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Many clients are asking whether the new COLA calculation for workers at the maximum compensation rate adopted by the Alaska Supreme Court in the Roberge case will apply retroactively to the inception of a claim, will only apply going forward (prospective application), or whether there will be some intermediate limit placed on past benefits that can be claimed and awarded based on fairness. The Court in Roberge did not address that issue. The Supreme Court has the authority to determine whether a new rule should be applied retroactively or prospectively, but it would take litigation to reach that result. The application of Roberge is therefore an issue that can be legally challenged, and we expect the issue to be litigated.
When the Supreme Court altered the calculation of disability benefits under the Act in the past, it applied four factors to determine whether a new rule should be applied retroactively or only prospectively:
1) Whether the holding either overrules prior law or decides an issue of first impression whose resolution was not anticipated;
2) Whether the purpose and intended effect of the new rule of law is best accomplished by a retroactive or a prospective application;
3) The extent of reasonable reliance upon the old rule of law; and
4) The effect on the administration of a retroactive application of the new rule of law.
Based on these factors as applied in other cases, we expect the Board and the Court to decide that Roberge will generally apply retroactively to any claims that are open to adjudication and/or preserved for appeal.
Still, each case is different and may present facts that support a limitation on retroactive application of Roberge. For example, if a compensation rate issue was raised and settled in a case, an adjustment will likely not be allowed. If a C&R covering indemnity benefits was done, claiming additional past disability benefits will also likely be prohibited. And if more than two years has passed since the last payment of benefits, the statute of limitations in section .105 of the Act might apply.
On the other hand, for workers or beneficiaries currently receiving undisputed PTD or death benefits, there is likely no statute of limitations running on a claim for increased weekly benefits and there is a significant risk that increased benefits will be awarded from the inception of those benefits. The Supreme Court would have to determine if it would be unfair to employers to impose increased liability going back many years and the Court could adopt a limit of some kind, but it would take litigation to reach that result.
We recommend a practical approach to the issue of retroactive application of Roberge: determine the exposure and assess if litigating the issue will be worthwhile. Settlement may be preferable, or voluntarily paying additional past benefits may be the best option in order to avoid legal cost exposures.
If you decide to challenge liability for retroactive benefits, the most conservative approach is a petition asking for a Board determination whether and how far back a compensation rate adjustment needs to be made. A more aggressive approach is to file a controversion notice on the basis that Roberge does not apply retroactively under the factors described above. Since the issue of retroactive application of the rule adopted in Roberge is a question of law, a controversion on that basis could be filed in good faith. The worker would have to decide whether to challenge the controversion. Ultimately the issue will have to be decided by the Alaska Supreme Court.