THOMAS D. FISHBACK, SR., deceased Employee, by THOMAS, JR., MONICA, PAUL, and BRANDON FISHBACK, Dependents/Appellants, v. AM. STEEL & INDUS. SUPPLY and RTW GROUP, Employer-Insurer/Respondents.

This proceeding was initiated by a claim petition filed by the children of the deceased employee seeking interest and penalties on admitted underpayments of dependency benefits. The compensation judge found that interest was not due under Minn. Stat. § 176.221, subd. 7, and denied penalties. We affirm in part and reverse in part.

On October 21, 1996, Thomas Fishback, Sr., sustained a fatal injury while working for the employer. The deceased employee was survived by his wife, Judith Fishback, and four minor children, Thomas, Jr., Monika, Paul, and Brandon.^[1] Mr. Fishback’s average weekly wage at the time of the fatal injury was $563.96.^[2]

On October 31, 1996, an RTW claims administrator met with Mrs. Fishback and her parents. The names and birth dates of the dependent children were obtained and recorded and dependency benefits were discussed.^[3] RTW initiated payment of weekly dependency benefits on November 4, 1996.

On January 13, 1997, Mrs. Fishback reported to RTW that she was receiving social security benefits. In March 1997, RTW recalculated the amount of dependency benefits payable, reducing the amount of workers’ compensation benefits payable by the amount of social security survivors benefits received by Mrs. Fishback and the dependent children.^[4] The recalculation resulted in an overpayment recovered by RTW by reducing the monthly benefit paid to the dependents by 20 percent.

On January 28, 2002, an RTW claims adjuster requested documentation of the social security benefit received by each dependent individually on an annual basis since they began receiving the benefits. The social security statements were provided as requested.

On July 3, 2003, an RTW claims adjuster sent a letter to Mrs. Fishback apologizing for the delay in reviewing her claim and requesting a copy of the social security benefit information for 2003. On November 26, 2003, RTW sent a letter informing Mrs. Fishback that they had miscalculated the weekly dependency benefits resulting in an overpayment of $8,643.83 and that the workers’ compensation benefit would be reduced by 20 percent until the overpayment was recovered.

On May 10, 2004, Mrs. Fishback called RTW and advised them that Thomas, Jr., then 18 years old, would graduate from high school on June 5, 2004, and would not be attending secondary school. After this point, Thomas was no longer an eligible dependent.^[5] On October 6, 2004, an RTW claims specialist sent a letter to Mrs. Fishback requesting a copy of the social security benefit statement for herself and the remaining three dependents since Thomas’s graduation.

On November 1, 2005, RTW sent to Mrs. Fishback its annual letter requesting a copy of the social security benefit change notification for 2006. On July 26, 2006, Mrs. Fishback contacted RTW and advised the insurer she was working less and wanted to know what they needed. The claims specialist requested documentation so RTW could confirm the proper dependency benefit amount payable. Mrs. Fishback agreed to provide the information. On November 28, 2006, RTW requested from Mrs. Fishback copies of the annual social security benefit change notification for 2007.

On April 6, 2007, RTW sent a letter to Mrs. Fishback inquiring about the status of Monika’s social security benefits. Mrs. Fishback called RTW in response stating Monika would not turn 18 until December 2007, and would be in school an additional year. On December 6, 2007, RTW sent its annual reminder letter requesting a copy of the social security benefit change notification for 2008. The claims specialist also requested a letter from Monika’s school verifying full-time student status after her eighteenth birthday. On August 13, 2008, RTW sent a follow-up letter requesting written documentation of Monika’s additional year of high school.

On January 23, 2008, RTW sent its annual letter requesting a copy of the social security benefit change notification letters. On March 10, 2009, Mrs. Fishback spoke to the RTW claims specialist stating her tax person had the documents, but she would provide them to RTW once they were returned to her. She additionally advised the claims adjuster that Monika was no longer in school and that Paul, who turned 18 in December 2009, would be in school for a while as he did not have enough credits to graduate.

On April 2, 2009, RTW sent a letter to Mrs. Fishback acknowledging receipt of the social security benefit documentation for 2008 and 2009. Based on the information, the claims specialist calculated an underpayment for the period of January 1, 2008, through March 19, 2009, and determined the weekly rate should be increased. No payment of the amount underpaid was made. The claims adjuster sought additional documentation of 2006 and 2007 social security benefits and the amount of social security received by Monika until her benefits were discontinued in October 2008. The claims specialist stated that upon receipt of the necessary information an audit would be performed and necessary adjustments would be made.

RTW sent follow-up letters on June 25 and October 1, 2009, without response. On November 3, 2010, Mrs. Fishback left a voicemail stating she was on disability and had been unable to work since November 16, 2009. On November 24, 2010, RTW followed up with a letter requesting updated social security information for 2009 and updated student status information for Paul. On December 7, 2010, Mrs. Fishback spoke with the claims adjuster. She confirmed that both Paul and Brandon were getting social security but Monika was not. The claims specialist urged her to provide the requested documentation to RTW or execute an authorization prepared by RTW. Mrs. Fishback responded she would try but was very tired all the time.

On May 27, 2011, Mrs. Fishback called RTW to inform them that she was receiving $700.00 a month in disability payments that were not social security, and wondering if that made a difference. That same day, RTW sent a letter addressed to Mrs. Fishback with a copy of the April 2, 2009, letter and enclosing a social security authorization form. Mrs. Fishback signed the authorization on June 9, 2011, and returned the form to RTW.

Ten months later, on April 17, 2012, RTW sent a letter to Mrs. Fishback stating that after no response from the federal Social Security Office of Public Disclosure, RTW decided to contact the local Social Security Office in Duluth and discovered that RTW had listed the wrong social security number on the authorization. A new authorization was enclosed for Mrs. Fishback’s signature.

On July 31, 2012, Thomas Fishback, Jr. left a voice mail notifying RTW that Mrs. Fishback had passed away on July 20, 2012, and wondering what to do with two dependency checks that had not been deposited. At the hearing, Thomas testified that Mrs. Fishback had been chronically ill since about 2004 or 2005, and by 2010 was seriously ill and having trouble remembering and following through on things. In the spring of 2011, Thomas was given power of attorney for his mother and began handling her affairs. (T. 20-25.)

On August 15, 2012, the claims specialist returned Thomas’s call. She stated she had been trying to get social security information from his mother but had not been successful. The claims specialist stated she was quite certain benefits were underpaid. By letter dated August 17, 2012, a copy of the April 2009 letter and a social security authorization form was sent to Thomas. The claims specialist stated she also needed all social security changes since 2009 as well as documentation of Paul and Monika’s student status and an address for each of them. Thomas responded on August 30, stating he did not have a way to get the social security benefit history and asking that the claims specialist talk to Randy Moder, the attorney handling his mother’s estate. The claims adjuster spoke to Mr. Moder on November 8, 2012. Mr. Moder indicated he thought it would be better if Thomas took the authorization to the Duluth Social Security office himself to request the information.

Thomas made two trips to Duluth, and obtained Mrs. Fishback’s social security records. On February 12, 2013, the claims adjuster spoke with Thomas who stated he had obtained the social security information going back to 2003. The claims adjuster reiterated she also needed the dates the dependent children were in school full time. Thomas emailed the information requested to the claims adjuster on March 8, 2013.

After about a month, on April 5, 2013, Thomas contacted the claims adjuster who stated she needed social security histories for each of the dependent children. Thomas obtained his own and told each of his siblings. Monika obtained her social security information, and Thomas went with his two brothers to Duluth and got their information. Thomas sent the claims adjuster all of the social security information by email with 19 attachments on July 30, 2013.

On August 15, 2013, the claims adjuster emailed Thomas stating she had reviewed the information, but before proceeding with the audit wanted to make sure nothing was missing as there appeared to be gaps in the information provided. Thomas emailed additional information on August 16 and August 28, 2013.

On August 30, 2013, the claims adjuster emailed Thomas stating that she should be able to get the audit done the next week and would give him a call upon its completion. Thomas did not hear from the claims adjuster, so on November 8, 2013, contacted her asking for the results of the audit. On November 12, 2013, the claims adjuster responded stating she would get the audit done that week. On November 26, 2013, the claims adjuster stated she had everything calculated out but needed documentation of when each child graduated from high school, as well as documentation of Paul’s and Monika’s status as full-time students. Additional documentation was provided on January 14, 2014.

On February 20, 2014, the RTW claims adjuster spoke to Thomas and informed him there was a pretty large underpayment of benefits for periods both prior to and after his mother’s death. The claims adjuster stated it would take until the following week to finalize the numbers and get approval from a supervisor.

On March 7, 2014, the claims adjuster telephoned Thomas and raised the possibility of settling the underpayment of dependency benefits. He expressed interest in the option. On May 2, 2014, the claims adjuster emailed Thomas stating that the case had been discussed with RTW’s attorney and approval had been obtained for the settlement.

On May 21, 2014, the dependents retained attorney Donald Kohler to represent their interests. On May 28, 2014, a mediation session was scheduled for September 11, 2014. The mediation was cancelled and on August 7, 2014, checks were issued by RTW to Monika in the amount of $21,417.72; $33,564.73 to Paul; and $5,965.29 to Brandon, for a total underpayment of dependency benefits of $60,947.74.^[6] Shortly thereafter, on September 8, 2014, the dependents filed a claim petition alleging underpayment of compensation benefits and seeking penalties. The dependents elected to not cash the checks until after resolution of the claim.

In early July 2015, the claims adjuster realized an error had been made in calculating the underpayments based on a repayment made to the Social Security Administration that was not accounted for in the original calculation. Taking this into account, the claims adjuster determined there was an additional underpayment of $15,030.36. A check in the amount of $9,419.43 (less $3,006.07 for recovery of past overpayments and less attorney fees) was issued to Thomas, Jr., on September 29, 2015.

The case was heard by a compensation judge on February 5, 2016. At the hearing, the dependents claimed $15,037.81 in interest on underpaid dependency benefits accruing through August 7, 2014, and through September 29, 2015, respectively, pursuant to Minn. Stat. § 176.211, subd. 7, as well as penalties pursuant to Minn. Stat. § 176.225, subds. 1 and 5. The compensation judge found the dependents failed to establish that statutory interest was due on the underpayments, and that penalties were not due for unreasonably or vexatiously delayed payments or neglect or refusal to pay compensation when due. The dependents 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(3). 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), summarily aff’d (Minn. June 3, 1993).

The dependents assert the compensation judge committed legal error in denying payment of interest on the admitted underpayments of dependency benefits.^[7] We agree.

The applicable statute, Minn. Stat. § 176.221, subd. 7, provides that “[a]ny payment of compensation . . . not made when due shall bear interest from the due date to the date the payment is made.” The employer and insurer have a statutory obligation to pay compensation at the time and in the manner prescribed by the act.^[8] See Bourdeaux v. Gilbert Motor Co., 220 Minn. 538, 20 N.W.2d 393, 395, 14 W.C.D. 46, 49 (1945). Under the plain language of the statute, interest on any delayed payment of benefits - including underpayments - is mandatory and not discretionary. Lambert v. City of Duluth, No. WC11-5268 (W.C.C.A. Nov. 18, 2011); Crimmins v. NACM No. Central Corp., 45 W.C.D. 435 (W.C.C.A. 1991); compare Titera v. Clearwater-Polk Elec. Co-op, Inc., 63 W.C.D. 245 (W.C.C.A. 2002); Carlson v. Donovan Constr. Co., 62 W.C.D. 72 (W.C.C.A. 2001); Hop v. Northern States Power, 56 W.C.D. 73 (W.C.C.A. 1996).

The respondents acknowledge that RTW, while paying dependency benefits since the onset of the claim in November 1996, did not issue dependency payments in the correct amounts. It has long been established that once it is ascertained that payment was due, the employer and insurer’s responsibility relates back to the date on which the correct amount of the benefit should have been paid, and interest is due from and after that date. Hop at 77 (compensation generally bears interest from the date the debt first existed); Bourdeaux, 20 N.W.2d at 396, 14 W.C.D. at 51, (“if an employer or insurer is found to owe back payments, . . .interest is due on each weekly installment from the very beginning,” quoting Horovitz, Workmen’s Compensation , p. 354); Brown v. City of Pipestone, 186 Minn. 540, 245 N.W. 145, 7 W.C.D. 212 (1932) (interest is due from the date on when each installment of compensationshould have been paid).

In this case, the judge was persuaded that underpaid benefits were not due and owing until the insurer had all of the information needed to calculate the total amount of the underpayments from 2003 through 2014. The judge acknowledged the insurer did not pay the correct amount of dependency benefits through a large portion of the claim, but excused the late payments concluding it was largely due to Mrs. Fishback’s failure to provide information needed by the insurer to calculate the benefit rate correctly. (Mem. at 11.) As noted previously, interest pursuant to Minn. Stat. § 176.221, subd. 7, for any payment not made when due is mandatory. Interest is not a penalty nor is it based on fault. In Bourdeaux, the supreme court explained that the duty to pay interest arises from the employer and insurer’s statutory responsibility to make compensation payments in the amounts and at the times prescribed by the workers’ compensation act. When an employer fails to make payments in the amount due, by reason of which the employer retains and has the use of funds which should have been paid at intervals to the deceased employee’s dependents, payment of interest is required. If there is a specified time for payment, and a failure to then pay the full amount due, then the debt bears interest from the date the amount unpaid was due. Bourdeaux, 20 N.W.2d at 395, 14 W.C.D. at 50; compare Titera, 63 W.C.D. 245.

The judge was persuaded the compensation was not “due” until the insurer obtained all of the information it needed which was no later than February 20, 2014. (Finding 49; Mem. at 11-12.) First, there appears to be no reason why at least partial calculations of underpayments could not have been made at earlier points in time. It is apparent the insurer was aware that dependency benefits were being underpaid. Secondly, the underpayments were clearly ascertainable as of February 20, 2014. The fact that the dependents considered a mediated settlement of the admitted underpayments and chose not to cash the checks issued by RTW until resolution of the claim, is no basis for denying interest on underpayments clearly due and ascertainable. We, accordingly, reverse the compensation judge’s determination and order that interest be paid on the underpaid amounts of dependency benefits.

The dependents additionally argue the insurer had an obligation pursuant to Minn. Stat. § 176.175, subd. 2, to contact each of the dependent children individually for information needed to process the claim after the dependent reached the age of majority (age 18). In this case, RTW contacted solely the dependent’s mother, Judith Fishback, for social security and school status information until her death in July 2012, and Thomas, Jr., after that time. The dependents assert that had RTW exercised due diligence and contacted the adult dependents directly, the requisite information could have been obtained in a timely manner.

Minn. Stat. § 176.175, subd. 2, provides only that no claim for compensation owned by a dependent is assignable. There is no evidence the employer or insurer improperly assigned any of the dependents’ benefits to another person or entity. Pursuant to Minn. Stat. § 176.111, dependency benefits are payable to the surviving spouse for the benefit of the spouse and dependent children until the last dependent child is no longer dependent. Under subd. 1(b), a child of the deceased employee under the age of 25 who is regularly attending school remains a dependent. After Mrs. Fishback’s death, Thomas, Jr., who had no legal obligation to do so, took the responsibility of contacting the insurer and acting as a go-between for his siblings. In hindsight, it may have proved more effective to contact the adult dependents directly after age 18, but we see nothing in Minn. Stat. § 176.175, subd. 2, that requires such action.

In our view, the statutory obligation to pay compensation at the time and in the manner prescribed by the act places the onus on the employer and insurer to put measures in place, including contacting dependents individually as needed, to ensure information is obtained in a timely fashion so as to avoid significant underpayments as seen in this case.

The dependents sought penalties pursuant to Minn. Stat. § 176.225, subd. 1(2) and (3) and subd. 5, asserting the employer and insurer unreasonably or vexatiously delayed payment of benefits and neglected to pay compensation, and inexcusably delayed making payments. The compensation judge denied penalties concluding that the benefit underpayments were attributable to the insurer’s inability to timely obtain needed verification of social security survivors benefits and the school status of the dependent children, resulting in inaccurate payments. As the employer and insurer did not have the necessary information needed to correctly calculate benefits, they did not inexcusably delay benefits. (Mem. at 12.) The judge also found that after obtaining the information it needed to calculate the total underpayment, RTW and the dependents attempted to mediate settlement of the claim. When the scheduled mediation was cancelled, RTW promptly issued checks for the underpaid benefits. (Findings 50-55.)

Whether a penalty is appropriate under Minn. Stat. § 176.225 is generally a question of fact for the compensation judge. Bell v. State, Dep’t of Transp., 73 W.C.D. 767 (W.C.C.A. 2013); Maxfield v. Stremel Mfg. Co., slip op. (W.C.C.A. Jan. 6, 1999). In Hines v. Kobiela, 308 Minn. 20, 241 N.W.2d 814, 28 W.C.D. 400 (1976), the supreme court held that a penalty under Minn. Stat. § 176.225, subd. 1, may be imposed if “the reason for [the employer and insurer’s] neglect and refusal to pay compensation was patently ill-founded and unwarranted.” Penalties may be awarded “where an insurer unreasonably delays or neglects to pay benefits which are unquestionably due.” Sass v. Fraser Constr. Co., 44 W.C.D. 447, 453 (W.C.C.A. 1991)(emphasis in original).

Our review of factual determinations made by a compensation judge is limited to a consideration of whether substantial evidence supports the compensation judge’s decision. Larson v. RR. Donnelley, 74 W.C.D. 703 (W.C.C.A. 2014). We cannot conclude the judge’s reasoning is clearly erroneous or unsupported in the record as a whole. Minn. Stat. § 176.421, subd. 1(3); Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975). We accordingly affirm the denial of penalties.