Why Minn. Stat. § 176.021, Subd. 7 Should Be Repealed

Several legal texts are ordered across several shelves.

If you have been through the Minnesota workers’ compensation system, you are probably well aware of the fact that it’s not always fair to injured workers. In fact, in many respects, the deck is stacked against injured workers.
Nothing is more frustrating than seeing an injured worker get shortchanged because of an innocent mistake, ambiguous language within the law, or because the benefits provided by workers’ compensation are simply inadequate to fully address the full extent of their losses.

Major changes to the Minnesota Workers’ Compensation Act don’t happen often, and it’s usually a long process to make changes to the law. Nonetheless, I’d love to see the Minnesota legislature take up the challenge of making this change to the Minnesota Workers’ Compensation Act to make things more fair for injured workers.

Repeal of Minn. Stat. §176.021, Subd. 7.

This portion of the Minnesota Workers’ Compensation Act provides in relevant part, that:

If an employee covered by the Minnesota State Retirement System receives total and permanent disability benefits pursuant to section 352.113 or disability benefits pursuant to sections 352.95 and 352B.10, the amount of disability benefits shall be deducted from workers’ compensation benefits otherwise payable. If an employee covered by the teacher’s retirement fund receives total and permanent disability benefits pursuant to section 354.48, the amount of disability benefits must be deducted from workers’ compensation benefits otherwise payable.

In plain language, what this statute says, at least according to the state of Minnesota, is that if you are a state worker and you’re eligible for MSRS disability benefits by virtue of a work-related injury, the state gets to reduce (or eliminate) your workers’ compensation benefits to the extent of one dollar for every dollar of MSRS disability benefits you receive. This provision, arguably, affects state corrections workers, state troopers, teachers, conservation officers, and almost all other state employees.

This statute is ambiguous, for one, because it doesn’t specify which types of workers’ compensation benefits are subject to this offset. For example, if you are receiving $500 a week in MSRS disability benefits, and you are also eligible for $500 a week in workers’ compensation wage loss benefits, it’s the state’s position that you get zero workers’ compensation wage loss benefits. Arguably, the state could offset your entitlement to other types of workers’ compensation benefits, too, like permanent partial disability benefits, rehabilitation benefits, or even medical benefits. The plain language of the statute could theoretically allow the state to refuse to pay your medical bills to the extent of your MSRS disability benefits. By way of example, an injured worker who receives $1000 per month in MSRS disability benefits could, in theory, be required to pay the first $1000 of their workers’ compensation medical bills before work comp kicks in, so that person’s entire monthly MSRS disability benefit could be wiped out by medical bills.

So what’s wrong with this?

First off, MSRS disability benefits don’t cover 100% of your lost wages, so you’re just out of luck making up the difference between MSRS and your normal wage. Moreover, as noted above, while I’ve never seen the state of Minnesota try to offset anything except wage loss benefits, the language of the statute would clearly allow them to offset their obligation to pay other workers’ compensation benefits, like PPD benefits, rehabilitation benefits, or even medical expense benefits.

Second, basically, state employees are paying for their own workers’ compensation insurance. State employees make contributions to MSRS, just like private-sector employees pay into social security. By offsetting its obligation to pay workers’ compensation benefits, the state is passing the cost of work-related injuries right back to the injured worker.

The other problem with this statute is that it unfairly discriminates against state employees. Only state employees are subject to this offset provision. There is another provision under the Workers’ Compensation Act, Minn. Stat. § 176.101, Subd. 4 that provides for coordination of workers’ compensation benefits and other governmental disability benefits, such as PERA and SSDI. That statute only allows the workers’ compensation insurer to take an offset if the injured worker is receiving PERA or SSDI disability, has been determined to be permanently totally disabled, and has been paid $25,000.00 in PTD benefits. Importantly, this provision applies only to permanent total disability benefits, not other types of wage loss benefits.

Here’s an example of how this exactly how this unfairness can play out. You have a state trooper and a city police officer, with identical injuries, and identical entitlement to workers’ compensation benefits. The state trooper receives MSRS disability benefits, and the police officer receives PERA disability benefits (which incidentally, are paid at the same rate). The police officer is entitled to receive both her workers’ compensation benefits, and her PERA benefits, subject to certain caps, above which PERA reduces the amount it pays, but the state trooper receives only his MSRS disability benefits. This makes no sense.

In my humble opinion, Minn. Stat. § 176.021, Subd. 7 is unconstitutional because it discriminates against state employees. Unfortunately, there is some rather old case law that supports the validity of the statute, although my arguments set forth above were not directly addressed by the Court, and this case law at least arguably supports the State’s position.

Simply repealing this section solves the problem.

Minn. Stat. § 176.101, subd. 4 provides the normal offset rules that apply to injured workers who receive other governmental benefits, including SSDI and PERA. It can just as easily be applied to injured workers’ who receive MSRS disability benefits.

Moreover, the MSRS disability statutes already contain their own offset provisions, meaning that MSRS can reduce the amount of its disability payment if the combination of work comp. and disability benefits exceeds certain amounts. The MSRS offset provisions currently in existence within the disability statutes prevent overcompensation and double dipping.

Repeal Minn. Stat. § 176.021, Subd. 7. Problem solved. Statutory ambiguity eliminated and uniformity created. Fairness achieved.

If you’re a state employee, particularly if you’ve sustained a work-related injury, I encourage you to contact your state representatives and bring this issue to their attention. Fixing the problem is simple. Minn. Stat. § 176.021, Subd. 7 should be repealed.

Meuser Law Office, P.A. is one of the few workers’ compensation law firms in the state of Minnesota that also handles PERA and MSRS disability claims. We’ve successfully represented hundreds of police officers and firefighters throughout the state for both workers’ compensation and PERA/MSRS disability claims. Sitting down with us for a consultation to learn more about your potential claims is a lot like financial planning. We can explain what rights you have and make recommendations to you in terms of how to best protect your rights to those benefits. The knowledgeable attorneys at Meuser Law Office, P.A. can help make the process easier to navigate. Contact us today for a free, no-obligation consultation.