Golden v. Westark Community College , 58 Ark. App. 209 ( 1997 )

Andree Layton Roaf, Judge.

Bill Golden sustained a compensable injury while at work as a security officer for Westark Community College (Westark). Golden was ultimately assigned a 20% permanent partial disability to the body as a whole. However, the Commission found that Westark was entitled to offset all of Golden’s permanent disability benefits pursuant to Ark. Code Ann. § ll-9-522(f) (Repl. 1996), since Golden was over sixty-five and drawing retirement benefits from Social Security. Golden raises four arguments- in his appeal. He claims that (1) Ark. Code Ann. § ll-9-522(f) is unconstitutional in that it violates the Equal Protection Clauses of the state and federal constitutions; (2) the Age Discrimination in Employment Act promulgated by Congress preempts the application of Ark. Code Ann. § ll-9-522(f); (3) there is not substantial evidence to support the Commission’s finding that he is entitled to only 20% permanent partial disability to the body as a whole; and (4) permanent partial disability benefits do not include money or benefits for permanent physical impairment. We affirm.

Golden worked as a security guard for Westark and was 67 years old at the time of his injury. His duties included walking or driving around the campus and ensuring the security of tlie buildings and facilities. He was required to walk up and down stairs and otherwise remain on his feet for extended periods of time.

In November 1993, when crossing a bridge connecting two buildings on the campus, Golden slipped on ice and injured his back. He underwent prolonged treatment as a result of the injury, and continued to suffer from pain and discomfort at the time of his workers’ compensation hearing. Golden’s treating physician gave him a 5% physical impairment rating and permanent restrictions on the type of work he was allowed to perform. The restrictions effectively prevented him from performing his duties as a security guard, and he was subsequently terminated. Golden was sixty-nine years old at the time of his workers’ compensation hearing and was receiving $575 per month in social security retirement benefits. Westark paid, without contest, Golden’s medical expenses and temporary total disability through his healing period. However, Westark contested the extent of Golden’s permanent disability, and denied payment of any permanent disability benefits because of the operation of Ark. Code Ann. § ll-9-522(f).

The administrative law judge (ALJ) found that Golden sustained a 20% impairment to his body as a whole (5% physical disability and 15% wage-loss disability). The ALJ recognized that Ark. Code Ann. § 11-9-522(f) provides for a dollar-for-dollar offset for anyone aged sixty-five or older who either is drawing or is eligible to draw benefits from a publicly or privately funded retirement plan. However, the ALJ found that Golden was entitled to receive disability payments of $119 for 22 and one-half weeks based on his 5% physical disability, reasoning that the statutory offset did not apply to benefits for physical impairment. The ALJ did not reach the issue of constitutionality of the statute. Golden appealed to the Commission, which reversed the judgment of the ALJ with respect to the finding that a portion of Golden’s benefits should not be offset pursuant to Ark. Code Ann. § ll-9-522(f), and found the statute not violative of equal protection. Because Golden’s social security benefits of $575 per month were greater than the amount of his permanent disability benefits, Golden was thus left without any benefits for his permanent partial disability.

Í. Constitutionality of Ark. Code Ann. 11-9-522 ff)

Golden first argues that Ark. Code Ann. § ll-9-522(f) is unconstitutional in that it violates the Equal Protection Clauses of the state and federal constitutions. Golden claims that the classification in the statute is arbitrary, unreasonable, and allows for persons similarly situated to be treated differently. Golden also alleges that the classification of people found in the statute has no rational basis to any legitimate objective of the state.

Arkansas Code Annotated § ll-9-522(f) (Repl. 1996) was included among the major changes to the workers’ compensation law enacted by the Arkansas General Assembly in 1993, and provides:

(1) Any permanent partial disability benefits payable to an injured worker age sixty-five (65) or older shall be reduced in an amount equal to, dollar-for-dollar, the amount of benefits the injured worker received or is eligible to receive from a publicly or privately funded retirement or pension plan but not reduced by the employee’s contributions to a privately funded retirement or pension plan.

(2) The purpose and intent of this subsection is to prohibit workers’ compensation from becoming a retirement supplement.

A companion statute, Ark. Code Ann. § ll-9-519(g) (Repl. 1996) provides for an identical offset with respect to permanent total disability benefits.

Because age, unlike race or gender, is not a suspect or quasi-suspect classification, this court should apply a rational-basis test to determine if the statute violates equal protection. Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 314 (1976). It is well settled that an act by the legislature is entitled to a presumption of constitutionality. American Trucking Ass’n v. Gray, 288 Ark. 488, 707 S.W.2d 759 (1986); Pulaski County Mun. Court v. Scott, 272 Ark. 115, 612 S.W.2d 297 (1981). On appellate review, this court must presume that a statute is constitutional, and the party challenging the statute has the burden of proving otherwise. All doubts are resolved in favor of constitutionality. Misskelley v. State, 323 Ark. 449, 915 S.W.2d 702 (1996)(citing Reed v. Glover, 319 Ark. 16, 889 S.W.2d 729 (1994)).

The Equal Protection Clause does not preclude all statutory classifications. Cook v. State, 321 Ark. 641, 906 S.W.2d 681 (1995); Hamilton v. Hamilton, 317 Ark. 572, 879 S.W.2d 416 (1994). Classifications are permitted that have a rational basis and are reasonably related to a legitimate government purpose. McFarland v. McFarland, 318 Ark. 446, 885 S.W.2d 897 (1994). The role of the reviewing court is not to discover the actual basis for the legislation, but to consider whether any rational basis exists that demonstrates the possibility of a deliberate nexus with state objectives so that the legislation is not the product of utterly arbitrary and capricious government purpose. Misskelley, supra; Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). This court must presume that the challenged classification will promote a legitimate state purpose if there is “any conceivable set of facts to uphold the law’s rational basis.” Bosworth v. Pledger, 305 Ark. 598, 810 S.W.2d 918 (1991).

Neither of Arkansas’s two workers’ compensation retirement offset statutes have faced a constitutional challenge since their enactment in 1993. However, a number of other states have considered similar statutes and have consistently upheld the constitutionality of the offset provisions. It is necessary to understand the underlying rationale for this legislation in order to properly consider the constitutionality of a particular statute. The premise for both state and federal offset legislation is the impropriety of duplicate benefits. This premise is based upon the idea that all wage-loss legislation is social legislation designed to restore to workers a portion of wages lost due to the three major causes of wage loss: disability, unemployment, and old age, and that, despite the cause, a worker experiences only one wage loss and should receive only one wage-loss benefit. See 9 Larson’s Workers’ Compensation Law, § 97.10. The primary aim of both federal and state offset legislation is to avoid duplicate benefits and, in addition, to designate the primary source for payment of a particular benefit.

With this premise in mind, the majority of jurisdictions have upheld the constitutionality of offset legislation against equal protection attacks, and even the two courts that have struck down their statutes have not done so based upon the lack of a legitimate governmental concern. These jurisdictions have found a variety of valid governmental purposes for the offset statutes. See e.g. Brown v. Goodyear Tire & Rubber Co., 599 P.2d 1031 (Kan. App. 1979) (to prevent duplicate benefits); Sasso v. Ram Property Management, 431 So. 2d 204 (Fla. Dist. Ct. App. 1983) (to avoid “double dipping;” to reduce payment of fringe benefits due to age-related decline in productivity and physical abilities; to make room in the job market for younger workers by inducing retirement of older workers; to reduce costs of insurance premiums to employers); Harris v, State, 843 P.2d 1056 (Wash. 1993) (to avoid duplicate payments; to reduce industrial insurance premiums; to save money for the state fund); State v. Richardson, 482 S.E.2d 162 (W.Va. 1996) (to preserve fiscal integrity of workers’ compensation fund, to avoid duplicate benefits); Case of Tobin, 675 N.E.2d 781 (Mass. 1997) (coordination of benefits to prevent stacking of benefits; to reduce the cost of workers’ compensation premiums for employers who pay into multiple-benefit systems).

It is clear that the Arkansas offset statutes are founded upon legitimate governmental concerns. The stated purpose of Ark. Code Ann. § ll-9-522(f) is “to prohibit workers’ compensation from becoming a retirement supplement.” Arkansas Code Annotated § 11-9-101 (Repl. 1996) provides that one of the primary purposes of the workers’ compensation laws is “to emphasize that the workers’ compensation system in this state must be returned to a state of economic viability.” These purposes are simply a restatement of the goals of avoiding duplicate payments and of curtailing the cost of workers’ compensation insurance, which have been found by other jurisdictions to be legitimate governmental concerns, and we do not disagree with their conclusions on this issue.

However, we must also determine whether the offset legislation is rationally related to these stated governmental purposes. Although two states have held that similar statutes are not, the two statutes held to be violative of equal protection provided for termination or reduction of benefits for totally disabled workers aged sixty-five or older, but not for partially disabled workers in the same age classification. However, both courts further held that the statutes in question would not be rationally related to the stated governmental purposes even if this discriminatory, aspect of the legislation were eliminated. In Industrial Claims Appeals Office v. Romero, 912 P.2d 62 (Colo. 1996), the court found that a statute that provided for the outright termination of workers’ compensation benefits to permanently totally disabled workers, aged sixty-five or older, without regard to their eligibility for social security or other retirement benefits, was not rationally related to the purpose of preventing duplicate payments because social security retirement benefits and workers’ compensation benefits do not serve the same purposes. The court also found that because the statute was based upon a “convenient perception that [persons aged sixty-five or older] receive retirement benefits,” it impermis-sibly denied these persons equal protection of the laws for mere administrative convenience.

In State ex rel. Boan v. Richardson, 482 S.E.2d 162 (W.Va. 1996), the court differentiated between old-age social security benefits and permanent total disability benefits and also found that there was a “lack of commonality of purpose” for the two benefits. The court characterized workers’ compensation benefits as payments in lieu of tort damages, and stated that the disability payments could not be considered a duplication of old-age social security benefits, which were earned retirement benefits. The West Virginia statute, which provided for a reduction in the permanent total disability benefits for persons receiving social security old-age benefits was thus held not rationally related to the legitimate governmental purpose of avoiding duplicate benefits.

Although Golden makes similar arguments to those advanced in Romero and Richardson, we must agree with the remaining jurisdictions that have found a rational relationship between legitimate governmental purposes and the age classification contained in the offset statutes.

We cannot say that the classification in Ark. Code Ann. § ll-9-522(f) between those workers aged sixty-five and older, who are receiving or who are eligible to receive public or private retirement benefits, and all other workers, is arbitrary and capricious, for which there is no legitimate government purpose. See Reed v. Glover, 319 Ark. 16, 889 S.W.2d 729 (1994). Although this classification undoubtedly will exclude some persons under sixty-five who may also be eligible for retirement benefits, if there is any rational basis for the disparate treatment, the classification must be upheld. Allen v. State, 327 Ark. 350, 939 S.W.2d 270 (1997).

Moreover, a court will not strike down a classification merely because it is under inclusive. Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428 (1992). We conclude that the classification contained in the Arkansas statute is based upon a reasonable, not arbitrary, distinction. The Legislature undoubtedly considered, as have other jurisdictions, that sixty-five is the age at which most workers will be eligible for retirement benefits.

Furthermore, the Arkansas Supreme Court has recognized the social nature of workers’ compensation legislation in Corbitt v. Mohawk Rubber Co., 256 Ark. 932, 511 S.W.2d 184 (1974), where the court stated, “[t]he Workmen’s Compensation Act is based largely on the social theory of providing disabled employees support and preventing their destitution.” Corbitt, 256 Ark. at 935, 511 S.W.2d 186. We thus cannot say that the decision to offset permanent disability benefits at age sixty-five, for those disabled workers who are eligible to receive retirement benefits, is arbitrary and capricious.

2. Preemption by Federal Law

Golden also argues that the Age Discrimination in Employment Act (ADEA) promulgated by Congress preempts the application of Ark. Code Ann. § 11-9-522(f).

The doctrine of federal preemption is based upon the Supremacy Clause in Article VI of the United States Constitution. Under the Supremacy Clause, state laws that “interfere with, or are contrary to the laws of Congress, made in pursuance of the constitution” are invalid. Gibbons v. Ogden, 22 U.S. 1, 211 (9 Wheat.) (1824); Lawson v. Sipple, 319 Ark. 543, 893 S.W.2d 757 (1995). The doctrine involves a congressional intent to supplant state authority in a particular field. Jones v. Rath Packing Co., 430 U.S. 519 (1977).

The test for determining whether a state law would be preempted is based upon four factors: whether Congress expressed a clear intent to preempt state law; whether Congress occupies the field so as to leave no room for the states to supplement; whether compliance with both the state and federal laws is impossible; and whether the state law stands as an obstacle to Congress’s objective or purpose. Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984).

Absent express preemptive language, congressional intent to supersede state law may be implied. Ciba-Geigy Corp. v. Alter, 309 Ark. 426, 834 S.W.2d 136 (1992). Implied preemption can occur: (1) when the scope of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the state to act, (2) when the state and federal law actually conflict, (3) when compliance with state and federal law is physically impossible, and (4) when the state law stands as an obstacle to the accomplishment of the full objectives of Congress. Ciba-Geigy, supra. See, e.g., Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963); Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947).

However, the reviewing court begins with the assumption that the historic police powers of the states are not to be superseded by a federal act unless that is the clear and manifest purpose of Congress. Rice, supra. The burden is on the moving party to prove that Congress intended to preempt state law. Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984).

Golden argues that the ADEA preempts Ark. Code Ann. § ll-9-522(f) from operation, because the Act prohibits an employer from discriminating against any individual with respect to “compensation, terms, conditions, or privileges of employment” on the basis of age. Golden asserts that disability benefits fall within the meaning of the ADEA and thus, any action by a private employer or state government which compels older workers to substitute retirement benefits for disability benefits is precluded.

However, the ADEA contains no clear expression of the intent to preempt the state’s administration of workers’ compensation benefits. We also cannot say preemption may be implied to preclude the state-enacted ofiset because the ADEA prohibits only an employer from discriminating against individuals. We agree with the Supreme Judicial Court of Massachusetts that the ADEA “concerns age-based discrimination against employees resulting from activities within the employer’s control.” Tobin, 675 N.E.2d at 786.

3. Substantial Evidence

Golden also argues that there is not substantial evidence to support the full Commission’s finding that he is entided to only 20% permanent partial disability to the body as a whole. We find no merit in this argument.

Golden’s doctor assigned him a physical impairment rating of 5% and released him with permanent restrictions. Taking into consideration his age, education, and physical restrictions, the ALJ and the Commission found that he was also entitled to a 15% impairment rating attributable to his decreased 'earning capacity. Golden argues that his age, education, and physical restrictions require a far greater award.

Golden was sixty-nine years old at the time of the hearing, and had a tenth-grade education. He testified that he had applied for jobs since his injury, because he was required to do so to qualify for unemployment, but that he applied “cold turkey” where no positions were advertised. Golden further testified that his work history included employment as a salesman, as owner and operator of a pest control company for over thirty years, and truck driver.

Arkansas Code Annotated § ll-9-522(b)(l) (Repl. 1996) provides that the Commission may consider in addition to the percentage of permanent physical impairment, “such factors as . . . age, education, and work experience,” in considering claims for permanent partial disability benefits in excess of the employee’s permanent physical impairment. Here, the Commission awarded Golden an additional 15% benefit for reduction in his wage-earning capacity, in addition to the 5% physical impairment assigned by his treating physician. The Commission found that Golden had sustained a 15% impairment to his earning capacity “after consideration of [Golden’s] restrictions, along with [his] physical limitations, his age, education, and previous work experience.” Golden’s age and lack of education, while factors to be considered, do not constitute a disability. Although Golden’s physical restrictions prevent him from working in a job where he must lift heavy items or do a lot of bending or stooping, we cannot say that there was not substantial evidence to uphold the finding of the Commission that he was entitled to only a 20% disability rating.

Moreover, because of our resolution of Golden’s constitutional argument, even a 100% disability rating would not allow Golden any recovery because it would not increase the amount of his weekly benefits, but would only extend the period of payment. See Ark. Code Ann. § ll-9-522(a) (Repl. 1996).

4. Physical Impairment

Golden finally contends that permanent partial disability benefits do not include money or benefits for permanent physical impairment. He argues that the finding of the Commission that loss in earning capacity and physical impairment are two components of permanent partial disability which can exist with or without each other was in error. Golden argues that the definition of “disability,” found at Ark. Code Ann. § 11-9-102(9) does not include actual physical disability or impairment and that it is not otherwise defined. Therefore, he asserts that the implication is that benefits for permanent physical impairment are not considered permanent partial disability benefits and that they should not be treated as such.

In declining to adopt this position, the Commission noted that, in Arkansas, a worker is considered “disabled” if he suffers an impairment to his ability to earn wages, or if he suffers an anatomical impairment. The Commission noted that “disability,” within the meaning of the workers’ compensation law, includes loss of use of the body to earn substantial wages, as well as anatomical impairment. Glass v. Edens, 233 Ark. 786, 346 S.W.2d 685 (1961); Oller v. Champion Parts Rebuilders, 5 Ark. App. 307, 635 S.W.2d 276 (1982). A person can be disabled if the injury has caused physical loss or an inability to earn as much as he was earning when he was hurt. Fund v. Coleman, 16 Ark. App. 188, 699 S.W.2d 401 (1985); Bragg v. Evans-St. Clair, Inc., 15 Ark. App. 53, 688 S.W.2d 956 (1985). See also Terrell v. Austin Bridge Co., 10 Ark. App. 1, 660 S.W.2d 941 (1983).

Consequently, although the definition of “disability” fails to include any specific reference to physical impairment, Arkansas law clearly indicates that both physical and earning impairment are components of “disability.” Moreover, in making his constitutional argument, Golden states that “[permanent partial disability benefits are, as the Commission suggests, based on two components. The first is physical anatomical impairment.” This assertion by Golden, although it serves to advance his constitutional argument, seems to concede the very point he now argues. We thus conclude that the Commission did not err in finding that physical impairment is included within the definition of disability.

Although we declare that Ark. Code Ann. § 11-9-522(f) does not violate Bill Golden’s right to equal protection under the laws, we may only consider the question of the constitutionality of this statute. If indeed this statute is unfair to older workers, many of whom must continue to work to supplement their social security retirement benefits, this is a matter for the Legislature to address, not this court. As our supreme court has often said:

the question of the wisdom or expediency of a statute is for the Legislature alone. The mere fact that a statute may seem unreasonable or unwise does not justify a court in annulling it, as courts do not sit to supervise legislation. Courts do not make the law; they merely construe, apply, and interpret it.

S. W. Bell Tel. Co. & Wheeler v. Roberts, 246 Ark. 864, 868, 440 S.W.2d 208, 210 (1969) (quoting Newton County Republican Cent. Comm. v. Clark, 228 Ark. 965, 311 S.W.2d (1958)).

Affirmed.

Jennings, Bird, and Arey, JJ., agree. Robbins, C.J., and Neal, J., dissent.