Attorney General's Opinion
Attorney General Richard Blumenthal
April 9, 1996
Christopher B. Burnham
Office of the Treasurer
55 Elm Street
Hartford, CT 06106-1773
Dear Treasurer Burnham:
This is in response to your letter dated March 7, 1996, wherein you requested a legal opinion from this office concerning the computation of cost of living adjustments (COLAs) for injured workers pursuant to the provisions of the Connecticut Workers' Compensation Act as it may be affected by recent decisions of the Workers' Compensation Review Board (CRB). Your letter cites the recent CRB decision of Paulina Wolfe v. JAB Enterprises. Inc., Case No. 1875 CRB-3-93-10 (June 5, 1995), and the decision of Commissioner George Waldron in Karyn Gil v. Courthouse One as being the source of confusion in this area. Specifically, you ask for clarification on what method should be applied to the calculation of COLAs by the Second Injury Fund during the period of time until the legislature enacts new legislation. In effect, there are two issues which must be decided: 1) under what circumstances do you apply the percentage calculation versus the flat rate calculation; and 2) in cases where you do apply the percentage calculation, do you apply it to the base rate plus prior COLAs.
COLAs became a part of Connecticut's Workers' Compensation Act in 1969, upon the passage of P.A. 69-696. Codified as § 31-307a of the general statutes, this act provided for annual COLAs for claimants receiving temporary total benefits, based on the dollar difference between the maximum compensation rate at the time of injury and the maximum compensation rate at the time of the calculation. That dollar difference was then added to the claimants base compensation rate at the time of the injury. § 31-307a remained basically the same until P.A. 91-339 was enacted. Effective October 1, 1991, this Act amended section 31-307a to change the method of calculation of COLAs from the flat dollar difference to a percentage difference. The Act required that the percentage difference between the maximum compensation rate at the time of the injury and the maximum compensation rate at the time of the calculation be multiplied times the base compensation rate at the time of the injury. Your question involves the issue of how these two procedures are to be applied.
In Wolfe, the claimant was injured in January of 1990 and had a base compensation rate of $303.09 per week. On October 1, 1990, she received a $26.00 COLA pursuant to the statutory formula in place as of that date. The issue in Wolfe was the amount of the COLA that the claimant should receive as of October 1, 1991, and thereafter. The commissioner calculated the 1991 COLA, which pursuant to the new language in § 31-307a was to be based on the percentage difference between the maximum compensation rate at the time of the injury (January 1990) and the maximum compensation rate at the time of the COLA determination (October 1991), as 2.5% of the claimants base compensation rate at the time of the injury (in January of 1990), plus the $26 00 1990 COLA. This made the computation a cumulative one, ie., the COLA was compounded. In other words, the 1990 COLA became a part of the base compensation rate for the 1991 COLA. Upon review, the CRB reversed the commissioner, interpreting § 31-307a of the General Statutes as "increasing the base compensation rate at the time of the injury by the percentage of the increase in the maximum compensation rate." Wolfe, p.3. The Board went on to say that "[t]he statutory formula does not contemplate an increase based in part on prior COLAs, as those take place after the time of the injury. This language is unambiguous, and we do not have discretion to construe it otherwise." According to the CRB in Wolfe, therefore, after October 1, 1991 1) all COLAs are to be calculated according to the percentage calculation method required by § 31-307a and 2) such calculations shall not consider prior COLAs. Despite the CRB's statement to the contrary, a review of the statutes reveals that there is some ambiguity in this area.(Endnote 1).
In regard to the CRB's first holding in Wolfe, 31-307a, read by itself, supports the CRB's reasoning that after October 1, 1991 all COLAs are to be based on the percentage method rather than the flat dollar calculation. It states:
The language in § 31-307a, standing alone, seems clear. For injuries that occur on or after October 1, 1969, and before July 1, 1993, it requires that the COLA be based on the percentage of the increase in the maximum compensation rate determined under § 31-309 from the date of injury to the October first in question. However, despite the apparent clarity of § 31-307a, when § 31-309 is consulted to determine the maximum compensation rate, the requirement that the percentage method be used to calculate all COLAs on or after October 1, 1991, becomes less certain.
Section 31-309 determines the maximum weekly compensation rate under the Workers' Compensation Act. It also states that "the weekly compensation received by an injured employee whose injury occurred before July 1, 1993, shall be computed according to the provisions of law in effect at the time of his injury." Thus, even though the method of computing the maximum compensation rate, as set by § 31-309, may change periodically, these changes will have no effect on the employee who was injured prior to those changes. His or her rate will still be calculated in accordance with the law as of the date of injury. This is consistent with the concept that substantive changes in the law are generally prospective in nature. "[N]ew workers' compensation legislation affecting the rights and obligations as between the parties and not specifying otherwise applies only to those persons who received injuries after the legislation became effective, and not to those injured previously." Iacomacci v. Trumbull, 209 Conn. 219, 222, 550 A.2d 640 (1980)
Similarly, COLAs are calculated based on the maximum compensation rate in effect on the date of the injury. Since COLAs are included in the statutory definition of "compensation" in § 31-275(4) as adjustments required by the Chapter, it is arguable that COLAs should also be calculated in accordance with the law in effect at the time of the injury. That may require that COLAs for claimants injured before October 1, 1991, would continue to be calculated on a flat dollar basis, and that only COLAs for claimants injured on or after October 1, 1991, and before July 1, 1993, would be calculated on a percentage basis, contrary to the holding in Wolfe. The legislative history for Public Act 91-339, § 27 of which amended § 31-307a to require that COLAs be calculated on a percentage basis rather than a flat dollar basis, supports this interpretation. (Endnote 2).
In regard to the second holding in Wolfe, that prior COLAs cannot be accounted for in the COLA computation, the law is also uncertain. In fact, the Chairman of the Workers' Compensation Commission has issued several memos to commissioners, insurance carriers and others that appear to contradict Wolfe. For example, a memo issued by the Chairman on February 9, 1996 to "All Commissioners, Fiscal Administrative Officers, Self-Insureds, Insurance Carriers, Attorneys and Unions" regarding "Cost of Living Adjustments - Recalculation of Benefits" states that "anyone entitled to a COLA for an injury occurring before October 1, 1991 shall continue to receive all COLAs accrued by that date. All COLA determinations after 1991 shall be calculated on the basis of the percentage increase set out in P.A. 91-339 § 27." This is in direct conflict with the CRB decision in which held that in the October 1991, calculation of a COLA for a pre- 1991 injury prior COLAs were to be disregarded.
Additionally, the decision by Commissioner Waldron that you mention in your request for an opinion, Karyn Gil v. Courthouse One, does not comport with either the law as defined by the CRB in Wolfe or with the language in § 31-309. The claimant in Gil was injured in 1983, suffering permanent injuries to her lungs. At the time of her injury, the claimants base compensation rate was $93.35. After receiving COLAs for each year until 1991, her benefits totaled $466.06. Using the formula mandated by the Wolfe decision, the Second Injury Fund calculated her COLA by taking the current maximum rate of $584.00 and dividing it by the maximum rate at the time of her injury, $345.00, and multiplying the resultant percentage times the claimants base compensation rate of $93.35. The result equaled $316.04, a reduction from the amount the claimant had been receiving. The commissioner found that the percentage increase method of calculating COLAs under § 31-307 applied only to the period of time from October 1, 1991, and that the claimant is entitled to continue to receive all of the annual COLAs equal to the dollar amount increase in the maximum compensation rate for the period from 1984 through September 30, 1991. The commissioner held that "the method of calculating the cost of living adjustments with the percentage increase formula should be applied from October 1, 1991 only." Commissioner's Finding On Cost Of Living Adjustments, February 29, 1996, paragraph F. This holding conflicts directly with the holding in Wolfe that the COLAs should be calculated "solely using the statutory method in place at the time each calculation is made." Wolfe, p. 4. It also conflicts directly with § 31-309. which states that the law in effect on the date of injury controls. If § 31-309 is found to be the operative section, then under one interpretation of that statute, Ms. Gil's COLAs should continue to be calculated on a flat rate basis, since that is what the law required on the date of her injury.
As you know, Gil has been appealed by this office on behalf of the Second Injury Fund. The Compensation Review Board has decided to expedite this appeal. Consequently, our brief was filed on March 25, 1996, and the case will be argued on April 19, 1996. The Board has expedited this on its own, and this office expects a decision relatively quickly. As the Compensation Review Board is the state agency with primary jurisdiction to determine workers' compensation issues in Connecticut, it is the body that should make this determination. See Levanti v. Dow Chemical Co., 218 Conn. 9, 15-16, 587 A.2d 1023 (1991), where the Court stated that the interpretation of the statutes by the CRB "warrants respect as the considered judgment of the governmental agency vested with primary authority for enforcing our workers' compensation statutes ......"
In conclusion, in response to your request, the Second Injury Fund should continue to calculate COLAs using whatever methodology it has been using since the CRB decision in the Paulina Wolfe case. It is also our advice that you continue to pursue the appeal of the Karyn Gil case in the CRB. The CRB can then decide to clarify its holding in Wolfe, or decide that Wolfe was incorrect.
Very truly yours,
William J. McCullough
Assistant Attorney General