Temporary Total Disability Benefits Cannot Be Offset by Benefits Paid Under Short-Term Disability Plan

The Minnesota Supreme Court affirmed a decision of the Workers’ Compensation Court of Appeals and held that an employee’s claim for temporary total disability benefits cannot be offset by benefits paid for the same period of disability under the employer’s self-funded, self-administered, short-term disability plan.

In Claude Bruton v. Smithfield Foods, Inc., Bruton fell and dislocated his right shoulder. Initially, primary liability was denied and Bruton received STD through a plan which was paid for and administered by the employer. STD was paid at 80% of Bruton’s regular wage. The employer and insurer then admitted liability and began paying temporary total disability benefits. Retroactive payments were made to Bruton for the difference between the STD and the TTD payments.

At the hearing before the compensation judge, the issue was whether the employer and insurer were entitled to an offset of TTD benefits for the STD benefits paid. The compensation judge concluded that they were entitled to an offset to avoid a double recovery.

The Workers’ Compensation Court of Appeals reversed. The WCCA determined that STD payments were not wage-continuation payments and that given the circumstances of this case, the employer had no contractual right of reimbursement of STD payments. The matter was then appealed to the Minnesota Supreme Court.

The Minnesota Supreme Court affirmed, holding that temporary total disability benefits cannot be offset by benefits paid for the same period of disability under the employer’s self-funded, self-administered, short-term disability plan. The Court noted that the Legislature has enacted provisions that provide employers with certain offset remedies, but that those statutes are not applicable here. The Court declined to expand these legislative offsets beyond their plain and unambiguous meanings.

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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