The employer appeals from the compensation judge’s approval of a stipulation for settlement, the judge’s denial of its request for reimbursement of wage continuation payments, and the denial of its request for an order directing the insurer to pay the attorney fees of the employer.

Tamara Joan Haeg, the employee, worked as an account executive for SEKO Worldwide d/b/a Vast Logistics, the employer.  On August 7, 2004, the employee attended a golf event with one of the employer’s clients at which time she was struck in the left eye by a golf ball.  On that date, the employer was insured by the Minnesota Assigned Risk Plan administered by Berkley Risk Administrators.

Following the injury, the employee was off work for eight weeks during which time the employer paid the employee full wages.  The employee later filed a claim petition claiming her injury arose out of her employment.  The employee alleged that as a result of her injury, she was totally disabled from August 7 through September 10, 2004, sustained a 24 percent permanent partial disability for an enucleation of the left eye and incurred medical expenses in excess of $40,000.00.  The insurer denied liability for the claimed injury contending it occurred during a golf outing in which the employee participated for recreational purposes unrelated to her employment.

The employee’s claim petition was initially scheduled for a hearing in November 2005, but was stricken and the parties pursued mediation.  A tentative settlement was reached between the employee and the insurer and a stipulation for settlement was drafted.  The parties were, however, unable to reach settlement with Regions Hospital on its intervention claim, and the case was rescheduled for a hearing on June 22, 2006.

Prior to the scheduled hearing, the employee, the insurer and the intervenors reached a settlement of their respective claims.  By this point, the employer had retained separate counsel, and the insurer also made an offer to the employer to settle its reimbursement claim.  The employer rejected the offer.  The proposed settlement agreement provided the “employer’s intervention claim for reimbursement of wage continuation during periods of temporary total disability is reserved to be determined pursuant to Parker Lindberg proceedings.”  (Stip., ¶VIII(5).)  The employer refused to participate in the settlement.  On June 21, 2006, the employer’s attorney filed a motion seeking a hearing on the proposed stipulation for settlement.  The employer contended it paid full wages to the employee during her claimed period of temporary total disability for which the employer sought reimbursement from the insurer.  The employer further moved that approval of the settlement be denied, and sought an order directing the insurer to pay the employer’s attorney fees based upon a conflict of interest between the employer and the insurer.

A hearing was held before the compensation judge to determine whether the stipulation for settlement should be approved.  No testimony was offered by any party.  A copy of the workers’ compensation insurance policy was received as an exhibit.  Following the hearing, the compensation judge issued an Award on Stipulation approving the terms of the stipulation for settlement.  By order dated July 20, 2006, the compensation judge also denied the employer’s motion seeking reimbursement for the wages paid to the employee during periods of her claimed total disability.  The compensation judge further found there existed no conflict of interest between the employer and the insurer requiring the insurer to provide separate counsel for the employer.  The employer appeals.

The compensation judge concluded that the employer’s claim for reimbursement of the wages paid to the employee is not enforceable under workers’ compensation law and denied the claim.  The employer appeals contending the judge’s decision is legally erroneous.

The appellant argues that under Minn. Stat. § 176.221, subd. 9, and equitable principles, a Minnesota employer does have the right to seek reimbursement for wage loss benefits paid the employee.  Minn. Stat. § 176.221, subd. 9, provides:

An employee who sustains a work-related injury may be entitled to other benefits in addition to workers’ compensation benefits.  Such benefits may include public benefits such as Social Security, unemployment compensation or welfare benefits and private benefits including no-fault automobile insurance, disability benefits, wage continuation benefits and medical benefits.  Certain of these benefits may be paid simultaneously with workers’ compensation benefits while others are exclusive and can not be paid simultaneously with workers’ compensation benefits.^[1]  Private benefits may be provided an injured employee by a third party provider or insurer or through a plan established by a self-insured employer or a union.

Under Minn. Stat. § 176.191, subd. 3, health and disability insurers are obligated to make medical or disability payments whenever there is a dispute about the compensability of a personal injury.^[2]  The statute provides a right of reimbursement to the insurer if the injury is subsequently determined to be compensable.  See Johnson v. Blue Cross & Blue Shield, 329 N.W.2d 49 (Minn. 1983).  The employer, however, offered no evidence that its wage payments to the employee were made pursuant to a policy of accident and health insurance or group disability income coverage.  Since the employer does not argue it is entitled to a right to reimbursement under Minn. Stat. § 176.191, subd. 3, solely as an employer, we need not reach that issue in this case.

As a general rule, an intervenor’s right to reimbursement is contingent upon the employee prevailing on his or her claim.  Although a health or disability insurer has a right of reimbursement, it cannot initiate a claim on its own but can only intervene or participate in an existing proceeding.  Le v. Kurt Mfg. Co., 557 N.W.2d 202, 55 W.C.D. 650 (Minn. 1966).  Thus, an intervenor’s rights are typically derivative.  See Wenderski v. John A. Dalsin & Son, Inc., slip op. (W.C.C.A. 2003).  However, once proceedings have commenced, they must be conducted so as to protect the health or disability carrier’s reimbursement interest.  Brooks v. A.M.F., Inc., 278 N.W.2d 310, 31 W.C.D. 521 (Minn. 1979).

An employer asserting a reimbursement claim for wages paid to an employee is entitled to the same protection and rights as an intervenor under Minn. Stat. § 176.361,^[3] and is entitled to participate in a settlement like any other intervenor.  If the employer asserts a reimbursement claim, the insurer must include the employer in any settlement negotiations and comply with the principles established in Parker/Lindberg v. Friendship Village, 395 N.W.2d 713, 39 W.C.D. 125 (Minn. 1986).  If an employer with a wage reimbursement claim participates in the settlement and receives reimbursement, the employer is liable for attorney fees pursuant to Edquist v. Browning-Ferris, 380 N.W.2d 787, 38 W.C.D. 411 (Minn. 1986).  The employer may, however, decline to participate in the settlement and elect to proceed to hearing.  In such case, the employer must, at hearing, prove the employee’s claim was compensable, including proving entitlement to wage loss benefits for the period wages were paid, and establish its right to reimbursement.  Parker/Lindberg at 719, 39 W.C.D. at 135-36.

In this case, the settlement agreement preserved the employer’s reimbursement claim and allowed the employer to establish its claim at a hearing.  We conclude, however, the employer failed to prove its claim.  Proof that an employer made payment of wages to the employee during a period of total disability, standing alone, is not legally sufficient to establish a right to reimbursement.  A right of reimbursement is contractual and must be established by the language of a policy of insurance or a contract between the employee and the party paying the benefit.^[4]  Typically, wage continuation and disability contracts include language that specifically provides an employee is entitled to such benefits only if the employee is not entitled to workers’ compensation benefits for the same disability or for the same period of time.  Such contracts may also provide that in the event the employee subsequently receives workers’ compensation benefits, for the same period of time, the employee will reimburse the provider.  See e.g., Ransom v. Ford Motor Co., 472 N.W.2d 134, 45 W.C.D. 45 (Minn. 1991).  There is no evidence in this case that the employer paid the wage benefits pursuant to any contract, nor is there any evidence that the employee agreed to reimburse the wage benefits to the employer in the event she received workers’ compensation benefits.  In Farah v. Mall of America, slip op. (W.C.C.A. Nov. 1, 2001), this court stated, “[a]bsent evidence of a contractual agreement between the employee and the employer concerning reimbursement of wage continuation benefits in the event of an award of temporary disability benefits, the compensation judge and this court have no basis to award a reimbursement to an employer for payments made to an employee.”  On this basis, we affirm the compensation judge’s denial of the employer’s claim for reimbursement.

The appellant contends the compensation judge issued the award on stipulation based on the erroneous conclusion that the employer’s reimbursement claim is not recognized by workers’ compensation law.  The appellant contends this conclusion is legally incorrect and asserts  the award on stipulation should be vacated pursuant to Minn. Stat. § 176.521, subd. 3, on the grounds of an error of law.  We disagree.  The employer was afforded a hearing and an opportunity to prove its claim.  The employer failed to prove entitlement to reimbursement of the wage paid the employee.  We, therefore, find no error of law.

The employer also argues the insurer’s settlement with the employee bars the employer’s reimbursement/subrogation claim for the recovery of wages against the employee or a third-party tortfeasor.  They contend the insurer’s right to settle claims should not include the right to compromise the employer’s claim for affirmative relief against a third party.  For these reasons, the appellant contends the award is not in accord with workers’ compensation law.  We are not persuaded.

Paragraph 9 of the stipulation for settlement provides:

The employer contends it has three potential remedies for recovery of its wage payments outside of the workers’ compensation system.  These are: (1) sue the employee in state court for reimbursement of the wages paid; (2) sue the insurer in state court for reimbursement of  the wages paid; and (3) collect its reimbursement through a subrogation action brought by the employee against a third party.  All of these remedies, the appellant contends, are prejudiced by the terms of the stipulation for settlement.  We disagree.

Paragraph 9 of the stipulation for settlement deals solely with of the right of subrogation under Minn. Stat. § 176.061, not with any independent contractual agreement or equitable claim that may be enforced in state court.  To the extent the employer has any cause of action against the employee, nothing in the stipulation for settlement impairs that right.  With respect to the purported claim against the insurer, the employer’s right to reimbursement for the wage continuation benefits was amply protected within the workers’ compensation system.  The employer had the opportunity to prove its right to reimbursement at the hearing before the compensation judge but failed to do so.  Finally, we find no right to reimbursement for wages paid in Minn. Stat. § 176.061, subd. 6.  That subdivision sets out the allocation of the proceeds of a third party action and provides the employer “shall be reimbursed in an amount equal to all benefits paid under this chapter to or on behalf of the employee . . . .”  The wages paid the employee were not workers’ compensation benefits so no right of reimbursement is provided by this statute.  We, therefore, deny the employer’s petition to vacate the award on stipulation.

At the hearing before the compensation judge, the employer sought an order directing the insurer pay its attorney fees due to a conflict of interest.  The compensation judge denied the request finding no conflict of interest was created by the settlement.  The employer appeals the denial of attorney fees and contends there was a direct conflict of interest between the insurer and the insured with respect to the employer’s wage reimbursement claim, citing United States Fidelity & Guarantee Co. v. Lewis A. Roser Co., Inc., 585 F.2d 932 (8th Cir. 1987).  The appellant contends the insurer must bear the expense of providing independent counsel to its insured.

In Pine Island Farmers v. Erstad & Riemer, 649 N.W.2d 444 (Minn. 2002), the Supreme Court held “that in an insurance defense scenario, defense counsel has an attorney-client relationship with the insured.”  Thus, the court acknowledged, when the interests of the insurer differ from those of the insured, defense counsel may find itself in “an exceedingly awkward position.”  But, as is apparent from a reading of Pine Island, whether there existed a conflict of interest and whether the insurer was obligated to provide separate counsel for the insured, are not issues arising under the workers’ compensation laws of this state.  Accordingly, this court lacks jurisdiction to resolve those issues.  See Minn. Stat. § 175 A.01, subd. 5.