TONI L. GOBLE, Employee, v. LEISURE HILLS OF HIBBING and MINN. HEALTH CARE ASS’N/CCMSI, Employer-Insurer/Appellants, and MEDICA HEALTH PLANS, Intervenor/Respondent.

The employer and insurer appeal the compensation judge’s findings as contrary to law and unsupported by facts in the record.  The employer and insurer claim that the compensation judge erred in her rejection of the employer and insurer’s assertion that notice of the right to intervene to the Minnesota Department of Human Services (MDHS) constituted notice to Medica Health Plans under a principal-agent theory.  The employer and insurer seek to reverse the compensation judge’s findings and extinguish Medica’s intervention interest in this proceeding for failure to file a timely motion to intervene.  Intervenor Medica responded that the compensation judge applied the correct statutory standard regarding intervention and correctly refused to apply the alternative standard offered by the employer and insurer.

Intervenor Medica also moved to strike evidence submitted with the appellants’ brief as that evidence was not offered at the hearing before the compensation judge.  We affirm and grant the motion to strike.

The employee, Toni L. Goble, worked as a nurse’s aide for Hibbing Leisure Hills, the employer and insurer.  On August 6, 2003, the employee suffered a work injury to her upper back and neck while attempting to prevent a resident’s fall.

From August 12, 2005, to December 5, 2005, Intervenor Medica paid a portion of the medical bills incurred by the employee for treatment of her work injury, including the surgical care provided on October 25, 2005.^[1]  Intervenor Medica was responsible for payment of those medical bills under a contract between Medica and the Minnesota Department of Human Services (MDHS) for provision of Medical Assistance (MA), General Assistance (GA), and MinnesotaCare Medical Care Services (MnCare).  The contract between Intervenor Medica (referred to in the contract as a managed care organization or MCO) and MDHS provided for MDHS to make payments to the MCO for each enrollee covered under the contract independently of any services being received by the enrollee.  The contract called for cost avoidance procedures to be followed whereby the medical service provider could seek reimbursement from a third-party payor prior to payment by the MCO.^[2]  The contract also had provisions for the MCO to recover costs from third parties after payment of claims, called “pay and chase.”^[3]  “State” is defined in the contract as “the Minnesota Department of Human Services or its agents and the Commissioner of Human Services.”^[4]

Article 3 of the contract sets out the responsibilities of the MCO.  Those duties are consistent with those of an insurance provider.  The contract explicitly designates enrollees as third party beneficiaries of the contract between MDHS and Medica.^[5]  Article 12 designates the MCO as an agent of the state for obtaining third party reimbursement.  The MCO is required to “take reasonable measures to determine the legal liability of third parties to pay for services furnished to MCO Enrollees.”^[6]  MDHS must provide information regarding known third party resources twice per month.^[7]  The MCO retains any such recovery, up to the cost of services provided, so long as it does not result in duplicated recovery or is prohibited by federal or state law.^[8]  Workers’ compensation is identified as a potential source of post payment recovery.^[9]

On December 23, 2010, the employee filed a Claim Petition with the Minnesota Office of Administrative Hearings.  Medica was not served with an intervention notice, and did not intervene.  MDHS was served with an intervention notice and did not intervene.  The matter came before a compensation judge who issued a Findings and Order on December 7, 2012.  Relevant to this proceeding, the compensation judge found that the employee’s March 3, 2003, work injury was compensable and that the work injury was a substantial contributing cause to all of the medical care provided to the employee’s thoracic and cervical spine.  The compensation judge issued an amended Findings and Order on December 12, 2012, which closed out the intervention interest of various potential intervenors, including MDHS.  Medica was not identified as an intervenor whose interest was closed out.^[10]

On April 22, 2013, the employee filed a Claim Petition seeking benefits.  MDHS was notified of the new proceeding and MDHS notified UCare MN/Ingenix.  Ingenix was linked to Medica and provided Medica with the information needed to recognize an intervention interest.  On September 3, 2014, Medica moved to intervene for the purpose of obtaining reimbursement of $50,122.61 in medical expenses which were paid to treat the employee’s thoracic and cervical spine in 2005.  On October 27, 2015, the matter came before a compensation judge who found that neither MDHS nor Medica had been put on notice prior to the hearing in 2012.  The compensation judge further found that the 2012 record had been left open for filing motions to intervene.  MDHS was notified but made no motion to intervene in that proceeding.  Medica was not notified in the 2012 proceeding.  The compensation judge awarded Intervenor Medica its claimed medical costs and awarded interest from the time those costs were paid.  The employer and insurer appealed the award.

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).

The employer and insurer contend that common law agency principles apply in this matter to impute notice from the principal to the agent.  Since notice was provided to MDHS as the principal, the employer and insurer argue that therefore Medica, as an agent, had notice.^[11]  For this reason, the employer and insurer contend that Medica’s failure to intervene earlier should result in Medica’s intervention interest being extinguished.  Intervenor Medica contends that the principal-agent argument is irrelevant to the statutory system for recognizing and extinguishing intervenor rights.  As the notice required under the statute was not provided in the manner required under the statute, Intervenor Medica maintains that there is no basis to overturn the compensation judge’s award.

The statute controlling the underlying issue in this proceeding is Minn. Stat. § 176.361, subd. 2.(a), which states in pertinent part:

This court has explicitly rejected application of an alleged principal-agent relationship for extinguishing a reimbursement interest.  Rouse v. J.P. Food Serv., Inc., slip op. (W.C.C.A. Sept. 30, 1997) (no evidence alleged agent was acting on behalf of alleged principal, and even if the relationship existed, alleged agent would require proper classification as an intervenor and required notice under Minn. Stat. § 176.361).  As the statute sets out the condition for extinguishing an intervenor interest, that condition must be met to obtain the result sought by the employer and insurer.

Minn. Stat. § 176.361, subd. 2.(a), provides for extinguishing a potential intervenor interest upon failure to file a timely motion to intervene.  The 60-day period for that filing begins to run with the service of notice of a right to intervene on the potential intervenor.  There is no reference to notice from any source other than the served document triggering the time period.  The definition of potential intervenor is provided by rule and is broad.  Minn. R. 1415.0300, subp. 18 (“potential intervenor” is a “person or entity [that] may either gain or lose by an order or decision in the case.”).  Medica plainly meets the definition of a potential intervenor and was entitled to notice under the statute to pursue its intervention interest.  The terms of this statutory provision do not provide for extinguishing a potential intervenor’s interest under any other mechanism.^[12]  As no notice was served on Medica, the 60-day period for Medica to move to intervene did not begin to run.  As there was no failure to timely move for intervention, Intervenor Medica’s interest cannot be extinguished under Minn. Stat. § 176.361, subd. 2.(a).  The compensation judge’s award of benefits is affirmed.

The employer and insurer’s Appellant Brief included notices and documents regarding the intervention of MDHS in 2005 and 2012.  Intervenor Medica moved to strike the documents as outside the record and to strike those portions of the appellants’ brief that mention those exhibits.  Intervenor Medica relies upon the recent decision in Nord v. Downtown Diner, No. WC12-5422 (W.C.C.A. Aug. 21, 2012) to support the motion to strike.

In Nord, this court held that a treatise not entered into evidence at trial cannot be considered as part of the argument advanced on appeal.  This court has frequently held that “this court's authority is limited to reviewing the record as submitted to the compensation judge.”  Sharp v. Great Northern Oil Co., slip op. (W.C.C.A. Dec. 13, 1990) (citing Minn. Stat. § 176.421, subd. 1.(3) and Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 37 W.C.D 235 (Minn. 1984)); see also Pelzer v. Molin Concrete Prods., slip op. (W.C.C.A. July 21, 1995) (citing Gollop v. Gollop, 389 N.W.2d 202, 38 W.C.D. 757 (Minn. 1986)), Skic v. Beverage Transp. Corp., slip op. (W.C.C.A. Oct. 6, 1995), Kallestad v. Old Dutch Foods, Inc., No. WC08-215 (W.C.C.A. Feb. 27, 2009).

In its Reply Brief, the employer and insurer made no reference to the employee’s motion to strike or any argument that could reasonably be taken to respond to that motion.  There is no reason offered as to why these documents, clearly in existence at the time of the hearing before the compensation judge, were not placed into the record of the proceeding below.  The motion to strike is granted.