Employer and Insurer are Entitled to a Credit for Amount Paid Under Vacated Award

The Minnesota Supreme Court recently concluded that Minnesota Statute § 176.179 does not apply to an award vacated by the Workers’ Compensation Court of Appeals unless there was a mistake in fact or law.

In Galen Block v. Exterior Remodelers, Block sustained a work-related injury to his low back while working as a roofer for Exterior Remodelers in 1988. The parties entered into a full, final, and complete settlement for $40,000, excluding future medical expenses. Block did not treat for his back injury for many years until he began experiencing new symptoms in 2009 related to the 1988 injury. In 2016, Block filed a Petition to Vacate the Award, arguing that there was: (1) a mutual mistake of fact when the settlement was entered into; and (2) a substantial change in his medical condition that could not have been anticipated at the time of the Award. The Workers’ Compensation Court of Appeals decided there was no mutual mistake of fact but did vacate the Award based on the substantial change in Block’s medical condition.

After the Award was vacated, Block filed a Claim Petition for additional benefits. The issue was whether Exterior Remodelers was entitled to a credit for the $40,000 already paid under the vacated Award. The compensation judge ruled that section 176.179 did not apply, and that Exterior Remodelers was entitled to a full credit against Block’s current claim for benefits. The Workers’ Compensation Court of Appeals affirmed.

The Minnesota Supreme Court agreed with the Workers’ Compensation Court of Appeals, noting that because no mistake of fact or law occurred, no mistaken compensation was paid, and therefore section 176.179 does not apply. Block argued that there was a mistake of fact in connection with the settlement. He contended that when the parties settled his claim, they believed Block’s back injury was cured and thus payment of an award that is later vacated must be a mistake. The Court noted that nothing in the record shows that when the parties negotiated the settlement a mutual mistake of fact occurred. In fact, the Court noted the record shows the parties negotiated at arms-length and based on all of the information available at the time.

Please click here to download a copy of the Court’s decision.

If you have any questions, please contact Lauren Harvey at lnh@mccollumlaw.com.

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