Colorado Balance

The intricacies of workers' compensation law are illogical to many, because work comp is not a logical system - it is a contrivance of fantasies designed to resolve a problem - people and families left without remedy following a work accident, and spreading that small risk (frequency rate is at an all time low - except for in the Greater Los Angeles area of course) to the business community so no single employer is disproportionately affected.

And because each state has its own political wind shaping its workers' compensation program, there are disparities that even the courts acknowledge are nonsensical, but are nevertheless the law.

The Colorado Court of Appeals last week presented a prime demonstration of this last week, ruling that the family of a deceased worker who had already collected benefits from Mississippi could also get Colorado benefits, and the carrier was entitled only to a 50% offset pursuant to Colorado law, but that interest on the award would be based on the Mississippi half, not the Colorado award.

John Eric Keel, a Mississippi resident, started working for TTS, a rail shipping logistics and engineering company, in March 2010. After seven months, TTS offered him a job in Colorado that paid substantially more.

Keel agreed to the transfer, but he was killed the day after he arrived in Pueblo while overseeing the loading of a wind farm tower onto a railcar.

The 21-year-old left behind a wife and young son.

After Keel's death, TTS' carrier, Ace American Insurance Company, began paying benefits to his family under the Mississippi workers' compensation system at a rate of $337.58 per week.

Two years after Keel's death, his family filed a claim for benefits in Colorado.

An administrative law judge determined that Keel's death was compensable under Colorado law, and that Ace owed benefits in accordance with Colorado's Workers' Compensation Act.

Under Colorado's comp system, Keel's widow and young son were entitled to weekly death benefits of $810.67. However, this amount was subject to a Social Security offset of $190.38, leaving Ace's future obligation to Keel's family at $620.29 per week.

Since the amount of benefits payable in Colorado was higher than the amount Ace paid Keel's family under Mississippi law, the carrier conceded that it owed the family additional compensation.

Ace calculated the amount of benefits due to the family for this 148-week period under Colorado law as $91,902.92. It then subtracted the Social Security offset and took a credit of $24,980.92 – representing one half of the amount the company had paid in death benefits under the Mississippi comp system. This left $66,822 as the amount owed to Keel's family.

Ace made payment of this sum to the family, plus $2,040.32 in interest, and the family objected to the calculation of interest.

Ace arrived at the $2,040.32 sum by subtracting the $49,961.84 in Mississippi payments from the $66,822 owed in Colorado benefits. It used the difference of $16,860.16 to when calculating interest at 8%.

An administrative law judge found the calculation of interest was appropriate, but the ICAO reversed.

The ICAO said Keel's family should not have been allowed to recover the Colorado past due death benefits that the employer paid, but since that was not an issue before it, ICAO concluded that Ace owed interest on $41,841.08.

It arrived at this sum by taking the amount of benefits due to the family under Colorado law for the 148-week period – $91,902.92 – and subtracting the Social Security offset and the full amount of the benefits the family had received under the Mississippi system.

The Court of Appeals said this was an error, because Colorado Revised Statutes Section 8-42-114 was applicable, and it limited the credit Ace could take to 50% of the benefits paid under the Mississippi comp system.

The court noted that Section 8-42-114 expressly applies when death benefits under a workers' compensation act of another state "are payable to an individual and the individual's dependents."

As benefits were paid to Keel's family under the Mississippi comp system, the court said that Section 8-42-114 came into play.

The court acknowledged that Keel's family had benefitted by filing a comp claim in Mississippi prior to Colorado because Mississippi law would have required the death benefit payments to be offset by 100% of the Colorado death benefits if the claims had been filed in reverse order.

But hey, that's the law and how it's supposed to apply. 

Besides, the probability of this occurring on a regular basis is very small, or as one commentator put it to WorkCompCentral legal reporter, Sherri Okamoto, the Keel case is an "unusual factual situation."

One other poignant observation: where a claim resides makes a huge difference in the amount of benefits, the premise of the original ProPublica story, "Insult to Injury."

The case is Misty Keel vs. Industrial Claim Appeals Office, 2016 COA 08. No. 15CA0466.