PRACTICE & PROCEDURE - MATTERS AT ISSUE. Where a party did not offer any competent, relevant evidence on an issue or submit an issue to the judge for analysis and decision at a hearing, and did not appeal the subsequent findings and order, the party may not raise the same issue as a defense to its failure to comply with the findings and order over a year later.
PENALTIES. Where an employer relied on a defense to payment ordered by a compensation judge that had not been appealed and where the defense was not submitted as an issue to the compensation judge at the time of the hearing, the employer did not have a good faith defense to payment.
Compensation Judge: Sandra J. Grove
Attorneys: Vincent A. Petersen, The Law Offices of Donald F. Noack, Mound, Minnesota, for the Cross-Appellant. Arlen R. Logren, Kristine L. Cook, Peterson, Logren & Kilbury, P.A., Roseville, Minnesota, for the Cross-Respondent.
Reversed.
DEBORAH K. SUNDQUIST, Judge
The self-insured employer appealed the compensation judge’s finding that payment of the intervenors’ claims was not prohibited under the fee schedule but has withdrawn the appeal. The employee cross-appeals the compensation judge’s finding that the employer is not obligated to pay penalties pursuant to Minn. Stat. § 176.225 for failing to pay medical bills for 16 months after an order by the compensation judge. We reverse and order penalties to be paid to the employee.
Sergio Medina, the employee, worked for Paymasters, Inc., the employer. On March 12, 2018, he sustained personal injuries while attempting to lift a large mold with co-workers. The employee sought treatment with JK Imaging Corporation, Twin Cities Diagnostic Center, and Twin Cities Pain Management. The employer did not pay medical expenses billed by these providers. Consequently, the employee filed a claim petition seeking, among other claims, payment of the outstanding medical bills. All three health care providers filed motions to intervene and were granted intervenor status.
The issues at the hearing on April 18, 2019, included the nature and extent of the employee’s injuries and whether the medical treatment provided by the intervenors was reasonable and necessary. The employer requested, if payment was ordered to the intervenors, that the compensation judge include language in the order that payment would be made pursuant to the fee schedule, apparently intending to preserve a defense that would prohibit payment to them under Minnesota Statutes chapter 256B and the Workers’ Compensation Act.[1] Minn. Stat. § 256B.0644 governs reimbursement for certain state health care programs and includes a requirement that providers in those programs demonstrate participation in the medical assistance and MinnesotaCare programs. The employer presented no evidence at the hearing to demonstrate that Minn. Stat. § 256B.0644 applied to the intervenors or to the employee in this case and made no argument on the record at the hearing in support of a defense to payment under this chapter.
In Findings and Order served and filed May 22, 2019, the judge found that the medical diagnostics and treatment provided by intervenors JK Imaging Corporation, Twin Cities Diagnostic Center, and Twin Cities Pain Management were reasonable and necessary to cure or relieve the effects of the employee’s March 12, 2018, work injuries.[2] The compensation judge ordered the employer to pay the intervenors’ claims pursuant to the Minnesota Workers’ Compensation Medical Fee Schedule.[3] The employer had 14 days to make payment to the intervenors. Minn. Stat. § 176.221, subd. 8(a). The employer did not make payment and did not appeal the judge’s findings and order.
The employee filed another claim petition seeking payment of the intervenors’ claims and for penalties against the employer for refusal to pay the intervenors’ claims as ordered, citing Minn. Stat. §§ 176.221 and 176.225. On August 29, 2019, the employer filed a motion to dismiss the claim petition, alleging that the intervenors’ claims were excessive health care charges under Minn. R. 5221.0500, subp. 1.E, because the intervenors did not accept medical assistance or MinnesotaCare patients, as required under Minn. Stat. § 256B.0644 for certain state health care programs.
The employer’s motion to dismiss was heard at a special term conference on September 9, 2019. The employer presented evidence that the intervenors did not participate in medical assistance or MinnesotaCare programs and argued that the reference to Minn. Stat. § 256B.0644 in Minn. R. 5221.0500, subp. 1.E, made that statute part of the medical fee schedule, and that payment to the intervenors was accordingly prohibited. The employee responded that this argument had not been raised at the initial hearing. By Order on Motion, the compensation judge found that she had jurisdiction to interpret the phrase “pursuant to the Minnesota Workers’ Compensation Medical Fee Schedule” from her previous order.
Based on a determination that Minn. R. 5221.0500 and its reference to Minn. Stat. § 256B.0644 were not part of the Minnesota Workers’ Compensation Medical Fee Schedule, the judge concluded that payment of the medical bills identified in the claim petition was not prohibited by the medical fee schedule. The judge therefore denied the employer’s motion to dismiss and ordered an evidentiary hearing. The employer appealed the order, and this court heard arguments by counsel on issues related to the employer’s refusal to pay the intervenors on February 24, 2020. We determined that the order being appealed was not a final decision on the merits and that this court lacked jurisdiction to consider the employer’s appeal. The appeal was therefore dismissed, and the matter was returned to the compensation judge for a full hearing on the employee’s claim for penalties. Medina v. Paymasters, Inc., No. WC19-6322 (W.C.C.A. May 15, 2020).
The employee’s claim for payment to the intervenors and for penalties came on for hearing before the same compensation judge on August 10, 2020. The compensation judge listed the issues as whether the employer neglected or refused to pay compensation within the meaning of Minn. Stat. § 176.225, subd. 1(3); whether the employer was guilty of inexcusable delay in paying the claims of JK Imaging Corporation, Twin Cities Diagnostic Center, and Twin Cities Pain Management within the meaning of Minn. Stat. § 176.225, subd. 5; and whether interest was due and owing pursuant to Minn. Stat. § 176.225, subd. 5. A penalty under Minn. Stat. § 176.221 was not listed as an issue. At the hearing, the employer argued that the judge would need to “reconsider” and “alter” her determination that Minn. R. 5221.0500 and Minn. Stat. § 256B.0644 were not part of the medical fee schedule. Requesting penalties of 30 percent and an additional 25 percent for the intervenors, the employee argued that the employer was prohibited from litigating a defense that had not been presented to the compensation judge at the underlying hearing on April 18, 2019, and had not been appealed. At the time of the hearing, almost 15 months had passed from the judge’s order and the employer had not yet made payment.
In Findings and Order served and filed September 10, 2020, the compensation judge noted that payment to the intervenors had been ordered and concluded that the ruling was the law of the case. The judge denied the claim for penalties, finding that the employer’s argument regarding the interpretation of the term “medical fee schedule” was asserted in good faith and constituted a “colorable” defense to payment of the intervenors’ claims; that there was no neglect or refusal to pay compensation within the meaning of Minn. Stat. § 176.225, subd. 1(3); and that there was no inexcusable delay within the meaning of Minn. Stat. § 176.225, subd. 5. The judge ordered interest paid because payment to the intervenors had not been made when due in the absence of an appeal under Minn. Stat. § 176.255, subd. 5.
The employer appealed the judge’s conclusion that payment of the intervenors’ medical expenses was not prohibited under the fee schedule. Subsequently, the employer and the three intervenors settled the intervenors’ claims in a partial stipulation for settlement which was approved by the compensation judge in an Award on Stipulation, served and filed on October 2, 2020. The employer then withdrew its appeal by letter dated October 9, 2020. The employee cross-appealed the denial of penalties.[4]
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). This case rests upon the application of rules and law which we shall consider de novo.
On appeal, the employee argues that the compensation judge’s order denying the penalty claim is erroneous and must be reversed. He points out that the previous Findings and Order, served and filed May 22, 2019, unequivocally ordered payment to the intervenors, that the employer did not appeal, and that the employer defied the order to pay. In response, the employer argues that, based on its interpretation of the Minnesota Workers’ Compensation Medical Fee Schedule as including Minn. R. 5221.0500 and its reference to Minn. Stat. § 256B.0644, zero dollars were due to be paid to the intervenors and it had therefore complied with the judge’s May 2019 order.
“It is the intent of the legislature that chapter 176 be interpreted so as to assure the quick and efficient delivery of indemnity and medical benefits to injured workers at a reasonable cost to the employers . . . .” Minn. Stat. § 176.001. To that end, the Workers’ Compensation Act requires payment of compensation be made within 14 days of the filing of an order by a compensation judge unless the order is appealed. Minn. Stat. § 176.221, subd. 8(a). Penalties under Minn. Stat. § 176.225 are available to an employee for failure of an employer or insurer to pay medical expenses in a timely fashion. Spawn v. Northern Castings, 53 W.C.D. 167, 174 (W.C.C.A. 1995). An employee has standing to claim penalties for late payment of medical expenses. Roers v. Jennie-O Foods, 60 W.C.D. 54, 68 (W.C.C.A. 1999), summarily aff’d (Minn. Feb. 22, 2000). This court has authority to award compensation, in addition to the total amount of compensation award, of up to 30 percent of that total amount where the employer or insurer has unreasonably, negligently, intentionally, delayed or refused payment, or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay. Minn. Stat. § 176.225, subd. 1.
The employer’s defense in refusing to pay the ordered medical bills, which was argued at the hearing on the motion to dismiss the second claim petition, is that the charges were excessive under Minn. R. 5221.0500, subp. 1E. That rule states that a billing charge is excessive and a payer is not liable for the charge if the service was performed by a provider prohibited from receiving reimbursement under Minnesota Statutes, chapter 176, pursuant to Minnesota Statutes, sections 176.83, 176.103, 176.1351, and 256B.0644, which addresses reimbursement under certain state health care programs.[5] Because the intervenors did not meet criteria of serving medical assistance and MinnesotaCare patients under Minn. Stat. § 256B.0644, the employer maintains it is not liable for the charges. The employer apparently had an off-the-record discussion about this possible defense at the initial hearing on April 18, 2019, but the issue was not submitted to the compensation judge for her to consider and decide. There was no evidence offered as to whether the intervenors met the criteria or whether Minn. Stat. § 256B.0644 applied to the intervenors or to the employee, and the judge did not address this defense other than to order that payment of the intervenors’ claims be made pursuant to the medical fee schedule.
After the employer chose not to pay the intervenors’ claims as ordered by the compensation judge, the employee filed another claim petition seeking payment of the same claims and penalties. The employer then asserted said defense in a motion to dismiss along with evidence purporting to show that the intervenors did not meet the criteria for providers under Minn. Stat. § 256B.0644. In denying the motion to dismiss, the judge addressed the employer’s defense by finding that Minn. R. 5221.0500, and its reference to Minn. Stat. § 256B.0644, are not part of the Minnesota Workers’ Compensation Medical Fee Schedule and do not prohibit payment to the intervenors.
This defense was not presented to the judge at the initial hearing in April 2019. The employer asserts that the defense was raised at the initial hearing in an off-the-record discussion. We disagree that such a discussion adequately raised the issue before the compensation judge at that hearing. A compensation judge is required to hear all competent, relevant evidence produced at a hearing and to dispose of all questions of fact and law submitted to the judge. Minn. Stat. § 176.371. In this case, the employer did not offer any competent, relevant evidence on the defense on the record or submit the issue to the judge for analysis and a decision at the initial hearing. The judge properly did not address the issue in the May 2019 findings and order because it was not submitted for a decision, and, had the employer appealed at that time, this court likely would not have had a sufficient record to review the issue. See Moreno v. Advertising Unlimited, slip op. (W.C.C.A. Jan. 3, 2001) (issues not raised at the hearing level may not be raised on appeal). The employer appeared at the hearing without the evidence needed to present its defense on the intervenors’ claims and did not appeal the order. The judge’s order did not explicitly reserve the defense to payment to be raised at a later date on the same claims, and the employer’s attempt to do so is an impermissible collateral attack on the judge’s May 2019 order. See Madson v. Minneapolis Police Dep’t, 71 W.C.D. 7, 21 (W.C.CA. 2010) (an attack on a judgment brought in a different proceeding is a collateral attack), summarily aff’d (Minn. Aug. 25, 2010); see also Koehnen v. Flagship Marine Co., 947 N.W.2d 448, 456 (Minn. 2020) (provider who chose not to intervene in a workers’ compensation proceeding may not collaterally attack the subsequent compensation award).
A determination of whether a penalty is appropriate under Minn. Stat. § 176.225 is generally a question of fact for the compensation judge. Shelton v. Indep. Sch. Dist. No. 625, 63 W.C.D. 650, 657 (W.C.C.A. 2003), summarily aff’d (Minn. Dec. 1, 2003); see also French v. Special Sch. Dist. No. 1, 70 W.C.D. 91, 104 (W.C.C.A. 2010). An employer or insurer may avoid penalties by raising a colorable defense. Carroll v. Allina Mercy Hosp., 74 W.C.D. 567, 579 (W.C.C.A. 2014). In denying penalties, the compensation judge found that the employer had made a colorable defense[6] and determined that the only way the employer could assert this defense was to not pay the intervenors so that the employee would have to file a claim petition, and the employer could then raise the defense. The employer argues that it made a calculated delay in payment to protect its defense argument regarding the interpretation of Minn. R. 5221.0500, Minn. Stat. § 256B.0644, and the medical fee schedule, and that it continued to request that the compensation judge reconsider this defense, refusing to concede a defense it considered viable. We are not persuaded. The employer had the opportunity to present this defense before the compensation judge at the April 2019 hearing, but did not. Instead, the employer unilaterally withheld payment it had been ordered to make, and presented the argument on a motion to dismiss at a special term hearing after the employee had filed another claim petition for payment of the same claims and penalties.
While an award of penalties is not appropriate where the employer or insurer interpose a good faith defense, Heise v. Honeywell, Inc., 48 W.C.D. 523, 540 (W.C.C.A. 1993), in this case, the employer did not interpose its defense in a timely manner. This court could not address the employer’s defense because it was not properly submitted to the compensation judge and could not have been raised for the first time on appeal. Furthermore, the employer settled the intervenors’ claims and withdrew its appeal. The employer had appealed the judge’s finding that payment of the intervenors’ claims was not prohibited because Minn. R. 5221.0500 and Minn. Stat. § 256B.0644 are not part of the fee schedule , but that appeal was withdrawn after the employer and the three intervenors settled the intervenors’ claims.
As a result, there is no basis for the compensation judge’s finding that the employer had a colorable or good faith defense to the ordered payment of the intervenors’ claims. To allow the employer to refuse payment to the intervenors for over 16 months without penalty, does not assure the quick and efficient delivery of benefits to the employee under the Workers’ Compensation Act as the intended by the legislature. The statute confers authority to this court to impose penalties. Minn. Stat. § 176.225, subd. 1. [7] Therefore, we reverse the compensation judge’s findings, and award penalties to the employee of 30 percent of the total amount awarded by the compensation judge in the May 22, 2019, findings and order to the intervenors, JK Imaging Corporation, Twin Cities Diagnostic Center, and Twin Cities Pain Management, for the employer’s refusal to make payment following that order.
[2] Finding 26.
[3] Order 3.
[4] The employee filed his cross-appellant’s brief before the transcript of the August 10, 2020, hearing was received at this court and before the notice of transcript received was served by this court. There was apparently a delay in ordering the transcript during the time period where the employer settled the intervenors’ claims and withdrew its appeal. The employer contends that the employee’s brief was untimely because it was served and filed early and therefore the employee’s cross-appeal should be dismissed. We disagree and deny the employer’s request for dismissal of the cross-appeal.
[5] Minn. Stat. § 256B.0644(a) provides:
(a) A vendor of medical care, as defined in section 256B.02, subdivision 7, and a health maintenance organization, as defined in chapter 62D, must participate as a provider or contractor in the medical assistance program and MinnesotaCare as a condition of participating as a provider in health insurance plans and programs or contractor for state employees established under section 43A.18, the public employees insurance program under section 43A.316, for health insurance plans offered to local statutory or home rule charter city, county, and school district employees, the workers’ compensation system under section 176.135, and insurance plans provided through the Minnesota Comprehensive Health Association under sections 62E.01 to 62E.19. The limitations on insurance plans offered to local government employees shall not be applicable in geographic areas where provider participation is limited by managed care contracts with the Department of Human Services. This section does not apply to dental service providers providing dental services outside the seven-county metropolitan area.
[6] Finding 8 (Sept. 10, 2020, Findings and Order).
[7] Minn. Stat. § 176.225, subd. 1, provides in part: “Upon reasonable notice and hearing or opportunity to be heard, the commissioner, a compensation judge, or upon appeal, the court of appeals or the supreme court shall award compensation, in addition to the total amount of compensation award, of up to 30 percent of that total amount . . . .”