BRIAN G. GLEDHILL, Employee, v. DUPONT VILLA APARTMENTS and AMERICAN FAMILY INS. GROUP, Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 5, 2005

 

No. WC05-156

 

HEADNOTES

 

TEMPORARY TOTAL DISABILITY; STATUTES CONSTRUED - MINN. STAT. § 176.101, subd. 1(e)(1).  The statute precludes recommencement of temporary total disability benefits after an employee has returned to work and then is discharged for misconduct, and does not apply to terminate an employee=s ongoing entitlement to temporary total disability benefits.  Because the employee was discharged for conduct that occurred while he was off work due to his injury and while he was receiving temporary total disability benefits, the statutory provisions concerning cessation and recommencement of benefits do not apply.

 

TERMINATION OF EMPLOYMENT - MISCONDUCT.  Substantial evidence of record supports the compensation judge=s finding the employer and insurer should not have been allowed to discontinue the employee=s temporary total disability benefits as of  June 18, 2004, on the basis of alleged misconduct, because the employee=s actions which provided the basis for the termination of his employment did not constitute misconduct.

 

EVIDENCE - BURDEN OF PROOF.  At hearing on employee=s objection to discontinuance of benefits based on misconduct, the employer and insurer have the initial burden of proof to establish the evidentiary basis for the discontinuance.

 

EVIDENCE - HEARSAY.  The admission of hearsay evidence did not constitute error on the part of the compensation judge.

 

Affirmed.

 

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

Compensation Judge: Nancy Olson

 

Attorneys: Robert E. Wilson, Minneapolis, MN, for the Respondent.  Joan G. Hallock, Hansen, Dordell, Bradt, Odlaug & Bradt, St. Paul, MN, for the Appellants.

 

 

OPINION

 

MIRIAM P. RYKKEN, Judge

 

The employer and insurer appeal from the compensation judge=s determination that the employer and insurer should not have been allowed to discontinue the employee=s temporary total disability benefits as of June 18, 2004, on the basis of alleged misconduct, because (1) Minn. Stat. ' 176.101, subd. 1(e)(1), is inapplicable to the facts of this case and (2) because the employee=s actions which provided the basis for the termination of his employment did not constitute misconduct sufficient to bar his entitlement to future temporary total disability benefits under the analysis provided in Marsolek v. George A. Hormel Co., 438 N.W.2d 922, 924, 41 W.C.D. 964, 966-67 (Minn. 1989).   The employer and insurer also appeal from the compensation judge=s finding that no other grounds existed on which to base a discontinuance of benefits.  We affirm.

 

BACKGROUND

 

In March 2002, Mr. Brian Gledhill, the employee, began working as a maintenance technician for Dupont Villa Apartments, a division of Hegenes Apartment Management.  His duties included repairs and maintenance, such as plumbing and electrical work.  He was responsible for overseeing maintenance requirements for three properties managed by the employer, one of which was Dupont Villa Apartments.  Although the employer provided major equipment for the employee=s use, such as augers, shovels, snowblowers, garden tractors, saws and pipe wrenches, the employee was asked to supply some of his own smaller tools, such as drills, wrenches, sockets, channel locks and hammers, which he stored in a garage on the employer=s property.  The employer also provided the employee with a two-way phone radio, property and lockbox keys, and a company-held Home Depot credit card.

 

On January 20, 2004, the employee sustained an admitted injury to his low back, when he slipped and fell while walking through a parking lot.  He continued working through January 30, 2004; the employer and insurer paid temporary partial disability benefits based on the employee=s reduced wages.  Due to his low back condition, he was off work from February 2 to 13, 2004, returned to work for one week between February 16-20, 2004, and remained off work thereafter.  While he was off work, the employer and insurer paid the employee temporary total disability benefits.

 

At  the center of the dispute on appeal is the employer and insurer=s assertion that the employee was terminated for cause on April 12, 2004, that his actions leading to his termination - - unauthorized use of a company credit card - - constituted Amisconduct@ and, therefore, his misconduct was sufficient to bar his ongoing entitlement to temporary total disability benefits.

 

The record contains testimony from the employee concerning the sequence of events surrounding his use of the company credit card to replace stolen or missing tools and his understanding of the employer=s approval of or policy related to purchasing replacement tools.  By way of background, on March 10, 2004, while the employee remained off work, one of his co-workers, Mark Flaherty, called the employee, asking him to return his Arover@ or property key because there was a shortage of keys.  The employee returned the key to the employer that day.  Later that same night, Mr. Flaherty called the employee again, and advised him that he needed to clear out his tools from the employer=s storage garage, and also needed to turn in his phone and keys, due to a new company policy that stated the employee could not keep the keys and phone until he returned to work.  The employee testified that on March 11th, he returned his building keys and phone to the office of the community manager, Joyce Otto.  He spoke to Ms. Otto and Mr. Flaherty, who then assisted with loading his tools out of the storage building as well as a weight bench that the employee had stored in the building.  While they did so, the employee noticed that three tools were missing:  his cordless drill, vice grips and channel lock pliers.  According to the employee, he immediately advised Mr. Flaherty about the missing tools.  Based on his follow-up conversation with Mr. Flaherty, it was the employee=s impression that he should replace the tools.  The following day, the employee purchased replacement tools from Home Depot, and dropped his company credit card and a copy of the receipt from Home Depot into the employer=s lockbox, for the manager, Ms. Otto, to receive the next morning.

 

After he discovered that certain tools were missing, the employee gave Mr. Flaherty his empty drill box.  The employee testified that while he was never notified of the employer=s policy regarding stolen or lost tools, there was a policy in place regarding broken tools which required employees to turn in the broken tools before replacing them.  Because his tools were stolen, the only thing he was able to return to the employer was an empty drill box.

 

The record contains conflicting testimony concerning the employer=s policy for obtaining approval to use the company credit card.  The employee testified that he had the impression from Mr. Flaherty that he should replace his tools.  He also testified that he learned in January 2004 that Mr. Flaherty had been promoted to the position of maintenance supervisor, and that he was advised to report to the employer through Mr. Flaherty if he needed materials, supplies or any help.  Before Mr. Flaherty=s purported promotion to a supervisory position,^[1] it was the employer=s practice to require employees to obtain approval from Joyce Otto, community manager for DuPont Villa Apartments, when they needed to purchase supplies.  The employee testified that once Mr. Flaherty became supervisor, Aall the men in his [Mr. Flaherty=s] personnel were told that any materials you need to buy, or anything you need to do, if you need help you have to go through Mark, you get Mark=s permission before you call any other maintenance to help you out or anything, Mark=s your supervisor.@

 

According to testimony by Marnie Johnson, property manager for Hegenes Management, maintenance technicians are authorized to purchase needed supplies; she did not specifically state that preauthorization for the supply purchases was required.  Instead, she testified that the employee=s community manager, Joyce Otto, reviewed the purchase receipts left at the property, coded them, entered them into the computer and authorized the purchase of the various items.  Ms. Johnson testified that the community managers= handbook stated that community managers must obtain approval from a senior property manager or the company owner for any purchase costing more than $200.00.  She also testified about situations where the employee would have been required to obtain preapproval from Ms. Otto for purchases.  According to the employee, however, on several occasions when Ms. Otto was not available to provide approval, he purchased needed supplies at Home Depot, using the company credit card, and turned in the credit card receipt to Ms. Otto.

 

The only other evidence in the record concerning purchase of tools and supplies is contained in the Employee=s Handbook, the Maintenance Technician Job Description and the Maintenance Technicians= Employment Agreement.  These documents contain no specific procedures to follow, but contain certain references that are pertinent to purchasing, supplies, inventory, and prohibition against theft:

 

1.  The job description states that AAll supplies will only be purchased with the approval of Community Manager through pre-approved vendors of HAM [Hegenes Apartment Management].

 

2.  The job description states that AYou are responsible for keeping accurate records of your inventory and to communicate with the Community Manager to maintain your stock items as necessary.  (Monthly) At no time to exceed an inventory of a month=s supply of any item.@

 

3.  The Maintenance Technicians= Employment Agreement includes  APurchase of supplies; maintain inventory control@ in the list of duties of the position.

 

4.  The Maintenance Technicians= Employment Agreement, signed by the employee, includes an acknowledgment that the employee had received, read and would conform to the employee handbook policies.

 

5.  Page 12 of the Employee Handbook lists AStandards of Conduct@ and states that Atheft or misappropriation of resident, employee or Apartment property@ would be grounds for disciplinary action and/or dismissal.

 

At the time the employee was asked to turn in his keys and cell phone to the employer and to remove items from the storage garage, he had not been medically released to return to work and was receiving temporary total disability benefits.^[2]  Two weeks later, on March 24, 2004, he underwent surgery to his low back to repair a bulging disc.^[3]  The employee remained off work post-surgery, and, by letter dated April 12, 2004, the employer notified him that his employment had been terminated.  Although the letter contained no explanation of the basis for the termination, the employer later advised the employee that his position was terminated because he incurred unauthorized charges to the company credit card.

 

On June 18, 2004, the insurer filed a Notice of Intention to Discontinue (NOID) workers= compensation benefits, stating that Dr. Thienprasit had  released the employee to return to  work as of June 15, 2004, and that work would have been available to him if he had not been terminated for cause unrelated to his injury.  The NOID was addressed at an administrative conference on July 28, 2004, following which a compensation judge determined that reasonable grounds existed to conclude that the employee=s position was terminated for misconduct, and, therefore, the employer and insurer were entitled to discontinue temporary total disability benefits.

 

The employee filed an Objection to Discontinuance on October 4, 2004.  The discontinuance issue was addressed de novo at an evidentiary hearing on March 3, 2005.  In her findings and order served and filed on March 9, 2005, the compensation judge found that the employer and insurer should not have been allowed to terminate the employee=s temporary total disability benefits on June 18, 2004, and that they had failed to prove that the employee=s employment was terminated for misconduct sufficient to bar his ongoing entitlement to temporary total disability benefits.  The employer and insurer appeal.

 

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 (2004).  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), summarily aff=d (Minn. June 3, 1993).

 

DECISION

 

The employer and insurer argue that the employee committed an unauthorized use of the company credit card at Home Depot on March 11, 2004, when he purchased personal tools with that credit card.  Citing to the provisions of Minn. Stat. ' 176.101, subd. 1(e)(1), the employer and insurer argue that this action constituted Amisconduct@ sufficiently Awillful and wanton@ to bar his ongoing entitlement to temporary total disability benefits.  In response, the employee argues that it was reasonable for the compensation judge to infer that he sought permission to use the company credit card on previous occasions, and that he honestly believed he had the appropriate permission on this occasion because he didn=t know of any policy regarding stolen tools, and, therefore, his actions did not constitute misconduct.

 

In its primary argument, the employer and insurer argue that Minn. Stat. ' 176.101, subd. 1(e)(1), (effective for injuries occurring on or after October 1, 1995), provides a basis for discontinuing the employee=s temporary total disability benefits.  That portion of the statute was amended to provide that, where an employee=s temporary total disability compensation has ceased because the employee had returned to work, and where the employee was later terminated for misconduct, his right to recommencement of payment of temporary total disability benefits following that termination is forfeited.  Minn. Stat. ' 176.101, subd. 1(e)(1), specifically provides that

 

if temporary total disability compensation ceased because the employee returned to work, it may be recommenced if the employee is laid off or terminated for reasons other than misconduct within one year after returning to work if the layoff or termination occurs prior to 90 days after the employee has reached maximum medical improvement.

 

This provision is not applicable to this case.  The statute precludes recommencement of temporary total disability benefits after an employee has returned to work and then is discharged for misconduct, and does not apply to terminate an employee=s ongoing entitlement to temporary total disability benefits.  In this case, the employee was discharged for conduct that occurred while he was off work due to his injury and while he was receiving temporary total disability benefits.  Since the employee was not working at the time the alleged misconduct occurred, the statutory provisions concerning cessation and recommencement of benefits do not apply.  See also Reggs v. Knutson Constr., 63 W.C.D. 453 (W.C.C.A. 2003); Griffin v. Fabcon, Inc., 59 W.C.D. 445 (W.C.C.A. 1999).

 

An alternative argument presented by the employer and insurer is that even if Minn. Stat. ' 176.101, subd. 1(e)(1), does not apply, the employee=s justifiable discharge for misconduct would suspend his right to wage loss benefits until he could show that his work-related disability was the cause of his inability to find or hold new employment.  See Marsolek v. George A. Hormel Co., 438 N.W.2d 922, 924, 41 W.C.D. 964, 966-67 (Minn. 1989).^[4]  The employee testified about his understanding of company policies related to use of the company credit, and that he believed that it was appropriate for him to replace stolen tools by charging new tools on the company credit card.  The compensation judge concluded that, based upon lack of contradictory witness testimony and based upon documents in the record that demonstrated his past use of the credit card, the employee=s testimony was sufficiently credible to establish his position that he honestly did not realize that replacing his stolen tools using the company credit card was prohibited conduct.

 

We note that it is the trier of fact's responsibility to assess the credibility of a witness.  Tolzmann v. McCombs-Knutson Associates, 447 N.W.2d 196, 198, 42 W.C.D. 421, 424 (Minn. 1989) (citing Even v. Kraft, Inc., 445 N.W.2d 831, 835, 42 W.C.D. 220, 225 (Minn. 1989)).  It is not the role of this court to evaluate the credibility and probative value of witness testimony and to choose different inferences from the evidence than the compensation judge.  Krotzer v. Browning-Ferris/Woodlake Sanitation Serv., 459 N.W.2d 509, 513, 43 W.C.D. 254, 260-61 (Minn. 1990), and we therefore defer to the compensation judge=s assessment of the employee=s credibility concerning his understanding of whether he was authorized to charge replacement tools to the company credit card.  Based on the evidence of record, we affirm the compensation judge=s conclusion that the employee=s actions did not constitute misconduct.

 

The employer and insurer also argue that the employer would have had work for the employee to perform, had his employment not been terminated for cause, whether or not that Acause@ was Amisconduct.@  The compensation judge found that the evidence did not show that the employee was unemployed solely due to the termination of his job.  The compensation judge concluded that at the time the employee=s job was terminated, he was less than one month post-surgery and remained subject to physical work restrictions related to his work injury.  At the hearing, the employee testified about his restrictions.  However, no medical records were submitted into evidence by either party, and it appears there was no dispute at the hearing that the employee remained subject to restrictions at the time his benefits were discontinued.  The employer and insurer=s sole basis for discontinuance was the employee=s alleged misconduct, and the record contains no other information to support a discontinuance on other grounds.   For these reasons, it was not unreasonable for the compensation judge to conclude that at the time the employee=s position was terminated, he remained entitled to temporary total disability benefits.

 

The employer and insurer also argue that the compensation judge erred by basing her decision wholly on hearsay evidence, and that her reliance on hearsay was prejudicial.  They argue that the hearsay evidence on which the judge relied was flawed and prejudicial, since the judge allowed the employee to testify as to what he was told by a co-employee regarding the most important element of the case, whether the employee had permission to purchase replacement tools with a company credit card.  We disagree.

 

At the outset, we note that, pursuant to statute, compensation judges are not bound by common law or statutory rules of evidence and that reliable hearsay is expressly admissible under the statute.  See Minn. Stat. ' 176.411, subd. 1; see also Heine v. Simon, 674 N.W.2d 411 (Minn. Ct. App. 2004).  Moreover, the compensation judge heard testimony from the employee and from an employer witness, both of whom provided hearsay testimony, and the judge had the opportunity to review documentary evidence in addition to the testimony.  Finally, both parties had an opportunity to call the witness, Mr. Flaherty, whose comments formed the basis for the hearsay evidence objected to by the employer and insurer, and so both parties had the opportunity to provide direct testimony from that witness.  Where evidence, or, in this case, the opportunity to call Mr. Flaherty as a witness, is equally available to parties, no negative inference can be made against either party for failure to call him to testify at the hearing.  See Kmetz v. Johnson,113 N.W.2d 96 (Minn. 1962).  This court earlier has held that evidentiary rulings are generally within the sound discretion of the compensation judge, Ziehl v. Vreeman Constr. Co., slip op. at 5 (W.C.C.A. Oct. 15, 1991), and we conclude that, under the facts of this case, the admission of hearsay evidence did not constitute error on the part of the compensation judge.

 

The employer and insurer also argue that the judge erred when she found that they had the initial burden to prove by preponderance of evidence that discontinuance of workers= compensation benefits was warranted.  They argue that since they prevailed at the earlier administrative conference, having met their burden of showing reasonable grounds to discontinue temporary total disability benefits, the burden of proving entitlement to benefits shifted to the employee.  We disagree.  An employer petitioning to discontinue benefits has the initial burden Ato prove that discontinuance of benefits was warranted by a preponderance of evidence.@  Violette v. Midwest Printing Co., 415 N.W.2d 318, 322, 40 W.C.D. 445, 453 (Minn. 1987).  Once this has occurred, the burden of proving entitlement to benefits is placed upon the employee.  King v. Farmstead Foods, 45 W.C.D. 292 (W.C.C.A. 1991), aff'd without opinion (Oct. 1, 1991); see also Larsen v. Hauenstein and Burmeister, slip op. (W.C.C.A. June 24, 1999).  In this case, even though the employer and insurer obtained a favorable outcome following the administrative conference held to address their notice of intention to discontinue benefits, they still had the initial burden at the time of the hearing de novo to establish the evidentiary basis for discontinuing benefits.  In any event, regardless of who bore the initial burden to establish a basis for discontinuance of benefits or an entitlement to ongoing benefits, the compensation judge reviewed the same evidence, reviewed the same testimony, and applied the same statutory and case law principles to the issues before her.  We find no merit to the employer and insurer=s assertion, presented at oral argument, that the outcome of the case may have been affected by the compensation judge=s predetermination of which party bore the burden of proof.  We therefore affirm the  compensation judge=s conclusion that the employer and insurer had the initial burden to prove that discontinuance of benefits was warranted.

 

The sole basis for the employer and insurer=s discontinuance was alleged misconduct. The provisions in Minn. Stat. ' 176.101, subd. 1(e)(1), concerning forfeiture of entitlement to temporary total disability benefits as the result of misconduct, are inapplicable to the facts of this case.  In addition, the record contains substantial evidence to support the compensation judge=s findings that the employee=s use of the company credit card to purchase tools did not demonstrate Amisconduct@ on his part that would bar his entitlement to ongoing temporary total disability benefits under Marsolek.  Finally, the compensation judge did not err when concluding that, based on a lack of medical evidence describing the employee=s work restrictions or release to return to work, there were no other grounds on which to base a discontinuance of benefits.  We therefore affirm the compensation judge=s finding that the employee=s temporary total disability benefits should not have been discontinued as of June 18, 2004.