The employee appeals from the compensation judge’s decision as to the discount rate applicable to the employee’s claim for lump sum payment of permanent partial disability benefits pursuant to Minn. Stat. § 176.101, subd. 2a(b).  The employer and insurer challenge the compensation judge’s authority to determine the applicable discount rate and also contend that the judge erred in his recitation of the parties’ agreement as to the extent of the employee’s permanent partial disability.  We affirm.

The relevant facts are undisputed.^[1]  On December 2, 2011, the employee sustained catastrophic injuries in an accident arising out of and in the course of his employment with Bauer Electric, Inc. [the employer].  The employer and insurer accepted liability for the injury and paid various benefits.  The employee’s weekly wage on the date of injury was $1,083.98, resulting in a compensation rate of $722.65.  The parties agreed that the employee has a 99% permanent partial disability as a result of his work injuries, with the employee reserving the right to claim additional permanency benefits.  The total value of the 99% rating is $509,850.00, which would take more than 13 years to pay out in periodic installments.

In September 2012, the employee, through his guardian, requested lump sum payment of benefits for the employee’s permanent partial disability.  The employer and insurer applied a 5% discount rate to arrive at what they asserted was the present value of the employee’s permanent partial disability, and they consequently paid the employee $373,079.00 for his 99% impairment.  The employee’s guardian subsequently filed a claim petition, alleging that the employer and insurer had erred in applying a 5% discount rate, and he ultimately alleged that the appropriate discount rate for purposes of calculating present value was 1.59%.  The two calculations differ by more than $85,000.00.

When the matter came on for hearing before the compensation judge, the employer and insurer contended in part that the compensation judge lacked authority under the applicable statute to determine the discount rate but that, in any event, a 5% rate was appropriate.  The employee maintained that a 1.59% discount was applicable because that was the rate for 10-year treasury bills on the date he demanded lump sum payment.  The employer and insurer submitted testimony and a report from Ralph Keysser, a financial consultant and investment banker, in support of their use of the 5% discount.

In a decision served and filed on February 11, 2014, the compensation judge concluded that he had authority to determine present value and the appropriate discount rate to be used for calculating the employee’s lump sum payment of permanent partial disability benefits.  The judge also concluded that 5% was a reasonable and appropriate discount rate to be used in the case before him.  Both parties appeal.

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 (2014).  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).  Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed.  Id. at 60, 37 W.C.D. at 240.  Similarly, findings of fact should not be disturbed, even though the reviewing court might disagree with them, “unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of evidence or not reasonably supported by the evidence as a whole.”  Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).

“[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).

Prior to 2000, requests for payment of permanent partial disability benefits in a lump sum were governed by Minn. Stat. § 176.165, which provides,

The testimony and report of Mr. Keysser, the employer and insurer’s financial expert, was essentially the only evidence submitted.  Based on that testimony and report, the compensation judge concluded that the employer and insurer were entitled to use a 5% discount rate to arrive at the present value of payments for the employee’s functional impairment.  On appeal, the employee argues that the judge erred as a matter of law in reaching this conclusion and also that the judge’s decision is unsupported by substantial evidence.

More specifically, the employee contends that the compensation judge erred in relying on what Mr. Keysser characterized as the “prudent investor” standard in determining the appropriate discount rate.  Rather, the employee argues, the judge should have used what the employee calls the “comparable risk” standard.  And, the argument goes, because an employee who chooses to accept periodic payments of permanent partial disability benefits essentially assumes zero risk, the least risky investment option should be used to decide what discount rate to apply.  Mr. Keysser acknowledged that treasury bills are considered to have essentially no risk, so, the employee alleges, the 10-year treasury bill rate in effect on the date an employee demands lump sum payment of permanent partial disability benefits, in this case 1.59%, is the appropriate discount.  However, as Mr. Keysser repeatedly indicated, an employee who chooses to take his benefits in periodic installments is not making an investment, and those periodic installments therefore in no way reflect any “return” on investment.  As such, taking periodic permanent partial disability benefit payments is not comparable to investing at the treasury bill rate.  Moreover, as Mr. Keysser also explained, investment of the entire sum at a 10-year treasury bill rate would effectively result in a negative return, as the employee would almost certainly lose ground to inflation.

The concept of “present value” recognizes that money today is worth more than money in the future, because whoever holds the money at present has the opportunity to invest and realize a return on that investment.  Presumably the discount allowed by Minn. Stat. § 176.101, subd. 2a(b), is intended at least in part to compensate the employer and insurer for losing that opportunity for investment, because, when a lump sum payment demand is made, that opportunity to realize a return through investment shifts to the employee.  Mr. Keysser testified that a reasonable discount rate would actually exceed 5% and that, based on his professional experience and historical rates of return for various investment options, 5% would be the appropriate rate to use here, given the statutory cap.

The compensation judge explained his decision at some length in his memorandum, concluding,

On cross-appeal, the employer and insurer contend that Minn. Stat. § 176.101, subd. 2a(b), gives an insurer sole authority to determine which discount rate to use, up to 5%, without judicial approval, and that the compensation judge therefore lacked authority to decide the issue.  It seems unlikely to us that the legislature intended to give insurers sole discretion to decide how much to pay an employee for his or her permanent functional impairment, even within limits, and it is hard to envision circumstances in which an insurer would voluntarily choose to pay an employee more than the statute would require.  Whether an insurer would ever choose a discount rate of less than 5% is questionable at best.  However, because of the particular circumstances of this case, we need not reach that issue.

The employer and insurer took the maximum discount allowed by statute, 5%, and the compensation judge agreed that 5% was the appropriate rate.  Whatever our decision on the employer and insurer’s cross-appeal, 5% remains the maximum allowable discount.  This court generally declines to decide issues that have no practical effect.  See, e.g., Vigoren v. Joseph Catering, slip op. (W.C.C.A. 2001).  In fact, the employer and insurer can gain nothing tangible in this particular case no matter what our decision on cross-appeal.  As such, any decision on that question would constitute an impermissible advisory opinion.  “The existence of a justiciable controversy is prerequisite to adjudication.  The judicial function does not comprehend the giving of advisory opinions.  No controversy is presented, absent a genuine conflict in the tangible interests of opposing litigants.”  Isaak Walton League of Am. Endowment, Inc., v. State, Dep’t of Natural Resources, 312 Minn. 587, 589, 252 N.W.2d 852, 854 (1977) (emphasis added); Konczal v. Hage Constr. Co., 70 W.C.D. 410 (W.C.C.A. 2009).  The employer and insurer’s cross-appeal is therefore dismissed.^[2]