Opinion ID: 1420198
Heading Depth: 1
Heading Rank: 12

Heading: Social Security Retirement Benefits and PTD Benefits Share a Wage Loss Protection Purpose

Text: Through the offset provision, the General Assembly has chosen to place social security retirement and PTD benefits into the same pool of benefits. Accordingly, we must determine whether coordination of these types of benefits serves a legitimate governmental purpose. In proceeding with our analysis, we recognize that the legislature has provided a straightforward declaration of legislative intent that we must effectuate when construing the Workers' Compensation Act and when determining the constitutionality of its provisions. It is the intent of the general assembly that the Workers' Compensation Act of Colorado be interpreted so as to assure the quick and efficient delivery of disability and medical benefits to injured workers at a reasonable cost to employers, without the necessity of any litigation, recognizing that the workers' compensation system in Colorado is based on a mutual renunciation of common law rights and defenses by employers and employees alike. § 8-40-102(1), 3 C.R.S. (1998)(emphasis added). The Act intends to compensate injured workers through a reliable source and amount of payment, while controlling costs and minimizing claim delay. See Engelbrecht, 680 P.2d at 233; Bellendir v. Kezer, 648 P.2d 645, 647 (Colo.1982). Under workers' compensation law, lost earning capacity is compensable only in the form of statutorily-prescribed disability benefits. See generally 4 Arthur Larson, Larson's Workers' Compensation Law § 57.11 at 10-2 (1994) (It has been stressed repeatedly that the distinctive feature of the compensation system, by contrast with tort liability, is that its awards are made not for physical injury as such, but for `disability' produced by such injury.) Workers' compensation benefits include elements of medical impairment compensation and wage loss protection. See Colorado AFL-CIO v. Donlon, 914 P.2d 396, 404 (Colo. App.1995). The disability concept is a blend of two ingredients, whose recurrence in different proportions has received a great deal of legislative and judicial attention. 4 Larson, supra, at § 57.11, 10-16. The first ingredient is medical incapacity evidenced by a loss of a limb, muscular movement, or other bodily function. The second ingredient is wage-earning incapacity evidenced by an employee's inability to resume his or her prior work. See 4 Larson, supra, at § 57.11, 10-16. Social security retirement benefits arise from employment; both the employee and the employer make contributions in recognition of the fact that the employee may discontinue economically productive activity as he or she becomes older. Employers and employees contribute to the system as a result of an employee working some period of time at an average taxable salary. See 42 U.S.C. § 415 (1994). Benefits are payable when the employee or former employee (1) is a fully insured individual, (2) has attained age sixty-two, and (3) has filed application for old-age insurance benefits. See 42 U.S.C. § 402(a)(1994). [4] We have previously recognized the validity of the General Assembly placing placed workers' compensation benefits, social security retirement benefits, and unemployment benefits into a general pool of wage loss compensation benefits for purposes of an offset provision. See Goode, 867 P.2d at 879-80. In Goode, we relied upon Larson's discussion: Once it is recognized that work[ers'] compensation is one unit in an overall system of wage-loss protection, ... the conclusion follows that duplication of benefits from different parts of the system should not ordinarily be allowed. .... [Offsetting] is inevitable, once it is recognized that workmen's compensation, unemployment compensation, nonoccupational sickness and disability insurance, and old age and survivors' insurance are all parts of a system based upon a common principle. 9 Larson, supra, § 97.00-97.10, at 18-9 to 18-10 (1998). Other state courts have recognized that workers' compensation benefits and social security retirement benefits share a common purpose. See, e.g., Injured Workers of Kan. v. Franklin, 262 Kan. 840, 942 P.2d 591, 613-14 (Kan.1997); McClanathan v. Smith, 186 Mont. 56, 66-67, 606 P.2d 507, 513-14 (Mont. 1980); Vogel v. Wells Fargo Guard Servs., 937 S.W.2d 856, 860-61 (Tenn.1996); Harris v. Department of Labor & Indus., 120 Wash.2d 461, 843 P.2d 1056, 1066 (Wash. 1993). The Washington Supreme Court, for example, has held that workers' compensation and federal old age social security benefits serve the same purpose: to restore earnings due to wage loss. The cause of wage losswhether it be old age, disability, or unemploymentis irrelevant. Harris, 843 P.2d at 1066. The Washington court quoted another portion of Larson's treatise in support of its holding: Wage-loss legislation is designed to restore to the worker a portion, such as one-half to two-thirds, of wages lost due to the three major causes of wage-loss: physical disability, economic unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. Now if a workman undergoes a period of wage loss due to all three conditions, it does not follow that he should receive three sets of benefits simultaneously and thereby recover more than his actual wage. He is experiencing only one wage loss and, in any logical system, should receive only one wage-loss benefit.... Harris, 843 P.2d at 1066 (quoting 4 Arthur Larson, Workmen's Compensation § 97.10 (1990)). [5] The United States Congress has employed provisions which demonstrate that social security retirement payments have, at least in part, a wage loss protection characteristic. First, the Social Security Act states that an individual who receives social security retirement benefits cannot collect social security disability benefits. See 42 U.S.C. § 423(a)(1)(B)(1994). [6] This provision evidences a commonality of purpose, shared by retirement and disability benefits. Second, an individual may earn wages up to a certain amount without reduction of his or her social security retirement benefits. If a social security recipient earns above the designated amount, then his or her retirement benefits must be reduced. See 42 U.S.C. § 403(b) (1994). This provision again suggests that retirement is, at least in part, a form of wage loss protection. The federal reduction for excess earnings ceases once the individual reaches age seventy. See 20 C.F.R. § 404.435(a) (1998). A worker who is seventy years of age or older may earn full social security retirement benefits and continue to work. These provisions, taken together, establish that the components of social and economic legislation is a policy choice for lawmakers. [7] In Pace, 938 P.2d at 504, we upheld a provision that offset workers' compensation benefits by the amount of unemployment insurance benefits being paid for the same time period. See § 8-73-112(1)(f), 3B C.R.S. (1995 Supp.). We viewed the legislative intent of those two benefits, workers' compensation and unemployment insurance, as sharing a wage loss purpose even though they arise from different circumstances and serve different functions. While workers' compensation results from loss of earning capacity due to an industrial injury, unemployment insurance benefits are payable to individuals who are willing and able to work but cannot find employment. Nevertheless, we gave effect to the General Assembly's decision to require their coordination in calculating the amount of workers' compensation payments owed. Acting upon the presentations made to it and its choice of social and economic objectives to be served, the Colorado legislature has crafted an offset provision that accommodates both the wage loss-like character and the entitlement-like character of social security retirement benefits by allowingand limitingreduction of the employer-owed disability compensation to one half of the social security retirement benefits payable to the injured worker or dependents, but not less than zero. See § 8-42-103(1)(c)(II). In light of Goode and Pace, where we held that the General Assembly may place social security, employment compensation, and workers' compensation benefits into the same pool of funds for coordination, we hold that the offset provision at issue here serves a legitimate purpose in preventing duplication of benefits. 3.