State News : Alaska

In February, the Alaska Supreme Court issued a decision in Roberge v. ASRC in which it established a new method for applying the cost-of-living adjustment (COLA) under AS 23.30.175 for workers who are entitled to benefits at the maximum compensation rate. As a result, workers residing out-of-state who have been paid TTD benefits may be entitled to a higher compensation rate based on the new rule.

Prior to the Court’s decision, the rule as stated by the Appeals Commission was that employers and insurers would cap TTD/PTD benefits at the maximum compensation rate and then apply the applicable COLA adjustment to reduce the rate below the maximum. Using that method, a worker who was subject to COLA reductions would never receive the maximum Alaska rate where the cost of living was less than in Alaska.

However, in the Roberge case, the Supreme Court held that the Commission erred in its interpretation of the COLA statutes. The Court held that, for workers paid at the maximum compensation rate, employers and insurers must first apply the COLA adjustment to the “uncapped” TTD rate (the TTD rate that would apply if there was no maximum rate). If the COLA adjustment lowered the “uncapped” TTD rate below the maximum rate, that lower rate would apply. If the COLA adjustment did not lower the “uncapped” TTD rate below the maximum rate, the maximum rate would still apply, effectively eliminating the COLA.

This is best illustrated through an example:

A worker is injured on 9/20/21, is single with no dependents (S-1) and lives in Atlanta, Georgia after injury. The COLA rate for Atlanta is .6977. Gross weekly earnings equal $2,500.00. The board’s Benefit Calculator states that the spendable weekly wage (SWW) is $1,901.33 and the maximum TTD rate is $1,298.00. The Benefit Calculator does not state what the TTD rate would be if there was no maximum rate.

Prior formula: Based on GWE of $2,500.00, the maximum compensation rate of $1,298.00 applies per the board’s Benefit Calculator. The COLA for Atlanta of .6977 is applied to the maximum rate and reduces the TTD rate to $905.61 ($1,298 x .6977 = $905.61).

Revised formula under Roberge:

1)      For workers at the maximum TTD rate, determine the TTD rate as if there was no maximum rate (the “uncapped” TTD rate). In this example, based on a GWE of $2,500, the spendable weekly wage (SWW) would be $1,901.33 and the “uncapped” TTD rate would be $1,521.06 (80% of the SWW). The board’s Benefit Calculator provides the SWW but not the “uncapped” TTD rate. Multiply the SWW by .8 to get the “uncapped” TTD rate.

2)      Apply the COLA to the “uncapped” TTD rate. In this example, multiply $1,521.06 by .6977. The result is $1,061.24.

3)      Determine if the result from step 2 is above the maximum TTD rate for that year. If so, the maximum rate applies and no COLA is taken. If less than the maximum rate, the result from step 2 applies. In this example, the TTD rate of $1,061.24 from step 2 applies after the COLA.

In this example, the worker would receive $155.63 more per week in TTD benefits under the new formula compared to the prior COLA calculation method. The overall impact of this change is that a COLA might not apply in the case of a very high wage earner or may lead to a lower COLA adjustment than before. 

Be aware that this procedure is only necessary if the worker is at the maximum compensation rate prior to application of a COLA. If the board’s Benefit Calculator indicates that the TTD rate is less than the maximum before any COLA, this procedure need not be followed and the COLA should be calculated as usual.

ALSO BE AWARE THAT THIS NEW FORMULA WILL APPLY IN DEATH CASES WHERE THE MAXIMUM COMPENsATION RATE APPLIES.

In light of the Court’s ruling in Roberge, we recommend that you review all cases where the maximum TTD/PTD rate applies and where a COLA has been taken to determine if a rate adjustment is necessary. This will avoid unnecessary attorney’s fees and litigation costs.