Culver v. Ace Elec.

• Decision Date: 19 January 1999
• Docket Number: 97SC892,97SC767,Nos. 97SC891,s. 97SC891
• Citation: 971 P.2d 641
• Parties: 1999 CJ C.A.R. 429 Leonard O. CULVER, Petitioner, v. ACE ELECTRIC; Colorado Compensation Insurance Authority; the Industrial Claim Appeals Office of the State of Colorado; and Subsequent Injury Fund, Respondents. Raymond Stolworthy, Petitioner, v. John Clark, d/b/a Clark Construction; Colorado Compensation Insurance Authority; Subsequent Injury Fund; and Industrial Claim Appeals Office of the State of Colorado, Respondents. Robert Duddy, Petitioner, v. ADT Security Systems, Inc.; Liberty Mutual Fire Insurance Company; the Subsequent Injury Fund; and the Industrial Claim Appeals Office, Respondents.
• Court: Colorado Supreme Court

Page 641

971 P.2d 641

1999 CJ C.A.R. 429

Leonard O. CULVER, Petitioner, v. ACE ELECTRIC; Colorado Compensation Insurance Authority;

the Industrial Claim Appeals Office of the State

of Colorado; and Subsequent Injury

Fund, Respondents.

Raymond Stolworthy, Petitioner, v. John Clark, d/b/a Clark Construction; Colorado Compensation

Insurance Authority; Subsequent Injury Fund; and

Industrial Claim Appeals Office of the

State of Colorado, Respondents.

Robert Duddy, Petitioner, v. ADT Security Systems, Inc.; Liberty Mutual Fire Insurance

Company; the Subsequent Injury Fund; and the

Industrial Claim Appeals Office, Respondents.

Nos. 97SC891, 97SC892, 97SC767.

Supreme Court of Colorado En Banc.

Jan. 19, 1999.

Dawes and Harriss, P.C., Gail C. Harriss, Durango, Colorado, Attorney for Petitioner in Nos. 97SC891 and 97SC892.

Michael J. Steiner, Denver, Colorado, Attorney for Respondent, Ace Electric and John Clark d/b/a Clark Construction.

Curt Kriksciun, Michael J. Steiner, Denver, Colorado, Attorneys for Respondent, Colorado Compensation Insurance Authority in Nos. 97SC891 and 97SC892.

Ken Salazar, Attorney General, Barbara McDonnell, Chief Deputy Attorney General, Michael E. McLachlan, Solicitor General, Garth C. Lucero, Deputy Attorney General, Hollyce H. Farrell, Assistant Attorney General, Denver, CO, Attorneys for Respondent, Subsequent Injury Fund

Wilcox & Ogden, P.C., Ralph Ogden, Denver, Colorado, Attorney for Petitioner in No. 97SC767.

Law Offices of Jonathan S. Robbins, Jeanne M. Labuda, Denver, Colorado, Attorneys for Respondents, ADT Security Systems, Inc. & Liberty Mutual Insurance Co.

Weinberger & Kanan, P.C., Thomas L. Kanan, Denver, CO, Attorney for Amicus Curiae Colorado Defense Lawyers.

Justice HOBBS delivered the Opinion of the Court.

We accepted two certiorari issues ¹ and consolidated three cases to address the challenged constitutionality and proper application of the offset provision of section 8-42-103(1)(c)(II) and (IV), 3 C.R.S. (1998), of the Colorado Workers' Compensation Act (Act). This provision reduces, but not below zero, the periodic permanent total disability payments otherwise payable to an injured worker who has reached the age of sixty-five and to whom, or to whose dependents, social security or employer-paid retirement benefits are also payable. The offset amount cannot exceed one-half of the workers' social security benefits. The provision does not apply to injured workers who have reached their sixty-fifth birthday and are eligible to receive temporary or partial permanent workers compensation payments, nor does it apply to permanently and totally disabled (PTD) workers who incurred their injuries prior to reaching the age of forty-five. See § 8-42-103(1)(c)(IV), 3 C.R.S. (1998).

Petitioners Leonard Culver, Raymond Stolworthy, and Robert Duddy (Petitioners) contend that the offset requirement violates equal protection of the laws because it does not serve a legitimate governmental purpose, lacks a rational basis, and arbitrarily discriminates between (1) PTD workers who have reached the age of sixty-five, and workers of the same age who are temporarily or partially disabled; (2) PTD workers injured on or after their forty-fifth birthday, and PTD workers who were injured prior to their forty-fifth birthday. Petitioner Culver also argues individually that Colorado's statute does not allow the reduction of disability payments to a worker who was receiving social security on or before the date of injury.

The court of appeals held the offset provision to be constitutional. See Culver v. Ace Elec., 952 P.2d 1200, 1204-06 (Colo.App.1997); Stolworthy v. Clark, 952 P.2d 1198, 1199-1200 (Colo.App.1997). The court of appeals also rejected Culver's statutory argument. We took Duddy's case on certiorari review, prior to decision by the court of appeals, pursuant to C.A.R. 50. We conclude that the statute is constitutional and uphold the judgments of the court of appeals in Culver and Stolworthy and the decision of the Industrial Claim Appeals Office (ICAO) in Duddy v. ADT Security Systems, Inc., W.C. No. 3-996-097 (Industrial Claim Appeals Office, Feb. 19, 1997).

I. Facts and Procedural History

Petitioners challenge the constitutionality of section 8-42-103(1)(c)(II) and (IV), and petitioner Culver questions the statute's application to his circumstances.

A. Leonard Culver

Culver sustained an industrial injury in July 1992, while working for Ace Electric. Finding Culver to be PTD, the administrative law judge (ALJ) attributed sixty percent of the liability to the Colorado Compensation Insurance Authority (CCIA) and forty percent to the Subsequent Injury Fund (SIF) on account of a previous industrial injury. The ALJ denied the request of CCIA and SIF for an offset under section 8-42-103(1)(c)(II).

On appeal, ICAO modified the ALJ's order and offset Culver's PTD benefits against his social security retirement benefits. The court of appeals affirmed the ICAO order, holding that section 8-42-103(1)(c) does not violate the Equal Protection Clause of the United States Constitution or the Due Process Clause of the Colorado Constitution, article II, section 25.

B. Raymond Stolworthy

Stolworthy sustained an injury in September of 1992 while working for Clark Construction. The parties stipulated to his PTD, with liability being apportioned fifteen percent to the SIF and eighty-five percent to the CCIA. Stolworthy became eligible for social security retirement benefits in July 1992, a few months before his industrial injury. He began receiving social security retirement benefits on December 1, 1992, and turned sixty-five on July 13, 1995. His spouse began receiving social security retirement benefits when she turned sixty-two on February 1, 1994.

On August 20, 1996, the ALJ found that respondents CCIA and SIF were entitled to an offset, due to the social security retirement benefits payable to Stolworthy and his wife. The ICAO affirmed the ALJ's order. The court of appeals affirmed the ALJ and ICAO decisions and upheld the constitutionality of section 8-42-103(1)(c), in reliance on Culver, which it announced on the same day as Stolworthy.

C. Robert Duddy

At an administrative hearing on February 12, 1997, the ALJ found that Duddy was PTD as a result of two on-the-job injuries suffered while working for ADT Security Systems, Inc. Duddy reached maximum medical improvement from the second of these two injuries on December 16, 1993 and has been receiving PTD benefits since then. Liberty Mutual Insurance Company, the compensation carrier at the time of the second injury, pays for eighty percent of the disability benefits; SIF pays for the remaining twenty percent. CCIA and SIF admitted to this apportionment of liability, and Duddy did not challenge it.

As a result of his on-the-job injuries, Duddy began receiving social security disability benefits in November of 1992. At the time of the administrative hearing and his appeal to ICAO, Duddy had not begun to receive retirement benefits. Nevertheless, he asserted a constitutional challenge to section 8-42-103(1)(c)(II), anticipating that he would face invocation of the retirement benefits offset in the future. For want of jurisdiction by an administrative agency to declare a statute unconstitutional, the ALJ denied Duddy's equal protection challenge to the statute. The ICAO affirmed the ALJ decision.

Duddy petitioned the court of appeals solely on the issue of the statute's alleged unconstitutionality. While Duddy's appeal was pending, the court of appeals issued its decisions in Culver and Stolworthy. We exercised our transfer authority under C.A.R. 50, granting Duddy's petition for writ of certiorari prior to judgment in the court of appeals.

D. Consolidation of Cases

We have consolidated Culver's, Stolworthy's, and Duddy's cases for briefing, oral argument, and decision. The primary point of contention is the constitutionality of the social security and employer-paid retirement benefits offset provision. Section 8-42-103(1)(c)(II) and (IV) of Colorado's Workers' Compensation Act reduces the amount of PTD compensation payable to injured workers who have reached their sixty-fifth birthday, depending on the availability of federal social security retirement or employer-paid retirement benefits also payable to them or their dependents. This provision recites, in pertinent part that:

(II) In cases where it is determined that periodic benefits granted by the federal old-age, survivors, and disability insurance act or employer-paid retirement benefits are payable to an individual and the individual's dependents when the individual reaches the age of sixty-five years, the aggregate benefits payable for permanent total disability pursuant to this section shall be reduced, but not below zero:

(A) By an amount equal as nearly as practical to one-half such federal benefits; except that this reduction for the periodic benefits granted by the federal old-age, survivors, and disability insurance act shall not exceed the reduction specified in subparagraph (I) of this paragraph (c) for the periodic disability benefits payable to an individual;

(B) By an amount determined as a percentage of the employer-paid retirement benefits, said percentage to be determined by a weighted average of the employer's contributions during the period of covered employment divided by the total contributions during the period of covered employment; except that in permanent total disability cases all contributions made by the employer pursuant to a collective bargaining agreement with the employee's representative shall be considered to have been made by the employee.

....

(IV) the provisions of subparagraphs (II) and (III) of this paragraph (c) shall apply only if the injury on which the award for permanent total disability was based occurred after the claimant reached forty-five years of age.

§ 8-42-103(1)(c)(II),(IV), 3 C.R.S. (1998) (emphasis added).

Relying on ...