JOHN W. VANEPS, Employee/Appellant, v. BLANDIN PAPER CO., SELF-INSURED/HELMSMAN MGMT. SERVS./LIBERTY MUT. INS., Employer/Cross-Appellant, and SPECIAL COMP. FUND.
WORKERS’ COMPENSATION COURT OF APPEALS
AUGUST 29, 2011
CALCULATION OF BENEFITS; PENALTIES; ATTORNEY FEES. Under the circumstances of this case, the compensation judge erred in concluding that the employer was entitled to withhold ongoing attorney fees after fee payment had been made in accordance with a stipulation for settlement. As a result, the employer’s improper withholding resulted in an underpayment of benefits for one of the two weeks in question, and remand was necessary to allow the judge to consider the employee’s penalty claim for that one week.
Reversed and remanded.
Determined by: Wilson, J., Pederson, J., and Milun, C.J.
Compensation Judge: Gary P. Mesna
Attorneys: Thomas R. Longfellow, Longfellow Law Office, St. Paul Park, MN, for the Appellant. Leslie M. Altman, Littler Mendelson, Minneapolis, MN, for the Cross-Appellants. Lorelei Hoyer, St. Paul, MN, for the Special Compensation Fund.
DEBRA A. WILSON, Judge
The employee appeals from the compensation judge’s denial of his claim for penalties based on the employer’s alleged underpayment of wage loss benefits. The employer appeals from the judge’s failure to make a decision as to the extent of a past overpayment. We reverse and remand the matter for further proceedings.
On September 13, 1991, the employee sustained a work-related low back injury while employed by Blandin Paper [the employer], which was self-insured for workers’ compensation liability. The matter has been the subject of several settlement agreements.
In a 2007 stipulation, the parties agreed that the employee had been permanently and totally disabled since September 18, 2002, and that he had become eligible for supplementary benefits as of October 18, 2002. The parties further agreed that the employer had paid the employee $25,000 in permanent total disability benefits as of June 2, 2003, and had therefore become entitled to begin taking the social security offset as of that date. Because the employer had not taken that offset, the employee had received a substantial overpayment of workers’ compensation benefits, the extent of which had not been determined as of the date of the settlement. According to the stipulation, the parties anticipated that the employee would receive a retroactive reimbursement of social security benefits and that, once that reimbursement occurred, final calculations as to the exact amount of the employer’s overpayment would be incorporated into a new settlement agreement. In the meantime, the parties agreed that
upon execution of the present Stipulation, the Employer and/or its TPA will be entitled to reduce its ongoing payment of permanent total disability benefits to the Employee by the offset of Social Security benefits received pursuant to Minn. Stat. § 176.101, subd. 4, and will also be entitled to reduce its payment of ongoing permanent total disability benefits to the Employee to recover its overpayment pursuant to Minn. Stat. § 176.179.
On the issue of attorney fees, the 2007 stipulation provided, in part, that the employer would deduct a total of $11,601.70 from the employee’s ongoing permanent total disability benefits and pay that amount to the employee’s attorney. An award on stipulation was issued on August 15, 2007. Subsequently, in April of 2010, the parties settled claims for permanent partial disability and penalties, and the employee’s attorney was paid another $7,000 in fees.
The matter came on for hearing before a compensation judge on December 21, 2010, for resolution of several issues. The employer sought reimbursement from the Special Compensation Fund for supplementary benefits it had paid. At hearing, the Fund agreed to reimburse the employer for those benefits in the amount of $112,041.11. For his claim, the employee sought penalties based on an alleged underpayment of benefits, contending that the employer had improperly withheld attorney fees long after the fees specified by the 2007 stipulation had been paid. The employee also contended that the employer had taken a larger overpayment credit from weekly benefits than allowed by statute. The employer sought a finding by the compensation judge concerning the precise dollar amount of its past overpayment. A snowstorm apparently prevented the employee from attending the hearing. Due to issues related to the employee’s inability to appear, the employee’s counsel limited his underpayment and penalty claim to two specific weeks.
In a decision issued on February 11, 2011, the compensation judge calculated the payment to which the employee had been entitled for the two weeks in question. Then, concluding that the employer had been entitled to withhold attorney fees, the judge found that the employee had in fact been overpaid, rather than underpaid, and he therefore denied the employee’s penalty claim. In an amended findings and order issued a week later, the judge indicated that the employer’s overpayment calculations for the entire period at issue were erroneous, and he directed the parties to recompute the employee’s benefits using the same method the judge had used to decide the employee’s underpayment and penalty claim. Both parties appeal.
STANDARD OF REVIEW
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 (2010). 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, 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 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).
“[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers’ Compensation Court of Appeals] may consider de novo.” Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).
1. Underpayment and Penalty Claim
In connection with his underpayment claim, the employee submitted copies of the weekly workers’ compensation benefit checks issued to him from August 29, 2007, to September 28, 2010. However, because of issues related to the employee’s inability to attend the hearing, counsel for the employee limited the employee’s underpayment and penalty claim to two specific weeks: the week of March 3 to March 9, 2010, and the week of September 1 to September 7, 2010.
In order to resolve that claim, the compensation judge first determined the total amount of benefits payable to the employee for each of those two weeks, prior to any reduction for overpayment or attorney fees. He then calculated and subtracted the 20% credit to which the employer was entitled based on its past overpayment. Finally, he determined that the employer had been entitled to withhold attorney fees, and he calculated and subtracted those fees for the week of March 3, 2010. For the other week at issue, beginning September 1, 2010, no attorney fees had been withheld, so no subtraction was required. After performing these calculations, the compensation judge concluded that the employee had been overpaid, not underpaid, for those two weeks, and he denied the employee’s claim for penalties.
The primary dispute on appeal concerns the compensation judge’s decision that the employer was entitled to continue to withhold attorney fees, even after $13,000 in fees had been paid in this case. In coming to this conclusion, the judge explained, in his memorandum, as follows:
Attorney Longfellow argues that the self-insured employer should not have withheld attorney fees beyond $13,000. The court does not agree. There are numerous instances in which an attorney may be entitled to fees beyond the initial $13,000 statutory limit. The employer must protect itself against a claim for additional attorney fees and the statutory lien for such fees. If attorney Longfellow intended to waive his claim for additional fees, he could have instructed the insurer to not withhold additional fees. There is no evidence in the record that he did so. Therefore, the employer was entitled to continue to withhold fees.
We conclude that the judge erred in his decision on this issue.
An attorney’s entitlement to fees is dependent on the existence of a genuine dispute. Minn. Stat. § 176.081, subd. 1(c). By the same token, as a general rule, an employer or insurer should not withhold fees from benefits unless the employee’s entitlement to those benefits was in some way disputed. Here, the 2007 stipulation reflected the parties’ agreement that the employee’s attorney was entitled to $11,601.70 in fees from the employee’s ongoing permanent total disability benefits. Those stipulated fees, when paid, apparently brought the total fee paid in this case to $13,000 or more. Given the language of the 2007 settlement, the absence of evidence of any dispute over the employee’s entitlement to ongoing permanent total disability benefits, and the fact that the employee’s attorney never requested the employer to withhold fees beyond the $11,601.70 specified in the agreement, the employer was not entitled to withhold fees, and that unjustified withholding resulted in an underpayment in benefits to the employee.
Because the compensation judge found no underpayment, he awarded no penalties pursuant Minn. Stat. § 176.225, subds. 1 or 5. Given our conclusion as to the underpayment for the week of March 3, 2010, we reverse and remand the matter for reconsideration of the employee’s penalty claim for that one week.
2. The Employer’s Overpayment Claim
At hearing, the employer sought a finding from the compensation judge specifying the precise amount of its previous overpayment. In support of this claim, the employer submitted an exhibit purporting to detail the figures necessary to calculate the overpayment, which the employer claimed amounted to $31,479.11 as of the hearing date.
In his amended findings and order, the compensation judge found as follows with respect to the employer’s claim:
21. The employer may have overpaid benefits for other periods of time. The parties shall recompute the benefits to which the employee was entitled in the same manner that the court has done herein, for the other periods of time. If the recalculation shows an overpayment, and there is no dispute over the calculations, the employer may recover the overpayment with a 20 percent credit as provided by Minn. Stat. § 176.179. If there is a dispute over specific calculations, the parties may request a further hearing to resolve the dispute.
In his accompanying memorandum, the judge explained,
The employer has requested amended findings determining, pursuant to Exhibit 2, that they are entitled to an overpayment credit of $31,479.11. However, the calculations in Exhibit 2 are clearly in error. For example, for the period from March 3 to March 9, 2010, the court calculated an overpayment of $10.16. Exhibit 2 does not give weekly totals, but for the period from October 1, 2009 to March 9, 2010, a period of 22.8 weeks, it shows an overpayment of $1,652.38. Dividing this amount by 22.8 weeks, would give a weekly overpayment of $72.47.
In its letter brief on appeal, the employer contends that it “appealed to this court specifically to dispute the Compensation Judge’s overpayment calculations during [the weeks of March 3, 2010, and September 1, 2010].” However, at oral argument, counsel for the employer conceded that the judge’s calculations for those two weeks were likely correct. In any event, we cannot conclude that the judge erred by ordering the parties to calculate the employer’s overpayment on a weekly basis, using the method employed by the judge, and to then bring any resulting disputes before the judge for further hearing, if required. Both parties concede that a remand is required if a specific dollar amount for the overpayment is to be determined, and the employer is entitled to a finding on this issue. However, the compensation judge may decline to rule on this issue until the parties submit the required evidence and/or calculations in the form he specifies. If either party declines to submit calculations as requested by the compensation judge, the judge may take that failure as an agreement with the opposing party’s submissions. As the judge suggested, the most efficient course would be for the parties to bring only disputed calculations to the judge for resolution. Again, however, the judge may require the parties to address the overpayment claim in the manner he sees fit.
 The employer also moves this court to strike the employee’s brief because attachments to the brief were not submitted at hearing and are therefore not part of the record on appeal. We have not considered the cited attachments, but we deny the request to strike the brief.
 In his findings, the compensation judge set forth the applicable adjusted compensation rate ($848.03), the social security offset ($455.63), the resulting permanent total disability benefit figure ($392.42), the supplementary benefit payable ($169.65), the total amount payable to the employee prior to credit for overpayment or attorney fee withholding ($562.07), the amount of the employer’s 20% credit for overpayment ($112.41) the resulting amount payable to the employee before withholding of attorney fees ($449.66), the amount of fees properly withheld for the week of March 3, 2010, ($89.93), and the resulting net payment owed to the employee for that week ($359.73). Calculated using these figures, the compensation judge found an overpayment of $10.16 for the week of March 3, 2010, and an overpayment of $28.78 for the week of September 1, 2010.
 See Minn. Stat. § 176.081, subd. 1(b) (all fees for services related to the same injury are cumulative and may not exceed $13,000). However, fees beyond the statutory cap may be payable pursuant to the rationale of Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999), and related cases.
 In fact, the employer did not simply withhold but apparently actually paid the employee’s attorney some fees beyond those specified by the stipulation. At oral argument, counsel indicated that he had returned those fees to the employer.