ARVID TRONE, Employee, v. DAHLEN TRANSP., UNINSURED, Employer, and SPECIAL COMPENSATION FUND.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 7, 2000

 

HEADNOTES

 

APPORTIONMENT - EQUITABLE; CREDITS & OFFSETS.  The employer on the risk for an injury which is a substantial contributing cause of the employee=s permanent total disability is not entitled to reduce benefits payable to the employee by a credit based on the alleged contributory share of prior work injuries sustained in other employment.  Where no claim for contribution or reimbursement has been made by the most recent employer against the prior employer and insurer, and where that prior employer is not a party to the hearing on the employee=s claim petition by virtue of prior settlements with the employee, the judge was not required to determine whether, and in what proportions, such prior injuries contributed to the current disability.

 

Affirmed.         

 

Determined by Wheeler, C.J., Johnson, J., and Rykken, J.

Compensation Judge:  Cheryl LeClair-Sommer

 

 

OPINION

 

STEVEN D. WHEELER, Judge

 

The Special Compensation Fund appeals from the compensation judge=s failure to apportion part of the liability for the employee=s permanent total disability to the employee=s January 1980 work injury and from the denial of a credit against benefits payable.  We affirm.

 

BACKGROUND

 

On January 4, 1980, and again on February 5, 1980, the employee, Arvid Trone, sustained work-related injuries to his left knee.  The employer for both of these injuries was Spector Red Ball, Inc., which was insured by Transport Insurance Company.  On August 1, 1984, the employee settled his claims arising out of the February 5, 1980 injury on a full, final and complete basis except for medical expenses which were left open.  (12/30/98 F & O: Findings 1 - 4 [unappealed].) 

 

The employee sustained a right knee injury, not directly at issue in the present case, on May 26, 1994, while employed by Dahlen Transport, Inc.  He sustained a third left knee injury on July 10, 1997, again while in the employ of Dahlen Transport.  (12/30/98 F & O: Findings 5 - 8 [unappealed].) 

 

The first hearing in this matter was held on October 20, 1998, at which time a compensation judge considered the employee=s claim for temporary total disability compensation.  The employee was found to be temporarily totally disabled from July 16, 1997, through the date of hearing.  The judge found that the 1997 injury was a permanent aggravation of the underlying degenerative condition of the left knee and was a substantial contributing factor to the development of a consequential injury to the right knee.  The judge apportioned responsibility for the temporary total disability and medical benefits 50 percent to the 1980 injuries and 50 percent to the 1997 injury.  However, in her order the judge placed 100 percent of liability for payment of compensation benefits on uninsured Dahlen Transport and thereby on the Minnesota Special Compensation Fund, which is responsible for Dahlen=s workers= compensation payments.  (12/30/98 F & O: Finding 10, 11.)

 

The employee appealed to this court, asserting that, as the January 1980 injury had not been closed out by settlement, the compensation judge had erred in failing to apportion the 50 percent liability determined for the 1980 injuries between the January and February 1980 injuries.  The Fund did not join in this appeal.  Prior to this court=s hearing the appeal, the employee and employer Spector Red Ball and its insurer entered into a stipulation for a full, final and complete settlement, closing out benefits for the January 1980 injury in return for a lump sum payment.  The settlement was submitted to this court for review.  The Special Compensation Fund submitted a letter on May 17, 1999, simply objecting to approval of the stipulation.  On May 26, 1999, this court served and filed an award on stipulation approving the settlement.  In the memorandum accompanying the award, Judge Richard C. Hefte of this court noted that the Special Compensation Fund had not appealed the findings and order and that the Fund=s letter had not set forth factual or legal reason not to approve the stipulation.  The employee=s appeal was dismissed.  (Judgment Roll.)

 

On September 3, 1999, the employee filed a claim petition against the employer Dahlen Transport seeking permanent total disability benefits from and after July 16, 1999.  The Special Compensation Fund moved for the joinder of Spector Red Ball and Transport Insurance Company, on the basis that this employer and insurer Amay be liable in whole or in part for workers= compensation benefits to the employee.@  The compensation judge noted that the judgment roll disclosed that the prior injuries with employer Spector Red Ball had been closed out by settlement and denied the motion for joinder.  The matter came on for hearing before a compensation judge of the Office of Administrative Hearings on December 7, 1999.  Following the hearing, the compensation judge found that the employee was permanently totally disabled from July 16, 1999 through the date of hearing, and that the July 16, 1997 work injury was a substantial contributing factor to the employee=s permanent total disability.  The judge further found that the July 16, 1997 work injury was 50 percent responsible for the permanent total disability.   Because employer Spector Red Ball was not a party to the matter before the compensation judge, the judge determined she had no jurisdiction to apportion liability for and between the January 4, 1980 and February 5, 1980 work injuries.  The compensation judge thus denied the request by Dahlen and the Special Compensation Fund for such an apportionment, and further rejected their request for a credit against the permanent total disability awarded.  The judge ordered Dahlen Transport and the Fund to pay 100 percent of the permanent total disability benefits due.  (2/8/2000 F & O: Findings 4, 5.)  The Special Compensation Fund appeals.

 

STANDARD OF REVIEW

 

The issue on appeal in this matter involves the interpretation and application of case law to undisputed facts.  While this court may not disturb a compensation judge=s findings of fact unless clearly erroneous and unsupported by substantial evidence in the record as a whole, Minn. Stat. ' 176.421, subd. 1(3) (1983), a decision which rests upon the application of the law to undisputed facts involves a question of law which this court may consider de novo.  Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607 (W.C.C.A. 1993).

 

DECISION

 

This case presents an appeal from the determination that  Dahlen Transport, the employer on the risk for the employee=s most recent injuries, is liable to pay the employee=s permanent total disability benefits in full without first applying a credit requested by Dahlen and the Fund for a portion of that disability allegedly attributable to a prior work injury in January 1980 while the employee was in the service of employer Spector Red Ball, Inc.^[1]

 

It is a longstanding principle in Minnesota workers= compensation that an employer takes an employee with any pre-existing maladies the employee may have, and even though a work injury may combine with the effects of prior injury to cause disability, the employer and insurer on the risk for the most recent work injury having a causal relationship to the employee=s disability are considered to bear liability for the entire compensation.  However, where two or more work injuries combine to produce the final disability, common law principles of equitable apportionment have long been applied in Minnesota to mitigate the potential harshness of the liability falling on the last injury employer and insurer.  Where such apportionment is available, successive employers and insurers may be required to contribute their proportional share of the employee=s wage loss benefits.   Goetz v. Bulk Commodity Carriers, 303 Minn. 197, 226 N.W. 2d 888, 27 W.C.D. 797,  (Minn. 1975); DeNardo v. Divine Redeemer Mem. Hosp., 450 N.W.2d 290, 42 W.C.D. 626 (1990); see also Silva v. Maplewood Care Center, 582 N.W.2d 566, 568, 58 W.C.D.386 at 388-390 (Minn 1998).

 

While equitable apportionment thus divides the liability for payment of benefits between employers and insurers responsible for injuries contributing to the final disability, Minnesota statutory and case law also provides remedies to an employer or insurer which has paid benefits in error or which pays, voluntarily or under an order, benefits for which another party is found to be liable in whole or in part.  For example, under Minn. Stat. ' 176.179, an employer and insurer may obtain a credit against certain future benefits payable to an employee for payments it has made to the employee under a mistake of fact or law.  Contribution and reimbursement also have long been recognized under Minnesota workers= compensation law.  In Haverland v. Twin City Milk Producers Ass'n, 142 N.W.2d 274, 23 W.C.D. 764 (Minn. 1966), our supreme court held that where the last employer and insurer on the risk pay full benefits to the employee after a series of work injuries together substantially contribute to cause disability, that employer may seek contribution or reimbursement directly from the employers and insurers on the risk for the prior contributing injuries for that part of the benefits it pays attributable to the prior contributing injuries. 

 

In the present case, the compensation judge found that the employee was permanently totally disabled from July 16, 1999 through the date of hearing.  She found that 50 percent of the total disability during this period was the result of the July 16, 1997 work injury.  The judge refused to apportion liability between the January 4, 1980 or February 5, 1980 work injuries, as employer Spector Red Ball had not been joined in the action, and the liability of Spector Red Ball to the employee had already been closed out by the 1984 and 1999 settlements.  Accordingly, the compensation judge ordered that employer Dahlen Transport, whose 1997 injury was a substantial contributing cause of the employee=s permanent total condition, pay 100 percent of the benefits due to the employee.  As Dahlen Transport was uninsured for workers= compensation liability, the liability for payment fell upon the Special Compensation Fund [AFund@].  The Fund appeals from the judge=s failure to apportion and denial of a credit.

 

To support its purported right to a credit, the appellant relies on two cases.  The first of these cases is Robert D. Pierce v. Robert D. Pierce Ltd., 363 N.W.2d 76, 37 W.C.D. 514 (Minn. 1985).  There, an employee sustained a 1975 injury to the left leg while working for an Alaska employer.  Various benefits were voluntarily paid by the Alaskan employer.  The employee subsequently returned to work in Minnesota.  In June 1980 the employee began to experience additional problems with his left leg in his Minnesota employment.  He was hospitalized and diagnosed with acute thrombophlebitis.  His treating physician rendered the opinion that the 1975 injury was a major contributing cause of the thrombophlebitis and the employee then filed a claim in Alaska seeking further benefits from the Alaska employer.  The Alaska employer denied liability and contended that the employee=s thrombophlebitis was not causally related to the 1975 injury.  On June 11, 1981, the employee reached a settlement with the Alaska employer and received $60,000 in a lump sum payment, Ato resolve all issues with respect to compensation for disability.@  The employee then filed a claim petition in Minnesota, alleging that the Minnesota work between 1977 and June 1980 had resulted in his thrombophlebitis condition.  A compensation judge determined that the Minnesota employment had been a substantial contributing factor in the development of the thrombophlebitis.  The Minnesota employer sought a credit for the proceeds of the Alaska settlement award.  This credit was denied by the compensation judge and, on appeal, by this court.  The Minnesota Supreme Court, however, reversed the failure to award a credit, noting that, under prior Minnesota cases, the settled rule under Minnesota law was that an award or settlement obtained in one state Adoes not bar a successive award in another state deducting the award of settlement received in the first proceeding from the second.@  Pierce, 363 N.W.2d at 762, 37 W.C.D. at 516 (emphasis added; citations omitted).  The Fund argues that this case supports their claim for a credit in the amount of the settlement proceeds received by the employee from his settlement with Spector Red Ball for the January 1980 injury.

 

The court=s decision in Pierce was based solely upon application of longstanding principles related to coordination of benefits between Minnesota and non-Minnesota injuries.  The issue in Pierce was, therefore, one of avoiding the prospect that an employee might achieve a double recovery by resorting to workers= compensation claims in more than one state.  The present case, on the other hand, involves an issue of whether a Minnesota employer can reduce benefits payable to an employee where the disability for which benefits is paid may result in part from prior Minnesota employment injuries.  As such, we do not believe that the Pierce case presents authority for an award of the kind of credit requested by the Fund in the present case.

 

The second case on which the Fund relies is that of Wolk v. Alliant Tech. Systems, slip. op. (W.C.C.A. July 18, 1997).  In Wolk, the employee sustained a 1991 injury while working for Alliant Tech and a 1993 injury while working for employer SciMed.  SciMed initially paid some compensation benefits but later alleged that these benefits had been paid by mistake of fact.  The employee subsequently filed a claim petition against SciMed and Alliant Tech.  Alliant admitted the 1991 injury but SciMed denied its alleged injury.  The employee reached a settlement with employer Alliant after the 1993 injury and immediately prior to the hearing.  The employee=s claim against SciMed went on for hearing before a compensation judge who determined that the employee had not sustained the alleged injury with SciMed.  However, the compensation judge denied SciMed=s claim for reimbursement against Alliant.  On appeal, this court reversed and remanded.

 

While the Fund cites Wolk as support for its claim that it should be entitled to apportion out from benefits payable to the employee, an apportioned contribution of liability attributable to the January 1980 injury, we conclude that the Wolk case does not support this proposition.  The  Wolk case involved not a credit, but a claim for contribution or reimbursement from the first employer.  We find nothing in Wolk which supports the notion that the Fund should be able to reduce the amount of benefits it is required to pay on behalf of employer Dahlen Transport to the employee for the disability arising from the 1997 injury. 

 

The Fund has offered no clear precedent or statutory authority to support the use of a credit against the employee=s benefits in the present situation.  Although our statutes provide for a credit in limited circumstances, as where benefits were paid in error, the use of this remedy is limited to cases where benefits have already been paid by the employer or insurer seeking to apply the credit, a situation clearly not present in this case.  See Minn. Stat. ' 176.179.   A kind of credit against ongoing permanent total disability benefits otherwise payable, in the form of what has become known as the Asocial security offset,@ is provided by Minn. Stat. ' 176.101, subd. 4, but this reduction applies only where benefits are simultaneously being paid for the same injury by a government disability program.  We are, accordingly, unpersuaded that there is any basis for the credit requested by the Fund in this case.  

 

Accordingly, we hold that the compensation judge correctly denied the Fund=s request for a credit against the benefits payable to the employee. 

 

The compensation judge also ruled properly in refusing to determine the extent of the contribution, or apportionment, of the 1980 injuries to the present disability.  That question would be relevant only to a claim seeking contribution or reimbursement by Dahlen Transport against Spector Red Ball, or to a claim by the employee against Spector Red Ball for benefits.  Neither of these was before the compensation judge at the hearing.  A claim for contribution or reimbursement was not alleged, a claim by the employee was precluded by the prior settlements, and Spector Red Ball was not a party to the matter being determined.  Therefore, we affirm the findings and order of the compensation judge.