Appellate Deference to DSM‑5‑TR–Based PTSD Diagnoses; Mootness Bars Consequential OSTD Claims; Frivolous Denials Penalized

Introduction

In Lucas Peterson v. City of Minneapolis, Self-Insured, 23 N.W.3d 582 (Minn. 2025), the Minnesota Supreme Court affirmed in part and reversed in part a decision of the Workers' Compensation Court of Appeals (WCCA) concerning a long-serving Minneapolis police officer’s claim for workers’ compensation benefits for post-traumatic stress disorder (PTSD). The case presents three central issues:

• Whether the WCCA erred in affirming the compensation judge’s finding that Peterson presently has a compensable PTSD diagnosis grounded in the most recent Diagnostic and Statistical Manual of Mental Disorders (DSM‑5‑TR).
• Whether the WCCA erred by addressing, and directing findings on, Peterson’s alternative claim for other specified trauma and stressor-related disorder (OSTD) as a consequential injury.
• Whether the WCCA erred in affirming a 30% penalty against the City for frivolously denying primary liability.

Writing for the Court, Justice Gaïtas held that substantial evidence supported the compensation judge’s finding of a present PTSD diagnosis and that the penalty award was within the judge’s discretion. However, the Court held the WCCA erred by adjudicating the OSTD consequential injury issue because it had become moot once the tribunal affirmed compensability for present PTSD. Justice Moore, joined by Justice Thissen, concurred in part and dissented in part, warning against an interpretation of the DSM‑5‑TR that would effectively render PTSD diagnoses perpetual for benefit purposes and urging reversal on the PTSD and penalty issues.

Summary of the Opinion

• PTSD compensability affirmed. The Court upheld the WCCA’s affirmance of the compensation judge’s factual finding that Peterson presently has PTSD as defined by the most recent DSM (DSM‑5‑TR). Applying deferential review, the Court concluded the finding was not “manifestly contrary to the evidence,” given expert testimony by a licensed psychologist (Dr. Kasey Aleknavicius) that Peterson had a present PTSD diagnosis under the DSM‑5‑TR (Tea v. Ramsey County standard).
• OSTD consequential injury vacated as moot. The Court reversed the WCCA’s sua sponte referral and decision on Peterson’s OSTD claim, holding that once the WCCA concluded Peterson was entitled to benefits for a present PTSD diagnosis, any additional determination on OSTD as a consequential injury was unnecessary on this record and therefore moot (Dean v. City of Winona standard).
• Penalty for frivolous denial affirmed. The Court affirmed a 30% penalty under Minn. Stat. § 176.225, subd. 1(5), holding the City frivolously denied liability without investigation and in the face of the statutory PTSD presumption for police officers (Minn. Stat. § 176.011, subd. 15(e)), and misstated that the employee had pre-existing mental health conditions contradicted by pre-employment psychological evaluations. The Court emphasized the Legislature’s policy choice requiring swift employer responses within 14 days (Minn. Stat. § 176.221, subd. 1; Juntunen v. Carlton County).

Detailed Analysis

A. Precedents and Authorities Cited

• Smith v. Carver County, 931 N.W.2d 390 (Minn. 2019): Established that to recover for PTSD under the Workers’ Compensation Act, the employee must present a diagnosis by a licensed psychiatrist or psychologist that is based on the most recent DSM. Framed the fact-finder’s role as choosing between competing, adequately founded expert diagnoses.
• Chrz v. Mower County, 986 N.W.2d 481 (Minn. 2023): Confirmed that only a present PTSD diagnosis qualifies as a compensable “mental impairment” and that benefits end when the worker no longer meets the DSM criteria for PTSD. The majority distinguishes Chrz because here, an expert provided testimony that the employee presently has PTSD as defined by the latest DSM; the fact-finder accepted that testimony.
• Tea v. Ramsey County, 5 N.W.3d 114 (Minn. 2024): Clarified that compensation judges may not independently apply DSM criteria; they must decide between medical experts’ diagnoses with adequate foundation. The majority invokes Tea to reject the City’s invitation for tribunals to perform their own “legalistic analysis” of DSM text.
• Juntunen v. Carlton County, 982 N.W.2d 729 (Minn. 2022): Interpreted the PTSD presumption under Minn. Stat. § 176.011, subd. 15(e) and emphasized the high burden on employers to rebut the presumption with “substantial factors,” and the legislative policy for timely access to care.
• Lagasse v. Horton, 982 N.W.2d 189 (Minn. 2022) and Schmidt v. Wal‑Mart Stores, 988 N.W.2d 124 (Minn. 2023): Defined the “manifestly contrary to the evidence” standard—findings are upheld unless the evidence clearly requires reasonable minds to adopt a contrary conclusion.
• Dean v. City of Winona, 868 N.W.2d 1 (Minn. 2015); State v. Rud, 359 N.W.2d 573 (Minn. 1984); Winkowski v. Winkowski, 989 N.W.2d 302 (Minn. 2023): Articulated Minnesota’s mootness doctrine and limited exceptions for issues of statewide importance that are functionally justiciable.
• Joyce v. Lewis Bolt & Nut Co., 412 N.W.2d 304 (Minn. 1987): Applied the “law on the date of injury” principle; here, the May 26, 2021 injury date controls the statutory framework.
• Statutes: Minn. Stat. §§ 176.011, subd. 15(d)–(e) (PTSD definition and presumption), 176.221, subd. 1 (14‑day denial rule), 176.225, subd. 1(5) (penalty for frivolous denial), 176.66 (occupational disease framework).

B. Legal Reasoning

1) Present PTSD Diagnosis Under DSM‑5‑TR: A Factual Finding Supported by Substantial Evidence

The heart of the appeal was whether Peterson had a present PTSD diagnosis. Two licensed psychologists offered irreconcilable opinions:

• Dr. Kasey Aleknavicius (employee expert): Initially, in May 2022, concluded Peterson no longer met all PTSD criteria under DSM‑5 and diagnosed OSTD as “subthreshold PTSD.” By the hearing, after considering the DSM‑5‑TR’s textual revisions, she opined that because Peterson had previously met Criteria B–E simultaneously for more than a month and still met the remaining requirements, he had a present PTSD diagnosis “based on the lifetime diagnosis provision” in DSM‑5‑TR.
• Dr. Kenneth Young (employer expert): Concluded Peterson had no diagnosable mental disorder and rejected any notion that “lifetime PTSD” is a clinical diagnosis rather than a prevalence descriptor.

The compensation judge found Dr. Aleknavicius more credible and persuasive, grounding that choice in detailed reasons (consistency with the record, corroboration by Peterson and his spouse, alignment with other providers, and undisputed exposure to multiple traumas). The WCCA affirmed, and the Supreme Court, applying Tea/Lagasse/Schmidt deference, held that the finding was not manifestly contrary to the evidence. Crucially, the Court declined to construe the DSM‑5‑TR itself or to endorse any interpretation of the “lifetime PTSD” text, emphasizing that fact-finders must choose between medical opinions rather than substitute their own DSM analysis (Tea).

The City’s reliance on Chrz did not carry the day: in Chrz, both experts testified the employee no longer met PTSD criteria; here, one expert testified the employee does presently meet the latest DSM criteria. Thus, the difference is evidentiary, not legal.

2) OSTD Consequential Injury: Mootness Bars Redundant Adjudication

Peterson amended his petition to add OSTD after the May 2022 evaluation. By the time of hearing, however, his expert tied OSTD to “subthreshold PTSD” and opined that DSM‑5‑TR supported a present PTSD diagnosis. Once the WCCA affirmed compensability for present PTSD, deciding whether “subthreshold PTSD” (labeled as OSTD) was also a compensable consequential injury provided no additional relief; it was functionally duplicative on this record. Applying Dean, the Supreme Court held the WCCA erred in addressing OSTD at all and reversed that portion of the decision. The Court also declined to reach any broad legal question about whether OSTD can ever be a compensable consequential injury of PTSD; that issue awaits a live dispute with a developed record and adversarial presentation.

3) Penalties for Frivolous Denial of Primary Liability

Under Minn. Stat. § 176.225, subd. 1(5), a frivolous denial includes one made without a good‑faith factual investigation or on a basis clearly contrary to fact or law. The compensation judge found, and the WCCA affirmed, that the City:

• Denied the PTSD claim without investigating; and
• Asserted pre-existing personal mental health conditions despite pre-employment psychological examinations twice concluding no significant mental health issues.

Given the statutory presumption for police officers (Minn. Stat. § 176.011, subd. 15(e)) and the 14‑day response requirement (Minn. Stat. § 176.221, subd. 1), the Court reaffirmed that employers bear a heightened, time-sensitive obligation to identify and communicate “substantial factors” if they intend to rebut the presumption (Juntunen). The 30% penalty was therefore affirmed. The City’s policy plea about the difficulty of investigating within 14 days was answered by the Legislature’s expressed choice prioritizing timely access to care.

C. The Concurrence/Dissent: The “Lifetime PTSD” Debate and Its Implications

Justice Moore, joined by Justice Thissen, agreed the OSTD issue was moot but dissented on PTSD and penalties. He viewed the WCCA’s acceptance of a present PTSD diagnosis “based on a lifetime PTSD” reading as contrary to Chrz and to the unchanged DSM‑5‑TR diagnostic criteria. In his view:

• “Lifetime PTSD” is not a clinical diagnosis; it references prevalence, not ongoing diagnosis.
• Allowing benefits where current symptoms do not meet the DSM criteria risks making PTSD benefits perpetual, which Chrz disallows.
• The record showed Dr. Aleknavicius herself earlier concluded Peterson did not meet certain PTSD criteria at the time of her evaluation, underscoring that current symptomatology matters for a present diagnosis.

The majority responds not by endorsing the disputed DSM reading, but by applying deferential review to the compensation judge’s credibility choice among experts, consistent with Tea and Smith.

D. Impact and Practical Consequences

1) For Trial-Level Adjudication and Appellate Review

• Deference reinforced. Where there is competent expert testimony that an employee presently meets the latest DSM definition of PTSD, and the compensation judge makes a reasoned credibility choice, appellate courts will not reweigh the evidence or parse the DSM independently.
• Tea’s boundary holds. Compensation judges and the WCCA may not substitute their own DSM application for that of medical experts. The case further normalizes use of DSM‑5‑TR in Minnesota workers’ compensation proceedings.

2) For Consequential Mental Injury Claims

• Mootness discipline. If the employee secures benefits for present PTSD, tribunals should avoid redundant adjudication of an overlapping “subthreshold” diagnosis framed as a consequential injury. Future cases presenting OSTD as a truly distinct sequela may still be litigated on a live record.

3) For Employers/Insurers (Especially Public Safety)

• Presumption plus 14-day clock. The PTSD presumption for police officers remains potent. Denials must be grounded in promptly identified, communicated “substantial factors.” Failure to investigate swiftly can trigger penalties.
• Documentation matters. Assertions of pre-existing conditions must be supported; contradictory data (e.g., pre-employment psychological screenings) will undermine rebuttal and expose employers to penalties.

4) For Employees and Practitioners

• Use the latest DSM. Ensure the diagnosing expert expressly ties the diagnosis to the most recent DSM edition (currently DSM‑5‑TR) and explains how current presentation satisfies the DSM as applied in that edition.
• Expert clarity. If the presentation is fluctuating or “subthreshold,” experts should explain how DSM‑5‑TR text interacts with past periods meeting all symptom clusters and current requirements. The majority’s deference suggests such testimony—if adequately founded—can sustain findings.

Complex Concepts Simplified

• PTSD “mental impairment” in workers’ comp. Minnesota recognizes PTSD (and only PTSD) as a compensable “mental impairment” when diagnosed by a licensed psychiatrist or psychologist using the latest DSM.
• PTSD presumption for police officers. By statute, certain public safety employees (including police) are presumed to have work-related PTSD if diagnosed and not previously diagnosed. Employers can rebut only with “substantial factors” and must disclose those reasons at denial.
• DSM‑5 vs. DSM‑5‑TR. DSM‑5‑TR is a 2022 text revision of DSM‑5. The dispute here centered on DSM‑5‑TR language the employee’s expert read to support a present diagnosis where all core symptom clusters coexisted for a month in the past and some continue presently. The court did not adopt a definitive interpretation of that text; it deferred to the fact-finder’s acceptance of expert testimony.
• “Manifestly contrary to the evidence.” An appellate court will not disturb a trial finding unless the evidence clearly requires the opposite conclusion. This is a highly deferential standard.
• Consequential injury. A condition is “consequential” if it is substantially caused, aggravated, or accelerated by a compensable injury. Here, the employee’s OSTD claim was characterized by his expert as “subthreshold PTSD” and thus redundant once present PTSD was found compensable.
• Frivolous denial penalty. If an employer denies a claim without a good-faith factual investigation or on a basis clearly contrary to fact or law, the tribunal may award up to a 30% penalty on the compensation amount.
• Mootness doctrine. Courts avoid deciding questions that no longer matter to the outcome or cannot yield effective relief. Exceptions require a functionally justiciable record and issues of immediate statewide significance; the Court declined to apply an exception here.

Conclusion

Peterson v. City of Minneapolis clarifies three important points in Minnesota workers’ compensation law. First, when a licensed expert testifies that an employee presently meets the DSM‑5‑TR definition of PTSD and the compensation judge credibly accepts that testimony, appellate courts will not second-guess the diagnosis by parsing DSM text themselves. This is a robust application of Tea’s instruction that DSM application is for medical experts, not judges, coupled with highly deferential review of fact-finding.

Second, the decision imposes doctrinal discipline through mootness: once a tribunal awards benefits for present PTSD on this record, it should not reach an overlapping consequential injury framed as “subthreshold PTSD” (OSTD). The Court leaves for another day whether OSTD might be compensable as a distinct consequential injury in a live controversy with a fuller record.

Third, the Court reinforces the Legislature’s policy choice of swift employer action in PTSD cases involving public safety employees. Denials issued without prompt investigation and grounded in assertions contradicted by the record may be deemed frivolous, carrying significant penalties.

The concurrence/dissent underscores an ongoing debate: how to reconcile Chrz’s insistence on a present diagnosis with DSM‑5‑TR’s “lifetime” text. The majority sidesteps a definitive DSM construction, emphasizing evidentiary deference. Practitioners should expect fact-intensive adjudication of DSM‑5‑TR–based PTSD claims, vigilant mootness enforcement for redundant consequential injury theories, and rigorous scrutiny of employer denials under the PTSD presumption and 14‑day rule. In short, Peterson deepens deference to expert medical testimony, narrows unnecessary appellate forays into medical texts, and strengthens the incentives for timely, evidence-based claim handling.