MARK B BRUDOS (DEC'D), Worker

TRACY ANN BRUDOS et al., Applicant

WORK INJURY SUPPLEMENTAL
BENEFIT FUND, Respondent

ARROWOOD INDEMNITY CO, Insurer

Prior to his death, Mark B. Brudos, the decedent worker, filed a hearing application in February 2001, seeking compensation for a back injury on October 20, 1997. In September 2005, following Mr. Brudos' death, Kathryn Brudos filed a hearing application listing Tracy Anne Brudos as the applicant and claiming benefits under Wis. Stat. § 102.59.

No hearing was held. Rather this matter proceeded to disposition on stipulated facts under Wis. Stat. 102.17(1)(a). On March 27, 2009,(1) the ALJ issued his decision dismissing the hearing application. The dependents-applicants filed a timely petition for review.

The commission has considered the petition and the positions of the parties, and it has reviewed the stipulation submitted to the ALJ. Based on its review, the commission makes the following:

1. Issue and stipulated facts.

This case poses a purely legal issue: is the Wisconsin Work Injury Supplemental Benefit Fund (the Fund) liable for death benefits to the decedent's dependents under Wis. Stat. § 102.47(2) based on the additional compensation payable under the second injury statute (Wis. Stat. § 102.59)?

In November 2007, the parties executed a stipulation to the following facts(2):

•  Mark Brudos (the decedent) suffered an injury while working at Zimbrick, Inc., on October 20, 1997. This is the "primary injury" for the purposes of analysis under the second injury statute. Temporary disability as a result of the primary injury ended on January 18, 1998.
• As a result of the primary injury, the decedent was entitled to 377.26 weeks of permanent disability compensation. These permanent disability payments "are treated under Wis. Stat. § 102.59 as having ended on April 18, 2006."
• At the time of the primary injury, the decedent had a pre-existing permanent disability which, if it had resulted from the primary injury, would have entitled him to an additional 201.56 weeks of permanent disability indemnity.
•  The decedent died on January 2, 2005, leaving two minor children, Tracy Anne and Shannon Marie, who are both his "dependents" as defined in Wis. Stat. 102.51(1)(a)(3). They filed an application for hearing seeking benefits under the second injury statute on or about September 26, 2005.

2. The second injury statute

The second injury statute, Wis. Stat. § 102.59, provides in relevant part:

102.59 Preexisting disability, indemnity.²¹⁷
(1) If an employee has at the time of injury permanent disability which if it had resulted from such injury would have entitled him or her to indemnity for 200 weeks and, as a result of such injury, incurs further permanent disability which entitles him or her to indemnity for 200 weeks, the employee shall be paid from the funds provided in this section additional compensation equivalent to the amount which would be payable for said previous disability if it had resulted from such injury or the amount which is payable for said further disability, whichever is the lesser.²¹⁸ If said disabilities result in permanent total disability the additional compensation shall be in such amount as will complete the payments which would have been due had said permanent total disability resulted from such injury. This additional compensation accrues from, and may not be paid to any person before, the end of the period for which compensation for permanent disability resulting from such injury is payable by the employer, and shall be subject to s. 102.32 (6), (6m), and (7). No compromise agreement of liability for this additional compensation may provide for any lump sum payment.²¹⁹
...

(3) All payments received under this section shall be deposited in the fund established by s. 102.65.

The department's interpretative footnotes provide:

²¹⁷This subsection has a two-fold purpose: First, to eliminate any incentive for discrimination against the employee who has serious previous disability when he or she comes to seek re-employment because of the employer's fear, real or otherwise, that the loss of another member may subject the employer to very large indemnities on the ground that such loss would cause total or near total disability; second, to secure to the employee sustaining the loss or total impairment of a second member such amount of indemnity as the seriousness of the combined disabilities calls for. Direct liability of the employer in case of the loss of the second member is made the same as for the loss of the first member, and the injured employee's rights are conserved by orders drawn on the fund for the balance of the indemnity. Primary liability of the employer for payment of $20,000 to the fund is insurable. Payments to the work injury supplemental benefit fund were suspended for injuries occurring in calendar years 1994 through 1998.

²¹⁸To illustrate, one who has previously lost an arm at the shoulder would have been entitled to 500 weeks compensation. By second injury he or she loses the hand at the wrist and becomes entitled to 400 weeks of compensation. Over and above payment for second injury, the employee may receive an additional 400 weeks for compensation from the fund.

²¹⁹This amendment clarifies that the benefits are to be paid monthly as they accrue after primary benefits are accrued rather than in lump sum or advancement.

DWD, Worker's Compensation Act of Wisconsin with Amendments to December 2007 (WKC-1-P (R.03/2008).

In addition, the department has promulgated a rule, Wis. Admin. Code § DWD 80.68, dealing with payments under the second injury statute. The rule and its accompanying Note provide:

DWD 80.68 Payment of benefits under s. 102.59, Stats. (1) Payment of benefits under s. 102.59, Stats., shall initially be made to the individual entitled to the benefits at such time as payments of primary compensation by the employer cease to be made or would have been made had there been no payment under s. 102.32 (6m), Stats., unless the preexisting disability and the disability for which primary compensation is being paid combine to result in permanent total disability.

(2) Payments received by an employee or dependent from an account in a financial institution or from an annuity policy where such account or annuity policy are established through settlement of the claim for primary compensation, shall be considered payments by the employer or insurance carrier.

(3) Payments under s. 102.59, Stats., shall be on a periodic basis but subject to s. 102.32 (6m) and (7), Stats.

Note: This rule is adopted to insure the solvency of the work injury supplemental benefit and to insure the protection of dependents as of the date of death of the employee with the preexisting disability.

Summarizing the second injury statute, Neal and Danas, Worker's Compensation Handbook § 5.37 (5th ed. 2007) states:

Wisconsin's so-called second injury fund provides additional benefits to employees who, when injured, have a pre-existing permanent disability equivalent to at least 200 weeks, if the industry injury causes additional permanent disability equivalent to at least 200 weeks. [Emphasis in original.]

3. Death benefits

The applicable death benefit statute, Wis. Stat. § 102.47(2), provides:

102.47 Death benefit, continued. If death occurs to an injured employee other than as a proximate result of the injury, before disability indemnity ceases, death benefit and burial expense allowance shall be as follows:
...

(2) Where the injury proximately causes permanent partial disability, the unaccrued compensation shall first be applied toward funeral expenses, not to exceed the amount specified in s. 102.50. Any remaining sum shall be paid to dependents, as provided in this section and ss. 102.46 and 102.48, and there is no liability for any other payments. All computations under this subsection shall take into consideration the present value of future payments. If there are no surviving dependents the amount payable to dependents shall be paid, as provided in s. 102.49 (5) (b), to the fund created under s. 102.65.

Recently, the court of appeals has made it clear that the term "unaccrued compensation" may include permanent partial disability (including loss of earning capacity compensation) from a claim the decedent had not yet made prior to his or her death. Edward Bros. Inc. v. LIRC, 2007 WI App 128, 300 Wis. 2d 638, 7 et seq. Specifically, the court stated:

...the ordinary meaning of the term "unaccrued compensation" is compensation that has not become due, or compensation for which a claim is not yet enforceable.

Id., 300 Wis. 2d 638, 7.

4. Discussion.

The decedent in this case claimed compensation, including permanent partial disability, for his October 20, 1997 back injury, but did not file a claim for compensation under the second injury statute during his lifetime. Given the holding in Edward Bros., however, the Work Injury Supplemental Benefit Fund (the Fund) does not argue against liability on that basis. Indeed, the Fund concedes (by stipulation) that "if second injury benefits are payable as death benefits then the Application was timely filed by the dependents pursuant to Edward Bros. v. LIRC ..." Rather, the Fund argues that second injury payments are not "unaccrued compensation" within the meaning of the death benefits statute, that paying death benefits from the Fund violates its appropriation statute, and that paying death benefits based additional compensation payable under the second injury statute would unreasonably deplete the Fund.

a. Second injury payments as "accrued compensation."

Regarding its argument that second injury payments are not unaccrued compensation within the meaning of the death benefits statute, the Fund cites Green Bay Soap Co. v. ILHR Department, 87 Wis. 2d 561, 565-66 (1979). Based on that case, the Fund argues that the second injury payments are something entirely separate from the compensation for the work injury, and therefore should not be included in a death benefit.

The commission does not agree. The applicable death benefits statute states that "[w]here the injury proximately causes permanent partial disability, the unaccrued compensation shall" be paid as death benefits. That is, the actual language in the death benefits statute refers simply to "unaccrued compensation." It does not say "unaccrued compensation for permanent partial disability from the work injury for which the employer is liable" or even "unaccrued compensation for permanent disability from the work injury." The commission concludes the words "unaccrued compensation" in Wis. Stat. § 102.47(2) is broad enough to include payments under the second injury statute that were not yet accrued as of the decedent's death.

The term "compensation" in chapter 102, Wis. Stats., means "worker's compensation" and "worker's compensation" is defined quite broadly as "allowances, recoveries and liabilities under this chapter." Moreover, the second injury statute, Wis. Stat. § 102.59(1), refers to the payments made thereunder as "additional compensation" which begins to accrue after the payment of compensation by the employer. Thus, while the payments under Wis. Stat. § 102.59 may be viewed as "additional compensation" as distinct from the compensation for disability caused by the primary work injury owed by the employer, they are still "compensation" and in this case a substantial amount was "unaccrued" at the time of the decedent's death.

Beyond that, the payment of "additional compensation" under the second injury statute is for permanent disability and its payment is occasioned by the permanent partial disability caused by the work injury. The department's interpretative note says that one of the two purposes of the second injury statute is "to secure to the employee sustaining the loss or total impairment of a second member such amount of indemnity as the seriousness of the combined disability calls for." While the Green Bay Soap case may distinguish the compensation paid by the employer from that paid by the Fund in terms of which is paid when and by whom, it does not divorce the Fund's liability under Wis. Stat. § 102.59 from the occurrence of a second injury causing permanent disability.

Nor does the supreme court's decision in State v. LIRC, 136 Wis. 2d 281 (1987) require otherwise. That case involved a claim by a worker's widow for previously-unclaimed permanent total disability compensation from the date of the worker's disability to the date of his death. Id., at 136 Wis. 2d 285-86. The widow's claim for death benefits had been conceded and paid by the time the case reached the supreme court. In other words, State v. LIRC involved only a "tardy" claim for disability benefits that had already accrued by the time of the worker's death. See id., at 136 Wis. 2d 290. The case did not bar a death claim based on unaccrued compensation under Wis. Stat. § 102.47(2), a fact recognized by the court of appeals by Edward Bros. Inc. v. LIRC, 300 Wis. 2d 638 10-12. State v. LIRC would apply if the dependents were claiming benefits that accrued, or could have accrued, to the decedent before his death, but the case does not bar a claim for death benefits based on payments under the second injury statute that were unaccrued as of the decedent's death.

The decedent's claim is also supported by Wis. Admin. Code § DWD 80.68. The main point of the rule, of course, is to ensure that the Fund need not make payments of the second injury until after the employer's liability for permanent disability on the primary injury has fully accrued. Even where the employer has paid disability compensation in lump sum before it accrued, the Fund's liability does not begin until the point the permanent partial disability would have been fully accrued had it been paid in monthly installments, thus protecting the Fund against having to make advanced payments, at least without getting an interest credit for doing so.

But the rule also refers to the "[p]ayment of benefits under s. 102.59, Stats., ... made to the individual entitled to the benefits" rather than simply "to the employee." It also refers to payments in settlement of the primary compensation received by a dependent, at least implicitly contemplating the situation where the worker has died and a dependent is receiving funds as a death benefit. If second injury payments cannot be paid to dependents as death benefits, one must wonder why Wis. Admin. Code DWD 80.68 addresses the situation where dependents are receiving payments; payments to dependents implicate a death benefit claim.(3) More explicitly, the Note appended to the rule states that the object of the rule is to "to insure the protection of dependents as of the date of death of the employee with the preexisting disability." In other words, Wis. Admin. Code § DWD 80.68 protects a worker's dependents by making certain that the second injury benefits are not paid to the worker before the benefits actually accrue, ensuring that his or her dependents will be able to collect them as a death benefit if the worker dies.

Finally, the decedent's dependents point to State v. DILHR and Catherine Behr, case no. 79 CV 4452 (Dane County Cir. Court, April 14, 1980) issued by then reserve judge, formerly supreme court justice, George Currie. Judge Currie, considering many of the same arguments raised above, concluded that the compensation under for a second injury under Wis. Stat. § 80.59 was "unaccrued compensation" under the death benefits statute. Indeed, he affirmed the commission's decision to that effect. The Fund suggests it was wrongly decided and accurately points out the case is not binding precedent. However, Behr appears to be the only case actually addressing the issue at hand, and in that case the commission and the court both held the Fund liable to a decedent worker's dependents for death benefits based on the unaccrued compensation under the second injury statute.(4)

b. The appropriation clause argument.

The Fund has a second argument, though, not discussed by Judge Currie in the Behr decision. While the Work Injury Supplemental Benefit Fund is established under Wis. Stat. § 102.65, its appropriations are handled in the statutes under Wis. Stat. § 20.445(1)(t). That statute provides:

20.445 Workforce development, department of. There is appropriated to the department of workforce development for the following programs:
...

(1)(t) Work injury supplemental benefit fund. All moneys paid into the work injury supplemental benefit fund under ss. 102.35 (1), 102.47, 102.49, 102.59, 102.60, and 102.75 (2), to be used for the discharge of liabilities payable under ss. 102.44 (1), 102.49, 102.59, 102.63, 102.64 (2), and 102.66.

The Fund points out that there is no reference to the death benefits statute, Wis. Stat. § 102.47, in the appropriation language. There is a reference to the second injury statute, Wis. Stat. § 102.59. However, the Fund contends that permits payments under Wis. Stat. § 102.59 directly injured workers during life, not the analytically-distinct payments to dependents for death benefits under Wis. Stat. § 102.47(2).

And the claims of the injured worker while living and his dependent's after his death are separate, the law is clear on that. However, while the dependent's death benefit is a separate claim from the decedent's permanent disability claim, Edward Bros., Inc., 300 Wis. 2d 638, 10 (citing State v. LIRC, 136 Wis. 2d 281, 295 (1987)), the unaccrued compensation arising from the decedent's permanent partial disability is the measure of the dependent's death benefit. Ibid.

By the same token, Wis. Stat. § 102.59 is the source or provides the measurement of the "unaccrued compensation" giving rise to the Fund's liability for death benefits in this case, even if the death benefit payment is actually made under Wis. Stat. § 102.47(2). Indeed, as discussed above, Wis. Admin. Code § DWD 80.68 and its accompanying Note indicate the Fund is liable under the second injury statute for death benefits.

On this point, the decedent's dependents assert that the Fund pays death benefits on barred claims under Wis. Stat. § 102.66. Although such death payments do not involve the second injury statute, they are still payments of the death benefits by the Fund, the appropriation clause language notwithstanding. The commission must observe, however, that the situation where the Fund pays a death benefit on a barred claim is likely to be unusual, at least after the decision in International Paper Co. v. Labor & Indus. Review Comm'n, 2001 WI App 248, 248 Wis. 2d 348. In that case, the court affirmed the commission's finding that the statute of limitations for death benefits against the employer begins to run with a worker's death, not with his injury, so that even where a worker dies more than 12 years after the last date of injury or treatment, his or her dependent's claim for death benefits is against the employer, not the Fund.

The International Paper Co. court did not directly address the issue raised by the appropriation statute, Wis. Stat. § 20.445(1)(t). Indeed, the appropriations clause argument appears not to have been raised or addressed in any commission decision or reported case. There have, however, been a few administrative decisions which held the Fund liable for death benefits in barred claims cases, including the underlying ALJ decision in the International Paper Co. decision.(5) Further, the court in International Paper stated:

It is undisputed that pursuant to [Wis. Stat. § § 102.17 and 102.46], Lorraine can collect death benefits. Whether International Paper or the fund must pay the benefits depends on whether Lorraine's claim for death benefits needed to be filed within twelve years of Robert's injury, or within twelve years of his death.

Id., at 248 Wis. 2d 348, 12. In other words, in International Paper, the court seemed prepared to find the Fund liable for death benefits--the appropriations language not being raised as a defense--if the statute of limitations issue was resolved against it.

In light of these prior decisions and Wis. Admin. Code DWD 80.68, the commission concludes that, historically at least,(6) the appropriation language has not been regarded as a defense or statutory bar to the Fund's liability for death benefits under either Wis. Stat. § 102.59 (second injury) or 102.66 (barred claims). The commission further concludes that the death benefits claimed by the decedents in this case may reasonably be characterized as "a liability payable under Wis. Stat. § 102.59" within the meaning of Wis. Stat. § 20.445(1)(t), even though Wis. Stat. § 102.59 may be regarded as only providing the measurement of the unaccrued compensation payable as the death benefit. The commission therefore concludes that the language in that appropriations section does not bar the dependents' claim of the unaccrued second injury payments as a death benefit.

c. Depletion of Fund.

The Fund's last argument is that paying the death benefits would unreasonably deplete the Fund by requiring payment for purposes other than those intended. This argument, of course, cannot provide a separate rationale for releasing the Fund from liability if the statutes are reasonably construed to require payment of the death benefit in this case by the Fund.

5. Conclusion.

The decedent's dependents are therefore entitled to receive the additional 201.56 weeks of permanent disability indemnity stipulated by the parties as arising under the second injury statute, all of which were stipulated to be unaccrued as of the date of decedent's death on January 2, 2005. The matter shall be remanded to the department for calculation of the award.

NOW, THEREFORE, the Labor and Industry Review Commission makes this

The findings and order of the administrative law judge are reversed. The matter is remanded to the Department of Workforce Development, Worker's Compensation Division, for calculation of the award in a manner consistent with this decision.

Jurisdiction is reserved for further orders and awards as are appropriate and consistent with this decision.

Dated and mailed September 30, 2009
brudosm.wrr:101:5 ND 5.37, 6.9

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

NOTE: Because this case was tried on stipulated facts, no credibility conference with the ALJ was necessary.

cc: Attorney John Neal
Attorney Jennifer Sloan Lattis
Ms. Abby Butler
Mr. Corey Finkelmeyer

Appealed to Circuit Court.

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(1)( Back ) The decision was misdated March 27, 2008. The file contains an April 7, 2009 letter to the parties from Janell M. Knutson, of the Worker's Compensation Division clarifying the date.

(2)( Back ) The stipulation also includes a provision regarding attorney fees.

(3)( Back ) In addition to providing payment of death benefits to dependents of deceased workers, the worker's compensation act provides for payments to dependents of certain persons confined to public institutions in certain cases under Wis. Stat. 102.195. Given the Note to Wis. Admin. Code, DWD 80.68, however, it would be unreasonable to read the reference to "dependents" in Wis. Admin. Code DWD 80.60(2) as limited to the situation arising under Wis. Stat. 102.195.

(4)( Back ) The Fund also notes that the language in the death benefits statute that states that after the unaccrued compensation is used to pay burial expenses, "[a]ny remaining sum shall be paid to dependents, as provided in this section and ss. 102.46 and 102.48, and there is no liability for any other payments." However, assuming the unaccrued second injury liability is "unaccrued compensation," then it would be used to pay the dependents as provided in the statutes, and there would be no liability for any other payments.

(5)( Back ) Hueck v. Algoma Hardwoods, 2001 WI Wrk. Comp. LEXIS 33, WC claim no. 200003549 (LIRC, February 9, 2001)(ALJ Falkner ordered the Fund to pay death benefits, LIRC reversed under Int'l. Paper rationale); Reiter v. Milwaukee Transport Service, 1994 Wrk. Comp. LEXIS 547 (LIRC, January 20, 1994) (LIRC ordered the Fund to pay death benefits); Hillard v. Midwest Biochemical Company, 1986 WL 192386, WC Claim no. 83-43798 (LIRC, September 29, 1986) (LIRC ordered the Fund to pay death benefits.) The commission ordered the Fund to pay the death benefits in State v. LIRC, though the circuit court reversed and ordered payment by the employer under a statute of limitations argument presaging International Paper; because the employer conceded its liability, the death benefits issue per se was not at issue in the supreme court. See State v. LIRC, 136 Wis. 2d at 285.

(6)( Back ) In his decision, the ALJ cites a May 26, 2005, letter from Janell M. Knutson, section chief in the Worker's Compensation Division, stating that

It has long been the department's position that the employee, not his widow or dependant, must make the claim for Second Injury Fund Benefits. The employee must be alive at the time the claim is made and the primary benefits are due.

The employee died prior to a claim being made for Second Injury Fund benefits in this case. No benefits are due.

The commission reads Ms. Knutson's letter--which predates the Edward Bros. decision by two years--to rely on the argument that the worker must himself have started the underlying claim giving rise to the "unaccrued compensation" in order for his or her decedents to receive a death benefit. However, the Fund now concedes this argument was subsequently rejected by the court of appeals in Edward Bros. The commission does not read Ms. Knutson's letter to state that the Fund has no statutory authority to pay death benefits because of the appropriations clause language.

uploaded 2009/10/19