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COLORADO DECISION INCREASING AVERAGE WEEKLY WAGE ON A WORKER'S POTENTIAL FUTURE CAREER AND NOT ACTUAL EARNED WAGES.

Increase liability

Within the past week
, the Industrial Claim Appeals Office (ICAO) in Colorado issued an opinion concerning the issue of average weekly wage (AWW) that may increase potential indemnity liability in Colorado Workers' Compensation claims.  As a result, the potential increase in liability may necessitate planning and preparation for increases in reserves.

In Wheeler v. Archdiocese of Denver Management Corp., (
Wheeler Decision.pdf) a claimant working part-time on her date of injury successfully increased her AWW to the maximum allowable compensation rate based on an argument that such increase was a more fair representation of her loss of earning capacity.  In 2005, claimant suffered a catastrophic injury which resulted in the respondents subsequently admitting to permanent total disability benefits when claimant was placed at maximum medical improvement in 2009.  At the time of claimant's injury, she was working part-time for the employer earning a AWW of $74.40, resulting in a weekly compensation rate of $49.60  Respondents began to provide permanent total disability benefits based on the $49.60 compensation rate and claimant challenged the AWW.    

Following a hearing on the issue of AWW, the administrative law judge agreed with the claimant that her AWW for her claim should be increased to allow her to obtain the maximum allowable compensation rate of $807.24, which represented a AWW of $1,210.86. 
Specifically, the administrative law judge credited the opinion of claimant's vocational expert who testified that but for the work injury,  it was "vocationally probable" that claimant would  have secured  employment  in the video arts profession and would have earned a higher AWW of over $900.  The administrative law judge determined that prior to her injury, claimant had started her education  for a career in the arts and media industry inclusive of  (1) emphasizing video production in high school; (2) obtained a degree from a community college; (3) completed some courses in art at the University of Northern Colorado; and (4) was taking steps to apply to the Vancouver Film School.  As a result, the administrative law judge concluded that an AWW represented from the mean wage of someone working in the video arts profession more fairly compensation claimant due to her injury.       

Consequently, the administrative law judge ordered that the claimant obtain the maximum compensable rate allowable at the time claimant reached maximum medical improvement.  As such, claimant's permanent total disability benefits were ordered to be paid out at the weekly compensation rate of $807.24 per week, rather than the admitted rate of $49.60. 

The ICAO upheld the administrative law judge's decision to increase the claimant's AWW.  ICAO determined that the administrative law judge has the authority to increase  the AWW based on the expert opinion that it was "vocationally probable" that claimant would have worked in the video production industry but for the work injury. 
ICAO reasoned that the issue of AWW is a matter within the sound discretion of the administrative law judge, who statutorily can determine a "fair" amount for an injured workers' average weekly wage.  Additionally, ICAO rejected the arguments made by respondents that such an increase to the AWW was based on speculation and conjecture.  In doing so, ICAO indicated that the claimant's vocational opinion constituted substantial evidence to support the increase and that such increase was thus not based on speculation or conjecture. 

However, ICAO did modify the order to the extent that the maximum compensable rate at the date of injury in 2005 be used ($697.20 per week) rather than the rate at maximum medical improvement. 

In light of this recent decision,  indemnity liability on Colorado workers' compensation claims may increase. There is the strong potential that additional injured workers in the future will assert similar arguments in order to try and increase their AWW in order to obtain an increase in temporary and permanent disability benefits.  In particular, it is expected that injured workers will argue that "fairness" requires increases to their AWW based on similar vocational expert opinions to support their contention that the work injuries have prevented them from obtaining higher paying positions, in the future.  If successful, compensation rates will not only increase for permanent total disability benefits, but could potentially increase for temporary disability and whole person permanent partial disability benefits.

It is only a matter of time before additional injured workers assert such claims to increase their AWW.  Therefore, employers and insurers should be made aware of this potential increase in liability and thus plan accordingly with the setting of claim reserves.    

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