Court Concludes “Due Date” for Underpaid Benefits Following Ekdahl and Hartwig Decisions is Date of Each Underpayment

The Minnesota Supreme Court recently concluded that the “due date” for underpaid compensation benefits is the date of each underpayment, and interest on those underpayment benefits accrues at the statutory rate in effect at the time the payment was due.

In Richard Oseland (deceased) v. Crow Wing County, Oseland sustained a work-related injury while working as a surveyor for Crow Wing County in 1980. The workers’ compensation insurer accepted liability and began paying him benefits. It was determined Oseland had become permanently and totally disabled. Once he began receiving retirement benefits from the Public Employees Retirement Association, the insurer began deducting the amount of retirement benefits Oseland received from the amount of permanent total disability benefits it paid him. Following the Ekdahl and Hartwig decisions in 2014, the reductions the insurer were taking from its payments to Oseland were no longer permitted. Oseland’s heirs filed a claim petition seeking underpaid benefits and interest. While the insurer acknowledged that it owed underpaid benefits to the heirs, they denied liability for any interest on the unpaid benefits.

The compensation judge determined that the heirs were not entitled to additional underpaid benefits, penalties, or expenses, but held that the heirs were entitled to interest on the unpaid benefits. The compensation judge concluded that the applicable rate of interest on the underpayments was based on the date of each underpayment. In other words, the applicable interest rate was “the rate set by statute at the time the benefits became due and owing.” The parties cross-appealed to the WCCA.

The WCCA unanimously affirmed the compensation judge’s denial of the heirs’ claims for penalties and expenses. However, the WCCA concluded that the due date for Oseland’s underpaid benefits was the statutory deadline set out in Minn. Stat. § 176.1292, subd. 2(d)(3), the statute enacted by the Legislature after the decisions in Ekdahl and Hartwig, and that no interest was owed because the insurer paid the heirs before that statutory deadline had passed. Oseland’s heirs appealed to the Minnesota Supreme Court.

The Minnesota Supreme Court upheld the denial for penalties and expenses but refused to adopt the WCCA’s conclusions regarding interest. Instead, the Court reinstated the compensation judge’s decision regarding interest. The Court concluded Oseland’s offset benefits were due on the date of each underpayment and, therefore, bear interest from those dates. The Court also concluded that interest owed accrues at the statutory rate in effect at the time the payment is due.

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

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