predecessor to Minn. Stat. § 176.238. Subdivision 1 of that statute required the NOID be accompanied by “a statement of facts in support of the discontinuance of compensation payments and whatever medical reports are in the possession of the employer bearing on the physical condition of the employee.”
 Based on Minn. Stat. § 176.241, subd. 2, which stated that “until the notice and reports have been filed with the division, the liability of the employer to make payments of compensation continues.” The language of that subdivision is restated in Minn. Stat. § 176.238, subd. 2(b), which provides that “the liability of the employer to make payments of compensation continues until the copy of the notice and reports have been filed with the division.”
 The employer and insurer are correct in stating that Minn. Stat. § 176.84 was “enacted” in 1983, prior to the supreme court’s decision in Woelfel. Minn. Stat. § 176.84, subd. 3, states, however, that “This section shall not be effective until the commissioner adopts rules which specify what is required to be contained in the notice of discontinuance and the denial of liability.” Minn. R. 5220.2630, subp. 4.B., was published and adopted on March 2, 1987, effective March 9, 1987 (State Register, March 2, 1987, Vol. 11. No. 35, p. 15-30).
 An employer and insurer who fail to comply with the NOID notice and filing requirements do so at risk of a penalty or fine pursuant to Minn. Stat. § 176.225, subd. 1, Minn. Stat. § 176.238, subd. 10, and/or Minn. Stat. § 176.84, subd. 2.