February 2006

Workers' Compensation Alert

Minnesota Supreme Court Undoes a Portion of 2000 Statutory Amendment Relating to Workers’ Compensation Subrogation

In the decision of Zurich v. Bjelland, filed on February 2, 2006, the Supreme Court turned this law on its head, and held that an employer’s damages are limited to those damages recoverable by the employee at common law or by statute. The Supreme Court decision drafted by Justice Helen Meyer goes through gyrations to undo the language in the 2000 statutory amendment confirming that the employer by statute has its own "separate additional cause of action against the third party to recover amounts payable for medical treatment or for other compensation payableunder the section resulting from the negligence of the third party regardless of whether such benefits are recoverable by the employee or the employee's dependents at common law or by statute." Minn. Stat. '176.061, Subd. 7. (See also Subds. 3, 5, and 10). The Supreme Court never analyzes or even quotes the above underlined language of the amendment in its unanimous decision overruling the unanimous unpublished Court of Appeals decision written by Judge Gordon Shumaker finding that the statutory amendment means what it says in Zurich American Ins. Co. v. Bjelland, No. A04-709, 2004 W.L. 2984336 (Minn.App. December 28, 2004). Instead, it engages in a misguided analysis of what the legislature really meant by the words "all benefits" which was in the statute prior to the enactment of the 2000 statutory amendments, concluding ultimately that those words somehow makes the amendment ambiguous.

The Supreme Court's decision will potentially reduce a self-insured or workers' compensation carrier's subrogation recovery in the rare cases in which the level of workers' compensation benefits paid exceed the amount of damages that can legally be recovered under common law or a civil damage statute.  However, the decision appears to have no impact on the portions of the amendment that create the right to “Waive and Walk” and limit the employer contribution to the subrogation recovered as opposed to the workers’ compensation paid and payable.

Michael Carr of our office was the primary drafter of the statutory amendment supported by both the Minnesota Self Insurer’s Association and the Minnesota Trial Lawyers Association and acted as Amicus Curiae or "friend of the court" counsel for the Minnesota Self Insurer’s Association in the Zurich v. Bjelland case at the Court of Appeals. At the end of this alert are links to the decision as well as relevant articles by Michael Carr and Joe Nemo for Minnesota Defense and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. seminars.

If you feel that you have a case that may be impacted by the decision in Zurich v. Bjelland or if you have any questions regarding the Zurich decision or any workers’ compensation subrogation and employer liability issues , please feel free to contact Michael Carr or Joe Nemo.

The Workers’ Compensation Practice Group at Arthur, Chapman, Kettering, Smetak & Pikala, P.A. has extensive experience representing employers, insurers, third party administrators, and self-insured employers in all phases of workers’ compensation litigation. Our group has handled cases involving all types of medical conditions in all Minnesota workers’ compensation venues.

Related Links:

Zurich v. Bjelland Decision

Article - Court of Appeals Upholds Workers' Compensation Subrogation Statutory Measure of Damages

Article - Workers' Compensation Subrogation "In A NUTSHELL"