Alaska Airlines, Inc. v. DarrowAlaska Airlines, Inc. v. Darrow
Kimberly D. Rodgers, Assistant Attorney General, Anchorage, and James E. Cantor, Acting Attorney General, Juneau, for Intervenor/Cross-Appellee State of Alaska.
CARNEY, Justice.
I. INTRODUCTION
An employee continued to work for over ten years after a job-related knee injury but had multiple surgeries on her injured knee. Over time, her employer made several permanent partial impairment payments, and she was eventually determined to be permanently and totally disabled because of the work injury. She began to receive Social Security disability at about the same time she was classified as permanently and totally disabled for workers’ compensation.
Her employer asked the Alaska Workers’ Compensation Board to allow two offsets to its payment of permanent total disability (PTD) compensation: one related to Social Security disability benefits and one related to the earlier permanent partial impairment (PPI) payments. The Board established a Social Security offset and permitted the employer to deduct the amount of previously paid PPI (adjusted for inflation).
The employee appealed to the Alaska Workers’ Compensation Appeals Commission, arguing that the Board had improperly applied one of its regulations in allowing the PPI offset and had incorrectly calculated the amount of the Social Security offset. She also brought a civil suit against the State challenging the validity of the regulation. The State intervened in the Commission appeal; the lawsuit was dismissed. The Commission reversed the Board’s calculation of the Social Security offset and affirmed the Board’s order permitting the PPI offset. The employer appealed the Commission’s Social Security offset decision to this court, and the employee cross-appealed the PPI offset. We affirm in part and reverse in part.
II. FACTS AND PROCEEDINGS
Pamela Darrow worked for Alaska Airlines at the Fairbanks airport in 1996. While working, she suffered a knee injury that required multiple surgeries and ultimately led to her becoming permanently and totally disabled. Darrow held other jobs in the years following the 1996 injury, and Alaska Airlines paid her temporary total disability (TTD) during times she was unable to work because of her injury. Alaska Airlines also made four payments for PPI for a total of $40,500.1 The last payment was made in 2005.
In 2012 the Social Security Administration decided Darrow met its standards for disability related to her knee, found her disabled as of December 2010, and determined that her first month of eligibility for benefits was June 2011. In January 2013 Darrow filed a written workers’ compensation claim for PTD benefits and an adjustment of her disability compensation rate.2 She was receiving TTD at the time and was in the reemployment process.3
Alaska Airlines initially objected to her reclassification, but later agreed she was permanently and totally disabled. It objected to the compensation rate adjustment and noted it might be entitled to an offset for Darrow’s Social Security disability (SSDI) under
During Darrow’s 2014 deposition Alaska Airlines learned that she had also been work-
The Board held a hearing in August 2014; because the contested issues were primarily legal, no witnesses testified. Darrow argued that, contrary to Alaska Airlines’ assertion,
Alaska Airlines argued first that it was entitled to an SSDI offset based on Darrow’s actual wages in 1996 rather than the amount it had agreed to as an adjusted wage under
Alaska Airlines acknowledged that
In its decision the Board adopted the approach used in Miller, but its application of Miller did not give Darrow the outcome she wanted.14 Instead, the Board’s result when it calculated the SSDI offset was the same as Alaska Airlines’ proposal. When it turned to the PPI offset, the Board referred to the legislative history of the 1988 amendments to the Act that replaced permanent partial disability with permanent partial impairment. It also quoted from Larson’s Workers’ Compensation Law to explain the differences between impairment and disability in compensation.15 The Board concluded that the legislature intended to change the partial impairment benefit under the Act to “a physical impairment benefit” rather than a disability benefit; it therefore concluded that payment of both PPI and PTD would not result in Darrow receiving duplicate compensation for the same loss. The Board did not think Alaska Airlines should be entitled to an offset for PPI according to statute, but it allowed the offset because it considered itself bound by its own regulation stating that “[f]or purposes of ...
Darrow appealed to the Commission, challenging the Board’s decision regarding both offsets. She also filed suit in the superior court challenging the Board’s regulation, evidently contending that it was not consistent with the statute.17 The director of the Division of Workers’ Compensation intervened in the Commission appeal for purposes of addressing the regulatory issue. The lawsuit was stayed and, according to the State, later dismissed.
The Commission reversed the Board’s calculation of the SSDI offset and, using a different legal analysis, decided the PPI payments could be recouped under a different part of the Act. The Commission calculated the same amount as Darrow for the SSDI offset, even though its analysis was somewhat different from hers.18 Under the Com-
Next the Commission decided that Darrow’s PPI did not now meet the terms of
Alaska Airlines appeals, and Darrow cross-appeals.
III. STANDARD OF REVIEW
In an appeal from the Alaska Workers’ Compensation Appeals Commission we review the Commission’s decision rather than the Board’s.22 We apply our independent judgment to questions of “statutory interpretation requiring the application and analysis of various canons of statutory construction.”23 “We exercise our independent judgment in determining the validity of an administrative regulation....”24 “Regulations are presumptively valid and will be upheld as long as they are ‘consistent with and reasonably necessary to implement the statutes authorizing [their] adoption.’”25
IV. DISCUSSION
A. The Commission Correctly Calculated The Social Security Disability Offset.
The main question presented by the lead appeal is the proper method of calculating an offset for Social Security disability (SSDI) payments when the amount of permanent total disability (PTD) paid is based on income calculated under
Alaska Airlines sought an offset under
for an injury for which a claim has been filed under this chapter, weekly disability benefits payable under this chapter shall be offset by an amount by which the sum of (1) weekly benefits to which the employee is entitled under
42 U.S.C. 401-433 , and (2) weekly disability benefits to which the employee would otherwise be entitled under this chapter, exceeds 80 percent of the employee’s average weekly wages at the time of injury.
Calculation of an offset thus depends on the following amounts: weekly SSDI, weekly workers’ compensation benefits, and “the employee’s average weekly wages at the time of injury.” The parties’ main dispute centered on the meaning of the phrase average weekly wages at the time of injury. Alaska Airlines argued that this phrase required using $668.98 as Darrow’s average weekly wage because that represented her wages in 1996, the time of her injury. Darrow, in contrast, contended that $1,390, the adjusted weekly wage to which the parties had agreed under
The Commission considered Shirley and the 1995 amendments to
In Shirley the employee asked us to interpret the phrase average weekly wages in
Alaska Airlines asserts that
Historically
The legislature amended
Alaska Airlines argues that our statement in Shirley that “[t]he general purpose of the bill under which
Alaska Statute 23.30.225(b) was enacted in 1977 as part of Senate Bill (S.B.) 131, but subsection
When S.B. 131 was initially introduced, the governor identified one of its general purposes as “making benefits more affordable to employers,”48 a purpose we noted in Shirley.49 While the House Labor and Management Committee anticipated that its bill would decrease workers’ compensation insurance premiums and thereby save employers money, those savings were to come from shifting costs to the federal government. The House measure was meant to take advantage of a then-existing “loophole” in federal law that permitted states to offset workers’ compensation payments with SSDI when an injured worker received both forms of compensation, thereby shifting part of the cost of supporting a disabled worker to the federal government.50 One witness told the committee that in “no case” would the proposed offset result in any decrease in payments to workers.51 This witness presented a report that had been prepared for the Municipality of Anchorage showing hypothetical examples in which an employer would generally pay less in workers’ compensation under the proposal.52 This legislative history is a stark contrast to the history we discussed in Louie, which showed the legislature expressly chose to lower benefits for some workers at the same time it increased benefits for others.53 Nothing in the legislative history of either the Senate or House proposals shows any intent to reduce benefits paid to injured workers; to the contrary, one argument in favor of the legislation was that it would give workers the benefit of the Social Security taxes they had paid.54
We have recognized that workers’ compensation must balance two competing concerns. Wages must be calculated “to arrive at a fair approximation of [a] claimant’s probable future earning capacity”55 while at the same time, benefits must not be too generous for fear that an injured worker will not have an incentive to return to work.56 The 1977 hearing testimony suggests that the offset legislation was meant to balance these goals: replacing enough income with enough money that an injured worker’s standard of living would not be dramatically reduced but keeping benefits low enough to provide an incentive to return to work.57 The federal Social Security offset provision had a similar pur-
Alaska Airlines also argues that we should consider
We agree with the Commission that the statutes can be harmonized; therefore the rule that specific provisions govern more general ones does not apply.61 When the offset provision was adopted, the average weekly wage under
Here Alaska Airlines’ construction of the statute results in Darrow getting less per week in combined workers’ compensation benefits and SSDI—$535.18—than she would get in workers’ compensation alone—$668.98—based upon the stipulated amount of $1,390 as her weekly wage. While the Commission’s interpretation does not give Alaska Airlines an offset as long as Darrow gets SSDI, the amount Darrow receives under the Commission’s analysis is still substantially less than the adjusted weekly wage the parties stipulated to. The Commission’s construction of the Act is consistent with both the purpose of keeping an employee’s benefits below wages and providing adequate compensation. We hold that the Commission correctly construed and applied
B. The Commission Erred In Allowing An Offset For PPI.
Darrow’s cross-appeal also presents an issue of statutory construction and requires us to examine the legislature’s use of the terms disability and impairment in the context of workers’ compensation. Alaska Statute 23.30.180(a) provides in part, “If a permanent partial disability award has been made before a permanent total disability determination, permanent total disability benefits must be reduced by the amount of the
Alaska Statute 23.30.190(a) sets out a formula for paying compensation “[i]n case of impairment partial in character but permanent in quality, and not resulting in permanent total disability.” To determine “the existence and degree of permanent impairment,”
Before 1988,
Relying principally on
Darrow argues that the Commission misinterpreted the Act by allowing Alaska Airlines to offset the PPI it had previously paid her against her PTD award. Her argument is based on statutory language:
Darrow points to a different statutory subsection,
Alaska Airlines asks us to affirm the Commission’s interpretation of the Act allowing it to recoup PPI under
The State supports the Commission’s interpretation of the statute, arguing that Darrow “is not entitled to PPI benefits for her knee injury because her impairment resulted in permanent total disability.” The State relies on the plain meaning of
As noted, the Commission’s decision relied solely on
Alaska Airlines asks us to ignore
As set out above,
In Rydwell v. Anchorage School District we considered the difference between disability and impairment in the context of reemployment benefits under
The language of
Alaska Statute 23.30.190(a) authorizes payment of PPI “[i]n case of impairment partial in character but permanent in quality, and not resulting in permanent total disability.” We apply common rules of grammar to construe statutory language.81 The statutory language and sentence structure suggest that the phrase and not resulting in permanent total disability was intended to limit PPI to workers whose disability did not fall under
The provision in subsection
Two distinct drafting errors are possible. The provision in subsection
2. Legislative history
The legislative history related to these statutory provisions yields few clues as to the legislature’s intent. The legislature received testimony and reports about the difference in the concepts of impairment and disability when it considered the change from permanent partial disability to permanent partial impairment.89 That legislative history shows some inconsistent use of the terms disability and impairment when referring to permanent partial compensation.90 The main reasons discussed for changing the permanent partial benefit from permanent partial disability to permanent partial impairment were concerns about fairness in benefit levels and litigation costs related to unscheduled benefits.91 Neither concern is particularly relevant to the issue before us.
Throughout the time the legislature considered the 1988 amendments to the Act, the language in
The State asks us to apply the rule that an agency’s longstanding interpretation of a statute should be given deference. But in this case the Commission’s construction of the statute does not rely on or support the Board’s regulation, which appears to be the longstanding construction to which the State refers. This difference in construing the statutes suggests that the Board did not interpret the Act as the Commission did.98 Had the Board interpreted
C. 8 AAC 45.134(c) Is Invalid Because It Is Inconsistent With The Act.
Darrow’s cross-appeal asks us to consider the validity of
Alaska Statute 23.30.129(a) gives a party the right to appeal a decision by the Commission to this court rather than the superior court. This is precisely the posture of the case before us; we therefore have jurisdiction. The question of the regulation’s validity may not technically be ripe for review because the Commission correctly decided it lacked jurisdiction to determine a regulation’s validity and, according to the State, the superior court case was dismissed.106 But the parties briefed the merits of this issue before the Commission and this court, and our construction of the relevant statutes leaves no question as to the validity of
Because Darrow does not challenge whether the regulation was properly promulgated, we consider only “whether the regulation is consistent with and reasonably necessary to carry out the purposes of the statutory provisions” and “whether the regulation is reasonable and not arbitrary.”107 “We exercise our independent judgment in determining the validity of an administrative regulation....”108 A regulation that “differs substantively from the clear language of the statute” is invalid.109 Here
V. CONCLUSION
We AFFIRM that part of the Commission’s decision reversing the Board’s calculation of the Social Security disability offset and REVERSE that part of the Commission’s decision permitting an offset for permanent partial impairment benefits. We therefore REMAND this matter to the Commission for further proceedings consistent with this opinion.