Colorado AFL-CIO v. Donlon, AFL-CIO

• Decision Date: 15 June 1995
• Docket Number: 93CA1392,AFL-CIO,Nos. 93CA1118,s. 93CA1118
• Parties: COLORADO; Kent Replogle; Stephen P. Cramer; Mark Harkman; James Martinez; Lawrence Smith; Mae L. Durant; and David Organ, Plaintiffs-Appellants, v. John J. DONLON, Executive Director, Department of Labor and Employment; Kenneth M. Platt, Director, Colorado Division of Workers' Compensation; Bruce Posey, Executive Director of Colorado Department of Administration; Edwin L. Felter, Jr., Director, Administrative Hearings and Chief Administrative Law Judge; Workers' Compensation Coalition; and Colorado Compensation Insurance Authority, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 396

914 P.2d 396

COLORADO AFL-CIO; Kent Replogle; Stephen P. Cramer; Mark Harkman; James Martinez; Lawrence Smith; Mae L Durant; and David Organ, Plaintiffs-Appellants, v. John J. DONLON, Executive Director, Department of Labor and Employment; Kenneth M. Platt, Director, Colorado Division of Workers' Compensation; Bruce Posey, Executive Director of Colorado Department of Administration; Edwin L. Felter Jr., Director, Administrative Hearings and Chief Administrative Law Judge; Workers' Compensation Coalition and Colorado Compensation Insurance Authority, Defendants-Appellees.

Nos. 93CA1118, 93CA1392.

Colorado Court of Appeals Div. II.

June 15, 1995.

As Modified on Denial of Rehearing

July 13, 1995.

Certiorari Denied April 1, 1996.

Wilcox & Ogden, P.C., Ralph Ogden, Turner and Meiklejohn, P.C., Robert W. Turner, Scott A. Meiklejohn, Denver, for plaintiffs-appellants Colo. AFL-CIO, Kent Replogle, Stephen P. Cramer, Mark Harkman, James Martinez, Lawrence Smith and Mae L. Durant.

Elrod, Katz, Preeo, Look, Moison & Silverman, P.C., Eldon E. Silverman, Gilbert R. Egle, Denver, for plaintiff-appellant David Organ.

Gale A. Norton, Atty. Gen., Stephen K. ErkenBrack, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Mary Karen Maldonado, Michael P. Serruto, Sr. Asst. Attys. Gen., Denver, for defendant-appellee John J. Donlon, Executive Director, Dept. of Labor and Employment, Kenneth M. Platt, Director, Colo. Div. of Workers' Compensation, Bruce Posey, Executive Director of Colo. Dept. of Admin., and Edwin L. Felter, Jr., Director, Administrative Hearings and Chief Administrative Law Judge.

Plaut, Lipstein & Mortimer, P.C., Frank Plaut, Charles E. Mortimer, Jr., Evan S. Lipstein, Lakewood, Berry & Singer, John Berry, Denver, for defendant-appellee Workers' Compensation Coalition.

Michael J. Steiner, Colo. Compensation Ins. Authority, Vaughan, Reeves and DeMuro, David R. DeMuro, Weinberger & Kanan, P.C., Thomas L. Kanan, Denver, for defendant-appellee Colo. Compensation Ins. Authority.

Opinion by Judge CRISWELL.

In separate declaratory judgment actions filed in the trial court, plaintiff, David Organ, in one instance, and all of the other plaintiffs in a second case, sought court decrees declaring various provisions of the 1991 amendments to the Workers' Compensation Act (Act) unconstitutional. After consolidating the two actions for trial and disposition, the trial court rejected all of plaintiffs' contentions and entered judgment dismissing their claims, from which judgment plaintiffs appeal. We affirm in part and reverse in part.

I. The Organ Appeal

Plaintiff Organ was employed by a contractor who had been engaged to build a new home for a couple in Loveland, Colorado. During the course of that construction, Organ was seriously injured as a result of an industrial accident. At the time of that accident, the house being built was not habitable and was not, in fact, inhabited until some eight months later, when the owners moved in.

Prior to its amendment in 1991, the Act provided that an owner of property, who contracted for work to be done on that property, was to be considered a statutory employer of the contractor and of his or her employees. However, it also provided that the owner of a "private home" would be excepted from this provision. Section 8-48-102(1), C.R.S. (1986 Repl.Vol. 3B). But, a division of this court had interpreted this exception to apply only to residential structures that were inhabited, or were capable of being inhabited, at the time of the injury; the structure was not considered to be a "private home" during the period of its construction. Betts v. Kempers, 745 P.2d 283 (Colo.App.1987).

One of the 1991 amendments to the Act, § 8-41-402(1), C.R.S. (1994 Cum.Supp.), changed the term "private home" to "residential real property which meets the definition of a 'qualified residence' under section 163(h)(4)(A) of the federal 'Internal Revenue Code of 1986,' as amended." Organ asserts that such definition is implicated under the Internal Revenue Code only if there is a mortgage upon the property, so that the interest paid on the obligation secured by such encumbrance is deductible for income tax purposes. He argues that, if there exists no such encumbrance, there can be no "qualified residence" under the Internal Revenue Code. He concludes, therefore, that this 1991 amendment violates equal protection guarantees by distinguishing between properties that are encumbered and those that are not and by providing workers' compensation benefits only to those workers who are employed upon unencumbered residences.

However, in the administrative proceedings upon Organ's workers' compensation claim, the Industrial Claim Appeals Office rejected this interpretation of the statute. Both that tribunal and a division of this court in the later opinion in Organ v. Jorgensen, 888 P.2d 336 (Colo.App.1994) concluded that the only purpose of the reference to the Internal Revenue Code's definition of "qualified residence" in § 8-41-402(1) was to change the interpretation of the term "private home" that was adopted in Betts v. Kempers, supra. Its purpose is to make clear that a residence under construction can be a qualified residence under certain conditions. See Temp.Treas.Reg. § 1.163-10T(p)(5) (1987). Thus, § 8-41-402(1) does not draw any distinction for this purpose between residential properties with encumbrances and those that are free of any encumbrance.

Hence, because the statute does not create any distinction of the type foreseen by Organ, there exists no basis for his claim of a denial of equal protection.

We recognize that, in Organ's reply brief, filed with this court after the issuance of the opinion in Organ v. Jorgensen, supra, the argument is made that § 8-41-402(1) also creates two other classes--those workers who engage in working on qualified residences and all other workers. It is then argued that workers in the first class are discriminated against because they may be required to wait for a period approaching 24 months before a determination can be made whether owners of residential properties are statutory employers, while all other workers are entitled to more expeditious determinations.

However, because this argument was not previously advanced, we decline to address it. See People v. Czemerynski, 786 P.2d 1100 (Colo.1990); Knappenberger v. Shea, 874 P.2d 498 (Colo.App.1994).

II. The Other Plaintiffs' Claims

The other plaintiffs consist of individuals affected by the 1991 amendments by virtue of having sought benefits for an industrial injury sustained after their effective date plus the Colorado AFL-CIO, a labor organization. The trial court accorded all plaintiffs standing, and defendants do not contest that ruling.

A. The "Age Cap" on Permanent Total Disability Benefits

Section 8-42-111(5), C.R.S. (1994 Cum.Supp.) provides that, for those injuries occurring between July 1, 1991, and July 1, 1994, all payments for permanent total disability will cease when the employee reaches 65. Payments for any temporary disability or permanent partial disability continue beyond this age without interruption. Plaintiffs assert that this statute violates their right to equal protection by discriminating against the older worker. We agree.

This issue was considered and determined favorably to plaintiffs' assertion in Romero v. Industrial Claim Appeals Office, 902 P.2d 896 (Colo.App.1995). We conclude, therefore, that plaintiffs are entitled to a declaratory decree determining that § 8-42-111(5) is invalid, and we shall remand the cause to the trial court to enter such a decree.

B. "Scheduled" Versus "Non-Scheduled" Benefits

As the statute existed prior to the 1991 amendments, it created two different methods for determining benefits for permanent disabilities. See Colo.Sess.Laws 1990, ch. 62, § 8-92-107 at 491-93.

First, the Act established a schedule that described various losses of the upper or lower extremities (and various parts thereof), the loss of an eye, deafness, and blindness. It then provided for the payment of a specified number of weeks' indemnity for each specific loss described. In addition, it provided that, in the case of a total or partial loss of use of any of the members described in the schedule, the Director of the Division of Labor had discretion to award compensation benefits either under the schedule (based upon the relationship between the percentage of the loss of use and the amount of benefits to be awarded for a total loss of the member) or "under the permanent partial disability section" of the Act. Colo.Sess.Laws 1990, ch. 62, §§ 8-42-107.

On the other hand, Colo.Sess.Laws 1990, ch. 62, § 8-42-110 at 493-494 required the Director, in determining a claimant's permanent partial disability, to consider the claimant's general physical condition and mental training, ability, former employment, and education and to determine the extent of his or her general permanent disability, expressed as a percentage.

While not the sole criterion upon which such percentage was to be based, the effect of the claimant's physical impairment upon his or her earning capacity was an important factor to be considered in determining the amount of disability. Byouk v. Industrial Commission, 106 Colo. 430, 105 P.2d 1087 (1940); Dravo Corp. v. Industrial Commission, 40 Colo.App. 57, 569 P.2d 345 (1977).

The 1991 amendments changed the foregoing method of determining permanent compensation benefits in two important ways.

First, while the schedule under § 8-42-107 continued to apply to the loss, and to the loss of use (whether total or partial), of any member described in the schedule, the discretion of the Director to award benefits for such losses under the permanent partial disability section of the Act was repealed. See Colo.Sess.Laws 1991, ch. 219, § 8-42-107(7)(b) at 1308-1309. The benefits to be awarded for the loss, or total or partial loss of use, of any...