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Workers' Compensation Court of Appeals Bruton v. Smithfield Foods, Inc.

Supreme Court of Minnesota

February 27, 2019

Workers' Compensation Court of Appeals Claude Bruton, Respondent,
Smithfield Foods, Inc. and ESIS, Inc., Relators, and Mayo Clinic, Intervenor.

          Workers' Compensation Court of Appeals Office of Appellate Courts

          Christopher Sandquist, Sandquist Law Office, LLC, Mankato, Minnesota, for respondent.

          Andrew Grimsrud, Aafedt, Ford, Gray, Monson & Hager, P.A., Minneapolis, Minnesota, for relators.


         In the absence of statutory authority to offset workers' compensation benefits by the amount of disability benefits paid under an employer's self-funded and self-administered plan, the employer must pay workers' compensation benefits without reducing those benefits by the amount of previously paid disability benefits.



          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.


         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. ยง 176.361, subd. 1 (2018) (allowing "[a] person" with "an interest" to intervene in a workers' compensation proceeding). Finally, the WCCA ...

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