ROXANN ROBERTS, Employee v. HERITAGE LIVING CTR. and MINNESOTA COUNTY INS. TRUST, Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 23, 2008

 

No. WC08-177

 

HEADNOTES

 

TEMPORARY PARTIAL DISABILITY - SUBSTANTIAL EVIDENCE.  An employee's voluntary termination from employment does not preclude a claim for workers' compensation benefits upon proof that the wage loss is attributable to the disability.  Substantial evidence supports the compensation judge=s conclusion that considering the employee=s physical problems performing her former jobs and the limited job opportunities in the employee=s labor market, it was reasonable for her to open and operate a home daycare business.

 

TEMPORARY PARTIAL DISABILITY - EARNING CAPACITY.  Substantial evidence supports the compensation judge=s finding that the employee=s self-employment earnings, as calculated by using data from her income tax returns, accurately represented her earning capacity and therefore provided a basis for calculation of temporary partial disability benefits. 

 

Affirmed.

 

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

Compensation Judge: Penny Johnson

 

Attorneys: John P. Bailey, Bailey Law Office, Bemidji, MN, for the Respondent.  Barbara G. Lawton, Koll, Morrison, Charpentier & Hagstrom, St. Paul, MN, for the Appellants.

 

 

OPINION

 

MIRIAM P. RYKKEN, Judge

 

The employer and insurer appeal from the compensation judge=s award of temporary partial disability benefits.  We affirm.

 

BACKGROUND

 

On April 21, 2002, the employee sustained an admitted low back injury while working as a certified nursing assistant at Heritage Living Center, the employer, which was insured by Minnesota County Insurance Trust, the insurer.  On that date, the employee earned a stipulated weekly wage of $410.00.

 

The employee began working as a CNA for the employer in 1996.  On July 29, 1999, she sustained an admitted low back injury which resulted in some intermittent lost time from work, permanent partial disability and permanent work restrictions.  The employee=s treating physician, Dr. John Fredell, diagnosed chronic low back pain with spondylolisthesis, and as early as August  recommended that the employee consider an alternate occupation that Awould not be so strenuous on her back.@  The employee received ongoing conservative medical treatment, and, by mid-September 1999, returned to modified work at her full wage.

 

Also in 1999, Dr. Fredell recommended surgery as an option, and referred the employee to Dr. John Hutchison, neurological surgeon, for an evaluation.  Dr. Hutchison recommended physical therapy and an exercise program and assigned work restrictions on lifting and bending.  He also recommended that the employee consider fusion surgery at the L5-S1 level, or Ato remain permanently on the light duty restrictions either at [her current] job with restrictions or at a different job after appropriate retraining.@  The employee elected to continue conservative medical treatment at that point and continued to work for the employer.

 

Following her April 2002 injury, the employer offered the employee modified work as a bath aide.  She found that she was able to perform those duties for a period of time, but eventually was unable to continue that work because of her low back condition.  She again consulted Dr. Hutchison, who diagnosed a clinical worsening of grade 1 spondylolisthesis at L5-S1 with some nerve root irritation.  He recommended that the employee continue to abide by his earlier-assigned work restrictions, and discussed the possibility of surgery, with the provision that the employee should attempt both weight loss and smoking cessation if she were to undergo surgery in the future.

 

Although the employer provided the employee with other light-duty work in 2002, the employer was unable to provide continuing work within her restrictions.  The employee therefore sought alternative employment, and was provided rehabilitation assistance, commencing in July 2002.  The employee continued to work for the employer through September 5, 2002.

 

In August 2002, the employee and her family moved to Blackduck, Minnesota, where the employee=s husband had secured employment earlier in 2002.  The employee continued to receive rehabilitation assistance; the goal of her rehabilitation plan was to obtain employment within her restrictions in the Blackduck area.  The employee sought and obtained employment with Anderson Fabrics, located in Blackduck, where she sewed draperies.  She began working for Anderson Fabrics on September 18, 2002, and continued to work for that employer through May 2004.  She worked at a slight wage loss in comparison to her wages earned as a CNA at the time of her 2002 injury, and therefore the employer and insurer paid her temporary partial disability benefits during her employment with Anderson Fabrics.

 

The employee was provided continued rehabilitation assistance through January 2003, at which time that assistance was terminated, by agreement of the parties, because the employee had successfully completed 90 days of employment with Anderson Fabrics.

 

While working at Anderson Fabrics, the employee performed various commercial sewing-related tasks, including sewing cording into draperies, sewing pockets for drapery rods, standing and ironing fabric, and laying out and moving fabrics on tables.  The employee testified that it was awkward and difficult to push and pull fabrics while sewing draperies, and that those tasks required more bending than had been required of her earlier in her tenure with Anderson Fabrics.  The employee also testified that she spoke with a representative of Anderson Fabrics about the ongoing physical problems and difficulty she had with her various work duties, and that Anderson Fabrics tried to accommodate the employee=s request for different work duties that would help relieve her constant low back and leg pain.

 

According to the employee, the nature of Anderson Fabrics= work required her and other employees to be flexible with accepting work assignments to meet that company=s business obligations, and that eventually her low back pain prevented her from performing her sewing work.  The employee resigned from Anderson Fabrics effective May 28, 2004, advising that employer of her substantial low back pain and her inability to perform her work tasks.  In her letter of resignation, the employee advised Anderson Fabrics that she was anticipating low back surgery and would like to return to work after surgery as she had enjoyed her work and co-workers at Anderson Fabrics.

 

In June 2004, the employee began operating a home daycare business, and has continued to operate that business.  In September 2004, the employee again consulted Dr. Hutchison, reporting continued lower back pain.  She reported that she had quit working in commercial sewing because that job had required too much lifting.  Dr. Hutchison=s chart note of September 13, 2004, refers to a recommendation by AWorkers Comp@ for a functional capacities evaluation and work hardening.  He recommended against a work hardening program, as he doubted that such a program would improve the employee=s functional abilities.  Instead, he recommended a continued restriction to light duty work, and also recommended annual lumbar x-rays to ensure that the spinal listhesis was not progressing further.

 

In August 2005, the employee participated in a Functional Capacities Evaluation to more specifically quantify her work restrictions related to her low back injury.  The physical therapist who conducted the FCE concluded that the employee should restrict her lifting, bending, and other physical movements, and advised that the employee had decreased tolerance for sitting, standing, walking and climbing stairs, and therefore should change her position frequently.

 

In December 2005, the employee requested a rehabilitation consultation.  Following an administrative conference on April 3, 2006, the employer and insurer agreed to provide the employee with a rehabilitation consultation; that agreement was memorialized in an Order on Agreement served and filed May 6, 2006.  Also in May 2006, the employer and insurer reinstated rehabilitation services for the employee, with a goal of seeking alternative employment.  The  employee=s rehabilitation plan was expanded to include applications for positions in a variety of areas, including work as a receptionist, para-professional, and seamstress.  The employee conducted an ongoing job search, but received no job offers.

 

On June 8, 2006, Dr. Fredell affirmed the work restrictions from the August 2005 FCE.  Dr. Fredell advised that the employee could not be expected to be employable in her local labor market within her work restrictions and would be best served by being retrained for a job to fit her physical capabilities.  He determined that the employee=s tasks required for her home daycare business exceeded some of her work restrictions, including restrictions on lifting, bending, and twisting.

 

On August 23, 2006, the employee filed a claim petition, seeking temporary partial disability benefits based upon her wages earned through her self-employment, basing her claim for temporary partial disability benefits on a wage rate derived from her business profit reflected in her federal income tax returns.  To respond to the employee=s claim, the employer and insurer consulted an accounting expert for an analysis of the employee=s business records and tax returns and for assistance with calculations of the earnings from her day care business.

 

The employee also sought retraining as a medical administrative secretary, sought payment of medical expenses, and reserved her claim for permanent partial disability benefits.  Although the employer and insurer had admitted primary liability for the employee=s injury, they disputed her entitlement to the claimed benefits.

 

The employee=s claims were addressed at a hearing before a compensation judge on May 1, 2008.  Records submitted into evidence included medical and rehabilitation records, reports from a vocational expert, a retraining proposal and related labor market survey, tax returns, and employment records.  Testimony was presented by the employee, her QRC and the employer and insurer=s accounting expert.

 

In her Findings and Order served and filed on May 22, 2008, the compensation judge awarded temporary partial disability benefits from June 2004 to the present and continuing, based upon income from the employee=s daycare business but with adjustments based upon the accounting expert=s opinion regarding which expense deductions should be considered when determining the employee=s self-employment income.

 

The compensation judge awarded the employee=s claimed retraining as a medical administrative secretary, concluding  that retraining was likely to restore the employee=s lost earning capacity.  The compensation judge awarded retraining in a one-year program rather than the two-year retraining program that had been requested by the employee.  The compensation judge also awarded a potential underpayment of temporary partial disability benefits for the period of time when the employee worked for Anderson Fabrics, if any such underpayment was identified by the parties following the issuance of the Findings and Order.

 

The employer and insurer appeal the award of temporary partial disability benefits.  No appeal has been taken from the award for retraining benefits.

 

DECISION

 

The employer and insurer appeal from the award of temporary partial disability benefits.  An employee is entitled to temporary partial disability benefits Awhile the employee is employed, earning less than the employee=s weekly wage at the time of the injury, and the reduced wage the employee is able to earn in the employee=s partially disabled condition is due to the injury.@  Minn. Stat. ' 176.101, subd. 2(b).  To prove entitlement to temporary partial disability benefits, an employee must demonstrate a work-related physical disability and an actual loss of earning capacity causally related to the disability.  Krotzer v. Browning-Ferris, 459 N.W.2d 509, 43 W.C.D. 254 (Minn. 1990); Arouni v. Kelleher Constr., Inc., 426 N.W.2d 860, 864, 41 W.C.D. 42, 48-49 (Minn. 1988); Dorn v. A.J. Chromy Constr. Co., 310 Minn. 42, 245 N.W.2d 451, 29 W.C.D. 86 (1976).  To be entitled to temporary partial disability benefits, an employee must be gainfully employed, that is, the employee must show something more than Asporadic employment resulting in an insubstantial income.@  See Schulte v. C.H. Peterson Constr. Co, 278 Minn. 79, 83, 153 N.W.2d 130, 133-134, 24 W.C.D. 290, 295 (1967); Hubbell v. Northwoods Panelboard, 45 W.C.D. 515, 517 (W.C.C.A. 1991); compare Hansford v. Berger Transfer, 46 W.C.D. 303 (W.C.C.A. 1991).

 

The employer and insurer argue that, contrary to her testimony,  the employee did not attempt to obtain accommodations for her low back condition and restrictions from Anderson Fabrics but instead left the employ of Anderson Fabrics for personal reasons unrelated to her work injury and immediately implemented her plan for self-employment.  The employer and insurer argue that the employee has made a personal lifestyle choice in operating her daycare business, in part because the business allows her to care for her children in her home.  The employer and insurer also argue that the employee=s self-employment is not physically suitable in that it is beyond her work restrictions.  They argue that the employee knew from the outset that such work would be beyond her restrictions, and they dispute the employee=s claim that she can take breaks as needed while performing her day- care work more easily that she could while working in a formal job setting.

 

Whether the employee voluntarily terminated her employment or whether she left her job due to the effects of her work injury is not the primary consideration in determining whether the employee is entitled to benefits in this case.  An employee's voluntary termination from employment does not preclude a claim for workers' compensation benefits upon proof that the wage loss is attributable to the disability.  Fielding v. George A. Hormel & Co., 439 N.W.2d 12, 41 W.C.D. 942 (Minn. 1989); Johnson v. State, Dep=t of Veterans= Affairs, 400 N.W.2d 729, 39 W.C.D. 367 (Minn. 1987); Kurowski v. Kittson Mem=l Hosp., 396 N.W.2d 827, 39 W.C.D. 169 (Minn. 1986).

 

The compensation judge accepted the employee=s testimony that she tried to obtain modified work duties at Anderson Fabrics without success and was unable to continue performing her sewing tasks at Anderson Fabrics due to her increased low back pain.  The compensation judge acknowledged that the employee began making plans to open a daycare business from her home even before she left her job at Anderson Fabrics, which was one of the employer and insurer=s concerns.  The judge also referred to the employee=s testimony that she anticipated being able to physically handle the required tasks of the daycare business.  The compensation judge concluded that Aconsidering the physical problems [the employee] had performing her former jobs and the limited job opportunities in the employee=s labor market, it was reasonable for her to open and operate a home daycare business from June 2004 up to the time of hearing.@  The judge explained that

 

At that time, her doctor had not stated she was unable to perform the work duties; however, the employee was a very hard worker and knew her limitations.  None of the doctors who have examined the employee have questioned her credibility in accurately reporting her symptoms.  The forward flexion, bending, and lifting of heavy drapery fabrics most likely exceeded the restrictions ultimately determined by [the] Functional Capacities Evaluation.

 

It is the trier of fact's responsibility to assess the credibility of a witness, Tolzmann v. McCombs-Knutson Assocs., 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)), and in this case the compensation judge had the opportunity to hear the employee=s testimony and to review her medical and rehabilitation records when reaching her conclusion that the employee=s ongoing wage loss was causally related to her low back condition that had resulted from her work injury.  We will not disturb a finding based on credibility of a witness unless there is clear evidence to the contrary.  In addition, based upon the evidence in the record, including documentary evidence and the employee=s testimony, we conclude that substantial evidence in the record supports the compensation judge=s determination that the employee=s wage loss during her self-employment was causally related to her work injury.

 

The employer and insurer also argue that the wages the employee had earned from her self-employment did not accurately reflect her earning capacity, that the employee=s wages at Anderson Fabrics established her post-injury earning capacity, and that any loss of earnings beyond those wages is unrelated to her work injury.  The employer and insurer advocate for using the employee=s wages at Anderson Fabrics to impute a wage for purposes of calculating temporary partial disability benefits.  The employer and insurer also referred to the employee=s cost savings that resulted from the elimination of the need for the employee and her husband to pay for outside day care.^[1]

 

An employee=s actual earnings are presumed to be an accurate reflection of the employee=s ability to earn.  Mathison v. Thermo Co., Inc., 308 Minn. 471, 243 N.W.2d 110, 28 W.C.D. 406 (1976).  This presumption may, however, be rebutted by evidence that the employee=s ability to earn is different than the post-injury wage or that the reduction in the employee=s earning capacity is unrelated to the employee=s disability.  Borchert v. American Spirits Graphics, 582 N.W.2d 214, 215, 58 W.C.D. 316, 318 (Minn. 1998); Wesley v. City of Detroit Lakes, 344 N.W.2d 614, 36 W.C.D. 518 (Minn. 1984).  The issue of earning capacity is factual in nature and is determined by the compensation judge as the trier of fact.  Mathison v. Thermal Co., Inc., 308 Minn. 471, 243 N.W.2d 110, 28 W.C.D. 406 (1976); Noll v. Ceco Corp., 42 W.C.D. 553 (W.C.C.A. 1989); see Hanmer v. Wes Barrette Masonry, 403 N.W.2d 839, 39 W.C.D. 758 (Minn. 1987); see also Serra v. Hanna Mining Co., slip op. (W.C.C.A. Apr. 12, 2005), summarily aff=d (Minn. Aug. 23, 2005).  The question for this court on appeal is whether substantial evidence supports the decision of the compensation judge.  Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 37 W.C.D. 235 (Minn. 1984).

 

The compensation judge concluded that the employee=s self-employment earnings, as calculated by using data from her income tax returns, accurately represented her earning capacity and therefore provided a basis for calculation of temporary partial disability benefits.  Tax returns may be used to establish a post-injury earning capacity if they are shown to be relevant and reliable. McQuillan v. Sysco, slip op. (W.C.C.A. Oct. 7, 1997); see, e.g., Gilles v. S.B. Foot Tanning Co., 48 W.C.D. 183, 190 (W.C.C.A. 1992); Rathbun v. Atlas Tem­poraries, slip op. (W.C.C.A. June 18, 1993); Jones v. D.J. Serv. Ctr., slip op. (W.C.C.A. Dec. 12, 1991).  In this case, the parties both calculated the employee=s self-employment wages on an annual basis, using tax return data, but disputed the appropriate method for calculating those wages and disputed which business expenses to add or subtract from the employee=s gross receipts to arrive at her net profit.  The employee had calculated her net profit by subtracting her business-related expenses from her gross receipts; the employer and insurer argued that certain expense deductions should not be allowed to reduce the employee=s calculated wage rate.

 

The compensation carefully analyzed the tax and business information and concluded that the employee=s wages from her daycare business were reasonably calculated using information listed on her tax returns, with certain modifications for deductions made on those returns.  The compensation judge accepted part, but not all, of the employee=s wage calculations, disallowing a portion of the tax deductions the employee used to calculate her business=s net profit and her corresponding weekly wage.

 

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 (2006).  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).  It is evident from the findings and order that the compensation judge carefully reviewed the financial information presented by the parties, as well as the opinions and testimony presented by the employer and insurer=s accounting expert.  Based on our review of the record, we conclude that the compensation judge=s conclusions concerning the appropriate calculation of the employee=s self-employment wages are reasonably supported by substantial evidence of the record.  We affirm.