Johnson v. Industrial Com'n of State of Colo., 86SC383
| Decision Date | 19 September 1988 |
| Docket Number | No. 86SC383,86SC383 |
| Parties | Richard E. JOHNSON, Petitioner, v. The INDUSTRIAL COMMISSION OF the STATE OF COLORADO; Mike L. Baca and Gary B. Rose, as Members of the Industrial Commission of the State of Colorado; Charles McGrath, Director of the Division of Labor; Patricia Jean Clisham, the Hearing Officer of the Department of Labor and Employment, Division of Labor, State of Colorado; Lovett Ski Corporation; and State Compensation Insurance Fund, Respondents. |
| Court | Colorado Supreme Court |
French & Stone, P.C., Mark M. Haynes, Boulder, for petitioner.
Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Michael J. Steiner, Asst. Atty. Gen., Denver, for respondent, The Indus. Com'n of the State of Colo.
Paul Tochtrop, Denver, for respondent, State Compensation Ins. Fund.
We granted certiorari to review the decision of the court of appeals in Johnson v. Industrial Commission, 732 P.2d 1236 (Colo.App.1986), which construed section 8-51-101(1)(c), 3B C.R.S. (1986), to permit a workers' compensation insurer to offset against future workers' compensation disability benefits payable to a claimant one-half the amount of federal social security disability benefits received by the claimant and his dependents prior to the point at which the insurer claimed the offset. We affirm the judgment of the court of appeals.
On October 31, 1978, Richard Johnson, the claimant, injured his left hand in the course of his employment for the Lovett Ski Corporation. The injury resulted in the amputation of the middle and ring fingers and the partial amputation of the index and small fingers. Johnson filed a claim for workers' compensation benefits and Lovett's insurer, the State Compensation Insurance Fund (Fund), subsequently filed a general admission of liability. On December 8, 1978, the Fund began paying Johnson $109.33 per week in temporary total disability benefits.
Johnson, his wife, and two children also applied for and began receiving federal social security disability benefits in April 1979 and continued to receive them until September of 1980 when the benefits were terminated. The Johnsons challenged the order of termination, and in July 1981 they were awarded future social security disability benefits plus amounts due for the period of termination.
As a result of his industrial injury Johnson was provided with vocational rehabilitation services. In a report to the Fund dated October 16, 1980, Johnson's vocational rehabilitation counselor noted that Johnson and his family had been receiving social security disability benefits but that those benefits had recently been terminated. The report also stated that Johnson's wife, Marlene, was presently employed as a grocery store clerk.
On March 6, 1981, and again on July 31, 1981, the Fund sent a letter to Johnson's attorney requesting information on the status of Johnson's social security disability benefits. In April 1982, Johnson's attorney responded to these inquiries and informed the Fund of the Johnson family's receipt of social security disability benefits. Shortly thereafter, on May 11, 1982, the Fund filed a special admission of liability in which it admitted liability for Johnson's temporary total disability, but, pursuant to section 8-51-101(1)(c), 3B C.R.S. (1986), claimed an offset of $9,226.90 against any future workers' compensation disability benefits that might be awarded to Johnson. The offset claimed by the Fund represented one-half the amount of social security disability benefits received by the Johnson family from April 1978 to April 1982. Johnson contested the special admission of liability on the basis that section 8-51-101(1)(c) did not permit a retroactive offset of social security disability benefits, and, alternatively, that the equitable doctrines of estoppel and waiver operated to preclude the Fund from claiming the offset based on workers' compensation disability benefits already paid to him.
On February 28 and June 18, 1984, a hearing officer conducted a hearing on the issues of permanent disability, disfigurement benefits, and the Fund's claim of offset. Johnson's wife, Marlene, testified that three or four days after the industrial accident she telephoned the Fund in order to obtain information about applying for workers' compensation benefits. She stated that a claims adjuster told her that she, her husband, and their two children should also apply for federal social security disability benefits but did not advise her that any such benefits would be offset against any workers' compensation benefits awarded to her husband. It was Mrs. Johnson's recollection that she told one of the Fund's claims adjusters within a year after the accident of her family's receipt of social security disability benefits. She acknowledged, however, that she did not notify the Fund in writing and that she never advised the Fund of the amount of social security benefits received by the family. Mrs. Johnson also testified that in 1980, because the family was receiving both workers' compensation and social security disability benefits, she quit her job as a grocery store clerk.
Lois Lanter, a senior claims adjuster for the Fund, testified that the standard procedure in answering an inquiry about an application for workers' compensation benefits is to inform the person making the inquiry of the possible availability of federal social security disability benefits. The Fund's claims adjusters, according to Lanter, are instructed to tell claimants of the need to inform the Fund of the receipt of social security benefits and the exact amount of such benefits so that they may then be offset against the workers' compensation disability benefits. Lanter also testified that the Fund had not been aware of the Johnson family's receipt of social security benefits prior to October 1980, when the vocational rehabilitation counselor informed the Fund of that fact, and that the Fund did not exercise any right of offset at that time because the report stated that the benefits had been terminated.
The hearing officer concluded that Johnson had sustained a permanent disability of thirteen percent as a working unit and ordered the Fund to pay Johnson $20,623.95 at the rate of $84 per week commencing on March 20, 1983, and a lump sum award of $2,000 for disfigurement. With respect to the issue of offset, the hearing officer, rejecting Johnson's claims of estoppel and waiver, determined that section 8-51-101(1)(c) authorized the Fund to offset against the workers' compensation benefits awarded to Johnson one-half the amount of social security disability benefits already received by him, exclusive of cost of living increases, but that the Fund could not offset the social security benefits paid to Johnson's wife and children. The Industrial Commission (commission) affirmed that part of the order authorizing an offset of social security disability benefits without regard to any time limitation for exercising the right of offset and further held that, contrary to the hearing officer's determination, section 8-51-101(1)(c) authorized the Fund to offset one-half the amount of aggregate social security disability benefits paid to Johnson, his wife, and their children. The commission also concluded that Johnson's claims of estoppel and waiver were without merit.
Johnson appealed the commission's order to the court of appeals, claiming that the commission had erred in not applying the doctrines of estoppel and waiver to bar the offset. The court of appeals affirmed the commission's order. The court concluded that since section 8-51-101(1)(c) established a legal right to assert an offset, "the equitable doctrine of estoppel cannot be used to circumscribe that right," and that, moreover, Johnson failed to demonstrate any detrimental reliance. Johnson, 732 P.2d at 1238. With respect to Johnson's invocation of waiver, the court concluded that since section 8-51-101(1)(c) contains no time limitation for asserting an offset, there was no basis to infer that the Fund voluntarily or intentionally relinquished its right to claim the statutory offset. Id.
We granted Johnson's petition for certiorari to consider two issues: (1) whether section 8-51-101(1)(c) authorizes an insurer to offset against future workers' compensation disability benefits payable to the claimant one-half the amount of social security disability benefits received by the claimant and his dependents prior to the point at which the insurer claimed the offset; and (2) whether the equitable doctrines of estoppel and waiver should have been applied to preclude the Fund from exercising its statutory right of offset in this case.
We first consider whether a workers' compensation insurer may offset against future workers' compensation disability benefits one-half the amount of social security disability benefits paid to the claimant and his dependents prior to the insurer's claim of offset. Section 8-51-101(1)(c), 3B C.R.S. (1986), provides in this respect as follows:
In cases where it is determined that periodic disability benefits granted by the federal old-age, survivors, and disability insurance act are payable to an individual and his dependents, the aggregate benefits payable for temporary total disability, temporary partial disability, permanent partial disability, and permanent total disability pursuant to this section shall be reduced, but not below zero, by an amount equal as nearly as practical to one-half such federal periodic benefits; but, if provisions of the federal old-age, survivors, and disability insurance act should be amended to provide for a reduction of an individual's disability benefits thereunder because of compensation benefits payable under articles 40 to 54 of this title, the reduction of compensation benefits provided in said articles shall be decreased by an...
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