Bhupaul Goberdhan, Respondent, vs. Illinois Farmers Insurance Co., Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-732

Bhupaul Goberdhan,

Respondent,

vs.

Illinois Farmers Insurance Co.,

Appellant.

Filed December 28, 2004

Affirmed

Lansing, Judge

Hennepin County District Court

File No. MC 03-13952

Linda Nord Taylor, Nord & Taylor, Ltd., 206 Titus Building, 6550 York Avenue South, Edina, MN 55435 (for respondent)

Sylvia Ivey Zinn, Brendel and Zinn, Ltd., Suite 110, 8519 Eagle Point Boulevard, Lake Elmo, MN 55042 (for appellant)

            Considered and decided by Lansing, Presiding Judge; Kalitowski, Judge; and Wright, Judge.

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

            In this appeal from a district court order confirming an arbitration award, the underinsured-motorist carrier challenges the district court's refusal to modify the award to deduct workers' compensation benefits.  Because the underinsured-motorist carrier failed to move for modification or correction and also failed to inform the arbitrators of an unrecorded agreement on collateral-source deductions, the district court was procedurally limited to confirming the arbitration award, and we affirm.

F A C T S

            Bhupaul Goberdhan sustained a work-related injury while driving his employer's vehicle.  Goberdhan settled his liability claim against the at-fault driver and also settled the subrogation interest of the workers' compensation carrier.

Goberdhan then sued Illinois Farmers Insurance Company, his employer's insurer, to recover underinsured motorist benefits.  Goberdhan and Illinois Farmers submitted the issue of damages to binding arbitration.  According to Goberdhan and Illinois Farmers, they initially agreed to collateral-source deductions from the gross-damages award for the $90,000 liability settlement and for $39,000 in workers' compensation payments.  The arbitrators were not informed of the oral agreement.

On April 17, 2003, the arbitrators issued their award, totaling $135,000 without any collateral-source deductions.  Four days later, Illinois Farmers' attorney sent Goberdhan's attorney a letter stating that they had "requested the settlement draft" and would forward it upon receipt.  Deducting the agreed-on collateral-source payments, the resulting settlement amount was $6,000.  But in a letter dated May 6, 2003, Illinois Farmers' attorney notified Goberdhan's attorney that a check would not be sent.  The letter stated that the attorney had concluded that, after the collateral-source offsets, Goberdhan was no longer underinsured.  Illinois Farmers did not move to modify or correct the $135,000 arbitration award.

            Several months later, in August 2003, Goberdhan applied to the district court to confirm the arbitration award, minus a $90,000 deduction for the liability settlement.  Illinois Farmers contested the motion, arguing that the case should be remanded to the arbitrators for redetermination.  The district court refused to remand and granted the motion to confirm, explaining that Illinois Farmers had filed no motion for modification within the statutory ninety-day period.  Illinois Farmers requested reconsideration, arguing for reinstatement of the initial oral agreement on collateral-source deductions.  The district court rejected the reconsideration request, and Illinois Farmers appeals.

D E C I S I O N

            Illinois Farmers presents this appeal as a legal controversy over the deduction of workers' compensation benefits from an arbitration award.  The procedure for dealing with workers' compensation payments in arbitration for underinsured-motorist benefits was addressed and resolved in W. Nat'l Mut. Ins. Co. v. Casper, 549 N.W.2d 914 (Minn. 1996).  It is not the substantive law, but Illinois Farmers' dispositive procedural choices that preclude recovery:  Illinois Farmers did not move to modify or correct the arbitrators' award and Illinois Farmers did not submit to the arbitrators any evidence of its oral agreement with Goberdhan or any evidence of a collateral-source payment from the workers' compensation carrier.

The district court's power to confirm, modify, or correct an arbitration award is governed by statute.  Int'l Union of Elec. & Mach. Workers v. Portec, Inc., 303 Minn. 341, 343, 228 N.W.2d 239, 241 (1975).  Under Minn. Stat. § 572.18 (2002), "[u]pon application of a party, the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case the court shall proceed as provided in sections 572.19 and 572.20."  The time limit imposed by Minn. Stat. § 572.20 (2002) allows the district court to modify or correct the award on application within ninety days of the delivery of a copy of the arbitration award.  The ninety-day period for seeking modification is strictly enforced.  Minn. Licensed Practical Nurses Ass'n v. Bemidji Clinic, Ltd., 352 N.W.2d 65, 67 (Minn. App. 1984). 

The arbitrators issued their award on April 17, 2003.  Illinois Farmers acknowledged, in its memorandum opposing Goberdhan's motion to confirm the award, that it did not move to modify or correct the arbitrators' award.  Illinois Farmers also admits that it did not present evidence to the arbitration panel of its oral agreement with Goberdhan or any other evidence of a collateral-source payment from the workers' compensation carrier.

The Minnesota Supreme Court has held that it is the arbitration panel, not the district court, that must consider offsets under Minn. Stat. § 548.36 (2002), the collateral-source statute.  W. Nat'l Mut. Ins. Co., 549 N.W.2d at 917.  "[I]t is the arbitrators who, in arriving at their award, must determine the amounts paid by collateral sources which have been included in the gross award and who must then calculate the net award accordingly."  Id.  In submitting evidence to an arbitration panel, the underinsured-motorist insurer bears the burden "either to present evidence of the workers' compensation benefits paid . . . and to request that the award demonstrate that the amount . . . has been included . . . and then deducted from the award or to request that the award show that it does not include any award for damages compensated by workers' compensation."  Id. at 918.  Illinois Farmers made neither showing in this case.  Instead, Illinois Farmers argues that the district court should make the collateral-source deductions for workers' compensation payments, that Goberdhan should be held to the oral agreement, or that the confirmation award should be barred as a duplicative recovery.  All of these arguments are unsound. 

First, Illinois Farmers cannot circumvent the ninety-day period for seeking modification of the award by asking the district court to make the collateral-source offset for workers' compensation payments.  Attempting to shift an arbitration decision to the confirmation process distorts the proceedingsespecially when Illinois Farmers attempts to use the confirmation hearing to raise the offset issue for the first time.  See Pierce v. Midwest Family Mut. Ins. Co., 390 N.W.2d 358, 361 (Minn. App. 1986) (upholding arbitration award in which arbitration panel decided issue as submitted and stating that stipulated record should have included any agreement made by parties for reduction of award).  The law clearly provides that a party who wishes an arbitration panel to consider workers' compensation benefits as a collateral source must present that information to the arbitration panel for consideration, and Illinois Farmers failed to comply with that procedure.

Second, Illinois Farmers' argument to enforce the initial, oral settlement agreement ignores its May 2003 letter withdrawing from the agreement.  Having miscalculated the legal effect of their withdrawal, it now wishes to reinstate the agreement.  But Illinois Farmers has provided no legal basis to hold Goberdhan to an agreement that Illinois Farmers repudiated.

Finally, Illinois Farmers argues that the district court's confirmation of the arbitrators' award results in an impermissible, duplicative recovery.  Goberdhan, on the other hand, argues that, taking into account his costs of recovering benefits, the recovery is not duplicative.  The record was not developed on this issue, but duplication, alone, will not mandate reversal.  See Smith v. Am. States Ins. Co., 586 N.W.2d 784, 786 (Minn. App. 1998) (stating that collateral-source statute does not prohibit double recovery in all instances), review denied (Minn. Feb. 18, 1999).  Furthermore, any duplication results, not from Goberdhan's actions, but from Illinois Farmers' withdrawal from the agreement.

Goberdhan requests that this court strike materials submitted on appeal by Illinois Farmers that were not filed with the district court, including the insurance policy and answers to interrogatories.  See Minn. R. Civ. App. P. 110.01 (stating that record on appeal consists of papers filed in district court, exhibits, and transcripts).  Because these materials do not properly form part of the record before us, we have not considered them in reaching our decision. 

            Affirmed.