W.C. No. 4-365-220Industrial Claim Appeals Office.
November 20, 2003
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Friend (ALJ) which determined the claimant’s average weekly wage (AWW). The claimant contends the ALJ erred in failing to include the value of family health care coverage in the AWW following termination of the employer paid coverage. We affirm.
The pertinent facts found by the ALJ are apparently undisputed. The claimant sustained a compensable injury in 1997 and became disabled. At the time of the injury the employer provided health care coverage for the claimant and his family.
In 1999 the employer continued paying for health insurance, but the claimant elected to limit coverage to himself only. The reason for this election is not apparent from the limited record provided and is not explained by the parties.
On April 1, 2001, the claimant’s employer terminated coverage and the claimant became eligible for COBRA coverage. The ALJ found the cost to “continue” the claimant’s individual coverage was $61.15 per week, and the ALJ increased the AWW accordingly. (Finding of Fact 3, Conclusions of Law 6, 7). However, the ALJ rejected the claimant’s argument that the AWW should be increased to reflect the cost of family coverage which the claimant had at the time of the injury. The ALJ ruled that under §8-40-201(19)(b), C.R.S. 2003, the AWW includes the “cost of conversion to a similar or lesser insurance plan where the employer no longer provides the benefit.”
On review, the claimant contends the AWW should reflect the value of employer paid health insurance in effect at the time of the injury. Therefore, the claimant reasons the AWW should reflect the value of the family coverage he maintained at the time of the injury. In support of this contention the claimant points out that § 8-40-201(19)(a), C.R.S. 2003, provides that the term “wages” refers to the compensation “under the contract of hire at the time of the injury.” Similarly, §8-42-102(2), C.R.S. 2003, states that the AWW shall be calculated based on the remuneration the claimant was receiving at the time of the injury. We disagree with the claimant’s argument.
Section 8-40-201(19)(b) provides that the term wages “shall include the amount of the employee’s cost of continuing the employer’s group health insurance plan and, upon termination of the continuation, the employee’s cost of conversion to a similar or lesser insurance plan.” This provision reflects a legislative compromise which attempts to value health insurance once the employer stops paying premiums. The amendment adds the cost of health care coverage when the employer stops paying. Further, the terms “continuing” and “conversion” are specialized terms of art derived from the Consolidated Omnibus Budget and Reconciliation Act of 1985 (COBRA). “Continuation” refers to the employee’s statutory right to maintain the employer’s group rate coverage at his own expense for eighteen months after the employer terminates payments for insurance. “Conversion” refers to the claimant’s right to obtain coverage from the employer’s insurer when the COBRA coverage ends. Midboe v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 03CA0159, September 25, 2003).
Moreover, § 8-40-201(19)(b) serves as a limitation on the rule that the AWW is determined based on remuneration earned at the time of the injury. Prior to enactment of § 8-40-201(19)(b) the AWW included the “reasonable value” of fringe benefits including health insurance. Enactment of the statute restricted the reasonable value rule by providing that upon termination of health insurance payments by the employer the claimant is limited to the “cost of conversion to a similar or lesser insurance plan.” Schelly v. Industrial Claim Appeals Office, 961 P.2d 547 (Colo.App. 1997).
Here, the COBRA letter sent to the claimant on March 28, 2001, which notified him of his rights upon termination of the employer’s insurance, states the following:
You and your covered dependents may elect to continue benefits for which you had coverage prior to your termination. You and your covered dependents may not add benefits for which you were not currently enrolled. For example, if you and your covered dependents were enrolled for medical benefits and not dental benefits, you may continue medical benefits only. (Emphasis added).
Thus, it appears that under COBRA the claimant is not entitled to insure dependents not enrolled at the time the employer terminates coverage. Because the term “continuing” in § 8-40-201(19)(b) is a term of art derived from COBRA, and because the statute represents a legislative compromise designed to value health insurance as a fringe benefit, we conclude the ALJ properly excluded the cost of family coverage when calculating the claimant’s AWW. At the time the employer terminated health insurance payments the claimant could not “continue” family coverage because such coverage was not in effect. Further, his only statutory right was to include the “cost of continuing” the coverage under COBRA.
We recognize that this result tends to diminish the value of compensation the claimant was receiving at the time of injury, and the value of benefits dependent on the AWW. However, our conclusion effects the legislative purpose to reconcile competing concerns regarding the valuation of health insurance and other fringe benefits. See Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, 26 P.3d 546 (Colo.App. 2001) (§ 8-40-201(19)(b) is broadly worded and could encompass factual situations favorable to either the claimant or the employer). Presumably, when the General Assembly enacted the statute it was aware that the value of COBRA insurance, and hence the inclusion of the cost of such insurance in the AWW, would be dependent on enrollment at the time the employer terminates coverage. Moreover, the result reached here does not increase the claimant’s AWW, and hence his lifetime permanent total disability benefits, based on family health insurance coverage which the claimant elected to forgo.
The claimant’s remaining arguments are without merit.
IT IS THEREFORE ORDERED that the ALJ’s order dated March 10, 2003, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Robert M. Socolofsky
NOTICE
This Order is final unless an action to modify or vacate this 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, within twenty (20) days after the date this Order was mailed, pursuant to §8-43-301(10) and § 8-43-307, C.R.S. 2002. The appealing party must serve a copy of the Petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this order were mailed to the parties at the addresses shown below on November 20, 2003 by A. Hurtado.
Tomas M. Gonzales, 710 Sherry Dr., Fort Collins, CO 80524
Blair Miller, Risk Management, City of Fort Collins, P. O. Box 580, Fort Collins, CO 80522
Greg Tempel, Esq., City of Fort Collins, P. O. Box 580, Fort Collins, CO 80522
Shirin Chowdhury, Occupational Healthcare Management Services, P. O. Box 173682, Denver, CO 80217-3682.
Robert Fusinato, Safety National Casualty Corporation, 2043 Woodland Pkwy., #200, St. Louis, MO 63146.
Subsequent Injury Fund, Tower 2, #500, Division of Workers’ Compensation — Interagency Mail
Chris L. Ingold, Esq., 501 S. Cherry St., #500, Denver, CO 80246 (For Claimant)
Kent N. Campbell, Esq., P. O. Box 2166, Fort Collins, CO 80522 (For Respondents)