WAYNE F. ROBERTS, Employee/Respondent, v. HIBBING TACONITE MINING and NEW HAMPSHIRE INS. CO./SEDGWICK CLAIMS MGMT. SERVS., Self-Insured Employer/Appellants.

The self-insured employer appeals from the compensation judge’s denial of its petition for reimbursement seeking recovery of temporary total disability benefits paid to the employee under alleged fraud or mistake of law or fact. We affirm.

Wayne Roberts was employed by Hibbing Taconite Mining (HTM) since 1988. At the time of his admitted March 7, 2016, injury, he was working as a welder, repairing and maintaining machinery and equipment. This work involved climbing ladders, stairs, and scaffolding, walking on uneven ground, gravel, and railroad tracks, and working in confined spaces with a lot of kneeling, squatting, stooping, and bending.

For more than 30 years, Mr. Roberts also operated his own business installing and inspecting septic systems. This work was done in addition to his employment at HTM and was generally performed during weekends, evenings, and vacations. Over the years, the employee had been hired for septic projects by both hourly and salaried employees of HTM, and the existence of his business was well-known by co-workers and management.

On March 7, 2016, while moving iron with a jib crane and walking backwards, the employee tripped over a rock and injured his right knee. He sought medical care on March 10, 2016, at Essentia Health – Virginia. He was diagnosed with “acute right knee pain, sprain injury.” Monitoring and first aid treatment were suggested and the employee continued to work full-time in his regular position with no restrictions.

The employee continued to have right knee pain and consulted with Dr. William Schnell, an orthopedic specialist with whom he had treated in the past. After x-rays and an MRI scan, Dr. Schnell assessed the employee as having internal derangement of the right knee and recommended arthroscopic surgery. On June 28, 2016, Dr. Schnell performed partial medial and partial lateral meniscectomies and patellofemoral debridement of the right knee. The employee was taken off of work and the self-insured employer’s claims administrator commenced payment of temporary total disability benefits. During a telephone conversation in June to discuss benefits, the claims adjuster asked the employee about activities he enjoyed and the employee answered that he enjoyed doing septic work. According to her testimony at the hearing, the claims adjuster concluded this was a hobby of the employee’s.^[1]

The claims administrator referred the employee’s file to a disability case manager to coordinate the employee’s medical care. The disability case manager spoke with the employee on July 29 and recorded in her initial report that the “injured worker indicates having an excavation business for basements and septics for 33 years.”^[2]

Without notifying or copying the employee, the claims adjuster wrote to Dr. Schnell, asking if the employee could be returned to work. Dr. Schnell responded to the claims adjuster with a handwritten note dated August 13, 2016, stating that the employee could return to work with restrictions of “no prolonged standing or walking, no climbing of stairs.” These restrictions were also reflected in a workability form completed by Dr. Schnell on the same date, though neither the employee nor the disability case manager were notified.

The claims adjuster discussed Dr. Schnell’s work release with management at HTM. No light-duty job was offered to the employee. Instead, the claims administrator hired an investigation firm to determine whether the employee was performing excavation work while restricted from his employment at HTM. The firm reviewed public records showing the permits the employee had obtained for his septic business. The firm also conducted surveillance of the employee for ten days over a period of five weeks, collecting over 60 hours of observation, resulting in about one hour of video.

Dr. Schnell released the employee to return to work without restrictions as of October 5, 2016. The employee returned to his usual job at HTM and temporary total disability benefits ceased. After his return to work, HTM management confronted the employee with the investigation and surveillance relating to his septic work. The employee was suspended by the employer and proceedings were initiated to terminate his employment.

On January 9, 2017, the self-insured employer filed a petition for reimbursement pursuant to Minn. Stat. § 176.179, seeking recovery of temporary total disability benefits paid and alleging that the employee had obtained workers’ compensation benefits through fraud or had received benefits with the knowledge that those benefits were being paid under a mistake of law or fact.

The petition was heard by a compensation judge on August 8, 2018. The judge found that the employee had a good faith belief that he was entitled to the benefits he received. By Findings and Order issued September 20, 2018, the petition was denied. The self-insured employer appeals.

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 self-insured employer appeals the compensation judge’s denial of its petition for reimbursement. In its petition, the self-insured employer claims that the benefits paid to the employee were not received in good faith. Specifically, it was alleged that the employee received temporary total disability benefits while self-employed in his septic business. Counsel for the self-insured employer said in his opening statement, “Mr. Roberts purposely and systemically withheld the fact that he was working for his own company….” (T.7.)

The self-insured employer sought reimbursement based on the provisions of Minn. Stat. § 176.179 which provides for the recovery of compensation paid to an employee if those benefits were not received in good faith. Benefits obtained through fraud or with knowledge that payments were made based on a mistake of law or fact are considered benefits not received in good faith. The self-insured employer argues that the compensation judge did not apply the correct legal standard because he considered only fraud and failed to address whether the employee knew the self-insured employer was making payments under a mistake of law or fact. We disagree.

The compensation judge correctly outlined the provisions of the statute. The self-insured employer points to one sentence in the judge’s memorandum in which, it argues, the judge required a showing of both fraud and knowledge. Read in its entirety, the decision of the compensation judge addresses both fraud and knowledge separately, consistent with the statute. This sentence is insufficient to support the argument of the self-insured employer. Further, a compensation judge need not provide a memorandum and the memorandum need not discuss all of the evidence presented at the hearing. Minn. Stat. § 176.371; Cherry v. Duininck Bros. Inc., 72 W.C.D. 451 (W.C.C.A. 2012). More importantly, the arguments presented at hearing by the self-insured employer focused primarily on the claim that the employee had committed fraud. The self-insured employer alleges that the employee had purposely misled or misrepresented his self‑employment. Because of that focus on the alleged fraud of the employee, it was appropriate for the compensation judge to discuss the evidence as he did.

The basis for the self-insured employer’s petition for reimbursement was that it was not aware that the employee was self-employed at the time of his injury, or that he continued to operate his business after the injury as he had done for more than 30 years. The compensation judge rejected this position, and substantial evidence supports his determination. It is uncontroverted that both hourly and salaried employees of HTM had hired Mr. Roberts for septic projects. The claims adjuster knew of his septic work when she spoke to him in June 2016 though she stated that she had believed his septic work was a hobby. The disability case manager knew of the employee’s self-employment when she conducted her initial interview in July 2016. Dr. Schnell knew the employee was self-employed. No evidence was presented that the employee made any misstatements or misrepresentations regarding his side business to his employer.

At the time the employee was released to return to work with restrictions by Dr. Schnell in August, the self-insured employer knew the employee had continued to operate his side business, not only because of the employee’s statements to the disability case manager and the claims adjuster, but also through the investigation and surveillance. Rather than offering the employee a light-duty job within those restrictions, the self-insured employer withheld the work release and instead initiated proceedings to terminate his employment. Substantial evidence supports the compensation judge’s determination that the employee did not knowingly obtain benefits under a mistake and that there was no misrepresentation by the employee regarding his self-employment.

The self-insured employer also argues that the compensation judge erred by expanding the issues at the hearing. It refers to a finding in which the compensation judge noted the statutory obligation of an employer to pay benefits based on an injured employee’s wages from all employers. We do not consider this comment to be an expansion of the issues, nor is there any indication that the compensation judge’s comment affected his analysis with respect to the applicability of Minn. Stat. § 176.179 or his denial of the petition filed by the self-insured employer.

The decision of the compensation judge is affirmed.