Opinion ID: 2155826
Heading Depth: 2
Heading Rank: 1

Heading: Workers' Compensation Lump Sum Award

Text: [¶ 8] Washburn's lump sum award was allocated by the workers' compensation hearing officer among three separate components; permanent impairment, wage replacement, and medical costs. After hearing the parties' testimony, the court set apart the permanent impairment component to Washburn as his nonmarital property and determined that approximately 87% of the wage replacement and medical cost components were nonmarital because they represented a replacement of assets that Washburn would have received after the divorce was final. The resulting calculation designated approximately 13% of the wage and medical cost components as marital property. Washburn contends that the District Court erred by finding that any part of his workers' compensation lump sum award was marital property. Alternatively, he argues that the court incorrectly calculated the marital components of the award. [¶ 9] Because workers' compensation benefits usually represent a replacement for lost earnings, they relate to the earning power of the [marital] community if received during the marriage, and therefore, will be determined to be marital property unless proven otherwise. Cummings v. Cummings, 540 A.2d 778, 779 (Me.1988). [3] The fact that the benefits are received in the form of a lump sum award does not result in an analysis different from any other asset. [4] The spouse urging the nonmarital status of any or all of the award must prove the existence of the nonmarital component. Craigue, 617 A.2d at 1028. [¶ 10] There is no dispute here that the award was received during the marriage. It is also evident that the lump sum does not readily fall into one of the specific exceptions to the marital property presumption set out at 19-A M.R.S.A. § 953(2) (1998). [5] It was not acquired before the marriage or after a legal separation; it was not excluded by agreement of the parties; it does not represent the increase in value of property acquired before the marriage; and it certainly was not acquired by gift, bequest, devise or descent. See id. Thus, unless Washburn demonstrates that the award represents, in whole or in part, a direct replacement of nonmarital assets pursuant to section 953(2)(B), [6] the award must be treated as marital property. See Sewall, 1999 ME 46, ¶ 17, 726 A.2d at 228 (holding that property acquired from the proceeds of nonmarital property is nonmarital). [7] [¶ 11] The court accepted Washburn's evidence that the lump sum award contained the three distinct types of compensation: permanent impairment, wage replacement, and medical costs. [8] It then went on to determine which, if any, of those components represented compensation for, or replacement of, nonmarital assets. We address each component in turn.
[¶ 12] The wage replacement component of a workers' compensation benefit is designed to replace earnings lost to the employee resulting from a work injury. Cummings, 540 A.2d at 779. When those benefits are received as weekly or periodic compensation, they are treated as ordinary earnings for purposes of a marital property analysis. See id. If received during the marriage, they are marital property. Id. When received after the marriage, they are not included in the marital estate. Id. at 780. [¶ 13] A more complex analysis may be necessary when the benefits are received, not in the form of periodic compensation, but in a lump sum award. As always, the analysis must start from the understanding that when the lump sum award is received during the marriage, it will be presumed to be marital unless proved to be otherwise. [9] That proof may be accomplished by demonstrating that the award is intended to compensate the recipient for earnings that would not have accrued during the marriage. See id. [¶ 14] Washburn received the lump sum award in November of 1994. The divorce judgment was entered on January 5, 1999. Washburn offered evidence that, in allocating the award, the hearing officer assumed that Washburn had a life expectancy of 31.1 years. From the hearing officer's allocations, the court concluded that the wage replacement component was intended to compensate Washburn for lost earnings throughout his remaining lifetime, that is, from receipt of the lump sum award in November of 1994 through approximately November of 2025. [¶ 15] The court found that Washburn met his burden of proving that part of the wage replacement component was not marital property because it represented earnings that would have accrued to Washburn after the divorce. The court therefore apportioned the wage loss component between the years of marriage and the post-divorce years through 2025, using the date of the divorce judgment as the end point of the marriage. The marital component of the wage replacement was determined by applying the ratio of marital years (4.1 years of marriage following receipt of the award  November 1994 to January 1999) to Washburn's life expectancy as of November 1994 (31.1 years). That ratio yielded a marital property component of approximately 13%. [¶ 16] In sum, the court determined that the amount of the wage replacement award attributable to the time after the receipt of the lump sum award during which the parties remained married was marital property and that the remaining amount represented wage replacement for the years following the divorce. Because Washburn's post-divorce earned income would be nonmarital property, wage replacement for those earnings would similarly be nonmarital. We find no error in the court's application of the law to the wage replacement component. The court correctly allocated replacement for marital earnings to the marital estate and set aside replacement for nonmarital earnings as Washburn's separate property. [10]
[¶ 17] The amount allocated to permanent impairment may be understood to be analogous to a separate pain and suffering award in a personal injury dispute. [11] Looking to the workers' compensation law regarding Washburn's benefits suggests that the permanent impairment component was intended to compensate Washburn for loss directly associated with the loss or reduced use of a part of his body. When a permanent impairment award is awarded separately from compensation for the loss of earning capacity, the award is singular to the person suffering the loss. [12] The very personal nature of a permanent impairment award, as it existed in Maine law at the time of Washburn's award, separated it from association with the marital estate. Because it compensated the spouse for a loss that is uniquely personal, that is, the loss of or reduced use of a part of the human body, the court did not err in determining that the permanent impairment component constituted a nonmarital asset. [13]
[¶ 18] Determining the marital or nonmarital nature of the medical costs component of the award should be a straightforward process. As with any other asset, the award will be presumed marital unless the spouse urging its nonmarital status demonstrates that a specific amount has been allocated for reasonably certain future medical expenses, and thus, that the award compensates the spouse for anticipated, post-marital expenses. [¶ 19] The record before us is devoid of any specific evidence regarding medical expenses anticipated in the future or even incurred during the marriage. Washburn argues that since Doucette has not proved the presence of marital expenditures, the court was required to find that the medical cost component was nonmarital. Nothing could be clearer, however, than our often repeated admonition that the spouse urging a nonmarital designation has the burden of presenting evidence in support of that conclusion. See Clum v. Graves, 1999 ME 77, ¶ 10, 729 A.2d 900, 904-05. [¶ 20] Washburn failed to meet that burden. The record contains little more than Washburn's bald assertion that no marital funds had been expended on medical care. He presented no specific evidence that he would incur medical expenses after the marriage ended. On this record, the medical costs component would have to be determined to be a marital asset. The court, however, allocated the medical costs using the same ratio as applied to the wage replacement component, resulting in the determination that only approximately 13% of the medical component was marital. Because Washburn received the benefit of the court's calculation, and because Doucette does not challenge the result in light of our affirmance of the judgment, we do not disturb it. [14]