W.C. No. 4-608-694.Industrial Claim Appeals Office.
December 14, 2009.
ORDER OF REMAND
The respondents seek review of an order of Administrative Law Judge Walsh (ALJ) dated July 29, 2009, that calculated the offset for Social Security Disability Insurance (SSDI) benefits taken against permanent partial disability (PPD) benefits. We set the order aside and remand for entry of a new order.
The relevant facts were stipulated to by the parties. The claimant suffered an industrial injury in 2004. The claimant attained maximum medical improvement and was assessed a 32 percent whole person impairment. The claimant’s AWW is $674.59. The claimant’s age for purposes of permanent partial disability (PPD) benefits translates to an age factor of one. These factors together would entitle the claimant to an unadjusted PPD benefit of $86,347.52. However, the statutory cap of $120,000 imposed by § 8-42-107.5 C.R.S. 2004 applies to this case. We note the statutory cap was increased to $150,000 in 2005, but otherwise the statute was unchanged. Colo. Sess. Laws 2005, Ch. 323 at 1505. The claimant had been paid $98,369.99. Therefore, the total amount possibly due under the cap is $21,630.01 ($120,000 — $98,369.99 = $21,360.01). The statutory maximum payout rate for PPD benefits is $361.99 per week. The claimant received SSDI, which results in an offset of $197.80 a week.
The ALJ identified the issue as being the method of calculation of the PPD award in consideration of the statutory cap on indemnity benefits, the statutory cap on PPD payout and the statutory offset of the SSDI award. The ALJ’s method of calculation is as follows. The claimant was entitled to PPD benefits in the amount of $21,630.01, which represented the difference between the benefits the claimant had already received and the $120,000 cap. The proper method of calculating the weekly amount of PPD benefits was
to deduct the SSDI offset of $197.80 a week from the statutory maximum weekly payout rate of $361.99 for PPD benefits. Therefore, the weekly PPD benefit due the claimant was $164.19. The ALJ then determined how many weeks it would take to pay off the entire $21,630.01 ($21,630.01 ÷ 164.19 = 131.7377 weeks).
The respondents, primarily relying on Armijo v. Industrial Claim Appeals Office 989 P.2d 198 (Colo. App. 1999), contend the ALJ erred in calculating the PPD benefits due the claimant. In our view, the ALJ’s methodology in essence eliminates the SSDI offset and therefore a remand is necessary.
Section 8-42-103(1)(c)(I) C.R.S. 2009 provides that where SSDI benefits are payable to the claimant “the aggregate benefits payable” for PPD “shall be reduced, but not below zero, by an amount equal as nearly as practical to one-half such federal periodic benefits.” The overall purpose of this statute is to prevent “double recovery” of SSDI and workers’ compensation benefits for the same disability. See U.S. West Communications, Inc. v. Industrial Claim Appeals Office, 978 P.2d 154 (Colo. App. 1999).
As we read his order, the ALJ found that the “aggregate benefits payable” for PPD is $21,630.01. The ALJ then determined the proper method of calculating the weekly amount of PPD benefits in a manner that would require the respondents to pay off the entire $21,630.01.
In our view, the “aggregate benefits payable” for PPD should determine the number of weeks it will take to pay the award in full. In contrast, the ALJ’s calculation of the offset was not based on the “aggregate benefits payable” for PPD, but rather the amount necessary to bring the PPD payments to the claimant up to the $120,000 cap. For the purposes of this case, § 8-42-107.5 provides that no claimant may receive more than one hundred twenty thousand dollars from combined temporary disability payments and permanent partial disability payments. This section of the Workers’ Compensation Act contains no exemption from the SSDI offset provisions of § 8-42-103(1)(c)(I).
The ALJ’s calculation on the surface takes into account the SSDI offset. However, we view the ALJ’s methodology as simply extending the PPD payout over a longer period of time without reducing the actual payout of PPD benefits as a result of the SSDI offset. The effect is to understate or actually eliminate the SSDI offset. It follows that the ALJ’s calculation of the overpayment must be modified.
In our opinion the calculations used by the ALJ is not the formula mandated by Armijo. In Armijo v. Industrial Claim Appeals Office, the court held the proper method to calculate the SSDI offset is to calculate the total amount payable for PPD in accordance
with the statutory formula, convert this amount to its weekly equivalent, and deduct the corresponding weekly SSDI offset. Se Stecklein v. Charles D. Jones Company
W. C. No. 4-331-925 (May 9, 2001). As we read Armijo v. Industrial Claim Appeals Office, the remaining liability for PPD capped at $21,630.01 should be paid out subject to the social security offset. For example, payment at the statutory maximum PPD rate of $361.99 would require 59.753 weeks to accomplish. The SSDI offset of $197.80 would be deducted from the $361.99 for PPD payments of $164.19. The $164.19 would then be paid for a period of 59.753 weeks. This would give the respondents credit for the social security offset.
A similar situation was faced by the court in Yates v. Sinton Dairy 883 P.2d 562 (Colo. App. 1994). In Yates, the court determined that the offset against workers’ compensation benefits for social security disability benefits is to be subtracted from the worker’s disability rate after, not before, the rate is reduced to the state maximum. The court found to do otherwise would result in the claimant being entitled to the same total amount of payments merely spread over a longer period of time. The Yates court, citing Engelbrecht v. Hartford Accident Indemnity Co., 680 P.2d 231 (Colo. 1984), stated that the purpose of the offset is to prevent an injured worker from receiving the full amount of social security and workers’ compensation benefits for the same disability.
Here the result may appear harsh because the payments by the insurer will be less then the $120,000 cap. However, the aggregate benefits payable for PPD is a combination of the workers’ compensation benefits directly paid by the insurer and credit for SSDI benefits. This result prevents the “double recovery” of SSDI and workers’ compensation benefits for the same disability proscribed in U.S. West Communications, Inc. v. Industrial Claim Appeals Office, supra; see also Jiminez v. Industrial Claim Appeals Office, 51 P3d 1090 (Colo. App. 2002) (the very purpose of the offset is to prevent a windfall of duplicative disability benefits).
IT IS THEREFORE ORDERED that the ALJ’s order dated July 29, 2009 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
______________________________ John D. Baird
______________________________ Thomas Schrant
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LEONARD FLORES, PUEBLO, CO, (Claimant).
OREGON STEEL MILLS, INC., Attn: CAROLYN BJUR, PORTLAND, OR, (Employer).
CONTINENTAL CASUALTY CO., Attn: MICHELLE TRESSLER, C/O: SEDGWICK CLAIMS MANAGEMENT SERVICES, INC., LEXINGTON, KY, (Insurer).
LAW OFFICE OF MICHAEL W SECKAR, PC, Attn: MICHAEL W SECKAR, ESQ., PUEBLO, CO, (For Claimant).
LEE KINDER, LLC, Attn: KATHERINE M LEE, ESQ., DENVER, CO, (For Respondents).