Direct Employee Recovery of Health-Insurer-Paid Medical Expenses and Extinguishment of Non‑Intervening Insurers’ Interests under Minnesota’s Workers’ Compensation Act

Introduction

In Paula Kay Brunner v. Post Consumer Brands and Gallagher Bassett Services, Inc., the Minnesota Supreme Court clarified two recurring issues at the intersection of medical benefits and procedural intervention within the Workers’ Compensation Act (Minn. Stat. ch. 176):

Whether an employee can assert a direct claim against the employer and its workers’ compensation insurer for medical expenses related to a compensable work injury even when those expenses were already paid by the employee’s health insurer during a compensability dispute; and
Whether a health insurer’s failure to timely intervene under Minn. Stat. § 176.361 extinguishes its intervenor interest notwithstanding the reimbursement mandate in Minn. Stat. § 176.191, subd. 3.

The case arises from Brunner’s compensable left shoulder injury, initially controverted by her employer after an independent medical examination. During the dispute, her health insurer (Anthem) paid the medical bills under Minn. Stat. § 176.191, subd. 3. Anthem received proper notice of its right to intervene but did not timely do so. A compensation judge found the injury compensable but concluded that Brunner could not assert a direct claim for the Anthem-paid bills, and extinguished Anthem’s intervenor interest for untimely intervention. The Workers’ Compensation Court of Appeals (WCCA) reversed on both points. On certiorari, the Minnesota Supreme Court affirmed in part and reversed in part.

Summary of the Opinion

The Court issued a two-part holding:

Direct Employee Claim: Following and extending its decision in Johnson v. Concrete Treatments, Inc., 7 N.W.3d 119 (Minn. 2024), the Court held that an employee retains a freestanding substantive right under Minn. Stat. § 176.135 to recover medical expenses from the employer for a compensable injury—even if a health insurer has already paid those expenses while compensability was disputed and even if that insurer failed to intervene under § 176.361.
Extinguishment of Intervenor Interest: The Court held that the WCCA erred in reviving Anthem’s intervenor interest. Anthem’s failure to timely intervene extinguished its procedural right to participate and press an independent claim in the workers’ compensation proceedings pursuant to § 176.361, subd. 2.

Even so, because Brunner prevailed on compensability and presented evidence of the amounts Anthem paid, the Court directed the compensation judge to order reimbursement from the workers’ compensation insurer (Gallagher Bassett) to the health insurer (Anthem) in accordance with § 176.191, subd. 3, including statutory interest at 12 percent per year.

Disposition: Affirmed in part (employee’s direct claim); reversed in part (WCCA’s restoration of Anthem’s intervenor interest); reinstated the compensation judge’s extinguishment order; and directed reimbursement with 12% interest to Anthem under § 176.191, subd. 3.

Analysis

Precedents and Authorities Cited

Johnson v. Concrete Treatments, Inc., 7 N.W.3d 119 (Minn. 2024):
The seminal case holding that an employee may assert a direct claim for medical expenses under § 176.135 even when medical providers who could have intervened under § 176.361 did not. Johnson distinguished the employee’s substantive right to have compensable medical expenses paid from the procedural right of would-be intervenors to participate. Brunner extends Johnson’s core holding from the context of medical providers to health insurers, eliminating any distinction based on whether expenses are outstanding or already paid.
Leuthard v. Independent Sch. Dist. 912, 958 N.W.2d 640 (Minn. 2021):
Identified § 176.135 as the medical benefits statute, underscoring the employer’s obligation to furnish reasonable and necessary treatment for compensable injuries.
In re Estate of Ecklund, 20 N.W.3d 351 (Minn. 2025):
Cited for the principle of plain-language statutory interpretation.
Minn. Stat. § 176.001:
Declares legislative intent favoring the quick and efficient delivery of indemnity and medical benefits to injured workers at reasonable cost, guiding the Court’s purposive reading that preserves employees’ direct access to medical benefits.
Minn. Stat. § 176.135, subd. 1:
Imposes a substantive obligation on the employer to furnish reasonable medical treatment to cure or relieve effects of compensable injuries. This right runs to the employee and does not evaporate because a third party paid while compensability was disputed.
Minn. Stat. § 176.191, subd. 3:
Requires a health insurer to pay medical costs during a compensability dispute (notwithstanding policy provisions to the contrary) and mandates that the workers’ compensation insurer reimburse those payments with 12% interest once the injury is adjudicated compensable. The Court applies this reimbursement mandate even where the health insurer has not intervened, as long as the employee proves the amounts paid.
Minn. Stat. § 176.361:
Governs intervention by “a person” with an interest that may be affected, including health care providers and insurers that have paid under § 176.191. Failure to timely intervene extinguishes the would-be intervenor’s procedural right to participate and pursue an independent claim in the workers’ compensation proceeding, but does not curtail the employee’s substantive right to obtain medical benefits or the statutory reimbursement obligation triggered by a compensability finding.
Minn. Stat. § 645.26 (Conflict of statutes):
The WCCA applied conflict-resolution principles to prioritize § 176.191 over § 176.361. The Supreme Court found it unnecessary to reach that conflict analysis because the employee’s direct claim resolves the reimbursement issue without nullifying the extinguishment consequence for non-intervenors.
ERISA, 29 U.S.C. § 1132(a)(3):
The Court noted but did not decide ERISA subrogation issues; the motion to supplement the record to prove ERISA status was denied as unnecessary to the disposition.

Legal Reasoning

The employee’s substantive right vs. intervenors’ procedural rights.
Drawing directly from Johnson, the Court reaffirmed that § 176.135 gives an employee a freestanding substantive right to have qualifying medical expenses for a compensable injury paid by the employer. This right is not contingent on whether third parties—medical providers or health insurers—intervene under § 176.361. The intervention statute creates a procedural gateway for non-parties to participate and assert their own claims; it does not carve back the employee’s substantive entitlement to benefits.
No meaningful legal distinction between providers and health insurers.
Section 176.361 repeatedly uses “person” and expressly includes both “a health care provider” and “an insurer who has paid benefits under section 176.191” as illustrative intervenors. Nothing in the statutory text turns on the status of the non-party. In the Court’s view, Johnson’s logic applies “with equal force” where the non-party is a health insurer, including where the provider bills have already been paid.
Paid vs. unpaid medical expenses is immaterial under §§ 176.135 and 176.361.
The employer’s obligation to furnish medical treatment under § 176.135 does not depend on whether a health insurer or the employee fronted the costs while compensability was disputed. The Act aims to place responsibility for work-injury-related medical costs on the employer/insurer once compensability is established.
The reimbursement mandate of § 176.191, subd. 3, remains operative.
Section 176.191, subd. 3, ensures continuity of care during disputes by requiring health insurers to pay first and be reimbursed later if the injury is adjudicated compensable. The Court emphasized that this reimbursement flows from the employer’s fundamental obligation under § 176.135, not the other way around. Thus, the health insurer’s failure to intervene does not eliminate the statutory duty to reimburse, provided the record contains evidence of the amounts paid.
Extinguishment still has bite: Anthem lost its procedural rights in the comp proceeding.
The Court reversed the WCCA’s revival of Anthem’s intervenor status and reinstated the compensation judge’s extinguishment order. Extinguishment prevents late participation, presentation of evidence, and assertion of independent claims in the workers’ compensation forum. It also introduces practical risk to non-intervening payers: if the employee does not present proof of the paid amounts, reimbursement may be difficult to order. Here, that risk did not materialize because Brunner supplied the necessary proof.
No need to resolve an irreconcilable-statutes conflict.
The Court declined to apply § 645.26 because the case can be resolved consistently: the employee’s direct claim proceeds; the non-intervening insurer’s procedural rights are extinguished; and reimbursement is ordered under § 176.191, subd. 3, based on the evidence the employee introduced.

Impact and Practical Consequences

For Employees and Their Counsel

Employees can confidently assert direct claims for medical expenses under § 176.135 even when their health insurer paid during a compensability dispute and did not intervene.
Proof matters: Employees should ensure the record contains reliable evidence of amounts actually paid by the health insurer to enable a reimbursement order under § 176.191, subd. 3, including 12% interest.
Strategic leverage: The 12% statutory interest creates settlement incentives once compensability prospects become clear.

For Health Insurers

Timely intervention remains the safest route to protect participation rights, present evidence, and control reimbursement proof. Failure to intervene extinguishes those procedural rights.
Even if not intervening, reimbursement can still be ordered if the employee proves the paid amounts—but that introduces dependency on the employee’s litigation strategy and record-building.
Subrogation considerations: The Court noted potential ERISA-based claims (29 U.S.C. § 1132(a)(3)) but did not decide their interaction with § 176.361’s extinguishment. Health insurers should evaluate federal and plan-based subrogation rights independently.

For Employers and Workers’ Compensation Insurers

Johnson’s rule is now expressly extended to health insurers and paid medical bills: An employee’s direct claim for medical expenses survives regardless of non-intervention by third parties.
Contesting compensability carries a predictable cost if the employee prevails: reimbursement to the health insurer with 12% statutory interest.
Intervention defenses are limited: Extinguishment prevents the non-party’s participation but does not bar the employee’s direct claim or the statutory reimbursement mandate once compensability is established and amounts are proven.
Operational takeaway: Be prepared to address reimbursement amounts even where the health insurer is not a party. Consider early evaluation and potential resolution to mitigate 12% interest accrual.

For Adjudicators and the WCCA

Compensation judges may order reimbursement under § 176.191, subd. 3, directly to a non-intervening health insurer, based on evidence in the record adduced by the employee.
Extinguishment must be enforced where intervention is untimely; it remains a meaningful procedural sanction designed to deter tardy participation.
No statute-conflict analysis is necessary where the employee’s direct claim supplies a lawful path to reimbursement consistent with both § 176.361 and § 176.191.

Complex Concepts Simplified

Compensable Injury: A work-related injury “arising out of and in the course of” employment, which triggers the employer’s duty to furnish medical benefits under § 176.135.
Direct Claim (Employee’s Freestanding Substantive Right): The employee’s own right under § 176.135 to have the employer pay medical expenses for a compensable injury. This right is independent of whether a provider or insurer intervenes.
Intervention and Extinguishment (Procedural Rights): Under § 176.361, non-party “persons” (including providers and health insurers) may intervene to participate and assert their own claims. Missing the statutory deadlines extinguishes that procedural right—preventing late participation—without curtailing the employee’s substantive right to medical benefits.
Interim Payment and Reimbursement: When compensability is disputed, § 176.191, subd. 3, requires the health insurer to pay medical costs to maintain continuity of care. If the injury is later found compensable, the workers’ compensation insurer must reimburse the health insurer for those payments with 12% annual interest.
IME (Independent Medical Examination): An employer-retained examination used to evaluate causation or disability. Here, the employer’s IME supported denial, but the compensation judge credited the treating orthopedist and found the injury compensable.
ERISA Subrogation (Not Decided): Some health plans may seek reimbursement from beneficiaries for amounts recovered elsewhere (e.g., workers’ compensation), potentially under ERISA. The Court noted the issue but did not decide any ERISA or state subrogation interaction with § 176.361.

Conclusion

Brunner cements and extends Johnson’s core principle: An employee’s substantive right under § 176.135 to recover medical expenses for a compensable injury is independent of third parties’ intervention decisions. The Minnesota Supreme Court held that employees may directly recover medical expenses from the employer and its workers’ compensation insurer even when the employee’s health insurer paid the bills during a compensability dispute and failed to intervene.

At the same time, the Court preserved the teeth of § 176.361’s intervention regime. Anthem’s failure to timely intervene properly extinguished its intervenor interest and ability to participate or assert an independent claim in the workers’ compensation proceeding. Yet, because Brunner proved compensability and documented the amounts Anthem paid, the Court ordered reimbursement in accordance with § 176.191, subd. 3, including 12% interest.

The decision streamlines outcomes in disputed compensability cases while reaffirming procedural discipline for intervenors. For employees, it ensures access to full medical benefits notwithstanding non-participation by third parties. For health insurers, it underscores the importance of timely intervention or, failing that, reliance on the employee’s proof. For employers and workers’ compensation carriers, it highlights the financial consequences of unsuccessful denials—reimbursement with statutory interest—even when the health insurer is not a party. Taken together, Brunner provides an integrated, workable framework that marries employee protections, procedural rigor, and statutory reimbursement mechanics across §§ 176.135, 176.191, and 176.361.