Industrial Claim Appeals Office v. Ray

• Decision Date: 23 October 2006
• Docket Number: No. 05SC652.,No. 05SC757.,No. 05SC632.,05SC632.,05SC652.,05SC757.
• Parties: INDUSTRIAL CLAIM APPEALS OFFICE; New World Van Lines of Colorado, and Liberty Mutual Fire Insurance Company, Petitioners, v. Carnell RAY, Respondent. Industrial Claim Appeals Office, Sunnyrest Health Care, and Pinnacol Assurance, Petitioners, v. Jodie Marsh, Respondent. Industrial Claim Appeals Office; Nu Horizon Window Systems, Inc.; and Pinnacol Assurance, Petitioners v. Chris Ashmore, Respondent.
• Court: Colorado Supreme Court

145 P.3d 661

INDUSTRIAL CLAIM APPEALS OFFICE; New World Van Lines of Colorado, and Liberty Mutual Fire Insurance Company, Petitioners, v. Carnell RAY, Respondent.

Industrial Claim Appeals Office, Sunnyrest Health Care, and Pinnacol Assurance, Petitioners, v. Jodie Marsh, Respondent.

Industrial Claim Appeals Office; Nu Horizon Window Systems, Inc.; and Pinnacol Assurance, Petitioners v. Chris Ashmore, Respondent.

No. 05SC632.

No. 05SC652.

No. 05SC757.

Supreme Court of Colorado, En Banc.

October 23, 2006.

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

Zarlengo, Mott, Zarlengo and Winbourn, P.C., Scott M. Busser, Denver, Colorado, Attorneys for New World Van Lines of Colorado and Liberty Mutual Fire Insurance Company.

Michael J. Steiner, Denver, Colorado, Attorney for Pinnacol Assurance.

Bisset Law Firm, Jennifer Bisset, Denver, Colorado, Attorneys for Respondent Ray.

Alexander and Ricci, P.C., William Alexander, Jr., Colorado Springs, Colorado, Attorneys for Respondent Ashmore.

Stephanie J. Stevenson, P.C., Stephanie J. Stevenson, Colorado Springs, Colorado, Attorneys for Respondent Marsh.

Law Office of O'Toole & Sbarbaro, P.C., Neil D. O'Toole, John A. Sbarbaro, Denver, Colorado, Attorneys for Amicus Curiae Workers Compensation Education Association.

Chief Justice MULLARKEY delivered the Opinion of the Court.

I. Introduction

We consolidated three workers' compensation cases decided by the court of appeals for purposes of this opinion: Ray v. Industrial Claim Appeals Office, 124 P.3d 891 (Colo. App.2005); Marsh v. Industrial Claim Appeals Office, No. 04CA0911, 2005 WL 1837497 (Colo.App. Aug.4, 2005) (not selected for publication); and Ashmore v. Industrial Claim Appeals Office, No. 04CA1870, 2005 WL 1692850 (Colo.App. July 21, 2005) (not selected for publication). All involve employees who suffered compensable on-the-job injuries and subsequently had their employment terminated. Each employer provided health insurance as an employee benefit. At issue is whether the cost of health insurance, calculated as the amount that the claimant would pay to obtain the coverage provided by the employer under the contract of employment, is to be included in the calculation of the claimant's average weekly wage if the claimant does not purchase health insurance after his or her employment is terminated.

The court of appeals held in Ray that a claimant's average weekly wage must include the amount of the claimant's cost of continuing an employer's group health insurance plan regardless of whether the claimant actually purchased the insurance. Ray, 124 P.3d at 894-95. Similarly, the court of appeals held that the average weekly wage must include the amount of a claimant's cost of conversion to a similar or lesser plan at the expiration of the allowed term of continuing coverage. Id.

We granted certiorari to resolve an apparent conflict between the court of appeals' decision in Ray and another decision by the court of appeals in Midboe v. Industrial Claim Appeals Office, 88 P.3d 643 (Colo.App. 2003). We affirm Ray and hold that the actual purchase of health insurance is not required in order for the cost of such benefits to be included in the calculation of a claimant's average weekly wage. We also overrule Midboe to the extent that it is inconsistent with this opinion.

II. Facts

Carnell Ray was injured on the job while driving a moving van for New World Van Lines. Ray sustained serious head injuries, including frontal brain damage. New World Van Lines filed a general admission of liability for temporary total disability benefits, and shortly thereafter, Ray was terminated from his employment. Ray was subsequently notified that he could continue his employer's group health insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 42 U.S.C. § 300bb-1 (2006), by paying $602.75 per month. Although initially Ray elected to continue his health insurance coverage, he did not actually make the payment required to purchase coverage.

Ray contended at a hearing before an administrative law judge ("ALJ") that the calculation of his average weekly wage should include the cost of health insurance benefits despite his failure to pay it. The ALJ denied the request to include the cost of the benefits in the calculation of the average weekly wage and, on review, the Industrial Claim Appeals Office ("ICAO") affirmed. The court of appeals reversed the decision of the ICAO, holding that the plain and ordinary meaning of the statute defining "wages" requires the ALJ to add the cost of health insurance to the determination of a claimant's average weekly wage, regardless of actual purchase. Ray, 124 P.3d at 894-95.

Similar to Ray, claimants Jodie Marsh and Chris Ashmore suffered on-the-job compensable injuries, and like Ray, they did not actually purchase continuing health care coverage. Jodie Marsh was employed as a certified nursing aide at Sunnyrest Health Care, where she suffered an injury to her back. After Marsh's condition worsened and she was no longer able to work, Sunnyrest discontinued her wages and health insurance benefits. Sunnyrest advised Marsh of her right to continue coverage under COBRA, but Marsh chose not to continue her coverage under COBRA or to purchase substitute health insurance.

Marsh filed a claim for workers' compensation benefits. Calculating her temporary total disability benefits, the parties agreed that Marsh's average weekly wage was $470.51, and if she had continued her health insurance under COBRA, her average weekly wage would have been $567.59. The ALJ ruled that Marsh's average weekly wage should not include the cost of continuing health insurance because she did not actually incur that cost. On review, the ICAO affirmed the ALJ. The court of appeals reversed the ICAO in light of Ray, and remanded with directions to recalculate Marsh's benefits to include the cost of continuing her health insurance under COBRA. Marsh v. Indus. Claim Appeals Office, No. 04CA0911, 2005 WL 1837497 (Colo.App. Aug. 4, 2005) (not selected for publication).

Chris Ashmore, a fusion-welder for Nu Horizon Window Systems, Inc., sustained an injury to his wrist, and his employment ended shortly thereafter. In the dispute over his workers' compensation benefits, the ALJ denied Ashmore's request to include the cost of continuing the employer's group health insurance, $350 per month, in his average weekly wage. The ALJ ruled that the continuation cost could not be included because Ashmore did not actually purchase continuing insurance.

On appeal, the ICAO affirmed the ALJ's holding. The court of appeals, relying on its decision in Ray, reversed the ICAO's determination of the average weekly wage that excluded the cost of continuing health insurance, remanding the case with directions to recalculate the average weekly wage in accordance with its decision. Ashmore v. Indus. Claim Appeals Office, No. 04CA1870, 2005 WL 1692850 (Colo.App. July 21, 2005) (not selected for publication).

In all three cases, the ICAO, employers, and insurance companies (collectively referred to as "employers") sought certiorari review of the court of appeals' decisions construing the "wages" statute to include "the amount of the employee's cost of continuing the employer's group health insurance plan and, upon termination of the continuation, the employee's cost of conversion to a similar or lesser insurance plan," without requiring the claimant to actually purchase the coverage. See § 8-40-201(19)(b), C.R.S. (2006) (definitional section of the Workers' Compensation Act).

III. Analysis

Our analysis begins, first, by discussing the evolving definition of "wages" under the Workers' Compensation Act from the Act's inception in 1919 to the most recent "wages" amendment in 1989. Second, we explore the holdings of several cases interpreting the meaning of "wages" before and after the 1989 amendment. Third, we examine in detail the rationale of Midboe, 88 P.3d at 643, and we find that the employers' argument in Ray depends on the dicta of Midboe. Finally, we conclude that the employers' argument lacks any foundation in either the language of section 8-40-201(19)(b) or its legislative history, and that conditioning the inclusion of healthcare benefits in the average weekly wage on the actual purchase of such benefits would frustrate the purpose of workers' compensation.

Under Colorado's Workers' Compensation Act, the "average weekly wage" is the key part of the formula used to calculate compensation for injured workers, and it is based upon the definition of "wages" provided at section 8-40-201(19):

(a) "wages" shall be construed to mean the money rate at which the services rendered are recompensed under the contract of hire in force at the time of the injury, either express or implied.

(b) The term "wages" shall include the amount of the employee's cost of continuing the employer's group health insurance plan, and upon termination of the continuation, the employee's cost of conversion to a similar or lesser insurance plan, and gratuities reported to the federal internal revenue service by or for the worker for purposes of filing federal income tax returns and the reasonable value of board, rent, housing, and lodging received from the employer, the reasonable value of which shall by fixed and determined from the facts by the division in each particular case, but shall not include any similar advantage or fringe benefit not specifically enumerated in this subsection (19). If, after the injury, the employer continues to pay any advantage or fringe benefit specifically enumerated in this subsection (19), including the cost of health insurance coverage or the cost of the conversion of such health insurance coverage, such advantage or benefit shall not be included in the determination of the employee's wages so...