Marinez v. Industrial Com'n of State of Colo.

• Decision Date: 07 December 1987
• Docket Number: No. 86SC327,86SC327
• Citation: 746 P.2d 552
• Parties: Grace MARINEZ, Personal Representative of the Estate of Natividad F. Marinez, Petitioner, v. The INDUSTRIAL COMMISSION OF the STATE OF COLORADO; Robert Husson, Director, Division of Labor; Drywall Supply, Inc.; and State Compensation Insurance Fund, Respondents.
• Court: Colorado Supreme Court

Page 552

746 P.2d 552

Grace MARINEZ, Personal Representative of the Estate of Natividad F. Marinez, Petitioner, v. The INDUSTRIAL COMMISSION OF the STATE OF COLORADO; Robert Husson, Director, Division of Labor; Drywall Supply, Inc.; and State Compensation Insurance Fund, Respondents.

No. 86SC327.

Supreme Court of Colorado En Banc.

Dec. 7, 1987.

Green & Josefiak, P.C., Mary M. Josefiak, Denver, for petitioner.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Robert C. Lehnert, Asst. Atty. Gen., Denver, for respondent Indus. Com'n.

William P. Dixon, Denver, for respondent State Compensation Ins. Fund.

Paul Conaway, amicus curiae for Colo. Trial Lawyers Ass'n.

LOHR, Justice.

We granted certiorari to review the unpublished opinion of the Colorado Court of Appeals in Marinez v. Industrial Commission, No. 85CA1534 (Colo.App.1986), in order to determine whether our decision in Engelbrecht v. Hartford Accident & Indemnity Co., 680 P.2d 231 (Colo.1984), is to be given retroactive effect. In Engelbrecht, we held that cost-of-living increases in federal social security disability benefits are not "periodic disability benefits" within the meaning of section 8-51-101(1)(c), 3B C.R.S. (1986), and therefore do not trigger deductions from state workers' compensation disability benefits. Subsequent to our decision in Engelbrecht, the petitioner applied for a hearing before the Department of Labor and Employment (Department), asserting that Engelbrecht should be applied retroactively to his case and that it entitled him to reimbursement for moneys previously deducted from his workers' compensation disability benefits based on cost-of-living increases in his federal social security disability benefits. The hearing officer ruled that Engelbrecht is to be applied prospectively only--that is, only to benefits payable after the date of that decision. The Industrial Commission of Colorado (Commission) entered an order affirming the hearing officer's decision, and the court of appeals in turn affirmed the order of the Commission.

We agree with the petitioner that our decision in Engelbrecht should be applied retroactively. Therefore, we reverse the judgment of the court of appeals.

I.

On March 19, 1976, the petitioner, Natividad F. Marinez, was involved in an automobile accident while in the course and scope of his employment. As a result of the accident, Marinez was rendered a paraplegic from the waist down. The State Compensation Insurance Fund (State Fund), the employer's workers' compensation insurer, admitted that Marinez was permanently and totally disabled and admitted liability for compensation. Marinez was accordingly awarded state workers' compensation periodic disability benefits payable for the remainder of his life. See § 8-51-107, 3B C.R.S. (1986). On September 1, 1976, Marinez also began receiving periodic social security disability benefits. The State Fund immediately began deducting $39.70 per week, constituting one-half of the social security disability payments, from Marinez's workers' compensation disability payments pursuant to section 8-51-101(1)(c), 3B C.R.S. (1986). On June 1, 1977, Marinez received a cost-of-living increase in his social security disability benefits, and the State Fund began deducting one-half of this increase from his workers' compensation disability benefits as well.

On May 1, 1984, approximately one week after we announced our decision in Engelbrecht, the State Fund ceased making deductions from Marinez's workers' compensation disability benefits based on the social security cost-of-living increases. Thereafter, on May 18, 1984, Marinez filed an application with the Department requesting a hearing to determine whether he should be reimbursed for the money previously deducted from his workers' compensation disability benefits based on cost-of-living increases in his social security disability benefits. A hearing was held before a hearing officer. The hearing officer concluded that Engelbrecht should be applied prospectively only, and therefore entered an order denying Marinez's request for reimbursement for the social security cost-of-living deductions. The Commission entered an order adopting and affirming the hearing officer's decision on October 16, 1985.

Marinez appealed the Commission's order to the court of appeals. That court affirmed the order, relying on Rusk v. Industrial Commission, 716 P.2d 156 (Colo.App.1985), a case which we had granted certiorari to review and which held that Engelbrecht should not be given retroactive application. ¹ Marinez v. Industrial Comm'n, No. 85CA1534 (Colo.App.1986). Marinez then filed a petition for certiorari with this court. We granted certiorari.

II.

In Engelbrecht v. Hartford Accident & Indemnity Co., 680 P.2d 231 (Colo.1984), we faced the issue of whether cost-of-living increases in social security disability benefits are themselves "periodic disability benefits" within the meaning of section 8-51-101(1)(c), 3B C.R.S. (1986), and therefore trigger deductions from state workers' compensation permanent disability benefits. Section 8-51-101(1)(c) provides in pertinent part:

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....

We held that to interpret the phrase "periodic disability benefits" in section 8-51-101(1)(c) to include cost-of-living increases in social security disability payments would not be consistent with the purposes of the Workmen's Compensation Act, sections 8-40-101 to 8-54-127, 3B C.R.S. (1986 & 1987 Supp.), "to protect employees who suffer injuries arising out of their employment and to give injured workers a reliable source of compensation." Engelbrecht, 680 P.2d at 233. Furthermore, we noted that to allow an injured worker to retain the full cost-of-living increase in federal benefits would not contravene the intent of the General Assembly to prevent double awards, i.e., payment of the full amount of social security and workers' compensation benefits for the same disability. We explained:

[A] cost-of-living increase [in federal social security disability benefits] does not result in a double award. The federal government has decided that it will maintain the buying power of social security payments, not that it will provide additional benefits for a particular injury. Because Colorado does not provide benefits to keep pace with inflation, there is no double payment.

Id. Finally, we noted that "allowing an insurer to deduct one-half the cost-of-living increase each time one occurs, and thus decrease the amount the insurer owes, is not consistent with the goal [of the Workmen's Compensation Act] of determining with certainty the amount owed." Id.

Therefore, we held that cost-of-living increases in social security disability benefits may not be deducted from workers' compensation disability benefits pursuant to section 8-51-101(1)(c). However, we did not address whether our holding was to be applied only prospectively--to payments to be made subsequent to the date of our decision--or retroactively as well--to all past payments from which such deductions had been taken. We turn now to the resolution of that issue.

III.

A.

"[T]he federal constitution has no voice upon the subject" of retroactivity and state courts are therefore free to choose whether to apply new state court rulings retroactively or prospectively. Great Northern Ry. Co. v. Sunburst Oil & Ref. Co., 287 U.S. 358, 364, 53 S.Ct. 145, 148, 77 L.Ed. 360 (1932) (rejecting a due process attack upon the solely prospective application of a state court decision in a civil case). The United States Supreme Court reaffirmed its Sunburst holding in Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), a federal criminal case, stating that "the Constitution neither prohibits nor requires retrospective effect." Id. at 629, 85 S.Ct. at 1737. In light of this premise, the court in Linkletter outlined a set of factors to be considered by a federal court in deciding whether to apply a new criminal law decision retroactively. ²

In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the United States Supreme Court set forth the standards governing the question of retroactivity in federal civil cases. Under Chevron, a court is to consider three separate factors. First, a "decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed." Id. at 106, 92 S.Ct. at 355 (citations omitted). Second, the court must " 'weigh the merits and demerits [of retroactive application] in each case by looking to the history of the rule in question, its purpose and effect, and whether retrospective application will further or retard its operation.' " Id. at 106-07, 92 S.Ct. at 355 (quoting Linkletter v. Walker, 381 U.S. 618, 629, 85 S.Ct. 1731, 1737-38, 14 L.Ed.2d 601 (1965)). Third, the court must weigh the inequity that would be imposed by retroactive application in order to avoid injustice or hardship. Id. 404 U.S. at 107, 92 S.Ct. at 355-56.

In People in the Interest of C.A.K., 652 P.2d 603 (Colo.1982), we looked to Chevron for guidance and adopted and applied the standards set forth in that case in determining whether to give retroactive effect to a decision concerning the quantum of proof to be required in cases involving termination of parental rights. We therefore...