W.C. No. 4-365-220.Industrial Claim Appeals Office.
August 2, 2004.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Jones (ALJ) which authorizes the self-insured employer (City) to “recoup” payments made under a long term disability (LTD) insurance policy. We reverse.
The ALJ found the claimant sustained a compensable back injury in 1997. The claimant was insured under an LTD policy purchased by the City and issued by Sun Life of Canada (Sun). In April 2001, at the City’s request, the claimant applied for LTD benefits under Sun’s policy. Eventually, Sun paid the claimant $30.931.93 in LTD benefits for the period September 26, 2000, to September 30, 2001. Sun terminated payments on October 1, 2001, when it determined the claimant failed to meet the policy definition of total disability.
The Sun policy provided the claimant was required to apply for workers’ compensation benefits if applicable to his situation. Further, if the claimant received workers’ compensation benefits “retroactively,” the LTD policy required the claimant to reimburse Sun for the value of such benefits. When the claimant filed for LTD, he signed a “reimbursement agreement” stating that he was not currently receiving workers’ compensation benefits and notifying him of the obligation to “pay back all amounts of such advances over and above the amounts to which the claimant was entitled under the policy provisions.” Commencing in October 2001 Sun asserted the claimant was “overpaid” $16,840, because he had failed to disclose the receipt of workers’ compensation benefits.
In January 2002, the respondents filed a Final Admission of Liability (FAL) admitting for temporary total disability benefits in the amount of $22,265.37, temporary partial disability of $12,436.19, and permanent partial disability benefits of $94,531.10. The claimant filed for bankruptcy, and in July 2003 the Bankruptcy Court discharged a debt to Sun in the amount of the alleged LTD overpayment of $16,840.
The City then advised the Bankruptcy Court of its intention to recoup an alleged overpayment of workers’ compensation benefits resulting from Sun’s payment of LTD benefits, and the City requested the Bankruptcy Court to determine whether their plan would violate the bankruptcy stay. The Bankruptcy Court ruled that an order requiring the claimant to repay
the alleged overpayment would violate the stay, but recoupment of the alleged overpayment against future benefits would not violate the stay.
The City filed a request to terminate or modify benefits, arguing that the claimant received $30,931.93 in LTD benefits, and that this amount must be offset against the City’s liability for workers’ compensation benefits pursuant to § 8-42-103 (1) (d) (I), C.R.S. 2003. The ALJ agreed, and ordered the claimant’s future benefits reduced at the rate of $125.06 per week until the entire amount is recouped.
The claimant filed a petition to review containing several specific allegations of error. The claimant asserts that the issue of the offset is beyond the jurisdictional boundaries of the Act and the City has no standing to assert the offset. Further, the claimant alleges the respondents failed to join Sun as an indispensable party. Finally, the claimant argues the ALJ erred in ordering the offset.
We reject the argument that adjudication of the offset is beyond the jurisdiction of the Act. Section 8-43-201, C.R.S. 2003, grants an ALJ jurisdiction to hear and decide all matters arising under the Act. Section 8-42-103 (1) (d) (I) expressly provides for a reduction of various workers’ compensation benefits based on the claimant’s receipt of “periodic disability benefits” which are payable under the provisions of a “pension or disability plan” financed in whole or in part by the employer. Thus, in adjudicating this issue the ALJ was acting within her express statutory authority and the claimant’s argument is without merit. See Lewis v. Scientific Supply Co., Inc., 897 P.2d 905 (Colo.App. 1995) (administrative tribunals adjudicating workers’ compensation cases are created by statute and their jurisdiction, powers, and duties are limited and defined by the statute).
Neither do we agree with the claimant’s argument that the City lacks standing to raise the offset provision. Standing requires a cognizable legal interest and an injury in fact. Bradley v. Industrial Claim Appeals Office, 841 P.2d 1071 (Colo.App. 1992). The City alleges that it has a legal right to reduce the workers’ compensation benefits based on the statute. Further, it alleges that it will suffer injury by paying more than it is legally required to pay if the offset is not granted. Thus, we perceive no standing problem.
Neither do we agree that Sun is an indispensable party. The claimant does not explain why the parties cannot adjudicate the existence and the amount of the offset without Sun being present. Moreover, the claimant’s liability to Sun arising out of the LTD policy was apparently discharged in bankruptcy. Thus, we perceive no abuse of discretion in the ALJ’s decision to proceed in this matter without Sun being present as a party See Renaissance Salon v. Industrial Claim Appeals Office, 994 P.2d 447, 450 (Colo.App. 1999) (if there is no risk of inconsistent results an absent party is not indispensable).
The claimant next argues that the City is not the “creditor on the amount in dispute” and is not entitled to the offset. Alternatively, the claimant asserts the offset ordered exceeds the amount permitted by the statute. We agree with the claimant that the City is not entitled to offset the claimant’s workers’ compensation benefits by the amount paid by Sun.
Section 8-42-103 (1) (d) (I) creates a reduction in the aggregate indemnity benefits payable for workers’ compensation based on periodic disability benefits payable under an employer financed pension or disability plan. However, this offset is subject to the limitation contained in § 8-42-103 (1) (d) (I) (B), C.R.S. 2003, which provides as follows:
Where the employer pension or disability plan provides by its terms that benefits are precluded thereunder in whole or in part if benefits are awarded under articles 40 to 47 of this title, the reduction provided in the paragraph (d) shall not be applicable to the extent of the amount so precluded.
It is true that subsection (1) (d) (I) is designed to prevent a “double recovery” of benefits where the employer has purchased both a disability plan and workers’ compensation benefits to compensate the claimant for a work-related injury. Spanish Peaks Mental Health Center v. Huffaker, 928 P.2d 741 (Colo.App. 1996). However, if the pension or disability plan by its terms precludes payment to the extent workers’ compensation benefits are available, subsection (1) (d) (I) (B) nullifies the offset by providing that no reduction of workers’ compensation benefits is permitted. In this manner a “double recovery” for a single disability is avoided, and benefits are coordinated so that the employer is no required to provide any benefits in excess of those mandated by the Workers’ Compensation Act. Masdin v. Gardner-Denver-Cooper Industries, Inc., 689 P.2d 714,717 (Colo.App. 1984).
Here, the ALJ found, on substantial evidence, that the LTD policy provides that LTD benefits are precluded to the extent the claimant receives corresponding workers’ compensation benefits. (Findings of Fact 4 6). Thus, to the extent the claimant received workers’ compensation benefits during the period from September 20, 2000, to September 30, 2001, his entitlement to LTD was reduced under the policy. Consequently, under subsection (1) (d) (I) (B) the City was not entitled to any offset against workers’ compensation benefits for amounts primarily covered by workers’ compensation.
Neither is the City entitled to an offset for any amounts that Sun paid in excess of available workers’ compensation benefits. To the extent that the LTD policy provided wage loss benefits in excess of workers’ compensation benefits, there is no “double recovery.” Rather, the provision of a disability policy which provides benefits exceeding those available under workers’ compensation was an election of the employer. The statute provides that workers’ compensation benefits may not be “reduced below zero” by the existence of disability benefits. Calculation of the offset is based on weekly benefits payable for workers’ compensation and weekly benefits available under the policy. See Industrial Commission v. Edlund, 759 P.2d 7 (Colo. 1988); Armijo v. Industrial Claim Appeals Office, 989 P.2d 198 (Colo.App. 1999). If the City received an offset based on LTD benefits paid in excess of workers’ compensation benefits during corresponding weeks, benefits would, in effect, be reduced below zero for those weeks.
Of course, the claimant actually received LTD benefits in excess of those to which he was entitled under the LTD policy. This is true because the claimant failed to disclose to Sun that he was receiving workers’ compensation benefits during the same period he received LTD benefits. The claimant’s failure to disclose created a debt to Sun which was discharged in bankruptcy. (Findings of Fact 8-11).
However, the mere fact that the claimant received LTD benefits in excess of what he was entitled to receive under the policy does not mean the City is entitled to claim those payments as an offset against liability for workers’ compensation. Subsection (1) (d) (I) (B) forbids an offset to the extent the terms of the LTD policy provide for a reduction in benefits based on the receipt of workers’ compensation benefits. To the extent Sun overpaid LTD benefits because of the claimant’s receipt of workers’ compensation benefits, the right to recover those payments with the City and Sun under the LTD policy. Indeed, Sun asserted such a right in the bankruptcy case. See Halliburton Services v. Miller, 720 P.2d 571 (Colo. 1986) (payments erroneously made to claimant under a sickness benefits plan could not be offset against workers’ compensation benefits because they were not made under a “pension plan,” and the employer’s remedy was to seek reimbursement under the sickness plan).
Here, the ALJ held that every dollar paid to the claimant under the LTD policy is subject to offset against the workers’ compensation benefits. This conclusion is erroneous to the extent the LTD policy provided for a reduction in benefits based on the receipt of workers’ compensation benefits. To the extent there was an overpayment of LTD benefits, the right to recover that overpayment rested with Sun, and the right was extinguished by the bankruptcy.
IT IS THEREFORE ORDERED that the ALJ’s order dated January 23, 2004, is reversed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Robert M. Socolofsky
Tomas Gonzales, Fort Collins, CO, Clair Miller, Risk Management, City of Fort Collins, Fort Collins, CO, Greg Tempel, Esq., City of Fort Collins, Fort Collins, CO, Shirin Chowdhury, Occupational Healthcare Management Services, Denver, CO, Robert Fusinato, Safety National Casualty Corporation, St. Louis, MO, Chris L. Ingold, Esq., Denver, CO, for Claimant.
Kent N. Campbell, Esq. and John D. Root, Esq., Fort Collins, CO, for Respondents.