Vogel v. Wells Fargo Guard Services

IN THE SUPREME COURT OF TENNESSEE

AT KNOXVILLE FILED

October 7, 1996

WALTER P. VOGEL, ) FOR PUBLICATION

Cecil Crowson, Jr.

) Appellate C ourt Clerk

Plaintiff/Appellee, ) Filed: October 7, 1996

)

v. ) Hon. John Turnbull, Judge

)

WELLS FARGO GUARD ) No. 03S01-9601-CV-00005

SERVICES, )

)

Defendant/Appellant, )

)

and )

)

DINA TOBIN, DIRECTOR OF THE )

DIVISION OF WORKERS’ )

COMPENSATION, TENNESSEE )

DEPARTMENT OF LABOR, )

SECOND INJURY FUND, STATE )

OF TENNESSEE, and CHARLES )

BURSON, ATTORNEY GENERAL )

FOR THE STATE OF TENNESSEE, )

)

Defendants/Appellants. )

For the Defendant/Appellants For Plaintiff/Appellee Vogel:

Wells Fargo Guard Services:

David H. Dunaway

Ernest D. Bennett, III DAVID H. DUNAWAY &

Nashville, TN ASSOCIATES

LaFollette, TN

For Defendants/Appellants

Dina Tobin and Charles Burson:

Charles W. Burson

Attorney General and Reporter

Dianne Stamey Dycus

Senior Counsel

Civil Division

Nashville, TN

OPINION

REVERSED WHITE, J.

In this workers' compensation case, we are asked to review the trial

court’s determination that Tennessee Code Annotated Section 50-6-

207(4)(A)(i) is unconstitutional and that plaintiff is entitled to life-time

workers’ compensation benefits. Having considered the positions of the

parties, the plain language and the legislative intent of the statute, and relevant

authority in other jurisdictions, we reverse.

Walter Vogel was employed as a security guard with Wells Fargo Guard

Services. As part of his obligation, he inspected tractor-trailers. During one

such inspection, he slipped on a muddy embankment, fell, and injured his

shoulder and back. At the time of his fall, Vogel was seventy-three years of

age and had substantial preexisting health problems, including stomach cancer,

heart difficulties, lung problems, and arthritic degeneration of the spine.

As a result of his work-related fall, Vogel sought the care of orthopedic

doctors. Dr. Donald Ivey performed back surgery on Vogel and assigned a

twenty-two percent physical impairment rating based on the back condition.

Dr. James McKinney, an orthopedic surgeon, found that Vogel had a seventy-

three percent impairment to the body as a whole, twenty percent of which was

attributable to Vogel's back injuries. Another orthopedic doctor, Dr. William

Kennedy, agreed that Vogel had significant body impairment and attributed

twenty-five percent to the back injury. Based on this evidence, the trial court

found that the medical evidence in the case supported a finding of twenty-three

percent medical impairment to the body as a whole.

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In addition to medical witnesses, Vogel presented the testimony of Dr.

Norman Hankins, a vocational expert. Hankins testified that Vogel's

vocational impairment was one hundred percent. As a result of this testimony,

the trial judge found that Vogel was one hundred percent permanently and

totally disabled as a result of the on the job injury. The state concedes that the

evidence supported this finding. The trial court apportioned the liability sixty-

five percent to Wells Fargo, Vogel's present employer, and thirty-five percent

to the Second Injury Fund.

In addition to awarding benefits, the trial court found that the statutory

scheme was unconstitutional. Specifically, the court held that Tennessee Code

Annotated Section 50-6-207(4)(A)(i)

would purport to limit [Vogel's] recovery for the compensable

disability found by the court to exist, due to his age. The court

finds that there is no rational basis for a situation which would, as

in this case, if a person was ninety-nine (99%) percent disabled,

award him three hundred ninety-six (396) weeks but, if he is one

hundred (100%) percent permanently and totally disabled, limit

him to two hundred sixty (260) weeks. The court therefore finds

after reviewing the entire record that the age related caps

contained in the Tennessee Worker's Compensation Reform Act . .

. should be and the same are declared to be arbitrary, capricious,

illegal, and unconstitutional under the Equal Protection Clause of

the Fourteenth Amendment of the United States Constitution

because they unfairly discriminate between workers based on age.

As a result of the trial judge's conclusion that the statute was unconstitutional,

the judge awarded Vogel life-time benefits under the Workers' Compensation

Act.

The statute at issue is part of the Workers' Compensation Reform Act of

1992. It provides, in relevant part, that

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compensation shall be paid during the period of such permanent

total disability until the employee reaches the age of sixty-five

(65); provided, that with respect to disabilities resulting from

injuries which occur after age sixty (60), regardless of the age of

the employee, permanent total disability benefits are payable for a

period of two hundred sixty (260) weeks. Such compensation

payments shall be reduced by the amount of any old age insurance

benefit payments attributable to employer contributions which the

employee may receive under the Social Security Act, U.S.C., title

42, chapter 7, subchapter II, as amended.

Tenn. Code Ann. § 50-6- 207(4)(A)(i)(1995 Supp.). Vogel contends that the

statute is constitutionally infirm because of the distinctions it draws between

workers who are injured before and after age sixty-five and between workers

who are injured before age sixty and those who are injured between the ages of

sixty and sixty-five. He challenges the statute as violating both the equal

protection clause and the Age Discrimination in Employment Act.

I. Constitutional Analysis Generally

We begin with the presumption which the law attaches and which we

cannot ignore that the acts of the General Assembly are constitutional. See

e.g., Petition of Burson, 909 S.W.2d 768 (Tenn. 1995); Davis-Kidd

Booksellers, Inc. v. McWherter, 866 S.W.2d 520 (Tenn. 1993); Bozeman v.

Barker, 571 S.W.2d 279 (Tenn. 1978). In evaluating the constitutionality of a

statute, we must indulge every presumption and resolve every doubt in favor of

constitutionality. Petition of Burson, 909 S.W.2d 768 (Tenn. 1995). A statute

comes to a court "clothed in a presumption of constitutionality [since] the

Legislature does not intentionally pass an unconstitutional act.” Cruz v.

Chevrolet Grey Iron Div. of General Motors, 247 N.W.2d 764, 769 (Mich.

1976). Therefore, notwithstanding the trial judge's findings in this case, we

must begin our inquiry with the presumption that the statute in question passes

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constitutional muster.

II. Equal Protection Challenge

From the beginning, we turn to analyze the statute in question

recognizing the very real concern that it violates equal protection by classifying

individuals differently based on age. In analyzing equal protection challenges,

we must first determine the appropriate measure of scrutiny. In Brown v.

Campbell County Board of Education, 915 S.W.2d 407 (Tenn. 1995), we

discussed the three levels of scrutiny applicable to discrimination claims and

concluded that claims such as these, in which the class allegedly discriminated

against is not a suspect class, should be scrutinized under the rational basis test.

Brown v. Campbell County Board of Education, 915 S.W.2d at 413-14. We

join other jurisdictions in applying the rational basis test to constitutional

challenges based on age. In a recent decision the Colorado Supreme Court held

that "[c]lassifications based on age are not suspect or special warranting strict

scrutiny or intermediate review." Industrial Claim Appeals Office v. Romero,

912 P.2d 62, 66 (Colo. 1996)(citing Massachusetts Board of Retirement v.

Murgia, 427 U.S. 307, 313-14 (1976)). See also Sasso v Ram Property

Management, 431 So.2d 204, 221 (Fla. App. 1983). Additionally, workers'

compensation benefits are not deemed to be fundamental rights thereby

triggering a higher standard of review. Industrial Claim Appeals Office v.

Romero, 912 P.2d at 66.

Under the rational basis test, our inquiry is whether the classification

system has a reasonable relationship to a legitimate state interest. "Unless the

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individual challenging the statute can establish that the differences are

unreasonable, the statute must be upheld.” Tennessee Small School Systems v.

McWherter, 851 S.W.2d 139, 154 (Tenn. 1992). If the classification is

naturally and reasonably related to that which it seeks to accomplish it has

passed the rational basis test and has met constitutional standards. Our chore,

then, is to determine whether the statute naturally and reasonably relates to

legitimate state purposes.

Our Workers’ Compensation Act, like most, draws classifications. The

fact that a statute classifies people differently, and results in inequality, does

not invalidate the statute. In fact, all classification systems involve

discrimination, but “only invidious discrimination with no rational basis for the

statutory classification . . . offends the equal protection guarantee.” Brown v.

Goodyear Tire & Rubber Co., 599 P.2d 1031, 1035 (Kan. App. 1979), aff’d,

608 P.2d 1356 (Kan. 1980).

As is also true of most workers’ compensation statutes, our statute uses

age as a basis for various classifications. Benefits are terminated for

permanently, totally disabled persons based on age and the length of benefits

for others who are permanently and totally disabled depends upon their age.

The use of age as a basis for drawing distinctions is not necessarily

problematic. In certain contexts, age-based discrimination has been deemed

rational and essential to legitimate governmental purposes. See Gregory v.

Ashcroft, 501 U.S. 452 (1991)(mandatory judicial retirement at age seventy is

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constitutional); Vance v. Bradley, 440 U.S. 93 (1979)(mandatory foreign

service officer retirement at age sixty is constitutional); Massachusetts Board

of Retirement v. Murgia, 427 U.S. 307 (1976)(Massachusetts ban on

employment of police officer over age fifty is constitutional). In the context of

disability benefits, no presumption of rationality attaches; consequently, we

must determine whether the discrimination is rationally related to any

legitimate government purpose.

Our statute, like many others, ties the termination of benefits for the

permanently, totally disabled worker to the commencement of Social Security

old-age benefits. Within this structure is the basis for what the state claims is a

rationally-based classification. The purpose of the statute, the state contends, is

to “provide permanent and total benefits to the age of 65, the age when an

employee is eligible for Social Security old-age benefits. This purpose, they

allege is consistent with the overall purpose of workers’ compensation law: the

replacement of lost wages. See Van Housler v. Mueller, 741 S.W.2d 329, 330

(Tenn. 1987).

The issue of whether a workers’ compensation scheme that ties the

termination of disability benefits to the onset of old-age benefits has led courts

to different, somewhat spirited debates.

In Industrial Claim Appeals Office v. Romero, 912 P.2d at 62, the

Colorado Supreme Court declared an age-based classification in its workers’

compensation law to be unconstitutional. The Colorado statute terminated

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permanent total benefits “when the employee reaches the age of sixty-five

years.” As a result, persons sixty-five and older who were permanently and

totally disabled were denied benefits for work-related injuries, while persons

who suffered less than total disabilities were allowed to recover.

The Colorado Court concluded that the statute created a discriminatory

classification between permanently totally disabled workers age sixty-five and

over and permanently partially disabled workers age sixty-five and over. As a

result, the Court analyzed the asserted governmental purposes to determine

whether the classification scheme was rationally related to a legitimate

government interest. The state alleged two governmental interests: prohibiting

duplicate benefits and reducing the costs of the compensation program. Upon

review, the Court found that “neither of those asserted purposes are rationally

related to the classification created . . . .” Id. at 67.

The Court found the governmental purpose of providing a cost-saving,

trade-off device, which enabled permanent total disability claimants under age

sixty-five to receive a cost of living increase, to bear no rational relationship to

the classification. They concluded that “[f]unding overall cost-of-living

increases for workers’ compensation recipients by eliminating benefits for

permanently and totally disabled persons age sixty-five and older is arbitrary,

unfair, and irrational.” Id. at 69.

In analyzing the asserted governmental purpose of preventing duplicate

benefits, the purpose implicit in the state’s position here, the Court noted that

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Social Security and workers’ compensation benefits “do not serve the same

purpose . . . . Social security retirement benefits . . . are not disability

benefits, but are old-age entitlements serving the same function as pension

payments. In contrast, workers’ compensation benefits are provided to

compensate employees who suffer work-related injuries for loss of income

resulting from such injuries.” Id. at 67-68.

Finally, the Court rejected the state’s argument that it was entitled to

draw distinctions based on administrative convenience. “[T]he legislature is

not justified in eliminating workers’ compensation benefits for all persons age

sixty-five and older who have been permanently and totally disabled merely

based on the administratively convenient presumption that such persons receive

retirement benefits.” Id. at 68.

That classification which the Colorado Court characterized as an

“administratively convenient presumption” was lauded by the Washington

Supreme Court as “serv[ing] a legitimate purpose in avoiding duplication of

benefits.” Harris v. State Department of Labor and Industries, 843 P.2d 1056,

1066 (Wa. 1993). The Washington Court discussed both the Florida approach

relied on by Colorado and the Kansas approach and found the latter more

palatable.

In the Florida decision, Sasso v. Ram Property Management, 452 So.2d

932 (Fla. 1984), the Court concluded that exclusion of those over 65 from

disability benefits was not “rationally related to the prevention of ‘double

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dipping’” since old-age benefits and disability benefits serve different

purposes. Sasso v. Ram Property Management, 452 So.2d at 934 n.3. The

statute survived an equal protection challenge because it was rationally related

to other legitimate government interests.

The Kansas approach, which the Washington Court found more

persuasive, adopts the theory that old-age and disability benefits, though

different, are “substantially similar” and serve the same purpose - the

replacement of wages. Thus, the Kansas Court of Appeals, like the

Washington Supreme Court, found that an age-based classification which

terminated disability benefits upon the commencement of Social Security

benefits “[h]as a rational basis, is not arbitrary, and affords like treatment of

persons similarly situated.” Brown v. Goodyear Tire and Rubber Co., 599 P.2d

1031, 1036 (Kan. App. 1979), aff’d, 608 P.2d 1356 (Kan. 1980). See also

Berry v. H. R. Beal & Sons, 649 A.2d 1101 (Me. 1994).

The Kansas and Washington approach views workers’ compensation

benefits as part of an overall “wage-loss program” which includes

unemployment, disability, and retirement benefits. When viewed as a part of

an overall program, it is argued that “[t]he crucial operative fact is the wage

loss, the cause of the wage loss merely dictates the category of legislation

applicable.” 4 A. Larson, Workmen’s Compensation § 97.10 (1990)

[I]f a work[er] undergoes a period of all three

conditions, it does not follow that [the worker] should

receive three sets of benefits . . . . [The worker] is

experiencing only one wage loss and, in any logical

system, should receive only one wage-loss benefit.

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Id. Thus, a statute that includes termination of disability benefits upon

commencement of old-age benefits, those courts conclude, is a rationally based

statute.

Our statute is not identical to the Colorado statute deemed

unconstitutional in Romero. Our statute terminates benefits for permanently,

totally disabled workers at age sixty-five, but it provides 260 weeks of benefits

for any worker who becomes permanently and totally disabled after age sixty

regardless of the age. Unlike the Colorado statute, it does not deprive

individuals like Vogel, seventy-three when injured, of benefits.

We conclude that our legislature intended to tie workers’ compensation

benefits for workers who are permanently and totally disabled to the

commencement of Social Security benefits. The distinctions drawn between

ages sixty and sixty-five, in an effort to accomplish that end, are not

unconstitutional. Further the 260 week award for claimants injured after age

sixty is rationally related to the goal of assuring that employees have an

adequate recovery. While we acknowledge the numerous1 distinction between

old-age and disability benefits,1 we conclude that the legislature was attempting

to serve legitimate state interest in awarding compensation benefits for the

permanently, totally disabled employee until old-age Social Security benefits

commenced. The scheme employed, differentiating on the basis of age, bears a

1

All persons who reach age sixty-five, who have been employed, and who have paid into

the Social Security Trust Fund are entitled to draw Social Security old-age benefits.

These benefits are not for disability. An eligible worker, despite his or her ability to

work, is entitled to receive Social Security old-age benefits. Disability benefits, under the

workers’ compensation statute, compensate the injured worker for that portion of his or

her industrial ability that has been lost due to injury.

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rational relationship to the accomplishment of that state interest. We are

persuaded, based on our reading of our statute and the excellent analyses by

other states reviewed in this opinion, that Section 50-6-207(A)(i), insofar as it

relates to termination of permanent total disability benefits for workers age

sixty and over, does not violate equal protection.

III. Age Discrimination in Employment Challenge

We turn now to the question of whether the statutory scheme violates the

Age Discrimination in Employment Act. That Act makes it unlawful for an

employer to

fail or refuse to hire or to discharge any individual or

otherwise (1) discriminate against any individual with

respect to . . . compensation, terms, conditions, or

privileges of employment, because of such

individual’s age; (2) to limit, segregate, or classify . . .

employees in any way which would deprive or tend to

deprive any individual or employment opportunities

or otherwise adversely affect [employee’s] status as

an employee, because of such individual’s age; or (3)

to reduce the wage rate of any employee in order to

comply with this chapter.

29 U.S.C. Section 623(a). The Act specifically excludes "bona fide seniority

system[s]" from coverage. Thus, we must determine whether the application of

the statute at issue concerns the "compensation, terms, conditions, or privileges

of employment" and, if so, whether it violates the terms of the Act or is

excluded from its coverage.

Some courts have held that state workers' compensation statutes do not

concern the "compensation, terms, conditions, or privileges of employment"

and thus are not affected by the Age Discrimination in Employment Act. See

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Peck v. General Motors Corp., 417 N.W.2d 547 (Mich. App. 1987); O'Neill v.

Department of Transportation, 442 So.2d 961 (Fla. App. 1983). The

Michigan Court of Appeals rationalized that while "[t]he ADEA addresses

discrimination by employers against employees, [t]he Workers' Disability

Compensation Act is a uniform system of compensation mandated by the state

and not the employer." Peck v. General Motors Corp., 417 N.W.2d at 55.

Likewise, the Florida Court of Appeals noted that ADEA provisions "are

limited to employment practices within the control of the employer.” O’Neill

v. Department of Transportation, 442 So.2d at 962.

While we find these justifications less than probing, we are mindful of

the fact that even if our statute concerns “compensation, terms, conditions, or

privileges of employment” such as to fall under the Act, classifications based

on age are not, by definition a violation of the Act. If the differentiation is

based on reasonable factors other than age, the classification is authorized,

even if it involves age discrimination. Brown v Goodyear Tire & Rubber Co.,

599 P.2d at 1031.

Against this backdrop, we have plaintiff's hollow claims that the statute

violates the Act. Plaintiff argues that Congress has mandated a policy that

promotes the employment of older persons and consequently, decries the cut-

off set by our statute. Yet, plaintiff cites no cases in which a provision of a

workers' compensation statute terminating benefits at age sixty-five has been

deemed to violate the Age Discrimination in Employment Act. Furthermore,

plaintiff does not describe how the statute differentiates between protected

13

individuals and non-protected individuals to the detriment of older individuals.

The disparity in our statute is not based on age, but on degree of disability.

Such disparity does not violate the Age Discrimination in Employment Act.

IV. Differentiation Between Permanent Total

and Permanent Partial Benefits

Unlike most of the cases on this subject, the constitutional challenge

before us is not limited to consideration of the reasonableness of tieing

workers’ compensation benefits to the onset of Social Security old-age

benefits. Our more difficult concern is a classification that is not age-based but

disability-based. Specifically, while permanently, totally disabled workers lose

their benefits at age sixty-five (or after 260 weeks), permanently, partially

disabled workers draw benefits based on a presumption that the maximum total

benefit is 400 weeks. Tenn. Code Ann. § 50-6-207(3)(E)(1995 Supp.). Thus, a

worker who becomes permanently, totally disabled at age sixty draws 260

weeks of benefits while the same worker who becomes ninety percent

permanently, partially disabled draws 360 weeks of benefits.

Undoubtedly, the line drawn in this instance by our legislation is

imperfect. It creates a result which, described in its best light, is odd. As the

trial judge noted, plaintiff would have received more benefits from a

determination of less disability. Such a scheme is irrational. It improperly

differentiates between persons and cannot stand.

Although we conclude that the differentiation between permanently

totally and permanently partially disabled workers over sixty is irrational, we

14

do not find that conclusion to authorize an award of lifetime benefits to

plaintiff. That remedy, created by the trial judge, is inappropriate. It is the

business of the legislature to pass new laws and modify existing ones. Thus, if

the legislature deems the award of lifetime benefits the appropriate solution,

they will undoubtedly amend the permanent, total disability section.

Pursuant to the statute, plaintiff, an employee who suffered “injuries . . .

after age sixty (60)” is entitled to benefits “for a period of two hundred sixty

(260) weeks” reduced by appropriate old-age benefits. Tenn. Code Ann. § 50-

6-207(4)(A)(i)(1995 Supp.). In order to lend some rationality to the

compensation scheme, we conclude that the 260 week cap set forth in

Tennessee Code Annotated Section 50-6-207(4)(A)(i) applies to all injured

workers over sixty who are awarded benefits under the Workers’

Compensation statute for permanent partial or permanent total disability. We

recognize that this conclusion militates against injured workers in some context

notwithstanding the remedial purpose of the Act. It is, nonetheless, required to

avoid an otherwise irrational result. Should the legislature intend lifetime

benefits for all that are permanently totally disabled and a 400 week cap for

permanent partial injuries, it may so declare.

V. Conclusion

The purpose of the Workers' Compensation Act is to provide injured

workers with periodic payments which serve as a substitute for wages. Van

House v. Mueller Co., 741 S.W.2d 329, 330 (Tenn. 1987). Our legislature's

response in awarding benefits for permanent total disability until age sixty-five,

15

or for 260 weeks for workers injured after age sixty, is a rational response to

that purpose which takes into account that Social Security old-age insurance

benefits commence at age sixty-five and which considers as well the

requirements of the Age Discrimination in Employment Act. We, therefore,

conclude that the provisions of Tennessee Code Annotated Section 50-6-

207(4)(A)(i) regarding permanent total disability do not violate either the Equal

Protection Clause of the United States Constitution or the Age Discrimination

in Employment Act.

We, do not find, however, the statute’s differential treatment of

permanent total and permanent partial benefits for workers over age sixty to be

rational. The trial court’s award of lifetime benefits is reversed. Plaintiff is

awarded benefits for 260 weeks pursuant to the statute. The costs are divided

equally among the parties.

_________________________________

Penny J. White, Justice

CONCUR:

Birch, C.J.

Drowota, Anderson, Reid, J.J.

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