Opinion
W.C. No. 4-552-585, 4-576-683.
September 29, 2004.
ORDER OF REMAND
The respondents seek review of an order of Administrative Law Judge Martinez (ALJ) insofar as it determined the claimant's average weekly wage (AWW). The respondents contend the ALJ erred in failing to deduct expenses from the claimant's gross earnings. We set aside the contested portion of the order and remand for further proceedings.
The ALJ found the claimant "worked for respondent-employer in 2002 on a contract basis as an exercise rider/trainer of horses." The ALJ also found the claimant, while working as a jockey and exercise rider, "customarily filed income taxes as a self-employed individual." (Findings of Fact 1, 7).
The claimant sustained two separate knee injuries in 2002 while "ponying" horses at a race track. The ALJ found that at the time of these injuries the claimant was earning $992 per week for exercising and ponying horses. The claimant was paid in cash by the owners of the horses.
The ALJ further found that "in addition to living expenses, the claimant incurred other expenses in her jobs with the tracks such as gasoline, riding supplies, horse maintenance, jockey valet and agent." A "substantial part" of the claimant's expenses involved depreciation claimed on her truck and fifth wheel trailer. (Findings of Fact 7, 8).
The respondents argued that the claimant's "expenses" should be deducted from her gross earnings to arrive at the claimant's correct AWW. However, the ALJ concluded that "no reported case has ever held that expenses and deductions are considerations in determining the AWW of an injured employee." Thus, the ALJ excluded expenses and determined that $992 represents a fair approximation of the claimant's AWW.
On review, the respondents contend the ALJ erred in refusing to consider expenses in calculating the claimant's AWW. We conclude the ALJ may have misapplied the law and remand for entry of a new order on the issue of AWW and related benefits.
Our courts have held that if the claimant is paid a "wage" by her employer, the AWW is to be calculated based on the gross wages without regard to expenses the claimant might have incurred to earn the wage. Sneath v. Express Messenger, 881 P.2d 453 (Colo.App. 1994); Fillipone v. Industrial Commission, 41 Colo. App. 322, 590 P.2d 977 (1978). However, in Elliott v. El Paso County, 860 P.2d 1363 (Colo. 1993), the court held that depreciation claimed on a self-employed truck driver's tax return could be considered in calculating the driver's AWW. The court reasoned that the "cost of earnings must be considered in measuring those earnings." Id. at 1366. The Elliott court also stated that it was not establishing a " per se rule of depreciation deduction for the simple reason that it would be manifestly unjust to require any depreciation deduction taken on a claimant's income tax return to be considered" when computing the AWW. Rather, the Elliott court held the "depreciation deduction must bear some logical relationship to a self-employed claimant's actual diminution in earnings as a result of capital expenditures." Id. at 1366.
We have subsequently applied Elliott in Anderson v. Schubert Ranches, Inc., W.C. No. 4-176-931 (December 23, 1998). In that case we upheld an order which calculated the claimant's AWW based on his gross receipts as a self-employed truck driver minus "service and repair" expenses. However, under the facts of the case we rejected the respondents' argument that the entire depreciation deduction claimed on the claimant's tax return had to be subtracted from gross receipts.
Here, the ALJ held as a matter of law that expenses may not be deducted from the claimant's gross earnings as a horse trainer/exerciser. However, in light of the cases discussed above this would only be true if the claimant was employed by some other entity; but it would not be true if she was "self-employed." See Sneath v. Express Messenger, 881 P.2d at 455-456.
Here, the ALJ seems to have made contradictory findings, or no finding at all, concerning whether the claimant was a wage earning employee of the Colorado Horseracing Association or was self-employed. The claimant's testimony in this regard appears to be ambiguous. For instance, at one point she testified she was "self-employed" and obtained her coverage "through" the Colorado Horseracing Association. (Tr. P. 13). Later she testified that her "position with Colorado Horseracing Association" was as an "exercise rider." (Tr. P. 35). The first report describes the Colorado Horseracing Association as the claimant's employer. (Claimant's Exhibit 2). Consequently, the ALJ shall determine, on remand, whether the claimant was an "employee" of the Colorado Horseracing Association and earning wages, or was self-employed. The findings shall be sufficient to support appellate review of this determination.
If the ALJ determines the claimant was self-employed, the ALJ may consider the claimant's expenses in calculating her AWW. Elliott v. El Paso County, supra. However, the ALJ is not under an automatic obligation to treat every expense claimed on the tax return as a deduction from the claimant's gross earnings when calculating the AWW. Rather, there must be a logical relationship between the deduction and the claimant's expenditures to earn money as a trainer/exerciser of horses. See Anderson v. Schubert Ranches, Inc., supra.
In light of these conclusions we need not reach the respondents' remaining arguments. Because our order may raise factual issues not previously contemplated by the parties, the ALJ may in the exercise of his discretion hold an additional hearing.
We do agree with the claimant's argument that the respondents are bound by their admissions for the claimant's AWW and consequent admissions for temporary disability benefits until February 10, 2004, the date of the hearing at which the respondents sought to withdraw the admissions. Pacesetter Corp. v. Collett, 33 P.3d 1230 (Colo.App. 2001).
IT IS THEREFORE ORDERED that the ALJ's order dated March 9, 2004, is set aside insofar as it determined the claimant's AWW to be $992 per week and awarded temporary disability benefits based on that wage. On these issues the matter is remanded for further proceedings and entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
_____________________________ David Cain
_____________________________ Robert M. Socolofsky
Jennifer Hunterson, Vernal, UT, Colorado Horseracing Association, Aurora, CO, Brandee DeFalco Galvin, Esq., Pinnacol Assurance — Interagency Mail, (For Respondents).
David Mueller, Esq., Grand Junction, CO, (For Claimant).
R. Mack Babcock, Esq., Denver, CO.