VACATION OF AWARD – REFERRAL. Where the employee is petitioning to vacate two awards on stipulation and there is conflicting evidence regarding the employee’s alleged incapacity at the time of the stipulations, the matter is referred to a compensation judge at the Office of Administrative Hearings for findings on whether the evidence shows that the employee appeared to be incapacitated at the time of the stipulations, and if so, the compensation judge shall refer the matter to district court for a determination of whether the employee was incapacitated at that time, then return all findings to this court.
Attorneys: John P. Bailey, Bailey Law Firm, Bemidji, Minnesota, for the Petitioner. Timothy P. Jung, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, Minnesota, for the Respondents.
Referred to OAH.
PATRICIA J. MILUN, Chief Judge
The conservator petitions to vacate and set aside two Awards on Stipulation, the first served and filed May 23, 2017, and the second served and filed January 25, 2018. Based upon the need for findings of determinative facts in this case, we refer the matter to the chief judge of the Office of Administrative Hearings (OAH) under Minn. Stat. § 176.381, subd. 1, for assignment to a compensation judge to make specific findings of fact as set out in the opinion below.
Bobby Lykins, the employee, was working as a driver for Anderson Contracting, Inc., on September 23, 2015, when he sustained life-changing injuries from an explosion, causing a traumatic brain injury, major facial fractures, and injuries to his ears, upper body, and back.
The employee was taken to a hospital in Bemidji, Minnesota, then was airlifted to Essentia Health in Fargo, North Dakota. The employee went into respiratory failure, was intubated, then experienced cardiac arrest and renal failure. He underwent a craniotomy for intracranial hematomas. Twelve days after the accident, attorney Van R. Ellig and the employee’s spouse signed an attorney representation agreement.[1]
On October 29, 2015, the employee was moved to Red Wing Health Center. On February 8, 2016, he was transferred to Havenwood Care Center in Bemidji, Minnesota, where he was assigned as a patient to Jesse Heuer, D.O.
On April 14, 2016, the employee was evaluated by Dr. Anthony Odland, a clinical neuropsychologist at Sanford Medical Center in Fargo, North Dakota. Dr. Odland wrote a medical opinion stating the employee had significant impairments in complex attention, hemispatial inattention, processing speed, and executive functioning, which included, but was not limited to, decreased insight/self-awareness, mental flexibility, disinhibition, and complex problem solving. Dr. Odland highlighted the employee’s behavioral issues citing frustration, impulsivity, and irritability. Dr. Odland was also of the opinion that the employee could not work nor drive, needed full-time personal care with supervision at home, and that the personal care with supervision should not be provided by a family member. With these recommendations, the employee was moved back into his home the day after Dr. Odland’s evaluation.
On July 11, 2016, the employee signed a “replacement workers’ compensation retainer agreement”[2] with Attorney Ellig. The employer and insurer admitted liability for the injuries and paid temporary total disability benefits, medical expenses, and nursing services of $5,000 per month to the employee’s spouse.[3] In-home nursing services began immediately following the employee’s release from the care center to his home. No claim petition was initially filed but the parties eventually disagreed on the amount of home nursing care needed.
At the request of the employer and insurer, a home care evaluation was conducted by Mitchell Disability Assessments on September 12, 2016. The home care evaluation report stated the employee did not need constant supervision at home, but due to his cognitive deficits he needed supervision and assistance for 25.45 hours per week. The report also noted the employee’s cognition had improved earlier in the year and his physical abilities had decreased.[4]
On November 28, 2016, the employer and insurer served a notice of maximum medical improvement retroactive from an October 10, 2016, report from Dr. Heuer. In Dr. Heuer’s report, he wrote that the employee had left-sided hemineglect and difficulties with executive functioning and needed continuous supervision for multiple reasons. Dr. Heuer was also of the opinion that “a personal care attendant continues to be required now and likely will be in the future.”[5]
On February 15, 2017, a notice of intention to discontinue (NOID) the employee’s temporary total disability benefits, based on Dr. Heuer’s report, was filed.[6] A few days before the NOID was filed, the Social Security Administration determined the employee was disabled and was entitled to monthly disability benefits of $1,226.90 as of March 2016, which was offset by his workers’ compensation benefits of $2,892.30 per month.[7] On February 28, 2017, a notice of benefits paid (NOBP) was filed at the Minnesota Department of Labor and Industry (DOLI), listing weekly payments of permanent partial disability benefits based on a 40 percent rating.[8]
In February 2017, Dr. Odland conducted a neuropsychological re-evaluation of the employee. In his report, he found the employee’s general cognitive function had improved but that the employee continued to show serious impairment “related to executive functioning (abstraction, divided attention, behavioral regulation, perseveration, metacognition, and disinhibition), complex attention, motor functioning, visuospatial attention, as well as verbal fluency and retrieval.”[9] Dr. Odland concluded that “the quality and severity of persistent residual cognitive and behavioral/psychiatric symptoms from his September 2015 head injury are severe and debilitating, and will require that he receive 24/7 supervision and supportive services on a long-term basis.”[10]
In a March 29, 2017, letter to the employee’s attorney, Dr. Odland also reported the following:
In addition to that information pertaining to the physical/medical trauma directly from the accident, [the employee] has incurred severe cognitive and related behavioral/psychiatric impairment as a result of his 9/23/2015 work-related traumatic brain injury. Briefly, the most prominent debilitating neuropsychological deficits from his 9/23/2015 traumatic brain injury relate to executive functioning (impulsivity, poor self-awareness/insight, poor judgment/decision- making, reduced abstraction, poor divided attention, behavioral dysregulation, perseveration, and disinhibition). The significance of these symptoms is severe and associated with a constellation of neuropsychiatric symptoms . . . .[11]
Dr. Odland reiterated that the “overall results from neuropsychological testing combined with his clear and consistent history of poor decision-making necessitate that [the employee] receive 24/7 PCA attendants and supervision 365 days per year . . . [and] that this high level of support and supervision will be required on a permanent basis.”[12]
On April 14, 2017, the parties attended a mediation. In an email summary, the mediator noted that the parties had reached a tentative settlement of $630,000 and that the employer and insurer’s attorney, Thomas Davern, would discuss the proposed terms with the insurer and the Workers’ Compensation Reinsurance Association (WCRA). The mediator also stated that the parties would stipulate to the reasonableness of the excess fees given the complexity of the issues and the employee’s “intense need for guidance and support throughout this process.”[13]
In less than a month, the parties reached an agreement to settle the case for an amount that was $192,000 less than the amount discussed at the April 24, 2017, mediation. The terms of the settlement included a full, final, and complete settlement for $438,000, excluding medical expenses, but specifically closing out nursing services whether performed by a family member or by a custodial service. Attorney Ellig was to be paid $93,000 in attorney fees as:
The contingency fees and the excess fees would be subtracted from the lump sum payment to the employee and the Roraff fees would be paid by the employer and insurer.
On May 22, 2017, Attorney Davern submitted a stipulation for settlement, initialed by the employee, to OAH with a cover letter. Attachments to the settlement included notices of intervention, a ledger of nursing services payments made to the employee’s spouse, and the home care evaluation report.[14] No medical records were included in the attachments to the settlement. Attorney Davern’s cover letter expressed support for the amount of excess fees included in the settlement due to the complexity of the matter and the amount of time the employee’s attorney expended helping the employee, whom Attorney Davern called “a confused and upset client.”[15]
In support of his request for excess fees set forth in the stipulation, Attorney Ellig filed a letter to DOLI dated May 18, 2017, indicating the intensity and the effects of the traumatic injury on the employee, which included problems with “recollection, motivation, personality, behavior, delusions, outbursts and anger.”[16] He also stated many phone calls were necessary “because the injured employee did not recollect the matter correctly, confused facts, dates, times and places, and without further explanation would [be] extremely high maintenance.”[17] Moreover, he stated, “The involvement with medical personnel and the interaction with the legal system was extremely confusing and taxing on [the employee].”[18] The May 18th letter enclosed a statement of attorney fees and was received at DOLI on May 22, 2017. On the same day, a compensation judge at OAH approved the stipulation for settlement and issued an award.[19]
In July 2022, Attorney John Bailey petitioned the Ninth Judicial District Court for appointment of a conservator to represent the employee in proceedings before the Workers’ Compensation Court of Appeals and OAH. The district court judge approved the appointment of a conservator for those proceedings as well as “in any other litigation that may be undertaken on his behalf” effective September 22, 2022.[20]
On August 30, 2023, the conservator, hereinafter the petitioner, filed a petition to vacate the 2017 and 2018 awards on stipulation. On October 12, 2023, the employer and insurer filed a response objecting to the petition to vacate.
The petitioner alleges that the employee appeared to be incapacitated at the time of his workers’ compensation settlements and that the attorneys involved in the settlements were required to seek appointment of a conservator to represent his interests in his workers’ compensation proceedings per Minn. Stat. § 176.092, subd. 2. In addition, the petitioner contends that when the initial stipulation for settlement was sent to OAH for approval in 2017, the attorneys deliberately withheld the reports of Drs. Heuer and Odland and other relevant documents from the compensation judge. Had the judge read these documents, the petitioner argues, the compensation judge would have referred the matter to district court for consideration of appointment of a conservator per Minn. Stat. § 176.092, subd. 3, before approving the stipulation and issuing an award. Based upon these allegations, the petitioner argues that the stipulations for settlement are either void or invalid based on fraud and therefore the awards on stipulation should be vacated.
Under Minnesota workers’ compensation law, an “agreement to settle any claim is not valid if . . . a conservator is required under section 176.092 and an employee has no . . . conservator.”[21] A conservator is required for an injured employee who is incapacitated “to represent the interests of the employee . . . in obtaining compensation according to the provisions of this chapter.”[22] Where the parties’ attorneys know or have reason to believe an employee is incapacitated and that employee does not have a conservator, the attorneys are required to seek appointment of a conservator in district court.[23] Minn. Stat. § 176.092, subd. 3, provides that in a proceeding before a compensation judge when it appears to the judge that an injured employee is an incapacitated person without a conservator, the judge shall refer the matter to district court for a determination of that issue.
The issue presented by the petition to vacate cannot be addressed without a determination of whether the employee appeared to be incapacitated, or was incapacitated, at the time of the stipulations for settlement. The evidence submitted with the petition to vacate raises significant questions of fact regarding the employee’s capacity at those times. Minn. Stat. § 524.5-102, subd. 6, defines an “incapacitated person” as:
an individual who, for reasons other than being a minor, is impaired to the extent of lacking sufficient understanding or capacity to make personal decisions, and who is unable to meet personal needs for medical care, nutrition, clothing, shelter, or safety, even with appropriate technological and supported decision making assistance.
This two-pronged definition requires not only a lack of capacity for personal decision making, but also an inability to meet personal physical needs. Here, while there was conflicting evidence as to the employee’s need for nursing services to provide for his physical needs, there appears to be no dispute that he was unable to meet those needs at the time of the stipulations. As to his personal decision-making ability, there is compelling evidence in the record to put into question whether the employee lacked the understanding or capacity to make personal decisions at the time of the stipulations. Because there was no referral to district court at that time, the issue of whether the employee was incapacitated was not adjudicated.
Minn. Stat. § 176.381, subd. 1, provides that this court may, before determining whether to set aside an award, refer the matter for factual findings. As stated in Minn. Stat. § 176.092, subd. 3, the compensation judge has jurisdiction to refer the matter to district court for a determination of whether the employee was incapacitated and in need of a conservator at the time of the settlements.
Therefore, this court refers this matter to the chief judge of OAH for assignment to a compensation judge to make findings on whether the evidence shows that the employee appeared to be incapacitated as defined under Minn. Stat. § 524.5-102, subd. 6, at the time of the stipulations. If the compensation judge finds that the employee did not appear to be incapacitated at the time of the settlements, the judge will return that finding to this court. On the other hand, if the compensation judge finds the employee appeared to be incapacitated at those times, the judge shall refer the matter to district court in accordance with Minn. Stat. § 524.5-108, for a determination of whether the employee was in fact incapacitated at the time of the stipulations. The compensation judge shall return the findings to the WCCA, including those of the district court. After the findings are returned, the WCCA will consider the petition to vacate.
[1] Ex. 8 at 128.
[2] Id. at 135.
[3] The first few months of payments for nursing services varied in the amount paid, but from July 2016 through April 2017, the employee’s spouse received $5,000 per month for nursing services provided to the employee. The total amount paid to his spouse for nursing services through April 2017 was approximately $62,000. (Ex. 54.)
[4] Ex. 5.
[5] Ex. 11 at 203.
[6] Ex. 6.
[7] Ex. 28.
[8] Ex. 7.
[9] Ex. 9 at 176.
[10] Id.
[11] Id. at 166.
[12] Id. at 168.
[13] Ex. 3.
[14] Ex. 1.
[15] Id. at 44.
[16] Ex. 8 at 123.
[17] Id. at 123-24.
[18] Id. at 124.
[19] Ex. 1. The employee was later involved in other legal proceedings. On June 6, 2017, the employee and his wife filed for bankruptcy. They were represented by Attorney Ellig in that matter. (Ex. 14.) The parties reached a second settlement for payment of hearing aids as an addendum to the previous stipulation and an award was filed on January 25, 2018. (Ex. 2.) A year later, the Lykins’ marriage ended in divorce proceedings. (Ex. 15.) The question of whether the employee needed the services of a conservator was not raised during any of these proceedings.
[20] Ex. 56.
[22] Minn. Stat. § 176.092, subd. 1 (citing Minn. Stat. § 524.5-102, subd. 6, for the definition of “incapacitated person”).
[23] Id., subd. 2.