Opinion
W.C. No. 3-114-839
February 3, 2000
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Martinez (ALJ), insofar as the ALJ denied the respondents' request to apportion the award of permanent total disability benefits, and to the extent the ALJ granted the claimant a $2000 "offset" for attorney fees which the claimant incurred in obtaining Social Security Disability Insurance (SSDI) benefits. We modify the order with respect to the attorney fees and, as modified, affirm it.
The claimant sustained compensable injuries on August 6, 1994, when he was involved in a truck accident arising out of and in the course of his employment. The respondents do not dispute the claimant is now permanently and totally disabled. The ALJ specifically found that the claimant sustained "brain damage" resulting in memory loss and "emotional instability." The claimant also experiences vision problems, sinus problems, and shoulder difficulties which restrict him to lifting 15 pounds frequently and 25 pounds occasionally. The claimant underwent a Division-sponsored independent medical examination which resulted in a 33 percent whole person rating for impairment of the thoracic and lumbar spine, the right upper extremity, brain function, cranial nerves, vision and facial disfigurement.
The record contains evidence the claimant was assigned a 10 percent disability rating by the Veterans Administration (VA) for a cervical injury which the claimant sustained during military service in the late 1970s or early 1980s. Apparently, the claimant was still receiving monthly compensation from the VA at the time of the June 1999 workers' compensation hearing.
The record also reflects that on March 9, 1997, the claimant was awarded SSDI benefits retroactive to February 1995. The "Notice of Award," which was received in evidence, reveals the claimant was awarded $16,838.60 in retroactive benefits, but that $4,000 was withheld as attorney fees. At the workers' compensation hearing the claimant requested an order requiring the respondents to "credit $2,000 toward the $4,000 in Social Security disability benefits for attorney's fees pursuant to the case law." (Tr. p. 3).
The respondents argued the ALJ should apportion the permanent total disability benefits based on the cervical injury which the claimant sustained during his military service. However, the ALJ found that prior to the 1994 industrial injury the claimant "was working on a full-time, full duty, full pay basis, performing medium physical work as a driver laborer." The ALJ further determined the claimant had "no disability which impacted his personal, social, and occupational demands just prior to his compensable injury." Thus, citing former § 8-42-104(2), C.R.S. 1998 [amended, 1999 Colo. Sess. Laws, ch. 141 at 410-411, for injuries occurring on or after July 1, 1999], and Lindner Chevrolet v. Industrial Claim Appeals Office, 914 P.2d 496 (Colo.App. 1995), the ALJ determined the claimant did not have a "previous industrial disability" at the time of the 1994 injury, and denied the request for apportionment.
The ALJ also found the claimant incurred $4000 in attorney's fees to obtain the SSDI benefits. Under these circumstances, the ALJ concluded the claimant was entitled to "an offset of attorney's fees in the amount of $2000."
I.
The respondents first contend the ALJ erred in failing to apportion the claimant's permanent total disability benefits based on the military injury and the ongoing VA benefits. The respondents argue the ALJ incorrectly held that apportionment is improper under former § 8-42-104(2) unless there is a "preexisting industrial disability." Further, the respondents assert the claimant's receipt of VA benefits creates a "presumption" of disability. We find no error.
Initially, we note the Supreme Court's recent decision in United Airlines, Inc. v. Industrial Claim Appeals Office, ___ P.2d ___ (Sup.Ct. No. 98SC657, January 24, 2000). The specific issue in that case concerned whether or not the premium statute, found at § 8-46-105, C.R.S. 1999, imposes full responsibility on the claimant's last employer in cases where successive industrial disabilities combine to produce permanent total disability. Although the opinion contains dicta suggesting that § 8-42-104(2) does not contemplate apportionment of permanent total disability benefits in cases where the permanent total disability results, in part, from preexisting nonindustrial disabilities, the court stated,
"we need not consider whether the previous disability statute [§ 8-42-104(2)] requires a reduction of benefits when one or more preexisting symptomatic nonindustrial disabilities combine with the subsequent industrial disability to render the claimant permanently and totally disabled." Slip op. at 29-30.
Rather, the United Airlines court merely cited its prior opinions indicating the court's "assumption" that the statute imposes "full responsibility on the last employer in such cases." See Subsequent Injury Fund v. Thompson, 793 P.2d 576 (Colo. 1990); City and County of Denver v. Industrial Commission, 690 P.2d 199 (Colo. 1984). Neither did the court expressly overrule or disapprove of several Court of Appeals opinions holding that § 8-42-104(2) authorizes apportionment in cases where disabling nonindustrial disabilities combine with subsequent industrial disabilities to produce permanent total disability. E.g., Waddell v. Industrial Claim Appeals Office, 964 P.2d 552 (Colo.App. 1998); Colorado Mental Health Institute v. Austill, 940 P.2d 1125 (Colo.App. 1997). Thus, we do not read United Airlines as authority prohibiting apportionment under the circumstances presented by this case, and we will analyze the issues under previously established precedent.
Former § 8-42-104(2) provides for apportionment of permanent total disability in cases where Subsequent Injury Fund liability is not available under § 8-46-101, C.R.S. 1999. Waddell v. Industrial Claim Appeals Office, supra. Apportionment is determined by "computing the percentage of the entire disability and deducting therefrom the percentage of the previous disability as it existed at the time of the subsequent injury." In Colorado Mental Health Institute v. Austill, supra, the Court of Appeals held that a preexisting, symptomatic nonindustrial condition is subject to apportionment under the statute where the evidence demonstrates the preexisting condition impacted the claimant's ability "to earn a wage and perform the same or other employment." See also, Baldwin Construction Inc., v. Industrial Claim Appeals Office, 937 P.2d 895 (Colo.App. 1997). The question of whether the preexisting nonindustrial condition was disabling at time of the subsequent industrial injury is one of fact for determination by the ALJ. Indeed, the statute contemplates the claimant may have fully recovered from a past disability so that the prior nonindustrial condition does not contribute to the claimant's present disability. See Mountain Meadows Nursing Center v. Industrial Claim Appeals Office, ___ P.2d ___ (Colo.App. No. 98CA 0469, February 4, 1999).
Because the question of whether the preexisting condition was disabling at the time of the subsequent industrial injury is one of fact, we must uphold the ALJ's order if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 1999. This standard of review requires us to defer to the ALJ's resolution of conflicts in the evidence, his credibility determinations, and the plausible inferences he drew from the evidence. Metro Moving and Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).
As we read the ALJ's findings of fact, he determined the claimant's military injury had no impact on the claimant's ability to earn wages or engage in employment at the time of the August 1994 industrial injury. This determination is supported by evidence the claimant was engaged in medium level employment at the time of the 1994 industrial injury, had engaged in work which required him to lift bales of hay weighing up to 100 pounds after leaving the military, and was not limited when engaging in social and recreational activities. This evidence supports the ALJ's conclusion that apportionment was not proper under § 8-42-104(2) because the claimant was not suffering any "industrial disability" at the time of the 1994 injury. Colorado Mental Health Institute v. Austill, supra. Although the ALJ's citation of Lindner Chevrolet was not on point, the overall findings and conclusions reflect a correct understanding and application of the law.
The mere fact that the claimant was receiving disability benefits from the VA because of the military injury did not require the ALJ to reach a contrary result. There is no showing of the basis on which the VA benefits were awarded, or that the award took into account the effect of the injury on the claimant's ability to earn wages. Moreover, there was no showing that the award of the VA benefits reflected the claimant's disability at the time of the 1994 industrial injury. See Lindner Chevrolet v. Industrial Claim Appeals Office, supra (prior social security decision awarding benefits did not prohibit ALJ from finding claimant was permanently and totally disabled as a result of a subsequent industrial injury).
II.
The respondents next contend the ALJ erred in awarding the "$2000 offset" for attorney fees which the claimant expended in obtaining the award of SSDI benefits. We agree with the respondents that the ALJ's order should be modified.
Section 8-42-103(1)(c)(I), C.R.S. 1999, provides that respondents are entitled to reduce the "aggregate benefits payable" for permanent total disability "by an amount equal as nearly as practical to one-half" the amount of SSDI benefits "granted" to the claimant. On two occasions the Court of Appeals has addressed the proper method of applying the SSDI offset where the claimant receives a retroactive award of SSDI benefits and incurs attorney fees to obtain the award. See Jones v. Industrial Claim Appeals Office, 892 P.2d 425 (Colo.App. 1994); St. Vincent's Hospital v. Alires, 778 P.2d 277 (Colo.App. 1989). In both instances, the court held that the proper method of applying the SSDI offset was to subtract the attorney fees from the gross SSDI award, and then permit the respondents to take an offset based on 50 percent of the remaining or net SSDI benefits. In Jones, the court stated that, "because the attorney fees are deducted before calculation of the offset, the claimant and the insurer each bear one half of the fees." Jones v. Industrial Claim Appeals Office, 892 P.2d at 426.
Although the precise meaning of the ALJ's order is unclear, we conclude the order must be modified to provide an offset as directed by the Court of Appeals in Jones and St. Vincent's Hospital. Therefore, the order is amended to reflect the respondents are entitled to take an offset based on the net SSDI award of $12,541.35 (after deduction of $4000 in attorney fees). The parties remain free to litigate whether the offset has been properly applied to the particular facts of this case.
IT IS THEREFORE ORDERED that the ALJ's order dated July 28, 1999, is modified to provide for an SSDI offset in accordance with this order. Otherwise, the ALJ's order is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Bill Whitacre
NOTICE
This Order is final unless an action to modify or vacate the Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, Colorado 80203, by filing a petition to review with the court, with service of a copy of the petition upon the Industrial Claim Appeals Office and all other parties, within twenty (20) days after the date the Order was mailed, pursuant to §§ 8-43-301(10) and 307, C.R.S. 1999.
Copies of this decision were mailed February 3, 2000 to the following parties:
Terry Ragsdale, 825 E. Otley, Space E-6, Fruita, CO 81521
Western Company of North America, 2403 River Rd., Grand Junction, CO 81505-1309
National Union Fire Insurance Company, Attn: Carol Keim, AIG Claim Services Inc., P.O. Box 32130, Phoenix, AZ 85064
J. Keith Killian, Esq., and Amy K. Eaton, Esq., P.O. Box 4859, Grand Junction, CO 81502 (For Claimant)
Joel S. Babcock, Esq., P.O. Box 22833, Denver, CO 80222 (For Respondents)
BY: A. Pendroy