VACATION OF AWARD. Payment made to an employee under a settlement agreement that is later vacated on the basis of an unanticipated medical condition is not a mistake of fact as contemplated by Minn. Stat. § 176.179, and the employer and insurer are entitled to a 100 percent credit for the settlement amount paid to the employee under the vacated settlement against the employee’s current claim for benefits.
Compensation Judge: Kathleen Behounek
Attorneys: Charles A. Bird, Bird, Jacobsen, & Stevens, P.C., Rochester, Minnesota, for the Appellant. Patrick W. Ostergren and Shannon A. Nelson, Law Office of Brian A. Meeker, Bloomington, Minnesota, for the Respondents.
Affirmed.
PATRICIA J. MILUN, Chief Judge
In 2016, the employee petitioned to vacate a 1992 settlement he had entered into with his former employer. The 1992 settlement resolved the employee’s claims arising out of an admitted 1988 work injury in exchange for the sum of $40,000.00. This court vacated the settlement upon the employee’s showing of an unanticipated change in medical condition. Thereafter, the employee filed a claim petition seeking various benefits. The employer and insurer did not dispute the employee’s entitlement to benefits; however, they sought credit for the $40,000.00 paid to the employee under the vacated settlement. The issue of a credit was heard by a compensation judge, who found the employer and insurer to be entitled to a 100 percent credit for the $40,000.00 settlement amount against the benefits owed to the employee. We affirm.
In the fall of 1988, Galen Block, the employee, suffered an injury to his low back while working for Exterior Remodeling, Inc., the employer. He underwent a left L5-S1 hemilaminectomy. Thereafter, the parties entered into a partial settlement, resolving the employee’s claims for wage loss and permanent partial disability benefits. A few years later, the employee underwent another laminectomy. He was then under permanent work restrictions but was able to return to his former line of work.
The employee subsequently claimed further wage loss and entitlement to permanent partial disability benefits. In 1992, he agreed to resolve those claims on a full, final, and complete basis, with future medical treatment left open, in exchange for a lump sum payment of $40,000.00, less attorney fees. The settlement between the parties was approved by a compensation judge and an Award on Stipulation was filed May 11, 1992.
Following the 1992 settlement, the employee did not treat for his low back condition until 2009, when he experienced an onset of low back, left leg, and foot drop symptoms. He treated conservatively, and in 2010, underwent decompression surgeries and a fusion at L3-S1. As a result, he suffered lost time from work and physical limitations in his personal life.
In 2016, the employee petitioned this court to vacate the 1992 settlement. We vacated the 1992 settlement on the basis of a showing of a substantial unanticipated change in the employee’s medical condition.[1]
Following the vacation of the settlement, the employee filed a claim petition seeking various benefits. The employer and insurer conceded the employee’s entitlement to benefits, but the parties disputed the extent to which the employer and insurer were entitled to a credit for the $40,000.00 paid to the employee under the 1992 settlement. The parties submitted the issue to the compensation judge on stipulated facts. Under the stipulated facts, the employee claimed benefits based on various periods of total disability in 2009; on a 22 percent permanent impairment; and on 37 weeks of temporary total disability benefits ending on March 3, 1992, which had been folded into the vacated stipulation for settlement.
The stipulation for settlement expressly noted that no other claims for benefits, including other periods of wage loss or other claims for permanent impairment, or defenses to such claims, were included in the stipulation. Finding the employer and insurer are entitled to 100 percent credit for the $40,000.00 payment, the compensation judge ordered an offset of 100 percent of the credit against benefits stipulated by the parties to be due to the employee. The employee appeals.
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 employee appeals from the compensation judge’s determination that the employer and insurer are entitled to offset 100 percent of the amount paid to the employee under the vacated settlement against the benefits awarded. It is the position of the employee that any claim for credit made by the employer and insurer is exclusively governed by Minn. Stat. § 176.179.
The relevant language of Minn. Stat. § 176.179 in effect at the time of the employee’s September 8, 1988, date of injury, reads:
[N]o lump sum or weekly payment, or settlement, which is voluntarily paid to an injured employee or the survivors of a deceased employee in apparent or seeming accordance with the provisions of this chapter by an employer or insurer, or is paid pursuant to an order of the workers’ compensation division, a compensation judge, or court of appeals relative to a claim by an injured employee or the employee’s survivors, and received in good faith by the employee or the employee’s survivors shall be refunded to the paying employer or insurer in the event that it is subsequently determined that the payment was made under a mistake in fact or law by the employer or insurer. When the payments have been made to a person who is entitled to receive further payments of compensation for the same injury, the mistaken compensation may be taken as a full credit against future lump sum benefit entitlement and as a partial credit against future weekly benefits. The credit applied against further payments of temporary total disability, temporary partial disability, permanent total disability, retraining benefits, death benefits, or weekly payments of economic recovery or impairment compensation shall not exceed 20 percent of the amount that would otherwise be payable.
Minn. Stat. § 176.179 (1988); see Joyce v. Lewis Bolt & Nut Co., 412 N.W.2d 304, 40 W.C.D. 209 (Minn. 1987) (law in effect on the date of the injury determines the rights of the parties).
The employee argues that if this provision applies, the credit must be capped at 20 percent, and that if this provision does not apply, there is no other authority under which the employer and insurer can claim credit. We are not persuaded by the employee’s arguments.
The compensation judge found Minn. Stat. § 176.179 does not apply in this case. She reasoned that the payment, which was voluntarily made by the employer and insurer and received in good faith by the employee, was not made under a mistake of fact or law by the employer and insurer. On appeal, the employee asserts that a “mistake of fact” within the meaning of the statute occurred when he was paid under the settlement, in that the parties did not contemplate that the employee’s medical condition would substantially change and necessitate later vacation of the settlement pursuant to Minn. Stat. § 176.461.
In 1992, the parties entered into a good faith agreement that was deemed fair, reasonable, and in conformity with the Workers’ Compensation Act. Terms of the agreement were negotiated, a sum of money proportionate to the degree and duration of the employee’s injury was offered and accepted, the agreement was executed by all parties, and an award was issued. In these circumstances, it cannot be said that the payment was made “under a mistake of fact.” The employer and insurer had an obligation to make payment within statutorily-mandated timeframes.[2]
Appellant asserts that if Minn. Stat. § 176.179 does not apply, there is no other statutory mechanism to deal with the issue in this case. Thus, the employee argues the employer and insurer are not entitled to any credit for the settlement amount paid. We disagree. When this court vacates a settlement, that fact does not imply that an employee’s claims are compensable or that an employee is entitled to compensation, only that the employee has established that the statutory grounds exist to vacate the award on stipulation pursuant to Minn. Stat. § 176.461. When this court vacated the 1992 settlement, both parties were placed in the same position they were in prior to the settlement. See Flanagan v. S. Minn. Constr. Co., 62 W.C.D. 221 (W.C.C.A. 2002) summarily aff’d (Minn. Jun. 19, 2002). Here, the employer and insurer seek to apply a credit for the amount paid to the employee against his current claims for benefits.[3] Because their claim is consistent with the general principle cited to in Flanagan, we agree that the employer and insurer are entitled to a 100 percent credit for the $40,000.00 settlement amount against any accrued benefits awarded.[4] We are not persuaded that the compensation judge erred in her interpretation of the statute. Therefore, we affirm.
[1] Block v. Exterior Remodeling, Inc., 76 W.C.D. 585 (W.C.C.A. 2016) (citing Fodness v. Standard Café, 41 W.C.D. 1054 (W.C.C.A. 1989)).
[2] See Minn. Stat. § 176.521, subd. 2a (1992) (“Payment pursuant to the award shall be made within 14 days after it is filed with the commissioner.”).
[3] Based upon the stipulated facts and rather limited record before this court, it appears that the employee’s current claim for benefits equates to less than the settlement amount, and therefore, less than the credit claimed by the employer and insurer.
[4] The employee claims the judge’s interpretation of the statute is too narrow in that it fails to include a mistake of fact made by the parties at the time of settlement; that mistake being the lack of ability to anticipate a substantial change in the employee’s medical condition. The employee’s argument implicitly suggests that the same standard applies to the interpretation of a mistake of fact under Minn. Stat. § 176.461. We disagree.