CAROL J. HAYDEN, Employee/Appellant, v. SCOTT COUNTY, SELF-INSURED/BROADSPIRE, Employer.

 

WORKERS= COMPENSATION COURT OF APPEALS

AUGUST 2, 2005

 

No. WC04-340

 

HEADNOTES

 

APPORTIONMENT - PERMANENT PARTIAL DISABILITY; STATUTES CONSTRUED - MINN. STAT. ' 176.101, SUBD. 4a.  Where there was no expert medical opinion or other evidence that the employee had any traumatically caused or congenital condition in her low back pre-existing the first of her two work injuries with the employer, the compensation judge=s apportionment of the employee=s permanent partial disability to a pre-existing traumatic injury or congenital condition, pursuant to Minn. Stat. ' 176.101, subd. 4a, was clearly erroneous and unsupported by substantial evidence.

 

PENALTIES.  Where, although it was reversing the judge=s decision to apportion 12% of the employee=s total 26% permanent partial disability, the court did not find unreasonable the judge=s implicit finding that the employer=s defense on the 12% was reasonable, but where the employer had no legal basis for delaying for over a year in making full payment of compensation for the remaining  14%, the compensation judge=s denial of penalties for vexatious delay in payment was reversed in part, to provide for an award of a penalty for the employer=s delay in paying compensation for the uncontested 14% impairment.

 

Affirmed in part, reversed in part.

 

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

Compensation Judge: Carol A. Eckersen

 

Attorneys: Timothy J. McCoy, McCoy, Peterson & Jorstad, Minneapolis, MN, for the Appellant.  James S. Pikala and Christine L. Tuft, Arthur, Chapman, Kettering, Smetak & Pikala, Minneapolis, MN, for the Respondent.

 

 

OPINION

 

WILLIAM R. PEDERSON, Judge

 

The employee appeals from the compensation judge=s reduction of a 26% permanent partial disability rating to 14% pursuant to Minn. Stat. ' 176.101, subd. 4a, and from the judge=s denial of penalties against the self-insured employer for allegedly interposing a frivolous defense.  We reverse the judge=s statutory apportionment of the employee=s permanent partial disability, and we reverse in part the judge=s denial of penalties.

 

BACKGROUND

 

Carol J. Hayden [the employee] sustained admitted work injuries to her low back on November 18, 1997, and October 29, 1999, while working for Scott County [the employer].  As a result, the employee underwent a left L4-5 microdiscectomy on January 29, 1999, a repeat left L4-5 microdiscectomy on November 24, 1999, and an anterior-posterior fusion from L4-5 to S1 on January 29, 2003.  The employee had a prior history of low back problems, however, and the essential issue on appeal is whether the employer is entitled to reduce its liability for permanent partial disability in accordance with the provisions of Minn. Stat. ' 176.101, subd. 4a.

 

The employee first experienced low back pain in 1993.  On December 23 of that year, she telephoned her family physician, Dr. Theodore Groskreutz, reporting that her back was bothering her.  She advised the doctor that she was unaware of any injury, later testifying that she associated her pain at the time with her menstrual cycle.  Dr. Groskreutz prescribed bed rest, heat or ice, and Naprosyn, and the pain subsequently resolved.  About eight months later, on September 1, 1994, the employee experienced a dull ache in her low back after lifting a garbage can at work.  She evidently reported the incident but did not seek medical attention, and again the pain evidently resolved.  Sometime in 1995, while visiting her sister in northern Minnesota, the employee began to experience pain in her left leg.  She later testified that she may have taken Tylenol for the pain but did not see a doctor.  She denied any specific injury or incident as the cause of her symptoms but acknowledged that thereafter her symptoms would come and go.

 

The employee first saw a doctor for both back and leg pain on May 24, 1996.  On that date, she reported having bumped her leg a couple of months before her visit and having pain in her leg off and on ever since that time.  She described her pain as migrating from the calf up to the thigh and into the lower buttocks area.  She reported also that she limped at times but that she was bothered more at night than during the day.  Dr. Groskreutz diagnosed back and hip and leg strain and referred the employee for physical therapy.  When seen in physical therapy on May 29, 1996, the employee indicated that her chief complaint was of left hip and knee pain.  She reported the onset of her symptoms as approximately two months earlier, Awith no known cause.@  She did not feel that her pain was related to any particular activity, and she stated that it came and went.  She indicated that she was unable to sleep through the night, had difficulty walking, and had trouble going up and down steps.  The employee attended five therapy sessions and discontinued treatment on June 17, 1996.  In a physical therapy discharge summary dated December 31, 1996, her therapist reported that the goals of therapy had been met and that the employee was doing well at the time of her last visit.

 

On January 17, 1997, the employee saw Dr. Groskreutz for a general physical exam.  In addition to other concerns, the employee reported having had lower back pain that had radiated down her left leg on occasion and had become Amore or less a continuous problem,@ at times keeping her awake at night.  The doctor=s assessment was of back strain due to multifactorial causes, including accentuated lumbar lordosis.  He gave the employee a back care instruction booklet and noted that, if she didn=t improve, additional therapy or an MRI would be considered.  Eventually he did refer the employee for an MRI of her lumbar spine, which was conducted on July 3, 1997.  The scan was read to reveal a moderate-sized, broad-based left paracentral disc protrusion at L4-5, with some mass effect on the left L5 nerve root.  In addition, the scan revealed degenerative changes of the posterior facet at L5-S1 bilaterally.

 

On August 5, 1997, the employee was seen in consultation by orthopedist Dr. David Carlson with a history of worsening low back pain and pain into the left leg.  On physical examination, Dr. Carlson noted that the employee had positive responses to straight leg raising tests on the left, both in the sitting and in the supine position.  Reflexes were normal in the lower extremities, but he did note that the employee had toe and ankle dorsiflexor weakness on the left that was not evident on the right.  He diagnosed a left L4-5 herniated disc and recommended epidural steroid injections and a back brace.  The employee was seen by Dr. James Rowe for the first of three injections on August 7, 1997.  Dr. Rowe noted on that date that the employee complained that she was in Anear-continual pain, which interferes with ambulation as well as sleeping.@  The employee reported temporary relief with the first injection, the second injection was unsuccessful, and she obtained no relief from the third injection.

 

The employee continued to experience significant left sciatica and returned to see Dr. Carlson on October 10, 1997.  Dr. Carlson again diagnosed an L4-5 herniated disc on the left, but with some mild improvement.  He and the employee discussed the possibility of surgery, but the employee decided to wait to see if she could get along by using good body mechanics and continuing her exercises at home.

 

On November 18, 1997, the employee sustained an injury to her low back at work when she and a bailiff were moving tables and chairs in a jury room.  The employee later testified that, up until this incident at work, she had performed all of her duties and never missed any time from work.  The employee saw Dr. Groskreutz on November 21, 1997, who prescribed medications and restricted her from working.  On November 25, 1997, Dr. Carlson diagnosed a recurrent L4-5 herniated disc on the left and released the employee to work subject to restrictions.  Eventually the employee came under the care of orthopedist Dr. John Sherman, who performed a left L4-5 microdiscectomy on January 29, 1999, following which the employee was off work for three weeks and the returned again to her regular job with the employer.

 

The employee sustained a second injury to her low back while lifting boxes at work on October 29, 1999.  She felt pain in her low back, and by the weekend she was flat on her back with the most severe low back pain that she had ever experienced.  The employee underwent a repeat MRI scan on November 16, 1999, which revealed a large recurrent L4-5 disc herniation with marked compression of the left L5 nerve sleeve.  On November 24, 1999, Dr. Sherman performed a second microdiscectomy, following which the employee was again off work for three weeks and again returned to her regular job with the employer.  On January 31, 2000, Dr. Sherman gave the employee permanent restrictions against lifting more than fifteen pounds and against doing any excessive bending and twisting.

 

On June 2, 2000, the employee was examined on behalf of the employer by orthopedist Dr. Mark Urban.  Dr. Urban obtained a history from the employee, reviewed the employee=s medical records, and performed a physical examination.  He diagnosed a recurrent left L4-5 herniated lumbar disc, status post two discectomies.  He opined that the employee=s herniated disc predated the November 18, 1997, injury but that the 1997 injury was a permanent aggravation of a pre-existing herniation at L4-5.  He found that the employee=s October 29, 1999, injury was also a permanent aggravation of the employee=s pre-existing condition.  Dr. Urban attributed the need for the employee=s surgeries to the employee=s 1997 and 1999 work injuries.  He rated the employee=s total permanent partial disability at  16% of the whole body, under Minn. R. 5223.0390, subp. 4.D. (1) (2) and (3).  Then, based on the employee=s July 3, 1997 MRI scan, he determined that 12% of that permanent partial disability predated the employee=s work injuries, apportioning the remaining 4% to the work injuries.  In an addendum report issued September 1, 2000, Dr. Urban apportioned 75% to the condition revealed on the MRI findings of July 3, 1997, 12.5% to the November 18, 1997, injury, and 12.5% to the October 29, 1999, injury.

 

On January 29, 2003, the employee underwent her third low back surgery, performed by Dr. Sherman - - an anterior-posterior fusion from L4-5 to S1, following which she missed six weeks of work.

 

Dr. Gary Wyard examined the employee at the request of the employer on July 10, 2003.  Dr. Wyard agreed with Dr. Urban=s 16% rating under the permanent partial disability schedules, and he added an additional 10% for the employee=s fusion under Minn. R. 5223.0390, subp. 5.B.  He also apparently agreed with Dr. Urban=s opinions regarding apportionment.  Shortly after receiving Dr. Wyard=s report, the employer paid $8,479.96 to the employee as a portion of her permanent partial disability compensation.

 

On August 28, 2003, the employee filed a claim petition, seeking payment for a 30% whole body impairment as well as a penalty against the employer for interposing a frivolous defense and unreasonably delaying payment of her permanent partial disability benefits.  The employer asserted that the employee had been paid all benefits to which she was entitled and that A[a] tentative denial of the claim for permanent partial disability has been made, until full discovery can be completed to determine the nature and extent of the pre-existing condition of the employee.@

 

On August 19, 2004, Dr. Wyard testified, by deposition, that the employee had a permanent impairment of her low back before the November 18, 1997, injury, which he rated at 12% under Minn. R. 5223.0390 - - 9% under subpart 4.D. and an additional 3% under subpart 4.D.(1).  He opined that the employee had a total permanent partial disability of 26% of the whole body.  On August 24, 2004, the employer paid an additional $3,320.04 in permanent partial disability benefits to the employee.

 

The employee=s claim for permanent partial disability benefits and penalties came on for a hearing before a compensation judge on October 25, 2004.  At the beginning of trial, the parties stipulated that the extent of the employee=s total permanent partial disability was 26% of the whole body. They stipulated also that the employer had already compensated the employee for a 14% impairment, having Aapportioned out@ the first 12% of the total permanency rating to a pre-existing condition.  In a Findings and Order issued December 23, 2004, the judge determined that the employee had a pre-existing permanent partial disability that was clearly evidenced in medical records made prior to the employee=s work injuries.  She concluded that the employee=s pre-existing low back condition had caused a permanent loss of use or function, and she accepted Dr. Wyard=s opinion that the employee=s condition prior to the work injury represented a 12% permanent partial disability.  The judge also determined that the employer had raised reasonable defenses to the payment of permanent partial disability benefits and did not vexatiously delay payment of benefits.  Therefore, she denied the employee=s claims for additional permanent partial disability benefits and penalties.  The employee appeals.

 

STANDARD OF REVIEW

 

On appeal, the Workers= Compensation Court of Appeals must determine whether Athe 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, Athey 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, Aunless 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 5521, 524 (1975).

 

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 Worker= 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

 

1.  Apportionment

 

The employee contends that the compensation judge erred as a matter of law by allowing apportionment of the employee=s permanent partial disability under Minn. Stat. ' 176.101, subd. 4a.  That statute provides in relevant part as follows:

 

If a personal injury results in a disability which is attributable in part to a preexisting disability that arises from a congenital condition or is the result of a traumatic injury or incident, whether or not compensable under this chapter, the compensation payable for the permanent partial disability pursuant to this section shall be reduced by the proportion of the disability which is attributable only to the preexisting disability.  An apportionment of permanent partial disability under this subdivision shall be made only if the preexisting disability is clearly evidenced in a medical report or record made prior to the current personal injury.

 

Minn. Stat. ' 176.101, subd. 4a (emphasis added).  The employer has the burden of proof on the issue of apportionment under Minn. Stat. ' 176.101, subd. 4a.  Arries v. Itasca Nursing Home, slip op. (W.C.C.A. Apr. 29, 1997).

 

Subdivision 4a permits reduction of the permanent partial disability benefits due to an injured employee by the proportion of the disability attributable to a pre-existing disability, whether work-related or not.  The statute clearly requires, however, that a nonwork-related pre-existing disability must arise either from a congenital condition or from a traumatic injury or incident.^[1]  In the present case, the compensation judge did not issue any factual findings relative to this statutory requirement.  While the employee quite obviously was suffering from a pre-existing low back Acondition@ evidenced by her own testimony and the MRI scan conducted on July 3, 1997, no evidence was presented to establish that her back complaints resulted from a congenital condition or any traumatic injury or incident.

 

The employee testified to a dull ache after lifting a garbage can in 1994, but she did not seek medical treatment and her pain went away.  In 1995, the employee experienced pain into her left leg for the first time.  But again she did not seek medical attention, and again the pain subsided.  There is evidence that the employee bumped her leg a couple of months before seeing Dr. Groskreutz on May 24, 1996, but there is no evidence or even any suggestion that somehow this incident caused a herniated disc or radicular pain.  And when the employee was seen in physical therapy five days later, she reported that her symptoms began Awith no known cause.@  None of the employee=s treating doctors ever suggested that the employee had a traumatic or congenital condition in her low back pre-dating the November 18, 1997, injury.  Nor did Dr. Urban or Dr. Wyard indicate that the employee=s pre-existing condition was related to trauma or was congenital.  Without evidence that the employee=s low back condition was associated with a prior traumatic injury or congenital condition, there can be no apportionment.  Hughes v. Bradshaw Gravel Supply, 41 W.C.D. 502 (W.C.C.A. 1988); Jolitz v. Bayliner Marine, 47 W.C.D. 347 (W.C.C.A. 1992); Buck v. 3M Company, 45 W.C.D. 108 (W.C.C.A. 1991); Schwartz v. Honeywell, Inc., 42 W.C.D. 902 (W.C.C.A. 1990).  Therefore we reverse the compensation judge=s decision reducing the employee=s total 26% permanent partial disability rating to 14%.

 

As we have determined that the employer is not entitled to statutory apportionment for the reason given, we need not address the employee=s arguments on the issue of whether the employee=s pre-existing condition constituted a Adisability@ under the statute.

 

2.  Penalties

 

The employer contested the employee=s claim for permanent partial disability benefits on the basis of equitable and statutory apportionment for a pre-existing condition.  The compensation judge determined that the employer had raised reasonable defenses to the payment of permanent partial disability benefits and had not vexatiously delayed payment of benefits to the employee.  The employee asserts that the employer=s initial payment of permanent partial disability benefits in July 2003 was based upon a theory of equitable apportionment in a solely statutory apportionment situation.  Therefore, she contends, the delay in paying the balance of compensation for the admitted 14% permanent partial disability warrants a penalty under Minn. Stat. ' 176.225.  She contends further that an award of penalties is also due for the delay in payment of the 12% permanency apportioned out of the total rating.

 

As the compensation judge noted in her memorandum, an award of penalties is not appropriate where the employer and insurer interpose a good faith defense.  See Heise v. Honeywell, Inc., 48 W.C.D. 523 (W.C.C.A. 1993).  As the judge also noted, the fact that an employer and insurer do not ultimately prevail in their defense does not necessarily create a basis for the imposition of penalties.  See Greene v. Independent Sch. Dist. #202, 36 W.C.D. 601 (W.C.C.A. 1984).  The employer contended at hearing that it was entitled to reduce the employee=s permanency award by 12% pursuant to Minn. Stat. ' 176.101, subd. 4a, and the compensation judge was persuaded by that defense, thereby finding it reasonable.  Although we are reversing the judge=s decision to apportion, we do not find unreasonable the judge=s implicit finding that the employer=s defense was at least reasonable.  Therefore we affirm the judge=s denial of a penalty on that 12%.  With regard to the payment of benefits for the admitted 14% impairment, however, we conclude that the employer had no legal basis for paying less than full benefits for that 14%.  The record is unclear as to the basis for the employer=s payment of $8,479.96 in July of 2003 or how it arrived at that figure.  About thirteen months later, and pursuant to subdivision 4a, the employer purportedly paid the balance of benefits due for the full 14% impairment.  We agree with the employee that no legal basis exists for applying a theory of equitable apportionment to pre-existing nonwork-related permanency.  Minn. Stat. ' 176.101, subd. 4a, provides the exclusive method for apportioning an employee=s nonwork-related permanent partial disability.  Here, it is undisputed that the claimed pre-existing disability subject to apportionment was no more than 12%.  Because a portion of the compensation due for the remaining 14% of the employee=s total permanency was clearly delayed for more than one year, we modify the judge=s order to provide a penalty of $500.00.