Zerba v. Dillon Cos.

• Decision Date: 26 April 2012
• Docket Number: No. 11CA1777.,11CA1777.
• Citation: 292 P.3d 1051
• Parties: Robert ZERBA, Petitioner and Cross–Respondent, v. DILLON COMPANIES, INC., d/b/a King Soopers, Respondent and Cross–Petitioner, and Industrial Claim Appeals Office of the State of Colorado, Respondent.
• Court: Colorado Court of Appeals

292 P.3d 1051

Robert ZERBA, Petitioner and Cross–Respondent,

v.DILLON COMPANIES, INC., d/b/a King Soopers, Respondent and Cross–Petitioner,andIndustrial Claim Appeals Office of the State of Colorado, Respondent.

No. 11CA1777.

Colorado Court of Appeals,

Div. V.

April 26, 2012.

Steven U. Mullens, P.C., Pattie J. Ragland, Westminster, Colorado, for Petitioner and Cross–Respondent.

Thomas Pollart & Miller LLC, Margaret Keck, Greenwood Village, Colorado, for Respondent and Cross–Petitioner.

No Appearance for Respondent.

Opinion by Judge GRAHAM.

¶ 1 This workers' compensation action requires us to examine the statutes governing offsets to permanent total disability (PTD) benefits. Both parties seek review of the final decision of the Industrial Claim Appeals Office (Panel), which allowed employer, Dillon Companies, Inc., doing business as King Soopers, to offset the old-age Social Security payments (SSA) received by claimant, Robert Zerba, against his PTD benefits, but denied King Soopers' request to also offset Zerba's military retirement benefits. See Ch. 62, sec. 1, § 8–42–103(1)(c)(I), 1990 Colo. Sess. Laws 488; § 8–42–103(1)(c)(II.5), C.R.S.2011.¹

¶ 2 Zerba appeals the permitted offset of his SSA payments, arguing that such an offset violates his right to equal protection under the Fourteenth Amendment. King Soopers cross-appeals the Panel's denial of its request for an offset against Zerba's military retirement benefits, contending that they are effectively the same as other payments for which offsets are allowed and therefore should not be treated differently. We reject both parties' arguments and affirm.

¶ 3 We conclude that Zerba has not established that his right to equal protection under the law was violated because the SSA offset has a rational basis and therefore meets constitutional scrutiny. We further hold that section 8–42–103(1)(c)(II.5) does not provide for an offset of military retirement benefits because that provision permits an offset only of “employer-paid retirement benefits.” Because King Soopers is not the employer providing Zerba with the retirement benefits in question, it is not entitled to the statutory offset.

I. Background

¶ 4 Zerba served in the military for twenty-eight and one-half years, until his retirement in June 1989. He then began receiving military retirement benefits, which he continues to receive. After leaving the military, Zerba worked for thirteen years as a receiving manager for K–Mart. At the age of sixty-two, he began drawing SSA benefits.

¶ 5 Subsequently, Zerba began working part time at King Soopers to earn income to supplement his SSA and military retirement benefits. In April 2009, he sustained injuries to his back while working for King Soopers when a rack of milk fell on him, pinning him to the floor. An ALJ found him to be permanently and totally disabled as a result of that accident. Neither party appeals the award of PTD benefits to Zerba. Consequently, the causes and extent of Zerba's injuries are not at issue in this appeal.

¶ 6 In conjunction with the hearing on PTD benefits, King Soopers requested that any PTD benefits be offset by the SSA and military retirement benefits Zerba was also receiving. After reviewing the applicable statutes and case law, the administrative law judge (ALJ) determined that King Soopers was entitled to an offset of Zerba's SSA benefits, but that section 8–42–103(1)(c)(II.5) did not provide for an offset of Zerba's military retirement benefits. The Panel affirmed the ALJ's order.

II. SSA Offset

¶ 7 Zerba contends that the ALJ and Panel erred in granting King Soopers an offset of his SSA benefits against the PTD benefits he was awarded. He argues that section 8–42–103(1)(c)(I), which permits an offset of a claimant's SSA benefits against that claimant's PTD benefits, unfairly impacts the poor and elderly who work to supplement their SSA payments. The applicable portions of the statute in effect at the time of Zerba's injury provided:

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 said individual's dependents, the aggregate benefits payable for temporary total disability, temporary partial disability, permanent partial disability, and [PTD] 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....

§ 8–42–103(1)(c)(I). Zerba claims this offset disproportionately harms elderly and poor workers by depriving them of the full sum they were receiving when they supplemented their SSA benefits with income. Essentially, he argues that by deducting SSA payments from the PTD benefits intended to replace that income, poor and elderly workers lose economic ground, thereby violating their right to equal protection under the law. However, we perceive no constitutional defect in section 8–42–103(1)(c)(I).

A. Standard of Review

¶ 8 This court has initial jurisdiction to address constitutional challenges to the Workers' Compensation Act (Act). See MGM Supply Co. v. Indus. Claim Appeals Office, 62 P.3d 1001, 1003 (Colo.App.2002). If a statute is found to be unconstitutional, we may set aside the Panel's decision concerning that statute as unsupported by the applicable law.

¶ 9 In determining whether section 8–42–103(1)(c)(I) is constitutional, “we begin with the presumption that it is valid. Therefore, the burden is on claimant, as the challenging party, to prove the statute is unconstitutional beyond a reasonable doubt.” Peregoy v. Indus. Claim Appeals Office, 87 P.3d 261, 265 (Colo.App.2004).

B. Equal Protection

¶ 10 The right to equal protection guarantees that similarly situated individuals will receive like treatment under the law. Harris v. The Ark, 810 P.2d 226, 229 (Colo.1991). The level of scrutiny applied when analyzing an equal protection challenge to a statute is dependent upon the nature of the classification created and the right affected.

If the classification is one involving a ‘suspect class,’ such as one based on race or national origin, or if it has an impact upon a fundamental right, the state has the burden of demonstrating that the statute is necessarily related to a compelling governmental interest and that the classification is specially fashioned and narrowly tailored to further its legitimate objective.

Romero v. Indus. Claim Appeals Office, 902 P.2d 896, 898 (Colo.App.1995), aff'd,912 P.2d 62 (Colo.1996).

¶ 11 Where, however, the challenged statute does not affect a fundamental right or adversely affect a suspect class, a “traditional or rational basis standard of review applies.” Harris, 810 P.2d at 230. Under that test, “a statute that treats classes of persons differently will be upheld so long as the classification has a reasonable basis in fact—that is, the classification is based on differences that are real and not illusory—and is reasonably related to a legitimate governmental interest.” Id. To successfully challenge a statute on equal protection grounds, “the party asserting the statute's unconstitutionality must show that the classification lacks a legitimate governmental purpose and, without a rational basis, arbitrarily singles out a group of persons for disparate treatment in comparison to other persons who are similarly situated.” Dillard v. Indus. Claim Appeals Office, 134 P.3d 407, 413 (Colo.2006).

¶ 12 Colorado courts have repeatedly held that workers' compensation claimants are not a suspect class and that workers' compensation benefits are not a fundamental right. See id.; Kroupa v. Indus. Claim Appeals Office, 53 P.3d 1192, 1197 (Colo.App.2002). Unless Zerba has established that he is a member of a suspect class created by the application of the statute, we will apply the rational basis test to his equal protection challenge. See Dillard, 134 P.3d at 413.

¶ 13 Zerba suggests that he is part of a subclass he identifies as “the poor” and “the elderly.” He asserts that the classification created by section 8–42–103(1)(c)(I)—“the poor” and “the elderly”—arbitrarily and disparately deprives those in these classes from benefits which other PTD beneficiaries receive. As the statute itself does not create these distinctions—references to those over age sixty-five were removed by amendment in 2000—we view Zerba's challenge as one to a classification created by the statute as applied. See Pepper v. Indus. Claim Appeals Office, 131 P.3d 1137, 1139 (Colo.App.2005) (“The distinction between a ‘facial’ and an ‘as applied’ equal protection challenge is not always clear cut. A facial challenge is supported where the law by its own terms classifies persons for different treatment. In contrast, a statute, even if facially benign, may be unconstitutional as applied where it is shown that the governmental officials who administer the law apply it with different degrees of severity to different groups of persons who are described by some suspect trait.”), aff'd on other grounds sub nom. City of Florence v. Pepper, 145 P.3d 654 (Colo.2006).

¶ 14 To the extent Zerba asserts these class distinctions to garner a less stringent standard of constitutional review, we must reject his position. With respect to his contention that he is a member of a class defined as “the elderly,” we note that “[c]lassifications based on age are not suspect or special warranting strict scrutiny or intermediate review.” Indus. Claim Appeals Office v. Romero, 912 P.2d 62, 66 (Colo.1996) (citing Mass. Bd. of Ret. v. Murgia, 427 U.S. 307, 313–14, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976)). Thus, even if Zerba is a member of the class defined as “the elderly,” the classification does not warrant strict scrutiny or intermediate review.

¶ 15 With respect to the former categorization, “the poor,” we note that Zerba has neither defined the parameters of the alleged class of “the poor” nor provided any evidence to demonstrate he is...