By: James B. Sherman, Esq. & Chad A. Staul, Esq.

In Frandsen v. Ford Motor Company, No. A11-0126 (Minn. Aug. 10, 2011), the Minnesota Supreme Court reversed a decision of the Workers' Compensation Court of Appeals (WCCA) that would have forced the employer to pay benefits to an employee beyond retirement age.

The employer and employee entered into a stipulation of settlement for the employee's workers' compensation claims agreeing that he was entitled to permanent total disability. The stipulation contained several provisions regarding the employer's rights but it failed to mention anything about discontinuance of benefits to the employee. After the employee turned 67 years old, the employer petitioned the WCCA to stop the employee's benefit payments. This was based on a statute that states "[p]ermanent total disability shall cease at age 67 because the employee is presumed retired from the labor market." The employee objected stating, among other things, that the employer waived its right to stop payments by not saying so in the stipulation of settlement.

Although the WCCA agreed with the employee, the Minnesota Supreme Court found in favor of the employer stating that because an employer must intentionally waive its right to discontinue payments under the statute, the question is whether the stipulation agreement specifically states the employer intended permanent total disability benefits to continue when the employee turned 67, not whether it says benefits should stop. In this case, the court found nothing in the agreement that the employer intended to continue the employee's benefits beyond the age of 67.

This case illustrates two important things. First, employers involved in the settlement of workers' compensation claims are wise to be aware of this provision and how it might affect both settlement negotiations and the ultimate agreement. Second, prudence and care are paramount when drafting settlement agreements and other documents. Although the Minnesota Supreme Court agreed that the employer did not have to specifically reserve its right to stop payment, this whole matter could have been avoided if it had done so expressly in the agreement.