Minnesota Supreme Court Reaffirms Intervenors Lack Standing to Independently Initiate WC Recovery Claims


Other Issues and Questions Unanswered

On August 12, 2020, the Minnesota Supreme Court issued its long-anticipated decision in Koehnen v. Flagship Marine Co. The Court affirmed the Minnesota Workers’ Compensation Court of Appeals (WCCA), and held that a health care provider who voluntarily declines to intervene in a pending workers’ compensation proceeding after receiving timely and adequate notice of the right to intervene cannot initiate a collateral attack on the compensation award under Minn. Stat. §§ 176.271, .291 (2018), or Minn. R. 1420.1850, subp. 3B (2019). However, the Minnesota Supreme Court did not explicitly address the issue of whether a potential intervenor/medical provider, placed on notice of its right to intervene, that fails to intervene and has its interest extinguished pursuant to Minn. Stat. 176.361, subd. 2a may still pursue remedies outside the workers’ compensation litigation system. 




The employee sustained a low back injury working for the employer, Flagship Marine Co., and subsequently received chiropractic treatment. The employer and its insurer admitted liability but disputed the nature and extent of the injury. They denied the chiropractic treatment and bills which eventually exceeded $9,000.00. The employee filed a claim petition seeking various benefits, including payment of the chiropractor’s outstanding bill. The chiropractor was served with the claim petition and a separate notice outlining his right to intervene and the consequences of not intervening. The chiropractor admitted receiving this notice but chose not to intervene. Instead, he relied on alleged assurances from the employee’s counsel that his bill would be satisfied.  


The employee settled with the employer and insurer. The agreement resolved his claim for benefits and the interests of other health care providers who intervened. The chiropractor never intervened and never received a settlement offer to resolve his bill. The parties submitted the stipulation to a compensation judge, she approved it and OAH issued an Award on Stipulation on April 23, 2018. The award extinguished the chiropractor’s interest, and by operation of statute, barred him from collecting from the employee or a third party.


In January 2019, more than 8 months after the award, the chiropractor filed a “Petition for Payment of Medical Expenses”. Both the employee and the employer and insurer filed motions to dismiss this petition. Following a hearing on the motion, the compensation judge dismissed the chiropractor’s petition with prejudice, finding that applicable Minnesota statutes and rule barred the chiropractor’s claim because he had been notified of his right to intervene in pending proceedings but did not do so within 60 days. The judge also found that the chiropractor lacked standing to assert a claim against the employer and insurer for payment of his outstanding bill in the absence of a pending claim asserted by the employee. The chiropractor appealed to the WCCA.


WCCA Decision


On 12/27/2019 the WCCA, ruling against the chiropractor, found the compensation judge did not err in extinguishing the interests of a potential intervenor who received notice of the right to intervene but chose not to intervene. It upheld the compensation judge’s dismissal for lack of standing the subsequent petition for payment of the potential intervenor’s claim. They also concluded the chiropractor's "interests were properly extinguished by the compensation judge under Minn. Stat. 176.361, subdivision 2(a).” The chiropractor’s attorney also asserted the workers’ compensation intervention statute and complementary administrative rules were unconstitutional. The WCCA lacks jurisdiction to adjudicate constitutional claims, so they did not address the constitutional issues raised by the chiropractor. The chiropractor appealed to the Minnesota Supreme Court, asking them to address the constitutional issues the WCCA could not address and asking the Court to reverse the WCCA’s and compensation judge’s decisions denying his petition for payment.


Supreme Court Decision


In its unanimous decision affirming the WCCA, the Minnesota Supreme Court found that under Minnesota's workers’ compensation statute the potential intervenor/chiropractor lacked standing to initiate a claim and may only intervene in an existing proceeding. The Court also rejected the potential intervenor/chiropractor's claim that the statutory provision allowing the initiation of a workers’ compensation claim by filing a claim petition allowed the potential intervenor/chiropractor to pursue his claim by filing a claim petition. In doing so, the Court noted "the Act specifically identifies health care providers as potential intervenors, and provides numerous mechanisms for intervenors to protect their interests and pursue payment, even when an employee chooses to settle a claim."  


The Court also noted that under Minn. Stat. 176.135, subdivision 7, a provider may have “alternative remedies”. Under subd. 7, a provider must submit a claim for payment before they "collect, attempt to collect, refer a bill for collection, or commence an action for collection against the employee, employer, or any other party." The Court concluded that by listing these “alternative remedies” the Legislature anticipated providers would seek reimbursement for disputed claims outside the workers’ compensation forum. The Supreme Court explicitly declined to rule on the impact, if any, of the statute allowing an order extinguishing potential intervention claims on these “alternative remedies".  


Finally, because the court concluded the potential intervenor/chiropractor lacked standing to initiate a claim, they declined to address his constitutional arguments.


Comment and Analysis 


The Minnesota Supreme Court's decision is a procedurally technical decision, but it leaves some significant unanswered questions with regard to intervention claims in the Minnesota workers’ compensation system.


The decision reaffirms long-standing precedent prohibiting the initiation of a legal proceeding in the workers’ compensation forum by a potential intervenor, placed on notice, who failed to intervene and had their interest putatively extinguished by an order issued by a compensation judge.


Because the Court dismissed the potential intervenor/chiropractor's claim on procedural grounds, it never addressed his constitutional challenges to the intervention provisions in Minnesota's workers’ compensation statute.


Most importantly, the Court skirted the issue of the effect of an order issued by a workers’ compensation judge extinguishing a potential intervenor’s claim.  May it be used to bar a potential intervenor’s claim should they pursue an “alternative remedy" in a forum outside the workers’ compensation system?  The statute is pretty clear and indicates that the interest of a potential intervenor who does not timely intervene "shall be extinguished and the potential intervenor may not collect, or attempt to collect, the extinguished interest from the employee, employer, insurer or any government program." The Workers Compensation Court Appeals’ decision in Koehnen found the potential intervenors/chiropractor's interest was "properly extinguished" by the compensation judge pursuant Minn. Stat. 176.361, subdivision 2(a).  However, the Supreme Court's narrowly-crafted decision leaves a "crack in the door" for a potential intervenor to potentially pursue collection claims outside the workers’ compensation system for payment of their outstanding billThis “crack in the door” available to medical providers is likely not available to “potential intervenors” that are not “health care providers”, such as health insurers, disability carriers, TPAs etc. 


If a potential intervenor/medical provider whose interest was extinguished chooses to pursue the claim outside the workers’ compensation system, the conciliation court or district court would almost certainly be asked by the employee, employer and insurer to recognize and enforce the order extinguishing the intervention claim. In doing so, a court would have to reconcile the provisions of Minn. Stat. 176.135, subd. 7 and Minn. Stat. 176.361, subdivision 2(a). 


Minn. Stat. 176.135, subd. 7 provides:


“A health care provider shall not collect, attempt to collect, refer a bill for collection, or commence an action for collection against the employee, employer, or any other party until the information required by this section [requiring appropriate itemized electronic billing and medical records] has been furnished.”


The relevant portion of the statute addressing intervention claims, Minn. Stat. 176.361, subdivision 2(a), states:

“Where a motion to intervene is not timely filed under this section, the potential intervenor interest shall be extinguished and the potential intervenor may not collect, or attempt to collect, the extinguished interest from the employee, employer, insurer or any government program.”


Minnesota lawmakers appear to have intentionally used similar language in these 2 provisions.  Minn. Stat. 176.135, subd. 7 indicates the provider shall not collect, attempt to collect, refer a bill for collection, or commence an action for collection against the employee, employer, or any other party” and Minn. Stat. 176.361, subdivision 2(a) provides the interest of the potential intervenor “shall be extinguished and the potential intervenor may not collect, or attempt to collect, the extinguished interest from the employee, employer, insurer or any government program” [176.361(2a)]. (Emphasis supplied.)  The Legislature used essentially the same terms in both statutory provisions – “collect, attempt to collect” v. “collect, or attempt to collect”. Therefore, a fair reading of these provisions together suggests that if an intervenor has been offered an opportunity to intervene (a statutory remedy) and they fail to timely intervene, a compensation judge may extinguish their interest and they cannot collect from any other party in the workers’ compensation system or in district court.


The WCCA’s opinion in Koehnen suggests that once a potential intervenor/medical provider’s interest has been extinguished, they have no more remedies to pursue recovery in any forum. That seems to be the interpretation of most stakeholders in Minnesota’s workers’ compensation system.  To allow such claims would impair the goal of bringing finality to workers’ compensation litigation and settlements. It would also seem to frustrate the Legislature’s intent “to assure the quick and efficient delivery of indemnity and medical benefits to injured workers at a reasonable cost to the employers” by introducing the specter of post-settlement litigation to resolve the claims of potential intervenors/medical providers that intentionally fail to pursue a clear remedy (intervention). The Minnesota Legislature could amend the statute to make even more explicit its intent to bar such claims in any forum. Absent legislative action, it may take additional litigation for the Supreme Court to reach the same conclusion.


The author acknowledges and appreciates the input of his colleagues in OLWK’s Workers’ Compensation Practice Group who offered substantive and editorial assistance in this update.