EDIN Y. PERALTA-HERNANDEZ, Employee/Respondent, v. PAHL EXTERIORS, LLC, JAMES PAHL, ME ROOFING, FRANCISCO GARCIA, SR., FRANCISCO GARCIA, JR., and MINN. ASSIGNED RISK PLAN, Employer-Insurer/Respondents, and SPECIAL COMP. FUND, Appellant.

The Special Compensation Fund appeals the denial of its Petition for Reimbursement^[1] and the dismissal of ME Roofing, LLC, from this proceeding pursuant to stipulation.  As the record does not demonstrate that ME Roofing, LLC, is a necessary party to the proceeding, we affirm.

The employee filed a claim petition on October 13, 2023, seeking benefits related to injuries that he allegedly sustained while employed by Pahl Exteriors, LLC (Pahl) on October 4, 2023.  Pahl was uninsured for workers’ compensation liability and the Special Compensation Fund (Fund) was named in lieu of an insurer pursuant to Minn. Stat. § 176.183.  The Fund interposed an answer denying the employee’s claims.  Subsequent investigation by the Fund revealed that Pahl was a general contractor and that ME Roofing was a subcontractor which possibly hired the employee.  ME Roofing was insured for workers’ compensation liability on the date of the alleged injury.  The employee then filed an amended claim petition adding as parties ME Roofing and Minnesota Assigned Risk Plan, administered by Superior Point.

Petitions to intervene were filed by several medical providers.  ME Roofing resolved the intervention claims by way of a stipulation for settlement resulting in an Award on Stipulation issued December 12, 2024.  Following mediation, ME Roofing and the employee entered into a stipulation for settlement in March 2025.  The settlement closed out the employee’s claims for workers’ compensation benefits, past, present and future, on a full, final and complete basis against ME Roofing.  Neither the Fund nor Pahl participated in or signed on to either of the stipulations for settlement.  All payments made to the employee, his attorney and the intervenors were made by Superior Point.

The stipulation for settlement between the employee and ME Roofing purports to be a Pierringer^[2] settlement and includes the following provision:

Following the issuance of the Award on Stipulation in March 2025, which dismissed the employee’s claim against ME Roofing, the Fund filed a petition for reimbursement against ME Roofing and the Minnesota Assigned Risk Plan, administered by Superior Point, followed by a motion to consolidate the petition for reimbursement with the employee’s claim petition.  At the time of the filing of the petition for reimbursement, and through the date of oral argument in this matter, the Fund made no payment to or on behalf of the employee and had incurred no costs associated with the employee’s claim.  ME Roofing filed an objection to the petition for reimbursement, and a hearing on the motion took place before a compensation judge on November 25, 2025.  Following the hearing, the compensation judge issued an order denying the Fund’s petition for reimbursement and dismissing ME Roofing and their insurer as parties, explaining that since the employee entered into a valid Pierringer settlement, and as the employee agreed to hold harmless and indemnify ME Roofing, ME Roofing must be released as a party from the case.  The compensation judge noted that despite the dismissal of ME Roofing, the court would determine liability for all workers’ compensation benefits as if ME Roofing were still present, “to ensure liability for workers’ compensation benefits is not shifted to the other employers or the Fund that would not otherwise be liable for those benefits.”^[3]  The Fund 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); see also Busch v. Advanced Maint., 659 N.W.2d 772, 778-79 (Minn. 2003).

The Fund appeals the compensation judge’s Order Denying the Petition for Contribution and Dismissing Parties arguing that the judge did not have jurisdiction to do so without conducting an evidentiary hearing, and that a Pierringer release is not appropriate in the workers’ compensation statutory scheme.  We conclude that the compensation judge’s order was appropriate, and that a decision on whether Pierringer settlements in workers’ compensation matters are disallowed is not necessary under the undisputed facts in this matter.  We affirm.

The Fund asserts that the compensation judge was required to hold an evidentiary hearing on the petition for reimbursement as there are unresolved factual issues.  Minnesota Rule 1420.2250, subp. 3, provides that a “judge shall take action on the motion within 30 days of the filing of the motion by issuing an order, advising the parties of how the motion will be resolved, or scheduling a conference or hearing on the motion.”   A formal hearing may be necessary where disputed factual issues must be resolved to determine the merits of the motion, in order to provide notice to the parties and to afford a sufficient record to allow appellate review.  Pederson v. Carter Day Co., slip op. (W.C.C.A. Jan. 3, 1994); Mokonnen v. Masterson Staffing Sols., No. WC22-6466 (W.C.C.A. Oct. 28, 2022).  In this case, the compensation judge scheduled a hearing which was held on the record.  The parties submitted their respective pleadings and presented arguments on the record.  No witnesses were called to testify and no documentary evidence beyond the pleadings was offered by any party.

The arguments presented by the Fund at the hearing do not present factual issues that require an evidentiary hearing.  The Fund contends that, for the indemnity agreement in the stipulation for settlement to “kick in,” there would need to be a finding that ME Roofing was the employer on the alleged date of injury.  The Fund maintains that ME Roofing must be a party to the action in order for that to happen.^[4]  The Fund’s argument is not persuasive.  As noted by the compensation judge in his memorandum, a determination of who the employer was on the date of injury can be accomplished without ME Roofing present at hearing.  More importantly, the issue at hearing on the employee’s claim petition would be whether Pahl was the employer on the date of hearing, which does not require ME Roofing’s presence.  The employee bears the burden of proof to demonstrate an employment relationship, not the Fund.  While the Fund may choose to defend against the employee’s allegation of an employment relationship, this fact does not make ME Roofing a necessary party to the proceeding.

The Fund further argues that the petition for reimbursement is not limited to reimbursement of any benefits payable by the Fund to the employee, but also statutory penalties and costs not included in the indemnity agreement.  This argument is without merit.  The Fund has no statutory claims against ME Roofing and their insurer, as ME Roofing was insured for workers’ compensation liability on the date of injury.  Any claims for statutory penalties to be made by the Fund would be against Pahl pursuant to Minn. Stat. § 176.183, subd. 2.

The Fund asserts that the indemnity provision in the stipulation could not apply to the Fund, since the Fund is not an insurer, and therefore would not apply to the Fund’s claim for reimbursement.  From a practical standpoint, there is no statutory mechanism requiring the Fund to make payments on behalf of ME Roofing for which the Fund could then seek reimbursement.  Under the undisputed facts presented, either Pahl or ME Roofing is the employer.  If Pahl is found to be the employer, the Fund would pay benefits to and on behalf of the employee per Minn. Stat. § 176.183, and ME Roofing would have no liability.  The Fund could then pursue Pahl for reimbursement and statutory penalties.  If ME Roofing is found to be the employer, the Fund would not be liable for any payments to or on behalf of the employee, and the Fund would have no claim for reimbursement from any party.  In addition to the practical reality, it should be noted that the indemnity provision of the stipulation provides indemnity to any “party or person” who is adjudged or otherwise determined to be liable for payment to the employee.  The Fund is a “party” under the terms of the stipulation, even though the Fund is not, in fact, an insurer.

The final argument made by the Fund is that there are “multiple issues of material facts.”  However, the only issue identified by the Fund is the determination of who the employer was on the date of the claimed injury.  As discussed above, ME Roofing is not a necessary party to the determination of that issue.

The compensation judge conducted a hearing on the record.  The parties’ pleadings were considered, as were the arguments made on the record.  No party presented witnesses for testimony or submitted evidentiary documents.  As no additional fact-finding is required to address the claims or defenses of the parties relative to ME Roofing, we affirm the compensation judge’s order denying petition for contribution and dismissing parties.

The settlement reached by ME Roofing and the employee purports to be a Pierringer settlement.  The compensation judge concluded that ME Roofing must be released from this action, as pursuant to case law there can be no contribution or reimbursement claims between the defendants where a defendant enters into a Pierringer settlement.^[5]  The Fund urges us to hold that Pierringer settlements are not appropriate in the workers’ compensation system as the effect is to prejudice non-settling parties.  The Fund anticipates difficulty with discovery, specifically obtaining information from ME Roofing, where ME Roofing is no longer a party to the action.  While the issue of whether Pierringer settlements are appropriate in workers’ compensation claims need not be addressed in this case, we affirm the compensation judge’s denial of the petition and dismissal of ME Roofing as not a necessary party.

A Pierringer settlement is a common-law development in tort cases in matters where a jury or fact finder apportions fault among the parties.  A Pierringer settlement 1) releases the settling defendant from the lawsuit and discharges a part of the cause of action equal to that part attributable to the settling joint tortfeasors causal negligence, 2) reserves the balance of the whole cause of action against the non-settling joint tortfeasors, and 3) contains an agreement whereby the plaintiff indemnifies the settling defendant from any claims of contribution made by the non-settling parties and agrees to satisfy any judgement he obtains from the non-settling tortfeasors to the extent the settling tortfeasor has been released.  Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963).  A Pierringer settlement precludes cross-claims between defendants, as the plaintiff agrees to indemnify the settling party for their share of liability, but allows the plaintiff to continue claims against non-settling defendants.  Fleming v. Threshermen’s Mut. Ins. Co., 388 N.W.2d 908, 911 (Minn. 1986).  Pierringer releases have been regarded as a principled way to encourage settlement in complicated multi-party litigation.  Rambaum v. Swisher, 435 N.W.2d 19, 22-23 (Minn. 1989).  This issue of whether Pierringer settlements are appropriate in workers’ compensation matters was briefly discussed, but not specifically decided, by the Minnesota Supreme Court in Sershen v. Metro. Council, 974 N.W.2d 1 (Minn. 2022).^[6]  As the terms of the settlement in this case releases ME Roofing from further liability to the employee and the Fund is statutorily unable to recover any payments that it may be ordered to pay from ME Roofing, we need not reach the issue of whether there is a place for Pierringer settlements in workers’ compensation matters.

The Fund also argues that allowing a Pierringer settlement shifts liability to an otherwise non-liable party.  Not only is that claim antithetical to the concept of a Pierringer, but the argument is not supported by the facts in the case at hand.  This is not a case of comparative fault or joint liability.  Rather, the remaining issue is whether the employee is entitled to benefits from Pahl because Pahl was the employer on the employee’s alleged date of injury.  If a compensation judge finds that Pahl was in fact the employer, there is no harm from the Pierringer settlement between the employee and ME Roofing.  If a compensation judge finds that ME Roofing is the employer, again there is no harm from the settlement, as the Fund would not be required to make any payments.^[7]

There is no compelling argument that ME Roofing’s settlement with the employee has in any way prejudiced the Fund.  Requiring an employer to be subject to the costs of ongoing litigation, despite a settlement with the employee, is contrary to the principle that settlements are favored in the workers’ compensation system.  Hentschel v. Smith, 278 Minn. 86, 153 N.W.2d 199 (1967); Larson v. Univ. of Minn., 64. W.C.D. 112, 115 (W.C.C.A. 2004); see also Wiehoff v. Indep. Sch. Dist. No. 15, 74 W.C.D. 41, 44 (W.C.C.A. 2014).  Settlements of workers’ compensation disputes, as authorized by statute, should be favored to avoid the delay of litigation and to expedite the granting of relief to employees and must be fair, reasonable, and in conformity with the Workers’ Compensation Act.  Senske v. Fairmont & Waseca Canning Co., 232 Minn. 350, 45 N.W.2d 640, 16 W.C.D. 242 (1951); Wiehoff, 74 W.C.D. at 44-45.  The compensation judge’s denial of the Fund’s petition for reimbursement is affirmed.