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Court Limits Retiree Presumption On March 23, 2010, the Maine Supreme Court issued a decision that greatly complicates the application of the retiree presumption in 39-A MRS § 223, which says an employee who retires from "active employment" and receives a non-disability pension from the employer is presumed not to have lost earnings from a prior work injury.
In Damon v. SD Warren, 2010 ME 24, the Court held that the retiree presumption does not apply to a retiring employee who "immediately" obtains full-time employment elsewhere.Damon worked at SD Warren for 36 years. He developed carpal tunnel syndrome in 1991, underwent surgery in 1992, and was returned to full duty work in 1993. In 2003, he learned he would be laid off because of downsizing, and he accepted an early retirement package. Before he left the mill, however, he found part-time work as a school custodian, and upon retirement he "immediately transitioned" to that as his full-time job.
In 2007, Damon filed a Petition for Restoration, and SD Warren raised the retiree presumption. HO Collier found that the retiree presumption did not apply and granted partial benefits with offsets, and the Court upheld that decision. Although in 1999 the Court had held in Pendexter v. Tilcon that the presumption applied to an employee who recommenced work 2 years after his retirement, the Court in Damon held that it did not apply because the employee did not "terminate active employment"– instead, he went immediately to another full-time job. Although the new job paid significantly less, the court emphasized the hearing officer's finding that the employee was earning his "full post-injury earning capacity." This observation might have been a response to S.D. Warren's argument that an employee should not be able to avoid the retiree presumption by taking a low-paying post-retirement job.
In Pendexter, the Court said:
We find no support for such an analysis in either the legislative history or the case law, nor do we ascribe to the Legislature an intent to require fact-finding concerning an employee's subjective, and possibly evolving, intentions to retire and to stay retired. Moreover, the employee's interpretation, if adopted, would, in effect, create a second means of rebutting the retiree presumption when the statute only provides one.
We do not address the situation of an employee who retired and went immediately to another job.In this case, Pendexter voluntarily terminated active employment and remained out of work for a period of time before seeking re-employment.The retiree presumption was therefore triggered in October 1990 when he initially retired.The Legislature could have rationally concluded that, in the case of an employee who terminates active employment and accepts nondisability retirement benefits, the employee's resulting unemployment or under employment is most probably no longer "due to the injury," but due to the retirement.
Damon opens up the can of worms the Court avoided in Pendexter. We are left to wonder what "immediately" means: Is a 1-day hiatus between jobs enough to trigger the presumption? Must it be a week, two weeks, a month, or a year? Does it matter whether the employee was looking for work all that time?Will the presumption apply if the post-retirement job pays less than the employee's "full post-injury earning capacity?" What happens when an employee quits his post-retirement job, or is fired, or is laid off, or goes to part-time, or takes a vacation, or goes elsewhere for less money? Will the retirement presumption apply then?
One thing seems clear. In a case involving post-retirement employment, it will be important to establish the employee's "full post-injury earning capacity," as the application of the retiree presumption might depend on it.
The Court also addressed the question of whether the coordination of benefits statute applies to the employer's payment of retiree insurance premiums. As part of Damon's retirement plan, S.D. Warren pays retiree health and life insurance premiums on his behalf. HO Collier allowed a compensation offset for those retirement benefit payments, but the Court reversed that part of the decision, ruling that the coordination of benefits statute applies only to wage replacement retirement benefits.
If you have questions about how Damon applies to your cases, please let us know.
Tom Getchell
Mike Richards
Dan Gilligan
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