2001 MTWCC 47

WCC No. 2000-0216

Summary: Claimant was 64 years of age when she was injured at work. She returned to a modified job but that job was then eliminated. By that time she was 65. She has been paid an impairment award but has been denied other permanent partial disability benefits based on section 39-71-710, MCA (1997), which provides that workers taking early social security retirement or who are eligible for full social security retirement or equivalent benefits are ineligible for permanent partial disability benefits other than the impairment award. Claimant challenges the constitutionality of the provision on equal protection grounds.

Held: Statute which denies permanent partial disability benefits to injured workers who have taken social security retirement or who are eligible for full social security retirement or equivalent benefits does not violate the Equal Protection Clause of either the Montana or United States constitution.

Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-710, MCA (1997). Statute which denies permanent partial disability benefits to injured workers who have taken social security retirement or who are eligible for full social security retirement or equivalent benefits does not violate the Equal Protection Clause of either the Montana or United States constitutions. The primary purpose of workers' compensation benefits is wage replacement and the provision is rationally related to that purpose since most people retire when eligible for social security benefits and are no longer in the labor market, thus they do not suffer a wage loss. Furthermore, social security retirement benefits are a form of wage replacement. Even though some persons may remain or wish to remain employed, the equal protection clause does not require precision in creating classifications.

Constitutions, Statutes, Regulations and Rules: Montana Constitution: Equal Protection. Statute which denies permanent partial disability benefits to injured workers who have taken social security retirement or who are eligible for full social security retirement or equivalent benefits does not violate the Equal Protection Clause of either the Montana or United States constitutions. The primary purpose of workers' compensation benefits is wage replacement and the provision is rationally related to that purpose since most people retire when eligible for social security benefits and are no longer in the labor market, thus they do not suffer a wage loss. Furthermore, social security retirement benefits are a form of wage replacement Even though some persons may remain or wish to remain employed, the equal protection clause does not require precision in creating classifications.

Constitutions, Statutes, Regulations and Rules: United States Constitution: Equal Protection. Statute which denies permanent partial disability benefits to injured workers who have taken social security retirement or who are eligible for full social security retirement or equivalent benefits does not violate the Equal Protection Clause of either the Montana or United States constitutions. The primary purpose of workers' compensation benefits is wage replacement and the provision is rationally related to that purpose since most people retire when eligible for social security benefits and are no longer in the labor market, thus they do not suffer a wage loss. Even though some persons may remain or wish to remain employed, the equal protection clause does not require precision in creating classifications.

Constitutions, Statutes, Regulations and Rules: United States Constitution: Equal Protection. "The Equal Protection Clause does not forbid classifications. It simply keeps governmental decision makers from treating differently persons who are in all relevant respects alike." The test of whether persons are in fact unalike is whether the separate classification of the persons is rationally related to a legitimate public interest.

Constitutions, Statutes, Regulations and Rules: United States Constitution: Equal Protection. In determining whether a classification is related to a legitimate public interest, the Court looks not only to the legislative history of the provision but also for any "plausible reason for the classification."

Constitutions, Statutes, Regulations and Rules: United States Constitution: Equal Protection. "The rationality commanded by the Equal Protection Clause does not require States to match age distinctions and the legitimate interests they serve with razorlike precision. . . . Under the Fourteenth Amendment, a State may rely on age as a proxy for other qualities, abilities, or characteristics that are relevant to the State's legitimate interests. The Constitution does not preclude reliance on such generalizations. That age proves to be an inaccurate proxy in any individual case is irrelevant . . . ." Kimel v. Board of Regents, 528 U.S. 62, 83-84 (2000).

¶1 The trial in this matter was held on April 17, 2001, in Great Falls, Montana. Petitioner, Alberta Black (claimant), was present and represented by Mr. Richard J. Martin. Respondent, MDMC/Benefis Healthcare, was represented by Mr. Leo S. Ward. Opening statements were waived.

¶2 Exhibits: Exhibits 1-28 were admitted without objection.

¶3 Witnesses and Deposition: The parties agreed that the deposition of Will Lynn shall be considered by the Court. Claimant, Alberta Black, was sworn and testified. Will Lynn was sworn and testified.

¶4 Issues Presented: The Court restates the issues as follows:

¶4A Whether a statutory provision (§ 39-71-710, MCA (1997)) providing for termination of permanent partial disability benefits, other than the impairment award, upon claimant's actual receipt of social security retirement benefits or her eligibility for full social security retirement benefits or the equivalent violates the claimant's right to equal protection of the laws.

¶4B If so, whether claimant is entitled to permanent partial disability benefits pursuant to § 39-71-703, MCA (1997).

¶5 Having considered the Pretrial Order, the testimony presented at trial, the demeanor and credibility of the witnesses, the deposition and exhibits, and the parties' arguments, the Court makes the following:

FINDINGS OF FACT

¶6 Claimant was born October 27, 1933, and is presently almost 68 years old. She completed the 8^th grade and has a GED. Her only other training was a Nanny course completed in 1987. (Trial Test.) Prior to 1980, claimant was a homemaker and worked at a bakery.

¶7 In June 1980 claimant went to work at the Columbus Hospital, now called Benefis West (hereinafter "Benefis"), in Great Falls, Montana. (Ex. 25-167 to 168.) She was employed as a distribution technician in Central Supply. Her duties consisted of answering the phone, taking orders for supplies, and taking actual supplies from the warehouse to hospital departments and the emergency room (ER).

¶8 On July 16, 1998, claimant experienced pain in her right shoulder while pulling a cart at work. (Ex. 3-001.) She applied ice to the shoulder and obtained a coworker's help to finish her duties. (Id. at 3-002.)

¶9 At the time of the incident, claimant was 64 years old.

¶10 At the time of the incident, Benefis was self-insured. (Uncontested Fact No. 2.) It accepted liability for claimant's injury. (Uncontested Fact No. 3.)

¶11 Claimant sought medical care immediately following her injury and was ultimately diagnosed as suffering a right shoulder rotator cuff tear. (Exs. 3-002, 7-001, 21-007.) On August 27, 1998, Dr. Gregory Tierney performed surgery to repair the tear. (Ex. 21-007.) Subsequent to the surgery, claimant received physical therapy but progressed slowly. (Id. at 004-006.)

¶12 Claimant was off work from July 29, 1998 to February 20, 1999. She received temporary total disability (TTD) benefits during that time. (Exs. 4, 6) Her medical benefits were also paid.

¶13 In February 1999, Dr. Tierney approved claimant to return to work but with "significant duty restrictions of no overhead work, no climbing, no repetitive push/pull, no lifting greater than 10 lbs repetitively or 20 lbs at one time." (Ex. 21-004.) The restrictions precluded her from doing even light-duty work in the Central Supply Department. (Ex. 9.)

¶14 On February 21, 1999, claimant returned to light duty work as a greeter at the Benefis Emergency Room for four hours a day. (Id.; Lynn Dep. Ex. 1 at 26.) She greeted patients, signed them in, got wheelchairs, and made coffee. (Id. at Ex. 2 at 50.)

¶15 A functional capacity evaluation (FCE) was performed on March 22^nd and 23^rd, 1999. The physical therapist found that claimant fell within the light to light-medium duty physical demand category. (Ex. 23-001 to 010.) Claimant's time-of-injury job required lifting , pushing, and pulling in excess of 50 pounds. Since claimant fully met only three of the nine critical job demands for her time-of-injury job, the physical therapist recommended claimant find a lighter part-time job. (Ex. 23-003, 007.)

¶16 Dr. Tierney placed claimant at MMI as of March 1, 1999. (Ex. 21-003.)

¶17 Following the FCE, Dr. Tierney rated claimant's impairment at 8% of the whole person (id. at 001) and permanently restricted claimant to the light/medium category: "continuous lift of 5 lbs from the floor to the waist and waist to overhead, 10 lbs continuously out horizontally, maximum lift of 25 lbs floor to waist, 20 lbs waist to overhead and 30 lbs in horizontal carry; push restrictions of 20 lbs frequently, occasionally up to 30, occasional overhead work, no climbing." (Id.) He never released her to return to her time-of-injury job.

¶18 Claimant continued working as an ER greeter until April 30, 1999, at which time Benefis terminated the temporary position. (Exs. 14, 25-003.) While working as a greeter, claimant received temporary partial disability (TPD) benefits. (Ex. 6.)

¶19 On May 23, 1999, Benefis terminated claimant since she could not return to her time-of-injury job. It informed her that no other light-duty work was available. (Exs. 14, 17, 25-001, 003.)

¶20 After being terminated by Benefis, claimant worked for a short time at McDonald's for $6.29 an hour. She quit that job because she had previously suffered from carpal tunnel syndrome and the repetitive work bothered her hands. (Lynn Dep. at 49; Ex. 25-055, 058.)

¶21 Prior to trial, claimant applied for work as a Wal-Mart greeter and as a hostess at Elmer's and the Prospector, but she had not been hired.

¶22 Claimant currently does volunteer work at the Information Desk at Benefis East answering the phone and escorting patients. She also volunteers in the gift shops at both Benefis East and Benefis West. She runs the cash register and is not required to do any stocking. Once a week she helps out at the Senior Citizens Center by setting the tables and serving food. Black estimated that she spends about 20-25 hours a week doing volunteer work.

¶23 Claimant hired Will Lynn (Lynn), a certified rehabilitation counselor, to assess her employability potential. Lynn testified that claimant's time-of-injury job was semi-skilled and that she has few transferable skills outside the hospital environment. He identified three jobs for which claimant is qualified: greeter, restaurant hostess, and some sales clerk positions. (Lynn Dep. at 21, 24; Lynn Dep. Ex. 1 at 2.) The jobs pay from $5.15 an hour to $6.50 an hour. (Lynn Dep. Ex. 1 at 2.)

¶24 Lynn opined that despite discrimination laws, claimant's employability has diminished. (Dep. at 26.) She will be able to obtain jobs such as those at McDonald's. He also researched current work force trends for individuals over age 65. (Lynn Dep. at 7.) According to the 1998 U.S. Bureau of Labor Statistics, only 13.7% of women over age 65 work full or part time. (Lynn Dep. Ex. 1 at 3.)

¶25 Benefis has paid claimant the 8% impairment award; however, pursuant to section 39-71-710, MCA (1997), it has denied liability for any other permanent partial disability benefits. (Ex. 19; Ex. 27.)

¶26 Claimant's normal retirement age for purposes of full social security benefits is age 65. In fact, claimant currently receives $557 a month in social security retirement benefits, along with a Benefis pension of $280 (after taxes). (Lynn Dep. at 46; Lynn Dep. Ex. 1 at 1.)

¶27 But for her injury claimant would have continued working in her central supply position at Benefis for several more years.

CONCLUSIONS OF LAW

¶28 The 1997 version of the Workers' Compensation Act applies to claimant's injury since that was the law in effect on the date of her injury. Buckman v. Montana Deaconess Hospital, 224 Mont. 318, 321, 730 P.2d 380, 382 (1986.)

¶29 The only issues raised in the Pretrial Order concern claimant's entitlement, if any, to permanent partial disability benefits. This decision is therefore limited to that matter.

¶30 At issue is the application, and ultimately the constitutionality, of section 39-71-710, MCA (1997). The section provides:

39-71-710. Termination of benefits upon retirement. (1) If a claimant is receiving disability or rehabilitation compensation benefits and the claimant receives social security retirement benefits or is eligible to receive or is receiving full social security retirement benefits or retirement benefits from a system that is an alternative to social security retirement, the claimant is considered to be retired. When the claimant is retired, the liability of the insurer is ended for payment of permanent partial disability benefits other than the impairment award, payment of permanent total disability benefits, and payment of rehabilitation compensation benefits. However, the insurer remains liable for temporary total disability benefits, any impairment award, and medical benefits.

(2) If a claimant who is eligible under subsection (1) to receive retirement benefits and while gainfully employed suffers a work-related injury, the insurer retains liability for temporary total disability benefits, any impairment award, and medical benefits.

Claimant reached age 65 on October 27, 1998, while she was still recovering from her industrial accident and receiving temporary total disability benefits. At that time, she became eligible for full social security retirement benefits, hence ineligible for permanent partial disability benefits other than her impairment award.

¶31 Claimant argues that the denial of permanent partial disability benefits violates her right to equal protection of the laws. Equal protection is guaranteed under both the United States Constitution, Amend. 14, and the Montana Constitution, Art. 2, § 4.⁽¹⁾ The provisions "provide generally equivalent but independent protection in their respective jurisdictions." Emery v. State, 177 Mont. 73, 79, 580 P.2d 445, 449 (1978).

¶32 In challenging the constitutionality of permanent partial disability benefits exclusion, claimant bears a heavy burden. She must persuade the Court beyond a reasonable doubt that the provision is unconstitutional; if any doubt exists, it must be resolved in favor of the statute. Grooms v. Ponderosa Inn, 283 Mont. 459, 467, 942 P.2d 699, 703 (1997)(citations omitted).

¶33 The Equal Protection clauses do not preclude different treatment of different groups or classes of people. "[M]ost laws differentiate in some fashion between classes of persons. The Equal Protection Clause does not forbid classifications. It simply keeps governmental decisionmakers from treating differently persons who are in all relevant respects alike." Nordlinger v. Hahn, 505 U.S. 1, 10 (1992) (emphasis added) and see Davis v. Union Pacific R. Co., As stated in Zempel v. Uninsured Employers' Fund, 282 Mont. 424, 432, 938 P.2d 658, 663 (1997), "[I]t is critical to recall that equal protection does not require that all persons be treated alike regardless of whether their circumstances are the same; it requires only that all persons be treated alike under like circumstances."

¶34 The critical question is always whether persons between whom a distinction has been made are "in all relevant respects alike" or " "alike under like circumstances." To answer that question in most cases, the applicable test is whether "the classification rationally furthers a legitimate state interest."⁽²⁾ Nordlinger at 10. In some matters heightened scrutiny is required, however, in workers' compensation matters the Montana Supreme Court has consistently held that classifications are not subject to heightened scrutiny, therefore the rational basis test applies. Powell v. State Compensation Ins. Fund, 2000 MT 321, ¶ 21.

¶35 In determining whether a classification is related to a legitimate state interest, the Court looks not only to the legislative history of the provision but also for any "plausible policy reason for the classification." Nordlinger, 505 U.S. at 11. Mere "cost savings" is insufficient to justify a distinction among injured workers, Heisler v. Hines Motor Co., 282 Mont. 270, 283, 937 P.2d 45, 52 (1997). But cost savings is typically not the sole reason for distinctions in the Workers' Compensation Act. In the case of the statute in question here, the logical purpose of the provision is to avoid payment of benefits to injured workers who, because of retirement, will not suffer a wage loss. The Workers' Compensation Act provides substitute compensation, albeit imperfect, for lost wages. Most workers retire irrespective of any prior work-related injury when they become eligible for either early or full social security retirement benefits. For individuals of claimant's age, that is at age 65 for full retirement benefits. As pointed out in the testimony in this case, only a small percentage - 13.7% - of women over the age 65 remain employed after age 65. While not all women and men retire when they can do so, actual early retirement or reaching the age of eligibility for full retirement are rough predictors of retirement from the labor market, and hence of the end of wage loss.

¶36 In the process of examining the constitutional challenge in this case, I requested counsel to determine whether other jurisdictions have addressed a similar issue. A number of cases have been brought to my attention. Some of the cases cited by the parties may be read as supporting a finding of unconstitutionality, however, others - the majority -- support a finding of constitutionality. Colorado, West Virginia, Louisiana and Arkansas are jurisdictions which have struck down age-related limitations on benefits. Industrial Claim Appeals Office of State of Colo. v. Romero, 912 P.2d 62 (Colo. 1996); State ex rel. Boan v. Richardson, 482 S.E. 2d 162 (W.Va. 1996); Pierce v. LaFourche Parish Council, 762 So.2d 608 (La. 2000); Golden v. Westark Community College, 969 S.W.2d 154 (1998). However, decisions from Tennessee, Kansas, Washington, Massachusetts, Florida, and Kentucky support a finding that retirement related reductions in benefits are constitutional. Vogel v. Wells Fargo Guard Services, 937 S.W.2d 856 (Tenn. 1996); Brown v. Goodyear Tire & Rubber Co., 599 P.2d 1031 (Kansas 1979); Injured Workers of Kansas v. Franklin, 942 P.2d 591, 609-613 (Kansas 1997); Harris v. Dept. of Labor and Industries, 843 P.2d 1056 (Wash. 1993); Tobin's Case, 675 N.E.2d 781, 784 (Mass. 1997); Sasso v. Ram Property Management, 452 So. 2d 932 (Fla. 1984); Brooks v. Island Creek Coal Co., 678 S.W.2d 791 (Ky. 1984).

¶37 In considering the four non-Montana cases which have struck down age-related restrictions on workers' compensation benefits, I initially note that the statutes at issue in those cases are distinguishable from the statute in this case and that the peculiarities of the statutes were relevant to the ultimate holdings. For example, in Pierce the statute in question allowed supplemental earnings benefits after retirement but arbitrarily limited them to 104 weeks while allowing non-retired workers to collect 520 weeks.

¶38 More importantly, none of the four cases consider the rationale I have outlined in paragraph 35. Three of the four cases (all except Pierce) view the purposes of workers' compensation benefits and old age or retirement benefits as wholly unrelated. In that regard, the three courts are at odds with long standing and prevailing wisdom that there is a connection in the purposes of the workers' compensation, unemployment, and retirement statutes which must be taken into consideration in any equal protection analysis. As set forth in the Washington decision in Harris, workers' compensation, unemployment and old age (social security retirement) benefits all serve the singular purpose of replacing lost wages and are therefore interrelated. Quoting Larson's treatise on workers' compensation, the Court in Harris rejected a constitutional challenge to a statute providing for an offset of social security retirement benefits against workers' compensation benefits:

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. . . .

(Footnote omitted.) 4 A. Larson, Workmen's Compensation §97.10 (1990). We find Larson's analysis persuasive. State disability benefits 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. RCW 51.32.225 serves a legitimate purpose in avoiding duplication of benefits.

843 P.2d at 1066. Larson's latest edition on Workers' Compensation Law repeats what is quoted in Harris and, in a renumbered section, §157.01, goes on to say that the one-wage loss benefit rule

is inevitable, once it is recognized that workers' 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. If this is denied, then all coordination becomes impossible and social legislation becomes a grab-bag of assorted unrelated benefits.⁽³⁾

I find Larson's analysis, and the cases invoking the analysis, more persuasive than the analysis adopted in the Colorado, West Virginia, and Arkansas courts.

¶39 The fact remains that most people retire when they reach social security retirement age, thus taking themselves out of the labor market. If they are not in the labor market, then they suffer no wage loss. The retirement provisions in section 39-71-710, MCA, provide a rough measure of that point of time, indeed in the case of women, it is an accurate predictor of individuals removing themselves from the labor market 86.3% of the time. Although the class does not provide a 100% correlation, the rough measure it provides is sufficient, as can be seen from the analysis in the recent United States Supreme Court decision in Kimel v. Board of Regents, 528 U.S. 62 (2000). Kimel discussed the use of age based classifications. While the provision in question here is not per se an aged based classification, it has some similarities to one and is ultimately age driven to the extent that retirement benefits are predicated upon, among other things, age. In Kimel the Supreme Court expressly approved the use of age based classifications so long as they are roughly correlated to the goal to be acheived:

States may discriminate on the basis of age without offending the Fourteenth Amendment if the age classification in question is rationally related to a legitimate state interest. The rationality commanded by the Equal Protection Clause does not require States to match age distinctions and the legitimate interests they serve with razorlike precision. . . . Under the Fourteenth Amendment, a State may rely on age as a proxy for other qualities, abilities, or characteristics that are relevant to the State's legitimate interests. The Constitution does not preclude reliance on such generalizations. That age proves to be an inaccurate proxy in any individual case is irrelevant. . . .

528 U.S. at 83-84 (emphasis added).

¶40 I am unpersuaded that the permanent partial disability benefits limitation set forth in section 39-71-710, MCA (1997), violates equal protection guarantees.

JUDGMENT

¶41 The provision in section 39-71-710, MCA (1997), which limits permanent partial disability benefits to an impairment award in cases of workers who have taken early social security retirement or are eligible for full social security retirement does not violate equal protection guarantees. Claimant is not entitled to permanent partial disability benefits other than her impairment award, which has been paid. Her petition is dismissed.

¶42 This JUDGMENT is certified as final for purposes of appeal pursuant to ARM 24.5.348.

¶43 Any party to this dispute may have 20 days in which to request a rehearing from these Findings of Fact, Conclusions of Law and Judgment.

DATED in Helena, Montana, this 24th day of August, 2001.

(SEAL)

\s\ Mike McCarter
JUDGE

c: Mr. Richard J. Martin
Mr. Leo S. Ward
Submitted: May 10, 2001

1. The Fourteenth Amendment to the United States Constitution states that "[n]o state shall . . . deny to any person within its jurisdiction the equal protection of the laws." Article II, Section 4 of the Montana Constitution provides, inter alia, "No person shall be denied the equal protection of the laws."

2. In Powell v. State Compensation Ins. Fund, 2000 MT 321, the Montana Supreme Court appears to hold that if there is some articulable distinction between two classes then the Equal Protection Clause is satisfied and no further analysis is necessary. It says, [W]hen addressing an equal protection challenge, this Court must first identify the classes involved and determine whether they are similarly situated." Id., ¶ 22. The Court went on to hold that the class of non-family caregivers is different from the class of family caregivers and that "[c]onsequently, it is not necessary for us to determine which level of scrutiny [applies] . . . or whether § 39-71-1107(3), MCA, would pass muster under either standard." Id., ¶ 26. The holding appears at odds with traditional equal protection analysis, which asks whether the distinction between the two classes is rationally related to a legitimate state or public interest. In Nordlinger v. Hahn, 505 U.S. 1, 10 (1992), for example, at issue was legislation which created two separate classes of taxpayers. The first class consisted of property owners who had recently purchased or acquired their property: They were taxed on the full appraised value of the property. The second class consisted of all other: They were taxed on the 1975-1976 value of the property. Thus, persons who recently purchased their property were typically taxed on higher values than identical taxpayers who had not recently purchased their properties. Even though there was a distinction between the two groups based on whether the property had been recently acquired, the United States Supreme Court applied the rational basis test to determine if the distinction between the two groups was constitutional (it was). The point here is that even if a distinction between two groups can be made, the distinction may not be rationally related to a legitimate state purpose, hence the two groups may be deemed "in all relevant respects alike" and therefore entitled to equal treatment.

3. The current section reads in full:

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 worker undergoes a period of wage loss due to all three conditions, it does not follow that he or she should receive three sets of benefits simultaneously and thereby recover more than his or her actual wage. The worker is experiencing only one wage loss and, in any logical system, should receive only one wage-loss benefit. [Footnote omitted.] This conclusion is inevitable, once it is recognized that workers' 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. If this is denied, then all coordination becomes impossible and social legislation becomes a grab-bag of assorted unrelated benefits. . . .