Opinion ID: 1812516
Heading Depth: 3
Heading Rank: 2

Heading: Met Con's Objections to Contribution

Text: With this background in mind, we turn to Met Con's specific objections to the use of the Gresser settlement as the basis for an award of contribution against Met Con.
Met Con argues, and the WCCA majority agreed, that Met Con cannot be liable for contribution because it was not a party to the Gresser settlement. But, under the common law of contribution, the fact that one of the liable persons was not a party to a settlement is not an obstacle to contribution. `Contribution is the remedy securing the right of one who has discharged more than his fair share of a common liability or burden to recover from another who is also liable the proportionate share which the other should pay or bear. Contribution rests upon principles of equity.' Lambertson v. Cincinnati Welding Corp., 312 Minn. 114, 123, 257 N.W.2d 679, 685-86 (1977) (quoting Hendrickson v. Minnesota Power & Light Co., 258 Minn. 368, 370, 104 N.W.2d 843, 846 (1960)). And a party who seeks contribution need not make payment pursuant to a judgment, but may settle by a fair and provident payment and then seek contribution from other joint tortfeasors for their fair share of the settlement price. Employers Mut. Cas. Co., v. Chicago, St. Paul, Minneapolis & Omaha Ry. Co., 235 Minn. 304, 309, 50 N.W.2d 689, 693 (1951). Thus, Met Con's argument that it should not be liable for contribution because it was not a party to the settlement fails.
Met Con argues that it was denied due process because it was entitled to a hearing to defend against employee's claims on the merits. We agree that `[b]asic fairness requires that the parties in a workers' compensation proceeding be afforded reasonable notice and an opportunity to be heard before decisions concerning entitlement to benefits can be made.' Manderfeld v. J.C. Penney, 526 N.W.2d 52, 54 (Minn.1995) (quoting Kulenkamp v. Timesavers, Inc., 420 N.W.2d 891, 894 (Minn. 1988)). But the Gresser settlement did not purport to establish Met Con's liability to employee. Instead, Met Con had a full opportunity to defend against liability to employee during the evidentiary hearing on Gresser's contribution claim. Met Con did present its defenses to any liability to employee by asserting a statute of limitations defense, providing an adverse medical evaluation of employee, cross-examining employee, and raising other legal challenges. In fact, Met Con had the opportunity to both defend against its underlying liability to employee (i.e., to prove that employee's 2001 injury was not permanent or did not contribute to his current disability or that employee's claim was procedurally barred) and to defend against Gresser's claim of contribution (i.e., to prove that the settlement was not reasonable because the employee was not disabled or the settlement exceeded the amount the employee was likely to recover in benefits). These opportunities satisfied Met Con's rights to due process.
This brings us to the issue of whether a non-settling employer/insurer can be required to contribute to a lump sum settlement that includes payment for benefits that have not yet accrued. Met Con argues that the compensation judge has no jurisdiction to award benefits that have not accrued on the date of the hearing. The WCCA majority agreedstating that nothing in the Act would allow a compensation judge to compel a party to pay benefits in the absence of proof that such benefits are presently due and actually payable.  Roemhildt, 2006 WL 2646040, at  (emphasis added). Essentially, compensation benefits are due and payable as nearly as possible    when the wage was payable. Minn.Stat. § 176.021, subd. 3 (2006). Because we have rejected Met Con's statute of limitations defense, and Met Con did not appeal the compensation judge's findings that Met Con was liable to employee or that specified benefits should be apportioned on a 50/50 basis, Met Con's general liability to Gresser for contribution is established. The only question is when that liability may be enforcedwhether currently, based on Gresser's lump sum settlement of future benefits, or in the future as each underlying benefit accrues. In essence Met Con claims the right to delay payment of its share of the benefits until each benefit accrues, so that Met Con may take advantage of the possibility that some event might occur that would terminate or reduce employee's benefits sooner than was contemplated by the lump sum settlement. The WCCA dissent correctly points out that the majority's view would require Gresser to serially assert multiple contribution claims against Met Con for the accrued benefits to which the employee would have been entitled but for the settlement. Id. at  (Johnson, J., dissenting). This process would be inefficient and it overlooks the effect of the settlement, which completely resolved the employee's claims for the whole array of possible benefits, including temporary total and permanent total disability, temporary partial and permanent partial disability, rehabilitation benefits, and retraining benefits. The WCCA dissent also correctly concludes that the decision of the WCCA majority would subvert the principles of equitable apportionment and discourage settlements. Id. at  11-12 (Johnson, J., dissenting). Although these concerns provide good policy reasons why a compensation judge should be given jurisdiction to award contribution based on a settlement that includes future benefits, the question before us is whether common law principles of contribution, as procedurally limited by the Act, do provide that authorization. We conclude that a compensation judge does have jurisdiction to award contribution based on a settlement that includes future benefits. That jurisdiction is based on the combination of the compensation judge's authority to apply common law principles of contribution and the specific legislative authorization for a compensation judge to hear and resolve all issues raised by a settling employer who has paid benefits under a temporary order and has petitioned for a determination of the liability of any other employer. That jurisdiction is reinforced by the statutory authorization of a compensation judge to approve settlements that include future benefits and to commute an employer's liability for future benefits into a lump sum amount. Under common law principles of contribution, a settlement that reflects the present value of future damages can be the basis for a contribution claim. See, e.g., Miller v. Shugart, 316 N.W.2d 729, 735 (Minn.1982). The only question is whether the settlement is reasonable (i.e., is there a sufficient risk of liability for the future damages and is the settlement a fair estimate of the present value of those damages). Id. ; see also Samuelson v. Chicago, Rock Island & Pac. R.R. Co., 287 Minn. 264, 268-69, 178 N.W.2d 620, 624 (1970). Thus, unless the legislature has limited this application of common law principles of contribution for workers' compensation cases, the Gresser settlement is an appropriate basis on which to order contribution. We conclude that the legislature has not limited this application of common law principles of contribution but, instead, has specifically authorized a compensation judge to apply them in the circumstances that are presented here. First, the Act provides broad authority for a compensation judge to award contribution after a temporary order has been issued. As noted above, although the 1995 amendments to section 176.191 eliminated a compensation judge's authority to award contribution, the 1997 amendment to the Act reinstated that authority by providing: At any time after a temporary order is issued, the paying party may also petition for a formal hearing before a compensation judge for a determination of liability among the parties.    The compensation judge shall have jurisdiction to resolve all issues properly raised, including equitable apportionment. Minn.Stat. 176.191, subd. 1 (2006) (emphasis added). This provision does not distinguish between cases where the temporary order was based on a settlement with the employee and cases where the order was based on a contested hearing. In this case, a compensation judge entered a temporary order requiring Gresser to commence payments of benefits to employee. That order also provided: IT IS FURTHER ORDERED that following a final determination of liability and if it has been determined that some other employer or insurer is liable for all or part of the compensation paid pursuant to this Temporary Order, then the Workers' Compensation Division, a compensation judge, or the Workers' Compensation Court of Appeals shall order the parties held liable to reimburse Gresser Companies and Zurich Insurance for that part of the compensation paid under this Temporary Order, for which the other parties are held liable, including interest at the rate of 12% per year. Because that temporary order was issued, the compensation judge had complete authority to consider Gresser's claim for contribution. Second, Minn.Stat. § 176.521, subd. 2 (2006), reinforces this conclusion because it specifically authorizes a compensation judge to approve a settlement that purports to be a full, final, and complete settlement of an employee's right to medical compensation under this chapter or rehabilitation under section 176.102. This section necessarily contemplates that a compensation judge may approve a lump sum settlement that includes the present value of benefits likely to accrue in the future, such as rehabilitation benefits. In fact, this section provides that such settlements are not valid unless approved (either by a compensation judge, the commissioner, or the WCCA). Id. And it authorizes a compensation judge to exercise discretion in approving or disapproving a proposed settlement. Id. In this case, a compensation judge did approve the Gresser settlement under section 176.521, finding that it was reasonable, fair, and in conformity with the Act. [5] Third, Minn.Stat. § 176.165 (2006) authorizes a compensation judge to commute periodic payments to a lump sum payment, on such terms and conditions as the compensation judge prescribes: The amounts of compensation payable periodically may be commuted to one or more lump sum payments   . In making these commutations the lump sum payments shall amount, in the aggregate, to a sum equal to the present value of all future installments of the compensation calculated on a five percent basis. In fact, this section authorizes a compensation judge to order a lump sum payment even where the parties have not reached any settlement on that lump sum. We cannot think of any reason why a compensation judge's authority should be any less where the lump sum amount is specified in a settlement, so long as the compensation judge finds that settlement to be reasonable under common law principles of contribution. [6] We conclude that these statutory provisions, taken together, provide the compensation judge with jurisdiction to apply common law principles of contribution to a lump sum settlement that includes future benefits. Our conclusion is supported by the prior decisions of the WCCA that have affirmed awards of contribution in such circumstances. The WCCA decisions in Niemi and Masters each involved settlements that included lump sum payments to resolve an employee's claims for future benefits. Masters, 47 Minn. Workers' Comp. Dec. at 434; Niemi, 45 Minn. Workers' Comp. Dec. at 351. Although the legislature limited the applicability of these decisions with its 1995 amendments, it effectively reinstated those decisions, for cases where a temporary order has been issued, with its 1997 amendment. We hold that Gresser is entitled to recover contribution from Met Con for the lump sum settlement, including contribution for the payment by Gresser of future benefits. Accordingly, we reverse that portion of the decision of the WCCA and reinstate the award of the compensation judge. Affirmed in part, reversed in part. MEYER, J., took no part in the consideration or decision of this case.