The self-insured employer appeals from the compensation judge’s determination that after a total of $25,000 in weekly compensation has been paid, the employer may not reduce the employee’s permanent total disability benefits by the amount of retirement benefits being paid to the employee through the Teachers’ Retirement Association.^[1]  We reverse.

The employee began working as a public school industrial arts teacher in 1974.  In 1983, he was hired by the Osakis Independent School District #213.  Beginning in 1984 or 1985, the employee also coached volleyball for the school district on a seasonal basis.  In addition, the employee had a snow plowing business, worked as an auctioneer, and owned and maintained three residential rental properties.  The employee’s date-of-injury average weekly wage was $977.92.

On September 9, 2004, the employee sustained an admitted work injury to his low back.  He underwent extensive conservative treatment, but his symptoms worsened.  In April 2006, he underwent low back surgery and was off work for approximately four weeks.  The employee continued to experience low back symptoms despite the surgery, developing right leg weakness and foot drop.  The employee briefly returned to work in May, finishing the 2006 school year.  However, due to his work-related condition, the employee was no longer able to perform his industrial arts teaching duties and notified the employer that he was retiring from his teaching position.  The employee resigned from his teaching job with the employer effective June 1, 2006.

Following his retirement from teaching, the employee obtained work as a seasonal volleyball coach with the Brandon-Evansville School District.  He resigned this position after the 2011 season as he was no longer able to perform his coaching duties.  He sold the snow plowing business in the spring of 2011 and did not work as a paid auctioneer after about 2008.  By 2011, the employee owned just one rental property, for which he performed minimal maintenance.  Medically, the employee’s condition progressively deteriorated, and by late 2011, the employee had constant pain in his low back, right hip, and right knee, along with right foot drop and leg weakness causing him to limp.

The employee applied for a Teachers Retirement Act (TRA) accelerated retirement annuity in March 2006.  The retirement annuity began accruing as of June 16, 2006, when he was 59 years old.^[2]  The employee selected a plan that accelerated payments to age 62 so that he would receive a larger benefit initially and a reduced benefit beginning at age 62.^[3]  He also selected an annuity that provided a 100% survivor benefit.  From July 2006 through April 2009, the employee received $2,700.00 per month with annual increases.  In April 2009, the employee began receiving his regular benefit amount of $1,682.81 per month.  The employee’s current monthly TRA benefit is $1,759.38.  The employee was sixty-six years old at the time of the hearing.  He has not applied for Social Security benefits, choosing to wait until age 68 to increase the amount of Social Security retirement benefits he will receive.^[4]

The employee filed a claim petition on June 26, 2012, seeking wage loss benefits.  Following a hearing, the compensation judge found the employee was permanently and totally disabled as of November 15, 2011.  There has been no appeal from this finding.  The judge further held that the self-insured employer may not reduce the employee’s permanent total disability benefits by the amount of retirement benefits paid to the employee through the TRA pursuant to the offset provisions of Minn. Stat. § 176.101, subd. 4.  The self-insured employer appeals from this determination.

“[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers’ Compensation Court of Appeals] may consider de novo.”  Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).

Minnesota Statutes § 176.101, subd. 4, provides, in part, that

The employee asserts that TRA disability benefits or Social Security old age and survivor benefits only may be offset from permanent total disability benefits and that nothing in the language of subdivision 4 allows an employer and insurer to reduce permanent total disability benefits by retirement benefits.  We disagree.  “This court has long interpreted the language of [subdivision 4] to require the offset from permanent total disability payments not only of federal social security retirement benefits, but also of a variety of state and local government retirement benefits.”  Adamski v. Kenneth Setterholm’s Farm, 58 W.C.D. 119, 121 (W.C.C.A. 1998).

This issue was first considered in Kramer v. City of St. Paul, 33 W.C.D. 425 (W.C.C.A. 1981).  The employee was receiving a Public Employee Retirement Association (PERA) retirement pension^[5] based on his years of service and age.^[6]  This court held the language “any old age . . . benefits” includes public employee retirement pensions.  The court specifically rejected the employee’s contention that the offset applies only to Social Security old age benefits.  The issue was again addressed in Wicks v. City of South St. Paul, slip op. (W.C.C.A. Nov. 18, 1988).  This court held the compensation judge properly relied upon Kramer in holding the employee’s PERA retirement benefits should be applied to reduce his permanent total disability benefits.  In Boll v. State, Dep’t of Pub. Safety, slip op. (W.C.C.A. Feb. 3, 1995), the self-insured employer claimed an offset against permanent total disability benefits based on the employee’s receipt of a Minnesota State Patrol retirement pension.  While not directly deciding the issue, the court noted that in two previous cases, Kramer and Wicks, the court had held the language “this reduction shall also apply to any old age and survivor insurance benefits” includes public pension retirement benefits.  Compare also Ruter v. State, Dep’t of Corrections, 63 W.C.D. 291, 301 (W.C.C.A. 2003); Ruter v. State, Dep’t of Corrections, 57 W.C.D. 126-27, n.2 (W.C.C.A. 1997).

In discussing coordination of workers’ compensation benefits with other wage-loss benefits, Larson observes that “most social [insurance] legislation in the United States has appeared in unrelated fragments.”  9 Lex K. & Arthur Larson, Larson’s Workers’ Compensation Law, Scope (Rev. Ed. 2013).  In Minnesota, public employee retirement and disability pensions preceded the federal Social Security system.  The Teachers Insurance and Retirement Fund was initially created by the legislature in 1915.  A more comprehensive act, the Teachers Retirement Act, was passed in 1931.  The State Employees’ Retirement Association, now MSRS, was legislatively created in 1929, and PERA was created in 1931.^[7]  The Social Security Act was enacted in 1935 to provide old age insurance benefits and was expanded in 1939 to include survivors’ and dependents’ benefits.^[8]

As part of a substantial revision and recodification of the workers’ compensation act in 1953, the Minnesota legislature enacted the initial offset provision which provided:^[9]

It can certainly be concluded, as this court did in Kramer, that by adding the word “any” in front of the reference to old age and survivor insurance benefits, the legislature intended to clarify that all government old age (retirement) benefits are included in the offset.  Cf. Parson v. Holman Erection Co., Inc., 428 N.W.2d 72, 41 W.C.D. 129 (1988) (“We must assume that the legislature intended its new changed language to mean something different than the language of the old statute.”)

While the Minnesota Supreme Court has not addressed this issue directly, in Potucek v. City of Warren, 535 N.W.2d 333, 336, 53 W.C.D. 88, 91 (Minn. 1995),^[11] the court observed that

As explained in Larson:

The employee maintains it is unfair, and unconstitutional,^[13] to reduce the permanent total disability benefits of a public employee, but not the benefits of those receiving a private retirement pension.  The terms of a public employee pension plan are memorialized in, and governed, by statute, unlike those of a pension provided through a private employer which is governed by the terms of the pension contract.  See, e.g., Cole v. Armour & Co., 257 N.W.2d 381, 30 W.C.D. 40 (Minn. 1977).  Thus, it is possible for an injured employee in the public sector to be subject to a different or even opposite offset than an employee in the private sector to accomplish the same goal, that is, coordination of wage loss benefits.  While the employee raises an important and significant concern, the claim is essentially an equal protection challenge which is outside of our jurisdiction.  Weber v. City of Inver Grove Heights, 461 N.W.2d 918, 43 W.C.D. 471 (Minn. 1990); compare, e.g.,  Ruter 569 N.W.2d at 408, 57 W.C.D. at 131 (citing Lindell v. Oak Park Coop. Creamery, 369 N.W.2d 505, 507, 37 W.C.D. 735, 738 (Minn. 1985)); cf., Schatz v. Interfaith Care Ctr., 811 N.W.2d 643, 72 W.C.D. 143 (Minn. 2012).

The employer and insurer argue that Minn. R. 5222.0100 defines “government disability benefits,” as contemplated in Minn. Stat. § 176.101, subd. 4, to include old age benefits and public employee retirement benefits.  The rule was promulgated by the Department of Labor and Industry pursuant to authority granted by Minn. Stat. § 176.132 which provided for supplementary benefits.  The purpose of the rule was to specify the procedure by which an employer could obtain an administrative finding of permanent total disability in order to obtain reimbursement of supplementary benefits.  Minn. Stat. § 176.132 was repealed, effective October 1, 1995.  We conclude the rule has no force and effect for injuries occurring after the repeal of the statute.

The employee, nonetheless, asserts that the cases allowing an offset against permanent total benefits for public employee retirement benefits occurred prior to the repeal, and that the repeal of supplementary benefits resulted in a significant impact on the income of injured workers, and these cases are, therefore, distinguishable.  We disagree.

The offset provision, originally enacted in 1953 and amended in 1967, existed prior to the enactment of Minn. Stat. § 176.132, effective January 1, 1972.  At the time of its repeal, supplementary benefits were available to an employee whose adjusted compensation rate was less than 65 percent of the statewide average weekly wage, or whose compensation rate fell below 65 percent because of reductions resulting from the simultaneous receipt of “old age or disability benefits.”  Minn. Stat. § 176.132, subd. 2 (1994).  Supplementary benefits could potentially increase injured workers’ benefits in essentially two ways: (1) by raising compensation levels for workers earning low wages at the time of injury and who had a low compensation rate, and (2) by increasing compensation for those whose benefits were reduced by simultaneous receipt of government old age or disability benefits.  The net result to workers in this second group was receipt of permanent total disability benefits at the supplementary benefit level, plus their retirement or disability pension.  See Flower v. Metropolitan Council, 61 W.C.D. 358, 363-365 (W.C.C.A. 2001).

Moreover, in addition to the repeal of supplementary benefits in 1995, the legislature also amended the minimum weekly compensation rate for permanent total disability benefits, increasing the minimum from 20 percent to 65 percent of the statewide average weekly wage.  In Shelton v. National Painting & Sandblasting, 627 N.W.2d 324, 330, 61 W.C.D. 255, 264 (Minn. 2001), the supreme court observed that

Similarly, while the employee’s workers’ compensation benefits may be reduced by the amount of his retirement pension, he retains 100 percent of the pension to which the employee and his government employer(s) contributed.  The net effect is that the injured employee receives permanent total disability benefits, without reduction, until $25,000 in compensation has been paid, while receiving his full retirement pension.  Once the threshold has been reached, the employee in this case will continue to receive a reduced amount of permanent total disability benefits in addition to his retirement pension.

It is well to recall that the current offset provision has been in effect for 46 years and this court’s interpretation has stood for more than 30 years.  As the supreme court has stated on more than one occasion, “[i]t is for the legislature, not the [c]ourt[s], to judge the social utility of this statutory system, which has no common law counterpart, to balance the interests of employees and employers, and to make whatever adjustments and corrections it deems appropriate.”  Parson, 428 N.W.2d at 76.^[14]

We, accordingly, reverse the decision of the compensation judge, and hold that after a total of $25,000 in weekly compensation has been paid, the self-insured employer is entitled to reduce the employee’s permanent total disability benefits by the amount of retirement benefits then being paid to the employee through the Teachers’ Retirement Association.