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Statutory Cap Does Not Apply Until the Act Permits Respondent to Terminate Temporary Disability Benefits

Posted by: Clay Thornton, Esq.

In United Airlines v. Industrial Claim Appeals Office , 2013 COA 48, 12CA1443 (COCA) (March 28, 2013), the claimant suffered an admitted injury and the employer admitted for temporary disability benefits. Temporary disability benefits were ended when the claimant was released to return to work. At this point in time, the claimant had received approximately $100,000.00 in temporary disability benefits. Subsequently, the claimant was put at MMI and went to a DIME. The respondent admitted to a 5% whole person rating pursuant to the DIME. In its final admission, respondent asserted an overpayment of $25,000.00 to account for benefits paid in excess of the applicable $75,000.00 cap on combined temporary and permanent disability benefits. The claimant objected to the overpayment, and the ALJ ultimately agreed with the claimant that the statutory cap did not apply to create an overpayment because the claimant was entitled to all temporary disability payments at the time she received them. The ICAO and Court of Appeals both affirmed the ALJ.

Primarily, the court stated that an overpayment can exist only for “money received” by a claimant that exceeds “the amount that should have been paid.” C.R.S. 8-40-201(15.5). Because the Act mandated that respondent continue paying temporary disability benefits until the claimant was released to return to work, all payments up to that date represented “the amount that should have been paid.” Accordingly, even if a claimant is ultimately not entitled to money paid by the respondent, the claimant will be permitted to keep that money so long as payment was legally required when made. Furthermore, the court reasoned that because the statutory cap is for “combined” temporary and permanent disability benefits, the cap cannot apply prior to permanent disability becoming ripe. In this case, all temporary disability payments were owing to the claimant when they were made, and all payments were made prior to permanent disability becoming ripe.

The court also rejected the respondent’s public policy argument that permitting claimants to keep temporary disability benefits in excess of the statutory cap encourages malingering. The court noted that an employer’s right to select the treating physician in the first instance leaves little opportunity for a claimant to malinger. Furthermore, the court determined that any risk of malingering is outweighed by the risk of claimants seeking to return to work prematurely in order to avoid being stuck with an overpayment. The court also rejected respondent’s constitutional challenges.

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