Petition for Writ of Certiorari — Rosa v. Warner Electrical Contracting

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Supreme Court, U.S. -

FILED

93191 6 May 27 199

No. 93-

dibbet er ste ta tie

In The

Supreme Court of the United States

October Term, 1993

STEVEN L. ROSA (deceased), CHRISTINA

ROSA, JOSHUA ROSA, AMBER ROSA,

and NATHANIEL ROSA,

Petitioners,

WARNER ELECTRICAL CONTRACTING,

COLORADO COMPENSATION INSURANCE

AUTHORITY and THE INDUSTRIAL CLAIM APPEALS

OFFICE OF THE STATE OF COLORADO,

Respondents.

Petition For A Writ Of Certiorari

To The Supreme Court Of Colorado

PETITION FOR A WRIT OF CERTIORARI

*RALPH OGDEN

Witcox & Ocpsn, P.C.

1306 Chancery Building

1120 Lincoln Street

Denver, Colorado 80203

303-861-5501

StevEN U. MULLENS

STEVEN U. Muttens, P.C.

321 South Tejon Street

Colorado Springs, Colorado 80903

719-632-5001

*Counsel of Record

May 27, 1994

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED FOR REVIEW

Whether a state mandated reduction in worker’s

compensation benefit levels, which is not expressly pro-

hibited by Congress and which is calculated according to

the amount of a Social Security award, decreases the

value of the recipient’s Social Security award and is

therefore invalid under the supremacy clause of the Con-

stitution, Article VI, Clause 2, unless Congress speci-

fically authorizes the states to make the reduction.

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW ............ i

TABLE OF ACTERUGMMEN ERS 6 nc b 05sec buivils ced caween ili

Sigil @ fs PPC ET PONT Pree rec er errr 1

JURISDICTION OF THE SUPREME COURT........ 2

CONSTITUTIONAL PROVISIONS AND STATUTES

IN VOLY Gas EC SURES GOA iis le a eoanes eas 3

SEAT oaeees GM Seem SNe 6666 cake sink de eeaeseen 4

REASONS FOR ISSUING THE WRIT............... 13

CURL ARIUUIS 6 icc aicknuced 00a 8e eee ee ek aa 17

TABLE OF AUTHORITIES

Page

Cases

Harris v. State Department of Labor and Industries,

120 Wash.2d 461, 843 P.2d 1056 (1993) .......-. 13, 15

Hisquierdo v. Hisquierdo, 439 U.S. 572 CIGTSD cc ctwaces 16

Hurtado v. CF&I Steel Corporation, 168 Colo. 37, 449

P.2d 819 (1969) .......-cccee cece cece cence eceeeneees 6

Kinterknecht v. Industrial Commission, 175 Colo. 60,

485 P2d 721 (1971).....-...ccceeeec ccc eereeeeeenes 5

McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507

PUN aed ebecsdvccssccsvccscccsscnsccrerscsescoes 13

Pyke v. Department of Social Services, 182 Mich.App.

619, 453 N.W.2d 274 (1990) ......---0 eee eee eee 15

Raskin v. Moran, 684 F.2d 472 (7th Cir. 1982).... 13, 15, 16

Richards v. Richards & Richards, 664 P.2d 254

(Colo.App. 1983) .......-----seeee erent eee ee recess 4

Richardson v. Belcher, 404 U.S. 78 (1971) .......------- 10

Sciarotta v. Bowen, 837 F.2d 135 (3rd Cir. 1988) ...... 12

Weinberger v. Wiesenfeld, 420 U.S. 636 (1975)..-...----- 8

Western Gas v. Industrial Claim Appeals Office, 797

P.2d 823 (Colo.App. 1990) .....--------eee seers eee: 6

STATUTES AND RULES

ey occ yenenseevseresesacess

42 US.C. § 402(d)

42 US.C. § 402(g)

INN 5 ioc sees vin vcects.. dso tecees eens

TABLE OF AUTHORITIES - Continued

Page

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Oe TRIE. ee I on 05.04 6 65 dc ageenes cua xpecee ec eees 9

Ge Ce IR a ns vc nkddcdccesusvtcessesnuacin 10

Oe Bee GR idaic tase cercsssccevecione aes a ee

me YS M&S ere rere ree 8

Ras ey ee TRIKE Es fadke eae ewa canes 9, 10

Paes Sy Oe a. FE Us BE na cs bn asa ccdewsencaes 10

fee fe ee ef erry rerr 11

Fakcs SRT, SR: Dele Fe ee GOD ovine ccasinacadens 11

Am . Re % YS | Mery ere Tre rrr Ee 12

Section 8-42-103(1)(a)(I), 3B C.R.S. (1993 Supp.)...... 13

Section 8-42-114, 3B C.R.S. (1993 Supp.).............. 4

Section 8-43-307(1), 3B C.R.S. (1993 Supp.) ........... 2

Section 8-50-103, 3B C.R.S. (1986 Repl.Vol.)...... 3, 4,5

Ee! ee FOr he eer re eee eer ee wore 8

Coto. Laws 1915, Chapter 179, § 57 ....22..2.20-2008 5

Colo. Laws 1963, Chapter 180, § 10.................. 6

Cote. Lawes 1975, Copner 7h, © FF nc s cree sneccccae 6

Colo. Laws 1991, Chapter 223, § 5... .....-22.0.0000 7

ALASRA SEAS. AIG. BD Zee ook ececakeasdedece 7

MCKINNEY’S CONSOLIDATED LAWS OF NEW

po FP ere re er eee one 7

MINN. STAT. § 176.111 subdivision 21............... 7

TABLE OF AUTHORITIES - Continued

Page

N.J. STAT. ANN. § 34:15-95.4 «0... -- ses reer rere ress 7

UTAH CODE ANN. § 35-1-68(2)(A)(ID ..---- +--+ ++> 7

PROVISIONS OF THE UNITED STATES CONSTITUTION

Article VI, Clause 2 .......--cceccccccseceseccecestes 3

No. 93-

In The

Supreme Court of the United States

October Term, 1993

STEVEN L. ROSA (deceased), CHRISTINA

ROSA, JOSHUA ROSA, AMBER ROSA,

and NATHANIEL ROSA,

Petitioners,

Vv.

WARNER ELECTRICAL CONTRACTING,

COLORADO COMPENSATION INSURANCE

AUTHORITY and THE INDUSTRIAL CLAIM APPEALS

OFFICE OF THE STATE OF COLORADO,

Respondents.

Petition For A Writ Of Certiorari

To The Supreme Court Of Colorado

PETITION FOR A WRIT OF CERTIORARI

o—

Christina Rosa, Joshua Rosa, Amber Rosa, and

Nathaniel Rosa respectfully petition the Court to issue a

writ of certiorari to review the judgment and opinion of

the Supreme Court of Colorado, issued on January 31,

1994.

OPINIONS BELOW

The opinion of the Supreme Court of Colorado is

reported at 870 P.2d 1210 and is set out in Appendix A.

The Court’s order denying rehearing, dated February 28,

1994, appears in Appendix B.

The opinion of the Colorado Court of Appeals is

reported at 849 P.2d 845 and is set out in Appendix C. The

final order of the Industrial Claim Appeals Office of the

State of Colorado, which is the administrative appeals

agency for workers’ compensation claims,' was entered

on August 27, 1991. It is set out in Appendix D and is not

reported. The Findings of Fact, Conclusions of Law and

Order of the Administrative Law Judge of the Colorado

Division of Labor, Workers’ Compensation Section, was

entered on April 22, 1991. It is set out in Appendix E and

is not reported.

JURISDICTION OF THE SUPREME COURT

The judgment and opinion of the Supreme Court of

Colorado were issued on January 31, 1994. On February

28, 1994, the court denied a timely petition for rehearing.

Jurisdiction of this Court is invoked pursuant to 28

U.S.C. § 1257. This petition is timely filed on Friday, May

27, 1994, which is the 88th day after rehearing was denied

by the Supreme Court of Colorado. Rule 13.1 of the

United States Supreme Court.

! The Industrial Claim Appeals Office is a statutory defen-

dant in all judicial proceedings to challenge its final orders.

Section 8-43-307(1), 3B C.R.S. (1993 Supp.)

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED IN THIS CASE

The Supremacy Clause, Article VI, Clause 2 of the

United States Constitution, states in pertinent part, that

This Constitution, and the Laws of the United

States which shall be made in Pursuance

thereof; and all Treaties made or which shall be

made, under the Authority of the United States,

shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby,

any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

Section 8-50-103, 3B C.R.S. (1986 Repl.Vol.) states:

8-50-103. Death Benefits. In case of death, the

dependents of the deceased entitled thereto

shall receive as compensation or death benefits

sixty-six and two-thirds percent of the deceased

employee’s average weekly wages, not to

exceed a maximum of eighty percent of the state

average weekly wage per week for accidents

occurring on or after September 1, 1975, and not

less than a minimum of twenty-five percent of

the applicable maximum per week. In cases

where it is determined that periodic death bene-

fits granted by the Federal Old Age, Survivors,

and Disability Insurance Act or a workmen's

compensation act of another state or the federal

government are payable to an individual and his

dependents, the aggregate benefits payable for

death pursuant to this section shall be reduced,

but not below zero, by an amount equal to 100

percent of such periodic benefits.

Portions of 42 U.S.C. §§ 402(d) and 402(g) and 42

U.S.C. § 424a appear in Appendix F.

STATEMENT OF THE CASE

Steven L. Rosa was electrocuted on July 2, 1987,

while in the scope and course of his employment with

Warner Electrical Contracting. At the time of his death,

Mr. Rosa’s wife and three children were totally depen-

dent upon him for support. Accordingly, they were eligi-

ble for death benefits under section 8-50-103, 3B C.R.S.

(1986 Repl.Vol.), now codified with changes at section

8-42-114, 3B C.R.S. (1993 Supp.)?

Pursuant to 42 U.S.C. § 402(d), the Social Security

Administration awarded each of Mr. Rosa’s children $356

per month in “children’s benefits.” Children’s benefits

are paid to surviving dependent children of a deceased

wage earner and are generally paid until a child reaches

the age of sixteen. 42 U.S.C. § 402(s)(1). Benefits are equal

to 75% of the deceased wage earner’s primary insurance

amount. 42 U.S.C. § 402(d)(2).

Pursuant to U.S.C. § 402(g), Mr. Rosa’s wife Christina

was awarded $356 per month in “mother’s benefits.”

Mother’s and father’s benefits are awarded to a surviving

spouse responsible for the care and maintenance of

dependent children of the deceased wage earner. They

are payable only until the last dependent child ceases to

2 In Colorado, “Disability benefits paid to a werker and

death benefits awarded to a worker’s dependents are entirely

independent of one another. This results in ‘two distinct rights -

one for the benefit of the workman and the other for the benefit

of his dependents.’ ” Richards v. Richards & Richards, 664 P.2d

254, 255 (Colo.App. 1983) (cert. denied, 1983).

be eligible for children’s benefits. Like children’s benefits,

mother’s benefits are paid at the rate of 75% of the

deceased wage earner’s primary insurance amount.

Because Mr. Rosa’s survivors received $1,424 per month

in Social Security survivor’s benefits, and because this

exceeded the $1,385.49 per month payable under the Colo-

rado Workers’ Compensation Act, an administrative law

judge for the Colorado Division of Labor ruled on September

14, 1987, that the offset provision in section 8-50-103 reduced

petitioners’ worker’s compensation death benefits to zero.

Although petitioners did not appeal this ruling, they retained

counsel and objected to the offset on the ground that section

8-50-103 was pre-empted by the Social Security Act. The

Director of the Division of Labor then allowed petitioners to

reopen their case and assert their constitutional challenge to

the offset. Because administrative law judges and the Indus-

trial Claim Appeals Office have no jurisdiction to consider a

constitutional challenge to any state law, see Kinterknecht v.

Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971), they

both declined to address petitioners’ pre-emption claims.

On appeal, the Colorado Court of Appeals held that the

offset provisions cf section 8-50-103 were not pre-empted by

the Social Security Act. The Colorado Supreme Court

granted discretionary review pursuant to Colorado Appel-

late Rules 49 et seq. and also ruled that Colorado’s death

benefits offset was not pre-empted, although its ruling was

based on different grounds.

Death benefits were included in Colorado’s first

Workers’ Compensation Act. See, Laws 1915, chapter 179,

§ 57, at page 549.

After 1975, death benefits were payable to a wholly

dependent widow for life or until remarriage. They were

also payable to totally dependent minor children until

they became eighteen years old, or if they continued to

attend school, until they became twenty-one. Western Gas

v. Industrial Claim Appeals Office, 797 P.2d 823 (Colo.App.

1990).

Although disability benefits were first subject to an

offset for Social Security disability benefits in 1963, see

Laws 1963, chapter 180, § 10 at page 645, a parallel offset

provision was not incorporated into the death benefits

statute until 1975. See, Laws 1975, chapter 71, § 19, at

page 299, which required workers’ compensation death

benefits to be reduced by 100% of the amount of Social

Security survivor’s benefits.

Since virtually all wage earners are fully insured at

the time of death, the 100% offset meant that the vast

majority of surviving dependents, like Mrs. Rosa and her

children, receive nothing in workers’ compensation death

benefits. Furthermore, since surviving dependents are

required to apply for all social security benefits for which

they may be eligible, and will have their workers’ com-

pensation benefits reduced by the amounts for which

they are eligible even if they don’t apply, there is simply

no way of avoiding the offset. Hurtado v. CF&I Steel

Corporation, 168 Colo. 37, 449 P.2d 819 (1969).

Between 1975 and 1991, workers’ compensation

death benefits were subject to a 100% offset for Social

Security survivors’ benefits, while workers’ compensa-

tion disability benefits were only subject to a 50% offset.

NaN et nN ct aot i NT I ML rine Oe, hes a ee

Sache te

The 1991 legislature reduced the death benefits offset to

50%. Laws 1991, chapter 223, § 5 at page 1351.

Five states other than Colorado — Alaska, Minnesota,

New Jersey, New York, and Utah - require a reduction of

workers’ compensation death benefits by some percent-

age of Social Security survivor’s benefits.*

3 Alaska: ALASKA STAT. ANN. § 23.30.225 (workers’ com-

pensation benefits reduced by 50% of federal survivors bene-

fits); Minnesota: MINN. STAT. § 176.111 subdivision 21

(combined total of weekly “government survivors benefits’ and

workers’ compensation death benefits must not exceed 100% of

the weekly wage earned by the deceased worker at the time of

injury; no workers’ compensation benefits paid when federal

survivors benefits exceed 100% of weekly wage, workers’ com-

pensation death benefits paid to surviving spouse may not be

reduced on account of children’s benefits if children are not in

the surviving spouse’s custody); New Jersey: N.J. STAT. ANN.

§ 34:15-9F 4 (Second Injury Fund liability for enhanced pay

ments to survivors of workers killed before January 1, 1980,

enhencement to be reduced by an amount equal to survivors

benefits paid under the Social Security Act); New York: MCKIN-

NEY’S CONSOLIDATED LAWS OF NY, Book 64, § 16 (if death

occurs after January 1, 1978, and if there is a surviving spouse

and no children under the age of 18 years or under 23 if enrolled

as full time students, workmen’s compensation death benefits

are reduced by 5% of the spouse’s share of survivors insurance

benefits under the Social Security Act for each $10 of the

deceased’s average weekly wage in excess of $100, with a maxi-

mum reduction of 50% of the Federal Social Security survivors

benefits; similar formula if there are surviving children and a

surviving spousc); Utah: UTAH CODE ANN. § 35-1-68(2)(A)(II)

(6 years after the worker’s death, worker’s compensation death

benefits shall be reduced by 50% of any Social Security sur-

vivors’ benefits — no reduction during the first six year period

after death).

In the Social Security Amendments of 1939, P.L.

76-666, § 201, 53 Stat. 1364-1368, Congress provided bene-

fits for surviving children and widows?’ of wage earners

who died before reaching retirement age. A widow was

eligible for three-fourths of her husband’s primary insur-

ance amount, but only if her husband also left dependent

children who were eligible for children’s benefits. These

same provisions are still in the Act. 42 U.S.C. § 402(g).

Surviving children were eligible for one-half of the

deceased wage earner’s primary insurance amount. The

total family benefit, however, could not exceed two times

the primary benefit amount, 80% of the worker’s average

wages, or $85.00 per month, whichever was less. 53 Stat.

1367.

The present statute gives each surviving child and

the surviving spouse three-fourths of the wage earner’s

primary insurance amount. The family maximum is

determined by a complex formula in 42 U.S.C. § 403. See

also, the explanation in 20 C.F.R. § 404.403.

No provision of the Social Security Act or of the

regulations promulgated thereunder has ever authorized

the states to reduce their statutorily mandated worker's

compensation death benefits by some percentage of the

Social Security benefits payable to the deceased worker’s

4+ Widower’s survivor’s benefits were not available until

this Court held that it was a denial of Equal Protection to give

benefits to surviving wives but not surviving husbands. Wein-

berger v. Wiesenfeld, 420 U.S. 636 (1975).

survivors. Nor, for that matter, has any provision of the

Act or of the Social Security regulations ever authorized

the Secretary to reduce survivors’ benefits by some per-

centage of workers’ compensation death benefits.°

By 1938, forty-four states and the (then) Territories of

Alaska and Hawaii® had workers’ compensation statutes

which paid dependent surviving spouses and children

benefits on account of a workers’ death from job related

activities. When Congress provided for Social Security

survivors’ benefits in 1939, then, it knew that in over 91%

of the states a worker’s dependents would be receiving

death benefits from Social Security and from the workers’

compensation insurer. That situation existed for 36 years,

or until 1975, when Colorado passed the first death bene-

fits offset statute.

Although both the Social Security Board and the

Advisory Council on Social Security recommended in

1938 that the Social Security program provide benefits for

totally disabled wage earners, disability benefits did not

become part of the Act until eighteen years later, in 1956.

Social Security Amendments of 1956, P.L. 84-880, 70 Stat.

816. Section 103 of the Amendments added a new section

223 to the Social Security Act, which was later codified at

5 Only the Railroad Retirement Act of 1974 allows offsets

for workers’ compensation death benefits. See, 42 U.S.C.

§ 405(0). And see, 42 U.S.C. § 403, which is entitled “Reduction of

Benefits” and which provides reductions in children’s, mother’s

and father’s benefits under certain circumstances, but not

because the survivors are also receiving worker’s compensation

or other death or survivor's benefits.

6 The remaining four states had passed death benefits pro-

visions by the early 1950s.

42 U.S.C. § 423. It was entitled “Disability Insurance

Benefit Payments” and provided benefits for all wage

earners who were between the ages of 50 and 65 and who

were unable “to engage in substantial gainful activity by

reason of any medically determinable physical or mental

impairment which can be expected to result in death or to

be of long-continued and indefinite duration.” Sections

223(a)(1)(b) and 223(c)(2). This is essentially the same test

for disability which appears in the current statute. 42

U.S.C. § 423(c)(2). The eligible age limit was subsequently

lowered to eighteen, and dependents’ benefits were

added by the Social Security Amendments of 1958, P.L.

85-840, § 205, 72 Stat. 1013.

P.L. 84-880 also added a new Section 224 to the Social

Security Act. Section 224 was entitled “Reduction of Ben-

efits Based on Disability” and stated in pertinent part that

“If... any individual is entitled to a disability insurance

benefit...and... it is determined that a periodic benefit

is payable . . . to such individual under a workmen's

compensation law or plan of the United States or of a

State on account of a physical or mental impairment of

such individual, then the benefit referred to in paragraph

(1) shall be reduced (but not below zero) by an amount

equal to such periodic benefit... . ”

In Richardson v. Belcher, 404 U.S. 78, 82 (1971), this

Court commented that “it is self-evident that the offset

reflected a judgment by Congress that the workmen’s

compensation and disability insurance programs in cer-

tain instances served a common purpose, and that the

workmen’s compensation program should take prece-

dence in the area of overlap.” Because Congress has not

enacted any offset provision for survivors’ benefits, how-

ever, it has expressed no similar concern over any overlap

between Social Security survivors’ benefits and state

workers’ compensation death benefits.

Section 224 was repealed in 1958. Social Security

Amendments of 1958, P.L. 85-840, § 206, 72 Stat. 1013.

After public hearings before the Senate Committee on

Finance, the 89th Congress reenacted a modified offset

provision. P.L. 89-97, Section 335, 79 Stat. 406, now cod-

ified at 42 U.S.C. § 424a.

Section 424a was entitled “Reduction of Benefits

Based on Disability on Account of Receipt of Workmen's

Compensation.” It provided that disabled wage earners

who received both Social Security disability benefits and

benefits “under a workmen’s compensation law or plan

of the United States or a State .. . ” would have their

Social Security disability benefits reduced by the amount

of these workmen’s compensation venefits, but only to

the extent the combined benefits exceeded 80% of the

worker's “average current earnings.” For purposes of this

computation, the total of the disabled wage earner’s pri-

mary insurance amount and any amounts payable to his

spouse and children under 42 U.S.C. § 402 were included

in the offset formula.

Section 424a also included the following provision:

(d) The reduction of benefits required by this

section shall not be made if the workmen's com-

pensation law or plan under which a periodic

benefit is payable provides for the reduction

thereof when anyone is entitled to benefits

under this title on the basis of wages and self-

employment income of an individual entitled to

benefits under section 223.

Section 424a(d) “thus allows the state[s] to recoup for

[themselves] the savings created by the Section 424a(a)

reduction.” Sciarotta v. Bowen, 837 F.2d 135, 137 (3rd Cir.

1988). “Furthermore, if a state chooses to implement a

reduction in state benefits because a recipient is simul-

taneously receiving federal disability benefits, this sec-

tion allows the state’s reduction to take precedence, and

recludes the Secretary from implementing a second,

double, offset.” Id.

In 1981, Congress limited the states’ ability to substi-

tute their own offsets for those allowed the Social Secu-

rity Administration by section 424a(1) by further

amending section 424a and adding the italicized language

to subsection (d):

The reduction of benefits required by this sec-

tion shall not be made if the workmen’s com-

pensation law or plan under which a periodic

benefit is payable provides for the reduction

thereof when anyone is entitled to benefits

under this title on the basis of wages of and self-

employment income of an individual entitled to

benefits under section 223, and such law or plan

so provided on February 1, 1981. (emphasis added)

Omnibus Budget Reconciliation Act of 1981, P.L. 97-35,

§ 2208, 95 Stat. 839, approved on August 31, 1981. Only

twelve states — Alaska, Colorado, Florida, Louisiana,

Michigan, Minnesota, Montana, New Jersey, North

Dakota, Oregon, Washington, and Wisconsin - had

enacted offset provisions for Social Security disability

benefits between 1965, when they were first authorized to

do so, and 1981, when they were prohibited from doing

so. Colorado’s offset is a flat 50% of federal benefits.

Section 8-42-103(1)(a)(I), 3B C.R.S. (1993 Supp.).

REASONS FOR ISSUING THE WRIT

Judicial opinion is evenly divided about whether, in

the absence of express Congressional permission, the

states can reduce mandatory state benefits solely because

the recipient is also the beneficiary of a Social Security

award.

In McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507

(1980) (rehearing denied) and Raskin v. Moran, 684 F.2d

472 (7th Cir. 1982), the courts held that such offsets frus-

trated the will of Congress by indirectly reducing the

value of their federal benefits, and were invalid unless

expressly authorized by Congress. In Harris v. State

Department of Labor and Industries, 120 Wash.2d 461, 843

P.2d 1056 (1993) (reconsideration denied) (Johnson, J.,

dissenting) and in the case at bar, the courts reached

precisely the opposite result. They held that offsets were

valid unless prohibited by Congress.

McClanathan involved a challenge to Montana’s 1974

statute which required a 100% offset of Social Security

benefits against workers’ compensation disability bene-

fits. The court held that, “The statute is in total opposi-

tion to federal legislation, in that it deprives a claimant of

benefits provided by Social Security legislation.” Id. at

606 P.2d 512.

In Raskin, a Wisconsin statute reduced the salaries of

reserve judges over the age of 70 by the exact amount of

their Social Security retirement benefits. The Seventh Cir-

cuit held that even though this offset was not expressly

prohibited by any provision of the Social Security Act, it

was void because it frustrated the will of Congress and

was in conflict with 42 U.S.C. § 403(f)(3). Section 403(f)(3)

allowed wage earners over the age of 70 to receive full

Social Security benefits regardless of their contemporane-

ous earnings. The court specifically held that

[A]lthough the SSA does not expressly preclude

the application of state law which might inci-

dentally affect some aspect of social security, we

have no doubt that a state statute which effec-

tively denies benefits conferred by section 203

would be suspect under the suprernacy clause.

* * *

[A]lthough not directly preventing or impeding

plaintiffs’ receipt of social security benefits, Wis-

consin effectively deprives the recipient of those

federal benefits by reducing plaintiffs’ salaries

in an amount preciseiy equal to the federal ben-

efits. Indeed, we would put form over substance

if we held that only direct efforts to reduce,

divert or eliminate social security benefits were

in conflict with section 203(f)(3).

Id. at 676 and 677 (footnotes omitted) (emphasis in origi-

nal)

Harris dealt with a Washington law which reduced

workers’ compensation disability benefits by the disabled

worker’s Social Security retirement benefits. Even though

42 U.S.C. § 424a only allows state offsets for Social Secu-

rity disability benefits, and even though no statute grants

permission for the states to apply offsets against Social

Security survivors’ benefits, the Washington Supreme

Court found no pre-emption because it found no “clear

evidence of congressional intent to pre-empt state reverse

offsets of federal social security retirement benefits.” Id.

at 843 P.2d 1060. The court rejected the Seventh Circuit's

holding in Raskin and held that offsets are permissible

unless Congress specifically prohibits them.

In the case at bar, the Colorado Supreme Court fol-

lowed Harris and held simply that there was no evidence

that Congress had intended to forbid those offsets which

it did not expressly authorize, and that in the absence of

such a prohibition, they were not invalid. Id. at 870 P.2d

1213.

Pyke v. Department of Social Services, 182 Mich.App.

619, 453 N.W.2d 274 (1990) was cited with approval in

both Harris and Rosa. It also holds, in a slightly different

context, that reductions in state benefits based on the

receipt of Social Security benefits “has no effect on the

amount of SSI benefits [the claimant] receives” and that

absent an express prohibition the offsets were not pre-

empted. Id. at 453 .N.W.2d 278.

Although these cases do not all involve the same

sections of the Social Security Act, and are therefore

somewhat distinguishable, they all involve the same fun-

damental legal question: whether, in the absence of

expressed congressional consent for the states to reduce

state benefits by the amount of federal Social Security

benefits, the states may nonetheless presume that Con-

gress gave its consent to such reductions simply because

Congress did not expressly prohibit them.

This is an extremely important question for this

Court to answer because of the increasingly diverse array

of benefits under the Social Security Act, other federal

statutes, and state laws. Furthermore, as pressure

increases to reduce state budgets and to appease special

interest groups who must pay state mandated benefits

such as those under the workers’ compensation laws, a

painless and hence very tempting escape is for state

legislatures to pass the burden back to the federal gov-

ernment by announcing that state and federal benefits

overlap, and that state benefits to recipients of federal

benefits will therefore be reduced proportionately. See,

e.g., Raskin at 478: “While pleading its concern with

‘double dipping,’ Wisconsin must concede that it is

directly regulating judicial salaries based upon, inter alia,

the receipt of federal benefits.”

In a different context, this Court has held that the use

of otfsets is every bit as invidious an attack on federal

benefits as a direct writ of attachment:

. an offsetting award, however, would upset

the statutory balance and impair petitioner's

economic security just as surely as would a reg-

ular deduction from his benefit check. The harm

might well be greater.

Hisquierdo v. Hisquierdo, 439 U.S. 572, 588 (1979). And see,

Raskin, at 479: “This setoff is the financial equivalent of

not receiving their social security benefits and, therefore,

frustrates the will of Congress.” If the Seventh Circuit is

correct, and Hisquierdo suggests that it is, the states are

continuing to indirectly decrease the value of federal

benefits through the use of offsets against state benefits

when they have no legal right to do so. Whether they are

SPS AUN ioe ie BB Abate RSD LB NS Se aglhtal LNGREN ANTI Wet AO Mas rE tt

or are not allowed to use these offsets, however, the

Court should clarify the law for them, for Congress, and

for the millions of recipients of both state and federal

benefits.

CONCLUSION

For the foregoing reasons, this Court should issue a

writ of certiorari to review the January 31, 1994, judgment

and opinion rendered by the Supreme Court of Colorado

in this case and resolve a significant issue which concerns

the relationships between state and federal governments

and the public assistance benefits which they pay or

mandate others to pay.

Respectfully submitted,

*RatpH Ocpen, #13623

Witcox & Ocpen, P.C.

1120 Lincoln Street

Suite 1306

Denver, Colorado 80203

303-861-5501

SteveN U. MULLENS

Steven U. Muttens, P.C.

321 South Tejon Street

Colorado Springs, Colorado

80903

719-632-5001

Attorneys for the Petitioners

‘Counsel of Record

APPENDIX A

The Opinion of the Supreme Court of Colorado

SUPREME COURT OF COLORADO

NO. 92SC689 January 31, 1994

STEVEN L. ROSA (Deceased), CHRISTINA

ROSA, JOSHUA ROSA, AMBER ROSA,

and NATHANIEL ROSA, Petitioners,

WARNER ELECTRICAL CONTRACTING,

COLORADO COMPENSATION

INSURANCE AUTHORITY, and THE

INDUSTRIAL CLAIM APPEALS OFFICE

OF THE STATE OF COLORADO, Respondents.

Certiorari to the Colorado Court of Appeals

EN BANC JUDCMENT AFFIRMED

Wilcox & Ogden, P.C.

Ralph Ogden

Denver, Colorado

Steven U. Mullens, P.C.

Steven U. Mullens

Colorado Springs, Colorado

Attorneys for Petitioners

Michael J. Steiner

Denver, Colorado

Attorney for Respondents Warner Electrical Contract-

ing and Colorado Compensation Insurance Authority

Gale A. Norton, Attorney General

Raymond T. Slaughter, Chief Deputy Attorney General

Timothy M. Tymkovich, Solicitor General

Paul Farley, Deputy Attorney General

Mary Karen Maldonado, First Assistant Attorney General

John D. Baird, Assistant Attorney General

Denver, Colorado

Attorneys for Kespondent Industrial Ciaim Appeals

Oi fice

JUSTICE ERICKSON delivered the Opinion of the Court.

We granted certiorari to review Rosa v. Warner Electrical

Contracting, 849 P.2d 845 (Colo. App. 1992), which held that

section 8-50-103, 3B C.R.S. (1986) (now codified with changes

at section 8-42-114, 3B C.R.S. (1993 Supp.)), does not violate

the Supremacy Clause of the United States Constitution. We

agree with the court of appeals that section 8-50-103 is not

preempted by the Social Security Act.

Steven L. Rosa (Rosa) was electrocuted while working in

the course and scope of his employment. Rosa’s

employer, Warner Electrical Contracting Company, and

its insurer, Colorado Compensation Insurance Authority

(collectively the respondents), admitted liability for the

death. At the time of his death, Rosa’s wife and three

children (collectively the petitioners) were totally depen-

dent on him for support. Because Rosa was killed in the

course and scope of his employment, petitioners are eligi-

ble for workers’ compensation death benefits in the

amount of $1,385 per month. § 8-50-103, 3B C.R.S. (1986)

(now codified with changes at section 8-42-114, 3B C.R.S.

(1993 Supp.)).!

' Rosa’s average monthly wage was $2,078. Absent any

reduction for Social Security benefits, two-thirds of this amount,

Pursuant to 42 U.S.C. § 402(d) (1988), the Social Secu-

rity Administration awarded each of Rosa’s children

“children’s benefits” in the amount of $356 per month.?

Pursuant to 42 U.S.C. § 402(g) (1988), Rosa’s widow was

awarded $356 per month in “mother’s benefits.”

On September 14, 1987, an administrative law judge

(ALJ) for the Division of Labor entered an order regard-

ing the petitioners’ workers’ compensation benefits.

Because the petitioners received $1,424 per month in

social security survivors’ benefits, and because this

exceeded the $1,385 per month payable under the

Workers’ Compensation Act, the ALJ reduced the peti-

tioners’ workers’ compensation benefits to zero pursuant

to the offset provision in section 8-50-1053. This order was

not appealed. Subsequently, however, Rosa’s wife and

children retained counsel and objected to the offset. As a

result, the Director of the Division of Labor entered an

order reopening the claim to allow the petitioners to

address the constitutionality of the offset.

$1,385, would have been payable each month as death benefits

under the Workers’ Compensation Act.

2 Children’s benefits are paid to the surviving dependent

children of a deceased wage earner. 42 U.S.C. § 402(d)(1), 402(s)

(1988). The benefits are equal to seventy-five percent of the

deceased wage earner’s primary insurance amount. Id. at

§ 402(d)(2) (1988).

3 “Mother’s benefits” are payable only until the last depen-

dent child ceases to become eligible for children’s benefits. Like

children’s benefits, mother’s benefits are paid at the rate of

seventy-five percent of the deceased wage earner’s primary

insurance amount. 42 U.S.C. § 402(g)(2) (1988).

An ALJ conducted a hearing regarding the offset and

ruled that she did not have the authority to address

whether the offset was constitutional. Therefore, the AL]

allowed the offset to stand. The petitioners appealed the

ALJ’s order to the Industrial Claim Appeals Office

(ICAO) which affirmed the ALJ stating that the ICAO had

no jurisdiction to consider the constitutionality of the

statute.

The petitioners appealed the decision of the ICAO

and the court of appeals held that because 42 U.S.C.

§ 424a(d) (1988) permits a state to offset workers’ com-

pensation benefits, section 8-50-103 does not violate the

Supremacy Clause of the United States Constitution. We

granted certiorari to determine whether section 8-50-103

violates the Supremacy Clause. Both parties concede that

section 42 U.S.C. § 424a(d) relates to disability benefits

and does not apply to survivors’ benefits. Although we

affirm the result reached by the court of appeals, we

disagree with the court of appeals analysis.

The preemption doctrine is derived from the Suprem-

acy Clause in Article VI, Clause 2 of the United States

Constitution. There are several ways Congress can pre-

empt state law. Congress can expressly declare that states

are precluded from legislating in an area of law. When

Congress does not expressly preclude state legislation,

state legislation may be preempted as a result of implied

preemption or conflict preemption. See Pacific Gas & Elec.

Co. v. State Energy Resources Conservation & Dev. Comm'n.

461 U.S. 190, 203-204 (1983). The petitioners do not claim

that express language exists anywhere in the Social Secu-

rity Act which prohibits a state from offsetting social

security survivors’ benefits against workers’ compensa-

tion death benefits. Instead, the petitioners maintain that

Congress implicitly forbids states from offsetting social

security survivors’ benefits against workers’ compensa-

tion death benefits and that the Colorado law interferes

with, or contradicts, federal policy.

Preemption will be implied if the federal regulatory

scheme is so pervasive, or the federal interest is so domi-

nant, that state law must be assumed to be preempted.

Implied preemption is sometimes referred to as a con-

gressional intent to “occupy the field.” Metropolitan Life

Ins. Co. v. Massachusetts, 471 U.S. 724, 748 (1985). To

determine if a federal law implicitly preempts a state

statute, a court must ascertain Congress’ intent in enact-

ing the federal statute. Shaw v. Delta Air Lines, Inc., 463

U.S. 85, 95 (1983); see also CSX Transp., Inc. v. Easterwood,

113 S. Ct. 1732, 1737 (1993) (stating that courts must seek

“evidence of preemptive purposes . . . in the text and

structure of the statute”). Similarly, in determining

whether a state law conflicts with a federal law: “The

purpose of Congress is the ultimate touchstone.” Retail

Clerks Int'l Assoc., Local 1625 v. Schermerhorn, 375 U.S. 96,

100 (1963).

An analysis of federal preemption issues begins with

“the basic assumption that Congress did not intend to

displace state law.” Maryland v. Louisiana, 451 U.S. 725,

746 (1981). When Congress legislates “in a field which the

States have traditionally occupied” courts will not apply

preemption unless that is the “clear and manifest purpose

of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218,

230 (1947).

The petitioners contend that two provisions of the

Social Security Act, 42 U.S.C. § 402 and 42 U.S.C. § 407,

set forth a policy that is inconsistent with the Colorado

offset provision in section 8-50-103 and thus Congress

implicitly preempted the Colorado statute. Neither sec-

tion 402 nor section 407 indicates that Congress intended

to prohibit states from offsetting social security survivors’

benefits against workers’ compensation death benefits.

The petitioners assert that because Congress

addressed the interrelationship between social security

disability benefits and workers’ compensation disability

benefits, but was silent with regard to the interrelation-

ship between social security survivors’ benefits and

workers’ compensation death benefits, Congress intended

to forbid states from offsetting survivors’ benefits.4

Section 424a allows the federal government to offset

state workers’ compensation disability benefits against

social security disability benefits. 42 U.S.C. § 424a (1988).

Congress also provided that if a state offsets federal

social security benefits, the state offset prevails. Id. There-

fore, the federal government is allowed to offset benefits

4 The basis of this argument is that because Congress’

intent can be determined by applying ordinary rules of statu-

tory construction, CSX Transp., Inc. v. Easterwood, 113 S. Ct. 1732,

1737 (1993), the principle expressio unius est exclusio alterius is

determinative of the preemption issue.

unless the state enacts a reverse offset.° The petitioners

contend that because 42 U.S.C. § 402 does not address the

issue of federal or state offsets of benefits, Congress

intended to prohibit states from offsetting survivors’ ben-

efits.

The petitioners rely on Raskin v. Moran, 684 F.2d 472

(7th Cir. 1982), which addressed the issue of whether a

Wisconsin statute was preempted by the Social Security

Act. The state statute reduced the salaries of state reserve

judges by an amount equal to their federal social security

retirement benefits. The reserve judges contended that

the statute was preempted by 42 U.S.C. § 403(f)(3) (1988).

Section 403(f)(3) provides that any income earned after an

individual’s seventieth birthday will not be used to

reduce his social security benefits. The Seventh Circuit

held that the state statute was preempted by section

403(f)(3) and stated that although the state statutory off-

set did not directly affect the reserve judges’ right to

receive social security benefits, the effect of the offset was

“the financial equivalent” of such a deprivation, and it

represented “a clear frustration” of the purpose of the

federal statute. Raskin, 684 F.2d at 479-80. The court based

its decision on the “quite apparent underlying goals of

the federal statute.” Id. at 480.

Raskin held that section 403(f)(3) sets forth a clear

statement of Congress’ intent to prohibit offsetting social

security retirement benefits against earned income.

5 The federal government’s deduction of a state’s work-

men’s compensation disability benefits is referred to as an “ off-

set”; a state’s deduction of federal disability benefits is referred

to as a “reverse offset.”

Courts that have interpreted Raskin have required an

equally clear expression of Congress’ intent before pre-

empting a state statute. See Barnes v. District of Columbia,

611 F. Supp. 130, 134 (D. D.C. 1985) (holding that a

District of Columbia statute that reduced individuals’

salaries dollar for doilar by the amount of their military

pensions was not preempted because Congress did not

express a “clear goal of protecting federal benefits”);

Harris v. State Dep't of Labor & Industries, 843 P.2d 1056,

1060 (Wash. 1993) (declining to infer preemption from

Congress’ silence because “42 U.S.C. § 424a does not

contain clear evidence of congressional intent to preempt

state reverse offsets of federal social security retirement

benefits”); Pyke v. Dep't of Social Services, 453 N.W.2d 274,

277-78 (Mich. App. 1990) (distinguishing Raskin because

it was based on express statutory intent that federal

payments not affect the receipt of other payments).

Section 424a by its express terms is only applicable to

disability benefits. 42 U.S.C. § 424a (1988). The legislative

history regarding the enactment, repeal, and reenactment

of this section demonstrates that Congress was address-

ing the interrelation of disability programs. See Social

Security Amendments of 1956, Pub. L. No. 84-880, 70 Stat.

816 (1956) (enacting offset for workers’ compensation

disability benefits); Social Security Amendments of 1958,

Pub. L. No. 85-840, 72 Stat. 1013 (1958) (repealing the

disability offset provision); Pub L. No. 89-97, 79 Stat. 406

(reenacting offset provision). The Supreme Court has

declared: “It is self-evident that the offset reflected a

judgment by Congress that the workmen’s compensation

and disability insurance programs in certain instances

served a common purpose, and that the workmen’s com-

pensation programs should take precedence in the area of

overlap.” Richardson v. Belcher, 404 U.S. 78, 82 (1971).

The legislative history of section 424a indicates that

Congress was addressing only disability benefits and was

not attempting to outline a broader policy which would

affect other sections of the Social Security Act. Even if a

broad federal policy could be derived from section 424a,

that policy would be that a state offset takes precedence if

it overlaps with federal law, not that a state is prohibited

from offsetting federal benefits. A policy of allowing a

state offset to take precedence over a federal offset is not

evidence of Congress’ intent to preempt state offsets.

Thus, section 424a does not provide a sufficient expres-

sion of Congress’ intent to infer federal preemption. Sim-

ilarly, the section does not reflect a broad federal policy

which conflicts with the Colorado law. See New York Dep't

of Social Servs. v. Dublino, 413 U.S. 405 (1973) (stating that

the exercise of federal supremacy is not to be lightly

presumed).

The “anti-alienation” provision of the Social Security

Act provides that Social Security benefits shall not be

“subject to execution, levy, attachment, garnishment, or

other legal process ... .” 42 U.S.C. § 407(a) (1988). The

petitioners assert that Congress’ intent in enacting section

407 was to prevent social security benefits from being

diminished and that because Colorado’s offset statute

diminishes the value of benefits provided under federal

law, the statute is preempted.

10a

The petitioners rely on two cases to support their

position: Phillpot v. Essex County Welfare Board, 409 U.S.

413, 415 (1973) (stating that the welfare department's

attempt to attach a welfare recipient’s bank account vio-

lated section 407); Hisquierdo v. Hisquierdo, 439 U.S. 572,

590 (1979) (holding that the anti-alienation provision of

45 U.S.C. § 231m (1988) prohibits an individual from

receiving equivalent property to her husband’s Railroad

Retirement Benefits as part of a divorce). In both of these

cases, the Court applied anti-alienation provisions to pro-

hibit the use of a legal process to transfer social security

benefits to a third party. The petitioners maintain that

Colorado’s offset provision qualifies as a transfer and the

workers’ compensation insurer is the third party that

receives the benefit of the transfer.

In the context of offsetting social security benefits

against pensions, courts have rejected the expansion of

the anti-alienation provision. In Hurd v. Illinois Bell Tele-

phone Co., 136 F. Supp. 125, 141 (N.D. Ill. 1955), aff'd, 234

F.2d 942 (7th Cir.), cert. denied, 352 U.S. 918 (1956), the

plaintiffs contended that offsetting their social security

retirement benefits against their pension benefits would

cause “a corresponding shift in the economic benefit of

the Social Security payment, and therefore a transfer

under Sec. 407.” The Illinois court rejected this argument

and held that section 407 “was directed at the ordinary

type of transfer or assignment such as a wage assign-

ment” and that section 407 is “concerned only with guar-

anteeing that the worker would actually receive for his

own use the amount due him under the Social Security

Act.” Id. In reaching this result, the court examined the

lla

legislative history of the Social Security Act and con-

cluded that Congress was well aware that offsets would

be taken and did not intend to invalidate these offsets.

Similarly, in Lamb v. Connecticut General Life Insurance

Co., 643 F.2d 108 (3d Cir.), cert. denied, 454 U.S. 836 (1981),

the Third Circuit ruled that offsetting social security cost-

of-living increases against insurance benefits did not vio-

late section 407. The court distinguished Phillpot and

Hisquierdo because: “Both cases involved the transfer of

Social Security payments to a third person through legal

process. Here, Lamb’s legal right to receive her Social

Security payments and the increases is uncontested.” See

also Raskin, 684 F.2d at 476 n.7 (holding offsetting social

security benefits does not violate section 407); Poisson v.

Allstate Life Ins. Co., 640 F. Supp. 147 (D. Me. 1986) (same);

Lessard v. Metropolitan Life Ins. Co., 568 A.2d 491 (Me.

1989) (same); Pyke, 453 N.W.2d at 276 (Mich. App. 1990)

(same).

Section 407 is not applicable because it was designed

to prevent the use of traditional legal process to allow a

third party to receive another individual's social security

benefits. In this case, the petitioners will receive their

social security benefits. Section 8-50-103 does not prohibit

a worker from receiving social security benefits. The stat-

ute reduces workers’ compensation benefits because sup-

port of the worker’s dependents is being provided under

a federal program.

Any doubt about Congress’ intent to allow states to

offset social security survivors’ benefits against workers’

12a

compensation death benefits is resolved by Congress’

decision to create the National Commission on State

Workmen’s Compensation Laws.

In 1969, the United States Congress created the

National Commission on State Workmen’s Compensation

Laws (National Commission). Occupational Safety and

Health Act of 1970, Pub. L. No. 91-596, &4 Stat. 1590,

1616-1618 (1970). Congress charged the National Com-

mission with determining “the relationship between

workmen’s compensation on the one hand, and old-age,

disability, and survivors insurance . . . on the other

hand.” Id. at 1618.

In its report, the National Commission recommended

that states offset social security survivors’ benefits

against workers’ compensation death benefits. As a result

of the National Commission’s study, the Colorado Gen-

eral Assembly amended section 8-50-103 and, for the first

time, enacted a one-hundred percent social security offset

for death benefits. See L.E.L. Construction v. Goode,

92SC837, slip. op. at 6-7 (Colo. Jan. 31, 1994).

Congress’ decision to create a committee to study the

relationship between social security survivors’ benefits

and worker’s compensation death benefits belies the

assertion that Congress intended to preempt state law

when it enacted section 402. When Colorado amended

section 8-50-103 ard added the offset for social security

survivors’ benefits, it did so at the behest of a Commis-

sion designed to provide an alternative to federalization

of the workers’ compensation system.

13a

Ill

Section 8-50-103 is not preempted by the Social Secu-

rity Act. Therefore, although we disagree with the reason-

ing of the court of appeals, the court of appeals reached

the right result. Accordingly, we affirm.

APPENDIX B

The Order of the Supreme Court of

Colorado Which Denies Rehearing

oe . ee eS ee —

14a

SUPREME COURT, STATE OF COLORADO

CASE NO. 92SC689

CERTIORARI TO THE COLORADO COURT OF

APPEALS, 91CA1523

INDUSTRIAL CLAIM APPEALS OFFICE, W.C.

No. 3-868-948

ORDER OF COURT

STEVEN L. ROSA (Deceased), CHRISTINA ROSA,

JOSHUA ROSA, AMBER ROSA, AND

NATHANIEL ROSA,

Petitioners,

WARNER ELECTRICAL CONTRACTING, COLORADO

COMPENSATION INSURANCE AUTHORITY, and THE

INDUSTRIAL CLAIM APPEALS OFFICE OF THE STATE

OF COLORADO,

Respondents.

Upon consideration of the Petition for Rehearing

tiled in the above cause, and now being sufficiently

advised in the premises,

IT IS THIS DAY ORDERED that said Petition for

Rehearing shall be, and same hereby is, DENIED.

cc:

15a

BY THE COURT, EN BANC, FEBRUARY 28, 1994.

[SEAL]

Ralph Ogden

WILCOX & OGDEN, P.C.

1306 Chancery Building

1120 Lincoln Street

Denver, CO 80203

Steven U. Mullens

321 S. Tejon Street

Colorado Springs, CO 80903

Michael J. Steiner

720 S. Colorado Blvd., #100N

P.O. Box 241305

Denver, CO 80224

John D. Baird

Assistant Attorney General

Human Resources Section

Timothy M. Tymkovich

Solicitor General

Human Resources Section

Patrick H. Stanford, Clerk

Colorado Court of Appeals

Industrial Claim Appeals Office

The Chancery

1120 Lincoln St., Suite 704

Denver, CO 80203

APPENDIX C

The Opinion of the Colorado Court of Appeals

l6a

COLORADO COURT OF APPEALS September 10, 1992

No. 91CA1523

Steven L. Rosa (Deceased), Christina Rosa, Joshua Rosa,

Amber Rosa, and Nathaniel Rosa,

Petitioners,

Warner Electrical Contracting; Colorado Compensation

Insurance Authority; and The Industrial Claim Appeals

Office of the State of Colorado,

Respondents.

Review of Order from the Industrial Claim Appeals

Office

of the State of Colorado

WC No. 3-868-948

Division III ORDER AFFIRMED

Opinion by JUDGE SMITH

Criswell and Rothenberg, JJ., concur

Steven U. Mullens, P.C., Steven U. Mullens, Colorado

Springs, Colorado; Schur, Olive & Gavaldon, Robert

Schur, Fort Collins, Colorado, for Petitioners

Michael J. Steiner, Denver, Colorado, for Respondents

Warner Electrical Contracting and Colorado Compensa-

tion Insurance Authority

Gale A. Norton, Attorney General, Raymond T. Slaughter,

Chief Deputy Attorney General, Timothy M. Tymkovich,

Solicitor General, Jeanne Labuda, Assistant Attorney

General, Denver, Colorado, for Respondent Industrial

Claim Appeals Office

17a

Christina, Joshua, Amber, and Nathaniel Rosa (claim-

ants), who are dependents of the deceased employee,

Steven L. Rosa (decedent), challenge the constitutionality

of the workers’ compensation offset statute applied by

the Industrial Claim Appeals Panel in determining that

respondents, Warner Electrical Contracting (employer)

and Colorado Compensation Insurance Authority

(CCIA), are entitled to offset 100% of claimants’ workers’

compensation dependency benefits against their social

security death benefits. We uphold the constitutionality

of the workers’ compensation offset statute, §8-50-103,

C.R.S. (1986 Repl. Vol. 3B) (now codified with changes at

§8-42-114, C.R.S. (1992 Cum. Supp.)).

Respondents admitted liability for decedent's fatal

accident. The Administrative Law Judge (ALJ) entered an

initial order awarding benefits, and the claim was later

reopened to allow claimants an opportunity to address

the constitutionality of respondents’ offset. Both the AL!

and the Panel allowed the offset, based on the premise

that they were required to apply the statute as written.

It is undisputed that, based on decedent's average

weekly wage, claimants’ workers’ compensation benefits

amount to $319.73 per week. However, since claimants’

combined social security death benefits exceeded the

amount of workers’ compensation benefits awarded, the

entire amount of the workers’ compensation benefits was

offset by the social security benefits.

Claimants contend that the Colorado workers’ com-

pensation offset statute violates the supremacy clause

7" i niet , —

18a

because the offset mandated by §8-50-103 exceeds the

scope of such an offset permitted by the Social Security

Act. We are unpersuaded.

The Social Security Act, at 42 U.S.C.A. §424a(d)

(1991), permits states to offset workers’ compensation

benefits if the state statute “under which a periodic bene-

fit is payable provides for the reduction thereof when

anyone is entitled to benefits under this subchapter on

the basis of wages.” Section 8-50-103 provides that, when

periodic death benefits under the Social Security Act “are

payable to an individual and his dependents, the aggre-

gate benefits payable for death pursuant to this section

shall be reduced, but not below zero, by an amount equal

to one hundred percent of such periodic benefits.”

Claimants’ argument is founded on the assumption

that a conflict exists between these two statutes. They

contend that the federal requirement that a state offset be

computed “on the basis of wages” is not met by the state

offset because the latter 1s made without regard to wages.

Claimants note that, instead, the offset is made dollar for

dollar on the amount of the federal benefits, and they

argue, therefore, that it does not provide for reduction of

workers’ compensation benefits on the basis of wages.

Our comparison of the two statutes reveals no such

conflict. The federal statute allows the state offset if the

claimant is entitled to “benefits . . . on the basis of wages,”

(emphasis added) and not, as claimants urge, if the offset

is made on the basis of wages. Workers’ compensation

death benefits, by definition, are based upon two-thirds

of the deceased employee's average weekly wage. Section

19a

8-50-103. Accordingly, since claimants are entitled to ben-

efits on the basis of wages, the state offset does not

exceed the scope of the state offset permitted by the

Social Security Act, and there is no violation of the

supremacy clause.

While we acknowledge that another jurisdiction has

reached a different conclusion, see McClanathan v. Smith,

186 Mont. 56, 606 P.2d 507 (1979), we are unpersuaded by

the reasoning employed therein.

Claimants contend also that the state offset consti-

tutes an equal protection violation because benefits of

disabled workers are offset by only 50%, while benefits of

dependents of deceased workers are offset by 100%. We

disagree.

As a preliminary matter, we reject claimants’ related

contention that the statutory classification of disabled

vorkers and dependents of deceased workers is subject

to strict scrutiny.

Claimants argue that the offset is not gender-neutral

because the maiority of fatally injured workers are men,

with the result being that their surviving women spouses

are inordinately affected by the disparity in the percent-

age of offset. However, in support of this argument,

claimants cite statistics which are not of record. Thus, this

contention cannot be considered. Subsequent Injury Fund

v. Gallegos, 746 P.2d 71 (Colo. App. 1987); see Marinez v.

Industrial Commission, 746 P.2d 552 (Colo. 1987).

20a

Because there is no properly admitted evidence

showing a suspect classification created by the offset

provision, we must uphold the provision unless it creates

an arbitrary classification which lacks rational justifica-

tion. Boehm v. Industrial Commission, 738 P.2d 804 (Colo.

App. 1987). .

We begin with the presumption that the offset provi-

sion is valid. Meyer v. Industrial Commission, 644 P.2d 46

(Colo. App. 1981).

Meyer, supra, constitutes dispositive precedent hold-

ing that the 100% offset provision of §8-50-103 does not

constitute a denial of equal protection. There, we con-

cluded that the rational basis for the distinction between

the 50% and 100% offsets was that a disabled worker

incurs greater expense than the dependents of a deceased

worker. Hence, both offsets are rationally related to the

goal of preventing duplicative benefits.

Claimants urge us not to follow Meyer on the basis

that the recent repeal of the 100% offset, and in its stead,

the enactment of a 50% offset similar to the one for

disabled workers, is an indication that Meyer was

wrongly decided. However, our inquiry here is limited to

determining whether the offset furthers a legitimate state

purpose in a rational manner. Bellendir v. Kezer, 648 P.2d

645 (Colo. 1982).

A subsequent change in legislation is not necessarily

indicative of a lack of any rational basis; at best, it is an

indication that the General Assembly is struggling to

counter inequities or imperfection in the statutory

scheme. But the existence of such imperfections, although

they may result in inequalities, does not constitute a

2la

violation of constitutional magnitude so long as a rational

basis exists for the discrepancy in classification. Bellendir

v. Kezer, supra. We articulated that rational basis in Meyer

and decline to deviate from that decision.

Ill.

We also reject claimants’ final contention that the

offset provision is unconstitutional because it deprives

them of their property rights without due process.

Again, we follow Meyer, supra. In that case, we held

that there is no constitutionally protected property rights

in workers’ compensation benefits, and therefore,

§8-50-103 does not infringe upon a claimant’s right to due

process. Both the rational basis standard employed and

the result in Meyer are dispositive here.

Accordingly, §8-50-103 is without constitutional

defect, and the order of the Panel is affirmed.

JUDGE CRISWELL and JUDGE ROTHENBERG con-

cur.

APPENDIX D

Final Order of the Industrial Claim

Appeals Office of the State of Colorado

‘

. a

; -

22a

INDUSTRIAL CLAIM APPEALS OFFICE

1120 LINCOLN STREET - SUITE 704

DENVER, COLORADO 80203

W.C. 3-868-948

IN THE MATTER OF THE CLAIM

OF STEVEN L. ROSA (Deceased),

CHRISTINA ROSA, JOSHUA

ROSA, AMBER ROSA,

NATHANIEL ROSA, and STEVEN

ROSA,

oa FINAL ORDER

Claimants,

WARNER ELECTRICAL

CONTRACTING,

Employer,

and

COLORADO COMPENSATION

)

VS. )

)

INSURANCE AUTHORITY,

)

Insurer, Respondents.

The claimants seek review of the order of Adminis-

trative Law Judge Wheelock (ALJ) insofar as it permits

the respondents to offset against dependency benefits,

100% of the social security death benefits received by the

claimants. The claimants assert that section 8-42-114,

C.R.S. (1990 Cum. Supp.), which provides for this offset,

is unconstitutional. Like the ALJ, we have no jurisdiction

to consider the constitutionality of a statute. See Kint-

erknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d

721 (1971). We note, however, that the Court of Appeals

23a

has previously upheld the constitutionality of the prede-

cessor statute against equal protection challenges. See

Boehm v. Industrial Commission, 738 P.2d 804 (Colo. App.

1987); Meyer v. Industrial Commission, 644 P.2d 46 (Colo.

App. 1981).

IT IS THEREFORE ORDERED that the ALJ's order

dated April 22, 1991, is affirmed.

STEVEN L. ROSA

W.C. No. 3-868-948

Page 2

Dated August 27, 1991

FOR THE INDUSTRIAL

CLAIM APPEALS PANEL

/s/ David Cain

David Cain

/s/ Dona Halsey

Dona Halsey

/s/ Barbara Schuman

Barbara Schuman

NOTICE

The Order is final unless an action to modify or

vacate this Order is commenced in the Colorado Court of

Appeals, 2 East 14th Avenue, Denver, Colorado 80203, by

filing a petition to review with the court, with service of a

copy of the petition upon the Industrial Claim Appeals

Office and all other parties, within twenty (20) days after

the date this Order was mailed, pursuant to sections

8-43-301(10) and 307, C.R.S. (1990 Cum. Supp.).

24a

Copies of this decision were mailed August 27, 1991 to

the following parties:

Christina Rosa, 4026 Whittier Dr., Colorado Springs, CO

80910

Joshua L. Rosa, 4026 Whittier Dr., Colorado Springs, CO

80910

Amber & Nathaniel Rosa, 4026 Whittier Dr., Colorado

Springs, CO 80910

Warner Electrical Co. d/b/a WECCO Co., 319 N. Bonfoy

Ave., Colorado Springs, CO 80909

Colorado Compensation Insurance Authority, Attn: R.

Stanley, Esq. Interagency Mail

Steven U. Mullens, Esq., 321 S. Tejon, Colorado Springs,

CO 80903 (For the Claimant)

By: /s/ Illegible

APPENDIX E

Findings of Fact, Conclusions of Law

and Order of the Administrative Law

Judge of the Workmen’s Compensation

Section of the Colorado Division

of Labor and Employment

NR al a adnate sine tes ae eae ang ns ae ee

. ee ee ee Bd» mas ”

st thy age

a lt

i ileal osha eam

Licino ot Sitar Stetice |

Pm ge

a nae va en hela hy ap ity we

Ny» a ied el ae A

25a

STATE OF COLORADO

BEFORE THE DIVISION OF LABOR AND

EMPLOYMENT DIVISION OF LABOR WORKER'S

COMPENSATION SECTION

COLORADO COMPENSATION

INSURANCE FUND, S.A. No.

C87-23773

Insurer, Respondents.

IN THE MATTER OF THE CLAIM ) W.C. NO.

OF STEVEN L. ROSA (Deceased), ) 3-868-948

Claimant, ) FINDINGS OF

oy . FACT

5 CONCLUSIONS

WARNER ELECTRICAL ) OF LAW AND

CONTRACTING, ORDER

Employer, )

and )

)

Hearing was held in the above-captioned matter on

November 16, 1990, before Cullen A. Wheelock, Adminis-

trative Law Judge, in Colorado Springs. Claimant was

represented by Attorney, Steven U. Mullens. Respondents

were represented by Russell A. Stanley, Counsel, Colo-

rado Compensation Insurance Authority. The court repor-

ter was Nancy Dorland.

ISSUES

The issues designated for hearing were average

weekly wage; whether Respondents were entitled to

100% off-set for Social Security benefits provided to

Claimant’s widow and dependents in this case under

dha

8-42-114 C._R.S., formerly 8-50-103 C.R.S.; and the consti-

tutionality of the statutory provision that allows for the

100% off-set of Social Security fatal benefits when death

has occurred as the result of an on-the-job injury, as

opposed to 50% off-set of Social Security benefits paid for

disability benefits when the injury has been serious

enough to entitle the injured Claimant to Social Security

benefits when no death has resulted.

Counsel for the parties stipulated at hearing as fol-

lows:

1. At the time of Claimant's death on July 2, 1987,

he was earning $450.00 per week with no fringe benefits.

However, as reflected in the Employer's records, Claim-

ant received an average weekly wage of $520.00 per

week, or $13.00 per hour, through August 13, 1986. Begin-

ning August 20, 1986, Claimant's average weekly wage

was reduced to $450.00, or $11.25 per hour.

2. Claimant received certain fringe benefits until

January, 1987, and said fringe benefits were discontinued

after that date.

3. Because Claimant's dependents receive $1,424.00

per month in Social Security benefits, or $328.62 per

week, no workmen's compensation benefits are being

paid. Claimant’s widow feels that this 100% offset is

unconstitutional and that the 50% offset should be appli-

cable.

Based on the foregoing stipulations, materials of

record, and the Administrative Law Judge being fully

advised, does enter the following:

27a

FINDINGS OF FACT

I. Steven L. Rosa died on July 2, 1987, as a result of

electrocution suffered in the course of his employment

with Respondent-Employer, Warner Electrical Contract-

ing. Mr. Rosa’s date of birth was May 19, 1956.

2. At the time of Steven Rosa’s death, based on one

year’s income, it is found that Mr. Rosa’s average weekly

wage was $479.59 per week.

3. On the date of Steven L. Rosa’s death, he was

married to Christina Rosa. There were three (3) children

of this marriage. The childrens’ names and dates of birth

are: Joshus Louis, dob, September 10, 1977; Amber Maria,

dob July 12, 1979; and Nathaniel Kemp, dob, March 10,

1983.

4. Widow, Christina Rosa, and the three (3) Rosa

children receive $356.00 per month (initial rate) fatal ben-

efits from Social Security, on the account of Steven Rosa,

as a result of the fatal electrocution suffered by Steven

Rosa which forms the basis of this worker’s compensa-

tion claim.

Based on the foregoing, the Administrative Law

Judge, includes the following brief:

DISCUSSIONS OF CASE

1. Widow, Christina Rosa, on behalf of herself and

her infant children raises an issue as to the constitu-

tionality of the statutory scheme that allows for the

worker's compensation carrier to off-set worker’s com-

pensation death benefits by 10U% of the Social Security

28a

fatal benefits that would otherwise be subject to 50% of

the Social Security benefits in the event that Steven L.

Rosa had merely been seriously injured instead of killed

in this compensable accident. While this issue and the

question of the constitutionality of off-set in fatal com-

pensation claims has been previously addressed by the

Colorado Supreme Court, it may be that the Colorado

Supreme Court will want to review this matter again.

Nevertheless, the Administrative Law Judge is without

authority to address constitutional issues such as are

raised by Christina Rosa.

Wherefore, the Administrative Law Judge does enter

the following:

ORDER

1. The Administrative Law Judge does not have the

authority to rule on the constitutionality of 100% vs. 50%

off-set of Social Security benefits set forth in C.R.S.

8-42-114 C.R.S., formerly 8-50-113 C.R.S.

2. Effective July 3, 1987, Respondent-Carrier shall

pay benefits at the weekly rate of $319.73, less applicable

Social Security offsets to dependents Christina Rosa for

her use and for use of dependent children Joshua, Amber,

and Nathaniel Rosa.

3. Respondents shall pay 8% per annum interest on

all amounts of compensation not paid when due.

29a

4. All other issues not set out in this Order shall

remain open for future determination.

DATED this 22nd day of April , 1991.

DIVISION OF LABOR

WORKMEN’S COMPENSATION

SECTION FOR THE DIRECTOR

BY /s/ Cullen A. Wheelock

Cullen A. Wheelock

Administrative

Law Judge

The decision of the Administrative Law Judge is final

unless a Petition to Review this decision is filed within

twenty (20) days from the date this decision is mailed.

The Petition to Review should be filed with the Division

of Labor, 20 East Vermijo Street, Room 407, Colorado

Springs, Colorado 80903.

CERTIFICATE OF MAILING

I hereby certify that a true and correct copy of the

foregoing Findings Of Fact Conclusions Of Law And

Order was mailed to the following parties this 23rd day

of April , 1991, to:

Russell A. Stanley, Esq.

Colorado Compensation Insurance Authority

950 Broadway, Third Floor

Denver, CO 80203

30a

Wecco, Inc.

10145 Burgess Road

Colorado Springs, CO 80903-4149

Christina L. Rosa

4026 Whillard Drive

Colorado Springs, CO 80910

Steven U. Mullens

321 S. Tejon

Colorado Springs, CO 80903

/s/ Illegible

APPENDIX F

Partial Text of 42 U.S.C. § 402(d)

3la

(d) Child’s insurance benefits. (1) Every child (as

defined in section 216(e) [42 USCS § 416(e)]) of an indi-

vidual entitled to old-age or disability insurance benefits,

or of an individual who dies a fully or currently insured,

individual, if such child -

(A) has filed application for child’s insurance

benefits,

(B) at the time such application was filed was

unmarried and (i) either had not attained the

age of 18 or was a full-time elementary or sec-

ondary school student and had not attained the

age of 19, or (ii) is under a disability (as defined

in section 223(d) [42 USCS § 423(d)]) which

began before he attained the age of 22, and

(i) if such individual is living, at the time

such application was filed,

(ii) if such individual has died, at the

time of such death, or

(iii) if such individual had a period of

disability which continued until he became

entitled to old-age or disability insurance

benefits, or (if he has died) until the month

of his death, at the beginning of such

period of disability or at the time he

became entitled to such benefits,

shall be entitled to a child’s insurance benefit

for each month, beginning with -

(i) in the case of a child (as so defined) of

such an individual who has died, the first

month in which such child meets the crite-

ria specified in subparagraphs (A), (B), and

(C), or

32a

(ii) in the case of a child (as so defined) of

an individual entitled to an old age insur-

ance benefit or to a disability insurance

benefit, the first month throughout which

such child is a child (as so defined) and

meets the criteria specified in subpara-

graphs (B) and (C) (if in such month he

meets the criterion specified in subpara-

graph (A)), which is earlier, and ending

with the month preceding whichever of the

following first occurs -

(D) the month in wnich such child dies, or

marries,

(E) the month in which such child attains the

age of 18, but only if he (i) is not under a

disability (as so defined) at the time he attains

such age, and (ii) is not a full-time elementary or

secondary school student during any part of

such month,

(7) if such child was not under a disability (as

so defined) at the time he attained the age of 18,

the earlier of -

(i) the first month during no part of

which he is a full-time elementary or sec-

ondary school student, or

(ii) the month in which he attains the age

of 19, but only if he was not under a dis-

ability (as so defined) in such earlier

month; or

(G) if such child was under a disability (as so

defined) at the time he attained the age of 18 or

if he was not under a disability (as so defined)

at such time but was under a disability (as so

defined) at or prior to the time he attained (or

would attain) the age of 22 -

33a

(i) the termination month, subject to sec-

tion 223(e) [42 USCS § 423(e)] (and for

purposes of this subparagraph, the termi-

nation month for any individual shall be

the third month following the month in

which his disability ceases; except that, in

the case of an individual who has a period

of trial work which ends as determined by

application of section 222(c)(4)(A) [42

USCS § 422(c)(4)(A)], the termination

month shall be the earlier of (1) the third

month following the earliest month after

the end of such period of trial work with

respect to which such individual is deter-

mined to no longer be suffering from a

disabling physical or mental impairment,

or (II) the third month following the ear-

liest month in which such individual

engages or is determined able to engage in

substantial gainful activity, but in no event

earlier than the first month occurring after

the 36 months following such period of

trial work in which he engages or is deter-

mined able to engage in substantial gainful

activity),

or (if later) the earlier of —

(ii) the first month during no part of

which he is a full-time elementary or sec-

ondary school student, or

(ili) the month in which he attains the age

of 19,

but only if he was not under a disability (as so defined) in

such earlier nionth.

34a

Entitlement of any child to benefits under this subsection

on the basis of the wages and self-employment income of

an individual entitled to disability insurance benefits

shall also end with the month before the first month for

which such individual is not entitled to such benefits

unless such individual is, for such later month, entitled to

old-age insurance benefits or unless he dies in such

month. No payment under this paragraph may be made

to a child who would not meet the definition of disability

in section 223(d) [42 USCS § 423(d)] except for paragraph

(1)(B) thereof for any month in which he engages in

substantial gainful activity.

(2) Such child’s insurance benefit for each month shall,

if the individual on the basis of whose wages and self-

employment income the child is entitled to such benefit

has not died prior to the end of such month, be equal to

one-half of the primary insurance amount of such indi-

vidual for such month. Such child’s insurance benefit for

each month shall, if such individual has died in or prior

to such month, be equal to three-fourths of the primary

insurance amount of such individual.

[Paragraphs (3) through (9) contain detailed eligibility

criteria and are omitted because they have no bearing on

this case.]

APPENDIX G

Complete Text of 42 U.S.C. § 402(g)

35a

(g) Mother’s and father’s insurance benefits. (1) The

surviving spouse and every surviving divorced parent (as

defined in section 216(d) [42 USCS § 416(d)]) of an indi-

vidual who died a fully or currently insured individual, if

such surviving spouse or surviving divorced parent -

(A) is not married,

(B) is not entitled to a surviving spouse’s

insurance benefit,

fits, or is entitled to old-age insurance benefits

each of which is less than three-fourths of the

primary insurance amount of such individual,

(D) has filed application for mother’s or

father’s insurance benefits, or was entitled to a

Spouse's insurance benefit on the basis of the

wages and self-employment income of such

individual for the month preceding the month

in which such individual died,

(E) at the time oi filing such application has in

his or her care a child of such individual entitled

to a child’s insurance benefit, and

(F) in the case of a surviving divorced parent -

(i) the child referred to in subparagraph

(E) is his or her son, daughter, or legally

adopted child, and

(ii) the benefits referred to in such sub-

paragraph are payable on the basis of such

individual’s wages and self-employment

income,

shall (subject to subsection (s)) be entitled to a

mother’s or father’s insurance benefit for each

month, beginning with the first month in which

36a

he or she becomes so entitled to such insurance

benefits and ending with the month preceding

the first month in which any of the following

occurs: no child of such deceased individual is

entitled to a child's insurance benefit, such sur-

Viving spouse or surviving divorced parent

becomes entitled to an old-age insurance benefit

equal to or exceeding three-fourths of the pri-

mary insurance amount of such deceased indi-

vidual, he or she becomes entitled to a surviving

spouse’s insurance benefit, he or she remarries,

or he or she dies. Entitlement to such benefits

shall also end, in the case of a surviving

divorced parent, with the month immediately

preceding the first month in which no son,

daughter, or legally adopted child of such sur-

viving divorced parent is entitled to a child’s

insurance benefit on the basis of the wages and

self-employment income of such deceased indi-

vidual.

(2) Except as provided in paragraph (4) of this subsec-

tion, such mother’s or father’s insurance benefit for each

month shall be equal to three-fourths of the primary

insurance amount of such deceased individual.

(3) In the case of a surviving spouse or surviving

divorced parent who marries -

(A) an individual entitled to benefits under

this subsection or subsection (a), (b), (c), (e), (f),

or (h), or under section 223(a) [42 USCS

§ 423(a)], or

(B) an individual who has attained the age of

eighteen and is entitled to benefits under sub-

section (d),

37a

the entitlement of such surviving spouse or surviving

divorced parent to benefits under this subsection shall,

notwithstanding the provisions of paragraph (1) but sub-

ject to subsection (s), not be terminated by reason of such

marriage.

(4)(A) The amount of a mother’s or father’s insurance

benefit for each month (as determined after application of

the provisions of subsection (k)) shall be reduced (but not

below zero) by an amount equal to two-thirds of the

amount of any monthly periodic benefit payable to the

individual for such month which is based upon the indi-

vidual’s earnings while in the service of the Federal Gov-

ernment or any State (or political subdivision thereof, as

defined in section 218(b)(2) [42 USCS § 418(b)(2)]) if, on

the last day the individual was employed by such entity -

(i) such service did not constitute

“employment” as defined in section 210

[42 USCS § 410], or

(11) such service was being performed

while in the service of the Federal Govern-

ment, and constituted “employment” as so

defined solely by reason of -

(iii) (I) clause (ii) or (iii) of subpara-

graph (G) of section 210(a)(5) [42

USCS § 410(a)(5)], where the lump-

sum payment described in such

clause (ii) or the cessation of cover-

age described in such clause (iii)

(whichever is applicable) was

received or occurred on or after Janu-

ary 1, 1988, or

(II) an election to become subject to

the Federal Employees’ Retirement

38a

System provided in chapter 84 of title

5, United States Code (5 USCS

§§ 8401 et seq.], or the Foreign Ser-

vice Pension System provided in sub-

chapter II of chapter 8 of title I of the

Foreign Service Act of 1980 (22 USCS

§§ 4071 et seq.] made pursuant to law

after December 31, 1987,

unless subparagraph (B) applies.

The amount of the reduction in any benefit

under this subparagraph, if not a multiple of

$0.10, shall be rounded to the next higher multi-

ple of $0.10.

(B) Subparagraph (A)(ii) shall not apply with

respect to monthly periodic benefits based in

whole or in part on service which constituted

“employment” as defined in section 210 [42

USCS § 410] if such service was performed for at

least 60 months in the aggregate during the

period beginning January 1, 1988, and ending

with the close of the first calendar month as of

the end of which the individual is eligible for

benefits under this subsection and had made a

valid application for such benefits.

odic benefit which otherwise meets the require-

ments of subparagraph (A), but which is paid on

other than a monthly basis, shall be allocated on

a basis equivalent to a monthly benefit (as deter-

mined by the Secretary) and such equivalent

monthly benefit shall constitute a monthly peri-

odic benefit for purposes of subparagraph (A).

For purposes of this subparagraph, the term

“periodic benefit” includes a benefit payable in

39a

a lump sum if it is a commutation of or a substi-

tute for, periodic payments.

APPENDIX H

Complete Text of USC § 424a

40a

§ 424a. Reduction of disability benefits

(a) Conditions for reduction; computation. If

for any month prior to the month in which an

individual attains the age of 65 -

(1) such individual is entitled to benefits under

section 223 [42 USCS § 423], and

(2) such individual is entitled for such month

to -

(A) periodic benefits on account of his or her

total or partial disability (whether or not perma-

nent) under a workmen’s compensation law or

plan of the United States or a State, or

(B) periodic benefits on account of his or her

total or partial disability (whether or not perma-

nent) under any other law or pian of the United

States, a State, a political subdivision (as that

term is used in section 218(b)(2) [42 USCS

§ 418(b)(2)]), or an instrumentality of two or

more States (as that term is used in section

218(g) [42 USCS § 418(g)]), other than (i) bene-

fits payable under title 38, United States Code

[38 USCS §§ 101 et seq.], (ii) benefits payable

under a program of assistance which is based on

need, (iii) benefits based on service all or sub-

stantially all of which was included under an

agreement entered into by a State and the Secre-

tary under section 218 [42 USCS § 418], and (iv)

benefits under a law or plan of the United States

based on service all or substantially all of which

is employment as defined in section 210 [42

USCS § 410],

the total of his benefits under section 223 [42 USCS § 423]

for such month and of any benefits under section 202 [42

USCS § 402] for such month based on his wages and self-

4la

employment income shall be reduced (but not below

zero) by the amount by which the sum of -

(3) such total of benefits under sections 223

and 202 [42 USCS § 423, 402] for such month,

and

(4) such periodic benefits payable (and actu-

ally paid) for such month to such individual

under such laws or plans,

exceeds the higher of -

(5) 80 per centum of his “average current earn-

ings”, or

(6) the total of such individual’s disability

insurance benefits under section 223 [42 USCS

§ 423] for such months and of any monthly

insurance benefits under section 202 [42 USCS

§ 402] for such month based on his wages and

self-employment income, prior to reduction

under this section.

In no case shail the reduction in the total of such benefits

under sections 223 and 202 [42 USCS §§ 423, 402] for a

month (in a continuous period of months) reduce such

total below the sum of -

(7) the total of the benefits under sections 223

and 202 [42 USCS §§ 423, 402], after reduction

under this section, with respect to all persons

entitled to benefits on the basis of such individ-

ual’s wages and self-employment income for

such month which were determined for such

individual and such persons for the first month

for which reduction under this section was

made (or which would have been so determined

if all of them had been so entitled in such first

month), and

42a

(8) any such increase in such benefits with

respect to such individual and such persons,

before reduction under this section, which is

made effective for months after the first month

for which reduction under this section is made.

For purposes of clause (5), an individual’s average cur-

rent earnings means the largest of (A) the average

monthly wage (determined under section 215(b) [42

USCS § 415(b) as in effect prior to January 1979) used for

purposes of computing his benefits under section 223 [42

USCS § 423], (B) one sixtieth of the total of his wages and

self-employment income (computed without regard to the

limitations specified in section 209(a)(1) and 211 (b)(1) [42

USCS §§ 409(a)(1), 411(b)(1)]) for the five consecutive

calendar years after 1950 for which such wages and self-

employment income were highest, or (C) one twelfth of

the total of his wages and self-employment income (com-

puted without regard to the limitations specified in sec-

tions 209(a)(1) and 211(b)(1) [42 USCS §§ 409(a)(1)]

411(b)(1)}), for the calendar year in which he had the

highest such wages and income during the period consis-

ting of the calendar year in which he became disabled (as

defined in section 223(d) [42 USCS § 423(d)]) and the

fives years preceding that year.

(b) Reduction where benefits payable on

other than monthly basis. If any periodic bene-

fit for a total or partial disability under a law or

plan described in subsection (a)(2) is payable on

other than a monthly basis (excluding a benefit

payable as a lump sum except to the extent that

it is a commutation of, or a substitute for, peri-

odic payments), the reduction under this section

shall be made at such time or times and in such

amounts as the Secretary finds will approximate

43a

as nearly as practicable the reduction prescribed

by subsection (a).

provisions. Reduction of benefits under this sec-

tion shall be made after any reduction under

subsection (a) of section 203 [42 USCS § 403(a)],

but before deductions under such section and

under section 222(b) [42 USCS § 422(b)].

(d) Exception. The reduction of benefits

required by this section shall not be made if the

law or plan described in subsection (a)(2) under

which a periodic benefit is payable provides for

the reduction thereof when anyone is entitled to

benefits under this title [42 USCS §§ 401 et seq.]

on the basis of the ages and self-employment

income of an individual entitled to benefits

under section 223 [42 USCS § 423], and such law

or plan so provided on February 18, 1981.

(e) Conditions for payment. If it appears to

the Secretary that an individual may be eligible

for periodic benefits under law or plan which

would give rise to reduction under this section,

he may require, as a condition of certfication

for payment of any benefits under section 223

[42 USCS § 423] to any individual for any month

and of any benefits under section 202 [42 USCS

§ 402] for such month based on such :individ-

ual’s wages and self-employment income, that

such individual certify (i) whether he has filed

or intends to file any claim for such periodic

benefits, and (ii) if he has so filed, whether there

has been a decision on such claim. The Secretary

may, in the absence of evidence to the contrary,

rely upon such a certification by such individual

that he has not filed and does not intend to file

such a claim, or that he has so filed and no final

44a

decision thereon has been made, in certifying

benefits for payment pursuant to section 205(i)

[42 USCS § 405(i)].

(f) Redetermination of reduction. (1) In the

second calendar year after the year in which

reduction under this section in the total of an

individual’s benefits under section 223 [42 USCS

§ 423] and any benefits under section 202 [42

USCS § 402] based on his wages and self-

employment income was first required (in a con-

tinuous period of months), and in each third

year thereafter, the Secretary shall redetermine

the amount of such benefits which are still sub-

ject to reduction under this section; but such

redetermination shall not result in any decease

in the total amount of benefits payable under

this section in the total of an individual’s wages

and self-employment income. Such redeter-

mined benefit shall be determined as of, and

shall become effective with, the January follow-

ing the year in which such redetermination was

made.

(2) In making the redetermination required by

paragraph (1), the individual’s average current

earnings (as defined in subsection (a)) shall be

deemed to be the product of -

(A) his average current earnings as ini-

tially determined under subsection (a);

(B) the ratio of (i) the deemed average

total wages (as defined in section 209(k)(1)

[42 USCS § 409(k)(1)]) for the calendar year

before the year in which such redetermina-

tion is made to (ii)(I) the average of the

total wages (as defined in regulations of

the Secretary and computed without

45a

regard to the limitations specified in sec-

tion 209(a)(1) [42 USCS § 409(a)(1)]})

reported to the Secretary of the Treasury or

his delegate for calendar year 1977 or, if

later, the calendar year before the year in

which the reduction was first computed

(but not counting any reduction made in

benefits fer a previous period of disabil-

ity), if such calendar year is before 1991, or

(II) the deemed average total wages (as

defined in section 209(k)(1) [42 USCS

§ 409(k)(1)]) for the calendar year before

the year in which the reduction was first

computed (but not counting any reduction

made in benefits or a previous period of

disability), if such calendar year is after

1990; and

computed before 1978, the ratio of (i) the aver-

age of the taxable wages reported to the Secre-

tary for the first calendar quarter of 1977 to (ii)

the average of the taxable wages reported to the

Secretary for the first calendar quarter of the

calendar year before the year in which the

reduction was first computed (but not counting

any reduction made in benefits for a previous

period of disability).

Any amount determined under this paragraph

which is not a multiple of $1 shall be reduced to

the next lower multiple of $1.

(g) Proportionate reduction; application of

excess. Whenever a reduction in the total of

benefits for any month based on an individuals’

wages and self-employment income is made

46a

under this section, each benefit, except the dis-

ability insurance benefit, shall first be propor-

tionately decreased, and any excess of such

reduction. over the sum of all such benefits other

than the disability insurance benefit shall then

be applied to such disability insurance benefit.

(h) Furnishing of information. (1) Notwith-

standing any other provision of law, the head of

any Federal agency shall provide such informa-

tion within its possession as the Secretary may

require for purposes of making a timely deter-

mination of the amount of the reduction, if any,

required by this section in benefits payable

under this title [42 USCS §§ 401 et seq.], or

verifying other information necessary in carry-

ing out the provisions of this section.

(2) The Secretary is authorized to enter into

agreements with States, political subdivisions,

and other organizations that administer a law or

plan subject to the provisions of this section, in

order to obtain such information as he may

require to carry out the provisions of this sec-

tion.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.