Opinion
W.C. No. 4-267-417
March 31, 1998
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Friend (ALJ) which denied the imposition of a penalty under § 8-43-304(1), C.R.S. 1997, for the respondents' failure to admit liability for temporary disability benefits. We affirm.
On April 10, 1995, the claimant suffered a work-related injury while employed by the respondent-employer. The respondents admitted liability for temporary disability benefits between August 29, 1995 and May 23, 1996, and permanent partial disability benefits commencing May 23, 1996. In January 1997 the claimant requested the reinstatement of temporary disability benefits based upon new medical restrictions. The respondents did not file an admission for the reinstatement of temporary disability benefits until May 1997.
The claimant asserted that the respondents' refusal to reinstate temporary disability benefits before May 1997 violated sections 8-42-103 and 8-42-105 C.R.S. 1997. Therefore, the claimant sought an order imposing a penalty under § 8-43-304(1).
The ALJ found that neither § 8-42-103 nor § 8-42-105 creates any duty on the insurer to admit liability for temporary disability benefits. Therefore, the ALJ determined that the claimant is not entitled to the assessment of a penalty under § 8-43-304. In support, the ALJ expressly cited Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995), and our conclusions in Villa v. Wayne Gomez Demolition Excavating Inc., W.C. No. 4-236-951 (January 7, 1997).
On review, the claimant reasserts the arguments made before the ALJ. The claimant also contends that Allison and Villa are distinguishable, because this is an "admitted" claim. We disagree.
Initially, we reject the argument that Allison v. Industrial Claim Appeals Office, supra, is not applicable to this claim. To the contrary, Allison establishes the proper legal standard for imposition of a penalty under § 8-43-304(1), where the claimant alleges a violation of § 8-42-105.
In Allison the insurer "admitted" liability for temporary disability benefits. However, the insurer asserted an offset for benefits received by the claimant in an unrelated claim. The claimant asserted that the insurer's failure to pay benefits based upon his full temporary disability rate violated § 8-42-105, and therefore, the claimant sought a penalty under § 8-43-304(1).
Section 8-43-304(1) provides for imposition of a penalty where a person or party "violates any provision" of the Workers' Compensation Act (Act) or "does any act prohibited thereby." The Allison court held that the imposition of a penalty under § 8-43-304(1) requires a two-step analysis. First, it must be determined whether the challenged conduct violates some provision of the Act. If there is a violation, it must be determined whether the challenged conduct was unreasonable as measured by an objective standard. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996).
The Allison court held that § 8-42-105 does not require an insurer to pay temporary disability benefits without regard to any claimed offset. Further, the court concluded that where an offset is disputed the insurer is required only to pay temporary disability benefits in accordance with its admission until the offset issue is resolved by an ALJ. Section 8-43-203(1), C.R.S. 1997. Consequently, the Allsion court concluded that the insurer's action in taking the offset against temporary disability benefits, up to the date of the ALJ's order finding that no offset was available, did not violate § 8-42-105. Thus, because the Act was not violated, no penalties could be assessed under § 8-43-304(1).
Here, as in Allison, the respondents admitted liability for temporary disability benefits. The claimant does not dispute that the respondents paid benefits in accordance with their admission. Further, the claimant does not dispute that the respondents properly terminated temporary disability benefits on May 22, 1996. The termination of benefits inherently reflects the respondents' "denial" of liability for temporary disability benefits after May 22, 1996. Accordingly, we reject the claimant's contention that this claim is factually distinguishable from Allison because the respondents initially "admitted" liability for temporary disability benefits. To the contrary, the respondents disputed the claimant's entitlement to temporary disability benefits after May 22, 1996, until May 1997.
Similarly, we perceive no error in the ALJ's reliance upon our conclusions in Villa v. Wayne Gomez Demolition Excavating Inc., supra. In Villa the claimant sought a penalty in connection with the respondents' refusal to admit liability for a work-related injury. The claimant argued that the respondents' denial of liability without any reasonable factual or legal basis for doing so violated § 8-42-105(2)(a), C.R.S. 1997. However, we upheld an ALJ's determination that based upon Allison, the penalty issue was dependent on whether the respondents' conduct violated the express requirements of § 8-42-105(2)(a). Further, we agreed with the ALJ that the § 8-42-105(2)(a) does not create a duty to act in "good faith" in deciding whether to admit or deny liability. Consequently, we concluded that the respondents' denial of liability was not a violation of § 8-42-105(2)(a) which would entitle the claimant to a penalty under § 8-43-304(1).
Moreover, nothing in either § 8-42-103 or § 8-42-105 expressly requires an insurer voluntarily to reinstate or admit liability for temporary disability benefits, and we may not read that requirement into the statute. See Best-Way Concrete Co. v. Baumgartner, 908 P.2d 1194 (Colo.App. 1995). Section 8-42-103(1)(a)-(f), C.R.S. 1997, provides that if an injury or occupational disease "causes disability" over three days, disability benefits shall be paid as wages pursuant to § 8-42-105(2), and reduced by any applicable offset. However, § 8-42-103(1) does not preclude the respondents from disputing whether the industrial injury has caused a "disability" which warrants the payment of temporary disability benefits for a particular period. Instead, the respondents may deny liability for temporary disability benefits until the factual dispute concerning the existence of a "disability" is resolved by an ALJ. See Allison v. Industrial Claim Appeals Office, supra; Silence-Boaz v. Carpet Clearance Warehouse, W.C. No. 4-172-786 (December 26, 1996) aff'd. Silence-Boaz v. Industrial Claim Appeals Office, (Colo.App. No. 97CA0078, October 9, 1997) (not selected for publication) [insurer's request for IME based on factual assertion that authorized treating physician determined MMI not violation of § 8-42-107(8)].
Sections 8-42-105(1), C.R.S. 1997, sets forth the rate of temporary disability benefits and § 8-42-105(2)(a), C.R.S. 1997, prescribes the method for paying temporary disability benefits, "unless the claim is denied." It follows that § 8-42-105(2)(a) does not apply to circumstances, such as presented here, where liability for further temporary disability benefits is "denied." Consequently, we agree with the ALJ's determination that the respondents' failure voluntarily to reinstate temporary disability benefits before May 1997, did not violate § 8-42-103 or § 8-42-105. Therefore, the ALJ did not err in refusing to assess a penalty under § 8-43-304(1). Allison v. Industrial Claim Appeals Office, supra.
IT IS THEREFORE ORDERED that the ALJ's order dated August 6, 1997, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL ____________________________________ David Cain ____________________________________ Kathy E. DeanNOTICE
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, with service of a copy of the petition upon the Industrial Claim Appeals Office and all other parties, within twenty (20) days after the date this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. 1997.
Copies of this decision were mailed March 31, 1998 to the following parties:
Wayne A. Butler, 29578 Loomis Way, Golden, CO 80403
Bridgewater, Inc., 542 Confluence Ave., Salt Lake City, UT 84123-1385
Colorado Compensation Insurance Authority, Attn: Curt Kriksciun, Esq. (Interagency Mail)
T.J. Carney, Esq., 21789 Cabrini Blvd., Golden, CO 80401 (For the Claimant)
Raymond F. Callahan, Esq., 3464 South Willow St., Denver, CO 80231-4566 (For the Respondents)
By: ________________________________