Hargon v. ICAO

25CA0977 Hargon v ICAO 01-22-2026

COLORADO COURT OF APPEALS

Court of Appeals No. 25CA0977
Industrial Claim Appeals Office of the State of Colorado
WC No. 5-267-135

Mary D. Hargon,

Petitioner,

v.

Industrial Claim Appeals Office of the State of Colorado, and Milvets Systems
Technology, Inc.,

Respondents,

and

Twin City Fire Insurance Company,

Insurer-Respondent.

ORDER SET ASIDE AND CASE REMANDED WITH DIRECTIONS

Division II
Opinion by JUDGE SULLIVAN
Fox and Kuhn, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced January 22, 2026

Elliott & Montgomery, Mark D. Elliott, Erin Montgomery, Arvada, Colorado, for
Petitioner

No Appearance for Respondent Industrial Claim Appeals Office

The Law Offices of Annalisa N. Grant, Tiffany S. Kinder, Las Vegas, Nevada, for
Respondent Milvets Systems Technology, Inc. and Insurer-Respondent Twin
City Fire Insurance Company
¶1 In this workers’ compensation action, Mary D. Hargon seeks

review of an order denying her request to increase the average

weekly wage (AWW) amount on which her temporary disability

benefits are predicated. We set aside the order and remand the

case for further proceedings.

I. Background

¶2 Since retiring from military intelligence with the United States

Army in 2006, Hargon has worked as a contract intelligence

analyst, performing discrete short-term contracts for various

employers, including Milvets Systems Technology, Inc. (Employer).

Each contract has lasted approximately two to three weeks. In

February 2024, Hargon suffered a debilitating injury while

performing such a contract for Employer.

¶3 Hargon opened a claim under Colorado’s Workers’

Compensation Act, and Employer filed an admission of general

liability acknowledging Hargon earned an AWW of $123.10.

Employer then began paying Hargon temporary total disability

benefits based on that admitted AWW.

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¶4 A few months later, Employer amended its admission of

liability, increasing the admitted AWW to $382.65 based on records

showing Hargon’s pre-injury earnings from another employer, CSA

Global, LLC. Employer accordingly adjusted the amount of

temporary total disability benefits it paid Hargon. Even so, Hargon

contended that the admitted AWW failed to fully capture her lost

earnings and requested an evidentiary hearing on the issue.

¶5 At the hearing, an administrative law judge (ALJ) admitted into

evidence Hargon’s 2023 W-2 forms showing that Hargon earned

$6,278.22 from Employer and $13,674.22 from CSA that year.

Employer explained that the admitted AWW reflected the sum of

these earnings ($19,952.44), divided by fifty-two weeks.1 Employer

argued this rate fairly compensated Hargon. Hargon testified that

she had earned significantly more before the COVID-19 pandemic

— approximately $40,000 annually — and that she expected to

earn more in 2024 than she had in 2023. Hargon also explained

1 We note that this equation produces an AWW amount of $383.70,

rather than the admitted AWW of $382.65.
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that, historically, she had earned more in even-numbered years.

However, though post-pandemic, 2022 departed from that pattern

because Russia’s invasion of Ukraine compromised her work

opportunities. Hargon testified that she anticipated working more

intelligence projects in 2024 than she had in 2023, and that she

also expected to work as a county election judge in 2024. Hargon

also raised various legal arguments regarding the proper

computation of her AWW.

¶6 After reviewing the evidence, the ALJ issued an order denying

Hargon’s request for an increased AWW. Citing section 8-42-

102(2), C.R.S. 2025, the ALJ agreed with Employer that the

admitted AWW fairly compensated Hargon. Hargon appealed to the

Panel, which affirmed the ALJ’s order.

II. Standard of Review and Legal Principles

¶7 As relevant here, we may set aside the Panel’s decision if the

denial of benefits isn’t supported by applicable law. § 8-43-308,

C.R.S. 2025.

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¶8 A claimant’s AWW provides the basis upon which to compute

total temporary disability benefit awards. §§ 8-42-102(1), 8-42-

105(1), C.R.S. 2025. Subsections (2) and (3) of section 8-42-102 set

forth alternative methods of computing an AWW. See Avalanche

Indus., Inc. v. Clark, 198 P.3d 589, 592 (Colo. 2008), overruled in

part on other grounds by Benchmark/Elite, Inc. v. Simpson, 232 P.3d

777 (Colo. 2010). Colorado courts describe subsection (2) as “the

default provision” and subsection (3) as “the discretionary

exception.” Id.

¶9 Under the default provision, the ALJ calculates the AWW

“upon the monthly, weekly, daily, hourly, or other remuneration”

the claimant received “at the time of the injury.” § 8-42-102(2).

That provision sets forth specific computation methods for each

category of remuneration. Id. “Where the employee is being paid by

the hour,” for instance, “the weekly wage shall be determined by

multiplying the hourly rate by the number of hours in a day during

which the employee was working at the time of the injury” and then

multiplying that number by the number of days (or fractions of

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days) the employee worked weekly. § 8-42-102(2)(c)-(d).

Paragraph (e) of the default provision addresses calculating the

AWW when an employer compensates the employee for production

output, rather than time spent working. § 8-42-102(2)(e). It

requires the ALJ to review the claimant’s total earnings in the

twelve months preceding the injury:

Where the employee is paid on a piecework,
tonnage, commission, or basis other than a
monthly, weekly, daily, or hourly wage and
where the employment is but casual and in the
usual course of the trade, business,
profession, or occupation of his employer, the
total amount earned by the injured or killed
employee in the twelve months preceding the
injury shall be computed, which sum shall be
divided by the number of pay periods the
injured person was employed during the twelve
months immediately preceding the injury, and
the result thus ascertained shall be considered
the average wage of said employee per pay
period.

Id.

¶ 10 The discretionary exception in subsection (3) applies when,

due to the nature of the employee’s work (among other possible

reasons), the computation methods prescribed in the default

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provision “will not fairly compute the average weekly wage.” § 8-42-

102(3). In such circumstances, the ALJ “may compute the average

weekly wage in such other manner and by such method as will . . .

fairly determine such employee’s average weekly wage.” Id. Thus,

the discretionary exception allows the ALJ broad discretion to

determine a fair AWW when the default provision causes an unfair

result. Avalanche Indus., 198 P.3d at 592.

¶ 11 “In cases applying the discretionary exception, we review the

ALJ’s decision for an abuse of discretion, only reversing where it

‘exceed[ed] the bounds of reason’ and was unsupported by

applicable law.” Id. at 596 (quoting Coates, Reid & Waldron v. Vigil,

856 P.2d 850, 856 (Colo. 1993)).

III. The ALJ Erred in Applying the Default Provision

¶ 12 Hargon argues the Panel erred in affirming the ALJ’s order

because the ALJ misapplied the default provision. We agree.

¶ 13 At multiple points in his order, the ALJ made clear that he

applied the default provision. He explicitly stated that “the default

provision provides a fair approximation of [Hargon’s] wage loss and

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diminished earning capacity,” and he later noted that the admitted

AWW “aligns with the [default provision’s] statutory purpose.”

Given these express statements, we disagree with the Panel that the

ALJ “actually applied . . . the discretionary method.”

¶ 14 In evaluating Hargon’s request for an increased AWW, the ALJ

considered her total earnings in the twelve months preceding her

injury. In doing so, it appears the ALJ applied paragraph (e) of the

default provision. But paragraph (e) applies only when a claimant’s

productivity determines their remuneration. § 8-42-102(2)(e).

Hargon, however, received her pay based not on her productivity

but rather on an hourly basis during the periods covered by her

unique short-term contracts. The default provision provides no

computation method for this remuneration scenario. See § 8-42-

102(2).

¶ 15 While we agree with the Panel that the ALJ could have

considered only Hargon’s twelve-month earning history in

computing her AWW if he had applied the discretionary exception,

we can’t say for certain that he would have done so when exercising

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the broad discretion that the discretionary exception affords.

Because only the discretionary exception applies under the

circumstances here, and because the ALJ didn’t apply it, the Panel

erred as a matter of law in affirming the ALJ’s order.

¶ 16 Accordingly, we set aside the Panel’s order and remand the

case to the Panel with instructions to remand to the ALJ to

determine Hargon’s AWW under the discretionary exception.2 Given

our disposition, we need not reach the remaining issues that

Hargon raises on appeal.

IV. Disposition

¶ 17 The Panel’s order is set aside, and the case is remanded to the

Panel with instructions to remand to the ALJ for a determination

under section 8-42-102(3).

JUDGE FOX and JUDGE KUHN concur.

2 On remand, the ALJ may exercise his discretion to consider

evidence of Hargon’s anticipated earnings when calculating her
AWW. Drywall Prods. v. Constuble, 832 P.2d 957, 959 (Colo. App.
1991).
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