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Supreme Court affirms ruling on ending rehab services

A case appealed to the Minnesota Supreme Court from the Workers’ Compensation Court of Appeals (WCCA) called on the court to determine when and under what circumstances an employer may terminate an employee’s rehabilitation benefits.

The case arose when Julie Halvorson, who was working for the Minneapolis facility of Omaha, Neb.-based B&F Fastener Supply, hurt her right elbow and both knees while on the job. A compensation judge awarded her workers’ compensation, including rehabilitation services, which consisted of vocational help intended to return Halvorson to a job in her field or in another area that could bring a salary comparable to what she had been making at B&F.

B&F and its insurance company paid for the wage losses, treatment expenses, and rehabilitation services resulting from Halvorson’s injury. Once Halvorson found part-time employment elsewhere, B&F sought to discontinue paying for her rehab by filing a request to that effect with the Workers’ Compensation Division of the Minnesota Department of Labor and Industry.

The company’s request claimed that under state law Halvorson was no longer a “qualified employee” entitled to receive rehabilitation benefits because she had returned to “suitable gainful employment” with another employer. After the Workers’ Compensation Division denied B&F’s request, B&F requested a formal hearing before a compensation judge.

Up for discussion before the judge was whether Halvorson was a qualified employee for rehabilitation services and whether her new employment status could preclude her from receiving ongoing rehab services. Halvorson agreed with those terms.

The compensation judge had granted B&F’s request, agreeing with the company that Halvorson’s part-time job meant she was no longer qualified for further rehabilitation services. The WCCA reversed the compensation judge’s decision, and in doing so declined to evaluate whether Halvorson’s part-time job constituted “suitable gainful employment” or whether she continued to be a “qualified employee.”

Instead, the WCCA determined that every request to terminate rehabilitation services is subject to the “good cause” standard in Minn. Stat. § 176.102, subd. 8(a), and Minn. R. 5220.0510, subp. 5 — neither of which were taken into consideration by the compensation judge. The WCCA cited the judge’s improper reliance on the definitional provisions of an administrative rule — Minn. R. 5220.0100, subps. 22, 34 — in holding that that B&F was not entitled to terminate Halvorson’s rehabilitation benefits.

The wrong strategy

In reviewing the matter following a writ of certiorari by B&F, the court set out to identify which legal standard might govern a request to terminate benefits awarded to an employee following a workplace injury.

If an employee is eligible to receive rehabilitation services according to Minnesota statute, the compensation judge then has the latitude to approve, modify or reject a plan developed by a qualified rehabilitation consultant. After approving and implementing a plan for rehabilitation services, an employer or insurer may request the termination of the plan if it shows good cause.

The parties disagreed on the procedure for terminating rehabilitation services. B&F was on board with the compensation judge’s decision, arguing that the definitions of “qualified employee,” and “suitable gainful employment” under state statute would permit the judge to terminate rehabilitation services. Halvorson, as did the WCCA, viewed the good-cause standard as the exclusive means for terminating a rehabilitation plan.

The court noted that B&F conceded that it could have relied upon the “good cause” standard to request the termination of Halvorson’s rehabilitation benefits, the thinking being that Halvorson’s return to part-time employment eliminated the need for further rehabilitation services. But instead of bringing that argument before the compensation judge, B&F disclaimed reliance on the plan-modification provision and tried to get the judge to instead terminate Halvorson’s rehabilitation plan under the definitional provisions of an administrative rule.

The Supreme Court found that despite B&F’s attempts to revive its argument now, its actions before the compensation judge, including its decision to withdraw its good-cause argument under the plan-modification provision, constituted waiver.

The court also held that contrary to B&F’s assertions regarding suitable gainful employment and what defines a qualified employee, it would have had to show that these definitional provisions independently create a right to seek the termination of rehabilitation services — which it didn’t, according to the court.

“Neither provision does anything more than define technical phrases that appear elsewhere in the administrative rules,” wrote Justice David R. Stras in his opinion.

The court noted that B&F’s argument failed to recognize the overlap between the definition of “qualified employee” and the good-cause grounds for termination in the plan-modification provision.

“The various statutes and administrative rules are part of a cohesive framework,” wrote Stras, “and if a recipient of rehabilitation services is no longer a ‘qualified employee,’ nothing prevents an employer or insurer from requesting the termination of rehabilitation services under one of the enumerated grounds in the plan-modification provision or on some other good-cause basis.”

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