This matter involves underpayments on permanent and total disability benefits resulting from the Ekdahl/Hartwig decisions. Specifically the Employee’s heirs claimed entitlement to an underpayment of PTD benefits, interest dating back to when the original PTD benefits were due at a fixed 8% interest rate, penalties, and reimbursement for costs incurred in obtaining a Decree of Descent.
The compensation judge previously determined that the underpayment issued to the Employee’s heirs by the Insurer was the correct amount. This was not appealed. The compensation judge also determined that interest was owed on the underpayment dating back to the initial underpayment of PTD benefits, based upon a variable interest rate, rather than a fixed interest rate of 8%. The compensation judge further determined that penalties should not be awarded and the claimed taxable costs were not reimbursable. The Employee’s heirs appealed the variable interest rate, denial of penalties, and denial of taxable costs. The Employer and Insurer cross-appealed the date at which interest began to accrue.
The W.C.C.A. affirmed the compensation judge’s denial of penalties and taxable costs. In doing so, the W.C.C.A. indicated that “before payment can be made, the heir or heirs must establish their legal right to receive those payments.” As a result, the cost of obtaining a decree of descent was a “condition precedent” to receipt of benefits and not reimbursable. Further, The W.C.C.A. indicated that the compensation judge’s determination that penalties were not due was supported by substantial evidence.
However, the W.C.C.A. overturned the compensation judge’s determination of the date when interest began to accrue. The Court indicated that there were multiple possible due dates for the underpayment, and noted that pursuant to Hop v. Northern States Power Co. “there can be no accrual of interest until the obligation to pay is both fixed and ascertainable.” Based upon the Court’s interpretation of Minn. Stat. §176.1292, the W.C.C.A. utilized the deadline as set forth by the statute. Since the Insurer issued the underpayment to the Employee’s heirs prior to the deadline in Minn. Stat. § 176.1292, interest did not begin to accrue. As a result, the insurer did not owe any interest to the Employee’s heirs. Due to the fact that it interest was not due, the majority did not address the fixed versus variable interest rate issue.
There were two separate opinions issued by Judge Milun and Judge Quinn, each concurring in part and dissenting in part.
Judge Milun concurred with the portions of the majority’s decision that affirmed the compensation judge’s decision, and dissented relating to the date when interest became due. Judge Milun agreed with the compensation judge that interest should be calculated dating back to when each individual underpayment was due, since this would reflect the time value of money, or the Employee’s inability to use the money when it was due. Judge Milun did not address the fixed versus variable interest rate.
Judge Quinn also dissented relating to the date interest began to accrue. He indicated that interest began to accrue as of the date of the Ekdahl and Hartwig decisions, as the underpayment was fixed and ascertainable at that point in time.