MAURICE J. PEPERA, 
Employee, 
Applicant
v. 
GENERAL CONCRETE CO INC,
Employer,
and 
AMERICAN HOME ASSURANCE,
Insurer,
Defendant(s).

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FINAL
DECISION AND ORDER
AWCB Case No. 199620147
AWCB Decision No. 99-0234 
Filed in Anchorage, Alaska
November 17, 1999

We heard the employee’s petition for a compensation rate adjustment and attorney fees and costs as well as the employer’s petition for a social security offset in Anchorage, Alaska on November 3, 1999. Attorney Talis Colberg represents the employee. Attorney Robin Gabbert represents the employer and insurer. We closed the record at the conclusion of the hearing.

1. Is the employee entitled to a compensation rate adjustment pursuant to AS 23.30.220(a)(10)?
2. Is the employer entitled to an offset of the employee’s weekly permanent total disability (PTD) compensation rate under AS 23.30.225(b) based upon his receipt of Social Security Administration (SSA) disability benefits?
3. Is the employee entitled to attorney fees and legal costs under AS 23.30.145?

The employee suffered severe injuries, including traumatic brain injury and neck, back and left knee injuries, while working for the employer on September 25, 1996. Specifically, scaffolding holding two men fell on him. The employer accepted the injury as compensable, paying medical benefits and temporary total disability (TTD) benefits. The employer then recharacterized the employee’s time loss benefits to permanent partial impairment (PPI) benefits effective December 18, 1997 based upon a PPI rating of 25% by the employee’s treating physiatrist, Dr. Levine.¹ On April 9, 1998 Dr. Levine reported that the employee was permanently and totally disabled, and the employer began paying PTD benefits at a weekly rate of $110.00 based upon gross weekly earnings (GWE) of $88.70.² At the hearing, adjuster Molly Murphy testified that she calculated the employee’s gross weekly earnings by applying the statutory formula pertaining to temporary workers.³

Royce Rock, business manager for the United Brotherhood of Carpenters and Joiners of America, Local Union No. 1281 ("union"), stated in a letter dated March 31, 1998 that the employee was working a "short call" for General Concrete, a job lasting ten days or less, on the date he was injured.

On May 12, 1998, the employee filed an Amended Workers’ Compensation Claim to change his compensation rate change from $110.00 to $582.64 per week, retroactive to the beginning of TTD payments on September 26, 1996 through the date of reclassification and continuing.

On January 25, 1999, the employee was awarded Social Security Disability benefits retroactive to May of 1997 with an initial entitlement of $982.00 per month.⁴

In a petition dated April 5, 1999, the employer sought an offset of the employee’s weekly PTD compensation rate under AS 23.30.225(b) based on the employee’s receipt of SSA disability benefits.

As a result of the SSA award, the employer recalculated the employee’s weekly compensation rate at $82.19 per week and further reduced that by 20% under AS 23.30.155(j) for claimed past overpayments. As such, at the time of the hearing, the employee was receiving $68.95 per week in PTD benefits. The employer calculated a proposed compensation rate of -$155.66 per week based upon the social security offset. In his legal brief and at the hearing, the employee argued that the calculated compensation rate of $82.19 does not fairly reflect the employee’s earnings during the period of disability and requested that the board adjust his compensation rate pursuant to AS 23.30.220(a)(10).⁵

The employee submitted a copy of a report by Charlene Renz, Employee Benefits, Southern Alaska Carpenters Trust Funds⁶ listing the hours worked by seven anonymous co-workers of the employee at the union from 1986 through 1998. These seven co-workers were working with the employee at the same job site in 1996 when he was injured.⁷ The employee claimed in his brief that the number of hours worked by his co-workers in 1997 and 1998 accurately reflects his potential earnings had he not been injured, and, therefore, his compensation rate should be adjusted accordingly.

Royce Rock testified at his deposition that 1996 through 1999 were good years for construction, but that it is up to an individual member of the union whether or not to take a job that is available.⁸ Ms. Renz testified at the hearing that there was a lack of work in the 1980’s but that there was a big influx in construction work in 1994 or 1995 and continuing.

The employee submitted a letter from Royce Rock stating that at the time of his injury he was earning $25.05 per hour.⁹ The employee argued that a compensation rate of $582.64 per week based upon forty hours of non-overtime work ($25.05 x 40 = $1,002.00 actual average weekly wage) is the proper and fair rate to apply to him. Further, the employee argued that it is this $582.64 compensation rate by which the Social Security offset should be applied.

The employer argued in their brief and at the hearing that the employee’s GWE was properly calculated based upon total wages in 1995 of $4,435.00 and using the statutory formula for temporary workers. The employee testified at his deposition that any other earnings in 1995 would have been reflected in his income tax records.¹⁰ The employee went on to testify at his deposition:

The employer submitted a report from Charlene Renz dated July 26, 1999, outlining the hours the employee worked for the union from 1986 through 1996. The report indicates the following hours for the employee:

1986 - 25 hours 1991 - 0 hours 1996 – 134 hours

1987 - 262 hours 1992 - 575 hours

1988 - 21 hours 1993 - 168 hours

1989 - 136 hours 1994 - 0 hours

1990 - 0 hours 1995 - 176 hours

Ms. Renz testified at the hearing that the employee had vested with the union in part due to credits he earned in his years with the union prior to 1986. The employee argued that the approximate ten year period preceding his injury is not an accurate reflection of his overall work history with the union, which goes back to 1970 in Alaska and the early 1960’s in Nevada. The employee submitted a report by Ms. Renz depicting the hours the employee worked in Alaska and Nevada since 1961.¹²

The employer argued that Ms. Renz’ report demonstrates that in the approximate ten years prior to his injury, the employee only worked sporadically with no earnings in 1994 and few in 1995. Moreover, the employer argued there is no evidence that the employee had any other income during that period. The employer submitted the employee’s documented earnings from 1987 through 1996, showing an annual average income of $6,572.35, making his average weekly earnings during that period $126.39.¹³

The employer argued that the GWE rate determined by the statutory formula fairly reflects the employee’s earnings during the period of disability. The employer argued that, given the employee’s sporadic work history in the approximate ten years prior to his injury, reviewing the employee’s work history pursuant to AS 23.30.220(a)(10) only confirms that the GWE rate fairly reflects his earnings during the period of disability.

Royce Rock testified at his deposition on July 9, 1999 that neither $88.70 nor $126.39 per week is an accurate reflection of a union member’s average weekly earnings.¹⁴ Mr. Rock also testified that the average number of hours worked by a union member is 1000 – 1500 per year.¹⁵

Ms. Renz testified at the hearing that the work histories of the seven anonymous co-workers did not really represent an accurate sampling of union members during the years 1986 through 1996 because two of the members did not start until 1993 and two others did not start until 1995. Moreover, Ms. Renz testified on cross-examination that the employee’s work history is not truly similar to the work histories of the seven co-workers in her report. She testified the employee only worked more that 200 hours in two of the years between 1986 and 1996, while the seven co-employees rarely worked under 200 hours in the years they worked.

The employee testified he is also receiving $498.00 per month in early retirement benefits from the union.¹⁶ The employee testified at the hearing that he is currently living in a house that he started building before his injury and that prior to his injury he was living in a lean-to.

Adjuster Murphy testified that she requested a reemployment benefits evaluation, but the issue of reemployment benefits was suspended for a period due to the employee’s lack of interest. Ms. Murphy testified that the reemployment benefits option was always open to the employee and never precluded from him. She further testified that the reemployment benefits process continued after the appearance by Attorney Talis Colberg.

Ms. Murphy testified that there was never a dispute regarding the payment of any benefits and that the employee was switched to PTD when Dr. Levine, the employee’s treating physician, issued his April 9, 1998 report. Ms. Murphy testified that the employer never obtained an Employer Independent Medical Examination and awarded PTD benefits based upon Dr. Levine’s report without question. Ms. Murphy testified that there was never a controversion in this case and that the activity checks on, or surveillance of, the employee were standard and done to provide continuing evidence of PTD to the insurer.

The employee submitted a Supplemental Affidavit of Attorney Fees and Costs dated November 2, 1999 requesting attorney fees of $8,927.01 (64.2 hours x $135.00/hour + $260.01 in sales tax) and costs of $55.00.

I. COMPENSATION RATE ADJUSTMENT

At the time of the employee’s injury, AS 23.30.220(a) provided in part:

In addition, at the time of the injury, AS 23.30.220(a) provided in part:

We find, based upon the testimony of the employee and adjuster Murphy, and the medical evidence submitted by the parties, the employee suffered an industrial accident on September 25, 1996. We find that the employer accepted that the employee was, and continues to be, permanently totally disabled under AS 23.30.180 on April 9, 1998.

We find that there is no dispute that the employee was a temporary employee at the time he was injured, and that such is supported by the employee’s own testimony and by a preponderance of the evidence in the record. Based on this evidence, we find the calculation of the employee’s gross weekly earnings was properly determined under AS 23.30.220(a)(6).

We next consider the compensation rate calculated by the employer. Because the employee is entitled to PTD compensation benefits under AS 23.30.180, we find subsection .220(a)(10) requires us to determine whether his GWE rate calculated under subsection .220(a)(6) "fairly reflects the employee’s earnings during the period of disability." We find it does. We make this finding based on the following:

We find that the employee’s GWE calculated under subsection .220(a)(6) amounted to $88.70 [i.e., $4,435.00 (Employee’s total wages in 1995) ÷ 50]. We find, based upon the Alaska Department of Labor—ES Tax Wage Inquiry, that the employee’s average weekly earnings from 1987 through 1996 amounted to $126.39 ($6,572.35 annually). Moreover, we find that the employee’s average weekly earnings from 1994 through 1996, the three years prior to his injury, amounted to $50.08 ($2,604.13 annually).¹⁷ Based upon this evidence, we find, while the employee had sporadic years of higher earnings, he demonstrated a trend towards lesser earnings in the years prior to his injury.

We further find, based on evidence in the record, that prior to his injury, from 1986 through 1995, the employee only worked more that 200 hours per year in two of those years. We find that in five of the years from 1986 though 1995, the employee worked 25 hours per year or less.

The Alaska Supreme Court found, in Thompson v. UPS, 975 P.2d 684 (Alaska 1999), that in order to deviate from the statutory formula for determining spendable weekly wages, the board must be presented with, "substantial evidence supporting the conclusion that past wage levels will lead to an irrational workers’ compensation award." We find one primary purpose of our workers’ compensation law is to accurately predict what wages would have been but for a worker’s injury.¹⁸

We find that the $88.70 GWE figure calculated under the statutory formula for temporary workers fairly reflects the employee’s earnings during the period of disability. We find that the employee has not provided substantial evidence that the claimant’s past wages used to calculate his GWE yielded an irrational workers’ compensation award.

Reviewing the employee’s GWE under AS 23.30.220(a)(10), we find the board would consider the, "nature of the employee’s work, work history, and resulting disability..." We find, considering the nature of the employee’s work, his sporadic work history with the union and his average earnings in the approximate ten years prior to his injury, a GWE rate of $88.70 fairly reflects his earnings during the period of disability.

We find, based upon testimony at the hearing and a review of the evidence in the record, that the work histories of the seven anonymous co-workers were not substantially similar to the employee’s. We find, therefore, no basis upon which to compare the 1997 and 1998 earnings of those seven co-workers with the potential earnings of the employee.

In light of the employee’s ten year work history, we find that evidence presented regarding available construction work in the years since the employee’s injury does not constitute substantial evidence that the employee’s past wages is an inaccurate predictor of lost earnings from his injury.

We find that the compensation rate proposed by the employee of $582.64 per week is over four times greater than his average weekly earnings in the ten years prior to his injury and does not fairly reflect his earnings for the reasons stated above. We note the employee’s proposed compensation rate predicts full-time work and is based upon his $25.05 hourly wage from a temporary job. The employee also proposed we consider reviewing his entire work history with the union. However, we find given the significant difference in the employee’s work patterns between the time he first began with the union in the early 1960’s and the approximate ten year period before his injury, a calculation based upon the employee’s entire work history would not fairly reflect his earnings during the period of disability.

We note that the Alaska Supreme Court has determined that a generalized fairness inquiry is not proper, but rather, the question is whether the past earnings could accurately be used to determine potential earnings, but for an injury.¹⁹ Consequently, we do not consider the effects of a Social Security offset in our fairness analysis. We note, however, that the employee is currently receiving disability benefits from the SSA of approximately $12,000.00 per year, almost double his average annual earnings from 1987 – 1996.

We conclude that the statutory formula utilized to calculate the employee’s gross weekly earnings fairly reflects his lost earnings during the period of disability, and, therefore, he is not entitled to a compensation rate increase.

II. SOCIAL SECURITY OFFSET

The employer seeks to reduce the employee’s compensation benefits because he received disability benefits from SSA. AS 23.30.225(b) provides:

Based on the documents accompanying the petition, we find the employee is entitled to disability benefits from the SSA due to his September 25, 1996 injury. We find the initial award of benefits from the SSA, combined with the employee’s Alaska Workers’ compensation benefits, exceeds 80 percent of the Employee’s gross weekly earnings. Under AS 23.30.225(b), we conclude the Employer is entitled to an offset. Stanley v. Wright –Schuchart-Harbor, AWCB Decision No. 82-0039 (Feb. 19, 1982); aff’d, 3 AN 82-2170 Civil (Alaska Superior Ct. 19 May 1983).

Based on the documentary record, we find:

Gross Weekly Earnings(GWE) $88.70

Weekly Compensation Rate $82.19

Monthly Social Security (SSA) $982.00

Weekly Social Security (SSA) $226.62 ($982.00 ÷ 4)

Compensation Rate + SSA = $308.81

80% of GWE = $70.96

Comp. Rate + SSA – 80% of GWE = $237.85

Accordingly, we conclude that under AS 23.30.225(b), the employer is entitled to an offset in the amount of $237.85 per week. We find that this would reduce the employee’s compensation rate to -$155.66 per week ($82.19 – 237.85). Because, we find that an employee cannot have an negative compensation rate, we find that the employer is entitled to a 100% offset, rendering the employee’s compensation rate zero.

III. WHEN THE EMPLOYER MAY BEGIN THE OFFSET

We find the SSA may be presently taking an offset due to the employee’s receipt of benefits from the employer. We want to coordinate benefits and assure the employee receives the full benefits to which he is entitled. We want to give the employee the opportunity to notify the SSA that the employer will be taking the offset and request the SSA cease taking any possible offset. Except as provided below, the employer may not begin the offset for the employee’s receipt of SSA benefits until 60 days after the date this decision is filed, and the offset may be taken only against payments made after that date. See, Milner v. Hull Cutting Co., AWCB Decision No. 88-0277 (October 26, 1988).

If the SSA ceases its offset, or confirms there is no offset, sooner than 60 days after the date of this decision, or if the SSA makes a lump sum payment to adjust the employee’s benefits for the past offset, the employee must immediately write to the employer, tell it of the SSA’s action, and send the employer a copy of the paperwork from the SSA. The Employer may begin its offset effective the date the SSA confirms it will cease taking the offset, or confirms there is no offset, for employee’s receipt of workers’ compensation payments.

If the SSA refuses to stop offsetting the workers’ compensation benefits, the employee should file a claim to seek modification of this decision under AS 23.30.130. We retain jurisdiction over this issue under AS 23.30.130.

IV. ATTORNEY’S FEES

Alaska Statute 23.30.145 provides in pertinent part:

We find, based upon the documentary evidence and the testimony at the hearing, that the employer determined the employee was permanently totally disabled as a result of Dr. Levine’s report of April 9, 1998. We find the employer never controverted or resisted any of the benefits due to the employee. We find that prior to the determination that the employee was permanently totally disabled, the employer kept retraining and reemployment options open to the employee.

As we have awarded no additional benefits, no attorney fees or costs can be awarded under AS 23.30.145(b). We conclude the employee is not entitled to an award of actual attorney fees and costs.

1. The employee is not entitled to a compensation rate adjustment pursuant to AS 23.30.220(a)(10).
2. The employee is not entitled to actual attorney fees and costs pursuant to AS 23.30.145.
3. The employer’s petition for an offset under AS 23.30.225(b) for the employee’s receipt of disability benefits from the SSA is granted. The employer is entitled to a 100% offset, rendering the employee’s compensation rate zero. Except as otherwise provided in this decision, the employer may begin the offset 60 days after this decision is filed.

Dated at Anchorage, Alaska this 17th day of November, 1999

ALASKA WORKERS' COMPENSATION BOARD

/s/ Darryl Jacquot
Darryl Jacquot,
Designated Chairman

/s/ S.T. Hagedorn
Steve Hagedorn, Member

This compensation order is a final decision. It becomes effective when filed in the office of the Board unless proceedings to appeal it are instituted. Proceedings to appeal must be instituted in Superior Court within 30 days of the filing of this decision and be brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska.

A party may ask the Board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with 8 AAC 45.050. The petition requesting reconsideration must be filed with the Board within 15 days after delivery or mailing of this decision.

Within one year after the rejection of a claim or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200 or 23.30.215 a party may ask the Board to modify this decision under AS 23.30.130 by filing a petition in accordance with 8 AAC 45.150 and 8 AAC 45.050.

I hereby certify that the foregoing is a full, true and correct copy of the Final Decision and Order in the matter of MAURICE J. PEPERA employee/applicant; v. GENERAL CONCRETE CO INC, employer; AMERICAN HOME ASSURANCE, insurer/ defendants; Case No. 199620147; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 17^th day of November, 1999.

Debra C. Randall, Clerk