Opinion
W.C. No. 4-735-985.
November 3, 2009.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Krumreich (ALJ) dated June 11, 2009, that denied the claimant's request for an increase in the average weekly wage (AWW). We affirm.
The facts as found by the ALJ are undisputed. The claimant was hired on May 10, 2004 and enrolled in the employer's health insurance plan. The claimant enrolled herself, her husband and her three sons as dependents. The claimant sustained a compensable injury on August 27, 2007. On October 30, 2008, the claimant removed her husband and two of her sons as dependents covered under the employer's health insurance program. The claimant removed one of her sons from the plan because he had turned 19 years of age and was no longer covered under the employer's health insurance plan. In addition, the claimant removed her husband and other son because she could no longer afford to pay her portion of the health insurance premium. Beginning January 1, 2009 the claimant and one dependent, her 12-year-old son, were covered under the employer's health insurance plan. The pre-tax payroll deduction per pay period for this coverage was $55.45.
The claimant's employment with the employer terminated March 13, 2009 because the claimant had been on a leave of absence for 18 months or more. The employer continued its contribution to the cost of the claimant's health insurance until the time of the claimant's termination from employment effective March 13, 2009. At the time of her termination from employment the claimant's cost for continuing the employer's health insurance plan for herself and one dependent was $791.45. This is a weekly cost of $182.64
At the time of the hearing, the claimant argued that her AWW should be increased by $85.10 per week effective January 1, 2009 to compensate her for the loss of health insurance coverage for her husband under the employer's plan. The amount claimed represented the difference between the cost of continuing the employer's plan for the claimant and one dependent and the cost for the claimant and two or more dependents. The claimant calculated this amount as: ($1,160.23 — $791.45 + $368.78 per month, or $85.10 per week). The claimant argued that this amount represents "wages" lost by the claimant as a result of her work injury because the claimant removed her husband from coverage under the employer's plan due to the cost of her off-work status.
The ALJ rejected the claimant's argument noting that § 8-40-201(19)(b) C.R.S. 2009 includes the cost of health insurance only when a claimant had "continued" the employer's coverage at her own cost pursuant to COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985). So long as the employer continues its payment or share of the premium for the health insurance the amount a claimant pays as her share of the premium for the insurance is not includable in the AWW under the definition of "wages" in § 8-40-201(19)(b). Midboe v. Industrial Claim Appeals Office, 88 P.3d 643 (Colo. App. 2003) rev'd on other grounds, Industrial Claim Appeals Office v. Ray, 145 P.3d 661, 667 (Colo. 2006). The ALJ reasoned that when the claimant reduced the number of dependents covered under her employer's health insurance at a time when the employer continued to make payment for its portion of the premium, the claimant was not entitled to have any portion of the cost of such insurance included in her average weekly wage. Because the employer continued payment for its portion of the cost of the health insurance, any value of decreased coverage under the plan did not constitute "wages" as defined under § 8-40-201(19)(b). The ALJ concluded that the claimant was not entitled to have any cost or value associated with the employer's health insurance plan included in her average weekly wage until after March 13, 2009 when the employment terminated and the employer's contributions ended.
The ALJ citing Gonzales v. City of Fort Collins, W.C. No. 4-365-220 (November 20, 2003), affd., Gonzales v. Industrial Claim Appeals Office, (Colo. App. No. 03CA2381, July 22, 2004) (not selected for publication) found that the claimant voluntarily ended coverage for certain dependents prior to the termination of her employment and loss of coverage. The ALJ determined that the claimant's voluntary reduction of coverage prior to her termination of employment, even though motivated by economic concerns related to her injury, did not entitle the claimant to a higher conversion cost to be included in her AWW under § 8-40-201(19)(b)("wages" shall included the amount . . . upon termination of the continuation, the employee's cost of conversion to a similar or lesser plan"). The ALJ found that cost should be measured by the cost of converting to a similar or lesser plan as that in effect upon termination of the employer's contribution to the plan.
On appeal, the claimant reasserts the arguments made before the ALJ and seeks to distinguish Gonzales v. City of Fort Collins, supra. We are not persuaded that the ALJ committed reversible error.
Section 8-40-201(19)(b) provides 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, and gratuities reported to the federal internal revenue service by or for the worker for purposes of filing federal income tax returns and the reasonable value of board, rent, housing, and lodging received from the employer, the reasonable value of which shall be fixed and determined from the facts by the division in each particular case, but shall not include any similar advantage or fringe benefit not specifically enumerated in this subsection (19). If, after the injury, the employer continues to pay any advantage or fringe benefit specifically enumerated in this subsection (19), including the cost of health insurance coverage or the cost of the conversion of such health insurance coverage, such advantage or benefit shall not be included in the determination of the employee's wages so long as the employer continues to make such payment. (Emphasis added.)
As pointed out by the court in Midboe v. Industrial Claim Appeals Office supra, the reference to "continuing" and "conversion" are terms of art related to those portions of COBRA. "Continuation" refers to the claimant's statutory right to maintain the employer's group rate coverage at his own expense for eighteen months after the employer terminates payments for insurance. "Conversion" refers to the claimant's right to obtain coverage from the employer's group health insurer following the expiration of the continued coverage.
The Panel consistent with Midboe has also noted the significance of the terms "conversion" and "continuation" in Gonzales v. City of Fort Collins, supra. In Gonzales, the Panel held that the cost of family health coverage, which claimant carried at time of injury was not included in AWW because the family was not enrolled at time the health insurance was terminated as required by COBRA. The Panel reasoned that because the General Assembly was presumably aware when it enacted the statute that inclusion of such coverage in AWW would be dependent on enrollment at the time of termination. The Panel's reasoning in Gonzales was affirmed on appeal.
The claimant acknowledges that Gonzales supports the ALJ's conclusions. However, the claimant seeks to distinguish Gonzales because here the claimant reduced her coverage because she could no longer afford to pay her portion because of her industrial injury. In contrast, in Gonzales the claimant did not submit evidence of why he reduced his coverage to himself. The claimant contends that under such circumstances the remedial purpose of the Workers' Compensation Act is best served by including the cost of insurance that would have been in effect, but for the industrial injury.
However, the remedial purpose of the Workers' Compensation Act was also argued in Gonzales. In Gonzales, the Panel recognized that the result reached would diminish the value of the claimant's benefits. Nevertheless, the Panel's decision, affirmed on appeal, was that the conclusion reached reflected the legislative purpose to reconcile competing concerns regarding the valuation of health insurance and other fringe benefits. The Panel and the Court of Appeals both noted that when the General Assembly enacted the statute it was presumably aware that the value of COBRA insurance, and hence the inclusion of the cost of such insurance in the AWW, would be dependent on enrollment at the time the employer terminated coverage.
Moreover, this result is consistent with Schelly v. Industrial Claim Appeals Office, 961 P.2d 547 (Colo. App. 1997). In Schelly, the court noted that § 8-40-201(19)(b) serves as a limitation on the rule that the AWW is determined based on remuneration earned at the time of the injury. The court further noted that prior to enactment of § 8-40-201(19)(b) the AWW included the "reasonable value" of fringe benefits including health insurance. In Schelly, the court found that the enactment of the statute restricted the reasonable value rule by providing that upon termination of health insurance payments by the employer the claimant is limited to the "cost of conversion to a similar or lesser insurance plan."
We are not persuaded to depart from the reasoning in Gonzales. Therefore, we conclude the ALJ did not err in increasing the claimant's AWW by $182.64 per week beginning at the time of the termination of her employment on March 13, 2009. IT IS THEREFORE ORDERED that the ALJ's order dated June 11, 2009 is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Curt Kriksciun
____________________________________ Thomas Schrant
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LEPRINO FOODS, Attn: JERRY BAER, DENVER, CO, (Employer).
ACE AMERICAN INSURANCE CO, Attn: ANITA FRESQUEZ-MONTOYA, C/O: ESIS, TAMPA, FL, (Insurer).
SAWAYA, ROSE KAPLAN, PC, Attn: BRITTON J MORRELL, ESQ., GREELEY, CO, (For Claimant).
TREECE, ALFREY, MUSAT BOSWORTH, PC, Attn: KATHLEEN M FAIRBANKS, ESQ., DENVER, CO, (For Respondents).