![Text Box: Under C.R.S. § 8-42-102(3), an ALJ has considerable discretion in calculating a claimant’s average weekly wage (AWW) when the ALJ determines that the default method of calculation found in section 8-42-102(2) would lead to an unfair result. At issue in Avalanche Industries, Inc. v. Clark, decided by the Supreme Court on December 15, 2008, was an ALJ’s discretion to base an injured employee’s compensation benefits in a reopened claim, not on the worker’s wage at the time of injury, but rather on claimant’s wage at the time the claim is reopened. In a lengthy opinion, from which three Justices dissented, the Supreme Court affirmed the decision of the court of appeals, holding that for purposes of a permanent impairment award pursuant to the discretionary exception established in section 8-42-102(3), a worker’s AWW could be based on a salary that a claimant was earning at an employer subsequent to the original accident and the AWW should include the cost of continuing healthcare from the subsequent employer. In 2000, while working as a secretary at Avalanche Industries, the claimant suffered a work-related accident. As a result of the accident, the claimant was awarded twelve percent whole person impairment. Avalanche admitted to a $415.63 AWW based on the claimant’s salary at the time. The claim was subsequently closed. While her claim was pending, the claimant left Avalanche for a new employer, Blair College. Two years later, the claimant petitioned to reopen the claim alleging a worsened condition. The Petition to Reopen was granted. In 2005, the claimant alleged she was permanently totally disabled as a result of the 2000 injury. At the time she stopped working for Blair College, the claimant’s average weekly wage was $625. After a hearing on the issue of AWW, the ALJ held the claimant’s AWW should be based on her salary at Blair College, plus the cost of continuing her COBRA benefits from Blair of $178.76 per week, resulting in an AWW of $803.76. The Industrial Claim Appeals Office affirmed the ALJ’s ruling. In a divided ruling, the court of appeals also held the ALJ had properly calculated the claimant’s AWW based on her most recent salary and health insurance cost. The Supreme Court agreed the discretionary exception of section 8-42-102(3) is broad enough to allow an ALJ to consider a claimant’s salary at a subsequent employer and extends to the calculation of the cost of the claimant continuing the subsequent employer’s health insurance benefits pursuant to COBRA. To justify its holding, the Court opined the “date of injury,” for purposes of calculating the AWW is the date of reopening. This statement alone may result in a slew of litigation.
Justices Rice and Coats, in separate opinions each joined by Justice Eid, dissented. Justice Rice noted, “Nothing less than the stability of the workers’ compensation system is at risk in this case.” Justice Coats said, "While our case law interpretations of the statutory scheme have long acknowledged great flexibility in the calculation of an injured employee’s average weekly wage, they have never suggested that an award of compensation payments from an employer could be based on any wage or salary other than the employee’s wage under his contract of employment with that employer. . . [U]ntil today the scheme had not been construed to permit an award altogether unrelated to the rate at which the injured employee was recompensed by the employer ordered to pay it." Justice Coats observed, “Subjecting employers to liability for future wage contracts with different employers exposes them to damages for potential wage losses which they cannot foresee and over which they have no control” inappropriately introducing an element of civil damages, contrary to the principle on which workers’ compensation is based.”
Although the Supreme Court disagreed its decision would have these results, Respondents should expect an “avalanche of litigation” on AWW, including an increase in Petitions to Reopen, together with increased difficulty in settling claims on a full and final basis. The court’s ruling introduces a significant level of uncertainty into the system. An employer can predict an employee's injury may degenerate over time and result in reopening the award. However, employers and insurers will have great difficulty in setting premiums if the calculation of the AWW is based on a wage figure that did not exist at the time of the injury. The incentive to settle claims promptly will diminish, and employers and insurers will be unsure about their ultimate financial responsibility to employees.](index_files/image013.gif)
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Avalanche Decision Expands ALJ’s Discretion in Wage Determination |
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Victories in the Trenches |
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Practice Pointer |
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Decision Permits Ex Parte Meetings With Plaintiff’s Providers |
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Changes to Rule 18-6(A) |
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Ipsi Dixit |
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Mileage Reimbursement Chart |
