Avalanche Industries, Inc. v. Clark

• Decision Date: 15 December 2008
• Citation: Avalanche Industries, Inc. v. Clark, 198 P.3d 589 (Colo. 2008)
• Docket Number: 07SC255
• Parties: AVALANCHE INDUSTRIES, INC.; Great States Insurance Company c/o Colorado Insurance Guaranty Association; and Western Guaranty Fund, Petitioners v. Gladys Louise CLARK and Industrial Claim Appeals Office of the State of Colorado, Respondents.
• Court: Colorado Supreme Court

198 P.3d 589

AVALANCHE INDUSTRIES, INC.; Great States Insurance Company c/o Colorado Insurance Guaranty Association; and Western Guaranty Fund, Petitioners v. Gladys Louise CLARK and Industrial Claim Appeals Office of the State of Colorado, Respondents.

No. 07SC255.

Supreme Court of Colorado, En Banc.

December 15, 2008.

As Modified on Denial of Rehearing January 20, 2009.^*

McElroy, Deutsch, Mulvaney & Carpenter, LLP, Thomas L. Kanan, C. Adam Foster, Denver, Colorado, Attorneys for Petitioners.

Heuser & Heuser, L.L.P., Gordon J. Heuser, Colorado Springs, CO, Attorneys for Respondent Gladys Louise Clark.

John W. Suthers, Attorney General, Mark N. McMullen, Assistant Attorney General, Laurie Rottersman, Assistant Attorney General, Denver, Colorado, Attorneys for Respondent Industrial Claim Appeals Office.

Harvey D. Flewelling, Denver, Colorado, Attorney for Amicus Curiae Pinnacol Assurance.

Chief Justice MULLARKEY delivered the Opinion of the Court.

I. Introduction

In this workers' compensation case, we affirm Avalanche Industries, Inc. v. Industrial Claim Appeals Office, 166 P.3d 147 (Colo.App.2007). The court of appeals correctly upheld the decisions of the Industrial Claims Appeals Office ("ICAO") and administrative law judge ("ALJ"), that determined a claimant's average weekly wage ("AWW") for purposes of a disability award pursuant to the discretionary exception established in section 8-42-102(3), C.R.S. (2008). The case involves two issues: (1) whether the AWW should be based on the salary that a claimant was earning at an employer subsequent to the original accident; and (2) whether the AWW should include the cost of continuing healthcare from the subsequent employer pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 26 U.S.C. § 4980B (2006); 29 U.S.C. § 1161-1167 (2006); 42 U.S.C. § 300bb-1 (2006). We answer both issues in the affirmative and therefore affirm the court of appeals' decision.

II. Facts and Procedural History

While working as a secretary at Avalanche, Respondent Gladys Louise Clark suffered a work-related accident in 2000. This accident resulted in a workers' compensation award for permanent partial disability, rated by an independent medical examination as a twelve-percent whole person impairment resulting from the injury of her lumbar spine. Avalanche admitted to an AWW of $415.63 based on her salary at the time, and the claim was closed.

While her claim was pending, Clark left Avalanche for a new employer. At that time, Avalanche informed her that her group health coverage would terminate but, if she paid $78.90 per week, she could continue to receive health benefits from Avalanche under COBRA. Clark was precluded from opting in to this coverage, however, because her new employer provided her insurance.

In 2001, Clark began working for her most recent employer, Blair College, as a financial aid officer. Two years later, she properly petitioned to reopen her claim pursuant to section 8-43-303(1), C.R.S. (2008), because her physical condition had worsened as a result of the accident she suffered at Avalanche. After an evidentiary hearing, the ALJ concluded that Clark's condition had in fact worsened and granted the petition to reopen her claim.

According to the stipulated facts, in 2005, Clark's authorized treating physician took her off work due to her disability, and Clark has remained off work since. When she was taken off work, her weekly wage was $625. Blair College, like Avalanche, advised Clark of her COBRA right to continue the college's group health care benefits after her employment at the college ended. Her initial cost would be $64.60 per week but, once she exhausted her available leave under the Family and Medical Leave Act, see 29 U.S.C. §§ 2601-2654 (2006), her cost to continue the coverage would increase to $178.76 per week.

At the subsequent hearing on the issue of Clark's AWW, the parties stipulated to the facts and called no witnesses; instead, each presented an argument to the ALJ regarding the appropriate determination of her AWW. Avalanche, citing the default provision for calculating a claimant's AWW found in section 8-42-102(2), C.R.S. (2008), argued that Clark was entitled to an AWW based on her earnings at Avalanche at the time of the accident, and that her AWW could not include the cost of health insurance benefits under COBRA because she had not previously sought those benefits from Avalanche. Clark, on the other hand, argued that the default provision would yield an unfair result, and that her AWW should be based on the salary she was earning from Blair College before being forced to resign and should include COBRA coverage at the amount it would actually cost her.

The ALJ agreed with Clark. He based her AWW on her salary at Blair College and, as a result, awarded an AWW of $625 plus the cost of her COBRA benefits. She would thus receive an AWW of $689.60 for the first twelve weeks while she could take medical leave, and then an AWW of $803.76 thereafter. This AWW would then be used to calculate her benefit award, pursuant to the statute. See §§ 8-42-105(1), -106(1), -107(8)(d), -111(1), C.R.S. (2008).

Avalanche appealed to the ICAO, which affirmed the ALJ's ruling. Avalanche then appealed to the court of appeals, which also affirmed in a divided opinion. Avalanche Indus., 166 P.3d at 149. The majority found that the ICAO and the ALJ had properly calculated Clark's AWW based on her most recent salary and health insurance cost. Judge Bernard dissented in part. While agreeing with the majority that a claimant can reopen her claim when her physical condition worsens, he concluded that the discretionary exception for calculating a worker's AWW is necessarily tied to her compensation at the time the accident occurred, not her compensation at the time the award was reopened. Judge Bernard also declined to join the majority in upholding the ALJ's decision to base claimant's cost for COBRA benefits on her most recent employer's rates.

III. Analysis

A.

The calculation of an injured worker's AWW is essential to determine the award of workers' compensation benefits. Section 8-42-102(1) describes the AWW as "the basis upon which to compute compensation payments." § 8-42-102(1), C.R.S. (2008). For example, permanent total and temporary disability benefit awards are calculated as a certain percentage of the worker's AWW subject to weekly maximum benefits specified in the statute. §§ 8-42-105(1), -106(1), -111(1); see also § 8-42-107(8)(d) (establishing permanent partial disability benefit awards as the percentage of the AWW multiplied by various factors including the medical impairment rating).

Subsections (2) and (3) of section 8-42-102 set forth alternative methods of computing an injured worker's AWW. In this opinion, we describe subsection (2) as "the default provision" and subsection (3) as "the discretionary exception."

The default provision requires the AWW to be calculated "upon the monthly, weekly, daily, hourly, or other remuneration" received by the injured worker "at the time of the injury." § 8-42-102(2). Other forms of remuneration addressed in the default provision include per diem, piecework, tonnage, commission, per mile, and casual employment. Id. Paragraphs (a) through (f) describe in detail how the various forms of compensation are converted to a weekly wage and then to an average wage. Id. The default provision is expressly subordinated or made subject to the discretionary exception. See § 8-42-102(2) (stating that the default provision applies "except as provided in this section").

The discretionary exception in subsection (3) provides:

Where the foregoing methods [set forth in subsection (2)] of computing the average weekly wage of the employee ... will not fairly compute the average weekly wage, the division [of workers' compensation], in each particular case, may compute the average weekly wage in such other manner and by such method as will, in the opinion of the director [of the division of workers' compensation] based on the facts presented, fairly determine such employee's average weekly wage.

§ 8-42-102(3). The director of the division of workers' compensation has delegated his authority to hold hearings and determine an employee's AWW to the ALJ. See Coates, Reid & Waldron v. Vigil, 856 P.2d 850, 855 n. 6 (Colo.1993). Although the default provision is tied to the injured worker's AWW at the time of the injury, the discretionary exception is not so limited.

The AWW has been the basis for computing benefits since the enactment of the workers' compensation statute in 1919. Likewise, there has been a default provision and a discretionary exception for calculating the AWW since the beginning. Ch. 210, sec. 47(b) and (c), 1919 Colo. Sess. Laws 716-17.

The present statute, however, was enacted by a citizen initiative adopted by the voters in the 1936 general election. Ch. 275, 1937 Colo. Sess. Laws 1380, 1383. Although it has been re-codified and relocated within the Colorado Revised Statutes over the years, the substance of the 1936 law has not been changed. The history of the 1936 initiative makes it clear that it was enacted to remedy inequities perceived in the original statute and that it was intended to provide the agency decision-maker broad discretion to determine a fair AWW when the default provision caused an unfair result.

In the original 1919 law, the AWW was tied to the injured worker's earnings at the time of the "accident," not the time of "injury" as in the present statute. The default provision for calculating the AWW was based on the worker's earnings during the six months preceding the accident. Ch. 210, sec. 47(b), 1919 Colo. Sess. Laws 716. The default provision neither addressed different methods of remuneration nor explained how those various types of compensation would be converted to an AWW, as the present statute does.

Then, as now, however, there was a...