Recent Workers' Compensation Decisions: an Update
| Publication year | 1995 |
| Pages | 2375 |
1995, October, Pg. 2375. Recent Workers' Compensation Decisions: An Update
The July article discussed Romero v. Industrial Claim Appeals Office,(fn2) a case in which the Court of Appeals declared unconstitutional the termination of permanent total disability benefits when the injured worker reaches age sixty-five. On August 28, 1995, the Supreme Court granted certiorari in this case and agreed to determine whether the Court of Appeals correctly applied the equal protection principles most recently discussed in Duran v. Industrial Claim Appeals Office.(fn3)
In Colorado AFL-CIO v. Donlon,(fn4) the Court of Appeals affirmed without discussion its decision in Romero, then rejected several other constitutional challenges to the 1991 amendments to the Workers' Compensation Act.
The first equal protection challenge in Donlon was brought by an intervening plaintiff ("Organ") who was employed by an uninsured contractor to work on a new private residence that did not become habitable until eight months after he was injured. When he learned that his employer was uninsured, Organ filed a workers' compensation claim against the homeowner, pursuant to CRS § 8-41-402 (1), which makes the owner of a residential property a statutory employer of the contractor's employees unless the property meets the definition of a qualified residence under Internal Revenue Code ("Code") § 163(h)(4)(A).
The Code defines a qualified residence in part as the owner's principal residence. An IRS regulation adds that a home under construction also may be a qualified residence for a period of twenty-four months if the residence becomes the owner's principal residence when it is ready for occupancy.
The administrative law judge ("ALJ") and the Industrial Claim Appeals Office ("ICAO") ruled that this IRS regulation was part of the statutory definition of "qualified residence" and denied Organ's claim because when the house became habitable, the owner moved in. Organ appealed, arguing that under the IRS regulations, a qualified residence was really nothing more than a residence on which mortgage interest was owed.
The Court of Appeals rejected this argument in Organ v. Jorgensen,(fn5) agreeing that if the residence was ready for occupation within twenty-four months and that if the owners occupied the residence when it was ready, the residence was qualified and the owners were not statutory employees of the contractor's employees. This would mean that in some cases, it could not be determined whether the residence was qualified and, hence, whether the owner was exempt from liability, for nearly twenty-four months after the worker was injured.
This result effectively hangs the worker out to dry for as long as two years if his or her contractor is uninsured. The court responded to this concern by noting that
to the extent that the interpretation of § 8-41-402(1) adopted by the Panel and this court may be viewed as conflicting with the policy to expedite cases reflected in the short time deadlines adopted in various other sections of the Act, such conflict is for the General Assembly to resolve.(fn6)
The interpretation of the statute in Jorgensen was handed down after the district court entered its judgment in Donlon. Organ's equal protection argument in Donlon was based on the assumption that a qualified residence was one with an interest-bearing mortgage, which also was his statutory construction argument in Jorgensen. He argued that it was irrational and unconstitutional to base the availability of benefits on the presence or absence of a mortgage. However, the construction of § 8-41-402(1) announced in Jorgensen made this argument moot.
Because the issue was not raised in the district court, the Court of Appeals refused to consider Organ's argument that the statute was unconstitutional even under Jorgensen because it still created two classes of workers: those who worked on qualified residences and those who worked on all other residences. Workers in the first class were discriminated against, he argued, because they had to wait up to twenty-four months for a de-
The Donlon court also rejected other plaintiffs' equal protection challenges to CRS §§ 8-41-301(2) and 8-42-107.5. Section 8-41-301(2) states that workers who suffer a permanent mental impairment that is not accompanied by a physical injury and is not caused by a crime of violence may receive only twelve weeks of permanent impairment benefits, regardless of how severe their impairment actually is. Furthermore, the twelve weeks of permanent benefits are reduced week for week by temporary total disability ("TTD") benefits, which means that as a practical matter, workers with these impairments will receive no permanent benefits.(fn7)
Section 8-42-107.5 imposes a $60,000 limit on combined temporary disability and permanent impairment benefits if the permanent impairment is 25 percent or less and $120,000 on the combined benefits if the permanent impairment exceeds 25 percent. Plaintiffs argued that these caps unreasonably discriminated against workers who, through no fault of their own, took longer to recover and reach maximum medical improvement ("MMI").
The court held that there was no improper classification because, although there were some differences in the underlying purposes served by temporary and permanent benefits, "the benefits payable, whether temporary or permanent, are intended to compensate a claimant for the extent to which his or her...
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