KENNETH STERLING, Deceased Employee, by SUZIE SPAIN, Petitioner, v. FAGEN, INC., and ZURICH N. AM., Employer-Insurer/Appellants.

WORKERS’ COMPENSATION COURT OF APPEALS
NOVEMBER 25, 2009

No. WC09-172

HEADNOTES

JURISDICTION - OUT-OF-STATE EMPLOYMENT.  Substantial evidence supports the compensation judge’s finding that the employee was hired in Minnesota by a Minnesota employer.  The judge’s determination that the employee was temporarily employed outside of the state is not clearly erroneous or contrary to law.

CREDITS & OFFSETS; JURISDICTION - OUT-OF-STATE-INJURY.  Where the payment for which credit was requested was not made to the employee, but to the Iowa Second Injury Fund, the compensation judge properly denied a credit against the payment of benefits ordered made to the employee’s estate.  Both the compensation judge and this court lack jurisdiction to determine whether the insurer owed payment under Iowa law or to order reimbursement to the State of Iowa for payments made pursuant to Iowa law.

Affirmed.

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

Compensation Judge: Gary M. Hall

Attorneys: Raymond R. Peterson, McCoy, Peterson & Jorstad, Minneapolis, MN, for the Respondent.  Patrick T. Grove, Drawe & Maland, Edina, MN, for the Appellants.

 

OPINION

THOMAS L. JOHNSON, Judge

The employer and insurer appeal from the compensation judge’s findings that the employee was hired in Minnesota, by a Minnesota employer, and was temporarily employed outside this state on the date of his personal injury and death.  The employer and insurer also appeal from the compensation judge’s denial of a credit for $45,000.00 paid by the insurer to the Iowa Second Injury Fund against the $60,000.00 ordered paid to the employee’s estate.  We affirm.

BACKGROUND

Kenneth Sterling, the employee, was employed by Fagen, Inc., the employer, on February 10, 2008, working in the state of Iowa.  On that date, the employee sustained a personal injury resulting in his death.  The employer was then insured by Zurich North America in both Minnesota and Iowa.

The employer is a Minnesota company with its headquarters and principal place of business in Granite Falls, Minnesota, and two small satellite offices in Nebraska and South Carolina.  The employer is an industrial design building company that constructs large ethanol and power plants throughout the United States, including Minnesota.  With the exception of office employees, all employees of the employer are temporarily assigned to job sites where construction is taking place.  As construction is completed at a particular location, the temporary work assignments end and employees are reassigned to other projects as they become available.

The employer’s human resource functions are based in the Granite Falls, Minnesota, office.  Interviewing and screening of persons seeking employment with the employer are conducted by personnel recruiters in the Granite Falls office.  Ms. Judy Hempel, a key personnel recruiter, testified about the hiring process at the hearing.[1]  A personnel recruiter places advertisements for positions, compiles resumes, deals directly with job sites that need employees, conducts interviews of job applicants, and makes conditional job offers.  The interview and screening process may be accomplished by telephone or email.  After an interview and screening, if an applicant is deemed a suitable candidate for employment, the recruiter makes a conditional job offer.  The conditionally hired employee is then directed to a particular job site.  At the job site, the person prepares an employment application, new hire documents and a skills sheet, takes a drug test, and undergoes safety training.  Depending upon the position for which the person is being hired, the person may also have to pass a craft skills test and establish the person has the proper tools to perform the job.  If the person meets all the conditions for the job, the project manager on the job confirms the hire of the applicant.  The project managers on site at the employer’s work locations have no authority to approve applicants other than those directed to them from the personnel recruiters in Granite Falls, Minnesota.  On occasion, placements are denied at the job site if a conditionally hired employee fails a drug or skills test or is found to have been dishonest during the interview process.  Once the hiring is confirmed, the employee’s paperwork is completed and forwarded to the human resources department for administration of payroll and for the employee’s personnel file.  Payroll is handled through the employer’s Granite Falls, Minnesota, office.

Prior to October 1, 2007, the employee contacted Fagen, Inc., at its Granite Falls, Minnesota, office and discussed employment opportunities with a personnel recruiter.  Following an interview, the employee received a conditional job offer from the recruiter for the position of an electrical helper at a job site in St. Ansgar, Iowa.  The employee presented at the St. Ansgar, Iowa, job site on October 1, 2007.  The employee completed an application for employment, a skills sheet, employment and payroll documents, took and passed a drug screen test, underwent safety training, and began work that same day.  The employee continued to work at the St. Ansgar, Iowa, job site until his death on February 10, 2008.  On that date, the employee was a resident of the state of Minnesota.

Following the death of the employee, a First Report of Injury was prepared by the employer and filed with the State of Iowa, Division of Workers’ Compensation - Division of Labor.  By letter dated February 28, 2008, the Iowa Division of Labor requested the insurer make payment to the Iowa Second Injury Fund in the amount of $45,000.00 pursuant to Iowa Code § 85.65.  The employer and insurer made the requested payment.

In March 2008, Ms. Suzie Spain, the employee’s sister, filed a claim petition seeking Minnesota dependency benefits on behalf of the employee’s estate.  The employer and insurer denied liability for the claimed benefits.  Thereafter, counsel for the employer and insurer wrote to the Iowa Treasury Department requesting a refund of the $45,000.00 paid to the Iowa Second Injury Fund pending determination of the employee’s claim in Minnesota.  The Iowa Department of Justice responded by letter stating a refund would not be made.  In February 2009, the employer and insurer filed a Petition for Declaratory Judgment with the Iowa Workers’ Compensation Commissioner.  With the petition, the insurer sought a declaratory order on the question of whether Iowa or Minnesota had jurisdiction over the deceased employee’s claim and whether the insurer should be reimbursed for the $45,000.00 payment previously made or whether it should receive a credit in the event it was determined that Minnesota had jurisdiction.  Subsequent to the hearing in Minnesota before the compensation judge, the employer and insurer’s petition was denied by the Iowa Workers’ Compensation Commissioner.

The claim for dependency benefits was heard by a compensation judge at the Office of Administrative Hearings.  In a Findings and Order, the compensation judge found the employee was hired in Minnesota, by a Minnesota employer, and was temporarily employed outside the state on the date of his death.  The compensation judge ordered the employer and insurer to pay the sum of $60,000.00 to the employee’s estate pursuant to Minn. Stat. § 176.111, subd. 22.  The compensation judge also denied the insurer’s request for a $45,000.00 credit for the amount paid to the Iowa Second Injury Fund.  The employer and insurer appeal.

DECISION

Whether the employee’s injury is compensable under the Minnesota Workers’ Compensation Act depends upon whether the circumstances of the employee’s employment and injury fall within the act’s extraterritorial application statute.  Minn. Stat. § 176.041, subd. 3, provides:

Temporary out of state employment.  If an employee hired in this state by a Minnesota employer, receives an injury while temporarily employed outside of the state, such injuries shall be subject to the provision of this chapter.

There is no dispute that Fagen, Inc., is a Minnesota company with corporate offices in Granite Falls, Minnesota.  The appellants contend, however, that the employee received only a contingent job offer from the personnel recruiter in Minnesota.  The contingent job offer, the appellants argue, was subject to a number of preconditions that were fulfilled in Iowa, including the completion of an employment application, a craft test, a drug test, a tool inventory, safety training, and a wage agreement.  It was only upon satisfactory completion of these preconditions, the appellants assert, that a job offer was extended.  They assert all of the functions of hiring and the final hiring decision were made at the St. Ansgar, Iowa, job site and, therefore, the employment contract was finalized in Iowa.  Accordingly, the appellants seek a reversal of the compensation judge’s finding that the employee was hired in Minnesota.

In Morrisette v. Harrison Int’l Corp., 486 N.W.2d 424, 46 W.C.D. 721 (Minn. 1992) the supreme court stated that in determining whether a employment contract was formed a court need not rely on words alone, but can "consider the surrounding facts and circumstances in the context of the entire transaction, including the purpose, subject matter, and nature of it."  Id. at 427, 46 W.C.D. at 726 (citing McEwen v. State Farm Mut. Ins., 281 N.W.2d 843 (Minn. 1979)).  The compensation judge concluded the significant contractual terms of the employment agreement were completed in Minnesota rather than Iowa.  The issue is, therefore, whether substantial evidence supports the compensation judge’s factual finding that the employee was hired in Minnesota.

Ms. Judy Hempel testified that personnel recruiters in the corporate office compile resumes, conduct interviews of job applicants, and make job offers.  The interview and screening process may be accomplished by telephone or email.  After an interview and screening, if an applicant is deemed suitable, the recruiter makes a conditional job offer and directs the employee to a specific job site.

The employer’s application for employment states, “FAGEN, INC. requires that applicants present themselves in person and personally complete and sign at our office (or specified project hiring office) the Employer’s original employment application form and will not accept photocopied, mailed or third-party applications or unsolicited employment referrals from any source.”  (Resp. Ex. 3.)  As evidenced by the document itself, the application may be completed in person either at the company office in Granite Falls, Minnesota, or, at the project job site specified by the employer.  Once the in-person application and new-hire documents were filled out, the paperwork was sent to the human resources department in Granite Falls, Minnesota, for administration of payroll and for the employee’s personnel file.  Upon these facts, the judge could have concluded that the place in which the employment application was filled out was not a significant factor in the formation of the employment contract.

When he arrived at the job site on October 1, 2007, the employee was given a drug test.  It is undisputed that passing the drug test was a condition precedent to employment.  The employee also participated in some safety instruction as part of the employer’s ongoing safety program.  Ms. Hempel testified all employees were required to undergo safety training prior to commencing work.  She testified that safety training was an ongoing process based on requirements of the employer and local requirements.  She stated each job site had its own safety training.  A safety document signed by the employee on October 1, 2007, states, “Our safety program has been developed to assure compliance with Federal, State and Local regulations with particular emphasis on the Occupational Safety and Health Act of 1970 (OSHA), and the OSHA requirements that apply to our construction operations.  It is the obligation of all employees to be knowledgeable of the standards established by these agencies and to implement the rules and regulations contained therein on projects under their direction.”  (Resp. Ex. 3.)  Since the employer’s safety program incorporated regulations of the particular state and locale of the job site, it is only logical that the safety training be conducted on the job site.  There is no evidence any employee was not confirmed because the person did not pass safety training.  It is reasonable, therefore, to view safety training as an ongoing teaching process, rather than a specific precondition to hiring.

The appellants contend the employee also had to pass a craft skills test as a condition of hiring.  Ms. Hempel testified that some of the craft applicants are required to take skills tests prior to starting work.  The employee was hired as an electrical helper and Ms. Hempel described his job duties as pulling wire, running conduit, running parts to the journeymen electrician, and assisting the journeymen electricians in any way possible, depending on the level of electrical knowledge of the helper.  Ms. Hempel stated that if the person being hired was a laborer or an assistant, that person would not take a separate skills test because that person brings no particular skills to the job.  Based on his job description, it appears the employee was in the laborer or assistant classification.  There is no evidence in the record that the employee was required to take a skills test.  Neither is there any evidence the employee was required to bring tools as a condition of employment or that the employer conducted a tool interview of the employee.  The judge could reasonably have concluded that neither a craft skills test nor a tool inventory were preconditions of the hiring of the employee.

Ms. Hempel testified that during the interview process, an applicant is told how much the applicant will be paid.  However, she testified that amount could be changed on the job site at the time of the hire by the craft superintendent or his immediate foreman.  Ms. Hempel gave no explanation of the circumstances under which the pay rate offered to the employee by the personnel recruiter might be changed at the job site.  On October 1, 2007, the employee signed a document entitled COMPENSATION OPTIONS that reflected the employee could choose between Option A or Option B.  Option B did not include any paid vacation or group insurance benefits.  The employee selected Option A which reflected a pay rate of $12.00 an hour with overtime of $18.00 an hour, health insurance, life insurance ($12,000.00), paid vacation, and a 401(k) Plan.  The numbers $12.00 and $18.00 were written in by hand.  There is no evidence the employee’s pay rate was negotiated at the job site or was any different than the pay rate offered to the employee by the personnel recruiter.

The employer’s personnel recruiters have authority to make conditional job offers.  The placement of employees on job sites is made only by personnel recruiters in the Granite Falls, Minnesota, office.  The project managers at the job sites do not have authority to hire, but only to reject a placed employee if the conditionally hired employee fails a drug or skills test or is found to have been dishonest during the interview process.  We do not agree with the appellant that the so-called preconditions of employment were, in fact, significant contractual elements completed in Iowa.  In summary, the in-person application for employment could have been completed by the employee either in Minnesota or Iowa.  The new-hire documents were administrative functions completed after the employee passed the drug test.  There is no evidence the employee was required to pass a craft skills craft test or that a tool inventory was conducted.  Neither can we conclude that safety training was a precondition to employment, nor is there any evidence the employee’s pay rate was different from the wage offered to the employee by the personnel recruiter.

Considering all of the evidence, the compensation judge could reasonably conclude the employee was hired in Minnesota.  Under this court’s standard of review, a compensation judge’s findings on questions of fact must be affirmed if there is substantial evidence to support the findings.  Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 37 W.C.D. 235 (Minn. 1984).  That the evidence might also have supported a contrary conclusion is not sufficient for reversal where substantial evidence supports the compensation judge’s conclusions.  The point is not whether this court might have viewed the evidence differently, but whether the findings of the compensation judge are supported by evidence that a reasonable mind might accept as adequate.  Where the evidence is conflicting or more than one inference may reasonably be drawn from the evidence, the findings of the compensation judge are to be upheld.  Redgate v. Sroga's Standard Serv., 421 N.W.2d 729, 734, 40 W.C.D. 948, 957 (Minn. 1988).  The compensation judge’s decision is, therefore, affirmed.

The remaining requirement of Minn. Stat. § 176.041, subd. 3, is whether the employee was “temporarily employed outside of the state.”  The appellants assert the employee’s job in St. Ansgar, Iowa, was not temporary.  Rather, they assert, Ms. Hempel testified the employee would have continued to work in Iowa until the job was completed and then would have been assigned to a different job site.  The possibility that the employee might at some later date work in Minnesota does not, the appellants assert, make the job in Iowa temporary.  Accordingly, the appellants contend the employee failed to satisfy all the statutory requirements to confer jurisdiction upon Minnesota.  We disagree.

In Vaughn v. Nelson Bros. Constr., 520 N.W.2d 395, 51 W.C.D. 159 (Minn. 1994), Mr. Vaughn was hired in Minnesota by a Minnesota employer as a permanent, full-time, traveling fixture superintendent.  His employment involved coordinating and supervising installation of fixtures at Target Stores throughout the United States.  When one project was completed, the employee would move to the next project.  In 1992, Vaughn was injured in Wisconsin while working on an 8 or 9-week project.  At issue in the case was whether Vaughn was “temporarily employed” outside of Minnesota on the date of his injury.  The court noted the provisions of Minn. Stat. § 176.041, subd. 3, concerning temporary out-of-state employment did not precisely fit the situation posed by employees who “are always at a ‘temporary location’,” and concluded that the “employment relation test” was a legitimate manner by which to define the scope of the coverage.  The court stated:

Employees whose work activity, by its very nature, is transient constitute a unique class.  The fact that they may spend a significant amount of time in one state does not detract from the essentially transitory nature of the activity in which they engage.  Although the quantity of time an employee spends in a single locale may be a factor in the determination of the situs of the employment relation, it should not be controlling.

The court concluded Mr. Vaughn’s employment was reasonably within the scope of the statutory objective and Minnesota, therefore, had jurisdiction.

The employee here, like Mr. Vaughn, was a transient employee with no permanent location.  He was assigned to the St. Ansgar, Iowa, job site and would have remained there only until the project ended.  At that point, the employee would have been assigned by the corporate office to another project job site.  The employee was, therefore, a transient employee and a member of the unique class defined in the Vaughn case.  The determination that the employee was “temporarily employed outside of the state” is not clearly erroneous or contrary to law, and thus, under Hengemuhle, id., we must affirm the finding of the compensation judge.

Finally, the appellants appeal the compensation judge’s denial of their request for a credit for the $45,000.00 previously paid to the Iowa Second Injury Fund against the ordered payment of $60,000.00 to the employee’s estate.  Citing Cook v. Minneapolis Bridge Constr. Co., 231 Minn. 433, 43 N.W.2d 792, 16 W.C.D. 198 (1950), the appellants contend the compensation judge erred in failing to give them a credit.  As a matter of public policy, the appellants assert the courts need to protect the insurer against having to pay for the same claim on more than one occasion.  Accordingly, they ask this court to reverse the compensation judge’s denial of a credit.  We decline to do so.

We find the Cook case inapplicable.  That case stands for the generally accepted proposition that an award or settlement obtained in one state does not bar a successive award in Minnesota for the same condition or injury.  However, the benefits received by the employee in another state must be credited against the compensation awarded to the employee in this state to avoid a double recovery.  See, e.g., Stolpa v. Swanson Heavy Moving, 315 N.W.2d 615, 34 W.C.D. 423 (Minn. 1982); Rundberg v. Hirschbach Motor Lines, 51 W.C.D. 193 (W.C.C.A. 1994).  However, since the $45,000.00 was paid to the Iowa Second Injury Fund, not to the employee, there is no double recovery to the employee here.

This case is controlled instead by Hale v. Viking Trucking Co., 654 N.W.2d 119, 62 W.C.D. 701 (Minn. 2002).  In Hale, a Colorado insurance carrier voluntarily paid workers’ compensation benefits to the employee for an injury sustained in Colorado in January 1998.  The employee then began working for a Minnesota employer and was again injured in July 1998.  The employee filed a claim for Minnesota workers’ compensation benefits in April 1999, and the Colorado insurer intervened seeking reimbursement of benefits it claimed were mistakenly paid under its Colorado policy.  The compensation judge denied the claim.  The Minnesota Supreme Court affirmed, stating neither the compensation judge nor the WCCA has subject matter jurisdiction to determine whether an employee was entitled to workers’ compensation benefits in another state, whether those benefits were mistakenly or improperly paid, or to determine or impose a Minnesota remedy in the event that such benefits were improperly or mistakenly paid under another state’s law.  Id. at 124, 62 W.C.D. at 706.  See also Boothe v. TFE, 55 W.C.D. 353, 355-56 (W.C.C.A. 1996); Rundberg at 204.  Similarly, this court lacks jurisdiction to determine whether the insurer owed the payment made to the Iowa Second Injury Fund, and lacks jurisdiction to order reimbursement to or a credit on behalf of the insurer in the event the payment was mistakenly or improperly made under Iowa law.  The employer’s remedy lies with the state of Iowa.  Accordingly, the compensation judge’s decision is affirmed.



[1] Ms. Hempel did not conduct the interview of the employee.  Ms. Hempel testified she referred the employee to Rachel, Fagen’s electrical recruiter.  Ms. Hempel testified all notes and documents prepared during the interview process were destroyed.