Posted by: Cliff Eley
January 30, 2009
Topic: Case Law Update

Avalanche Industries v. Clark, 07SC255 (December 15, 2008)

The issue in this appeal was average weekly wage. However, in crafting its decision, the Colorado Supreme Court may have opened up a new definition of “injury” which would allow cases to be brought long after the on-the-job accident.

Gladys Clark worked for Avalanche Industries and suffered a work-related accident in 2000. She received permanent partial disability benefits (PPD). PPD are permanent disability benefits that are awarded when a Claimant suffers a permanent injury but is able to earn wages. While her claim was proceeding, she left Avalanche and went to work for another employer. Then in 2001 she began working for Blair College. Two years later, she petitioned to reopen her workers compensation claim based on a worsening of condition. The ALJ ordered the case be reopened. In 2005 Ms. Clark’s authorized treating physician concluded that she could no longer work. The parties apparently agreed that Ms. Clark was permanent totally disabled (PTD). Under the Colorado Workers Compensation Act, a person who is thus disabled is entitled to two-thirds of her average weekly wage (AWW) for the rest of their life. AWW includes the cost of maintaining employer-provided insurance under COBRA. The issue that remained was which average weekly wage should be used in calculating the PTD benefit. She made considerably more at the latter employer. The cost of maintaining her insurance was more expensive as well.

The law for determining average weekly wage is codified in §8-42-104 C.R.S. Paragraph two provides for various ways of computing AWW based the different ways workers’ wages are calculated, including, monthly, weekly, daily, hourly and piecework. However, that paragraph is prefaced by the phrase, “except as provided in this section.” What that phrase refers to is paragraph three which allows for an ALJ to have broad discretion in computing the average weekly wage when the methods in paragraph two do not allow for the fair computation of the AWW.

The ALJ in the Avalanche case determined that the methods in paragraph two would not suffice and so used his discretion under paragraph three to use Ms. Clark’s wages and her COBRA costs at her last employer to calculate Ms. Clark’s AWW. This resulted in a higher AWW and thus, a higher PTD benefit.

The ICAO, Court of Appeals and the Supreme Court affirmed the ALJ’s order. The Supreme Court ruled that the phrase “except as otherwise provided in this section” in paragraph two of §8-42-104 requires the ALJ to use his own judgment and discretion if the other methods of calculation, as outlined in paragraph two, do not give a fair result.

Paragraph three has been used, for example, when the Claimant was injured twice with the same employer and was making less during the second injury because of permanent restrictions that resulted from the first injury. Another example would be when the Claimant was injured while receiving a lesser wage during a training period. However, in the Avalanche case, the worker had voluntarily left her job and was working at another employer. The Supreme Court reached this conclusion by deciding that the “injury” as used in determining AWW was when Ms. Clark became disabled from work, which was when she was at Blair College.

While Ms. Clark reopened her case within 6 years from the date of her accident, as required by the Act, this case begs the question of what could be done if the worker becomes completely disabled after the reopening time has passed. The Court seemed to answer that question when it said:

The ALJ could have construed her as having two injuries, one

at the time of the accident and a second at the time when the accident resulted in a permanent total disability. Avalanche at page 21.

That ramification of the Court’s plain language is that the ALJ can rule that an increase in disability can be considered a new injury. This has far reaching effects and could amount to a new claim being allowed whenever an injury becomes more disabling. This could mean that even 10 years after an accident, and even after a settlement, an injured worker can file a new claim based upon a worsening of the disability.

With regards to AWW, it means that an employer and an insurance carrier can be forced to pay benefits based upon wages that were unforeseen when the Claimant was injured. This is important because the premium charged by a workers compensation insurance carrier is usually based upon the employer’s payroll. The logic in this is that the payroll can be used to calculate the carrier’s potential liability for an on-the-job injury. But the Avalanche Industries case makes the carrier liable for unforeseen payroll at some future employer.

Avalanche Industries decision sides with workers on average weekly wage

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