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Broeker v. State Compensation Insurance Fund

Court of Workers Compensation of Montana

March 6, 1995

THOMAS R. BROEKER Petitioner
v.
STATE COMPENSATION INSURANCE FUND Respondent/Insurer for GREAT FALLS COCA-COLA BOTTLING COMPANY Employer. IRVIN ELL Petitioner
v.
STATE COMPENSATION INSURANCE FUND Respondent/Insurer for MONTANA DEPARTMENT OF HIGHWAYS Employer.

          [CORRECTED] DECISION AND JUDGMENT

         Summary: Two claimants receiving total disability benefits asked the Court to void or reduce the social security offset taken by the insurer under sections 39-71-701 and -702, MCA (1979) and, in Ell's case, under sections 92-701.1 and 92-702.1 R.C.M. 1947 (1977).

         Held: The amount used by State Fund in calculating Broeker's social security offset should not have included cost-of-living increases incorporated into claimant's social security award. Where the Montana statutes provide that weekly workers' compensation benefits are to be reduced by "one-half of the federal periodic benefits for such week," the reference "for such week" is to the week in which the workers' compensation benefits are paid, thus the statutory offset must be for any social security benefits as received by claimant (not as theoretically received had claimant become entitled on the date of his injury), though cost-of-living increases are not to be included in the offset.

         Where evidence indicated that claimant's social security disability award was based on the same low back condition for which he is receiving total disability benefits, the social security benefits claimant is receiving are "payable because of the injury" entitling the insurer to the statutory social security offset, whether the language of the offset statute is interpreted as requiring the workers' compensation injury to be the sole basis for the social security benefits, or as requiring that the injury contribute to the award on a "but for" or some lesser basis.

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-701(1) and -701(2), MCA (1979). Where evidence indicated that claimant's social security disability award was based on the same low back condition for which he is receiving total disability benefits, the social security benefits claimant is receiving are "payable because of the injury" entitling the insurer to the statutory social security offset, whether the language of the offset statute is interpreted as requiring the workers' compensation injury to be the sole basis for the social security benefits, or as requiring that the injury contribute to the award on a "but for" or some lesser basis.
Benefits: Social Security Offset: Generally. Where evidence indicated that claimant's social security disability award was based on the same low back condition for which he is receiving total disability benefits, the social security benefits claimant is receiving are "payable because of the injury" entitling the insurer to the statutory social security offset, whether the language of the offset statute is interpreted as requiring the workers' compensation injury to be the sole basis for the social security benefits, or as requiring that the injury contribute to the award on a "but for" or some lesser basis.

         Additional Topics referenced by Supreme Court decision.

         Thomas R. Broeker (Broeker) and Irvin Ell (Ell) have jointly petitioned the Court to void or reduce the social security offset being taken by the State Compensation Insurance Fund (State Fund) against their workers' compensation benefits. All parties agree that the offset issues may be resolved upon the agreed facts set forth in the Final Pre-Trial Order [Revised], the exhibits and affidavits attached to the parties' briefs, and a deposition of an official of the Social Security Administration. (Final Pre-Trial Order [Revised] Docketed July 11, 1994; Stipulation Regarding Use of Affidavits and Exhibits, and Order docketed March 8, 1994.) Deferred for later consideration are petitioners' requests for penalties and attorney fees, as well as their request for class certification. (Final Pre-Trial Order [Revised] at 16.)

         The Court has reviewed all of the factual materials submitted by the parties, along with their briefs. Since the essential facts appear undisputed, this decision will be in narrative form.

         Citations to Record

         Citations to exhibits, other than deposition exhibits, are to the 13 exhibits attached to Respondent/insurer's Opening Brief on Issues Pertaining to Social Security Offset. There are also two numbered exhibits (1 and 2) attached to Respondent/insurer's Reply Brief on Issues Pertaining to Social Security Offset. Those exhibits consist of portions of a Supreme Court brief filed in McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507 (1980) and an affidavit of respondent's counsel, Mr. William O. Bronson. The Bronson affidavit will be cited as Bronson Affidavit. The brief in McClanathan is not cited.

         Factual Background

         Petitioners were injured in separate industrial accidents. Ell suffered an injury to his low back on December 24, 1977, while working for the Montana Department of Highways. Broeker was injured on December 4, 1980, while working for Coca-Cola Bottling Company. He also injured his low back.

         The State Fund was the responsible insurer for both accidents. It accepted liability for both claims.

         Ell's injury resulted in a laminectomy which was performed in 1978. Following his recovery from surgery, Ell returned to work on December 10, 1978, and continued working until June 10, 1985. On October 15, 1985, the State Fund reinstated temporary total disability benefits retroactive to June of that year. The State Fund continued to pay temporary total disability benefits until November 7, 1991, when it determined Ell to be permanently totally disabled. Since November 7, 1991, the State Fund has paid Ell permanent total disability benefits.

         Broeker did not need immediate surgery and returned to work following his injury.[1] He continued to work intermittently until August of 1984, at which time the State Fund commenced paying temporary total disability benefits. Those benefits continued until June 1, 1992, when the State Fund determined Broeker to be permanently totally disabled. Since then it has paid permanent total disability benefits.

         On December 29, 1986, Ell applied for social security disability benefits. On March 2, 1988, an administrative law judge (ALJ) for the Social Security Administration found in Ell's favor, finding him to be disabled since June 10, 1985. The ALJ awarded benefits retroactive to December of 1985.

         Although Broeker's inability to work began almost a year earlier than Ell's, he did not apply for social security disability benefits until May 1990. His application was finally adjudicated on March 17, 1992. The ALJ found that his period of disability began August 23, 1984, and awarded benefits retroactive to May of 1989.

         Following the social security determinations, the State Fund began offsetting both petitioners' benefits. Ell was notified by letter dated August 1, 1988, that the State Fund had begun offsetting his biweekly benefits effective July 25, 1988. (Ex. 12.) The letter also notified Ell that he would have to reimburse the State Fund $20, 605.38 because of an overpayment resulting from the retroactive payment of the social security disability benefits. Broeker was notified by letter dated June 1, 1992, that the State Fund would begin offsetting his biweekly benefits effective June 3, 1992. The letter pegged his overpayment at $12, 081.49.

         In each case the State Fund based the amount of the offset on the initial amount of the social security disability benefit. For Ell that amount was $662.30 commencing in December 1985. (Ex. 11; Capp Dep. Ex. 3.) For Broeker the amount was $651.50. (Ex. 3; Capp Dep. Ex. 1.) While both petitioners received subsequent cost-of-living adjustments, those increases have not been included in computing the offsets.

         Additional facts pertaining to the issues in this case are set out in the discussion below.

         Issues

         Initially petitioners asked this Court to declare the offsets entirely illegal because their social security benefits were not based on their industrial injuries. Petition for Trial. Broeker has since abandoned that contention. Petitioner Thomas R. Broeker's Abandonment of Argument No. 1 (docketed April 18, 1994). However, Ell continues to assert that in his case the State Fund cannot take an offset because his disability was caused by multiple injuries rather than the single injury he suffered in 1977.

         The petitioners' other two challenges are to the manner in which the offset has been calculated. Broeker contends that the initial benefit rate used by the State Fund in calculating his offset included amounts attributable to cost-of-living increases. He argues that those increases should be excluded pursuant to McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507 (1980). Both petitioners further argue that the offset should be calculated on the social security disability payments they would have received had they become totally disabled at the time of their injuries and promptly applied for social security benefits. They argue that the "indexing" method of computing their benefits has inflated the offset.

         The parties set out the issues in their Final Pre-Trial Order [Revised]. The Court restates those issues as follows:

1. Are petitioner Ell's social security disability benefits payable to him because of his December 24, 1977 industrial injury and therefore subject to Montana's offset statutes?
2. Did the amount used by the State Fund in calculating Broeker's social security offset include cost-of-living increases, and, if so, should the cost-of-living portions be excluded under McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507 (1980)?
3. Should the offsets have been based on the social security disability benefits petitioners would have received had the onset of their total disabilities coincided with their injuries?

         Discussion and Decision

         At the time of Ell's industrial accident, the authority to offset social security benefits was set forth in sections 92-701.1 and 92-702.1, R.C.M. 1947 (1977). At the time of Broeker's injury, the offset authority was found in sections 39-71-701(2) and -702(2), MCA (1979). In each case, the first cited statute authorized an offset against temporary total disability benefits and the second authorized a similar offset against permanent total disability benefits. All four cited sections are identical and provide:

In cases where it is determined that periodic benefits granted by the Social Security Act, 42 U.S.C. 301 (1935), are payable because of the injury, the weekly benefits payable under this section are reduced, but not below zero, by an amount equal, as nearly as practical, to one-half the federal periodic benefits for such week.

         The offset statute in effect at the time of the injury governs any offset. Watson v. Seekins, 234 Mont. 309, 312, 763 Mont. 309 (1988). Therefore, the cited sections will be applied in this case.[2]I

         As an initial matter, Ell argues that no offset may be taken in his case because his social security benefits are not "payable because of the injury." (Joint Brief of Claimants/petitioners Broeker and Ell at 7, italics added, underline in original.) He would construe the offset statute as permitting the offset only where social security disability benefits are awarded "exclusively on account of the injury." (Responsive Brief of Claimants/petitioners Broker and Ell at 4, italics added, underline in original.)

         Ell's preferred interpretation is doubtful. The phrase "because of" has a dictionary definition of "by reason of: on account of." Webster's New Ninth Collegiate Dictionary (1982 Edition). Those words reflect the concept of causation, but causation is not always defined in terms of "exclusive" causative factors. For example, in the context of the Age Discrimination in Employment Act (ADEA), the Court of Appeals for the Seventh Circuit construed the ADEA provision prohibiting employers from discharging any individual ". . . because of such individual's age" as meaning that "the employer would not have discharged the employee if not for the employee's age." Castleman v. Acme Boot Co., 959 F.2d 1417, 1420 (7th Cir. 1992) (italics added). It went on to describe the test as a "but-for" test. "Thus it is not necessary that age be the only factor in the discharge; it need only be a 'but-for' factor." In the context of the offset provision, the "but-for" test would appear a more appropriate one than an exclusive factor test. However, we need not make any final determination concerning what test applies since Ell has failed to persuade the Court that an exclusive factor test is not satisfied.

         Ell contends that after his 1977 back injury he suffered "four subsequent injuries on the job between 1978 and 1984" and that social security disability benefits were awarded on account of all of the injuries. Initially, it is important to determine the basis for that assertion.

         In uncontested fact 18 of the Final Pre-Trial Order [Revised], the following statement is made:

18. Subsequent to December 24, 1977, Claimant alleged four other job-connected injuries. Defendant/Insurer denied the December 18, 1984 claim on the basis it was not filed and reported in a timely manner. [Emphasis added.]

         In support of his allegation of subsequent injuries Ell contends in paragraph 28, as follows:

28. Claimant sustained and reported four other industrial injuries as follows:
a. July 19, 1978 -- Slipped and fell, injuring back.
b. May 6, 1981 -- While cleaning shop, bent and twisted back.
c. December 1, 1982 -- Motor patrol overturned at work.
d. December 18, 1984 -- Motor patrol went into ditch, severely injuring claimant in car.

(Final Pre-Trial Order [Revised] at 6.) He offers no evidence to back up the contentions.

         The only additional information provided to the Court concerning the alleged subsequent injuries is contained in an affidavit of respondent's attorney, who reviewed the Fund's files for Ell's claims. (Bronson Affidavit.) He was unable to locate any claims for the alleged injuries in 1978 and 1981. (Id. at 2) With respect to the December 1982 alleged injury, he determined that no benefits were ever paid. Moreover, a copy of the claim submitted by Ell, which is attached to the affidavit as exhibit B, states that Ell "fell on right side" and injured his "right hip, shoulder and also neck." (Id. Ex. B.) There is no mention of any low-back injury. (Id.) With respect to the 1984 injury the Bronson Affidavit notes that the claim was not filed until 1986, and was rejected as untimely. (Id. at 2.)

         The Bronson Affidavit also mentions another claim for an injury which Ell alleged occurred on July 10, 1985. The claim is attached to the Bronson Affidavit as Exhibit E. It was rejected by the State Fund because the employer reported that claimant was on leave without pay on the date of the alleged injury. The Court also notes that claimant's temporary total disability benefits were reinstated effective June 8, 1985, a month prior to the alleged injury.

         Thus, the evidence presented to the Court establishes only that one claim for a subsequent injury was accepted. The accepted claim did not result in payment of any benefits, even medical benefits. Utterly lacking is evidence that any of the alleged injuries were permanent in nature or that they resulted in any permanent impairment or disability.

         The Court has also examined the decision of the ALJ. The decision found Ell to be "disabled primarily because of his low back pain related to the clinical findings and disc disease." (Respondent/insurer's Opening Brief on Issues Pertaining to Social Security Offset, Ex. 10 at 3.) The ALJ concluded:

The weight of evidence establishes that claimant has severe impairments which preclude him from past work-related activity and all substantial gainful activity or sustained activity because of back pain with a history of herniated discs at the L4-5 and L5-S1 levels and the residual effects of surgeries including a laminectomy performed in 1978 and a laminectomy and fusion performed in March 1987 with residual low back pain and muscle tension. This disability precludes claimant from sustained ...

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