DARLENE F. FOLLESE (nee HALL), Employee, v. EASTERN AIRLINES and FIDELITY & CASUALTY INS. CO., n/k/a CNA COMMERCIAL INS. CO., Employer-Insurer/Petitioners, and EASTERN AIRLINES and EMPLOYERS MUT. LIAB. INS. CO. OF WAUSAU, Employer-Insurer.

 

WORKERS= COMPENSATION COURT OF APPEALS

JULY 10, 2002

 

HEADNOTES

 

PERMANENT TOTAL DISABILITY - DISCONTINUANCE.  A discontinuance of benefits paid under an annuity for permanent total disability is not appropriate where there is no language in the Stipulation of Settlement stating the payments made to the employee are contingent on the employee remaining permanently totally disabled and the employer and insurer denied the employee was permanently and totally disabled at the time of the settlement.

 

VACATION OF AWARD - SUBSTANTIAL CHANGE IN CONDITION.  The petition to vacate the Stipulation of Settlement is denied where the employer and insurer maintained a denial of liability and  disputed entitlement to permanent total disability benefits in the stipulation for settlement, but agreed to settle the case on a lump sum basis, including the purchase of an annuity from which the employee is paid a monthly sum, and the basis for seeking vacation is the assertion that the employee is not now permanently and totally disabled.

 

Petition to discontinue permanent total disability or vacate award denied.

 

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

 

 

OPINION

 

THOMAS L. JOHNSON, Judge

 

Eastern Airlines and Fidelity and Casualty Insurance Company petition the Workers= Compensation Court of Appeals to discontinue payments of permanent total disability benefits or vacate an Award on Stipulation filed on July 7, 1980.  We deny the petition.

 

BACKGROUND

 

Darlene F. Follese, the employee, was born on June 4, 1942, and is currently 60 years of age.  On or about May 20, 1964, the employee was working for Eastern Airlines, the employer, when she allegedly sustained a head injury.  On July 5, 1965, the employee contended she sustained a low back injury while working for the employer.  On both these dates, the employer was insured by Fidelity and Casualty Insurance Company, now known as CNA Commercial Insurance Company.  On December 17, 1966, and July 5, 1968, the employee contended she sustained additional work-related injuries to her low back.  The employer was then insured by Employers Mutual Liability Insurance Company of Wausau.

 

In 1974, the employee filed a claim petition which proceeded to hearing before Compensation Judge Daniel B. Gallagher.  In a Findings and Determination dated December 31, 1979, the compensation judge found the employee sustained a cerebral concussion on May 20, 1964, and a consequential post-traumatic seizure disorder.  The judge found the employee was permanently and totally disabled as a result of the employee=s head injury and seizure disorder, and ordered the employer and CNA to pay permanent total disability benefits at the rate of $45.00 a week, together with supplemental benefits from the Special Compensation Fund.

 

The employer and CNA appealed the compensation judge=s decision to the Workers= Compensation Court of Appeals.  While the appeal was pending, the parties entered into a Stipulation of Settlement to fully and finally settle the employee=s claims for workers= compensation benefits, with the exception of future medical expenses.  The settlement provided:

 

2.  The employee shall be paid permanent total disability benefits at a weekly compensation rate of $45.00 with such benefits to commence as of November 18, 1975.  Such weekly benefits for the period of time from November 18, 1975 to the date that this settlement agreement is approved shall be paid by the Fidelity and Casualty Insurance Company in a lump sum to the employee . . . .  The Fidelity and Casualty Insurance Company will purchase a guaranteed annuity from Insurance Company of North America or other reputable insurer under the terms of which $45.00 per week shall continue to be paid to the employee less approved attorney=s fees from the date that this settlement agreement is approved with such weekly payments to continue to June 6, 2004 (Employee=s 62nd birthday   D.O.B. 6/6/42) and, in the event that the employee dies prior to her 62nd birthday, such payments less approved attorney=s fees shall continue to be made to the designated beneficiary or beneficiaries of the employee from the date of her death until June 6, 2004. . . .

 

3.  Fidelity and Casualty Insurance Company will pay the employee continuing supplementary benefits at the applicable rates with such payments to commence as of November 18, 1977.  The State Treasurer, as Custodian of the Special Compensation Fund, will make reimbursement to the Fidelity and Casualty Insurance Company for all supplementary benefits which the Fidelity and Casualty Insurance Company pays in accordance with this settlement agreement.

 

* * *

 

5.  The payments which are being made by the employer and Fidelity and Casualty Insurance Company pursuant to this settlement agreement are not to be deemed as an admission of liability by said employer and insurer and said employer and insurer continue to deny liability in all respects on the claims being brought by the employee and do not waive any defenses that they may have.

 

An Award Based on Stipulation was filed on July 10, 1980.  CNA then purchased an annuity consistent with the terms of the settlement and the stipulated benefits have been and continue to be paid to the employee.

 

In April 2001, CNA was informed the employee was working at a restaurant called AThe Diner@ in Minneapolis.  On April 23, 2001, an investigator from CNA visited the diner and obtained a restaurant survey card which listed ADarlene@ as the manager of the restaurant and AFrank@ as the owner.  On May 1, 2, 7, 8, 9 and 10, the employee=s automobile was seen parked at the diner.  The investigator also obtained newspaper articles about The Diner.  In July 1998, a local newspaper ran a story describing the employee as the manager.  In November 2000, another local newspaper gave the history of The Diner and stated the owner, Frank Call, trained his daughter, Darlene Follese, to run the restaurant so that it was a father-daughter management team.  Finally, CNA obtained video surveillance of the employee=s activities at the diner in July and September 2001.  The tapes show the employee serving coffee, water and food to customers, apparently directing other employees, and performing other activities in the restaurant. 

 

David Berdahl, a rehabilitation consultant, was retained by CNA to provide a vocational assessment of the employee.  Mr. Berdahl reviewed numerous medical records, the surveillance tapes taken of the employee, and the related newspaper articles.  From the information he reviewed, Mr. Berdahl concluded the employee was functioning as the manager of The Diner Restaurant, which required customer service skills, supervisory skills, knowledge of retail or service-related environments, and waitressing skills.  Based upon her skills and medical restrictions, Mr. Berdahl concluded the employee could work as a cashier, restaurant manager, receptionist, and hotel/motel front desk clerk.  These employments paid between $8.11 and $11.56 per hour.  Based on the information he reviewed, Mr. Berdahl concluded the employee demonstrated residual functional capabilities which would allow her access to bona-fide, sustained and gainful employment.

 

DECISION

 

In Ramsey v. Frigidaire Co. Freezer Prods., 58 W.C.D. 411 (W.C.C.A. 1998), this court established a procedure to discontinue permanent total disability benefits separate from the statutes permitting a vacation of an award on stipulation.  See Minn. Stat. '' 176.461 and 176.521.  In such cases, the court held the Workers= Compensation Court of Appeals may consider petitions to discontinue permanent total disability benefits if the stipulation for settlement contains language demonstrating the parties intended benefits would continue only so long as the employee remained permanently and totally disabled.[1]  The employer and CNA contend this is such a case.

 

CNA argues that, under the language of the stipulation, it is axiomatic that its agreement to pay ongoing permanent total disability benefits assumes the employee remains, in fact, permanently and totally disabled.  This conclusion, CNA contends, is further supported by the fact that the stipulation provides the permanent total disability payments are not to be deemed an admission of liability by the employer and CNA and they continue to deny liability.  CNA argues that since the employee is now able to work, she is not permanently and totally disabled and CNA is entitled to discontinue benefits.  We find these arguments unpersuasive.

 

In their settlement agreement, the parties agreed the employee would be paid permanent total disability benefits at the rate of $45.00 per week from November 18, 1975 through June 6, 2004.  Should the employee die prior to June 6, 2004, the stipulation provides the benefits continue to her designated beneficiary until that date.  The settlement agreement contains no language stating the payments are contingent on the employee remaining permanently and totally disabled.  In fact, CNA denied the employee was permanently totally disabled.  It is evident from the language of the stipulation the parties settled a disputed claim by a lump sum payment to the employee spread over a period of years.  Accordingly, we conclude this is not an appropriate case for a petition to discontinue permanent total disability benefits.

 

CNA also seeks to vacate the award on stipulation, contending the employee has undergone a substantial change in condition.  They argue the evidence shows the employee actively engaged in employment activities on more than a sporadic or insubstantial basis.  This evidence, together with the vocational opinion of Mr. Berdahl, CNA contends, supports a conclusion that the employee is employable and has an earning capacity.  Accordingly, CNA seeks to vacate the award on stipulation.

 

In this case, CNA purchased a guaranteed annuity from another insurer, under the terms of which weekly benefit payments were made to the employee.  The terms of the annuity contract are not before the court so we do not know whether CNA would somehow benefit financially if the stipulation was vacated.  This court has previously held we will not vacate a decision or an award unless there is a practical reason to do so.  See Henry v. American Bldg. Maintenance, slip op. (W.C.C.A. Jan. 27, 1994).

 

In the settlement document, the parties settled numerous claims, including any claim the employee was permanently and totally disabled.  The employer and CNA, however, specifically denied liability for all claims asserted by the employee, and the settlement agreement provided the payment was not to be deemed an admission of liability.  In exchange for the settlement, the employer and CNA agreed to purchase a guaranteed annuity which would pay a $45.00 per week benefit to the employee until June 6, 2004, her 62nd birthday.  The fact that the payment to the employee is spread over a period of years does not change the fact that the settlement in this case is, essentially, a lump sum payment to the employee.  The employee=s entitlement to permanent total disability benefits was disputed by the employer and settled by means of a lump sum payment to the employee.  In such case, a petition by an employer and insurer to vacate the settlement, on the basis that the employee is not permanently totally disabled, is not appropriate and is denied.

 

 


[1] See also Haberle v. Erickson Mills, Inc., 58 W.C.D. 487 (W.C.C.A. 1998).