Revisiting Personal Injury & Workers Compensation Awards & Divorce with Philip Goldberg | Episode 202

Welcome to This Week's Episode of Divorce at Altitude: Personal Injuries and Workers' Comp in Colorado Divorces

Episode Highlights:
In this episode, Ryan Kalamaya is joined by seasoned trial lawyer, Philip Goldberg, to unpack how personal injuries and workers' compensation claims are treated in Colorado divorces. They dive into the distinctions between personal injury awards and workers' comp benefits, and how each can impact the division of assets in divorce proceedings.

Key Discussion Points:
- Understanding Personal Injury Claims: Explore what constitutes a personal injury claim and how these awards are treated during divorce. Goldberg provides insights into how different states, including Colorado, categorize these awards as marital or separate property.
- Workers' Compensation Explained: Discover how workers' comp claims differ from personal injury claims, focusing on how Colorado uniquely handles these cases in the context of divorce.
- Marital vs. Separate Property: Learn about the "analytic approach" used to determine what portion of a compensation claim is considered marital property and how this differs between personal injury and workers' comp.
- Impact on Divorce Settlements: Goldberg and Kalamaya discuss real-world applications, including how these funds are divided in a divorce and potential complications that arise from concurrent personal injury and workers' comp claims.

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Note: This podcast aims to provide general information and is not a substitute for legal advice. Always consult with a qualified attorney for specific advice related to your legal issues.

Thank you for tuning in to Divorce at Altitude. We hope you found this episode enlightening and helpful as you navigate the complexities of divorce and compensation claims in Colorado.

What is Divorce at Altitude?

Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.

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DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.

Transcript

Ryan Kalamaya: 0:00

Welcome back to another episode of Divorce at Altitude. This is Ryan Kalamaya. This week we are talking about injuries, specifically personal injuries and workers comp claims, and how those can matter for purposes of a Colorado divorce. We are joined by Philip Goldberg, who is a divorce attorney in Denver. Phil is an 80 rated trial lawyer. He's tried multiple jury and bench trials and has argued cases in the Colorado Supreme Court, the Colorado Court of Appeals, the Georgia Court of Appeals, the Illinois Court Appellate Court as well as others. He is licensed to practice here in Colorado as well as Georgia. He focuses practice, he, sorry I struck that, he focuses his practice on complex family law matters and has extensive experience in probate and estate litigation as well as real estate commercial and appellate practice. He's been named as the included in the best lawyers in America, and as I said before, he is been av rated by Martindale Hubble. He is also a member or has been selected to the national trial lawyers top 100 civil plaintiff trial lawyers, and he has a 10 out of 10 forum avo. Phil, before I go on, welcome to the show.

Philip Goldberg: 1:20

Thanks, Ryan. Appreciate you inviting me. Looking forward to it.

Ryan Kalamaya: 1:24

We, I didn't mention in the intro, but you went to the Virginia Military Institute and I thought we'd start off there because that was nearby where I went to college. How did you end up at VMI?

Philip Goldberg: 1:36

I needed a way to pay for college. I was not as good of an athlete as you, I think, were. You played baseball, if I'm not mistaken. To get an athletic scholarship, I wasn't smart enough for an academic scholarship. And so I was looking for ways that I could go to college and not have to pay out of pocket, at least, a hundred percent. And a friend of mine's older brother went to VMI. And we were talking, I was over at the house, and he was on an Army scholarship. And so he persuaded me to try for a U. S. Army scholarship at VMI, which I did, and I was accepted. And so I was able to attend college on an Army scholarship. Now the trade off is you have to, I'll serve after graduation, which I did. And so that's how I ended up there. And I'll tell you in hindsight I'm really glad I went there not just because I was able to get a scholarship. I really enjoyed my time there and my best friends today are still my friends from VMI because we went through some hardships together and I think that really created bonds of brotherhood and that I, 30 plus years later, I still hold very dear.

Ryan Kalamaya: 2:39

And I'm sure you would agree that also I loved going to UVA and as a kid from Colorado, it was a cultural shock, but I, really value my time here in Colorado or living here in Colorado because it just the contrast and nothing against Virginia, but it just reinforces in my mind how wonderful Colorado is from, a variety of standpoints.

Philip Goldberg: 3:08

Oh, I totally agree. We moved here. I'm an East Coast kid, grew up in Maryland, college in Virginia, law school, University of Georgia. I'm an East Coast guy, and we moved out here in 07. My wife and I, we had, our kids were, I got three, they were very little at the time, six, four, and two. And we moved out here for the lifestyle. We knew it would be a once in a, not lifetime, but once in a Decades type of a move. We know we're not going to pick up with three kids and move again, and I knew that, I was in Atlanta. I had been practicing for over 10 years there, and we came out here, and I knew I would take a few steps back professionally, but it was worth the exchange for what we consider to be the lifestyle benefits of living out here, and we love it. So I've been out here now for almost 15 years.

Ryan Kalamaya: 3:56

I think a lot of our clients have similar stories in the sense of there's a lot of transplants and a lot of people that are here in Colorado and they're here for the lifestyle. As just an aside, I don't know if you're a big football fan, but I imagine that you're on cloud nine if you are being from the University of Georgia winning the national championship.

Philip Goldberg: 4:17

Let me show you. Ugh. Sitting here on my desk, if you can see this.

Ryan Kalamaya: 4:22

Oh, yeah. A nice little helmet for those that can't see. He's he's got a Georgia helmet back from the Hershel Walker days. I was a season

Philip Goldberg: 4:31

ticket holder until we moved here from Atlanta. I'm a huge Georgia fan. I've been watching since I started law school in 1989, so 31 years and finally reached the mountaintop this week. It was fantastic. Thanks for mentioning it.

Ryan Kalamaya: 4:46

Yeah football, you can have some injuries and you talked about lifestyle. Those can come into play when you get injured, so let's jump into personal injury awards. And the reason that I'd reach out to you about talking on this is that you had written an article for the Trial Talk, which is the trade journal for the Colorado Trial Lawyers Association. My dad was a personal injury lawyer, so I would go up to convention when I was a young kid going to Steamboat or Vail and they would have a convention for CTLA and it would just be a bunch of plaintiff's trial lawyers and you wrote an article on this issue which I thought was interesting and you and I talked before offline about just the experience of being in personal injury and the relationship with divorce. So for those that don't know, can you start off, what is personal injury? What is a claim of personal injury? And we can then jump off from there and maybe distinguish that from a worker's compensation claim.

Philip Goldberg: 5:51

Sure. So a personal injury claim is when a third party negligently or intentionally causes an injury to, we'll call it the injured party. Now it could be anything from a negligent driver who switches lanes when they weren't checking their mirrors and they caused an accident. It could be perhaps a store who didn't shovel the snow and we've got a slip and fall on ice. When there is a physical injury, and I believe in Colorado that you can correct me on this, I think you've got to have a physical injury in order to claim emotional damages as well. I could be wrong on that. I don't practice personal injury anymore. But when you've got that physical injury, you can bring a claim against what we call the tortfeasor, the person who wrongfully, negligently, or intentionally harmed you, and the compensation that you can receive from them is a money award or you can settle the case as well. And so it's money in exchange for the fact that the injured had to go through not only physical pain, but perhaps rehabilitation, perhaps they lost income, they have medical expenses, so it compensates not only the economic losses, but up to a cap in Colorado, non economic losses as well, such as pain and suffering.

Ryan Kalamaya: 7:14

Yeah, and to further explain that in Colorado, emotional damages They don't necessarily need to be accompanied by physical injuries, but there needs to be some sort of counseling or treatment, really, in order for there to be a valid claim. And for members that, or listeners that might recognize Eric Wolf, our hypothetical divorce client, when he Finds out that his wife, Melanie, is going to file for divorce. He goes and hits the slopes and he's skiing and so another example would be if Eric was out skiing and somebody else clipped him from behind and he had an injury or he was driving up to Keystone or Breckenridge on I 70 and was hit and so for you, Phil, You wrote an article about how unique Colorado is. Why don't we set aside the workers comp, we'll come back to that. But how does Colorado approach personal injury claims, and maybe in explaining that for listeners, you could also get into what other states do, because Colorado is pretty unique.

Philip Goldberg: 8:23

Yeah, for sure. The question is, how do we deal with Personal injury, either claims that are unliquidated or awards in a divorce. And so stepping back nationally, there's three primary approaches that various states take. One approach, at least two states take, New York and Delaware that I'm aware of, is what we call the unitary approach. And that is an approach where to the extent a spouse is injured during the marriage, receives awards, or has a claim, that, those funds the proceeds from any award or settlement are considered the separate non marital property of the injured spouse. So the The non injured spouse has no claim whatsoever to any of the proceeds from a personal injury settlement or award. Again, New York and Delaware are the two that I'm aware of. I don't believe there's any additional states. Although, frankly, I don't keep up with other states laws, but at least as of recently, those were the two states that adopt the unitary approach. The second approach is also a minority. approach, but a larger minority than the unitary approach. And it's the exact opposite of the unitary approach. It's called the mechanistic approach. And the mechanistic, under the mechanistic approach, If the injury occurred during the marriage, then any proceeds received by the injured spouse compensating him or her for that injury is entirely marital property, okay? That doesn't mean that the award necessary or the funds necessarily get split 50 50. We'll talk about that in a minute. But as far as the classification of those proceeds or funds, they're 100 percent marital if the injury occurred during the marriage, regardless of when the proceeds were received. We're just looking at timing of the injury. The third approach, which is the majority position, is called the analytic approach. And under the analytic approach, courts have to do a deeper dive and they have to look at the loss to the injured spouse that the proceeds are intended to compensate for. So for example, if the proceeds are intended to compensate the injured spouse for lost wages during the marriage or for medical expenses that were incurred during the marriage, those Or that portion of the proceeds are considered marital, but to the extent the proceeds are intended to compensate for, say, post divorce losses. For example, you've seen it, Ryan, maybe there's a life care plan. Someone's very seriously injured and they've got, A plan in place that is supposed to help them rehabilitate and live their life for the remainder of their of their life based on their their life expectancy. And so to the extent those proceeds. are intended to compensate that injured spouse for post divorce losses, such as the life care component that occurs after the divorce, then that's going to be separate a property. So in your example Eric is on the ski slope, somebody clips him. He's injured, he's very severely, he can no longer work, and he obtains, let's say, a 1 million personal injury award from the party who clipped him. To the extent that a portion of that 1 million is intended to compensate Eric for lost wages during the marriage and medical expenses during the marriage. That is going to be classified as marital, a marital asset, marital funds, to the extent those a portion of that million dollars in that example is for post divorce compensation, that's going to be considered separate. So it really requires the court to do a pretty deep dive, but it also requires the injured spouse when they're receiving or negotiating a settlement settlement. to ensure that the different components are spelled out in that settlement agreement, because if it's just a lump sum it's going to be potentially difficult for that injured spouse to argue that any portion was intended for post divorce compensation. It's tougher to do. Most people don't think of that when they're negotiating a personal injury settlement.

Ryan Kalamaya: 12:46

And in Colorado, so what is Colorado how do they handle it?

Philip Goldberg: 12:50

In Colorado, Colorado takes the mechanistic approach,

Ryan Kalamaya: 12:53

which

Philip Goldberg: 12:54

is the second approach I discussed. It's a minority approach, but it's a larger minority than the unitary approach. In Colorado, the courts look entirely at the timing of the injury. And if the injury occurred during the marriage, regardless of when the proceeds are received, it is a 100 percent marital asset. It's classified as marital and then the court has discretion to allocate that marital asset. And the matter in which the court believes is just.

Ryan Kalamaya: 13:24

And you and I were talking before that it, in, when you compare it to Colorado in how they handle workers comp, it just is really unique and if not unique. It just doesn't make sense to me from an analytical standpoint or logical standpoint, but these are the sorts of things that lawyers, we don't make the law. We help try to change the law, but the judges and we had a separate podcast Phil with Paige Mackey Murray up talking about appellate law and how law is developed by the judges. Usually the Colorado Supreme Court, but this is one of those things where we're handed these cards or dealt these cards, and then we just have to know how to play them. But as you said, it doesn't mean it's equal. And, you and I have had different experiences or heard about different ways that this is handled. But I think to, for listeners that may, you If Eric is out skiing, and he gets injured, my firm does a fair amount of personal injury, so we see this a fair amount. Where Eric will come and we'll explain to Eric there are two ways types of damages that you are looking at. One is economic damages, and then the other is non economic damages. And if you look at the economic damages, it's going to be lost wages as well as your medical expenses. And that gets really tricky because the medical expenses, you get paid based on what the amount that was billed. And there might be owed or subrogation claims, what they're called, is we have to pay back the health insurance. So It's not explicit in Colorado law, but the court has to be looking at the net amount, how much the person is actually collecting. Because if they get, in your example, a million dollars, if they have to pay their health insurance company back 200, 000, I mean that, that's real money and that's going to really change the economics. But what you and I are referring to is the lost wages in particular, because there may be lost wages, where if Eric is injured, he has a brain injury, he can't make money in the same manner. And that could extend after Eric and Melanie get divorced. And that is not supposed to be considered if we're talking, it's supposed to be separate property, but Colorado doesn't dive into that, which is certainly, I think you would agree that you could get into that in terms of that dynamic when you're arguing for a disproportionate allocation of that million dollars or whatever the net amount is to Eric.

Philip Goldberg: 16:17

Exactly. So the rationale that Colorado appellate courts use for treating personal injury proceeds under the mechanistic approach. It's based on a strict reading of the the statute in the domestic relations statute, 113, that specifically lists the four categories of property that are considered separate and it's, I don't have it in front of me, but it's, gift, gifted property, inherited property exchanged for property that you may have owned prior to the marriage, property you own prior to the marriage, etc. And since personal injury proceeds are not specifically set forth in the statute, it's The appellate court courts have determined that personal injury proceeds do not constitute separate property if the injury occurred during the marriage. It simplifies things in one way because we're not, we'll talk about the analytic approach a little, in a little more detail in a moment, but the courts aren't required necessarily to go into the settlement or the award itself to try to determine which portion of the award or proceeds are intended to compensate which loss. It's all going to be marital, but we then will get into the scenario where the parties are arguing for just, as you mentioned, a disproportionate allocation of those funds. And the court absolutely has discretion to award a disproportionate 50, a portion of those proceeds or all of those proceeds to the injured spouse or hypothetically to the non injured spouse as well. The court should look at those factors. the physical condition of the patient. Injured spouse post decree injury related expenses. Those are things the court should consider, meaning post dissolution injury related expenses. The court should absolutely be looking at those in determining the allocation of the proceeds. But they are 100 percent emerital. There was a recent story, Justin Ross is a pretty well known attorney in Denver. You probably know him, Ryan. I heard a story, and Justin's listening, and I get any of this wrong, apologies, but he was in court within the last few years, and the husband had experienced a devastating injury and he lost his leg. And during this court proceeding, Wife's attorney was arguing, it was a personal injury claim, and I believe he received proceeds from a settlement. Wife's attorney was arguing that the judge should award Wife, in that case, a 50 percent allocation of those proceeds because she incurred losses as well. She took care of him during his injury. She nursed him. back to health as best as she could. She was there for him. There were medical expenses that out of pocket that the parties had to incur together. And so the argument was at least in that case, that wife wanted a 50 percent allocation of those proceeds. And the judge, according to Justin Ross, I wasn't there listened very attentively to wife's attorney's argument. And when the argument was concluded looked at wife's attorney and said, Yeah, but he ain't got no leg and awarded 100 percent interest of those proceeds to the husband. So the court does have discretion and I think most judges use that discretion wisely. Under the analytic approach, The court would have less discretion and we're, and again, we're doing a deeper dive and we're looking at the individual components of the proceeds and what loss those individual components are intended to compensate for. And then we'll base the classification of marital or separate based on whether the loss was a loss to the marital estate. What's important to remember though. is even if it is determined by the judge to be a loss to the marital estate, the judge still has discretion to allocate those proceeds unequally, meaning the court still doesn't have to award a 50, 50 50 or any other allocation simply because the classification of those proceeds are marital versus simple.

Ryan Kalamaya: 20:34

And we can get, there are a variety of ways that we can go about this in terms of what implication these cases can have because you get into the non economic so the loss of the leg the person receiving the injured party, that is, there's pain and suffering which you can understand from a logical standpoint the wife. There is some damages to her or, the compensation that would be awarded. You could, there is a separate claim of loss of consortium and that is being done or that would be done by Melanie. If she's taking care of Eric at home, he gets in a ski accident, she takes care of him. There can be a claim of loss of consortium, which is for her. Actually, I had a case where there was a common law marriage claim and the parties filed a lawsuit and they claimed a loss of consortium. You can only do that if you're married. So the judge, just as an aside, determined that date of filing was when they determined that they were married because you can't be a boyfriend and girlfriend. But the principle was still the same and we deal with it a lot. It's tricky because you're getting into with a loss of consortium claim. about how often are you having sex, what the health of your marriage is, and when you're in a divorce, you're now you're on the flip side, talking about maybe why the reasons that you are getting divorced because of this injury that, substantively changed the relationship, and those are compensated in how Parties argue over that can really matter, but when we send out a demand letter to the insurance company, it will have these particular topics or issues, line item for, particular amounts. So the lost wages will be X, but loss of your limb. That's a, it's another category of damages, physical impairment, but when we get a check. To pay for our client's injuries, it just has a number and the, it just was releasing the full amount or the full claim. It doesn't line item how much a particular check is made out for. There used to be with personal injury lawyers, we would have an incentive To itemize it because the IRS used to tax the lost wages portion. Now the IRS is just, they've considered it generally to be non-taxable as of the date of this recording, but it, you can get into really tricky territory and then what you brought up in your. Your article is structured settlements, because oftentimes what will happen is someone will get a million dollars, but they'll get payments over time. And no one has really addressed necessarily. some of those, as well as putting the money into a trust. So for people that don't understand the what we're talking about, how could theoretically a party avoid the personal injury claim being marital property if they put it into a trust?

Philip Goldberg: 23:45

Yes, so that is a common scenario especially with larger settlements for, more serious and substantial injuries. So Under Colorado law, funds in an irrevocable trust that or over which the beneficiary spouse has no control, meaning the benefits that, that spouse may receive from the trustee are entirely in the trustee's discretion. And the injured spouse has no legal right to demand any allocate or any distribution or any benefit. That's a pretty common way to handle personal, substantial personal injury proceeds, as you mentioned, as long as. The funds were placed into an irrevocable trust and it is not determined by the judge. The judge does not determine that the placement of those funds into the trust was for an improper purpose. It's not considered dissipation of marital assets. I'll give you an easy example. Let's use Eric. He received we'll just say proceeds of one million. That was the net and he placed this into an irrevocable discretionary trust. And the parties get divorced five years later. It's going to be pretty hard for Melanie in that example to argue that Eric's purpose, his intent in placing the funds into this irrevocable discretionary trust was for purposes of not allowing Melanie to reach those funds in event of a divorce. It's going to be a hard argument to make. So as long as there's not a finding of dissipation, then that is an effective way to remove these. These funds from the marital estate because once any funds are placed into an irrevocable discretionary trust and there's no finding of dissipation, wrongful intent, wrongful motive, then those funds are effectively removed from the marital estate. However, the court can still consider those funds as an economic circumstance when allocating the other. Marital property of the estate. And if in this example, Eric's got 1 million sitting in an irrevocable discretionary trust, the court can absolutely consider that in the overall as an overall economic circumstance in arriving at an equitable distribution of the marital property that the court does have discretion to allocate. And another important thing to remember is any income from the funds that are in this trust is still considered income to the injured spouse for purposes of maintenance and child support. So it is possible to remove funds from the marital estate, but It's not possible under Colorado law to remove them from the judge's consideration or to remove the income component for purposes of spouse or child support.

Ryan Kalamaya: 26:45

Speaking of income, Phil, what, in your Justin Ross example of the, million dollars for a lost leg, what are your thoughts on the income from that million dollars that goes a hundred percent to the husband that lost his leg, which makes sense, but if they have children in terms of child support, what do you think is happening to that million dollars for child support purposes?

Philip Goldberg: 27:09

I think the court's going to have to look at what is the actual income that the injured spouse is receiving from the corpus, from the body, the one million dollars Let's say, just use easy math, let's say husband's generating 10%. So that would be 100, 000 in that example. That 100, 000 is going to be considered income for purposes of the child support calculation. And if we are still in the pre dissolution stage, post filing, pre decree, the court can consider and should consider that as income to the husband for purposes of deciding whether either party should be paying maintenance to the other party, spousal maintenance. very much.

Ryan Kalamaya: 27:49

I've seen some chatter on that. There's a LISR for CTLA, the Colorado Trial Lawyers Association, which. I'm a member of about someone receiving a personal injury award, and there is a lien or something against them for child support that they haven't paid child support and whether or not the personal injury lawyer has an obligation To pay out that lien. So there's these interrelated issues. And you and I, before we were talking or before we started recording, we're talking about marital torts and so to what, when I say marital torts, can you explain a little bit about that for listeners that may not know what a marital tort is?

Philip Goldberg: 28:29

Oh, sure. So a marital tort would be. a, an injury that one spouse inflicts on the other spouse. So an easy example is in the unfortunate circumstance of domestic violence, for example. The injured spouse has the right in Colorado to bring a lawsuit against the spouse the so called tortfeasor, the spouse who caused the injury, even if they're still married. The fact that they're married does not. prevent the injured spouse from bringing a lawsuit just if you know that injured spouse was walking down the street and somebody just, came out of nowhere and caused injury to that person, struck them, cold cocked them. The injured spouse absolutely has a right under Colorado law to bring a suit against the tortfeasor spouse. And so the question that's, that is unresolved is in that example, if the injured spouse receives an award, either a settlement or work from the court or a jury for those injuries and the parties are now getting divorced, how would the court allocate, first off, classify, and secondly, allocate those proceeds? So in Colorado, using the mechanistic approach, if the parties were still married, let's just use, the, one of the spouses commits domestic violence on the other spouse. That, if that occurs during the marriage, the proceeds. of the injured spouse's injury claim are 100 percent marital. But then again, we get back to the issue of the court potentially allocating those proceeds in an unequal manner. The, common sense would probably say, in that circumstance, the judge Very well may award the entire amount of those proceeds to the injured spouse. Colorado's not a 50 50 state, and to the extent the the tort fees or spouse has incurred a debt for this judgment, the court could award 100% of that debt to the tort fees or spouse. So that's one way courts can deal with it. But as far as classification goes, in that example, that's a 100% marital asset, meaning that the funds that are owed from one spouse to the other.

Ryan Kalamaya: 30:47

You we were talking about I, I had a case where we've, we filed a separate lawsuit and there was certainly some discussion with my client in terms of this is certainly a marital asset where and, if we use Eric and Melanie is sexually assaulted or there is some sort of battery or something in that context. That's the most common. And unfortunately it's far more common than it should be, but there was a separate lawsuit in Colorado law says you're not actually dealing with that claim in the divorce, although it will certainly be discussed, but that is an asset where Melanie may be. awarded and we'll get into does it actually have to settle during the divorce or during the marriage, Phil but then there's also this debt where Eric, he's going to have this judgment or this liability in owing Melanie for the damages that he caused and that also is a marital debt, but to your point, The judge could look at it and I think it's more likely to look at that in terms of really the equities or the reasoning behind that particular lawsuit. And we can't get into fault in Colorado unless it's economic fault. And what you referenced is dissipation. I do think that the court really is going to look at. What the circumstances were for that particular claim, but I referenced does it have to settle what happens Phil? With an open ended, claim that someone was injured and The lawsuit still going or there may not even be a lawsuit. There just could be this potential claim What happens in that circumstance here in Colorado?

Philip Goldberg: 32:36

So Under the mechanistic approach, the classification of the asset as marital or separate is based solely on the timing of the injury. So in your, in the example you just gave, the injury occurred during the marriage. The asset that is resulting from that injury, meaning a personal injury claim that potentially proceeds later, would be considered 100 percent marital because the injury occurred during the marriage. When the funds are received under Colorado law, it's not a relevant consideration in as far as classification of marital or separate property. And so in that example, it is a 100 percent marital. It's also, as you mentioned correctly, a 100 percent marital debt, and then it's going to be up to the judge to use their discretion in allocating potentially unequally both the asset and the debt, but the, there's a case, I don't remember the case may have been Feldheim or another case, but under Colorado law. Again, the timing of the receipt of the proceeds is irrelevant. There's a case where one of the parties just received a settlement offer that I think she accepted, and then the parties got divorced. And so what does the judge do with that? The judge can either reserve jurisdiction and say, hey, if and when you receive funds, come back and we'll determine how to allocate that marital asset. Or the court can. In a personal injury claim, not so much for workers comp, which we'll talk about in a minute. The court can allocate a certain percentage of whatever funds are received to both spouses. The court has wide discretion on how to deal with that. I think often the court will simply reserve jurisdiction, but the court doesn't have to. The court can say, okay, whatever is received, injured spouse gets 70 percent, other spouse gets 30 percent or any other percentage that the judge thinks is just. The judge would just have to make sure, I think in that example. to set forth the factors supporting the decision. If the court's not going to reserve jurisdiction, justifying the allocation that the court ultimately decides on. One issue that, this was an easy example, we're talking about a battery. A tougher case is what if a spouse negligently injures the other spouse? It's not intentional. Let's say, they're on their way to the mountains. Eric and Melanie are driving from Denver to go skiing, And Eric accidentally ran, T bones Melanie on the road. Eric, in that example. How would, it's a 100 percent marital asset, 100 percent marital debt if they're married, as we talked about. It's a tougher case, I think, in that example, because the court would be looking at what is an equitable distribution, and would the court want to stick Eric with that entire debt and Melanie with all of those proceeds. If we're not dealing with intentional conduct or an intentional wrong, especially if doing so would render Eric unable to meet his own needs. And so I think in that circumstance, it's a little bit of a tougher call for the judge, but I'm not aware of any appellate case that has addressed that issue directly. And so I don't know how the judge and the appellate court would deal with that.

Ryan Kalamaya: 35:57

You get into a couple issues there in that insurance of Eric and Melanie are driving up I 70 and she gets injured. She can make a claim against the insurance and, but there could be an excess or there could be damages beyond that. Certainly, the judge is going to take. into consideration her physical condition and mental condition when dealing with spousal support or division of property, because if she is permanently disabled, it may not have been Eric's intent or fault, but the reality is that she may need more property or she may need spousal support because she can't work as a result of this accident. The other issue is that I think divorce lawyers and personal injury lawyers need to be aware in terms of the releases and the documents that they sign, because if there is a an exclusion or a mutual release, which is pretty boilerplate for us in a separation agreement, there may not be a claim and in terms of really reserving jurisdiction, I certainly I saw a case where another lawyer handled it and they didn't disclose this injury and it was because or this claim and then there became this disclosure issue of, and I don't think a lot of divorce lawyers think about that where there might be this claim and that is it. It's property or it's an asset under the way that Colorado treats property. It's the reasoning behind the mechanistic approach, but there's just so many issues that can arise in these circumstances. But while we've referenced it in terms of workers comp, what is Workers Comp and how is it different in Colorado for purposes of divorce?

Philip Goldberg: 37:52

Workers Comp is intended to be a substitute for work related injuries as far as the injured employee. being able to bring a claim against the employer. And if there is a work related injury, the exclusive remedy of the injured employee is to bring a workers compensation claim, meaning that the employee, generally speaking, is not entitled to bring a personal injury lawsuit against the employer. Their sole remedy is a workers compensation claim. Now, there, there may be exceptions. I'm just speaking very generally. And workers compensation is a statutory substitute for work related injuries, and there's a trade off there. On the one hand, the injured employee may not be receiving every penny of what they may have been able to recover in a personal injury claim, but at the same time, the idea is that workers comp is a more of a streamlined. Type of a system where the injured employee is going to get something to help them economically to compensate for loss of earnings, diminished earning capacity, medical expenses faster. It may not be as much, but they're going to have something that they can fall back on. I'll tell you, I practice workers comp in Georgia. I don't practice it in Colorado. And that theory sounds great, but I will tell you, we litigate We litigated everything. And in practice, it may not be as as fast and efficient a system as it is intended to be, but at least that's the intent of the system. And so under workers comp, you've got, let's say, an employee is injured on the job. They've got to bring a workers comp claim and there are certain categories of we'll call it, I don't want to call it damages, but let's just call it damages for lack of a better word. So there's. temporary and permanent or permanent damages, and there's partial or total disability damages. There's four different categories of damage. You've got partial, your temporary partial disability, You've got temporary total disability. You've got permanent partial disability and permanent total disability. And these are various components of loss that workers compensation benefits are intended to compensate for. And at least in Georgia, I'm certain it's the same in Colorado. The allocation of benefits to the injured employee Is going to be classified under one of those four types of disability benefits. Yeah. Temporary, partial, temporary, total, permanent, partial, permanent, total. And what we look at in the context of a divorce, Oh, actually, before I get to this, an injured employee can with the employer agree on a lump sum settlement of the workers comp claim. And so while normally workers comp, or often workers comp benefits can be a weekly or a monthly benefit, the parties can agree for one lump sum payment. And that lump sum settles all of the claims that the injured employee has against the employer under workers comp. And so what we get into then is let's say Eric is injured on the job and he settles his work related injury for the million dollars that we were talking about. So now there's that million dollars. How does Colorado classify that for purposes of divorce? And Colorado looks at workers comp differently than personal injury benefits. Colorado uses the analytic approach for workers comp. So Colorado is really one of a very small minority of states that treats personal injury benefits differently than workers comp benefits as far as the classification of those benefits in a divorce as marital or separate. So under the analytic approach, the court must determine the loss that the worker's comp, either weekly benefits or the lump sum settlement payment, is intended to remedy. And the portion, if any, of the benefits that is intended to compensate the injured employee for loss of earning capacity and medical expenses incurred during the marriage That's going to be classified as marital property, but any compensation for premarital, but usually it's going to be post dissolution loss during incapacity or medical expenses, for example, a permanent partial disability benefit or a permanent total disability benefit. The portion that is intended to compensate the employee Post dissolution, meaning post divorce, that is classified as that injured employee spouse's separate property. So the court has to do a much deeper dive in determining how to classify benefits under worker's comp as either marital or separate. Now having said all of that, even if And I mentioned this earlier, even if workers comp benefits are determined by the court to be marital, it still doesn't mean that the court is required to allocate a specific percentage to the injured employee spouse versus the non injured spouse. The court still has to use its discretion to allocate those marital benefits according to the statute in the manner that the court deems most just.

Ryan Kalamaya: 43:26

But the, to give another example to show how unique or how, I think, weird or illogical this is. If Eric is injured on the job, he has a workers comp claim. And as you said, it's fairly formulaic. It's if you lose an arm or your other example, you use, you lose your leg. There's a rating service, and there's a particular amount for how much does a leg cost in a worker's comp and how much it's compensated, but there could, if he lost, if Eric lost his leg in when he was at work by somebody else, coming in and assaulting him or something of that variety. He had his exclusive remedy is workers comp against the employer, but he has a separate claim against a third party and that is a personal injury claim. So the court could be employing two different analytical Approaches to the same incident, and there's going to be two different sources of income. One's going to be from workers comp, and then the other is going to be from the TORF user. I guess the other thing too, to mention that you were referencing earlier is that. Generally insurance does not cover intentional torts or intentional acts. So if we're talking about the Eric and Melanie situation where someone injures permanently or intentionally, it's generally not going to be covered by insurance. But oftentimes when insurance is involved, it's going to be from negligence and it goes to the point of workers comp and that's coming from essentially a state run insurance fund. for workers.

Philip Goldberg: 45:15

Exactly. And the rationale that Colorado appellate courts use for differentiating between personal injury benefits and workers comp benefits and why it uses a different approach, I'll be honest, I don't necessarily find it very persuasive, personally, but the rationale is as follows. Workers compensation is a statutory A statutory remedy for injured workers. The legislature, presumably, has conducted an exhaustive cost benefit analysis and has determined that the workers who are injured in this state, their exclusive remedy is against the state, but we want to have a more guaranteed type of payment. And so since it is a statutory benefit that's intended to provide the injured employee with a readily available wage substitute, then to classify post dissolution, post divorce, benefits as marital would be contravening the legislative intent, whereas personal injury proceeds don't hold that special statutory status. And so that, so the courts use the mechanistic approach. Is that persuasive? Maybe not. But either way, the court, in your example, where there's a, lost leg due to the torfesor that happens at work, you're exactly right. The court would have to look at look at the classification of proceeds in in a different way depending on whether those proceeds are workers comp benefits or personal injury benefits and allocate them whether the allocation may be the same, but the court would have to classify the marital versus separate component before it even gets to the allocation. So you're right, the same injury could result in two different analyses by the judge depending on which source of proceeds the court's got to allocate.

Ryan Kalamaya: 47:13

hey everyone. This is Ryan again. Thank you for joining us on Divorce at Altittude. If you found our tips, insight, or discussion helpful, please tell a friend about this podcast. For show notes, additional resources or links mentioned on today's episode, visit Divorce at Altittude dot com. Follow us on Apple Podcasts, Spotify, or wherever you listen in. Many of our episodes are also posted on YouTube. You can also find Amy and. Law or 9 7 0 3 1 5 2 3 6 5. That's aaa.