Opinion
W.C. No. 4-399-448
June 18, 2002.
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Jones (ALJ Jones) imposing penalties of $500 per day based on the insurer's failure to obey a lawful order of Administrative Law Judge Coughlin (ALJ Coughlin). The respondents contend the evidence does not support a finding that they violated the order, and they further argue ALJ Jones applied an incorrect standard of law in finding a violation of the order. The respondents also argue the order of ALJ Coughlin is not equivalent to an order of the "director or panel" for purposes of § 8-43-304(1), C.R.S. 2001. The respondents next contend the order of ALJ Jones resulted in an improper retroactive application of the holding in Holliday v. Bestop Inc., 23 P.3d 700 (Colo. 2001). Finally, the respondents contend the amount of the penalty violates the respondents' rights under the Eighth and Fourteenth Amendments to the United States Constitution. We affirm.
The pertinent facts may be summarized as follows. The claimant sustained a compensable injury in September 1998. The claimant initially received treatment from Dr. Hill, D.C. Dr. Hill referred the claimant to Dr. Wolfley for vision testing, and this testing was accomplished in March 1999. Dr. Hill also referred the claimant to Dr. Turner. In May 1999, Dr. Turner recommended the claimant undergo an MRI of the brain and an ENT consultation. The respondents disputed liability for the vision testing and the diagnostic procedures recommended by Dr. Turner.
The matter went to hearing before ALJ Coughlin on October 12, 1999. On December 13, 1999, ALJ Coughlin entered an order which described the issue as "medical benefits; specifically, whether certain tests and treatments are reasonable and necessary and related to injury." ALJ Coughlin expressly found the vision testing, brain MRI, and ENT evaluation are reasonable and necessary treatments causally related to symptoms resulting from the industrial injury. Consequently, ALJ Coughlin ordered the respondents to pay for the vision testing, MRI, and ENT evaluation.
The respondents appealed ALJ Coughlin's December 13 order. In an Order of Remand dated January 22, 2001, we directed the ALJ to resolve a conflict in the reports of one of the treating physicians concerning whether or not the claimant was at MMI. We held this determination was necessary in order to decide whether or not the independent medical examination provisions concerning maximum medical improvement were applicable.
On April 24, 2001, ALJ Coughlin entered an Order After Remand. In accordance with our direction, ALJ Coughlin resolved conflicts in the evidence concerning whether or not a treating physician placed the claimant at MMI, and ALJ Coughlin determined the claimant was not at MMI. Otherwise, the ALJ expressly incorporated "her prior specific findings of fact and conclusions of law." Therefore, ALJ Coughlin ordered the respondents to "pay for the testing and treatment recommended by [the claimant's] treating physicians, Doctors Turner and Hill."
In August 2001, the claimant applied for hearing seeking the imposition of penalties under § 8-43-304 based on the insurer's alleged failure to comply with ALJ Coughlin's April 24 order to pay medical benefits. Following a hearing at which the insurance adjuster testified, ALJ Jones found that on August 14, 2001, the insurer sent a letter to Dr. Wolfley refusing to pay for the March 1999 vision testing because the services "rendered were not related to accident stated above (8-42-101)." Further, ALJ Jones found the insurer did not make full payment for the vision testing until October 29, 2001.
ALJ Jones also found that on August 7, 2001, the claimant reported to Dr. Turner, apparently for the purpose of obtaining the MRI and ENT consultation. However, the insurer refused to "authorize" treatment by Dr. Turner and took no steps to approve an MRI and ENT consultation until August 24, 2001.
Under these circumstances, ALJ Jones found the insurer "failed to take the action that a reasonable insurer would take to comply with ALJ Coughlin's order" to pay medical benefits, and the respondents offered "no appropriate explanation for their delay in providing medical benefits and paying for services rendered." Consequently, ALJ Jones ordered the respondents to pay a penalty of $500 per day from May 24, 2001, until October 29, 2001, when the respondents finally paid for the vision testing provided by Dr. Wolfley. ALJ Jones also imposed a penalty of $500 per day from August 7, 2001, to August 24, 2001, based on the respondents' failure to provide medical treatment with Dr. Turner, as ordered by ALJ Coughlin.
I.
On review, the respondents first contend that ALJ Coughlin's April 24, 2001 order was not sufficiently precise to justify the imposition of penalties for its violation. According to the respondents, the April 24 order did not require the payment of any specific medical benefits, but merely stated the respondents were required to provide the medical treatment recommended by Dr. Hill and Dr. Turner. We disagree with this argument.
Section 8-43-304(1) authorizes the imposition of penalties for failing, neglecting, or refusing to "obey any lawful order made by the director or panel." We do not dispute the respondents' argument that the record must establish the respondents' conduct constituted a violation of the order, and that the order must be sufficiently precise to describe the respondents' duty to act. See Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995).
Here, ALJ Coughlin's April 24 order is sufficiently precise in describing the respondents' obligation to pay for medical treatment. As the claimant argues, the April 24 order explicitly incorporates ALJ Coughlin's December 13, 1999 findings of fact and conclusions of law, and makes additional findings of fact sufficient to comply with our Order of Remand. The December 13 order expressly "concluded" the respondents were liable to pay for the vision testing, brain MRI and ENT evaluation. Additionally, the April 24 order reiterated the requirement for the respondents to pay for the treatments recommended by Dr. Hill and Dr. Turner. At the hearing, respondents' insurance adjuster did not exhibit any doubt that the combined effect of the orders was to require the respondents to pay for the testing. (Tr. pp. 15-18). Thus, the record does not support the respondents' contention that the April 24 order was so vague that they may not be penalized for failing to comply with it.
II.
The respondents next contend ALJ Jones' findings of fact are insufficient to determine whether she applied the correct standard of law when imposing penalties under § 8-43-304 (1). The respondents also argue that, contrary to the findings of fact, the record establishes the adjuster provided a legally sufficient explanation for the insurer's actions. We disagree with these arguments.
Under § 8-43-304(1), an insurer may not be penalized for "neglecting" to comply with an order if its actions are reasonable. Thus, penalties may be imposed "against an insurer that neglects to take the action a reasonable insurer would take to comply with the lawful order." Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676, 679 (Colo.App. 1995). The reasonableness of an insurer's action depends on whether the action is predicated on a rational argument based in law or fact, and does not require actual knowledge that the conduct is unreasonable. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997). Generally, the question of whether an insurer's failure to obey an order is based on actions which are objectively reasonable is a question of fact for determination by the ALJ. Human Resource Co. v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999); Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996).
Because the objective reasonableness of an insurer's action is a question of fact, we must uphold the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 2001. This standard of review requires us to view the evidence in a light most favorable to the prevailing party, and defer to the ALJ's resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. Metro Moving and Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995). Further, the ALJ is not held to a standard of absolute clarity in expressing findings of fact and conclusions of law. Rather, it is sufficient for the ALJ to enter findings and conclusions which demonstrate the factual and legal bases of the order. The ALJ is under no obligation to address testimony, evidence or inferences which are not found credible or persuasive. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000).
The respondents' argument notwithstanding, ALJ Jones clearly recognized the applicable legal standard for the imposition of penalties under § 8-43-304(1). In Finding of Fact 16, the ALJ expressly found the insurer "failed to take the action that a reasonable insurer" would have taken to comply with the ALJ Coughlin's order. Further, although ALJ Jones recognized the adjuster offered "explanations" for the insurer's conduct, she concluded these explanations were not "appropriate" in light of the ALJ's other findings.
Moreover, we have no difficulty in ascertaining the factual and legal bases of the conclusion that the adjuster's explanations do not provide a rational basis for failing to pay for the vision testing, and the MRI and ENT consultation prescribed by Dr. Turner. With respect to the vision testing, the adjuster testified that the delay in payment was attributable to the failure of Dr. Wolfley to submit required billing documentation including an "HCFA" form. However, the ALJ was not required to credit this testimony in light of the respondents' letter of August 14, 2001, which denied payment to Dr. Wolfley on grounds his services "were not related to accident." Indeed, ALJ Jones found the respondents' refusal to pay was not predicated on the lack of documentation, but rather the assertion that the vision testing was not related to the industrial injury. (Finding of Fact 12). Because ALJ Coughlin had previously found as a matter of fact that the need for vision testing was causally related to the industrial injury, the record supports the conclusion of ALJ Jones that the respondents' failure to pay for the vision testing was not based on any reasonable legal or factual argument involving the previously litigated issue of causation.
Neither did the record compel ALJ Jones to conclude the adjuster's "explanation" for refusal to authorize treatment by Dr. Turner on August 7 was based on a rational argument. The adjuster testified that she refused to authorize treatment by Dr. Turner because one of the claimant's primary physicians, Dr. Hill, was no longer providing treatment in the case and the adjuster hoped to appoint Dr. Wunder as a "designated provider" who would "authorize" the MRI and ENT evaluation. (Tr. pp. 29-30). However, as the ALJ apparently recognized during examination of the adjuster, the adjuster pointed to no legal authority which would require the appointment of a primary physician to manage or "authorize" the claimant's care, at least where ALJ Coughlin had previously determined the specified care was reasonable, necessary, and causally related to the industrial injury. Further, the respondents apparently do not dispute Dr. Turner was an authorized physician.
We aware of no case law, statute, or administrative regulation, and the respondents cite none in their brief, which might provide a rational legal theory justifying the inference that a reasonable insurer would have acted as the adjuster did this case. As a general matter of law, respondents are obligated to provide reasonable and necessary medical treatment, and must pay for such treatment when it is provided by an authorized physician. See § 8-42-101(1)(a), C.R.S. 2001; Yeck v. Industrial Claim Appeals Office, 996 P.2d 228 (Colo.App. 1999); Public Service Co. v. Industrial Claim Appeals Office, 979 P.2d 584 (Colo.App. 1999). Here, all of these legal predicates existed with respect to Dr. Turner.
Moreover, the adjuster herself testified that she arranged an appointment with Dr. Wunder, which the claimant apparently attended. However, Dr. Wunder did not appear to conduct the examination. This testimony further supports the conclusion of ALJ Jones that the respondents did not offer an "appropriate" explanation for the refusal to authorize treatment by Dr. Turner on August 7. (Tr. pp. 29-30).
III.
The respondents next contend the order of ALJ Jones constitutes an erroneous retroactive application of the holding in Holliday v. Bestop, Inc., supra (hereinafter Holliday). The respondents argue that prior to the Supreme Court's decision, established precedent held that failure to pay medical benefits was punishable under § 8-43-401(2)(a), C.R.S. 2001, not § 8-43-304 (1). See Holliday v. Industrial Claim Appeals Office, 997 P.2d 1212 (Colo.App. 1999); Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997). The respondents assert that because the Supreme Court's opinion in Holliday was issued in May 2001, but the claimant's injury occurred in September 1998, principles governing retroactive application of appellate decisions are pertinent and compel the conclusion that Holliday should not be applied retroactively to this case. We conclude the ALJ's order does not implicate retroactive application of Holliday.
Contrary to the respondents' argument, the issue of whether Holliday was retroactively applied is not dependent on the date of the claimant's injury. Rather, the question is whether Holliday was applied to conduct by the respondents which occurred prior to the Supreme Court's first announcement of the decision on May 14, 2001. Illustrative of this principle is the Court of Appeals decision in Loffland Brothers Co. v. Industrial Claim Appeals Office, 754 P.2d 768 (Colo.App. 1988), aff'd., 770 P.2d 1221 (Colo. 1989). In Loffland Brothers, the Court of Appeals was required to determine whether the Supreme Court's decision in Padilla v. Industrial Commission, 696 P.2d 273 (Colo. 1985), should be applied retroactively. Padilla held that, under then existing law, settlements were subject to reopening regardless of whether the settlement contained provisions under which the claimant purported to waive the right to reopen. In the Loffland Brothers case the Industrial Claim Appeals Office held that no issue of retroactivity existed because the claimant filed the petition to reopen the settlement agreement after announcement of the Padilla decision. However, the Court of Appeals concluded that this view was incorrect because it "seems to ignore the fact that claimant purported to waive his right to reopen before Padilla was announced." (Emphasis in the original). Loffland Brothers v. Industrial Claim Appeals Office, 754 P.2d at 769. Similarly, in Marinez v. Industrial Commission, 746 P.2d 552 (Colo. 1987), the court addressed the question of the retroactivity of a judicial decision involving the scope of the social security disability offset where the offsets were taken prior to the announcement of the decision. See also, Edrington v. Fourth Judicial District, W.C. No. 4-164-701 (February 10, 1997) (issue of retroactivity arises when a party seeks application of a judicial decision to events and transactions which occurred prior to the date the judicial decision was issued).
Applying these principles here, we conclude the order of ALJ Jones does not involve a retroactive application of Holliday. ALJ Jones determined the respondents had no obligation to pay for any medical benefits pursuant to ALJ Coughlin's order until 30 days after the order was entered, or until May 24, 2001. This conclusion appears to be predicated on § 8-43-401(2)(a), which provides that "after all appeals have been exhausted or in cases where there have been no appeals, all insurers and self-insured employers shall pay benefits within 30 days of when any benefits are due." (Conclusion of Law 7). Moreover, ALJ Jones found that the first "disobedience" of ALJ Coughlin's order did not occur until May 24, 2001. Indeed, the penalty for failure to pay Dr. Wolfley's bill was assessed from May 24, 2001, until October 29, 2001.
It follows that the "events and transactions" to which Holliday was applied, namely disobedience of ALJ Coughlin's order, first occurred after the May 14, 2001 announcement of the Holliday decision. Thus, at the time the respondents commenced disobeying the order, the Holliday decision had already been announced. Therefore, the respondents may not claim they were unfairly surprised by the application of § 8-43-304(1) and subjected to unfair treatment because of their reliance on pre- Holliday law. Although we recognize the Holliday decision was modified on rehearing on June 4, 2001, those modifications were not significant with respect to the fundamental holding of the case. Therefore, the modifications do not implicate retroactivity principles.
IV.
The respondents next contend ALJ Jones erred in ordering penalties under § 8-43-304(1) because, they argue, the order of ALJ Coughlin is not equivalent to an order of the "director or panel" for purposes of the statute. The respondents recognize this issue was resolved adversely to their position in Giddings v. Industrial Claim Appeals Office, 39 P.3d 1211 (Colo.App. 2001). However, the respondents wish to preserve the issue in the event another panel of the court would reach a different conclusion. We are bound by published opinions of the court and, therefore, reject the respondents' argument. CAR 35 (f).
V.
The respondents next contend the penalties imposed by ALJ Jones are excessive under the Eighth and Fourteenth Amendments to the Constitution. However, as the respondents recognize, we have previously held we lack jurisdiction to assess the constitutionality of a penalty which is within the statutory parameters established by the General Assembly. See Celebrity Custom Builders v. Industrial Claim Appeals Office, 916 P.2d 539 (Colo.App. 1995); Edmonds v. Snyder Service, Inc., W.C. No. 3-760-978 (April 28, 1997). Thus, we may not address this issue.
IT IS THEREFORE ORDERED that the order of ALJ Jones dated December 17, 2001, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Dona Halsey
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for review with the Court, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2001. The appealing party must serve a copy of the petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe Street, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed June 18, 2002 to the following parties:
Patrick S. Blea, P. O. Box 92, Atwood, CO 80722
D E Mail Contractors, Inc., P. O. Box 1267, Canon City, CO 81215-1267
Curt Kriksciun, Esq., Pinnacol Assurance — Interagency Mail (For Respondents)
Katherine E. Allen, Esq., 705 14th St., Greeley, CO 80631 (For Claimant)
John H. Stevens, Esq., 600 17th St., #1600N, Denver, CO 80202
By: A. Hurtado