United Airlines, Inc. v. ICAO

• Decision Date: 24 January 2000
• Docket Number: No. 98SC657.,98SC657.
• Citation: 993 P.2d 1152
• Parties: UNITED AIRLINES, INC., Petitioner, v. INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado; Howard R. Bowland; and The Subsequent Injury Fund, Respondents.
• Court: Colorado Supreme Court

993 P.2d 1152

UNITED AIRLINES, INC., Petitioner, v. INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado; Howard R. Bowland; and The Subsequent Injury Fund, Respondents.

No. 98SC657.

Supreme Court of Colorado, En Banc.

January 24, 2000.

Clifton, Hook & Bovarnick, P.C., Clyde E. Hook, Harvey D. Flewelling, Denver, Colorado, Attorneys for Petitioner.

Timothy Quinn, Denver, Colorado, Attorney for Respondent Howard R. Bowland.

Curt Kriksciun, Colorado Compensation Insurance Authority, Denver, Colorado, Amicus for Colorado Compensation Insurance Authority.

Weinberger & Kanan, P.C., Thomas L. Kanan, Trecia L. Sigle, Denver, Colorado, Amicus for Colorado Defense Lawyers Association.

Gordon & Macdonald, P.C.,William J. Macdonald, Denver, Colorado, Amicus for Worker's Compensation Education Association.

Chief Justice MULLARKEY delivered the Opinion of the Court.

In Bowland v. Industrial Claim Appeals Office, 984 P.2d 660 (Colo.App.1998), the court of appeals ordered the Industrial Claim Appeals Office (ICAO) to require United Airlines, Inc. (United), to pay Howard Bowland (Bowland) a full award of permanent total disability benefits under the Workers' Compensation Act of Colorado (the Act), sections 8-40-101 to 8-47-209, 3 C.R.S. (1999). We granted certiorari to determine whether the court of appeals erred by holding that sections 8-42-104(2), 3 C.R.S. (1998), and 8-46-105(1), 3 C.R.S. (1999), do not require the administrative law judge (ALJ) to reduce Bowland's disability award by the percentage of his permanent total disability attributable to a preexisting permanent partial industrial disability.¹ We now affirm the court of appeals' decision.

This case requires us to refer extensively to four separate statutory provisions of the Act. For the sake of clarity, we refer to section 8-42-104, 3 C.R.S. (1998), as "the previous disability statute," section 8-46-101, 3 C.R.S. (1999), as "the SIF statute," section 8-46-104, 3 C.R.S. (1999), as "the SIF closure statute," and section 8-46-105(1) 3 C.R.S. (1999), as "the insurance premium statute." The previous disability and insurance premium statutes are appended to this opinion.

I.

Bowland worked as a baggage handler for United. On August 3, 1993, in the course of his employment, he sustained an injury to his back. He subsequently filed a workers' compensation claim for an award of permanent total disability benefits.

Following a hearing to determine the nature and extent of Bowland's injuries, the ALJ found that Bowland was permanently and totally disabled. The ALJ further determined that, at the time of his August 3, 1993 injury, Bowland suffered from a preexisting partial disability.

According to the ALJ's findings, Bowland had sustained a series of occupational injuries between April 1988 and September 1990. Each of these injuries occurred in the course of his employment with United. After recovering from surgery to repair his cumulative injuries, Bowland returned to work for United and performed his regular duties. The ALJ determined that, at the time of the 1993 injury, the cumulative effects of Bowland's occupational injuries had resulted in a nine percent permanent medical impairment. Four months after his August 1993 back injury, Bowland reached maximum medical improvement and was placed on permanent physical restrictions that prevented his return to work for United. Bowland's physician restricted him from bending, lifting, pushing, twisting, crawling, and working from heights. In December 1996, Bowland's physician reported additional permanent restrictions on standing, walking, and sitting and noted that Bowland could work for no more than two hours per day.

Based on his findings and his interpretation of the Act's previous disability statute, the ALJ ordered United to pay Bowland an award amounting to 91% of the permanent total disability benefits for which he was eligible under the Act. Additionally, the ALJ concluded that Colorado's Subsequent Injury Fund (SIF) was not liable for the remainder of Bowland's permanent total disability benefits, because the SIF closure statute precludes SIF liability where the last injury contributing to a worker's permanent total disability occurred on or after July 1, 1993. Consequently, the ALJ's decision resulted in a nine-percent reduction of Bowland's permanent total disability benefits.

Bowland appealed the ALJ's order to the ICAO, seeking to hold United liable for 100% of his permanent total disability benefits. By final order dated September 19, 1997, however, the ICAO affirmed the ALJ's order.

In a unanimous decision, the court of appeals reversed the ICAO's order. See Bowland, 984 P.2d at 665. It reasoned that the General Assembly, in enacting the insurance premium statute, intended to place full liability for permanent total disability benefits on the last employer of an employee who, previously having sustained an industrial injury causing permanent partial disability, sustains a subsequent industrial injury resulting in permanent and total disability. See id. at 663-65. Accordingly, the court of appeals remanded the case for entry of an order requiring United to pay the balance of Bowland's permanent total disability benefits.

II.

To understand the present dispute between Bowland and United, we must examine the state of the law prior to the General Assembly's closure of the SIF to injuries occurring on or after July 1, 1993. Indeed, United's argument depends on its theory that, by closing the SIF to new injuries, the General Assembly intended a radical reduction in the amount of benefits available to a claimant whose preexisting industrial disability combines with a subsequent occupational injury to render him permanently and totally disabled. Accordingly, we provide a brief background of the SIF and apportionment in Colorado.

Among the issues the General Assembly addressed when it drafted the 1919 version of the Act was whether and to what extent the existence of a preexisting partial disability limits an employee's benefit award in the event of a subsequent permanent total disability. Although the 1919 Act stated that a preexisting disability would not preclude compensation for a later injury, it did not provide a mechanism to limit an employer's liability in cases where an employee suffered from a preexisting permanent partial disability at the time of his last injury. See ch. 210, sec. 48, 1919 Colo. Sess. Laws 700, 717 (enacting the predecessor to subsection (1) of the previous disability statute). Not until 1945, when the General Assembly first established the SIF, were employers able to avoid the full costs of permanent total disability benefits in a narrow class of qualifying cases. See ch. 164, sec. 1, § 355, 1945 Colo. Sess. Laws 447, 447-48.

In Colorado Fuel & Iron Corp. v. Industrial Commission of Colorado, 151 Colo. 18, 379 P.2d 153 (1962), we held that section 81-8-2, 4 C.R.S. (1953), the predecessor to subsection (1) of the previous disability statute, established the "full responsibility rule" in cases where an employee sustained a permanent total disability. Whereas many states had adopted apportionment statutes in conjunction with comprehensive subsequent injury funds, Colorado had no such apportionment statute and only a very limited subsequent injury fund.² Thus, applying the full responsibility rule, we held that "[w]hen an employer hires an employee who, by reason of a pre-existing condition or by reason of a prior injury, is to some extent disabled, he takes the man with such handicap." Id. at 26, 379 P.2d at 158. Accordingly, we held that the claimant, a worker who had suffered an injury that rendered him 30% partially disabled, was entitled to recover from his employer a full award of benefits when a subsequent injury left him permanently and totally disabled. See id. at 27, 379 P.2d at 158.

At the time of our decision in Colorado Fuel, problems with the full responsibility rule were evident and well-recognized. See 5 Arthur Larson and Lex K. Larson, Larson's Workers' Compensation Law § 91.01[1], at 91-2 to -4 (1999). The rule resulted in hardship to employers and employees alike. Employers, forced to bear the full cost of disabilities, tended not to hire partially disabled workers, since those workers were more susceptible to disproportionately expensive total disabilities.³ See id. at 91-3.

Shortly after this court's decision in Colorado Fuel, the General Assembly amended the Act to provide for apportionment of disability benefits. See ch. 180, sec. 2, § 81-8-2, 1963 Colo. Sess. Laws 640, 640-41. The General Assembly included an exception to the apportionment rule for cases of permanent total disability eligible for compensation under the SIF statute. See id.

In 1975 the General Assembly repealed and reenacted a substantial portion of the SIF statute. See ch. 71, secs. 31-32, § 8-51-106, 1975 Colo. Sess. Laws 290, 302. The amendments extended SIF liability to cover all cases in which an employee already suffering from a partial industrial disability sustained an additional industrial injury causing a permanent partial disability, the combination of which resulted in permanent total disability. See id.

For nearly thirty years, the SIF statute provided for apportionment of liability for permanent total disabilities between the employee's last employer and the SIF. In 1992, however, the General Assembly decided to close the SIF to injuries occurring on or after July 1, 1993.⁴ See ch. 238, sec. 5, § 8-46-104, 1992 Colo. Sess. Laws 1828, 1830. Also at this time, the General Assembly enacted the insurance premium statute. See id. § 8-46-105, at 1831.

Since Colorado Fuel we have continued to assume that the last employer bears full responsibility for the claimant's permanent total disability in cases where the SIF is not liable for a portion of the compensation. See Subsequent Injury Fund v. Thompson, 793 P.2d 576, 578 (Colo.1990); City & County of Denver v....