Bell v. State, Dep’t of Transp. (self-insured)

Bell v. State, Dep’t of Transp. (self-insured), No. WC13-5579 (W.C.C.A. Oct. 30, 2013)

The W.C.C.A affirmed a compensation judge’s decision to deny additional penalties under Minn. Stat. § 176.225 for failure to pay permanent partial disability benefits where the employer/insurer had good faith defenses.

In March 2010, the employee sustained traumatic injuries to multiple body parts while working on a highway construction crew for the Minnesota Department of Transportation.

In October 2011, an occupational medicine specialist evaluated the employee and detailed her findings on permanent partial disability in a report, which was provided to a claims adjuster handling the case.

According to the report, the employee had reached maximum medical improvement and each injured body part was assigned a permanent partial disability rating. Because an eight percent rating for a jaw fracture was omitted, the adjuster mistakenly believed the permanent partial disability rating for the total body was 21 percent when in fact it was 29 percent.  The chart notes, which were emailed to the claims adjuster, listed the correct total body rating, but the adjuster was unaware of the discrepancy.

Approximately two months later, in December 2011, the adjuster wrote the employee a letter stating permanent partial disability payments would not be made at that time, that the total amount of permanent partial disability ratings was 21 percent, and that an independent medical examination for a second opinion on the permanent partial disability rating would be scheduled at some point.

The employee retained an attorney who contacted the adjuster, explaining there was an error in the report and requested the insurer begin paying the minimum permanent partial disability payments based on the correct 29 percent total body rating.

A few days later, the employee received a permanent partial disability payment but only for one body part, his rotator cuff, which was rated at six percent.

In February 2012, the employer and insurer’s attorney made an informal demand for discovery requesting signed authorizations from the employee so they could retrieve his medical records.  The authorizations were not provided to the employer and insurer for several weeks.

In April 2012, the employer and insurer’s attorney notified the employee of two upcoming independent medical examinations in May.  Additional permanent partial disability payments were made following the examinations.

The employee brought a claim for penalties under to Minn. Stat. § 176.225 claiming the employer unreasonably or vexatiously delayed payment, neglected or refused to pay compensation, and for an inexcusable delay in payment.

The rules provide clear direction to the employer and insurer regarding the timing of permanent partial disability payments and notice requirements. See Minn. R. 5220.2550.  For instance, if a rating is disputed, periodic payments must begin on the undisputed minimal ascertainable amount and, within 30 days, the employer and insurer also notify the employee in writing they have scheduled independent medication examination.  If there is a delay in payments, a compensation judge may impose penalties on the employer and insurer under Minn. Stat. § 176.225.  Whether a penalty is appropriate is generally a question of fact for the compensation judge and is discretionary.

In this case, the rules clearly were not followed by the insurer and employer.  There were multiple missed deadlines for permanent partial disability payments, which most likely should have begun after receiving the occupational medicine specialist’s report in October 2011. The compensation judge found the delay in the initial minimum payments was unreasonable and inexcusable, and awarded penalties on those grounds.

But the judge also found that penalties were not appropriate where the employer raised defenses in good faith that were not frivolous or for the purpose of delay.  For instance, the judge found the employer was not solely responsible for the delays in obtaining signed authorizations to retrieve the employee’s medical records.  This delay slowed down the process and, in part, contributed to the late payments. The W.C.C.A. affirmed.