Monday, May 10, 2010

Supreme Court Affirms the Nelson case

The Colorado Supreme Court affirmed the Court of Appeals decision in the Nelson case. In Nelson the claimant had obtained an advance lump sum of future permanent total benefits and years later sought another advance. The problem posed by the case is that the claimant had exhausted the advance amount earlier and only sought the new advance when the law was changed. The original statutory top dollar advance was $26292 and the statute was changed to allow a $60000 advance. Is the insurer liable for this higher advance when it was not the law back when the claimant was injured? The Supreme Court said yes it was. This decision was not unanimous and 3 judges dissented. But the majority controls. Both sides recognized that the law was not to be applied retroactively but the majority indicated that the law change was procedural so it would apply to anyone applying for a lump sum as of today. Procedural laws are not really changing rights or liabilities as compared to laws which are substantive changes in rights or liabilities. A substantive law change cannot be imposed on the parties covered by an older law. For example if the benefits were increased by a statutory change to 100% wage loss it could not be imposed on the parties later on. The higher wage would be a substantive change. So in this case it seems the majority and dissenters disagreed on whether the law change was procedural or substantive. The majority felt the advance was not extra compensation and the dissent seems to view it as giving the claimant a higher benefit because he receives value sooner then spread out over his lifetime. Mathematically when we do present value analysis there is no real difference. Of course people can die young or outlive expectations so either side may have the advantage here and now we come to another point I have not heard recently. The court said that the law should be liberally construed in favor of the injured worker so it did not split hairs here and ruled in favor of the claimant getting another advance. I posted on the Court of Appeals decision earlier.

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