DAVID W. HILBRANDS, Employee, v. BOR-SON CONSTR. CO. and USF&G, Employer-Insurer, and CLEANCO TRUCK WASH and FIREMAN=S FUND INS.CO., Employer-Insurer/Cross-Appellants, and SPECIAL COMPENSATION FUND, Appellant.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 17, 2003

 

HEADNOTES

 

APPORTIONMENT - EQUITABLE; APPORTIONMENT - SPECIAL COMPENSATION FUND; SPECIAL COMPENSATION FUND - REGISTRATION.  The compensation judge correctly held that Koski v. Erie Mining Co., 223 N.W.2d 470, 27 W.C.D. 121 (Minn. 1973), rather than Kirchner v. County of Anoka, 339 N.W.2d 908, 36 W.C.D. 335 (Minn. 1983), applied so as to preclude apportionment of liability for permanent total disability benefits back to the pre-registration employer and insurer, where the pre-registration employer and insurer=s liability for temporary partial disability benefits had ended, by operation of law, years prior to the employee=s eventual permanent total disability.

 

SETTLEMENTS - INTERPRETATION.  The compensation judge properly concluded that a settlement agreement did not establish any ongoing liability for wage loss benefits by the pre-registration employer and insurer.

 

Affirmed.

 

Determined by Wilson, J., Rykken, J., and Pederson, J.

Compensation Judge:  Jeanne E. Knight

 

Attorneys:  Sara J. Stoltman, Special Compensation Fund, St. Paul, MN, for Appellant.  Timothy J. Manahan, Brown & Carlson, Minneapolis, MN, for Cross-Appellants.  Roderick C. Cosgriff, Heacox, Hartman, Mattaini, Koshmrl, Cosgriff & Johnson, St. Paul, MN, for Respondents.  Timothy J. McCoy, McCoy, Peterson & Jorstad, Minneapolis, MN, for Respondent.

 

OPINION

 

DEBRA A. WILSON, Judge

 

The Special Compensation Fund appeals from the compensation judge=s decision denying apportionment of liability to Bor-Son Construction and USF&G, a preregistration employer and insurer.^[1]  We affirm.

BACKGROUND

 

On October 11, 1976, the employee sustained an admitted injury while employed as a laborer by Bor-Son Construction, which was then insured by USF&G.  The employee=s weekly wage on the date of this injury was $368.40.  In early 1981, following litigation, the parties reached a settlement, agreeing in part that the employee had injured his neck, left arm, right arm, and stomach in the October 11, 1976, work incident.  Benefits paid pursuant to the stipulation included benefits for permanent partial disability to the extent of 25% of the back, 10% of the stomach as an internal organ, and 15% of the right arm.  USF&G also paid the employee temporary partial or temporary total disability benefits more or less continuously for more than eight years. 

 

On April 23, 1981, the employee=s disability resulting from the 1976 injury was formally registered with the Special Compensation Fund pursuant to Minn. Stat. ' 176.131 (repealed effective July 1, 1992).

 

In late 1984, after various unsuccessful attempts to return to work, the employee began a job as a boiler maintenance assistant with Cleanco Truck Wash [Cleanco].  He earned $3.35 per hour for this work, and USF&G paid him temporary partial disability benefits based on the difference between his $368.40 weekly wage on the date of his 1976 injury at Bor-Son and his $134.00 weekly wage from Cleanco.

 

On June 4, 1985, the employee sustained an injury to his right knee in the course and scope of his employment with Cleanco.  He initially lost no time from work due to his injury but was eventually paid temporary total and temporary partial disability benefits for various periods.  In September of 1985, the employee obtained higher paying work with a different employer, and USF&G reduced the employee=s temporary partial disability benefit payments accordingly.

 

The employee underwent knee surgery in May of 1986, and he was off work due to this surgery as well as his other disabilities until June of 1987, when he began a job as a security guard.

 

USF&G had begun paying temporary total disability benefits, under a temporary order, when the employee went off work due to his knee surgery.  However, USF&G asserted entitlement to contribution or reimbursement from Fireman=s Fund, alleging that the employee=s disability was due in whole or in part to the employee=s 1985 injury at Cleanco.  Initially, Cleanco and Fireman=s Fund responded to the contribution claim by denying primary liability and disputing the nature and extent of the alleged injury.

 

In 1988, the employee, Bor-Son and USF&G, Cleanco and Fireman=s Fund, and the Special Compensation Fund entered into a stipulated settlement.  Pursuant to the stipulation, Fireman=s Fund agreed to pay the employee temporary total disability benefits from May of 1986 to May of 1987, to pay the employee benefits for a 1.5% whole body impairment, and to reimburse USF&G for 25% of all temporary partial disability benefits paid by USF&G for the period May 4, 1987, through March 20, 1988, as well as 25% of wage loss and rehabilitation expenses paid by USF&G after March 20, 1988.  The Special Compensation Fund agreed to reimburse Fireman=s Fund for all wage loss and rehabilitation expenses paid by Fireman=s Fund after January 1, 1988.  The employee=s claims were settled on a Ato date@ basis; USF&G=s contribution claims were settled through March 20, 1988.  An award on stipulation was issued on August 5, 1988. 

 

From 1988 until early 1997, the employee continued to work as a security guard, and USF&G continued to pay him temporary partial disability benefits based on his 1976 weekly wage.  Fireman=s Fund reimbursed USF&G for 25% of the benefits paid to the employee and the Special Compensation Fund in turn reimbursed Fireman=s Fund for all benefits it paid to USF&G, in accordance with the settlement agreement.

 

In early 1997, USF&G determined that it had been overpaying the employee, in that the law in effect on the date of the employee=s 1976 injury placed a 350-week limit on temporary partial disability benefits.  See Minn. Stat. ' 176.101, subd. 2 (1976).  As USF&G calculated it, the 350-week maximum had been reached as of June 8, 1987.  Accordingly, USF&G served and filed a Notice of Intention to Discontinue Benefits and also sought contribution and/or reimbursement from Fireman=s Fund and the Special Compensation Fund for the overpayment.  Following litigation, it was determined that USF&G had overpaid temporary partial disability benefits, as claimed, but the contribution claim was denied.  Hilbrands v. Bor-Son Constr., slip op. (W.C.C.A. July 28, 2000).

 

On December 9, 1997, the employee went off work due to his knee condition.  Another knee surgery was performed on January 27, 1998, and Fireman=s Fund paid the employee intermittent temporary total and supplementary benefits.  The employee then received conservative care until June 9, 2000, when a third knee surgery was performed.  The parties have stipulated that the employee has been permanently and totally disabled since December 9, 1997.

 

The matter came on for hearing before a compensation judge on March 19, 2003, to determine liability for permanent total disability benefits as between Bor-Son and USF&G and Cleanco and Fireman=s Fund, and to determine the Special Compensation Fund=s liability for reimbursement.  The primary issues were whether the 1988 settlement agreement obligated Bor-Son and USF&G to pay a portion of the employee=s permanent total disability benefits and whether Koski v. Erie Mining, 300 Minn. 1, 223 N.W.2d 470, 27 W.C.D. 121 (1973), precluded apportionment of liability to Bor-Son and USF&G, the preregistration employer and insurer.  The matter was submitted to the compensation judge on stipulated facts and documentary evidence.

 

In a decision issued on June 5, 2003, the compensation judge rejected the Special Compensation Fund=s argument that Bor-Son and USF&G were responsible for permanent total disability benefits under the 1988 settlement agreement, and the judge further determined that Koski precluded apportionment.  Accordingly, the judge ordered Fireman=s Fund to pay permanent total disability benefits to the employee based on the employee=s weekly wage on the date of the 1985 injury.  The Special Compensation Fund was ordered to reimburse Fireman=s Fund for all benefits paid in excess of the statutory deductible.  The Special Compensation Fund appeals.

 

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 (1992).  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 the 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).

 

DECISION

 

1.  Effect of the 1988 Settlement

 

The Special Compensation Fund argues initially that USF&G is liable, under the terms of the 1988 stipulation for settlement, to pay a portion of the employee=s permanent total disability benefits.  This argument has no merit whatsoever.

 

The pertinent portions of the stipulation, cited by the Special Compensation Fund in support of their position, read as follows:

 

Fireman=s Fund shall continue to reimburse United States Fidelity and Guaranty Company in an amount equal to 25 percent of payment it makes for temporary total disability, temporary partial disability, permanent total disability, and rehabilitation, from and after March 20, 1988.

 

               * * *

 

The Special Compensation Fund agrees to reimburse Fireman=s Fund for all temporary partial disability, temporary total disability, permanent total disability, and rehabilitation benefits that it may pay for periods of disability or rehabilitation after January 1, 1988.

 

Clearly the quoted provisions establish the reimbursement obligations of Fireman=s Fund and the Special Compensation Fund, but they do not obligate USF&G to pay anything.  There is in fact  no language in the settlement agreement which could be construed to impose ongoing liability for continuing wage loss benefits, permanent total or otherwise, on USF&G.  The fact that USF&G mistakenly continued to pay the employee temporary partial disability benefits, beyond the statutory maximum, is irrelevant.

 

Because the stipulation does not obligate USF&G to pay any portion of the employee=s permanent total disability benefits, we affirm the judge=s decision on this issue.

 

2.  Application of Koski

 

The employee=s preexisting physical impairment was duly registered with the Special Compensation Fund in 1981.  Minn. Stat. ' 176.131, subd. 1 (1986), the law in effect on the date of the employee=s second injury, provided as follows:

 

Subdivision 1.  If an employee incurs personal injury and suffers disability that is substantially greater, because of a preexisting physical impairment, than what would have resulted from the personal injury alone, the employer shall pay all compensation provided by this chapter, but the employer shall be reimbursed from the special compensation fund for all compensation paid in excess of 52 weeks of monetary benefits and $2,000 in medical expenses

. . . .

 

In the present case, it is undisputed that the Asubstantially greater@ requirement of the statute has been met and that Fireman=s Fund made payments satisfying the statutory deductible.  As such, it is undisputed that Fireman=s Fund is entitled to full reimbursement from the Special Compensation Fund for whatever benefits Fireman=s Fund is obligated to pay the employee for his admitted permanent total disability.  The issue is just what responsibility, if any, Bor-Son and USF&G, the preregistration employer and insurer, have to contribute to permanent total disability payments, and which wage rate is applicable for benefit calculation purposes.

 

The Special Compensation Fund contends that this case is governed by Kirchner v. County of Anoka, 339 N.W.2d 908, 36 W.C.D. 335 (Minn. 1983) [Kirchner I], and that, under Kirchner, USF&G is liable for a portion of the employee=s permanent total disability benefits in an amount equal to the temporary partial disability benefits USF&G was paying the employee following his 1985 (second) injury at Cleanco.^[2]  Cleanco and Fireman=s Fund would then, under Kirchner, be liable for the balance, with reimbursement by the Special Compensation Fund.  The Fund also points out that the Kirchner analysis, which dealt with liability for temporary total disability, has been extended by this court to permanent total disability cases.  See, e.g., Floen v. Redwing Publishing Co., 41 W.C.D. 1126 (W.C.C.A. 1989).  The compensation judge, however, concluded that Koski v. Erie Mining Co., 300 Minn. 1, 223 N.W.2d 470, 27 W.C.D. 121 (Minn. 1973), is controlling and that, pursuant to Koski, no apportionment of liability may be made to USF&G.  Accordingly, the judge ordered Fireman=s Fund, the insurer on the risk for the employee=s second, post-registration injury, to pay permanent total disability benefits to the employee, based on the employee=s 1985 wage rate, with full reimbursement by the Special Compensation Fund.  After review of the relevant caselaw, we are persuaded that the compensation judge was correct in her analysis.

 

In Koski, the supreme court wrote as follows with regard to the argument that apportionment to the preregistration injury should be ordered:

 

The language of Minn. St. 1969, ' 176.131, which is applicable here, is clear, unambiguous, and unequivocal.  This statute not only makes no reference to apportionment but the language used negates any inference of intent that apportionment be applied.  Where a person with an existing physical or mental impairment which hinders his employability is hired or retained and incurs an industrial injury causing Adisability that is substantially greater, because of a pre-existing physical impairment, than what would have resulted from the personal injury alone,@ our statute declares that the employer, save for a limited liability, Ashall be reimbursed from the special compensation fund.@  We fail to see how the plain language of the statute is susceptible of any construction that would write into it the principle of equitable apportionment.

 

Koski, 300 Minn. at 7, 223 N.W.2d at 473, 27 W.C.D. at 127.  We are cognizant of the fact that the second injury fund was not created to protect preregistration employers and insurers, and it is clear that Koski does not automatically relieve a preregistration employer and insurer of responsibility for benefits in all instances.  Specifically, in Kirchner, the preregistration employer and insurer were found liable for continued payment of temporary partial disability benefits when the employee became totally disabled following a second injury, at a lower wage.  However, in Kirchner, and in subsequent cases applying Kirchner to claims for permanent total disability, the preregistration employer and insurer had continued legal liability for temporary partial disability benefits when the employee became totally disabled due to the subsequent injury.  See Floen, 41 W.C.D. 1126; Horstmann v. American Can Co., 46 W.C.D. 26 (W.C.C.A. 1993).  In the present case, Bor-Son and USF&G=s legal liability for temporary partial disability benefits had ended, by operation of law, many years before the employee became permanently and totally disabled in 1997.  See Minn. Stat. ' 176.101, subd. 2 (1976).  As we said in Groth v. Dotson Co., 61 W.C.D. 52 (W.C.C.A. 2000), Aeligibility for temporary partial disability benefits is the determinative factor for application of the Kirchner formula.@  Groth, at 65-66; see also Nybeck v. H.S. Kaplan Scrap Iron, 42 W.C.D. 1169 (W.C.C.A. 1990).

 

On rehearing in Koski, the supreme court reiterated that, Aif the legislature intended statutory apportionment [in second injury fund cases], it would have said so explicitly.@  Koski, 300 Minn. at 10, 223 N.W.2d at 475, 27 W.C.D. at 601-02 (1974).  In 1987, the Fund was finally successful in persuading the legislature to amend Minn. Stat. ' 176.131 to permit apportionment in cases such as this one.  However, it is undisputed that the amendment does not apply here given the date of the employee=s second injury -- prior to the effective date of the amendment.  See Schreiner v. C.S. McCrossan, Inc., 465 N.W.2d 917, 44 W.C.D. 50 (Minn. 1991).  Therefore, because the employee was not entitled to temporary partial disability benefits from Bor-Son and USF&G at the time of his total disability in 1997, Kirchner does not apply, and Koski precludes apportionment.  Furthermore, it is evident that Fireman=s Fund, the insurer on the risk for the employee=s 1985 injury, cannot be required to pay benefits based on the employee=s higher wage on the date of his 1976 injury.^[3]  Kirchner, 339 N.W.2d at 912, 36 W.C.D. at 341.  As such, the compensation judge correctly held that Cleanco and Fireman=s Fund are liable for payment of permanent total disability benefits, based on the employee=s 1985 wage rate, with full reimbursement from the Special Compensation Fund, and no apportionment to Bor-Son and USF&G.