Opinion ID: 1348729
Heading Depth: 1
Heading Rank: 6

Heading: Offer of proofsick leave benefits

Text: Morrell attempted to present evidence at the time of the departmental hearing that Employee had applied for and received sick leave benefits following his back injury. The Department ruled that such evidence was inadmissible under the holding in Middleton v. City of Watertown, 70 S.D. 158, 16 N.W.2d. 39 (1944). Morrell then made an offer of proof that: 1) During the time Employee was totally and temporarily disabled, it paid him sick leave benefits; 2) When an employee at Morrell is paid sick leave benefits, they are not entitled to worker's compensation benefits and vice versa; 3) All employees at Morrell are aware that if they receive sick leave benefits they are not entitled to worker's compensation benefits and vice versa. Employers contend that Department should have considered this evidence for two reasons. One, that these monies should be credited on the worker's compensation payments Employee received while he was totally and temporarily disabled. And two, that the Department should have considered this evidence as an admission by Employee that he was aware that his injury did not arise out of either employment. As noted above, Department held that Middleton v. City of Watertown , supra , precluded any consideration that Employers were entitled to a dollar-for-dollar credit for sick benefits received by Employee from Morrell. Circuit court affirmed Department citing Meyers v. Meyers Oil Company, 88 S.D. 166, 216 N.W.2d 820 (1984) and SDCL 62-3-18. In Middleton , employee suffered an injury to his knees resulting in a temporary total disability. Employer and employee then executed a compensation agreement whereby employee received payments totaling $420.00 in settlement of his claim. Sometime after his settlement, employee made an additional claim for a permanent partial disability of one of his knees. Since employee received his regular wages from employer during his temporary total disability, employer's insurer claimed that the employee's permanent partial disability award should be reduced by the amount of the wages employee received during the earlier disability. This Court held that there was no evidence of an agreement that employer was to receive a credit on any future award and that, thus, the amount of wages in excess of the first award amounted to a gratuity. The Court went on to hold that neither the employer nor its insurer could use gratuitous payments as a setoff against employer's statutory liability under the Workmen's Compensation Act. In the instant case the payments made by Morrell would not, pursuant to its offer of proof, be a gratuity. Therefore, we conclude that our holding in Middleton would not preclude the admission of this evidence on the credit question. In Meyers , supra , employee's father purchased a major medical policy which paid employee's medical bills. Employer's insurer contended that, since the bills were already paid, it should not have to pay employee for the same. We held, citing SDCL 62-3-18, that: (S)ince accident insurance is a matter of private contract, it would not affect the rights of injured employees to recover under compensation law. If a claimant chooses to pay the premium for personal insurance, the compensation carrier should not be the beneficiary of claimant's personal policy in the event of injury. [citations omitted]. 216 N.W.2d at 821. Meyers is distinguishable from the evidence proffered in the instant case. In Meyers the benefits received by employee were from a source collateral to the employer whereas the benefits in question were not. Thus, that decision does not provide support for Department's ruling. SDCL 62-3-18 provides that: No contract or agreement, express or implied, no rule, regulation or other device, shall in any manner operate to relieve any employer in whole or in part of any obligation created by this title except as herein provided. Circuit court reasoned that the language of this statute clearly prohibits Employers from relieving themselves of their obligation to pay worker's compensation benefits by any agreement or otherwise. From this proposition it concluded that the proffered evidence was void as against public policy. We recognize that this statute is very broad in its terms and effects. However, we are of the opinion that our legislature never intended to allow an employee to collect double benefits when a self-insured employer makes it clear that the employee is not entitled to do so. The purpose of this statute is to ensure that an employer does not, because of ruse, artifice, inequality of bargaining power, or by other means, cheat any employee out of either coverage or those benefits an employee would be entitled to under our worker's compensation act. Employers are not trying to cheat Employee out of his coverage or any of the benefits to which he is entitled. They are only asking that no employee receive a windfall at their expense when the employee is made aware of the type of facts set forth in Morrell's offer. Furthermore, by holding that Morrell's proffered evidence should be considered, we are of the opinion that our action does not contravene the public policy expressed by our legislature; rather, we foster public policy. Employee collected sick leave benefits in this case because Employers denied any coverage under worker's compensation. If Morrell would not have paid Employee sick benefits, he would not have received any type of monetary compensation to replace his lost wages during the time he was totally and temporarily incapacitated. If we were to agree with Employee, we would, in effect, be encouraging all employers to refuse to pay sick leave benefits any time that worker's compensation coverage is at issue. Such a result would most certainly not foster the public good. Finally, we would note that Employers, under the language of SDCL 62-3-18, are not attempting to relieve themselves from any obligation created by Title 62 of the South Dakota Codified Laws (South Dakota's Worker's Compensation Law). SDCL 62-1-9. Rather, they are simply saying that if they are liable to Employee, then they should receive credit for the non-gratuitous payments Morrell made to him. In summary, Employers are not attempting to take any unfair advantage of Employee. For the reasons stated we reverse both Department and circuit court on this issue. We remand this question with instructions that Department consider Morrell's offer. If the Department does allow this credit, then Employee may well be entitled, under his collective bargaining agreement, to be re-credited on his sick leave. As to Morrell's tacit admission argument, circuit court held that, while it had technical merit, the record failed to reflect that Morrell ever asked Department to consider the evidence as an admission against interest. Although Morrell admits that it did not specifically ask the hearing examiner to consider the evidence as an admission, it argues that the significance of the evidence was obvious from the offer itself. We have reviewed the record and agree with circuit court's conclusions that Morrell failed to fully and adequately advise the hearing examiner of the factual relevancy of the evidence and that, therefore, Employers failed to properly preserve this issue for appeal. Roach v. Snedigar, 76 S.D. 63, 72 N.W.2d 427 (1955).