Bruton v. Smithfield Foods, Inc.

• Decision Date: 27 February 2019
• Docket Number: A18-0914
• Citation: 923 N.W.2d 661
• Parties: Claude BRUTON, Respondent, v. SMITHFIELD FOODS, INC. and ESIS, Inc., Relators, and Mayo Clinic, Intervenor.
• Court: Minnesota Supreme Court

923 N.W.2d 661

Claude BRUTON, Respondent,

v. SMITHFIELD FOODS, INC. and ESIS, Inc., Relators,andMayo Clinic, Intervenor.

A18-0914

Supreme Court of Minnesota.

Filed: February 27, 2019

OPINION

McKeig, Justice.

The question presented in this case is whether an employee’s claim for temporary total disability (TTD) benefits under the Minnesota Workers’ Compensation Act can be offset by benefits paid to the employee for the same period of disability under the employer’s self-funded, self-administered, short-term disability (STD) plan. The workers’ compensation judge awarded TTD benefits to respondent-employee Claude Bruton (Bruton), but determined that relator-employer Smithfield Foods (Smithfield) was entitled to offset those benefits by the amount of STD benefits already paid. Then, because Smithfield had already paid STD benefits in essentially the same amount that would be owed as TTD benefits, the compensation judge dismissed Bruton’s petition. The workers’ compensation court of appeals reversed. Because there is no statutory authority for an offset of workers’ compensation benefits by the amount of benefits paid under an employer’s self-funded, self-administered STD plan, we affirm.

FACTS

The facts of this case are undisputed. On August 25, 2016, Bruton fell, dislocated his shoulder, and sustained facial lacerations while working for Smithfield. At the time of this injury, Smithfield maintained workers’ compensation insurance through Safety National Casualty Corporation, with the claims administered by ESIS, Inc. Smithfield’s policy has a $2 million deductible per claim. Smithfield also maintained an STD policy for its employees. The STD plan was administered by Smithfield’s human resources department and was in the name of John Morrell Food Group, which is an entity related to Smithfield. The parties stipulated that Smithfield owns the funds held in this plan and administers the plan on behalf of its (and John Morrell’s) employees. The parties also agreed that Smithfield’s plan did not qualify as an ERISA plan. See, e.g. , 29 U.S.C. § 1002 (2012) (defining plans governed by the Employee Retirement Income Security Act).

Smithfield initially denied that Bruton suffered a work-related injury covered by workers’ compensation benefits. But, Smithfield did not dispute that Bruton was disabled as a result of his injuries. Thus, Smithfield paid Bruton STD wage-loss benefits under its private plan, representing 80 percent of his weekly compensation from September 5, 2016 to March 26, 2017, totaling $12,419.90. During the same period, Smithfield also paid Bruton $2,030.48 for previously-accrued paid sick and vacation leave.¹

Bruton filed a petition for workers’ compensation benefits on October 24, 2016. After Smithfield conducted an investigation, it filed an amended notice of primary liability that acknowledged Bruton’s injuries were compensable and work-related under the Workers’ Compensation Act. ESIS, Smithfield’s workers’ compensation insurer, began paying benefits, including TTD benefits, starting on March 27, 2017. ESIS also paid Bruton benefits retroactively, for the period during which workers’ compensation liability was denied. For these retroactive payments, ESIS paid Bruton $636.52, which represented the difference between the STD benefits Smithfield had already paid (reduced for state and federal taxes), and the TTD benefits that Bruton would have received had Smithfield acknowledged workers’ compensation liability at the outset.

At the hearing before the compensation judge, Smithfield maintained that, because it had already paid Bruton wage-loss benefits under its STD plan, it did not owe Bruton additional TTD wage-loss benefits. Smithfield asserted that an offset was necessary to avoid imposing a double liability on it and to avoid a double recovery by Bruton. Relying on public policy that disfavors a double recovery, the workers’ compensation judge concluded that an offset in Bruton’s TTD benefits was required based on the amount Smithfield had paid as STD benefits.

Bruton appealed to the WCCA, which reversed. Bruton v. Smithfield Foods, Inc. , No. WC17-6113, 2018 WL 2710167 (Minn. WCCA May 21, 2018). The WCCA first concluded that the payments made under Smithfield’s STD plan were not workers’ compensation benefits because those payments were not made by an entity that is statutorily required to pay workers’ compensation benefits: an insurer, a self-insured employer, a government entity, or the Special Compensation Fund. Id . at *3–4. Next, the WCCA decided that Smithfield could not invoke either of two statutory routes to reduce benefit payments to an injured worker. Id. First, because the STD payments were not wage-continuation payments, Smithfield could not invoke Minn. Stat. § 176.221, subd. 9 (2018) (relieving an employer who makes payment of "full wages" of certain obligations). 2018 WL 2710167 at *3. Second, an intervention claim was unnecessary because the WCCA could not "infer" that Smithfield and John Morrell are the same entity, despite the parties’ stipulation otherwise. Id. at *4. See Minn. Stat. § 176.361, subd. 1 (2018) (allowing "[a] person" with "an interest" to intervene in a workers’ compensation proceeding). Finally, the WCCA concluded that, even if it accepted that Smithfield and John Morell are the same entity, Smithfield had no contractual right to reimbursement of STD payments in the circumstances of this case. Id . at *5. Smithfield petitioned by writ of certiorari for review of the WCCA’s decision.

ANALYSIS

We must decide whether the WCCA erred in determining that Smithfield is not entitled to offset its workers’ compensation liability to Bruton by the amount of STD benefits it paid to Bruton.²

The facts are undisputed. Thus, we must analyze the statutes that govern the employer’s liability for wage-loss benefits within, and outside of, the workers’ compensation system.³ When interpreting statutes, we apply a de novo standard of review. Ekdahl v. Indep. Sch. Dist. # 213 , 851 N.W.2d 874, 876 (Minn. 2014). "We are not bound by WCCA decisions that rest upon the application of a statute to undisputed facts." Id.

Workers’ compensation benefits are a statutory remedy that entitles employees to compensation for work-related injuries. See Ransom v. Ford Motor Co. , 472 N.W.2d 134, 136 (Minn. 1991). This statutory remedy includes provisions that address coordination of workers’ compensation benefits with additional benefits that may be available from an obligor other than the employer. See Potucek v. City of Warren , 535 N.W.2d 333, 336 (Minn. 1995) (explaining that as "but one element of a system of wage-loss protection, the Minnesota legislature early on provided a means for coordinating workers’ compensation" benefits with federal and state pension benefits). For example, certain insurers who pay medical costs and disability benefits to an injured employee may be reimbursed by the employer’s workers’ compensation insurer if the injury is later determined to be a compensable work-related injury. See Minn. Stat. § 176.191, subd. 3 (2018). Similarly, employers may be able to offset workers’ compensation benefits by the amounts paid under some, though not all, disability or retirement plans. See Minn. Stat. § 176.101, subd. 4 (2018) ; see, e.g. , Ekdahl , 851 N.W.2d at 876–77 (explaining that Minn. Stat. § 176.101, subd. 4 (2012) allows for an offset of federal social security benefits but holding that the plain language of this statute "does not encompass" benefits paid by a state retirement fund); Hartwig v. Traverse Care Ctr. , 852 N.W.2d 251, 253 (Minn. 2014) (concluding that the offset statute "does not apply to an employee’s non-social security pension benefits").

Smithfield contends that by seeking payment of TTD benefits and STD benefits from the same source, Smithfield, Bruton seeks a double recovery of his wage-loss benefits. Put differently, Smithfield argues that it has already paid Bruton the TTD benefits he is entitled to through its self-administered STD benefits plan. Smithfield argues that "[w]hether the checks said ‘Smithfield Foods’ [from the STD plan] or ‘ESIS’ [for TTD benefits] on them should be of no significance whatsoever, in deciding whether [Bruton’s claim] exceeds his compensation rate." Relying on the legislative intent to pay benefits to employees "at a reasonable cost to the employers," Minn. Stat. § 176.001 (2018), Smithfield contends that a recovery that compensates an employee for a work-related injury at a rate that is almost double the employee’s weekly wage contravenes legislative intent.

Wage-coordination provisions in the workers’ compensation laws are generally intended to avoid duplication of wage-loss benefits. See Ruter v. Minn. Dep’t of Corrs. , 569 N.W.2d 407, 408 (Minn. 1997) ("Our compensation plan ... is based upon the notion that for a single wage loss, there should be only one wage-loss benefit."); Brooks v. A.M.F., Inc. , 278 N.W.2d 310, 315 (Minn. 1979) (stating in the context of a health-insurer’s intervention claim that an employee "reimbursed twice for the same expense ... is unjustly enriched"). Smithfield cites our decision in Pierce v. Robert D. Pierce, Ltd. , for the principle that "the injustice of double recovery" is to be avoided in awarding workers’ compensation benefits. 363 N.W.2d 761, 763 (Minn. 1985).

Pierce is distinguishable and not applicable here. In Pierce , the employee recovered TTD benefits from a settlement with an Alaska employer and later sought the same benefits for an injury "arising out of the same disabling condition" from a different employer in Minnesota. Id . at 761. Here, Bruton is not seeking TTD benefits from two different employers. Instead, Bruton seeks the TTD benefits to which he is entitled by statute, in addition to the STD benefits conferred, separately, by his employer. Thus, the question is whether Smithfield has a statutory right to reduce workers’ compensation benefits otherwise payable by...