New Minnesota Supreme Court Decision: Claude Bruton v. Smithfield Foods, Inc., A18-0914 (Minn. Feb. 27, 2019)

Issue: Whether temporary total disability benefits can be offset by the amount of short-term disability benefits previously paid under an employer’s self-funded and self-administered plan for the same period of disability.


Answer: No.


In this case, Claude Bruton (“Employee”) sustained an injury after a fall while working for Smithfield Foods, Inc. (“Self-Insured Employer”), which maintained its own workers’ compensation and short-term disability policy. Employee’s workers’ compensation claim was denied, but he was paid short-term disability benefits through March 26, 2017. After Employee filed a claim for workers’ compensation benefits, Self-Insured Employer admitted liability for the injury. As a result, Self-Insured Employer began paying temporary total disability benefits starting on March 27, 2017. They also paid retroactive temporary total disability to make up the difference, but elected to offset the previously paid short-term disability benefits. It was argued that since Employee had already been paid short-term disability benefits, paying temporary total disability would result in double recovery. At the Hearing, the compensation judge agreed, and determined that Self-Insured Employer was entitled to offset short-term disability benefits already paid. The matter was appealed.


The WCCA reversed and determined that there was no statutory authority for an offset of TTD benefits against previously paid STD benefits. The WCCA concluded that the STD benefits did not constitute wage-continuation payments, and that Self-Insured Employer had no contractual right to reimbursement. The matter was appealed to the Minnesota Supreme Court.


The Minnesota Supreme Court affirmed. They agreed held that temporary total disability benefits cannot be offset by short-term disability benefits previously paid under a self-funded and self-administered plan. The Court relied on the fact that the Legislature has enacted provisions that provide employers with certain offset remedies, but those statutes are not applicable to self-funded short-term disability. This is an area for the Minnesota Legislature to address instead of the Minnesota Supreme Court.


In the concurrence opinion, Justice Thissen wrote that this decision does not foreclose an employer from seeking reimbursement for short-term disability benefits paid to an employee under a contract that requires such reimbursement. In other words, if a STD plan allows for an offset or reimbursement contractually, then such recovery may be allowed.


This summary provided by Parker Olson.