The Minnesota Supreme Court recently issued a decision that impacts an employee’s claim for temporary total disability (TTD) benefits under the Minnesota Workers’ Compensation Act and whether those benefits 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.
Upholding the decision of the Workers’ Compensation Court of Appeals (WCCA), the Supreme Court ruled 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.
The case at hand, Bruton v. Smithfield Foods, Inc. and ESIS, Inc., involved an employee working for a self-insured employer that maintained workers’ compensation insurance through a high deductible policy via an independent carrier. The self-insured employer also maintained, funded, and administered the STD benefits in question. The plan did not qualify as an ERISA plan. The employee’s workers’ compensation claim was initially denied and he was paid STD benefits by the self-insured’s plan.
Subsequently, the employee’s claim for workers’ compensation benefits was admitted and TTD benefits were paid retroactively for the same period during which the employee received STD benefits. A hearing was held at the Office of Administrative Hearings (OAH) to address the issue of “double recovery” of TTD and STD benefits. Relying on public policy, the compensation judge ruled that the self-insured employer was entitled to offset TTD benefits by STD benefits already paid. The WCCA reversed and the reversal was upheld by the Minnesota Supreme Court.
The Supreme Court noted the concern that self-insured employers are effectively penalized for maintaining an additional wage-loss benefit for its employees with a compensable workers’ compensation injury by paying out benefits immediately after an injury occurs while compensability and coverage of the workers’ compensation claim is assessed. However, in the absence of a legislative offset provision, the Court was compelled to affirm the decision of the WCCA. In essence, the court has left it up to the legislature to address this obvious discrepancy.
We anticipate this issue will be discussed in future legislative sessions. In the interim, we recommend employers act as “intervenors” and file appropriate intervention motions supporting the payment of STD benefits for any period of time workers’ compensation wage loss benefits are claimed, providing policy language that denies double-recovery.
The attorneys at Hansen Dordell welcome your questions related to workers’ compensation benefits and can be reached by phone (651) 482-8900 or our website, www.hansendordell.com.