Loffland Bros. Co. v. Industrial Claim Appeals Panel of State of Colo., 88SC154

Decision Date13 March 1989
Docket NumberNo. 88SC154,88SC154
Citation770 P.2d 1221
PartiesLOFFLAND BROTHERS COMPANY and National Union Fire Insurance Company, Petitioners, v. INDUSTRIAL CLAIM APPEALS PANEL OF the STATE OF COLORADO; Director, Division of Labor, Department of Labor and Employment, State of Colorado; and Kriss Burwell, Respondents.
CourtColorado Supreme Court

Blackman & Levine, Lawrence D. Blackman, Denver, for petitioners.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Michael J. Steiner, Asst. Atty. Gen., Denver, for respondents Indus. Claim Appeals Panel and Director of the Div. of Labor.

Withers, Seidman & Rice, P.C., Christopher Seidman, Grand Junction, for respondent Kriss Burwell.

Paul Tochtrop, Denver, for amicus curiae Colorado Defense Lawyers Ass'n.

LOHR, Justice.

We granted certiorari to review the opinion of the Colorado Court of Appeals in Loffland Brothers Co. v. Industrial Claim Appeals Office, 754 P.2d 768 (Colo.App.1988), to determine whether our decision in Padilla v. Industrial Commission, 696 P.2d 273 (Colo.1985), is to be given retroactive effect. In Padilla, we held that the Director of the Division of Labor had the statutory authority to reopen any workers' compensation claims, whether previously resolved by adjudicatory proceedings or by settlement agreements, and that no private agreement between the parties could abrogate the Director's reopening authority. Subsequent to our decision in Padilla, the respondent, Kriss Burwell, petitioned the Director to reopen his workers' compensation claim on the ground that his physical condition had worsened. In his settlement agreement, entered into prior to our decision in Padilla, Burwell waived "his right to re-open his case for any benefits whatsoever excepting medical benefits" provided for in the agreement. Despite this waiver, the hearing officer allowed the reopening of Burwell's claim "[i]n accordance with the holding in Padilla."

The Industrial Claim Appeals Panel affirmed the hearing officer's decision and held that no question of a retroactive application of Padilla was raised since Burwell's petition to reopen was filed after our decision in Padilla. On appeal, the court of appeals concluded that the retroactivity of Padilla was at issue since the settlement agreement whereby Burwell purportedly waived his right to reopen his claim was entered into prior to our decision in Padilla. The court of appeals nevertheless concluded that Padilla was to be applied retroactively, and it affirmed the order of the Industrial Claim Appeals Panel. We also conclude that our decision in Padilla should be applied retroactively, but for somewhat different reasons than relied on by the court of appeals. Accordingly, we now affirm the judgment of the court of appeals.

I.

Kriss Burwell suffered severe high voltage electrical burns to his legs and upper body while employed as a worker on an oil drilling rig with the Loffland Brothers Company, a drilling contractor, on June 7, 1981. As a result of this incident, Burwell's right leg was amputated below the knee. Several additional surgical operations were required to reconstruct his left leg and to accomplish skin grafts necessitated by the burn injuries.

After his accident, Burwell received temporary total disability benefits of $244.65 per week from his employer's insurer, National Union Fire Insurance Company. Burwell also received medical and vocational rehabilitation benefits from the Colorado Major Medical Insurance Fund beginning in 1982 and continuing into 1984.

During the summer of 1984, Burwell thought his medical condition had stabilized. On June 25, 1984, Burwell entered into a stipulation for settlement of his workers' compensation and vocational rehabilitation benefits claims. This stipulation was approved by the Director of the Division of Labor on August 13, 1984. Under the terms of the stipulated agreement, Burwell received a lump sum payment of $37,500 from his employer's insurer in exchange for waiving his claim to any additional past or future temporary partial, temporary total, permanent partial, or permanent total disability benefits. Burwell also received $4,000 from the Colorado Major Medical Insurance Fund in return for waiving his right to vocational rehabilitation and rehabilitation maintenance benefits. As part of the agreement, Burwell also waived "his right to re-open his case for any benefits whatsoever excepting medical benefits as provided" in the agreement.

On February 11, 1985, we announced our decision in Padilla v. Industrial Commission, 696 P.2d 273 (Colo.1985). In Padilla, we concluded that a settlement agreement purporting to be a "full and final" settlement of any and all workers' compensation claims and which "preclud[ed] forever any further additional claims" arising out of the industrial accident at issue was still subject to the Director of the Division of Labor's statutory authority to reopen a case within the time limits of section 8-53-119, 3 C.R.S. (1973). 1 696 P.2d at 275, 276, 279-80.

On February 7, 1986, Burwell petitioned the Director to reopen his claim pursuant to section 8-53-113, 3 C.R.S. (1973 & 1984 Supp.), 2 claiming that his physical condition had worsened. A hearing on Burwell's petition was held on July 17, 1986. The hearing officer found that Burwell's physical condition had worsened since the approval of the stipulated agreement on August 13, 1984. Burwell's worsened condition included acute foliculosis on the stump of his right leg, additional scar tissue which had to be surgically removed, progressive atrophy of the right leg which made it difficult to fit a prosthesis, worsening osteomyelitis of the left ankle, and a hammer toe condition caused by the contraction of the tendons in his left toes. The hearing officer concluded that because of his worsened condition, Burwell satisfied the statutory requirements for reopening his case under section 8-53-113. Additionally, the hearing officer concluded that the provisions of Burwell's stipulated agreement waiving additional claims and the right to reopen his case were not effective, in accordance with our holding in Padilla. Burwell was awarded additional temporary total disability benefits of $244.65 per week from August 13, 1984, until terminated in accordance with Part IX of the Industrial Commission Rules, 7 C.C.R. 1101-3, at 17-18 (1987). This compensation was to be offset by the amounts already awarded Burwell under the stipulated agreement.

The Loffland Brothers Company and National Union Fire Insurance Company appealed this order to the Industrial Claim Appeals Panel, arguing in part that Padilla should not be applied retroactively to permit a reopening of Burwell's claim. The appeals panel did not rule on the retroactive application of Padilla, concluding that no issue of retroactivity was presented. It reasoned that Burwell had filed his petition to reopen in February 1986, subsequent to our decision in Padilla, and that Padilla was the controlling law at that time for settlements executed before April 5, 1985. The appeals panel therefore affirmed the hearing officer's order.

The employer and its insurer then sought review of the panel's decision by the Colorado Court of Appeals. The court of appeals concluded that the retroactivity of Padilla was the principal issue governing whether Burwell's petition to reopen had been properly granted. Loffland, 754 P.2d at 768-69. The court of appeals noted that the key date for the retroactivity issue was not the date when the petition to reopen was filed, but rather the date when Burwell purportedly waived his right to have his case reopened. Id. at 769. Because this latter date was prior to our decision in Padilla, the question of whether Burwell's agreement effectively precluded a reopening of his claim did raise the issue of the retroactive application of Padilla. Id.

The court of appeals then considered the factors we used in Marinez v. Industrial Commission, 746 P.2d 552 (Colo.1987), for determining whether a decision should be given retroactive effect. Utilizing these factors, the court of appeals concluded that our decision in Padilla should be given retroactive effect. Therefore, it affirmed the order of the Industrial Claim Appeals Panel allowing the reopening of Burwell's claim. Loffland, 754 P.2d at 770. Loffland Brothers Company and National Union Fire Insurance Company petitioned for certiorari. We granted that petition in order to review the determination of the court of appeals that Padilla v. Industrial Commission, 696 P.2d 273 (Colo.1985), should be given retroactive application.

II.

The petitioners argue that under our decision in Marinez v. Industrial Commission, 746 P.2d 552 (Colo.1987), Padilla should not be applied retroactively to settlement agreements entered into prior to the date Padilla was decided. In Marinez, we gave retroactive effect to our decision in Engelbrecht v. Hartford Accident & Indemnity Co., 680 P.2d 231 (Colo.1984), which held that cost-of-living increases in federal social security disability benefits are not "periodic disability benefits" and therefore do not trigger deductions from state workers' compensation periodic disability benefit payments under section 8-51-101(1)(c), 3B C.R.S. (1986).

To reach our holding in Marinez, we considered the factors for determining whether to give retroactive effect to a civil decision that we adopted in People in the Interest of C.A.K., 652 P.2d 603 (Colo.1982). These factors were originally developed by the United States Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). We have described the Chevron factors and the manner in which they are to be applied as follows:

First, the decision, if it is not to be applied retroactively, must establish a new rule of law. Second, the merits of each case must be weighed by looking to the...

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