Vail Associates, Inc. v. West

• Decision Date: 17 December 1984
• Docket Number: No. 83SC5,83SC5
• Parties: VAIL ASSOCIATES, INC., and Valley Forge Insurance Company, Petitioners, v. Robert Dean WEST and Industrial Commission of the State of Colorado, Respondents.
• Court: Colorado Supreme Court

Page 1111

692 P.2d 1111

VAIL ASSOCIATES, INC., and Valley Forge Insurance Company, Petitioners, v. Robert Dean WEST and Industrial Commission of the State of Colorado, Respondents.

No. 83SC5.

Supreme Court of Colorado En Banc.

Dec. 17, 1984.

Knapp & Lee, P.C., Robert A. Weinberger, Denver, for petitioners.

Lawrence D. Blackman, Denver, for respondent West.

L. Duane Woodard, Atty. Gen., Charles B. Howe, Deputy Atty. Gen., Joel W. Cantrick, Sol. Gen., Lynn L. Palma, Asst. Atty. Gen., Denver, for respondent Industrial Comn.

Justice QUINN delivered the Opinion of the Court.

We granted certiorari to review the decision of the court of appeals in Vail Associates, Inc. v. West, 661 P.2d 1187 (Colo.App.1982), which upheld an award by the Industrial Commission of permanent partial disability benefits to the claimant, Robert Dean West. The court of appeals held that West was entitled to permanent partial disability benefits even though his post-injury earnings were higher than his earnings prior to the injury. We affirm the judgment of the court of appeals.

Robert Dean West injured his lower back on February 10, 1975, while employed as a ski instructor for Vail Associates, Inc. The injury occurred during the Vail ski season while West was teaching at a clinic for ski instructors. West, who was then twenty-seven years old, was working seven days per week as an instructor and was earning $29 per day. On April 30, 1975, West underwent a lumbar laminectomy and disc excision, and in August 1975 his physician permitted him to resume light work and released him from further treatment two months later. On December 31, 1975, Vail Associates, Inc. (employer) and its insurer, Valley Forge Insurance Company (insurer), admitted liability for temporary total disability benefits for the period from February 11, 1975, to August 8, 1975, and for permanent partial disability of 4 1/4% as a working unit. On February 11, 1976, the Industrial Commission granted West an award of temporary total and permanent partial disability benefits based on this admission of liability.

West returned to work as a ski instructor during the next three ski seasons at Vail, but due to his worsening physical condition filed a petition to reopen his claim on March 13, 1978. ¹ West testified that although he experienced some stability in his low back following the 1975 surgery, his condition significantly deteriorated in January 1978, and he underwent a spinal fusion in the lumbosacral region of his back in April 1979. This subsequent surgery, according to West, left him with reduced flexibility and rendered him unable to resume his occupation as a ski instructor. West also testified that prior to his latest surgery he had worked as a house painter during the summer months, that he was no longer able to pursue this employment, and that he also had to abandon his plans to teach skiing in Australia during the summer of 1978. There was evidence showing that West's maximum potential earnings from ski instruction and summer employment would have been approximately $30,000 per year. After the 1975 injury West obtained a real estate broker's license, and in 1978 he began working as a real estate broker. During the one year period of April 1979 to April 1980 West earned $90,229.79 from real estate transactions.

Medical evidence submitted at the hearing indicated that the 1979 lumbosacral fusion relieved West of some of his low back pain, but left him with severe limitations of motion. Estimates of his disability ranged from 12% as a working unit to 25-30% as measured at the low back. ²

The hearing officer found that West's physical condition had worsened since the industrial accident of February 10, 1975, and that the 1979 lumbar fusion rendered him unable to teach skiing and to engage in other strenuous work. While noting that West's earnings from ski instruction and summer employment would not have exceeded $30,000 annually, and that West had earned $90,229.79 as a real estate salesman during the period of April 1979 to April 1980, the hearing officer nonetheless concluded that West suffered an additional permanent partial disability of 5 3/4% as a result of the industrial accident of February 10, 1975, and that his worsened condition eliminated him from a substantial number of employment opportunities that otherwise would have been available to him. West was awarded additional permanent partial disability benefits of $8,280.35. The Industrial Commission affirmed the award, as did the court of appeals. Relying on section 8-51-108(1)(b), 3 C.R.S. (1984 Supp.), which enumerates the factors to be considered in determining permanent partial disability, the court of appeals concluded that "an increase in post-injury income in and of itself does not render improper an award for loss of earning capacity." Vail Associates, Inc., 661 P.2d at 1189. We granted certiorari to consider whether West's post-injury increase in earnings precluded a finding of loss of earning capacity in connection with his claim of permanent partial disability due to a worsened condition.

In urging reversal of the court of appeals' decision, the employer and the insurer present the following argument: Colorado should adopt a rule which treats evidence of a post-injury increase in earnings as giving rise to a rebuttable presumption of earning capacity commensurate with actual earnings; when this presumption attaches, a claimant must rebut the presumption by evidence independently showing that the post-injury earnings are an unreliable basis for determining earning capacity; and the claimant's failure to rebut the presumption in this case renders the award of 5 3/4% additional permanent partial disability erroneous. Although this rule of rebuttable presumption has been applied in several jurisdictions, e.g., Hewing v. Peter Kiewit & Sons, 586 P.2d 182 (Alaska 1978); Mitchell v. White Castle Systems, Inc., 290 N.W.2d 753 (Minn.1980); Agee v. Bay Springs Forest Products, Inc., 419 So.2d 188 (Miss.1982); Special Indemnity Fund v. Stockton, 653 P.2d 194 (Okla.1982); Whittaker v. Health-Tex, Inc., 440 A.2d 122 (R.I.1982), we decline to adopt it and, instead, elect to adhere to our existing rule which allows the Commission to consider post-injury earnings as one factor among several in ascertaining permanent partial disability.

Section 8-51-108(1)(b), 3 C.R.S. (1984 Supp.), provides in pertinent part as follows:

In determining permanent partial disability, the director shall ascertain in terms of percentage the extent of general permanent disability which the injury has caused, taking into consideration not only the manifest weight of the evidence but also the general physical condition and mental training, ability, former employment, and education of the injured employee. The director shall then determine the injured employee's expectancy of life from recognized expectancy tables and such other evidence relating to his expectancy as may be presented, but in no event shall the employee's life expectancy be reduced for these purposes if his injury or illness is the direct cause of his reduced life expectancy. He shall then ascertain the total amount which said employee would receive during the balance of his expectancy at the compensation rate of eighty-four dollars per week and shall then take that percentage of the total sum so arrived at as is indicated by the percentage of general permanent disability found to exist in the manner as set forth in this article....

The term "permanent partial disability" in section 8-51-108(1)(b) refers to industrial disability or loss of earning capacity in the labor market and not merely to a physical impairment or functional disability unrelated to industrial performance. Byouk v. Industrial Commission, 106 Colo. 430, 434, 105 P.2d 1087, 1089 (1940); see American Metals Climax, Inc. v. Cisneros, 195 Colo. 163, 576 P.2d 553 (1978); Matthews v. Industrial Commission, 627 P.2d 1123 (Colo.App.1980). Our prior cases clearly hold that actual earnings constitute one of several factors pertinent to the determination of whether a claimant has suffered a loss of earning capacity and is thus entitled to an award of permanent partial disability benefits. E.g., American Metals Climax, Inc. v. Cisneros, 195 Colo. 163, 576 P.2d 553; Byouk v. Industrial Commission, 106 Colo. 430, 105 P.2d 1087. ³ Awards of permanent partial disability have been upheld even when there was evidence of post-injury earnings equal to or in excess of those received by the worker prior to the accident. Wierman v. Tunnell, 108 Colo. 544, 120 P.2d 638 (1942); London Guarantee & Accident Co. v. Industrial Commission, 70 Colo. 256, 199 P. 962 (1921); Employers Mutual of Wausau v. Eidson, 646 P.2d 959 (Colo.App.1982); Evans v. Aurora Elevator Co., 631 P.2d 1201 (Colo.App.1981). As the court observed in London Guarantee & Accident Co., 70 Colo. at 258, 199 P. at 963, the critical inquiry is: "Has the workman's physical and mental efficiency been substantially impaired, and to what extent, and for what period of time will this impairment extend into the future?"

Several reasons support the conclusion that a worker's actual earnings following an...