GEORGE TITERA, Employee, v. CLEARWATER-POLK ELEC. CO-OP, INC., and FEDERATED RURAL ELEC. INS. CO., Employer-Insurer, and CLEARWATER-POLK ELEC. CO-OP, INC., and MINNESOTA RURAL ELEC. TRUST/COMPCOST, Employer-Insurer, and MN DEP=T OF LABOR & INDUS./VRU, Intervenor, and BLUE CROSS/BLUE SHIELD OF MINN., Intervenor/Appellant.

 

WORKERS= COMPENSATION COURT OF APPEALS

OCTOBER 2, 2002

 

HEADNOTES

 

INTEREST; STATUTES CONSTRUED - MINN. STAT. ' 176.191, SUBD. 3.  Interest paid to a health insurer on medical expenses reimbursed pursuant to Minn. Stat. ' 176.191, subd. 3, accrues from the date the expenses were paid by the health insurer.

 

Reversed.

 

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

Compensation Judge: Peggy Brenden.

 

 

OPINION

 

DAVID A. STOFFERAHN, Judge

 

Intervenor Blue Cross/Blue Shield of Minnesota appeals from an order determining the extent of interest on a reimbursement of medical expenses.  We reverse.

 

BACKGROUND

 

The employee, George Titera, began working for the employer, Clearwater-Polk Electric Co-op, in 1968.  He worked for the employer as a lineman until June 1995, when he was promoted to a supervisory position as a lineman foreman.  In 1981 the employee sustained an admitted injury to his right shoulder which required surgery to the right rotator cuff.  He sustained a further, admitted Gillette^[1] injury to the right shoulder in 1989 which required surgical treatment.  As early as the 1981 injury the employee also reported left shoulder symptoms, which eventually worsened and also required surgical treatment in 1991 and twice in 1995.   The employee=s medical treatment expenses after 1991 were paid in large part by his health plan, Blue Cross/Blue Shield of Minnesota (ABlue Cross@), the appellant in this matter.                      

 

In 1996, the employee filed an initial claim petition and, subsequently, a number of amended claim petitions.  The claim petitions alleged entitlement to benefits arising out of the admitted 1981 and 1989 right shoulder injuries and an alleged 1996 right shoulder Gillette injury and benefits arising out of claimed Gillette injuries to the left shoulder in 1991, 1994, and 1995.  The employer was insured by different workers= compensation carriers before and after January 1, 1995.  The first insurer, Federated Rural Electric Insurance Company (AFederated@), claimed that the employee=s disability and medical expenses were the result of injuries which occurred after its date of coverage.  The second insurer, Minnesota Rural Electric, denied liability on the theory that all of the employee=s disability and medical expenses were attributable to those injuries occurring prior to the inception of its coverage.  Blue Cross/Blue Shield of Minnesota filed its intervention claim in November 1996 seeking reimbursement of more than $ 22,000.00 in medical expenses it had paid since 1981. 

 

A compensation judge heard the matter in 1999 and his Findings and Order were served and filed on May 28, 1999.  The compensation judge found that the employee=s disability and medical expenses related entirely to injuries sustained before January 1, 1995, all during Federated=s coverage period.  The compensation judge further found the employee=s treatment expenses to have been reasonable and necessary, and awarded reimbursement to Blue Cross for certain medical expenses it paid on behalf of the employee.  In addition, the compensation judge found that:

 

The employee, the intervenor, and /or the health care providers are entitled to interest at the statutory rate on all benefits awarded and not previously paid, computed from the respective dates such benefits would have been ascertainable and thus due and payable, until actually paid.

 

(5/28/99 Findings & Order: Finding 19).

 

The employer and its insurer Federated appealed from the findings pertaining to specific dates of injury, and from the award of permanent partial disability benefits.  The findings as to the reasonableness and necessity of medical treatment, and the findings and orders pertaining to the award of statutory interest, were not appealed.  On April 13, 2000, this court affirmed the dates of injury found by the compensation judge.^[2]

 

Shortly after the issuance of this court=s opinion affirming the determination of its liability, Federated paid Blue Cross the principal amount of the medical expenses ordered reimbursed in the May 28, 1999 decision of the compensation judge.^[3]  However, Federated paid no interest.  Counsel for Blue Cross wrote to Federated=s attorney on August 17, 2000, demanding payment of interest in the amount of $12,597.69, calculated on the intervals between the date Blue Cross had paid each medical expense ordered to be reimbursed and the date of Federated=s reimbursement.  On December 13, 2000, Federated=s counsel wrote to Blue Cross asserting that interest was due only from April 13, 2000, the date of the final decision fixing its primary liability.  Accordingly, Federated contended it was liable for interest only in the amount of $1,189.55.         

 

Blue Cross filed a Motion to Enforce Findings and Order on January 31, 2001, and the employer and Federated filed their Answer to Motion to Enforce Findings and Order on February 9, 2001.  In an Order served and filed on February 5, 2002, a compensation judge ruled that Blue Cross= right to reimbursement was not Aascertainable@ until the service and filing of the May 28, 1999 Findings and Order.  The employer and Federated were ordered to pay $1,189.55 Ain full satisfaction@ of the intervenor=s interest claim.^[4]  The intervenor, Blue Cross, appeals.

 

DECISION

 

The parties agree that a health insurer is entitled to interest in the reimbursement of medical expenses it has paid pursuant to Minn. Stat. ' 176.191, subd. 3.  The issue in this case is the date when that interest begins to accrue.  In an unappealed finding served and filed on May 28, 1999, a compensation judge previously ordered that Blue Cross be paid Ainterest at the statutory rate on all benefits awarded and not previously paid, computed from the respective dates such benefits would have been ascertainable and thus due and payable, until actually paid.@  Blue Cross subsequently took the position that it was entitled to 12 percent interest under Minn. Stat. ' 176.191, subd. 3, calculated from the dates of each payment of compensable medical expenses it made on behalf of the employee.  The employer and insurer, on the other hand, contended that because primary liability was disputed, the amount of their liability was not Aascertainable@ until the underlying dispute over the fact of liability was finally determined, so interest would not begin to accrue on the payments made by Blue Cross until April 13, 2000, the date of the final decision fixing its primary liability. 

 

Minn. Stat. ' 176.191, subd. 3 provides that:

 

If a dispute exists as to whether an employee=s injury is compensable under this chapter and the employee is otherwise covered by an insurer pursuant to chapters 62A, 62C, and 62D, that insurer shall pay any medical cost incurred by the employee for the injury up to the limit of the applicable coverage....If the injury is subsequently determined compensable pursuant to this chapter, the workers= compensation insurer shall be ordered to reimburse the insurer that made the payments for all payments made under this subdivision by the insurer, including interest at a rate of 12 percent a year.

 

Federated argues that only post-judgement interest is contemplated by the statute.  We disagree.

 

First, interpreting '176.191 subd. 3 as allowing only post-judgment interest appears inconsistent with the express language of that statute which requires that the judge determining liability must order payment of reimbursement Aincluding interest@ (emphasis added).  Since both the existence and amount of any post-judgment interest would be entirely prospective and speculative at the time reimbursement is ordered, it appears that interest for periods prior to the judgment must have been contemplated.  

 

Second, case law does not support the argument of Federated and instead demonstrates that pre-judgment interest has long been awarded in workers= compensation cases. See, e.g., Brown v. City of Pipestone, 186 Minn. 540, 245 N.W.2d. 145, 7 W.C.D. 212 (1932); Bourdeaux v. Gilbert Motor Co., 220 Minn 538, 20 N.W.2d. 393, 14 W.C.D. 46 (1945); Tow v. William A. Smith Constr., 41 W.C.D. 245 (W.C.C.A. 1988).

 

Third, we note that pursuant to Minn. Stat. '176.221, subd. 7, the primary statutory provision governing interest awards in workers= compensation, pre-judgment interest is specifically required.  In the absence of any clear statutory directive to the contrary, we fail to see any logical reason to treat awards of interest differently under the two provisions.

 

Finally, we note that our supreme court has explained the purpose of Minn. Stat. ' 176.191, subd. 3, in the following terms:

 

Two policy considerations emerge from the statute and the case law:  First, the burden of economic loss in work‑related injuries is to be put on industry, not the health insurer; and, second, so that the injured employee does not suffer while primary liability is being disputed, health carriers are expected to pay the bills until workers= compensation coverage is established.

 

Johnson v. Blue Cross & Blue Shield, 329 N.W.2d 49, 52 (Minn. 1983).  In light of the purpose of placing the full economic loss of an employee=s workers= compensation injury on industry, rather than the health insurer, we believe that the legislature intended that pre-judgment interest be awarded under Minn. '176.191, subd. 3.

 

To determine that prejudgment interest exists in cases of reimbursement under Minn. Stat. ' 176.191, subd. 3, does not answer the question of when that interest begins to accrue.  Blue Cross argues that interest begins from the date it paid medical expenses.  We agree.

 

There are two sections in the workers compensation statute which deal with the payment of interest. Minn. Stat. § 176.221 subd. 7, added to the statute in 1977, calls for interest to accrue from the due date, defined variously depending on the benefit involved but generally from the date the request for payment of the benefit was submitted to the workers compensation insurer. Minn. Stat. § 176.191 subd. 3, the section in question here, was added to the statute two years later and contains no reference to the due date as used in Minn. Stat. 176.221 subd. 7 as being the date from which interest begins to accrue.

Minn. Stat. § 176.191 subd. 3 provides for the reimbursement to the health insurer of all payments with interest. In addition, the section as initially written had a paragraph which required the reimbursement of medical expenses paid under a program administered by the commissioner of public welfare as well as payment of interest. At the same time, Minn. Stat. 176.191 subd. 2 was added to the statute, providing for reimbursement to the Special Compensation Fund with interest when the Fund makes payment of benefits under a temporary order in a case in which liability for benefits is disputed between two insurers.

 

If the intent had been to provide interest for these parties from the same due dates set out in Minn. Stat. § 176.221 subd. 7, these new paragraphs of Minn. Stat. § 176.191 would have used the same language as in Minn. Stat. § 176.221 subd. 7, or would have referenced that section, or Minn. Stat. § 176.221 subd. 7 would have been amended. Further, these sections of Minn. Stat. § 176.191 all involve reimbursement to parties who ultimately have no obligation for expenses if there is a compensable injury. By providing for reimbursement of all payments plus interest at twelve per cent from the date of payment, these parties are encouraged to make payment.  The statutory language, while not specific, evinces a clear intent to make a payor such as Blue Cross whole by providing for payment of interest from the date of payment of the medical expense. This result is also consistent with the policy considerations set forth in Johnson v. Blue Cross & Blue Shield, 329 N.W.2d 49 (Minn. 1983), previously quoted.

 

Accordingly, we reverse the decision of the compensation judge and direct that Blue Cross shall receive interest on its payment of compensable medical expenses in this case from the date of its payment.