WILLIAM L. MCDOWELL, Employee, by RENEE KOHLER, Petitioner, v. PARSONS ELEC. CO. and CNA COMMERCIAL INS. CO., Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

MAY 24, 2002

                                                                             

HEADNOTES

 

PERMANENT PARTIAL DISABILITY; DEPENDENCY BENEFITS - HEIRS; STATUTES CONSTRUED - MINN. STAT. ' 176.021, SUBD.  3.  In Owens v. Water Gremlin Co., 605 N.W.2d 733, 738, 60 W.C.D. 36, 43 (Minn. 2000), the supreme court found that Athe plain meaning@ of the statutory language itself in Minn. Stat. ' 176.021, subd.  3, Adirects further payments of vested PPD benefits after the death of the employee,@and in the instant case the court found nothing in that same language itself to compel a different result merely on grounds that the heirs in this case were nondependent at the time of the decedent=s death, in spite of new documentary evidence as to legislative intent and in spite of certain incompletely revised provisions in the statute clearly related to statutory concepts that had been repealed.

 

PENALTIES; STATUTES CONSTRUED - MINN. STAT. ' 176.225, SUBD. 5.  An award under Minn. Stat. ' 176.225, subd.  5, is a penalty, not an increase in the decedent=s permanency, and where no entitlement to an award of penalties for inexcusable delay in payment of benefits was ever claimed by the decedent, much less vested in him, prior to his death, the Petitioner heir had no statutory basis or standing to assert a claim to such penalties, and the compensation judge=s conclusion to the contrary was reversed.

 

Affirmed in part and reversed in part.

 

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

Compensation Judge:  James R. Otto

 

 

OPINION

 

WILLIAM R. PEDERSON, Judge

 

The employer and insurer appeal from the compensation judge's award of the deceased employee=s unpaid permanent partial disability benefits and certain penalties to the deceased employee=s nondependent heirs.  We affirm the award of the permanency benefits and reverse the award of penalties.

 

BACKGROUND^[1]

 

On April 1, 1998, William McDowell sustained a cervical injury, a skull fracture, and left-side hearing loss all as results of a work-related injury in the course of his employment with Parsons Electric Company, where he was earning a weekly wage of $970.40.  Parsons Electric Company [the employer] and its insurer admitted liability for the injury and commenced payment of various benefits.  On June 26 or 29, 1998,^[2] Mr. McDowell underwent an MRI scan of his cervical spine, which revealed a herniated disc at C4-5, and on August 4, 1998, he underwent an anterior fusion at that level, approved and paid for by the employer and insurer.  By October 6, 1998, the insurer had received a copy of Mr. McDowell=s neurological records correlating his weakness and radicular findings with the disc herniation revealed on the June 1998 MRI scan, and by October 16, 1998, the insurer had apparently received a copy of that scan itself or a report of it.  Mr. McDowell subsequently returned to work without a wage loss on December 6, 1998.  On May 28, 1999, nearly six months later, the employer and insurer paid Mr. McDowell a lump sum of $8,625.00 in compensation for an 11.5% whole-body impairment related to his cervical spine injury.  Subsequently, on June 1, 1999, the employer and insurer completed a Notice of Benefit Payment, reflecting that the $8,625.00 had been paid in weekly installments beginning on December 7, 1998, the day after Mr. McDowell had returned to work.  On June 18, 1999, that Notice of Benefit Payment was apparently served and filed, together with a report containing Mr. McDowell=s treating physician=s opinion that Mr. McDowell had reached maximum medical improvement [MMI] with regard to his cervical condition on May 26, 1999.

 

On June 16, 1999, the treating physician for Mr. McDowell=s hearing condition, Dr. Paisner, had reported that Mr. McDowell was in for his Afinal@ evaluation although his Atinnitus hasn=t changed.@  Subsequently, between June 23, 1999, and early December of 1999, the insurer made several inquiries of Dr. Paisner as to MMI with regard to Mr. McDowell=s hearing condition.  On October 5, 1999, Dr. Paisner returned a Healthcare Provider Report to the insurer, on which the doctor indicated that Mr. McDowell had reached MMI with regard to his hearing loss, which Dr. Paisner rated as an 8% whole body permanent partial disability.  A month and a half later, on November 18, 1999, the insurer requested a clarification of that rating, because Dr. Paisner had not cited any scheduled basis for it.  There is no evidence that Mr. McDowell was ever served with Dr. Paisner=s October 5, 1999, MMI report, that he received any further treatment for his hearing condition, or that his symptoms ever improved subsequent to his June 16, 1999, appointment with Dr. Paisner.  It is uncontested that Mr. McDowell=s permanent partial disability was ascertainable prior to December 4, 1999, and that the hearing loss portion of that disability is, in keeping with Dr. Paisner=s opinion, ratable at 8% of the whole body and compensable at $5,310.00, after reduction of the 8% rating to 7.08% pursuant to Minn. Stat. ' 176.105.

 

On December 4, 1999, Mr. McDowell died in a nonwork-related motor vehicle accident, prior to receiving the permanent partial disability benefits related to his hearing loss.  On May 11, 2000, Renee Kohler, heir of Mr. McDowell [the decedent], filed a claim petition, seeking payment of those unpaid permanency benefits, plus a separate claim for penalties and interest.  In their answer, the employer and insurer denied the claim, alleging that Aas a non-dependent heir, said Petition[er] is not entitled to permanent partial disability benefits pursuant to Minn. Stat. ' 176.021, Subd. 3, and Eaves v. Control Data Corp., 43 W.C.D. 195 (1990).@^[3]  At a pretrial conference, on August 6, 2001, Ms. Kohler [the petitioner] amended her claim to allege entitlement to penalties pursuant to Minn. Stat. '' 176.221 and 176.225 and to Minn. R. 5220.2550, subp. 4, Minn. R. 5220.2750, Minn. R. 5220.2790, and Minn. R. 5220.2830, plus statutory interest, for the employer and insurer=s failure to make timely payment of compensation for the decedent=s 11.5% whole-body permanency claim related to his work-related cervical injury.                                                                                                                                                  .

 

The matter was scheduled for hearing on August 30, 2001, prior to which date the parties agreed to allow the judge to determine all issues based on stipulated facts and legal arguments made by the parties.  Those issues, as ultimately identified by the compensation judge in his findings and order, included (1) whether the decedent=s legal heirs are entitled to receive the permanent partial disability benefits that remained unpaid to the decedent at the time of his death and (2) whether those same legal heirs are entitled to an additional penalty award, pursuant to Minn. Stat. ' 176.225, because the employer and insurer had Afailed to timely pay [the decedent] for 11.5 percent permanent partial disability pursuant to Minn. Stat. ' 176.101, subd. 2a(b),@ which subdivision provides that A[p]ermanent partial disability is payable upon cessation of temporary total disability.@  By Findings and Order filed September 28, 2001, the compensation judge concluded that the decedent=s legal heirs are entitled to the unpaid permanent partial disability benefits related to the decedent=s hearing loss, totaling $5,310.00 plus interest, plus an additional award equaling twenty-five percent of the permanent partial disability compensation that was paid to the decedent for his cervical disability in May 1999, as a penalty for inexcusable delay by the employer and insurer in making payment at that time instead of upon the decedent=s return to work in December 1998.  The employer and insurer appeal.

 

STANDARD OF REVIEW

 

A[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 Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).

 

DECISION

 

1.  Permanency

 

At uncontested Finding 2, the compensation judge asserted as a basis for his award that AMinn. Stat. ' 176.021, subd.  3, provides in part that benefits payable for permanent partial disability vest[] in an injured employee at the time the permanent partial disability is ascertainable provided the injured employee lives for 30 days beyond the date of injury.@  That subdivision provides in fuller part as follows:

 

Permanent partial compensation is payable for functional loss of use or impairment of function, permanent in nature, and payment therefore shall be separate, distinct, and in addition to payment for any other compensation, subject to section 176.101.  The right to receive temporary total, temporary partial, or permanent total disability payments vests in the injured employee or the employee=s dependents under this chapter or, if none, in the employee=s legal heirs at the time the disability can be ascertained and the right is not abrogated by the employee=s death prior to the making of the payment.

 

The right to receive permanent partial compensation vests in an injured employee at the time the disability can be ascertained provided that the employee lives for at least 30 days beyond the date of the injury.  Upon the death of an employee who is receiving economic recovery compensation or impairment compensation, further compensation is payable pursuant to section 176.101.  Impairment compensation is payable under this paragraph if vesting has occurred, the employee dies prior to reaching maximum medical improvement, and the requirements and conditions under section 176.101, subdivision 3e, are not met.

 

Minn. Stat. ' 176.021, subd.  3 (emphases added).  Subdivision 3e of section 176.101 was repealed in 1995.  At uncontested Findings 3 and 4, the judge found further that the decedent=s permanent partial disability was ascertainable prior to his death on December 4, 1999,^[4] and that the decedent lived at least thirty days beyond the April 1, 1998, date of his injury.  On these conclusions the judge awarded to the decedent=s heirs the permanent partial disability benefits that were still due but unpaid to the decedent at the time of the decedent=s death.  In the lead case interpreting the statute, cited by the judge in his memorandum, Owens v. Water Gremlin Co., 605 N.W.2d 733, 60 W.C.D. 36 (Minn. 2000), permanency benefits that were due but still unpaid to the decedent at the time of his death were found payable to the decedent=s dependant heirs.  Nondependent heirs had not been at issue in Owens.

 

On appeal, the employer and insurer contend that the applicable statute, Minn. Stat. ' 176.021, subd. 3, by its plain language, does not provide for such payment, that suggestions to the contrary in Owens are not applicable, in that that decision addresses only dependent, as distinguished from nondependent, heirs and was written without consideration of the statute=s legislative history, and that, at any rate, the decedent=s attainment of MMI prior to his death, although he was apparently not served with a report of such, negates any right that his nondependent heirs might have to his unpaid permanency benefits under the statute.  We are not persuaded.

 

The employer and insurer contend that, as of the date of the decedent=s death,^[5] December 4, 1999, Minn. Stat. ' 176.021, subd. 3, did not give a right to unpaid permanency benefits to any heirs, whether dependent or nondependent, and that, following the repeal of  subdivision 3r of Minn. Stat. ' 176.101, section 176.101 was also without any authorization of payment to nondependent heirs.^[6] This issue, however, has already been addressed and resolved by this court and the supreme court in Owens, in which identical versions of the statute were at issue and in which it was held that Athe plain meaning of the >further compensation is payable= language of Minn. Stat. ' 176.021, subd. 3 directs further payments of vested PPD benefits after the death of the employee.@  Owens, 605 N.W.2d at 738, 60 W.C.D. at 43.  The employer and insurer argue that Owens is inapplicable, both because it is distinguishable for pertaining only to dependent, as distinguished from nondependent, heirs and because it was decided expressly without benefit of evidence of the statute=s legislative historyBevidence which the employer and insurer have amply supplied to the court in the present case.  Included in the documentation of legislative history submitted by the employer and insurer into evidence, and specifically highlighted in their brief, is documentation of the following language proposed, but ultimately rejected, for amendment of Minn. Stat. ' 176.021, subd. 3, at the point in the statute here relevant:

 

Upon the death of an employee from causes unrelated to the injury, further permanent partial disability is payable to the employee=s dependents.  If the employee has no dependents, permanent partial disability is payable to the employee=s adult children.  If an employee dies without dependents or adult children, no further permanent partial disability is payable.

 

Senate bill S. F. 1020, Feb. 15, 1995, Article 3, Section 6, 39; Journal of the House, May 9, 1995, 4043-44 (emphasis added).  The employer and insurer note that this language, had it been approved, would have specifically entitled even nondependent heirsBadult children--to payment of unpaid permanency.  They argue that its rejection is evidence that the legislature intended to preclude such distributions.  We note, however, that the language might well have been rejected for quite opposite reasonsBfor being too limiting instead of too liberal.^[7]  Legislation is an activity of compromise, in which a given ambiguity itself may well be the nearest thing to the legislating parties=Alegislative intent.@  At any rate, the supreme court has found that Athe plain meaning@ of the statutory language itself that is here at issue Adirects further payments of vested PPD benefits after the death of the employee,@ Owens, 605 N.W.2d at 738, 60 W.C.D. at 43, and we find nothing in that language itself to compel a different result merely on grounds that the heirs in this case are nondependent ones.

 

The employer and insurer contend also that, even if the statute might be construed to permit distribution of unpaid permanency benefits to a deceased employee=s nondependent heirs, the statute permits such distribution only Aif . . . the employee dies prior to reaching maximum medical improvement.@  Minn. Stat. ' 176.021, subd.  3.  They argue that permanency benefits are not payable in this case because the decedent had already reached MMI by the time of his death.  They apparently concede that the decedent was never served with an MMI report, but they contend that Minn. Stat. ' 176.021, subd.  3, precludes distribution to the heirs of any employee who has even reached MMI, regardless of whether he has been served with a report of it, and that the decedent=s own treating doctor had declared him to be at MMI on October 5, 1999.  We are not persuaded.

 

In its fuller context, the statutory language at issue here is that A[i]mpairment compensation is payable under this paragraph if . . . the employee dies prior to reaching maximum medical improvement, and the requirements and conditions under section 176.101, subdivision 3e, are not met.@  Minn. Stat. ' 176.021, subd.  3 (emphases added).  The sentence immediately preceding this one had referenced both economic recovery compensation and impairment compensation as being payable pursuant to section 176.101 in the event of the receiving employee=s death.  Clearly, by its specific reference to impairment compensation alone and by its specific reliance on Arequirements and conditions@ of subdivision 3e, which was repealed in 1995, this sentence is a vestige of the pre-1995 Atwo-tier@ system of benefits, incompletely revised to comport with the 1995 amendments.  As such, we conclude, it cannot be reasonably integrated into the statutory construction affirmed in Owens and applied here.

 

2.  Penalty

 

In addition to awarding the petitioner the permanency benefits for hearing loss that had remained unpaid to the decedent at the time of his death in December 1999, the compensation judge awarded the petitioner a 25% penalty on the permanency benefits for cervical disability that had already been paid to the decedent in May 1999.  Minnesota Statutes ' 176.225, subd.  5, provides that Apayments which are found to be delayed shall be increased by 25 percent@ where the employer and insurer are guilty of Ainexcusable delay@ in making payments, and the judge found the employer and insurer guilty of such Ainexcusable delay@ in waiting until May 28, 1999, to issue payment of those neck-related benefits instead of commencing payment of them immediately upon the decedent=s return to work on December 6, 1998.  The employer and insurer contend that it was not until May 26, 1999, that the insurer was provided with a specific whole body impairment rating upon which to base a permanency payment and that, since the statute provides no mechanism for the insurer to recover an overpayment of estimated permanency, the insurer=s prompt payment of PPD benefits after receiving a rating does not rise to the level of Ainexcusable delay.@   Moreover, they argue, the statutory provision cited by the judge does not provide for the payment of such a penalty to nondependent heirs, and the petitioner does not have standing to assert her claim to such a payment.  We agree that the petitioner has no standing for her penalties claim.

 

We concede that the decedent himself might have had viable grounds for asserting a claim to penalties prior to his death in December 1999.  However, no positive entitlement to a penalty had ever actually vested in the decedent or in his estate, nor is there any language in the statute authorizing heirs of that estate to assert a claim to such an entitlement.  The petitioner suggests that the penalty here at issue is not technically an award to the petitioner at all but rather, pursuant to the language of Minn. Stat. ' 176.225, subd.  5, merely an increase in the permanency benefits that were already due but still unpaid to the decedent at the time of his deathBbenefits which are expressly authorized under the statute for distribution to heirs.  We do not agree.  The judge=s award here is a penalty, not an increase in the decedent=s permanency, and no entitlement to an award of penalties was ever claimed by the decedent, much less vested in him, prior to his death.  A clear distinction exists in these matters between a reasonable basis for claiming benefits and a vested entitlement to those benefits.  Cf. Knoble v. Storer Realty Co., 255 N.W.2d 388, 391, 29 W.C.D. 577, 582 (Minn. 1977) (a valid distinction exists between an unperfected right to disability benefits and a perfected award of such benefits based on such a right).  While an injured employee=s perfected and vested entitlements generally survive his death and pass to his estate, absent any clear statutory provision to the contrary an injured employee=s colorable claims generally die with him.  Similarly, all rights of dependents of a deceased injured worker are fixed as of the date of the worker=s death.  See Schwartz v. Warren=s Masonry, 295 Minn. 356, 362, 205 N.W.2d 318, 322, 26 W.C.D. 627, 633 (Minn. 1973).

 

The Petitioner had no statutory basis or standing to assert a claim to penalties in this case, and the compensation judge=s conclusion to the contrary is reversed.