Richard Oseland (deceased) by Terrence Oseland, Richard Oseland, and Karen Hayhoe, Relator,
Crow Wing County and Auto-Owners Insurance Group, Respondents.
Workers' Compensation Court of Appeals Office of
M. McCashin, McCashin Law Firm, Chtd., Alexandria, Minnesota,
P. Falsani, Katherine R. Bealka, Fitch, Johnson, Larson,
& Held, P.A., Minneapolis, Minnesota, for respondents.
Ellison, Attorney General, Kelly S. Kemp, Assistant Attorney
General, Saint Paul, Minnesota, for amicus curiae
Commissioner of the Minnesota Department of Labor and
Under Minn. Stat. § 176.221, subd. 7 (2018), the
"due date" for underpaid compensation benefits is
the date of each underpayment, and interest on those
underpaid benefits accrues at the statutory rate in effect at
the time the payment was due.
compensation judge's determination that relator is not
entitled to penalties under Minn. Stat. § 176.225 (2018)
is supported by substantial evidence.
Relator's expense incurred in obtaining a decree of
descent is not a taxable disbursement under Minn. Stat.
§ 176.511, subd. 2 (2018).
in part, reversed in part, and remanded.
GILDEA, CHIEF JUSTICE.
workers' compensation case asks us to decide whether
Auto-Owners Insurance Group ("Auto-Owners") owes
interest, penalties, and expenses to the heirs of relator
Richard Oseland on underpaid disability benefits. The
compensation judge determined that the heirs were entitled to
interest from the date of each underpayment, but that neither
penalties nor expenses were warranted. The Workers'
Compensation Court of Appeals ("WCCA") affirmed the
compensation judge's denial of penalties and expenses but
held that the heirs were not entitled to interest. Because we
agree with the compensation judge's determinations
regarding interest, penalties, and expenses, we affirm in
part, reverse in part, and remand to the compensation judge
for proceedings consistent with this opinion.
January 10, 1980, Richard Oseland sustained a work-related
injury while working as a surveyor for Crow Wing County. At
that time, Auto-Owners was Crow Wing County's
workers' compensation insurer. Auto-Owners accepted
liability for Oseland's injury and began paying him
benefits. About 9 years later, the Department of Labor and
Industry ("the Department") determined that Oseland
had become permanently and totally disabled, and Auto-Owners
began paying him permanent total disability benefits.
1, 1996, Oseland started receiving retirement benefits from
the Public Employees Retirement Association. Auto-Owners then
began to deduct the amount of retirement benefits Oseland
received from the amount of permanent total disability
benefits it paid him. WCCA precedent at the time authorized
this deduction,  and Auto-Owners continued to pay Oseland
permanent total disability benefits, reduced by his
retirement benefits, until his death in 2013, at which point
his benefits ceased.
August 13, 2014, we decided Ekdahl v. Independent School
District # 213, 851 N.W.2d 874');">851 N.W.2d 874 (Minn. 2014), and
Hartwig v. Traverse Care Center, 852 N.W.2d 251
(Minn. 2014). In these cases, we held that the plain language
of the Workers' Compensation Act does not allow insurers
to reduce the amount of permanent total disability benefits
paid by the amount of public employee retirement benefits
employees receive. Ekdahl, 851 N.W.2d at 877-78;
Hartwig, 852 N.W.2d at 253. In other words, we held
that the statute did not permit the reductions that
Auto-Owners was taking from its payments to
that Ekdahl and Hartwig have retroactive
effect, the Department began contacting insurers who may have
paid reduced permanent total disability benefits to injured
employees. In September 2015, the Department sent Auto-Owners
a letter directing it to audit its files and determine
whether it had taken an offset for public employee retirement
benefits on any of its claims. Auto-Owners began its audit
and asked the Department how it should proceed if it found
files in which offsets were taken but the employees were
deceased. The Department did not respond to this inquiry.
After a two-month audit, Auto-Owners identified two files in
which offsets were taken, one of which was Oseland's.
Auto-Owners informed the Department of these files, noted
that both claimants were deceased, and asked the Department
to contact it if anything else was required. The Department
did not respond to this letter, and Auto-Owners did not
months later, on June 16, 2016, the Department sent a letter
to Auto-Owners stating that it had audited Oseland's
claim and determined that Auto-Owners had underpaid Oseland
$169, 177.32 as a result of its offsets. The Department
directed Auto-Owners to pay Oseland's estate these
underpaid benefits. In response, Auto-Owners hired a forensic
accountant to verify the amount of underpaid benefits. The
forensic accountant's audit took approximately two months
and revealed that the underpaid benefits were approximately
$10, 000 less than what the Department had determined.
Auto-Owners sent the results of its audit to the Department
on September 7, 2016, and the Department responded that it
agreed with the assessment.
the second audit, Auto-Owners had been in touch with Terrence
Oseland- one of Oseland's heirs. After learning that the
Department agreed with Auto-Owners' new calculation of
underpaid benefits, Auto-Owners emailed Terrence about the
results of its audit and requested the name of Oseland's
estate, the estate's personal representative, the estate
tax identification number, and the estate's address.
Terrence did not respond to Auto-Owners' emails.
November 3, 2016, Oseland's heirs filed a claim petition
seeking underpaid benefits and interest. Auto-Owners filed an
answer, acknowledging that it owed underpaid benefits to the
heirs and stating that it "was ready to issue payment on
proper submission of the decedent claimant's estate tax
ID number, address, and the personal representative of said
estate." Auto-Owners denied that it was liable for any
interest on the underpaid benefits.
Oseland died without a will, the heirs obtained a decree of
descent to establish that they were Oseland's legal
heirs. The decree of descent was issued on
January 31, 2017, and sent to Auto-Owners on February 13,
25, 2017, the parties executed a stipulation for settlement.
In it, the parties agreed that Auto-Owners would pay the
heirs the amount of underpaid benefits its forensic
accountant had calculated were due and that the heirs'
claims for approximately $10, 000 in additional underpaid
benefits, interest, penalties, and expenses would remain
open. Auto-Owners paid the heirs $159, 001.29 in underpaid
benefits on June 5, 2017.
heirs' outstanding claims proceeded to a hearing before a
compensation judge. The compensation judge determined that
the heirs were not entitled to additional underpaid benefits,
penalties, or expenses but held that the heirs were entitled
to interest on the underpaid benefits. In addition, the
compensation judge determined that the applicable rate of
interest on the underpayments was based on the date of each
underpayment. In other words, the applicable interest rate
was "the rate set by statute at the time the benefits
became due and owing."
parties cross-appealed the compensation judge's order.
The heirs appealed the compensation judge's decision on
the applicable interest rate, the denial of their claim for
penalties, and the determination that the decree of descent
was not a taxable expense. Auto-Owners, on the other hand,
appealed the compensation judge's determination that
interest began accruing prior to the date that our decisions
in Ekdahl and Hartwig were issued.
WCCA unanimously affirmed the compensation judge's denial
of the heirs' claim for penalties and
expenses. On the issues related to interest, the
court's decision was divided. A three-judge majority
determined that the due date for Oseland's underpaid
benefits was the statutory deadline set out in Minn. Stat.
§ 176.1292, subd. 2(d)(3) (2018), and that no interest
was owed because Auto-Owners paid the heirs before that
statutory deadline had passed. Oseland v. Crow Wing
County, No. WC17-6120, 2018 WL 4377144, at *4-7 (Minn.
WCCA Aug. 30, 2018).
WCCA judges dissented from this part of the court's
opinion. Chief Judge Milun dissented from the majority's
interest determination, concluding that the compensation
judge should be affirmed as to both the date interest accrued
and the applicable rate. Judge Quinn also dissented in part,