Opinion
W.C. No. 3-832-252.
October 4, 2006.
ORDER OF REMAND
The respondents seek review of an order of Administrative Law Judge Henk (ALJ) dated April 27, 2006 that limited the respondents offset against permanent total disability benefits to the amounts actually received by the claimant from the employer's disability pension under a surviving joint annuity option rather than the higher payment under a single life annuity payment option. We agree that the respondent is entitled to the offset of the amount payable under the single life annuity option. We therefore set the order aside and remand for entry of a new order
Essentially the facts in this case are not disputed. The claimant suffered a work-related injury on May 18, 1985, and was determined to be permanently and totally disabled as of May 21, 1990. Fifty percent of the claimant's permanent total disability benefits were ordered paid by the Subsequent Injury Fund (SIF).
On February 1, 1996 the claimant commenced receiving a disability pension under the disability pension plan. The ALJ, following State Penitentiary v. Toothaker, 832 P.2d 1009 (Colo.App. 1991), determined the extent the claimant's old age retirement benefits were enhanced on account of his disability retirement, and awarded the respondents an offset.
The claimant elected a 50 percent joint and survivor payment option, which meant that when the claimant passes away, a surviving joint annuitant would continue to receive benefits. The ALJ found that the claimant's disability pension benefit under the single life annuity payment option was $786.86. However, the claimant chose to receive the qualified joint and 50 percent survivor benefit option, which reduced the claimant's monthly disability pension to $699.24. Findings of Fact, Conclusions of Law, and Order at 4, ¶ 12.
The ALJ determined that the claimant's monthly disability pension was $699.24, and if the claimant had started receiving retirement benefits at age 65, he would have received $610.72 per month. Therefore the ALJ determined that the difference between these two figures was $88.52, which represented the amount directly attributable to the fact that the claimant was disabled from the work-related injury. The ALJ found the respondents are entitled to an offset (50 percent to respondent and 50 percent to the SIF) of $88.52 month.
The respondents appealed, and contend that although the ALJ correctly concluded that they are entitled to an offset for that portion of the claimant's pension attributable to his disability, she used an incorrect amount to calculate the offset. The respondents argue that the ALJ erred in using the actual joint survivor benefit option of $699.24 received by the claimant. Instead, the respondents argue that the ALJ should have used the greater amount of the single life annuity payment option of $786.86 that was available to the claimant had he elected to receive it.
The basis of the respondents' argument is that the ALJ erred by allowing the statutory disability pension offset to be reduced as a result of the claimant's volitional election to receive a smaller pension in return for a guarantee that the pension benefits would continue and be paid to a survivor after his death. They argue that payment of benefits under the provisions of a pension or disability plan financed in whole or in part by the employer is analogous to that of social security disability benefits. Relying upon Culver v. Ace Electric, 952 P.2d 1200 (Colo.App. 1997) and Ihnen v. Western Forge, 936 P.2d 634 (Colo.App. 1997) the respondents argue that their offset should be based upon the amounts the claimant was entitled to rather than the lesser amount actually received under an optional election.
The claimant contends that his benefits should not be reduced because of an election to receive his disability pension as a joint survivor pension rather than a single life annuity. The claimant argues that the employer, since the disability pension is 100 percent funded by it, has enjoyed the reduced pension payments to the claimant for years because of his selection of joint survivor annuity and should not be allowed to offset the amount the claimant would have received if he had selected the single life annuity. We agree that the applicable law supports the respondents' argument.
Section 8-42-103(1)(d)(I) C.R.S. 2006 allows an insurer to offset its liability for permanent total disability benefits "[i]n cases where it is determined that periodic disability benefits are payable to an employee under the provisions of a pension or disability plan financed in whole or in part by the employer." (The ALJ made reference to § 8-51-101(1)(d), C.R.S. 1985, the offset provision in effect on the date of the claimant's injury. The current statutory offset provision found in § 8-42-103 C.R.S. 2006, has been modified but still uses the term "payable").
In Myers v. Colorado, 162 Colo. 435, 428 P.2d 83 (1967), the Colorado Supreme Court explained the purpose of the offset provision:
[T]he General Assembly intended to require a reduction in the workmen's compensation benefits otherwise payable to an injured employee where the employer, who has himself already paid the cost of workmen's compensation insurance, has also purchased, in whole or in part, a disability pension or annuity plan for his employee. The General Assembly was of the view that an injured employee should not be permitted to receive so-called "double" disability benefits, i.e. both workmen's compensation benefits and [a] disability annuity at the expense of the employer.
However, the availability to the respondents of an offset may not depend upon the claimant's actual receipt of the periodic disability benefits. Rather, the supreme court has held that a claimant has an affirmative duty to apply for such disability benefits in order that the employer may claim the statutory reduction. See Hurtado v. CFI Steel Corp., 168 Colo. 37, 449 P.2d 819 (1969). Hurtado was based upon § 81-12-1(4), C.R.S. (1963 Perm Supp.), which did not contain any specific language concerning the claimant's duty to apply for SSDI. In 1988 the statute (subsequently reenacted and currently found at § 8-43-103, C.R.S. 2006) was amended to expressly require the claimant to apply for SSDI, and provide that the failure to apply may be cause for the suspension of benefits. See 1988 Colo. Sess. Laws, ch. 49 at 379, § 8-51-101(1)(c)(I). The relevant question under the applicable law appears to be whether a claimant is entitled to the benefits, not whether he or she actually applied for and received them. See Arellano v. Director Division of Labor, 42 Colo.App. 149, 590 P.2d 987 (1979) (failure of employee to apply for social security benefits causes presumption to arise that benefits are payable as result of an injury)
The present case is analogous to the situation in Ihnen v. Western Forge, 936 P.2d 634 (Colo.App. 1997). In Ihnen the claimant was receiving mother's benefits from the Social Security Administration on account of the death of her spouse. The claimant then suffered a work-related injury and was awarded temporary total disability benefits. The claimant, at the request of the employer, applied for and received social security insurance disability benefits (SSDI). However, the SSDI award rendered the claimant ineligible for the mother's benefits that she had been receiving. The claimant therefore elected to withdraw her SSDI application and she obtained reinstatement of the mother's benefits. The employer sought to reduce the temporary disability benefits based on the SSDI that would have been payable to the claimant had she not withdrawn her application for those benefits. The court of appeals, although acknowledging that the result might be inequitable, determined that the plain language of § 8-42-103. entitled the employer to the offset SSDI benefits even though the claimant elected not to receive them.
In our view Ihnen controls in the present circumstances, and the claimant's election of a lesser amount under the joint survivor payment option affords no basis for circumventing the coordination of benefits contemplated by § 8-42-103, or the respondents' right to obtain an offset based on the provisions of the statute. Generally, the rationale for the offset provisions is to coordinate benefits and prevent duplication. See Culver v. Ace Electric, 971 P.2d 664 (Colo. 1999). The claimant's arguments notwithstanding, allowing the respondents to offset the greater amount payable under the single life annuity payment option would not violate this principle. On remand the ALJ should therefore calculate and apply the offset based upon payments under the single life annuity payment, notwithstanding that the claimant did not elect to receive payments based upon that option.
IT IS THEREFORE ORDERED that the ALJ's order issued April 27, 2006, is set aside, and the matter is remanded for further proceedings and entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
_________________________________ Curt Kriksciun
___________________________________ Thomas Schrant
John N. Gargano, Wheatridge, CO, Coors Brewing Company, Risk Management Department, Rick Hindman, Esq., Golden, CO, Continental Casualty Co. c/o CNA Claims Plus, Mary Koch, Denver, CO, Steninger Balkenbush, LLC, John A. Steninger, Esq., Denver, CO (For Claimant).
McCrea Buck, LLC, Bruce B. McCrea, Esq., Denver, CO, (For Respondents).