Pepper v. Industrial Claim Appeals Office , 131 P.3d 1137 ( 2005 )

LOEB, J.

The sole issue in this appeal is whether § 8-40-202(l)(a)(I)(A), C.R.S.2005, violates equal protection guarantees because it excludes, at the option of the governmental body, members of volunteer police departments from the definition of an “employee” for purposes of workers’ compensation coverage. We conclude that the statute is unconstitutional. Accordingly, we set aside the order of the Industrial Claim Appeals Office (Panel) concluding that Booth Pepper (claimant) was not an employee of the City of Florence (City), and we remand for further consideration of his workers’ compensation claim.

This case was decided on stipulated facts. Claimant was an unpaid member of the City’s volunteer police reserves on September 28, 2001, when he allegedly suffered mental impairment and experienced stress as a result of a shooting incident. At the time of the incident, claimant was performing his duties as a volunteer reserve police officer.

In pertinent part, § 8-40-202(l)(a)(I)(A) provides that, for purposes of the Workers’ Compensation Act of Colorado (Act), § 8-40-101, et seq., C.R.S.2005, regularly employed police officers, firefighters, sheriffs, and deputy sheriffs are deemed employees. In addition, posse members and several types of volunteers, including volunteer firefighters and members of volunteer rescue, disaster, and ambulance teams, are deemed employees. However,

[mjembers of volunteer police departments, volunteer police reserves, and volunteer police teams or groups in any county, city, town, or municipality, while actually performing duties as volunteer police officers, may be deemed employees within the meaning of this paragraph (a) at the option of the governing body of such county or municipality.

(Emphasis added.)

The City chose not to include members of the volunteer police reserves as employees under its workers’ compensation insurance policy. Therefore, the administrative law judge (ALJ) determined that claimant was not the City’s employee on the date of the alleged injury.

In his brief in support of his petition to review, claimant challenged the validity of § 8-40-202(l)(a)(I)(A) on equal protection grounds. The Panel, citing its lack of jurisdiction over constitutional issues, affirmed the ALJ’s order.

Claimant contends there is no rational basis for allowing a governing body to exclude volunteer police from being considered employees under the Act, when all other similarly situated groups listed in the statute, whether regularly employed or volunteers, are deemed employees. We agree that the classification offends guarantees of equal protection.

I.

At the outset, we reject the Panel’s assertion that the constitutionality of this statute is not properly before this court.

In cases involving direct review of agency action, the court of appeals has initial jurisdiction to review actions when the constitutionality of a statute is at issue. Arapahoe Roofing & Sheet Metal, Inc. v. City & County of Denver, 831 P.2d 451 (Colo.1992) (court of appeals may consider the constitutionality of statutes in appeals taken from decisions of administrative tribunals); Celebrity Custom Builders v. Indus. Claim Appeals Office, 916 P.2d 539 (Colo.App.1995)(constitutionality may be addressed by review of action brought in either district court or administrative proceeding). Contrary to the Panel’s argument, the constitutionality of a statute need not be raised before the ALJ in order to preserve the issue for consideration by this court. See Indus. Comm’n v. Bd. of County Comm’rs, 690 P.2d 839, 844 n. 6 (Colo.l984)(constitutional issues arising in cases commenced in what is now the Department of Labor and Employment may be raised for the first time on appeal to the court of appeals); Montezuma Well Serv., Inc. v. Indus. Claim Appeals Office, 928 P.2d 796 (Colo.App.1996)(fact that petitioners did not raise constitutional issue before the ALJ and Panel did not preclude them from raising the issue before the court of appeals); Colo. Comp. Ins. Auth. v. Indus. Claim Appeals Office, 907 P.2d 676 (Colo.App.1995)(eonstitutional challenges to the facial validity of statutes need not be raised in administrative proceedings in order to be asserted on appeal).

Accordingly, claimant’s failure to raise the constitutionality of the statute before the ALJ does not preclude our consideration of the issue.

II.

In determining whether § 8-40-202(l)(a)(I)(A) is constitutional, we begin with the presumption that it is valid. See Dillard v. Indus. Claim Appeals Office, 121 P.3d 301, 2005 WL 1303265 (Colo.App. No. 04CA0680, June 2, 2005). Therefore, the burden is on claimant, as the challenging party, to prove the statute is unconstitutional beyond a reasonable doubt. See MGM Supply Co. v. Indus. Claim Appeals Office, 62 P.3d 1001 (Colo.App.2002).

A.

The Panel characterizes claimant’s appeal to the Panel as a facial challenge, but the appeal to this court as a challenge to the application of the statute. We reject this characterization and conclude that claimant’s appeal constitutes a facial challenge to § 8-40-202(l)(a)(I)(A).

The distinction between a “facial” and an “as applied” equal protection challenge is not always clear cut. A facial challenge is supported where the law by its own terms classifies persons for different treatment. In contrast, a statute, even if facially benign, may be unconstitutional as applied where it is shown that the governmental officials who administer the law apply it with different degrees of severity to different groups of persons who are described by some suspect trait. W. Metal Lath v. Acoustical & Constr. Supply, Inc., 851 P.2d 875, 880 n. 7 (Colo.1993).

Here, the challenged classification appears on the face of the statute because volunteer police are singled out for treatment different from that of regular police and firefighters, as well as from that of other categories of emergency volunteers. Thus, as we understand claimant’s argument, he makes a facial challenge, and therefore we need not consider the Panel’s arguments regarding the application of the statute.

B.

The threshold question in an equal protection challenge is whether the legislation results in dissimilar treatment of similarly situated individuals. To violate equal protection provisions, the classification must arbitrarily single out a group of persons for disparate treatment from that of other persons who are similarly situated. Peregoy v. Indus. Claim Appeals Office, 87 P.3d 261, 265 (Colo.App.2004).

Claimant argues that volunteer police are similarly situated to all the other groups included in the statute because they are subject to the same perils as regularly employed police officers and firefighters, and perhaps more perils than some of the other volunteer groups. The City argues that the groups to be compared should be limited to only volunteer police, some of whom, when injured, will receive workers’ compensation benefits, and some of whom will not, depending on the decision of their governing body.

We adopt a middle ground as the basis for comparison. We conclude that, for purposes of our equal protection analysis, volunteer police are similarly situated to all the other types of volunteers included in the statute. See Duran v. Indus. Claim Appeals Office, 883 P.2d 477, 482 n. 9 (Colo.1994)(“too exacting a focus” on classifications of claimants overlooks the fact that the Act “categorizes injured workers as a whole”).

C.

Because the receipt of workers’ compensation benefits is not a fundamental right, the rational basis tést applies to claimant’s equal protection challenge. See Peregoy v. Indus. Claim Appeals Office, supra; Kroupa v. Indus. Claim Appeals Office, 53 P.3d 1192 (Colo.App.2002). Under that test, a statutory classification will stand if it bears a rational relationship to a legitimate governmental objective and is not unreasonable, arbitrary, or capricious. Further, if any conceivable set of facts would lead to the conclusion that a classification serves a legitimate purpose, a court must assume that those facts exist. Christie v. Coors Transp. Co., 933 P.2d 1330, 1333 (Colo.1997); Peregoy v. Indus. Claim Appeals Office, supra.

Counties, cities, and municipalities have a legitimate interest in encouraging individuals to volunteer for dangerous activities that benefit the community. See Parker Fire Prot. Dist. v. Poage, 843 P.2d 108 (Colo.App.1992)(clear legislative intent of § 8-40-202(l)(a)(I), C.R.S.2005, which provides for compensation at the maximum rate for volunteers who qualify as employees, is to encourage voluntary public service). These governing bodies also have a legitimate interest in controlling their costs. See § 8^0-102(1), C.R.S.2005 (express intent of the Act is to provide “quick and efficient delivery of disability and medical benefits to injured workers at a reasonable cost to employers, without the necessity of any litigation”); McManus v. Indus. Claim Appeals Office, 81 P.3d 1074 (Colo.App.2003).

Here, however, we do not perceive how controlling costs relates to the statutory disparity between the two groups of volunteers. We can conceive of no valid purpose for allowing police volunteers to be excepted from workers’ compensation coverage, while mandating that all other volunteers, who similarly serve a vital function and are subject to similar risks and perils, be covered. Thus, even though we recognize that reducing costs may be a legitimate interest, we conclude the statute is not rationally related to achieving that purpose because it provides coverage for some volunteers but not others who are similarly situated. See Peregoy v. Indus. Claim Appeals Office, supra; see also Whiteside v. Smith, 67 P.3d 1240 (Colo.2003)(in determining whether due process is adequately afforded, financial and administrative burdens alone are not given the controlling weight).

The complete denial of benefits to volunteer police, at the governing body’s option, is similar to another complete denial of benefits that did not pass constitutional scrutiny. In Industrial Claim Appeals Office v. Romero, 912 P.2d 62, 69-70 (Colo.1996), the supreme court held:

[E]ven if we assume that preventing duplication of benefits and reducing the cost of workers’ compensation insurance are legitimate governmental purposes, section 8-42 — 111(5)[, C.R.S.2005,] is not rationally related to achieving those purposes because it eliminates benefits for totally disabled claimants who are age sixty-five or older, but provides such benefits for partially disabled claimants of the same age. Such disparate treatment of similarly situated individuals violates the equal protection guarantees of the state and federal constitutions and cannot be upheld.

The holding in Romero compels us to conclude that § 8-40-202(l)(a)(I)(A) violates constitutional guarantees of equal protection. The disparate treatment of totally disabled claimants who are age sixty-five or older under § 8-42-111(5) is not measurably different from the disparate treatment afforded volunteer police under § 8-40-202(l)(a)(I)(a). Both statutes completely eliminate benefits for a particular group of injured workers while affording coverage to similarly situated workers. In Romero, as here, the argument that cost reduction was a legitimate governmental purpose stops short of explaining how the disparate treatment in each case bears a rational relationship to fiscal concerns.

Although Romero was later distinguished in Culver v. Ace Electric, 971 P.2d 641 (Colo.1999), we are not convinced that any such distinguishing factors mandate a different result here. Culver involved an offset provision that reduced benefits to permanently totally disabled claimants after age sixty-five only if the worker was also eligible to receive Social Security or employer-paid retirement benefits. The supreme court noted that the complete elimination of benefits in Romero was significantly different from the coordination of benefits at issue in Culver, See Culver v. Ace Electric, supra, 971 P.2d at 647.

Here, too, the complete elimination of benefits for volunteer police is different from the coordination of benefits through the offset at issue in Culver. And inasmuch as neither the City nor the Panel has articulated a conceivable set of facts linking the complete denial of benefits for volunteer police to any legitimate governmental purpose, we conclude the supreme court’s reasoning in Romero is persuasive and applicable here.

We are not unmindful of the General Assembly’s prerogative to draw reasonable classifications, and we recognize that a legislative distinction, even if imperfectly drawn,' does not by itself result in the denial of equal protection. See Duran v. Indus. Claim Appeals Office, supra; Lobb v. Indus. Claim Appeals Office, 948 P.2d 115 (Colo.App.1997). We also recognize that a statutory classification that creates a harsh result in some instances does not necessarily fail to meet constitutional requirements under the rational basis standard. See Pace Membership Warehouse v. Axelson, 938 P.2d 504 (Colo.1997); Lobb v. Indus. Claim Appeals Office, supra. Here, however, we conclude the classification and disparate statutory treatment of volunteer police and other volunteers are not reasonable. Therefore, claimant is entitled to relief from the harsh result of excluding volunteer police, at the government’s option, from the definition of an “employee.”

The order of the Panel is set aside, and the case is remanded for the ALJ’s reconsideration of claimant’s entitlement, as an employee, to workers’ compensation benefits.

Judge MARQUEZ concurs. Judge CARPARELLI dissents.