W.C. No. 4-296-754Industrial Claim Appeals Office.
June 17, 1997
FINAL ORDER
The respondents seek review of a final order of Administrative Law Judge Friend (ALJ) which denied their claim for offset based on the claimant’s receipt of unemployment insurance (UI) benefits, and also denied an offset based on the claimant’s receipt of “severance pay.” We reverse the order in part and affirm it in part.
The parties stipulated to the pertinent facts. The claimant sustained a compensable injury, and was separated from her employment on December 26, 1995. Nevertheless, the employer continued to pay wages through December 30, 1995. In January 1996, the claimant received three weeks of “severance pay in the same amount as her wages.” Thereafter, from January 27, 1996 through July 26, 1996, the claimant received UI benefits.
Relying on the opinion of the court of appeals in Axelson v. Pace Membership Warehouse, 923 P.2d 322 (Colo.App. 1996), the ALJ held that the respondents are not entitled to an offset based on the claimant’s receipt of UI benefits. The ALJ also rejected the argument that the respondents are entitled to an offset due to the claimant’s receipt of severance pay. The ALJ reasoned that “there is no provision within the Workers’ Compensation Act to allow for” such an offset.
I.
On review, the respondents contend that the ALJ erred in relying on Axelson v. Pace Membership Warehouse, supra, in denying the UI offset. We agree.
Subsequent to the ALJ’s order, the supreme court issued its opinion in Pace Membership Warehouse v. Axelson, ___ P.2d ___ (Sup.Ct. No. 96SC229, May 19, 1997). The court reversed the judgment of the court of appeals, and held that the UI offset contained in 8-42-103(1)(f), C.R.S. (1996 Cum. Supp.), does not violate equal protection of the laws. Instead, the supreme court concluded that the offset is rationally related to a “legitimate state interest” in preventing double recovery of wage loss benefits when the loss occurs during a single period of time.
It follows that the ALJ’s order must be reversed insofar as it denied an offset based on the claimant’s receipt of UI benefits. The respondents shall be entitled to take the offset provided in § 8-42-103(1)(f).
II.
The respondents next contend that the ALJ erred in denying them an offset against temporary total disability benefits on account of the claimant’s receipt of “severance pay.”
The respondents reason that one of the purposes of severance pay is to substitute for loss of salary, and that temporary total disability benefits also compensate for an actual loss of wages. Therefore, the respondents argue that severance pay should be offset against temporary total disability benefits because any other result would cause a “double recovery” by the claimant. We disagree.
As the ALJ noted, the Act does not contain any provision for reduction of temporary disability benefits on account of the claimant’s receipt of “severance pay.” In the absence of an express provision creating a right of offset, our courts have been reluctant to create such a right, even if to do so would avoid a theoretical “double recovery.” See Halliburton Services v. Miller, 720 P.2d 571 (Colo. 1986) (payments to claimant under a “sickness benefit plan” were not offsetable against workers’ compensation benefits on the theory that they were part of an “employer pension plan”); City and County of Denver v. Industrial Claim Appeals Office, 892 P.2d 429 (Colo.App. 1994) (veterans benefits were not offsetable against workers’ compensation benefits on the theory that they are benefits payable under a “pension or disability plan”). Like the ALJ, we decline to create an offset for “severance pay” where the statute does not do so Kraus v. Artcraft Sign Co., 710 P.2d 480 (Colo. 1985) (court may not engage in judicial legislation by creating a remedy not specifically provided in the statute).
Neither do we believe that the severance pay falls within the wage continuation provisions of § 8-42-124(2), C.R.S. (1996 Cum. Supp.). Wage continuation plans do not entitle employers to recoup payments from the claimant or the insurer if the “employer has charged the employee with any earned vacation leave, sick leave, or other similar benefits for any reason.” Section 8-42-124(4), C.R.S. (1996 Cum. Supp.).
As stated in Public Service Co. v. Johnson, 789 P.2d 487
(Colo.App. 1990),§ 8-42-124(4) reflects “a legislative determination that an injured employee should not be required to sacrifice earned benefits in order to obtain statutorily mandated workmen’s compensation benefits.” Severance allowances are generally viewed as constituting consideration for past services Moore v. Digital Equipment Corp., 868 P.2d 1170 (Colo.App. 1994). Thus, allowing the claimant to receive the severance pay and temporary disability benefits for the same period of time does not cause a double recovery. To the contrary, the claimant earned the severance pay prior to the period of temporary disability.
IT IS THEREFORE ORDERED that the ALJ’s order dated December 2, 1996, is reversed insofar as it denied the respondents an offset on account of the claimant’s receipt of UI benefits.
IT IS FURTHER ORDERED that the ALJ’s order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Dona Halsey
NOTICE
This Order is final unless an action to modify or vacate theOrder is commenced in the Colorado Court of Appeals, 2 East 14thAvenue, Denver, Colorado 80203, by filing a petition to reviewwith the court, with service of a copy of the petition upon theIndustrial Claim Appeals Office and all other parties, withintwenty (20) days after the date the Order was mailed, pursuant to§§ 8-43-301(10) and 307, C. R. S. (1996 Cum. Supp.).
Copies of this decision were mailed to the following parties:
Terraesa Gallardo, 3805 Dyanna Dr., Thornton, CO 80241
Senter, Goldfarb Rice, Attn: Roberta Wallace 400 S. Colorado Blvd., Ste. 700, Denver, CO 80222
Colorado Compensation Insurance Authority, Attn; Laurie A. Schoder, Esq. (Interagency Mail)
Janet L. Frickey, Esq., 940 Wadsworth Blvd., 4th Flr., Lakewood, CO 80215 (For the Claimant)
By: _______________________________