Disability benefits can’t be offset by benefits already paid: Court

The Minnesota Supreme Court has ruled that an employee’s claim for temporary total disability benefits cannot be offset by benefits paid to the employee for the same period of disability under the employer’s short-term disability plan.

Claude Bruton fell, dislocating his shoulder and cutting his face, while working for Smithfield Foods Inc. in 2016. At the time of this injury, the company maintained both workers compensation insurance and a self-funded a short-term disability plan for its employees, administered by its human resources department, according to documents in Claude Bruton v. Smithfield Foods Inc. and ESIS Inc., Mayo Clinic filed in the Minnesota high court in St. Paul.

A workers compensation judge awarded temporary total disability benefits to Mr. Bruton but determined that Smithfield was “entitled to offset those benefits by the amount of short-term disability benefits already paid,” documents state. Then, because Smithfield had already paid the short-term disability benefits in “essentially” the same amount that would be owed as temporary total disability benefits under workers comp, the judge dismissed Mr. Bruton’s petition for comp benefits.

The state Workers’ Compensation Court of Appeals reversed this decision in 2018, and Wednesday’s decision by the Minnesota Supreme Court affirmed that ruling “because there is no statutory authority for an offset of workers’ compensation benefits by the amount of benefits paid under an employer’s self-funded, self-administered STD plan” in state law governing workers comp.

“We recognize Smithfield’s concern that the employer is effectively penalized for maintaining an additional wage-loss benefit for its employees suffering a covered workers’ compensation injury, and through this STD program, immediately paying benefits to its employee when an injury occurs,” the ruling states. “But in the absence of a legislative offset provision, we affirm the (appeals court). If a different result is necessary or intended, the Legislature — not the Judiciary — must act.”

Defense attorney Andrew M. Grimsrud, of Aafedt, Forde, Gray, Monson & Hager P.A. in Minneapolis, the firm that represented both the employer and insurer, wrote to Business Insurance, stating that “we are disappointed with the decision, because it orders this employer and similarly situated employers to pay far more than what is provided under the Minnesota Workers’ Compensation Act for wage-loss claims.”

“Minnesota employers providing short-term or long-term disability benefits to employees should ensure that they have policy language affording them a right to full reimbursement from the employee if they pay short-term or long-term disability benefits before the employee’s disability is later deemed compensable under workers’ compensation,” he wrote.

A spokesman for ESIS Inc. said the third-party administrator does not comment on litigation.

The companies and other attorneys involved in the case could not immediately be reached for comment.