The employer and insurer appeal from the compensation judge’s method of calculating the employee’s weekly wage, and from the award of temporary partial disability compensation for certain periods.  The employee cross-appeals from the denial of penalties.  We affirm in part and vacate in part.

The employee began working for the employer, SuperAmerica, as a full-time cashier in 2001.  In addition to cashier work, she also stocked baked goods and a cooler, cleaned and mopped.  In 2004, the employee started working a second full-time job as a night health care aide at St. Olaf’s Residence, an assisted living facility.  The physical duties of this second job were very light.  The employee regularly worked substantial overtime in both jobs.

Some time early in 2006, the employee was put on part-time status in her job with St. Olaf’s.  She was assigned to work three shifts per week, but still worked substantial overtime and covered extra shifts whenever they were available.

On May 18, 2006, the employee was working at SuperAmerica moving crates of milk in the cooler.  While lifting a crate of milk down from a shelf she experienced the onset of low back and right leg pain.  There were no witnesses to her injury and she did not initially report it to the employer, assuming the pain would go away.  She finished her shift and also worked as scheduled over the next few days without reporting an injury.  However, her low back pain continued to worsen.

On Sunday, May 21, the employee called her supervisor and told her about her back problems, and the next day, May 22, the employee was seen at the Hennepin County Medical Center (“HCMC”) emergency room for what was described as “intractable” back pain which she attributed to lifting at work a few days previously.  The range of motion in her low back was limited and she was seen to limp.  She was diffusely tender in the low back along the paraspinal muscles.  The employee was diagnosed as having a low back strain and was taken off work until June 3.

The employee took her restrictions to SuperAmerica and discussed her injury with her supervisor later that day.  She did not inform St. Olaf’s Residence of her restrictions or injury and continued working there as scheduled.  She testified that the job at St. Olaf’s was light enough that she was able to continue to do it, and that she did not think it was necessary to tell St. Olaf’s about the injury since it had not happened there.  SuperAmerica and its insurer denied the employee’s claim of a work-related injury, primarily because there were no witnesses to the injury, the employee did not report an injury for several days, and the employee had continued to work her regular duties without complaint for several days before she reported the injury.  The employer and insurer also contended that the employee was not cooperative with their investigation of the work injury.

The employee subsequently was seen at University of Minnesota Physicians on May 31, 2006, by Dr. Jason Como on referral from HCMC.  The employee reported that her pain had at first been constant for three days, and had radiated from her lower back down her right leg to above her knee, but that the pain was now intermittent and not radiating into the leg.  Dr. Como diagnosed a probable lumbosacral strain, noting that the employee’s main area of tenderness was in the paraspinal muscles.  He advised her to take ibuprofen and continue off work for the time authorized by HCMC.  However, he noted that he was not going to have her continue off work.  He predicted that her pain would be improved in about 3-4 weeks time.  In restrictions dated June 6, 2006, Dr. Como initially limited the employee to light duty work, but authorized her to return to work without restrictions as of June 12, 2006.

The employee returned to work at SuperAmerica on June 12, 2006, but her symptoms did not improve.  She began treating with a chiropractor at Four Seasons Chiropractic in August 2006.  Her chiropractor placed her under work restrictions of no lifting over ten pounds and only occasional bending and stooping.  She was treated with traction, exercises, and a TENS unit.

On August 31, 2006, the employee underwent an MRI of the lumbar spine at Minnesota Radiology at the referral of her chiropractor.  The scan showed broad-based bulging at L4-5 and L5-S1.

In October 2006, the employee returned to full-time hours at St. Olaf’s.  At the end of November, she was taken off the work schedule at SuperAmerica, apparently due to her restrictions.  She was taken off work completely by her chiropractor from October 30, 2006, through November 5, 2006, as a result of a flare-up of her symptoms.

The employee was examined on behalf of the employer and insurer by Dr. Thomas Raih on December 14, 2006.  Dr. Raih noted in his report that the employee’s injury was unwitnessed and that she was able to continue working after the date of the alleged injury for several days.  He stated that her injury would have been in the nature of a soft tissue sprain/strain, based on the records at HCMC.  He considered that subsequent chiropractic and medical care would then have been reasonable for six to eight weeks, but not after August 31, 2006.  He did not think the employee had any ongoing symptoms that could be related to the alleged work incident.  He considered her to have reached maximum medical improvement without any ratable permanency or need for work restrictions.

On December 12, 2006, the employee’s chiropractor issued the employee restrictions against lifting more than 15 pounds or doing any climbing, repetitive bending, crawling, twisting, or overhead work.  Standing and sitting were each limited to 50 percent of her shift, with the employee able to take a break from standing or sitting as needed.

St. Olaf’s eventually became aware of the employee’s restricted status.  Because of a policy against permitting employees to work with medical restrictions unless due to an injury sustained in its employ, St. Olaf’s took the employee off its work schedule in early January 2007.  The employee has not been terminated by either SuperAmerica or St. Olaf’s, but has not been allowed to work for either through the date of hearing.

The employee began treating with Dr. Amy Stenehjem-Kelsch, a physical medicine and rehabilitation specialist at the Park Nicollet Low Back Clinic on January 11, 2007, for low back and right leg pain.  The employee gave a history of sudden onset of low back and right leg pain while lifting a crate of milk at work in May, and told the doctor that there had been no improvement since then.  On examination, the employee exhibited an antalgic gait, limited ability to do stationary heel lifts, tenderness with palpation of the low back and right lower extremity, and an equivocal right straight leg raise.  Dr. Stenehjem-Kelsch recommended work restrictions, ibuprofen, and physical therapy.

On February 16, 2007, the employee was again seen by Dr. Stenehjem-Kelsch, who noted that the employee’s physical therapy was still awaiting approval through workers’ compensation.  The existing work restrictions were continued.  On March 16, 2007, the employee was again seen at Park Nicollet.  She had pain in her right leg radiating to the calf.  The doctor noted that she was about to begin physical therapy, and hoped that the employee’s restrictions might be reduced after therapy started.

The employee began a job search with the assistance of a QRC in April 2007.  She did not work through the date of the hearing below, May 17, 2007.
On May 11, 2007, Dr. Stenehjem-Kelsch saw the employee again and noted that the employee had recently started physical therapy with mild improvement.  The doctor continued the employee’s restrictions and noted that she was not yet at MMI.

The employee’s claim petition was heard by Compensation Judge Gary Mesna on May 17, 2007.  The employer and insurer continued to deny liability, and the employee alleged that the employer’s defenses were frivolous and that penalties were due to the employee.  Following the hearing, the judge found that the employee had in fact sustained a work injury on May 18, 2006, that the employee continued to require work restrictions from the date of injury through the date of hearing,  and that the employee had not reached maximum medical improvement.  The judge further determined that the employee had been regularly employed in two jobs as of the date of injury and had worked regular and frequent overtime.  The employee’s average weekly wage was found to be $894.81.  The judge awarded the employee temporary total and temporary partial disability compensation, medical expenses, and rehabilitation benefits.  The employee’s request for penalties was denied.

The employer and insurer have appealed from the compensation judge’s calculation of the employee’s weekly wage and from the finding that the employee was entitled to temporary partial disability compensation.  The employee has cross-appealed from the denial of penalties.

The compensation judge found that the employee was regularly employed in two employments at the time of her work injury and that she had worked frequent overtime hours.  He concluded that her wages from both employments, including overtime, should be included in the calculation of her weekly wage.  The compensation judge further found that the employee’s earnings had been irregular.  Accordingly, the compensation judge calculated the employee’s weekly wage based on her earnings during the 26 weeks prior to the work injury, based on Minn. Stat. § 176.011, subd. 3 (1982), which provides that

The employer and insurer had urged the compensation judge to adopt an alternative calculation based on the employee’s earnings during only the 18 weeks prior to the injury, arguing that a 26-week average would unreasonably inflate the employee’s weekly wage.  Their suggestion for an alternative 18-week average was predicated on the fact that the employee’s schedule at St. Olaf’s was changed from full-time to part-time about 18 weeks before the injury, and that she was working part-time hours at St. Olaf’s at the time she was injured.  The compensation judge did not adopt the appellants’ 18-week calculation.  The appellants have renewed their arguments in favor of this method on appeal to this court.

The object of wage determination is to "arrive at a fair approximation of [the employee's] probable future earning power which has been impaired or destroyed because of the injury."  Knotz v. Viking Carpet, 361 N.W.2d 872, 37 W.C.D. 452 (Minn. 1985), quoting Sawczuk v. Special Sch. Dist. No. 1, 312 N.W.2d 435, 34 W.C.D. 282 (Minn. 1981).

The appellants correctly point out that Minnesota case precedent clearly authorizes a compensation judge to depart from the statutory methods of wage calculation where another method more reliably meets this objective.  See, e.g., Loberg v. Northome Health Care Center, 57 W.C.D. 113 (W.C.C.A. 1997).  In Loberg, this court remanded the issue of wage calculations where the compensation judge decided he could not deviate from the statutory calculation method despite concluding that use of that method understated the employee’s lost earning capacity.  The appellants suggest in their brief that the compensation judge here may also have believed himself constrained to use the statutory method and that this court should substitute the employer’s calculations.  The compensation judge’s memorandum makes clear, however, that he was aware of the case law permitting alternative calculation methods, but concluded only that restraint should be exercised in deviating from the statutory formula.  In his memorandum, he also stated the conclusion that  “. . . in this particular case, the 26-week statutory formula produces a result that is [not] far off the mark.”

We note, first, that the use of the 26-week method here^[1] is amply justified generally in that the employee’s earnings during the period prior to the work injury clearly produced earnings that were irregular due to the very significant variations in the extent of overtime worked in each pay period at both employers.

The employer and insurer next argue that the failure to deviate from the statutory formula should be held clearly erroneous here as a matter of law.  In support of this argument, they cite Nowack v. Super Cycle, slip op. (W.C.C.A. March 7, 1994).  In Nowack, this court affirmed a compensation judge’s calculation of weekly wage based only on the two weeks prior to the injury,  when the employee was working a regular part time job for the employer, instead of on the 26 weeks  prior to the injury, when the employee had worked primarily full time.  The appellants contend that the employee’s situation in this case is analogous to that in Nowack, except that she went from full to part time work even longer prior to the injury, so that the rationale for use of a limited pre injury period of part time work is even more compelling.

We note, first, that Nowack involved this court’s affirmance of the judge’s decision to use an alternative method of calculation, and does not stand for the proposition that a failure to do so constitutes an error of law, even under similar facts.  More important, a critical fact we discussed in Nowack as supportive of the judge’s calculation method is absent in this case - - specifically, in that case the employee had made it clear on going to part time employment that he had no intention of ever returning to full time employment with the employer.  Under those circumstances, not present here, we concluded that the compensation judge could reasonably find that use of the 26-week formula overstated the employee’s earning capacity.

In the present case, the record does not clearly indicate why the employee was put on a part-time schedule at St. Olaf’s for a period prior to the injury.  However, there was no evidence that this was a permanent change for the employee or that a return to full-time work would be foreclosed to her.  Further, the evidence permits the conclusion that the employee always had tried to work as many hours in both jobs as were available to her, and that, in keeping with this intention, she would return to full-time hours at St. Olaf’s as soon as they were made available to her again.  In fact, the employee did return to full-time hours at St. Olaf’s when they were made available to her some months after the injury.  Under such circumstances we cannot say that the compensation judge here erred in addressing the pre-injury variation in her hours and earnings by including both the periods of full and part-time work at St. Olaf’s in the calculation.  We affirm the weekly wage as determined by the compensation judge.

The employer and insurer argue that the compensation judge erred in finding that the employee was entitled to temporary partial disability benefits from June 23, 2006, through January 7, 2007.  They contend that any wage loss in that period was not related to the employee’s work injury.

We note in reviewing the record that the employee’s wage loss during this period was due to the reduced hours she was working at St. Olaf’s.  She was continuing to work full-time with substantial overtime at SuperAmerica.  The hours worked at St Olaf’s in this period were essentially the same as the hours the employee had worked there for some weeks before her injury.  The employee testified that she was not restricted in her duties at St. Olaf’s because the job there was very light and that St. Olaf’s was unaware that she had any restrictions for this period.

We are not determining the validity of the employer and insurer’s argument, however, because in her responsive appellate brief, the employee “concedes that she is not entitled to TPD benefits from June 22, 2006, to January 7, 2007.”  The employee apparently bases her concession on the compensation judge’s failure to specifically order payment of the temporary partial disability benefits to which his findings indicate she was entitled.  While we might have concluded that the lack of a specific order was inadvertent, we decline to modify the findings and order to award benefits which are subject to significant argument on appeal and which have been waived by the employee.  Finding 11 is vacated.

Minn. Stat. § 176.225, subd. 1(a), provides for a penalty when an employer or insurer has interposed a defense which does not present a real controversy.  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).  The fact that the employer and insurer did not ultimately prevail on their defenses, does not necessarily create a basis for the imposition of a penalty.  Greene v. Independent Sch. Distr. #202, 36 W.C.D. 601, (1984).

The compensation judge found here that penalties were inappropriate, in that “[t]here were no witnesses to the injury.  The employee continued to work and did not report the injury for several days thereafter.  The employer had difficulty investigating the injury because the employee would not speak to them directly.”  Finding 22.  The employee challenges the denial of penalties on cross-appeal, arguing that none of these factors provided a sufficient basis to support the employer and insurer’s denial of liability.

With respect to the absence of witnesses to the injury, the employee points out that many injuries are unwitnessed, and argues that the policy favoring quick and efficient delivery of benefits to injured workers would be adversely affected if employers and insurers regularly denied liability merely on that basis.  This may be so, but it has little to do with the question of whether a specific employer and insurer in an individual case should be required to pay penalties for requiring a judicial determination as to the employee’s credibility, where that was the primary evidence connecting the alleged injury with the workplace.

The employee next argues neither the delay in reporting her injury nor her failure to cooperate fully with the employer and insurer’s investigation constitute a reasonable basis to deny liability, arguing that the facts in the present case are “identical” with those in Sattler v. Pipestone County Medical Center, slip op. (W.C.C.A., Mar. 18, 2003), and Dahle v. Ely Bloomenson Community Hospital, slip op. (W.C.C.A., Mar. 27, 2000), where compensation judges found that the employers and insurers’ denial of liability were frivolous and this court affirmed awards of penalties.  While there are some similarities with the facts in Sattler, and Dahle, there are also significant differences.  For example, the primary defense in Sattler was one of failure to give statutory notice, which the compensation judge found would not have been a viable defense if the employer and insurer had conducted a good faith investigation.  In Dahle, the defense was based on a question of medical causation, not whether the employee had sustained an injury at work, and the compensation judge found that the defense became frivolous after examination by the employer and insurer’s medical expert agreed with the causal relationship on which the denial was based.

Even if the facts of Dahle and Sattler were more similar to those in the present case, we would not find them to be controlling as to the issue of penalties.  As this court has frequently noted, the question whether penalties are appropriate is generally committed to the sound discretion of the compensation judge.  See, e.g., Crimmins v. NACM North Central Corp., 45 W.C.D. 435 (W.C.C.A. 1991); Erickson v. Texaco Refining, 45 W.C.D. 181 (W.C.C.A. 1991).  The compensation judge here was in the best position to assess whether, based on the evidence as a whole, the denial of liability constituted a merely frivolous defense.  Based on the record before us, we do not find that the compensation judge’s denial of penalties was a clear abuse of that discretion, and affirm.