Johnson v. Rca-Oms, Inc. , 681 P.2d 905 ( 1984 )

OPINION

MATTHEWS, Justice.

The question in this case is whether the Alaska Workers’ Compensation Board properly utilized subsection (2) of AS 23.-30.220 rather than subsection (3) of that statute in computing Robert Johnson’s average weekly wage for the purpose of establishing his temporary total disability benefits.¹ AS 23.30.220(2) and (3), as in effect at the time of Johnson’s injury, provided: ²

Except as otherwise provided in this chapter, the average weekly wage of the injured employee at the time of the injury is based for computing compensation, and is determined as follows:

(2) the average weekly wage is that most favorable to the employee calculated by dividing 52 into the total wages earned, including self-employment, in any one of the three calendar years immediately preceding the injury;

(3) if the board determines that the wage at the time of the injury cannot be fairly calculated under (2) of this section, or cannot otherwise be ascertained without undue hardship to the employee, the wage for calculating compensation shall be the usual wage for similar service rendered by paid employees under similar circumstances, as determined by the board; ...

In November of 1979 Robert Johnson retired from the United States Air Force after 20 years of service. On March 13, 1980 he began working for RCA-OMS, Inc. He was injured on the job on June 12,1980, but was able to return to work after a week of treatment. He continued to work until February 13, 1981 at which time he was hospitalized and spinal surgery was performed for a condition attributable to the June 12, 1980 injury.

Johnson’s salary for the final year of his military service, 1979, was $20,166.12. He asserted that his * salary for the approximately 40 weeks that he worked for RCA-OMS was some $42,000.00, most of it earned after his injury. The Board, using subsection (2) of AS 23.30.220, determined Johnson’s average weekly wage according to his military rather than civilian salary. So computed, his average weekly wage was $387.81, resulting in benefits of $258.54 per week. By contrast, if subsection (3) had been used, his average weekly wage would apparently have been approximately $1,000.00 with benefits two-thirds of that.

Johnson appealed the Board’s determination to the superior court which affirmed the Board’s ruling. Johnson now appeals to this court. We reverse.

The objective of AS 23.30.220 is to formulate a fair approximation of a claimant’s probable future earning capacity during the period in which compensation benefits are to be paid. Normally the formula in subsection (2) will yield a fair approximation of this figure. However, sometimes it will not, and in those cases subsection (3) of the statute is to be used.

The entire objective of wage calculation is to arrive at a fair approximation of claimant’s probable future earning capacity. His disability reaches into the future, not the past; his loss as a result of injury must be thought of in terms of the impact of probable future earnings, perhaps for the rest of his life. This may sound like belaboring the obvious; but unless the elementary guiding principle is kept constantly in mind while dealing with wage calculation, there may be a temptation to lapse into the fallacy of supposing that compensation theory is necessarily satisfied when a mechanical representation of this claimant’s own earnings in some arbitrary past period has been used as a wage basis.

2 A. Larson, The Law of Workmen’s Compensation § 60.11(d), at 10-564 (1983) (footnote omitted).

Other provisions of our Alaska Workers’ Compensation statutes demonstrate that the objective of average weekly wage calculation is to arrive at a fair approximation of probable future earning capacity. Thus AS 23.30.220(4) provides:

(4) if an employee is a minor or an apprentice, or a trainee, as determined by the board, when injured, and under normal conditions his wages would increase during the period of disability, this fact shall be considered in computing his average weekly wage; ...

AS 23.30.210, dealing with partial disability provides in part:

[T]he wage-earning capacity of an injured employee is determined by his actual earnings if the actual earnings fairly and reasonably represent his wage-earning capacity. If the employee has no actual earnings or his actual earnings do not fairly and reasonably represent his wage-earning capacity, the board may, in the interest of justice, fix the wage-earning capacity which is reasonable....

(Emphasis added).

If there is only a slight variance between wages at the time of injury and the average weekly wage arrived at under the formula of subsection (2) it would not be unfair to utilize the formula prescribed by subsection (2). In the present case, however, the apparent disparity between Johnson’s military salary and what he actually earned at the time of his disability is so substantial that application of the subsection (2) formula clearly does not fairly reflect his wage-earning capacity. The Board should, therefore, have calculated Johnson’s average weekly wage under subsection (3).

In reaching this conclusion we are aware that a broad reading of our recent case of State v. Dupree, 664 P.2d 562 (Alaska 1983.) would support the Board’s decision made in this case. Dupree presented essentially the converse facts of those in the present case. Dupree’s average weekly wage computed pursuant to AS 23.30.-220(2) exceeded her anticipated earnings as computed under subsection (3). Despite the fact that Dupree was not likely to return to work at her earlier higher wages, the majority opinion held that the formula in subsection (2) should be applied. Id. at 565. Without reconsidering the correctness of the result in Dupree, the present case is clearly distinguishable.

The holding in Dupree was based on three reasons: (1) the administrative convenience of applying subsection (2), as opposed to subsection (3); (2) the perceived purpose of subsection (2) which was “to give the benefit of past earnings history to the employee,” id. at 565; and (3) the “rule that ambiguous worker’s compensation statutes should be construed in favor of the employee.” Id. at 566. The second and third reasons are not present here, for application of subsection (2) does not benefit Johnson and any ambiguity in the statute is not resolved in Johnson’s favor when subsection (2) is employed. The first reason, administrative convenience, is a factor in the present case, but we regard it as insufficient to explain the result in Dupree or to require application of subsection (2) in this case. The structure of section 220 requires that the Board address and determine the fairness and undue hardship questions posed by subsection (3) in every case in which the points are raised. Although these questions do not have answers which can be arrived at with mathematical precision, the legislature, by enacting subsection (3), has recognized that the goal of certainty must give way to that of fairness whenever the two conflict.

The Board also determined that its decision to apply subsection (2) would not cause undue hardship to Johnson because he would receive his military pension in addition to any compensation award. Since the unfair calculation and undue hardship clauses of subsection (3) are disjunctive, our conclusion that Johnson’s wage at the time of injury could not be fairly calculated under subsection (2) is dis-positive. We note, however, that in our view consideration of Johnson’s pension was improper, since worker’s compensation benefits are meant to compensate for wages lost regardless of the other assets of the injured worker.

We also note that our decision that subsection (3) should have been utilized makes it unnecessary to decide whether the phrase “time of injury” as used in AS 23.30.220 means, in effect, time of disability due to injury. There is authority on both sides of this question. See 2 A. Larson, The Law of Workmen’s Compensation § 60.11(a), at 10-543, -544 n. 77.2 (1982). REVERSED and REMANDED.

1 . Under AS 23.30.185 a person entitled to receive temporary total disability benefits shall receive ⅜ of his average weekly wage during the continuance of the disability.

2 . AS 23.30.220(a)(1) and (2) were substantially amended effective January 1, 1984. The amended sections, which have no effect on this case read:

(a) The spendable weekly wage of an injured employee at the time of an injury is the basis for computing compensation. It is the employee’s gross weekly earnings minus payroll tax deductions. The gross weekly earnings shall be calculated as follows:

(1) The gross weekly earnings are computed by dividing by 100 the gross earnings of the employee in the two calendar years immediately preceding the injury.

(2) If the board determines that the gross weekly earnings at the time of the injury cannot be fairly calculated under (1) of this subsection, the board may determine the employee's gross weekly earnings for calculating compensation by considering the nature of the employee’s work and work history.