Motion for Reargument Denied July 30, 2013.
Christopher McVeigh of McVeigh Skiff, Burlington, for Plaintiff-Appellant.
Jeffrey T. Dickson and Keith J. Kasper of McCormick, Fitzpatrick, Kasper & Burchard, P.C., Burlington, for Defendant-Appellee.
Present: REIBER, C.J., DOOLEY, SKOGLUND, BURGESS and ROBINSON, JJ.
¶ 1. The issue in this case is whether employer-paid health insurance premiums must be included when calculating an injured employee's average weekly wage under the Vermont Workers' Compensation Act. The Commissioner of the Department of Labor (DOL) concluded that such premiums are not " wages" as defined under the Act and therefore should not be included. We affirm.
¶ 2. The underlying facts of this case are undisputed. Claimant is a licensed practical nurse who was employed by defendant, Trustaff, Inc., as a traveling nurse and was temporarily stationed in a Rutland, Vermont nursing home. While on duty, a patient attacked claimant, causing her to suffer, among other things, an acute cervical sprain. Defendant accepted responsibility for the physical injuries sustained by claimant, finding them compensable under workers' compensation. Three days after the injury, claimant returned to work but was restricted to desk duty. Unfortunately, defendant had no available desk jobs. Claimant left defendant's employ shortly thereafter and moved to Arizona, where she obtained employment at a long-term care facility. Claimant worked in various capacities at the facility until November 2009 when her treating physician recommended that she stop working on account of her cervical injury. At that point, defendant began paying claimant temporary total disability benefits under Vermont Workers' Compensation Act. See 21 V.S.A. § 650. When calculating claimant's average weekly wage pursuant to § 650, defendant did not include the employer-paid health insurance premiums paid by claimant's new employer.
¶ 3. Based on previous administrative interpretations of the statute, the Commissioner concluded that employer-provided health insurance premiums are not part of an employee's wages and therefore are not part of the claimant's average weekly wage computation. She rejected the inclusion of these benefits in the average weekly wage, citing a prior DOL decision that held this would " dramatically impact the delicate balance that the workers' compensation act seeks to maintain between employers and employees." See Pelissier v.
Hannaford Bros., No. 26-11 WC, ¶ 14 (Sep. 9, 2011) (internal citations omitted). Based on the Pelissier decision, the Commissioner also concluded that the interpretation was not appropriate for alteration by administrative fiat and that any such change was better left for the Legislature. This appeal followed.
¶ 4. While we review questions of law de novo, " the Commissioner has been entrusted by the Legislature with the administration of the workers' compensation program," and we accord " substantial deference to her initial interpretation and application" of the workers' compensation statutes. Letourneau v. A.N. Deringer/Wausau Ins. Co., 2008 VT 106, ¶ 8, 184 Vt. 422, 966 A.2d 133. Therefore, while we require the proper interpretation of the law, " we will defer to the Commissioner's construction of the Workers' Compensation Act, absent a compelling indication of error." Morin v. Essex Optical/The Hartford, 2005 VT 15, ¶ 4, 178 Vt. 29, 868 A.2d 729 (quotation omitted).
¶ 5. Our examination of the Commissioner's interpretation of the statute begins with the plain language of the Act. An injured worker's weekly compensation is based on the claimant's average weekly wage. 21 V.S.A. § 650. Wages, as defined in the Act, include " bonuses and the market value of board, lodging, fuel and other advantages which can be estimated in money and which the employee receives from the employer as a part of his or her remuneration." Id. § 601(13). The question here is whether the Legislature intended the phrase " other advantages" to include employer-paid health insurance premiums.
¶ 6. When construing statutes, our primary goal is to give effect to the Legislature's intent. Gallipo v. City of Rutland, 173 Vt. 223, 235, 789 A.2d 942, 952 (2001). If the meaning of a statute is plain on its face, it must be enforced accordingly; if, however, the statute is ambiguous and capable of more than one reasonable interpretation, the legislative intent " should be gathered from a consideration of the whole and every part of the statute, the subject matter, the effects and consequences, and the reason and spirit of the law." Langrock v. Dep't of Taxes, 139 Vt. 108, 110, 423 A.2d 838, 839 (1980) (quotation omitted).
¶ 7. The definition of " wages" does not mention employer-paid health insurance premiums. While one can presumably determine the market value of board or lodging or fuel, the phrase " other advantages which can be estimated in money" is ambiguous and capable of more than one reasonable interpretation. Thus, the plain and ordinary meaning of the phrase does not resolve the question presented. In fact, the phrase " other advantages" could cover countless other costs paid by the employer, including payments to third parties for the benefit of the employee, such as employer-paid life insurance premiums, pension packages or 401(k) contributions, employer-based social security contributions, and other fringe benefits. Because the phrase " other advantages" yields more than one reasonable interpretation, we attempt to discern the Legislature's intent by other means and look to legislative history. See In re Margaret Susan P., 169 Vt. 252, 262, 733 A.2d 38, 46 (1999) (stating that when " the language is unclear and ambiguous, legislative history may be used to determine the intent of the Legislature" ).
¶ 8. As part of a nationwide movement to provide adequate remedies for the growing number of injured industrial workers, states began enacting workers' compensation laws " to dispense with the concept of negligence" by providing compensation,
by means of medical coverage or income replacement benefits, " to any employee who is injured on the job and to limit employers' exposure to lawsuits for negligence in the workplace." 1 A. Larson & L. Larson, Larson's Workers' Compensation Law, §§ 2.07-2.08 (2012); see also 2007, No. 208 (Adj.Sess.), § 1(a)(1). Though there was little uniformity among the various acts in the early 1900s, most laws compensated employees for the core, nonfringe benefits of housing, food, and fuel.
¶ 9. Vermont followed suit. Vermont's Workers' Compensation Act emerged in 1915 when Vermont's economy depended on a large labor workforce and it was common for employers to provide lodging for those who toiled in the granite quarries, marble fields, and textile mills, among other industries. " Poor conditions for workers ... attracted the concern of several civic-minded groups," including the Vermont Federation of Women's Clubs, who began rallying against the " many evil conditions prevalent in the state." See M. Sherman, et al., Freedom and Unity: A History of Vermont 368 (2004). As part of the worker-protection momentum, the Legislature enacted the workers' compensation law, which provided payments to widows and children of men killed in industrial accidents and payment of medical and hospital costs to employees injured on the job. Id.
¶ 10. The definition of wages for determining a temporarily disabled employee's average weekly wage has remained unaltered since the Act's inception in 1915 with the exception of adding the term " bonuses." See 1915, No. 164, § 58(h). Health insurance, as it exists today, did not develop until the late 1920s, when a group of school teachers began to make small monthly payments to a hospital for future medical care. See S. Cancelosi, Revisiting Employer Prescription Drug Plans for Medicare-Eligible Retirees in the Medicare Part D Era, 6 Houston J. Health L. & Pol'y 85, 87 (2005). Before that time, individuals paid medical expenses out of pocket, placing both the scheme of health insurance and its future connection to the workplace well beyond the scope of even the most forward-thinking Legislature to consider when defining " wages" in 1915.
¶ 11. Even though there were some industries, such as lumber and railroad, that provided accident coverage to their workers early on, employer-paid health insurance did not become commonplace until World War II when labor was in high demand and employers were looking for ways to attract workers without going over the federally imposed wage cap. Id. For purposes of the wage cap, health insurance was not defined as a wage. Id. at 88. Because the health-insurance system was not in place when the Legislature defined wages in 1915, and because the Legislature has not amended the definition to include employer-paid health insurance after it developed into a customary benefit, it is prudent to conclude that such a benefit was not intended to be part of an employee's average weekly wage.
¶ 12. In fact, the expanded interpretation urged by claimant ignores the remainder of the statutory phrase, which limits " other advantages" to those " which the employee receives from the employer as a part of his or her remuneration." To remunerate is to " pay (a person) for goods provided, services rendered, or losses incurred" ; remuneration is a " payment." The American Heritage Dictionary 1101 (New College ed.1979). An employee is not paid for her work with health insurance; rather, health insurance is a fringe benefit of employment. The definition of wages implies a payment actually received by an employee— it more closely refers to
the actual earnings of the worker. See 21 V.S.A. § 650(a) (" Average weekly wages shall be computed in such manner as is best calculated to give the average weekly earnings of the worker ...." ).
¶ 13. Claimant's argument conflates employers' costs with employees' remuneration. The U.S. Supreme Court has rejected this approach. In Morrison-Knudsen Construction Co. v. Director, Office of Workers' Compensation Programs, 461 U.S. 624, 630, 103 S.Ct. 2045, 76 L.Ed.2d 194 (1983), the Court held that an employer's contributions to union trust funds required under the terms of the collective bargaining agreement did not qualify as a " similar advantage" under the Longshore and Harbor Workers' Compensation Act, the federal counterpart to state workers' compensation laws. The Supreme Court narrowed the question before it to whether the employer's contributions were a " similar advantage" to " board, rent, housing [or] lodging" and found they were not. Id. And, while the claimant in that case urged the Court to calculate the present value of the trust funds by using the employer's cost of maintaining these funds, the Court stated, " The employer's cost is irrelevant in this context; it measures neither the employee's benefit nor his compensation." Id. Finally, the Court refused to attempt to value the funds by the employee's expectation interest in them, " for that interest is at best speculative." Id. at 631, 103 S.Ct. 2045. Though the funds were intended for the benefit of the worker, as a means by which the company provided life insurance, health insurance, retirement benefits and career training for the employees, they were not, according to the Court, a part of the employee's wages. Id. at 630-32, 103 S.Ct. 2045.
¶ 14. The same can be said of Vermont's workers' compensation law. The employer's cost in providing health insurance measures neither the employee's benefit nor his compensation. Employer health insurance rates are based on the plans offered, which can vary tremendously. The costs are not tied to the employee's labors and instead are based on factors unconnected to the employee. The existence of the insurance and the calculation of the employer's contribution to it does not equate to a measurement of the benefit to the employee. While the employer may contribute a set figure for the coverage, the employee may enjoy medical services that far exceed the cost to the employer or, if lucky in health, the employee may never gain any tangible benefit from the coverage. As such, we find that the employer's contribution for health insurance, though determinable, does not accurately reflect the employee's labors or compensation as defined through wages.
¶ 15. Claimant challenges the relevance of the Morrison-Knudsen decision and attempts to distinguish her case from the federal counterpart based on a slight difference in language between the Longshore Act and the language of Vermont's Workers' Compensation Act. Where Vermont's Act defines wages to include " board, lodging, fuel and other advantages," 21 V.S.A. § 601(13), the Longshore Act includes " board, rent, housing, lodging and similar advantages." 33 U.S.C. § 902. Claimant contends that the modifier
" other" is more expansive than " similar," which she contends restricts " advantages" to those like the preceding list of items; claimant maintains that " other advantages" are not so narrowly constricted, but rather are limited only by whether they can be " estimated in money."
¶ 16. We appreciate the distinction and agree that the term " similar" is more restrictive than " other" ; nevertheless, the Court's rationale in Morrison-Knudsen remains cogent and serves as a helpful tool in analyzing legislative intent. In Morrison-Knudsen, the Court consulted the statute's legislative history and found no evidence indicating that Congress intended wages to include employer contributions to benefit plans. See 461 U.S. at 632-33, 103 S.Ct. 2045. Similarly, the Court recognized that while fringe benefits had become a common feature in American workplaces, their lack of inclusion in the original and amended enactments of the Longshore Act illustrated Congress's intent to exclude these benefits from the Act's wage definition. Id. The Court wrote, " a comprehensive statute such as this Act is not to be judicially expanded because of ‘ recent trends.’ " Id. at 635, 103 S.Ct. 2045. It further acknowledged that the Act
was not a simple remedial statute intended for the benefit of the workers. Rather, it was designed to strike a balance between the concerns of the longshoremen and harbor workers on the one hand, and their employers on the other....
Against this background, reinterpretation of the term " wages" would significantly alter the balance achieved by Congress.
Id. at 636, 103 S.Ct. 2045. The Court also relied on the Department of Labor's prior determinations that excluded fringe benefits from wages. Id. at 635, 103 S.Ct. 2045. We find the ...