MARCH

2005

Don’t Pay Lump Sum

Just Yet . . .

By Tiffany L. Scully

 

Wolford v. Pinnacol Assurance, 03SC472(February 28, 2005): Claimant was sexu-ally assaulted by a patient while working as a counselor.  As a result of the assault, Claimant sustained physical injuries and  developed post-traumatic stress disorder.  Claimant was unable to return to work due to the injuries and Pinnacol began paying Claimant TTD benefits.

   Six (6) months after the assault, Claimant began working as a secretary at a law firm, but continued to collect TTD benefits.   Claimant was employed as a secretary for eighteen (18) months. 

   Claimant reached MMI and following a hearing to contest a Division IME, Pinnacol was ordered to pay PPD benefits in the amount of $81,251.

   Soon after, Claimant was charged with willfully making a false statement to obtain benefits under C.R.S. 8-43-402.  This charge was based on Claimant’s sworn statements that she had not been employed, a requirement to receive TTD benefits, when in fact she had been employed as a secretary for eighteen (18) months. 

   Claimant pled guilty to the charge and was sentenced to six (6) years probation and ordered to pay restitution in the amount of $16,693 (the amount of TTD benefits collected during her eighteen months as a secretary).

   In addition, Pinnacol argued they did not have to pay Claimant any PPD benefits because a conviction pursuant to C.R.S. 8-43-402 results in a forfeiture of “all” rights to compensation. 

   The Supreme Court (SC) held that the forfeiture provision of C.R.S. 8-43-402 only applied to the benefits obtained as a

result of making a false statement, not to “all” workers’ compensation benefits.  

   The SC stated the forfeiture of “all” com-pensation, including PPD benefits, would undermine the General Assembly’s under-standing of how the workers’ compensa-tion system functions.

   The SC held a “narrower” construction of C.R.S. 8-43-402 best reflects the reme-dial purpose of the Workers’ Compensa-tion Act.  Therefore, the SC stated there must be a nexus between the false state-ment and the compensation forfeited.

   The SC stated the “narrower” construction of the statute will encourage Claimants to be truthful during the claims process.  It is unknown at this time whether Claimant will be “truthful” in the future.

   Pursuant to the SC holding, Claimant is entitled to receive all of her PPD benefits.

Claimant Collects after Conviction 

   After Respondents file a Final Admis-sion, claimants have the opportunity to request payment in part, or all, of the ad-mitted award in a lump sum.  Rule XI(C), W.C.R.P., makes a distinction between requests for lump sums on non-scheduled (whole person) ratings and scheduled ratings.

   For non-scheduled awards, the claimant must submit the request for the first $10,000 to the insurance carrier directly.  The claimant may then object to the Final Admission and pursue a DIME or apply for a hearing.  If the claimant requests more

than $10,000, the claimant must submit a formal Application for Lump Sum to the Director for approval.

   For scheduled ratings, regardless of the amount requested, the claimant must sub-mit the formal Application for Lump Sum to the Director.  A letter from claimant’s attorney requesting payment of a lump sum on a scheduled award is not enough.  In this instance you should inform the attor-ney that, per Rule XI(C)(4), W.C.R.P., the claimant needs to submit an Application for Lump Sum to the Director in order to

Cooper v. Indust. Claim, 03CA2330 (February 24, 2005):  Claimant suffered a compensable injury and Respondents filed a Final Admission admitting to PPD bene-fits in the amount of $26,800.  On Sept. 12, 2002, Respondents made a lump sum payment of approximately $10,000.  Two (2) days later, Claimant died of causes unrelated to her injury. 

   Claimant’s estate argued for the remain-ing payment of PPD benefits.  The Court of Appeals (CA) held Claimant’s estate did not qualify as “dependents” pursuant to C.R.S. 8-42-116(1) and therefore could not collect any unpaid PPD benefits.  How-ever, the CA also held Respondents were not entitled to a repayment of the lump sum because Respondents may not seek reimbursement for “awarded” benefits.

No Repayment After

Claimant’s Death

Practice Pointer