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Update on Dependency Benefits
What's New In The Last Two Years
by Thomas P. Kieselbach
Summary
Fortunately, there is very little new in the last two years. Essentially, we have only a handful of cases, including one from the Minnesota Supreme Court.
Minnesota Supreme Court
Pangerl v. Electric Repair & Construction, 645 N.W.2d 151 (Minn. 2002).
In this case, the court was presented with a fact pattern that was not complex. The arguments made by counsel and the sum and substance of the decision issued by the Supreme Court was extremely complex.
Mr. Pangerl died on August 12, 1987 as a result of a work-related injury which occurred on July 23, 1987. He was a high wage earner. His wage at the date of injury was $891.80. At the time of his death, he was survived by a spouse and two dependent children.
The maximum compensation rate in effect on the date of injury was $360.00. The $360.00 benefit was allocated on a 75%/25% basis between the spouse and children which resulted in the spouse receiving $270.00 per week and the children receiving $90.00 per week. The spouse and two children received the maximum compensation rate subject to allocation with adjustments up to the date in which the two children were no longer dependent. On that date, the insurance company applied Minn. Stat. §176.111, subd. 8 and reduced the weekly benefits to be paid to the spouse by 25 percent. Essentially, they reduced the last weekly compensation benefit by 25 percent as literally stated in the statute. This reduced the spouse to $270.00 per week plus adjustments with an entitlement to an additional ten years of benefits, the same benefit she had been receiving while her children were dependent.
Mrs. Pangerl essentially argued that the statute did not mean what it said. She pointed out that the statute was, in fact, somewhat ambiguous (even though it was not).
Essentially, the Supreme Court held that after the last child is no longer dependent, the spouse's benefit is determined by first calculating the spouse's benefit entitlement without regard to the statutory maximum rate. That weekly benefit is then subject to the statutory maximum compensation rate. Since the Employee was a high wage earner, this meant that the spouse would be entitled to $360.00, not $270.00, per week plus adjustments for ten years.
Again, the Supreme Court decision is phenomenally complex and difficult to understand. In plain language, what the Supreme Court did was look at the pre-injury wage of $891.50. They reasoned that a spouse with no children would have been entitled to benefits at the rate of 50 percent subject to the maximum. Fifty percent of the pre-injury wage of $891.50 is $445.75. Since the maximum compensation rate in 1987 was $360.00, had Mrs. Pangerl never had any children, her compensation rate would have been $360.00. The Court then reasoned that at the time that the children were no longer dependent, Mrs. Pangerl would then be entitled to $360.00 per week plus adjustments retroactive to 1987. She would then be entitled to ongoing benefits for another 10 years.
For those individuals who are not subject to the maximum, application of Minn. Stat. §176.11, subd. 8 could be applied literally. Using either the Pangerl method or the methodology set forth in Minn. Stat. §176.11, subd. 8, the benefit would be the same for lower wage earners. For example, assuming that the employee's wage at the date of injury in 1987 was $400.00 per week, applying the Pangerl rationale, the spouse would be entitled to $200.00 per week plus adjustments ($400.00 X 50 percent) at the time that the children are no longer dependent. If we follow the literal reading of the statute, a spouse and two children would be entitled to 66-2/3 percent of $400.00 or $266.68. When the children are no longer dependent, this benefit would be reduced by 25 percent back to $200.00 plus adjustments.
Again, the holding in this case will only be of any major significance to high wage earners whose benefit is subject to the maximum rate.
Oswald v. Boise Cascade Corporation, 2001 WL 1700651 (Minn. Work. Comp. Ct. App.)
In Oswald, the Workers' Compensation Court of Appeals was presented with an issue regarding survivability of permanent partial disability benefits. This matter followed in the footsteps of Owens v. Water Gremlin Company, 605 N.W.2d 733 (Minn. 2000).
In Oswald, the employee was diagnosed with malignant pleural mesothelioma which was caused by exposure to asbestos. A Claim Petition was filed in 1998 seeking minimum permanent partial disability of 50 percent. Thereafter, the employer agreed to accept primary liability and commenced payment of permanent partial disability benefits. The permanent partial disability benefits ceased on April 11, 2000. On April 17, 2000, the employee claimed 95 percent permanent partial disability less the previously paid 50 percent. On June 27, 2000, the employee died as a result of the malignant pleural mesothelioma.
The Court of Appeals quoted Owens and referenced that pre-conditions for survivability of permanent partial disability were:
1. The ascertainment of the disability;The defense argued that the employee's permanent partial disability benefits were not being paid at the time of death. It pointed out that the permanent partial disability benefits ceased April 11, 2000.
2. The determination that the injured employee lived at least 30 days beyond the date of injury; and
3. The establishment of the fact that the employee was receiving permanent partial disability at the time of his death.
The Court of Appeals held that the permanent partial disability benefits would in fact survive the death. It pointed out that the key phrase "who is receiving" is to be construed to mean "who is receiving or entitled to receive" permanent partial disability at the time of death. Even though the employee was not, per se, in payment status at the time of death, he was in fact entitled to receive permanent partial disability benefits at the time of death. As such, entitlement to permanent partial disability had vested in the employee and was in fact vested in this case.
McDowell v. Parsons Electric Company, 202 WL 1377753 (Minn. Work. Comp. Ct. App.).
McDowell similarly involved a case of survivability of permanent partial disability benefits. Mr. McDowell sustained a work-related neck injury on April 1, 1998. On December 4, 1999, he died in a non-work-related motor vehicle accident. At the time of his death, there were no dependents. He was survived by non-dependent heirs. The employee had reached maximum medical improvement prior to death although the report had not been served.
The defense argued that permanent partial disability benefits did not survive the death of the employee because there were no dependents as that term is defined in M.S. §176.111 and the employee had reached maximum medical improvement.
The Supreme Court rejected the defense's arguments and found that there was vesting. It pointed out that the reference in M.S. §176.121 requiring that the employee die prior to reaching maximum medical improvement was not applicable in this case. The court further found that there was no statutory prohibition against paying permanent partial disability to non-dependent heirs.
Born Canyon, Texas, July 5, 1950; admitted to bar, 1975, Ohio (inactive); 1977, Minnesota; 1985, Wisconsin. Education: B.S., Michigan State University, with honors, 1972; J.D., University of Toledo College of Law, 1975; Associate Editor, University of Toledo Law Review, 1974-75. AdjunctProfessor, Hamline University College of Law, 1983-present. Adjust Professor, William Mitchell College of Law, 1993. Listed in The Best Lawyers in America (Sixth and Seventh Eds. 1995-96; 1997-98). Author of "Death and Dependency Benefits," The Minnesota Workers' Compensation Deskbook, (1993, 1997). Member: Hennepin County Bar Association; Minnesota State Bar Association; American Bar Association; Minnesota Defense Lawyers Association, Defense Research Institute.
direct dial number: (952) 525-6955
e-mail: tpk@cousineaulaw.com