W.C. No. 4-007-532Industrial Claim Appeals Office.
April 17, 1997
FINAL ORDER
Respondent King Soopers seeks review of a final order of Administrative Law Judge Gandy (ALJ) insofar as it determined the claimant’s average weekly wage. We modify the order, and as modified, affirm it.
The issues in this case are whether King Soopers and the Subsequent Injury Fund (SIF) are entitled to an “offset” based on an allegedly improper calculation of the claimant’s average weekly wage, and whether the average weekly wage should be modified due to the claimant’s purchase of Medicare health insurance coverage. We note that this case was tried on stipulated facts, and the parties raised no procedural objections to the ALJ’s consideration of the issues.
The claimant suffered an injury in 1985, and the parties stipulated that the claimant’s “initial average weekly wage” was $206.07 per week. In January 1991, the claimant’s average weekly wage was increased to $242.27 per week to reflect the claimant’s increased cost of maintaining the health insurance provided by King Soopers. In 1993, King Soopers and the SIF admitted that the claimant is permanently and totally disabled, and accordingly admitted liability for benefits.
On April 17, 1994, the claimant totally lost her right to purchase medical insurance under the King Soopers plan because the “COBRA continuation period expired.” The parties stipulated that the cost for the claimant “to continue an individual policy with the same coverage and deductible increased from $156.84 per month to $834 per month.” King Soopers and the SIF then agreed to increase the claimant’s average weekly wage to $398.53, and to increase permanent total disability benefits accordingly.
On April 1, 1995, the claimant became eligible to purchase medical insurance under the Medicare program. Since that date, the claimant has had her social security disability benefits reduced by the amount of $46.10 per month to purchase Medicare coverage. It is undisputed that between April 17, 1994, and April 1, 1995, the claimant did not have or purchase any health insurance.
On March 7, 1996, King Soopers filed a “Revised Final Admission of Liability” reducing the claimant’s average weekly wage to $206.07 per week. King Soopers based the reduction on the fact that the claimant did not purchase health insurance prior to April 1, 1995. King Soopers also sought an order allowing it to recoup the “overpayment” resulting from the claimant’s receipt of benefits based on the inflated average weekly wage.
The ALJ rejected King Soopers’ position, holding that it is obliged to continue paying permanent total disability benefits based on the average weekly wage of $398.53. The ALJ also concluded that King Soopers is not entitled to credit for an “overpayment” based on the claimant’s failure to purchase health insurance. The ALJ reasoned that the statute currently codified as § 8-40-201(19)(b), C.R.S. (1996 Cum. Supp.), does not require the claimant to purchase health insurance in order to have the value of such insurance included in the calculation of her average weekly wage. The ALJ made no direct findings concerning whether or not the respondents are entitled to a reduction in the average weekly wage as of April 1, 1995, when the claimant purchased Medicare insurance.
I.
On review, King Soopers argues that the ALJ erred in holding that the claimant’s failure to purchase health insurance did not preclude consideration of the “cost” of purchasing such insurance when calculating the claimant’s average weekly wage. We find no error.
Section 8-40-201(19)(a), C.R.S. (1996 Cum. Supp.), defines wages as “the money rate at which the services rendered are recompensed under the contract for hire in force at the time of the injury.” Section 8-40-201(19)(b) goes on to state 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 . . .”
In a series of cases, we have held that the purpose of §8-40-201(19)(b) “is to insure that disabled claimants receive the reasonable value of employer-paid health insurance coverage if the employer terminates the coverage.” E.g., Turner v. Technology Products, Inc., W.C. No. 3-965-536 (April 30, 1996); Kasten v. Little Thompson Water District, W.C. No. 4-115-778 (February 23, 1995). Further, we have held that the General Assembly sought to attain this objective by permitting “market forces” to determine the value of the insurance to the claimant. This objective is achieved by setting the value of health insurance at the claimant’s cost of “conversion” to a similar or lesser plan, not the employer’s cost of providing insurance. Turner v. Technology Products, Inc., supra.
In view of this conclusion, we have also held that, in cases where the evidence establishes that the claimant has access to post-injury health insurance at no cost, the claimant suffers no “cost of conversion.” Consequently, the claimant is not entitled to have the value of health insurance included in the average weekly wage. A contrary result is impermissible because it would allow the claimant to be compensated for the loss of health insurance, while continuing to receive the benefit of insurance. See Quick v. Contractors Crane Service, W.C. No. 4-160-963 (May 10, 1995); Smith v. Teledyne Water Pik,
W.C. No. 4-101-833 (January 10, 1995).
However, as the claimant argues, we have never held that §8-40-201(19)(b) requires the claimant to purchase health insurance in order to benefit from § 8-40-201(19)(b). Although the claimant’s actual cost to purchase an alternative insurance policy would constitute compelling evidence of the “cost of conversion” to a similar or lesser insurance plan, a claimant could also establish the “cost” through a witness qualified to testify about the price of health insurance policies on the open market.
Moreover, we should give the words of the statute their plain and ordinary meanings. See Snyder Oil Co. v. Embree, 862 P.2d 259 (Colo. 1993). Although the statute provides that the term “wages” includes the “amount” of the “employee’s cost of conversion,” the statute does not expressly require that the claimant actually incur the cost.
Further, the purpose of defining wages is to establish the claimant’s average weekly wage under § 8-42-102(1), C.R.S. (1996 Cum. Supp.). The average weekly wage in turn determines the claimant’s right to various benefits, including temporary total disability benefits and permanent total disability benefits. Section 8-42-105(1), C.R.S. (1996 Cum. Supp.); § 8-42-111(1), C.R.S. (1996 Cum. Supp.). These benefits are not paid at a rate equivalent to the claimant’s loss, but at sixty-six and two-thirds of the average weekly wage up to a defined maximum. Consequently, requiring claimants to purchase health insurance to receive the benefit of § 8-40-201(19)(b) would require them to spend a portion of their non-health-insurance-related benefits on health insurance. Absent an express directive, we cannot legislate such a rule.
For these reasons, we perceive no error in the ALJ’s conclusion that the claimant’s failure to purchase health insurance from April 17, 1994 to April 1, 1995, precluded consideration of the “cost of conversion” in calculating the average weekly wage. For this period, the ALJ properly based the claimant’s average weekly wage on the stipulated “cost of conversion,” and it is immaterial that the claimant failed to utilize the resulting benefits to purchase health insurance.
II.
The respondents also contend that as of April 1, 1995, the claimant’s average weekly wage should be based on the cost of purchasing Medicare health insurance. Respondents argue that this would increase the claimant’s average weekly wage from $206.07 per week to $216.71 per week. We agree with this argument.
Once the claimant became eligible for and purchased Medicare health insurance, the stipulated facts necessarily establish that her “cost of conversion” to a “similar or lesser insurance plan” was no longer $834 per month. Rather, as of April 1, the average weekly wage should be based upon the actual cost of the health insurance, or $10.64 per week. Quick v. Contractors Crane Service, supra; Smith v. Teledyne Water Pik, supra.
Under these circumstances, the ALJ’s order must be modified to reflect that commencing April 1, 1995, the claimant is entitled to permanent total disability benefits based upon an average weekly wage of $216.71 per week. To the extent this conclusion creates an “overpayment” of permanent total benefits, the parties have agreed that it may be recouped against future benefits. Should the parties dispute the rate of recovery, the matter may be submitted to the ALJ to determine the proper rate of offset.
IT IS THEREFORE ORDERED that the ALJ’s order is modified to reflect that the claimant’s average weekly wage is $216.71 per week commencing April 1, 1995, and continuing. To the extent the respondents overpaid benefits subsequent to April 1, 1995, the parties may agree, or the ALJ may establish the proper rate of recoupment.
IT IS FURTHER ORDERED that the ALJ’s order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
________________________________ David Cain
________________________________ Bill Whitacre
NOTICE
This Order is final unless an action to modify or vacate the Orderis 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 AppealsOffice and all other parties, within twenty (20) days after the date theOrder was mailed, pursuant to §§ 8-43-301(10) and 307, C. R. S. (1996Cum. Supp.).
Copies of this decision were mailed April 17, 1997 to the following parties:
Patricia A. Schelly, 2209 W. Elizabeth, #203, Ft. Collins, CO 80521
Marc Gallegos, King Soopers, Inc., P.O. Box 5567, T.A., Denver, CO 80217
Subsequent Injury Fund — Interagency Mail
Stephen J. Jouard, Esq., P.O. Drawer J, Ft. Collins, CO 80522 (For the Claimant)
Ronald C. Jaynes, Esq., 777 E. Speer Blvd., Ste. 210, Denver, CO 80203 (For the Respondent)
Jill M.M. Gallet, Esq., Attorney General’s Office, 1525 Sherman St., 5th Flr.,
Denver, CO 80203 (For SIF)
By: ________________________________________________