Professional Associates in Rehabilitation, Inc., appeals from a determination by the Rehabilitation Review Panel that it violated a number of administrative rules and from an assessment of $22,000.00 in penalties.  We reverse.

In April 2010, the Department of Labor and Industry (DOLI) filed a 19 count complaint against Professional Associates in Rehabilitation (PAR). The complaint was made under the provisions of Minn. Stat. § 176.102, subd. 3a, and Minn. R. 5220.1806, and alleged PAR had violated rules found in chapter 5220 of the Minnesota Rules.  An evidentiary hearing was held before an administrative law judge (ALJ) of the Office of Administrative Hearings on December 15 and 17, 2010, and January 6 and 7, 2011. The ALJ served and filed his recommendations on April 6, 2011, and the file was referred to the Rehabilitation Review Panel (Panel) for a final decision.  The Panel considered written “exceptions” and oral arguments from the parties to the ALJ’s decision.  In its decision, served and filed November 10, 2011, the Panel adopted some of the findings and conclusions of the ALJ, but issued its own findings and conclusions on some of the issues. The Panel concluded that nine of the counts in the complaint were established and a fine of $22,000.00 was levied against PAR.  PAR has appealed this decision.

John Richardson (Richardson) became a qualified rehabilitation consultant (QRC) in 1986 and started PAR, a qualified rehabilitation consultant firm as defined in Minn. R. 5220.0100, subp. 24, in 1988.  In February 2008, Richardson and DOLI resolved a complaint filed against Richardson by DOLI and a civil lawsuit filed against DOLI by Richardson.  The stipulation between DOLI and Richardson provided that Richardson would voluntarily withdraw his QRC registration as of April 15, 2008, for a period of two years.  The stipulation also provided that Richardson would be allowed to “remain employed by and continue to own” PAR, although a registered QRC was required to be one of the management staff.  In addition the stipulation provided that “this agreement does not preclude Respondent (Richardson) from engaging in professional activities that do not require registration as a QRC, including, but not limited to, acting as an expert witness.”  In addition to his QRC registration, Richardson was also a Certified Rehabilitation Counselor (CRC), registered as such by the Commission of Rehabilitation Counselor Certification (CRCC).^[1]  The stipulation acknowledged Richardson’s status as a CRC.  Richardson testified that after his QRC license was surrendered, he never identified himself as a QRC and advised people with whom he dealt on a professional basis that he was a CRC.

Most of DOLI’s charges and the Panel’s conclusions dealt with interactions between Richardson and two injured workers, KA and CJ.^[2] The Panel determined that Richardson had provided statutory rehabilitation services to these injured workers, that certain of his actions violated the rules found in chapter 5220, and that Richardson’s actions were attributable to PAR, so that PAR was subject to discipline for those actions.  In addition to the allegations based on the conduct of Richardson, the complaint also charged that a non-compete agreement between PAR and a former QRC employee violated the rules in chapter 5220.

KA was an employee of Qwest who had sustained a work injury to his low back in February 2008. KA testified at the ALJ hearing that in early June 2008 he was concerned about his employment and medical situation.  KA shared his concerns with a friend at work and the friend suggested that KA contact Richardson, someone with whom the friend had dealt previously.  KA called Richardson and they met at a Perkins for coffee on a Saturday morning in early June.  KA testified he signed no forms and Richardson took no notes.  KA told Richardson that he was worried about the possibility of surgery since his wife had undergone back surgery with poor results.  In the course of the conversation, Richardson made some suggestions about possible medical care options.  KA told Richardson that he did not think he was able to discuss this subject with his doctor very well and he asked Richardson to go to his next medical appointment with him.

Richardson accompanied KA to his appointment with his treating doctor, Dr. Michael Schulenberg, on June 11, 2008.  KA did not sign an authorization to release medical information but KA was present with Richardson during the conversation with Dr. Schulenberg.  Richardson mentioned to the doctor another therapy program called MedX.  The doctor and KA met privately after this discussion and Richardson had no further contact with KA after the medical appointment.  Dr. Schulenberg referred KA to Physicians Diagnostic and Rehabilitation (PDR) for possible MedX treatment.  The appointment at PDR took place on June 23, 2008.

KA hired a lawyer to assist him with his workers’ compensation case and the lawyer filed a notice of representation with DOLI on June 24, 2008.  The lawyer also contacted PAR and asked them to provide a rehabilitation consultation.  Rex Smith, a QRC intern from PAR, met KA for the rehabilitation consultation on June 27, 2008, and a rehabilitation consultation report was subsequently filed by PAR.  The insurer for Qwest approved rehabilitation services and KA worked with a QRC from PAR until he settled his workers’ compensation case in early 2009.

In the evening of June 23, 2008, Richardson received a phone call from Carla Brunner, an employee of PDR.^[3]  Richardson testified that Ms. Brunner was upset about a telephone conversation she had with Denise Micale, a nurse from Intracorp, who had called on behalf of Qwest’s workers’ compensation insurer.  According to Richardson, Brunner told him that Micale did not seem to understand the nature and purpose of MedX therapy and had said that she would not approve the therapy.  Brunner asked Richardson to call Micale and explain MedX therapy to her.  Brunner also told Richardson that PDR was considering filing a complaint against Micale for practicing medicine without a license.

Richardson called Micale, who was in Arizona, at about 6:30 that evening.  Micale and Richardson agreed in their testimony that this was a contentious call but disagreed as to some of the details of that conversation.  Micale stated that Richardson identified himself as a QRC and that he was insistent and irate.  She said that he threatened to take her license and questioned her qualifications.  She ended the conversation abruptly because of his behavior.  Richardson denied saying that he was a QRC and denied threatening her.  He testified that he had relayed to Micale concerns that PDR had about her conduct and also said that he was a CRC.

Micale reported this conversation to the workers’ compensation insurer who filed a complaint with DOLI initiating the disciplinary process against PAR taken by DOLI.

Nine of the nineteen counts in DOLI’s complaint dealt with Richardson’s involvement with KA.  The Panel substituted its own conclusions for those of the ALJ and determined that six of those counts were established by DOLI.  Count 2 alleged that Richardson, as an agent of PAR, engaged in “adversarial communications” and violated Minn. R. 5220.1801, subp. 9.K., in his telephone conversation with Micale.  Count 3 alleged that Richardson, as an agent of PAR, was not “professionally objective” and violated Minn. R. 5220.1801, subp. 4a, when he recommended approval of MedX therapy in his telephone conversation with Micale.  Count 4 alleged that Richardson, as an agent of PAR, “disparaged” Micale’s qualifications and violated Minn. R. 5220.1801, subp. 10, in his telephone conversation with Micale.  Count 5 alleged that Richardson, as an agent of PAR, misrepresented his “level of skill and competency” and violated Minn. R. 5220.1801, subp. 10, in telling Micale he was a QRC.  Count 7 alleged that Richardson, as an agent of PAR, engaged in communication with a health care provider without written authorization and violated Minn. R. 5220.1802, subp. 5, when he met with Dr. Schulenberg and KA. Count 9 alleged that PAR, in allowing Richardson to assist KA in obtaining MedX therapy, was allowing an unqualified person to engage in rehabilitation services in violation of Minn. R. 5220.1801, subp. 9.J.

A number of the allegations in DOLI’s complaint dealt with Richardson’s interaction with CJ.  CJ was an employee of Northwest Airlines who had a work-related upper extremity injury in 2001.  In early 2008, she was referred by her union to attorney Roger Poehls and she retained him to represent her in her workers’ compensation case in March 2008.

At the time she retained Poehls, CJ was working at Delta Airlines, the successor to Northwest, in her regular job with no wage loss.  CJ had been receiving physical therapy for her work injury on an ongoing basis since the injury.  Her file at Liberty Mutual, the workers’ compensation insurer, had recently been assigned to a new adjuster who had withdrawn authorization for physical therapy on the basis of an IME opinion that the employee’s complaints were related to a non work-related condition.  Poehls obtained CJ’s medical records and referred CJ to PAR for a rehabilitation consultation.  Poehls testified that he made such a referral as a matter of course in all of his cases.  PAR sent a letter to the employee about the referral on March 13, 2008.

Initially, the meeting between CJ and a QRC from PAR was set to take place at the office of Dr. Janus Butcher, the employee’s treating doctor, in Duluth on April 11, 2008.  Bad weather on that date forced the cancellation of the appointment and it was rescheduled for April 17.

Sometime during the time between his referral to PAR and April 17, Poehls had telephone conversations with the adjuster at Liberty Mutual regarding CJ’s case.  Although the adjuster agreed with Poehls that there were questions about whether her treatment was related to the work injury and whether further physical therapy was appropriate, the adjuster refused to pay for a rehabilitation consultation.  Poehls advised PAR that the insurer would not pay for a consultation.  Richardson testified that in such a situation PAR did not provide a rehabilitation consultation unless there were current medical restrictions from the employee’s treating physician.  PAR declined to provide a rehabilitation consultation for CJ.

Poehls then contacted Richardson and asked him to go to the appointment CJ had with Dr. Butcher.  Poehls’ office is in the Twin Cities and he testified that he did not want to travel to Duluth for that appointment.  Poehls testified that he wanted Richardson to “tell me what was going on.”  At the time he made this request, Poehls was aware that Richardson would not be a QRC when he met with CJ and her doctor.

Richardson met with CJ at Dr. Butcher’s office on April 17.  CJ testified that Richardson made it clear to her that he was not a QRC.  She also told Dr. Butcher and his staff that she wanted Richardson to be present during her talk with Dr. Butcher.  When Dr. Butcher referred to Richardson as a QRC, CJ corrected him and stated that Richardson was not her QRC. In his chart notes from that date, Dr. Butcher referred to meeting with CJ and her QRC. Richardson sent a letter to Dr. Butcher, with a copy to CJ, stating that he had been acting as a case manager, not a QRC, in the meeting.

After the appointment, Richardson called Poehls to report on the meeting with CJ and the discussion with Dr. Butcher.  Richardson billed Poehls for his time and mileage and indicated on the statement that payment should be made directly to Richardson.  Richardson had no further contact with CJ after this meeting.

A QRC from PAR conducted a rehabilitation consultation with CJ on September 9, 2008, and a rehabilitation plan was filed with DOLI shortly thereafter.  DOLI’s actions against PAR because of Richardson’s visit with CJ were initiated by an employee of DOLI who saw a reference to Richardson in CJ’s file.

Four of the nineteen counts filed by DOLI dealt with Richardson’s involvement with CJ.  The Panel found two of those counts to be established.  Count 11 alleged that PAR allowed an unauthorized person, Richardson, to “engage in rehabilitation services” in violation of Minn. R. 5220.1801, subp. 9.J., when Richardson met with CJ and her doctor.  Count 12 alleged that Richardson, as an agent of PAR, violated Minn. R. 5220.1802, subp. 5, when he met with CJ’s doctor without written authorization.

In addition to the allegations against PAR for Richardson’s actions, the complaint filed by DOLI dealt with charges against PAR resulting from a non-compete agreement that PAR had with a QRC who had been an employee of PAR and who had left to start his own rehabilitation firm.

Gerard Guzik was a long-time acquaintance of Richardson who was hired by PAR to be a QRC intern in 2006.  There were two documents which set out the terms of the employment between Guzik and PAR.  One document, titled “Employment Agreement,” identified a signing bonus that would be paid to Guzik, the hourly rate he would receive as a QRC intern, a provision for profit sharing, health benefits, and some specifics on his work schedule and the like. The second document, titled “PAR, Inc. Non-compete Agreement,” placed limitations on Guzik’s contacts with referral sources if he left PAR and also contained a paragraph providing that if Guzik left PAR’s employment, he agreed not to take any of PAR’s clients with him. If he did so, Guzik agreed to “liquidated damages of $2,000.00, or 50% of fees generated after separation of employment” from his work with those clients.

Guzik became a QRC in January 2008 and about a month later, he left PAR and started his own rehabilitation firm.  Another QRC at PAR, Brian Finstad, left PAR at the same time and Guzik and Finstad formed a rehabilitation firm, Integrity Rehabilitation.  When Guzik and Finstad left PAR, approximately five of their clients at PAR went with them to their new firm.  Guzik testified that he received letters from PAR’s attorneys shortly thereafter reminding him of the separation paragraph in the non-compete provision and advising him that they expected him to comply with those terms.  PAR also sent a letter to the workers’ compensation insurer on one of the files, demanding that PAR be paid one half of the fees to be paid to Guzik’s firm.

Shortly thereafter, Guzik and PAR filed competing civil complaints in district court.  Guzik sued PAR for amounts he claimed had not been paid as required by the Employment Agreement.  PAR sued Guzik for damages as called for in the non-compete agreement.  These claims were ultimately settled but during the litigation, Guzik filed a complaint with DOLI against PAR that formed the basis for this part of DOLI’s complaint.

The Panel concluded that five of the six counts dealing with the non-compete agreement had not been established but that count 17 had been established. That count alleged that damages language in the separation paragraph of the non-compete agreement was “fee-splitting” and was a violation of Minn. R. 5220.1805(G).

In its complaint, DOLI had also alleged PAR had failed to cooperate with its investigation and had violated Minn. R. 5220.1801, subp. 4. The Panel concluded these allegations had not been established.

A decision of the Panel imposing discipline on a rehabilitation provider is appealed to this court in the same manner as an appeal from a decision of a compensation judge.  Minn. Stat. § 176.102, subd. 3a.  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.  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).  “A decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which this court 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).

The threshold issue for consideration is the responsibility of PAR for Richardson’s actions.  Throughout this matter DOLI has argued that all of Richardson’s actions in his contacts with KA and CJ must be imputed to PAR so that PAR, as a rehabilitation provider under the rules, was liable for Richardson’s actions.  The Panel accepted this argument in its decision.  The only evidence cited to support PAR’s liability is a footnote in the ALJ’s recommendations referring to testimony by Poehls that PAR and Richardson were considered one and the same by “everyone” in the workers’ compensation field.  The Panel’s determination on this issue is not supported by substantial evidence.

The Panel failed to give any consideration to the 2008 stipulation between Richardson and DOLI.  The stipulation specifically provided that Richardson could continue to own PAR and use its resources and that Richardson could continue to engage in vocational activities that did not require a QRC status.  By the stipulation, DOLI recognized that Richardson would engage in vocational rehabilitation activities separately from and independently from PAR.  DOLI agreed that Richardson and PAR were not “one and the same” and were separate entities in rehabilitation activity.  No evidence was produced that Richardson’s actions inured to the benefit of PAR.

We find no basis for imposing liability on PAR.  While our conclusion would be dispositive of this case, we are of the opinion that a complete review requires further consideration of the other issues raised by the parties.  We turn then to the question of whether Richardson provided rehabilitation services governed by the rules.

The goal of rehabilitation is to restore an injured employee to “an economic status as close as possible to that which the employee would have enjoyed without disability.”  Minn. Stat. § 176.102, subd. 1(b).  A QRC is responsible for developing and implementing a rehabilitation plan to accomplish that goal.  Minn. Stat. § 176.102, subd. 4.  To be eligible for rehabilitation under the statute, an injured employee must be a qualified employee.  A qualified employee is one who is permanently precluded or is likely to be permanently precluded from returning to her or his pre-injury occupation, is not likely to return to suitable employment with the pre-injury employer, and can reasonably expect to return to suitable gainful employment through the provision of rehabilitation services.  Minn. R. 5220.0100, subp. 22.

Rehabilitation services are defined as a “program of vocational services, including medical management, designed to return an employee to suitable employment” and may include the “first in-person visit” by the assigned QRC with the employee for a rehabilitation consultation.  Minn. R. 5220.0100, subp. 29.  A rehabilitation consultation is a meeting between the employee and the assigned QRC to determine if the employee is eligible for rehabilitation services.  Minn. R. 5220.0100, subp. 26, and Minn. R. 5220.0130.  An insurer “shall” provide a rehabilitation consultation if a consultation is requested by the employee, employer, or DOLI.  Minn. R. 5220.0130, subp. 2.  The insurer is required to provide a copy of the first report of injury, the disability status report, and the treating physician’s workability report to the assigned QRC before the consultation.  Minn. R. 5220.0130, subp. 3.A. After the rehabilitation consultation, the assigned QRC is required to file a report of the consultation with DOLI on a form prescribed by DOLI.  Minn. R. 5220.0130, subp. 3.C. and 3.D.  If the consultation results in a determination that the employee is qualified for rehabilitation, the QRC prepares a Rehabilitation Plan to be approved by all parties and to be filed with DOLI.  Thereafter, rehabilitation services are to be provided by the QRC pursuant to the rehabilitation plan.  Minn. R. 5220.0410.

The panel concluded that Richardson’s contact with KA was a rehabilitation consultation and, as a result, he was providing rehabilitation services to KA under the rules.  The Panel also concluded that Richardson’s actions in his contact with KA and Micale had violated the rules found in chapter 5220 of Minnesota Rules and that PAR, as Richardson’s employer, was responsible for Richardson’s alleged violations of those rules.  We consider whether the undisputed evidence supports these legal conclusions by the Panel.

KA contacted Richardson directly on the recommendation of a friend at work who had previously worked with him.  KA testified that he was worried about his medical care and about the treatment options that might be available to him.  In the meeting at Perkins, KA and Richardson talked about KA’s medical care.  There was no discussion about whether or not KA should have a QRC, Richardson took no notes, KA signed no forms, and neither KA nor PAR had requested a rehabilitation consultation from the insurer.  Richardson went with KA to his doctor and discussed treatment options for KA.  There is no evidence that Richardson described himself as a QRC at that appointment.  When Dr. Schulenberg referred to Richardson as a QRC in the chart notes from that appointment, Richardson corrected him.  Richardson had no further contact with KA.

As noted previously, an employee must be a qualified employee to receive rehabilitation services under the rules.  At the hearing, DOLI argued that KA was obviously a qualified employee within the meaning of Minn. R. 5220.0100, subp. 22, at the time of his meeting with Richardson, given the precarious nature of his continued employment with Qwest, and that, as a result, he was entitled to a rehabilitation consultation.  The argument is that since KA was entitled to a rehabilitation consultation, the meeting with Richardson should be considered a rehabilitation consultation.  We disagree. KA may have been a qualified employee as defined by the rule at the time of his first meeting with Richardson but there is no evidence that the employee, or the employer/insurer, or DOLI were requesting a rehabilitation consultation to determine eligibility for statutory rehabilitation.  Neither is there any evidence that KA was seeking vocational rehabilitation assistance from a QRC when he met with Richardson.  Instead, KA was seeking information on treatment options available to him and decided to talk to someone familiar with medical treatment for a back injury.

The definition of rehabilitation services as found in Minn. R. 5220.0100, subp. 29, is very broad but it is important to note that it calls for a “program” of vocational rehabilitation designed to return the employee to suitable employment.  An employee has the right to seek professional advice about her or his workers’ compensation claim, whether from an attorney, a doctor, or a vocational expert.  Where, as here, there was no evidence of an interest in statutory rehabilitation until KA met with the QRC from PAR two weeks later, a conclusion that Richardson’s contact with KA was the beginning of a program of vocational rehabilitation is not supported by any evidence.  We conclude Richardson was not providing rehabilitation services as defined by the rules in his contacts with KA.

The Panel’s discipline of PAR for Richardson’s telephone call with Micale was based on its determination that, at that time, Richardson was working as KA’s QRC and was subject to the rehabilitation rules in chapter 5220. Given our conclusion that Richardson was not providing a program of statutory rehabilitation, we find no basis for disciplining PAR because of the telephone call between Micale and Richardson.

CJ’s contact with Richardson came through her attorney, Roger Poehls.  Initially, Poehls had asked PAR to provide a rehabilitation consultation for CJ and a meeting was scheduled for April 11, 2008.  The meeting was postponed because of adverse weather conditions and rescheduled. In the meantime, the insurer had advised Poehls that it would not pay for a consultation.  We have held that in such a situation the QRC may provide rehabilitation services and then make a claim for payment of those services once liability against the insurer is established.  Parker v. University of Minn., 64 W.C.D. 134 (W.C.CA. 2003); Najarro v. Minnesota Minerals & Aggregates, Inc., 60 W.C.D. 484 (W.C.C.A. 2009).

However, we did not decide in those cases that a QRC or rehabilitation firm is required to provide services when an insurer refuses to authorize rehabilitation services.  A QRC or rehabilitation firm that provides services in that situation runs the risk of not being paid if liability for rehabilitation is not established and may decline to proceed in the absence of the insurer’s agreement to pay for those services.  Here, PAR, after being advised of the insurer’s position, declined to provide a rehabilitation consultation.  On appeal, DOLI argues that there is inadequate evidence to support a conclusion that PAR had declined to provide a rehabilitation consultation.  We disagree.  Both Poehls and Richardson testified that PAR had decided not to provide a rehabilitation consultation to CJ and there is no evidence to the contrary.  Both Poehls and Richardson testified that Richardson met with CJ and her doctor as an agent of Poehls to “find out what was going on.”  Richardson, not PAR, billed for his time in obtaining information for the employee’s attorney.

Richardson’s primary purpose in meeting with CJ and her doctor was to ascertain for her lawyer whether her ongoing medical treatment was related to her work injury. Every lawyer who is considering whether to represent an injured employee in a workers’ compensation case does an assessment of the employee’s case and medical care, including whether the care is related to a work injury, whether the care is reasonable and necessary, and whether the employee’s medical situation will affect employability.  If Poehls had traveled to Duluth to meet with CJ and her doctor or if Poehls had sent a paralegal from his office to do so, it would be apparent that the individual doing so was not providing rehabilitation services.  Richardson, acting as an agent of CJ’s lawyer in his case assessment, was not providing rehabilitation services when he met with her.

DOLI argues that even if Richardson was not providing rehabilitation services under the statute and rules, he was still subject to those rules based on our holding in In Re the QRC Registration of David Scorse, 56 W.C.D. 18 (W.C.C.A. 1996). Scorse was a QRC providing disability case management services on behalf of the workers’ compensation insurer. A complaint was filed against him alleging that in working as a disability case manager he was violating Minn. R. 5220.1801, subp. 8, by failing to keep separate the “roles and functions of a claims agent and a rehabilitation provider.”  This court discussed the origin of disability case management, the authority for the use of disability case management by employers and insurers, and whether the professional conduct provisions of the rules applied to a QRC acting as a disability case manager.

The Rehabilitation Review Panel had concluded in Scorse that none of the professional conduct rules in chapter 5220 applied when a QRC was providing disability case management services and not statutory rehabilitation.  This court vacated that conclusion and held that some of the professional conduct rules might apply to a QRC acting as a disability case manger but did not address the question further.

Scorse has little application in the present case.  Richardson’s contacts with KA and CJ do not rise to the level of rehabilitation services as defined by the rule.  At most, those contacts could be considered non-statutory services similar to those provided in disability case management.  In any event, Scorse applies to a QRC acting as a disability case manager and Richardson was not a QRC at the time of his contacts with KA and CJ.  There is no authority for applying the rules in chapter 5220 to an individual who is not a QRC and who is not providing statutory rehabilitation.

In its brief, DOLI argues that discipline is still warranted even if Richardson was not providing statutory rehabilitation because a rehabilitation firm has an obligation to make “full disclosure” that the firm is providing disability case management and PAR did not do so.  As authority DOLI cites to a concurring opinion in Scorse in which one member of this court provided “guidance” for QRCs in similar situations.  While that opinion might be helpful, an advisory opinion is not precedent and may not serve as a basis for discipline in this case.

Richardson was acting as an agent of KA in his contacts with KA and KA’s doctors.  He was acting as an agent of the employee’s lawyer in his dealings with CJ and her doctor.  Richardson was not providing rehabilitation services in those contacts and was not working on behalf of PAR.  If the Panel’s decision were to be affirmed, a QRC or any person employed by a rehabilitation firm would not be able to meet with an injured employee to discuss employment issues or medical concerns at the request either of the employee or the employee’s lawyer.  Dealing with the physical and economic consequences of a work injury, navigating one’s way through the maze of statutes, rehabilitation rules, medical parameters and doing so without any professional advice is virtually impossible for many injured workers.  The efforts of KA and CJ to receive professional advice outside of the system of statutory rehabilitation are simply not within the purview of DOLI.  There is no legal basis for penalties against PAR for Richardson’s actions.

In addition to the question of Richardson’s contacts with KA and CJ, the Panel disciplined PAR for fee splitting. The separation paragraph in the non-compete agreement between Guzik and PAR states that “If any injured worker chooses to continue their professional relationship with a QRC or QRC-I for any reason after separation of employment, PAR, Inc. is entitled to liquidated damages of $2,000, or 50% of fees generated after separation of employment and until the file closes with an R-8.”  DOLI alleged and the Panel concluded that PAR’s attempt to seek damages under this provision was a violation of Minn. R. 5220.1805(G), which states, “A rehabilitation provider shall not incur profit, split fees, or have an ownership interest with another rehabilitation provider outside of the firm that employs the provider.”

Fee splitting is not defined in the workers’ compensation statute or rules.  Black’s Law Dictionary defines fee splitting as “the division of attorney fees between the lawyer who handles a matter and the lawyer who referred the matter.”  Black’s Law Dictionary 692 (9th ed. 2009). According to this definition, the usual meaning of fee splitting involves a voluntary business arrangement between two parties in which one party obtained the file and the second party did the work on the file.  The two parties divide or split the resulting fee. The usual meaning of fee splitting is the usage supported by the language of Minn. R. 5220.1805(G), which, in addition to prohibiting fee splitting, also prohibits incurring a profit or having an ownership interest in another rehabilitation firm.  Both of these are also what might be assumed to be voluntary business arrangements between parties.

At the hearing, DOLI presented the testimony of Phillip Moosbrugger, an employee of DOLI who had conducted the investigation of Richardson and PAR.  Moosbrugger stated that there were two “potential evils” in fee splitting.  First, there was the potential confusion of an injured employee in a referral situation where it might appear unclear to the employee as to which QRC was actually providing services.  Second, a referral fee would reduce the amount the QRC actually performing rehabilitations services would receive, and since there is a cap on the hourly fee the QRC can charge an insurer, the QRC might not be adequately compensated for the services provided.  (12/17/10 Hearing, T. 28-29.)  Both of these “potential evils” deal with the referral of a case by a rehabilitation firm obtaining the client to a rehabilitation firm doing the actual work.  The concerns stated by DOLI do not exist in the present situation, a legal claim made against an ex-employee.  An R-3 was filed with DOLI by Guzik, changing the assigned QRC from PAR to himself.  All parties were aware of the identity of the QRC.  The second purpose does not exist because the intent of the damages provision would be to reduce the economic incentive for Guzik to violate the separation agreement.

The plain language of Minn. R. 5220.1805(G), the ordinary meaning and usage of fee splitting, and the reasons for the rule as enunciated by DOLI’s witness at the ALJ hearing demonstrate that PAR’s efforts to obtain damages for Guzick’s alleged breach of the separation agreement was not an agreement to split fees and was not a violation of the rules.

DOLI contends it has interpreted this rule so as to prohibit PAR’s actions and this court must give deference to its interpretation of the rule.  As the decision cited by DOLI indicates, deference is to be given to an agency’s findings because of the agency’s “expertise and its special knowledge in the field of its technical training and experience.”  Fine v. Bernstein, 726 N.W.2d 137, 142 (Minn. App. 2007). However, the meaning of words in a regulation is a question of law to be reviewed de novo. If the plain meaning of the regulation is clear, no deference need be given to the agency interpretation. In Re Rate Appeal, 728 N.W.2d 497, 503 (Minn. 2007). Further, words and phrases are construed “‘according to their common and approved usage.’ Minn. Stat. § 645.08 (2010).  When considering the plain and ordinary meaning of words or phrases, we have consulted dictionary definitions.  We also construe rules ‘as a whole’ and ‘words and sentences are understood . . . in the light of their context.’”  Troyer v. Vertlu Mgmt. & Lundberg Funeral, 806 N.W.2d 17, 24 (Minn. 2011) (citations omitted).^[4]

We find no ambiguity in the common usage and understanding of the phrase “fee splitting” and conclude it can not be construed to refer to the liquidated damages clause in a non-compete agreement.  Non-compete agreements are valid under Minnesota law if they are bargained for and are supported by adequate compensation.  National Recruiters. Inc. v. Cashman, 323 N.W.2d 735 (Minn. 1980); Kallock v. Medtronics, Inc.,  573 N.W.2d 356 (Minn. 1998).  We find no provision in the workers’ compensation statute or rules that prohibit the use of a non-compete agreement between a rehabilitation firm and a QRC employee.  DOLI asks this court to affirm a penalty against PAR of $3,000.00 for the “fee splitting.”  Before a party is penalized for violating a rule when its actions are otherwise allowable under Minnesota law, the rule alleged to have been violated must be clearer in its application than is the one at issue here.

The decision of the Rehabilitation Review Panel is reversed.

This case presents several issues on appeal from a determination by the Rehabilitation Review Panel that PAR and the firm’s sole owner, John Richardson, operated the business and managed the employees out of compliance with Minn. R. ch. 5220.  I concur with the majority’s reversal of the Panel’s determination that John Richardson was providing rehabilitation services to KA and CJ as defined in Minn. R. ch. 5220.  However, as to the majority’s conclusion that the liquidated damage provision of the non-compete agreement did not violate the provisions of Minn. R. 5220.1805(G), I disagree.  I find the voluntary business arrangement documented in the non-compete agreement clearly did violate Minn. R. 5220.1805(G) by mandating the rehabilitation providers to split fees when certain conditions are met.  I would affirm the Panel as to their findings on the non-compete agreement under the plain meaning of the rule in accordance with Minn. Stat. § 645.08.

Interpretation of the language and structure of Minn. R. 5220.1805(G) is a question of law.  Minn. R. 5220.1805(G) states “A rehabilitation provider shall not . . . split fees . . . with another rehabilitation provider outside of the firm that employs the provider.”  Despite the extensive analysis of the majority, I consider the issue plainly resolved when one looks at the language of the non-compete agreement and the facts in this case.
As the majority notes, Gerard Guzik, a rehabilitation provider, entered into a voluntary business arrangement with John W. Richardson/PAR, Inc., another rehabilitation provider, regarding QRC fees.  The agreement states if Mr. Guzik leaves PAR he must pay “$2000, or 50% of fees generated”^[5] for each client he takes with him.  In essence, two QRC providers agreed to voluntarily split fees if certain conditions were met.  I believe we need look no further than the agreement.  The simple language of the unambiguous rule has been met. The agreement violates the clear substantive prohibition against fee splitting enforceable by the Minnesota Department of Labor and Industry.  We do not need to go into further analysis on whether this type of fee splitting is like attorney fee splitting or referral fees.  The rule does not make such a distinction.  In my opinion, to come to the majority’s conclusion the rule would have to state:  A rehabilitation provider shall not split fees with another rehabilitation provider outside of the firm that employs the provider except for fee splitting arrangements regarding non-compete agreements.  Since the Minnesota Department of Labor and Industry did not write such an exception to the rule, I must defer to the interpretation and findings of the Rehabilitation Review Panel on this issue.  The Panel’s interpretation is consistent with the rule;  I would affirm.