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.
1 ¶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. 2 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.
3 ¶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
4 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
5 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
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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.
1 ¶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. 2 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.
3 ¶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
4 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
5 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
6 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
7 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). 8