State News : Minnesota

Recent significant cases:

Tea v Ramsey Cty., 5 N.W.3d 114 (Minn. 2024)

For Minnesota workers' compensation defense, this case underscores the importance of expert testimony, reinforces PTSD compensability under statutory definitions, and provides a clear avenue for dismissing improperly pled psychological conditions like major depressive disorder (MDD). It also limits challenges to DSM-based PTSD diagnoses while reinforcing defense strategies centered on exposure thresholds and expert credibility.

This case reinforces that PTSD is a compensable occupational disease under Minn. Stat. § 176.011, subd. 15, provided it meets the DSM criteria. The ruling confirms that Minnesota courts will defer to credible medical expert opinions when determining whether an employee’s PTSD is work-related. However, the ruling makes it clear that MDD alone is not compensable under Minnesota workers’ compensation law. Defense counsel can use this precedent to argue against the inclusion of standalone psychological conditions unless explicitly pled as consequential to PTSD. In this case, the employer successfully had the MDD finding vacated, setting a precedent for strictly interpreting psychological injury claims.

The Smith v. Carver Cnty., 931 N.W.2d 390 precedent played a crucial role, limiting the WCCA from independently assessing whether an expert’s PTSD diagnosis conformed precisely to DSM-5. This limits a defense strategy that challenges expert opinions by dissecting DSM compliance, shifting the focus instead to credibility and evidentiary weight of expert testimony.

The case highlights the necessity for plaintiffs to explicitly plead consequential injuries (e.g., MDD resulting from PTSD). From a defense perspective, this ruling strengthens motions to dismiss improperly pled psychological claims that are not explicitly tied to a compensable primary injury. This case emphasized repeated exposure to traumatic details as a qualifying factor for PTSD. Employers may attempt to distinguish future claims by arguing that an employee’s level of exposure was insufficient to trigger PTSD.

Peterson v. City of Minneapolis, No. A22-0518 (Minn. 2022)

This case has several significant implications for Minnesota workers’ compensation defense, particularly in the areas of PTSD claims, consequential mental injuries, and penalties for frivolous denials.

This decision expanded the scope of PTSD diagnoses under the DSM-5-TR test. Here, the court acknowledged that the DSM-5-TR may create a "lifetime" PTSD diagnosis, meaning that once an employee is diagnosed with PTSD, it may be difficult for employers to argue that the condition has been resolved. Relying on the Tea v Ramsey Cty., 5 N.W.3d 114 (Minn. 2024) precedent, compensation judges must defer to medical experts in determining whether an employee meets the DSM criteria for PTSD. However, judges are permitted to evaluate expert opinions in light of the DSM but may not independently interpret the DSM to make their own diagnoses. Accordingly, employers and insurers will face greater challenges in arguing that PTSD has resolved or no longer meets DSM criteria, potentially leading to longer-lasting claims and increased liability for PTSD-related wage loss and medical benefits.

The court expressly held that mental health conditions that develop because of a compensable PTSD injury are themselves compensable. This decision extends previous case law (e.g., Rohr v. Knutson Constr. Co. and Radermecher v. FMC Corp.) to apply to mental health conditions resulting from PTSD, such as other specified trauma- and stressor-related disorders (OSTD). Thus, employers may no longer argue that PTSD is the only compensable mental health diagnosis. If an employee’s PTSD leads to depression, anxiety, or other psychological conditions, those secondary conditions will also be compensable, significantly increasing the cost of claims.

Further, the court reinforced the statutory presumption (Minn. Stat. § 176.011, subd. 15(e)) that PTSD in first responders (such as police officers) is presumed work-related unless rebutted by substantial evidence. Under the holding, employers and insurers must communicate all substantial factors used to rebut the presumption at the time of denial, or the denial may be deemed frivolous. Employers and insurers defending PTSD claims from first responders will need strong and immediate medical evidence to rebut causation. Delaying medical evaluations or failing to communicate reasons for denial can lead to penalties.

In addition, the court affirmed a 30% penalty on temporary total disability (TTD) benefits because the employer denied liability without substantial evidence until it obtained an independent medical report. This ruling reinforces Juntunen v. Carlton Cnty., 982 N.W.2d 729 (Minn. 2022) where the Minnesota Supreme Court emphasized that employers must have substantial evidence before denying liability, or they risk penalties. Employers and insurers must carefully evaluate PTSD claims before issuing denials. Any denial without substantial supporting evidence at the time of denial could lead to significant penalties and increased litigation costs.

Johnson v. Concrete Treatments, Inc., 7 N.W.3d 119 (Minn. 2024)

The court was asked to decide two issues (1) whether an employee can assert a direct claim for unpaid medical bills when the unpaid medical providers’ intervention interests were extinguished under Minn. Stat. Section 176.361; (2) whether the WCCA erred in affirming the compensation judge’s findings that Johnson sustained a permanent work-related injury in October 2018 and that 60% of the responsibility for Johnson’s low back condition is properly apportioned to that injury.

This case strengthens employees' ability to seek direct compensation for medical expenses, regardless of provider intervention, and reinforces the deference given to compensation judges' factual determinations on causation. Employers and insurers must be prepared to defend medical claims even when procedural defenses (such as lack of provider intervention) would have previously been successful.

The ruling clarifies that an injured employee retains the right to directly assert claims for medical expenses, even if a medical provider’s intervention interest has been extinguished under Minn. Stat. § 176.361. Previously, there was ambiguity as to whether an employee could still seek reimbursement for medical bills after a provider failed to intervene properly. The court's decision reaffirms that workers' compensation benefits, including medical expenses, are ultimately the employee’s right, and failure by a provider to intervene does not extinguish the employee’s claim. Employers and insurers can no longer rely on a provider’s failure to intervene as a complete bar to liability for unpaid medical expenses. Employers and insurers should ensure that denial of medical expenses is well-documented and supported by substantial evidence to withstand claims directly brought by employees.

The court upheld the compensation judge’s determination that the employee’s 2018 work injury was a substantial contributing factor to his ongoing low back condition, even though conflicting expert opinions existed regarding apportionment. The ruling reinforces that factual findings on causation and apportionment are subject to deference unless manifestly contrary to the evidence. Employers and insurers face a high burden to overturn compensation judges’ factual findings on causation. Even minor errors in medical reports (such as a misdated MRI) may not be enough to discredit an expert opinion entirely. In practice, defense counsel should meticulously scrutinize expert reports for internal consistency and ensure that medical experts provide clear, well-supported opinions on causation and apportionment.

Statutory changes:

Minn. Stat. Section 176.137

The increase in the remodeling cap from $75,000 to $150,000 under Minn. Stat. § 176.137 has significant implications for workers' compensation defense in Minnesota, particularly for employers and insurers managing permanent disability claims.

First, the statutory increase doubles the employer’s potential financial responsibility for home modifications. Insurers and self-insured employers must anticipate higher costs associated with permanent disability claims, particularly for catastrophic injuries requiring extensive home modifications. Adjusters and risk managers must account for increased exposure when setting reserves for claims involving permanently disabled employees.

Previously, the $75,000 cap may have limited modifications to basic accessibility features (e.g., wheelchair ramps, widened doorways). The new $150,000 cap allows for more extensive renovations, including modifications to kitchens, bathrooms, and entire living spaces, leading to higher overall claim costs.

The statute continues to require certification by a licensed architect, but now includes an alternative approval process (i.e., through a certified building official or accessibility specialist, per Subd. 4(b)). This may create looser standards for approval, leading to less stringent scrutiny of requested modifications, increasing employer/insurer liability.

Subd. 3 allows for the purchase of a new residence if remodeling is impractical. The higher cap may lead to more claims for new home purchases, shifting liability from renovations to entire home acquisitions. Employers/insurers should evaluate whether a proposed new home purchase is necessary or merely a preference when contesting such claims.

This statutory increase significantly raises the financial exposure for employers and insurers in permanent disability claims. Employers and defense attorneys should anticipate higher costs, more extensive modifications, and increased litigation over necessity and scope of remodeling projects. The burden will fall on insurers to proactively scrutinize, negotiate, and contest unwarranted claims to control costs effectively.

Minn. Stat. Section 176.081, subd 1

The increase in the attorney fee cap from $26,000 to $55,000 under Minn. Stat. § 176.081 has significant implications for workers’ compensation defense in Minnesota, particularly for employers and insurers managing claims and litigation costs.

First, the higher fee cap makes workers’ compensation claims more attractive to plaintiffs’ attorneys, likely leading to increased litigation over disputed benefits. Plaintiff’s attorneys may take on complex medical and rehabilitation disputes, knowing they can recover higher fees.

Second, Employers and insurers face increased liability for attorney fees, particularly in cases involving disputed medical or rehabilitation benefits. The previous cap of $26,000 often limited extensive legal battles; with a $55,000 cap, attorneys may pursue longer, more complex litigation. Settlement values may increase as claimants’ attorneys push for higher fee recoveries in negotiations.

Third, Under Subd. 1(a)(1), attorney fees for medical or rehabilitation disputes are presumed covered under the 20% contingency fee model, unless inadequate. With the higher cap, attorneys may more frequently argue that contingency fees alone are insufficient, leading to more employer-funded fee awards. Under Subd. 1(c), attorneys can place liens on compensation payments for legal fees. The increased cap means larger portions of employee benefits may be withheld, possibly leading to more employee disputes over fee deductions. Insurers must ensure proper notice is given when withholding compensation for fees.

Lastly, the statute requires attorneys to file a fee statement and provide documentation of hours spent under Subd. 1(d). Employers and insurers should closely review fee requests, challenging excessive or unjustified fees. Under Subd. 1(f), fees not claimed within 12 months must be released to the employee, giving insurers a potential cost-containment strategy.

Taken together, the increased fee cap significantly raises litigation exposure for employers and insurers, incentivizing more aggressive claimant representation and longer legal disputes. Employers should prepare for higher costs, more frequent attorney fee claims, and increased challenges to excessive fees while implementing strategies to mitigate financial impact.