Opinion
W.C. No. 4-599-520.
October 21, 2005.
FINAL ORDER
The respondents seek review of an order of the Director of the Division of Workers' Compensation (Director) which imposed penalties under § 8-43-304(1), C.R.S. 2005, at the rate of $100 per day for the respondents' failure to comply with § 8-42-107(2), C.R.S. 2005. We set aside the order.
The claimant suffered an admitted hip injury in 2003. On January 17, 2005, Dr. Danahey placed the claimant at maximum medical improvement (MMI) and assigned permanent medical impairment of 32 percent of the lower extremity which converts to 13 percent whole person impairment. As a result of the claimant's advanced age, the monetary value of the impairment if compensated as a "scheduled disability" is greater than the value of medical impairment benefits for the whole person rating.
On February 18, 2005, the respondents filed a Final Admission of Liability (FAL) for the payment of permanent medical impairment benefits based on 13 percent whole person impairment. The claimant did not timely object.
However, on March 7, 2005, the Division of Workers' Compensation Claims Department directed the respondents to file a corrected FAL to admit liability for scheduled disability benefits based on Dr. Danahey's lower extremity rating.
The respondents promptly responded and asserted the existence of evidence that the industrial injury caused functional impairment to the claimant's back. Therefore, the respondents declined to file a corrected FAL.
The Director then issued an order requiring the respondents to show cause why penalties should not be imposed for their failure to comply with § 8-42-107(2), C.R.S. 2005. In response the respondents argued that Dr. Danahey's MMI report referenced the claimant's complaints of back pain and asserted that the claimant told the respondents' adjuster the industrial injury caused her preexisting back condition to become symptomatic. Under these circumstances, the respondents took the position that the facts established functional impairment which was properly compensated as whole person under § 8-42-107(8), C.R.S. 2005. Further, they asserted that because the FAL denied liability for penalties and the claimant did not object to the FAL, the claim was closed. Therefore, the respondents argued the Director lacked jurisdiction to impose penalties absent an order reopening the claim.
In an order dated May 16, 2005, the Director determined the March 7 letter put the respondents on notice that the FAL was "considered a defective admission." Consequently, the Director rejected the respondents' argument that the claim was closed. The Director also found Dr. Danahey's report did not attribute the claimant's low back pain to the industrial injury and did not assign an impairment rating to the back. The Director added that had Dr. Danahey assigned a separate rating for impairment to the back, that impairment would have to be compensated "in addition" to the scheduled disability award for impairment to the lower extremity. Under these circumstances, the Director determined there were no material facts in dispute and the record compelled a conclusion that the respondents were required to admit liability for a scheduled disability award.
Moreover, the Director determined that it was unreasonable to expect the claimant to understand that her impairment award would be less if paid as a whole person impairment than a scheduled disability. Therefore, in an order dated May 16, 2005, the Director found the respondents' FAL violated § 8-42-107(2) and imposed penalties at the rate of $100 per day commencing March 23, 2005.
The respondents timely appealed the May 16 order. After the matter was briefed the Director entered a Supplemental Order dated July 22, 2005, which additionally found that, because Dr. Danahey's report "clearly establishes a scheduled injury," the respondents refusal to file a FAL for scheduled disability benefits was "not based on a rational argument anchored in fact or law." The respondents timely appealed the Supplemental Order.
On review of the Supplemental Order the respondents contest the Director's findings that the claimant's impairment is fully enumerated on the schedule of disabilities and that their FAL for the payment of whole person impairment benefits was not based on a rational argument in law or fact. The respondents also contend the findings do not support the order and that the order is not consistent with the applicable law. We agree.
Under § 8-43-304(1), C.R.S. 2005, the Direction may impose a penalty up to $500 per day for an insurer's failure to comply with any provision of the Act. Section 8-43-305, C.R.S. 2005, provides that each day the insurer fails to comply is a separate violation.
The imposition of penalties under § 8-43-304(1) is a two-step process. The Director must first determine whether the disputed conduct constituted a violation of a statute. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). If the ALJ finds a violation, no penalty may be imposed unless the Director also finds that the actions which resulted in the violation were unreasonable. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo.App. 2003). The reasonableness of the insurer's actions depends on whether it was predicated on rational argument based in law or fact. Jiminez v. Industrial Claim Appeals Office, 107 P.3d 965 (Colo.App. 2003).
Section 8-42-107(1)(a), C.R.S. 2005, provides that permanent disability benefits are limited to benefits under the schedule of disabilities where the claimant suffers an injury or injuries described in § 8-42-107(2). Colorado AFL-CIO v. Donlon, 914 P.2d 396 (Colo.App. 1995). Where the claimant suffers functional impairment which is not listed on the schedule, the claimant is to receive medical impairment benefits for whole person impairment calculated in accordance with § 8-42-107(8)(d), C.R.S. 2005. In this context, the term "injury," refers to the manifestation in a part or parts of the body which have been functionally impaired or disabled as a result of the industrial accident. Langton v. Rocky Mountain Health Care Corp., 937 P.2d 883 (Colo.App. 1996) ; Strauch v. PSL Swedish Healthcare System, 917 P.2d 366 (Colo.App. 1996). The loss of use of the lower extremity at the hip is a scheduled disability. Section 8-42-107(2)(w), C.R.S. 2005.
It is now well established that the treating physician's opinion on functional impairment is relevant but not dispositive. City Market, Inc. v. Industrial Claim Appeals Office, supra. Indeed there is no requirement to present medical evidence to prove the situs of functional impairment. Smith v. Neoplan USA Corp., W.C. No. 4-421-202 (October 1, 2002), aff'd., Neoplan USA Corp. v. Industrial Claim Appeals Office, (Colo.App. 02CA2074, July 24, 2003) (not selected for publication). Rather, the determination of whether the claimant suffered impairment which cannot be fully compensated as a scheduled disability is one of fact. Warthen v. Industrial Claim Appeals Office, 100 P.3d 581 (Colo.App. 2004); Strauch v. PSL Swedish Healthcare System, supra; Walter v. Jim Fouco Motor Company, supra; Langton v. Rocky Mountain Health Care Corp., 937 P.2d 883 (Colo.App. 1996). Consequently, the Director erred insofar as she presumed Dr. Danahey's MMI report was determinative of whether the claimant was limited to a scheduled disability award.
Furthermore, functional impairment need not take any particular form. Consequently, the courts have concluded that evidence of pain which interferes with the claimant's ability to use a portion of the body may be considered "impairment." See Guillotte v. Pinnacle Glass Company, W.C. No. 4-443-878 (November 20, 2001), aff'd., Pinnacle Glass Co. v. Industrial Claim Appeals Office, (Colo.App. No. 01CA2386, August 22, 2002) (not selected for publication); Mader v. Popejoy Construction Co., Inc., W.C. No. 4-198-489 (August 9, 1996), aff' d., Popejoy Construction Co., Inc., (Colo.App. No. 96CA1508, February 13, 1997) (not selected for publication); Salaz v. Phase II et. al., W.C. No. 4-240-376 (November 19, 1997), aff'd., Phase II v. Industrial Claim Appeals Office, (Colo.App. No. 97CA2099, September 3, 1998) (not selected for publication).
Because the determination of the situs of functional impairment is a question of fact, due process of law requires that the parties be afforded an opportunity to confront adverse witnesses and present evidence and argument in support of their position on the issue. Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076 (Colo.App. 1990). Summary judgment is only proper if there is no genuine issue as to any material fact and the moving party is entitled to judgement as a matter of law. C.R.C.P. 56; Serna v. Kingston Enterprises, 72 P.3d 376 (Colo.App. 2002); Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969); Morphew v. Ridge Crane Service, Inc., 902 P.2d 848 (Colo.App. 1995).
Here, Dr. Danahey opined that the claimant's back pain was attributable to a 30 year history of spondylolisthesis. (Danahey February 14, 2005). However, the respondents expressly asserted that the FAL was based on the claimant's assertion that her preexisting back problem became symptomatic after the industrial injury. The respondents' assertion is supported by the claimant's responsive pleading where the claimant denies back pain prior to the industrial accident. (Brief in Opposition, July 13, 2005). In fact, the claimant asserted, through her daughter that, she "consistently complained to all of her health care providers about the intense back pain which began after the fall and subsequent surgery." The claimant also asserted that she was never provided necessary treatment for the work-related component of the back pain. Based on this evidence, we conclude the record fails to support the Director's finding that there is no dispute of material fact that the claimant's injury is fully enumerated on the schedule. Consequently, the current record does not support the conclusion the respondents violated § 8-42-107(2) by refusing to admit liability for a scheduled disability award.
While the fact scenario in this case is not identical, it is analogous to Abeyta v. Wackenhut Services W.C. No. 4-519-399 (September 16, 2004). In that case the claimant sustained compensable injuries to both knees. The Division-sponsored independent medical examination (DIME) physician noted the claimant also complained of back pain. However, the DIME physician stated that the back did not warrant a separate impairment rating because there was no specific injury to the low back and no objective evidence of injury to the lumbar spine. Nevertheless, the ALJ concluded that the back pain evidenced a functional impairment not found on the schedule of disabilities. Therefore, the ALJ converted the claimant's scheduled lower extremity impairments to a whole person impairment rating. On review we found that the mere fact that the DIME physician found the claimant did not suffer from a ratable impairment of the lumbar spine did not preclude the ALJ from finding the claimant sustained functional impairment beyond the "leg at the hip".
The present case may represent confusion of the question of functional impairment with impairment ratings. The determination of functional impairment is "distinct from and should not be confused with, the treating physician's rating of physical impairment under the AMA Guides". Strauch, supra, at 368; see also Walker v. Jim Fuoco Motor Co. 942 P.2d 1390 (Colo.App. 1997) (court has rejected argument that AMA Guides are controlling on situs of functional impairment). Similar to Abeyta it might be found that the situs of the claimant's "functional impairment" extends beyond the extremity. Therefore, we disagree with the Director that there is no rational argument anchored in fact or law which can support the filing in this case of an admission for a whole person injury. Similarly, we disagree with the Director that this record compels a conclusion the respondents' refusal to alter its FAL was not predicated on a rational argument in fact. Therefore, the Director's supplemental order shall be set aside.
In reaching our conclusion we are mindful of § 8-42-107(7)(b)(II), C.R.S. 2005 which provides that if the injured employee sustains "a loss set forth in the schedule" and a loss set forth for medical impairment benefits" the scheduled injury shall be compensated on the schedule and the whole person impairment shall be compensated solely under § 8-42-107(8). However, that statute applies where the claimant suffers scheduled impairment and whole person impairment which are both separately rateable. Warthen v. Industrial Claim Appeals Office, 100 P.3d 581 (Colo.App. 2004).
Here, there is no finding or assertion that the claimant suffered a separate rateable injury to the back. Therefore, the Director's determination that the respondents' FAL was improper because any impairment to the back would have to be compensated under § 8-42-17(8) "in addition" to the scheduled disability award is not consistent with the applicable law.
In view of our disposition we need not address the respondents' further arguments.
IT IS THEREFORE ORDERED that the Director's Supplemental Order dated July 22, 2005, is set aside.
INDUSTRIAL CLAIM APPEALS PANEL
____________________ Kathy E. Dean ____________________ Tom Schrant Lanelle Deaton, Highlands Ranch, CO, Lanelle Deaton, Littleton, CO, Wal-Mart, Inc., Littleton, CO, American Home Assurance, c/o Jon Causseaux, Claims Management, Inc., Bentonville, AR, Brenda Carrillo, Special Funds Unit, Division of Workers' Compensation — Interagency Mail, Mike Worley, Claims Management Unit, Division of Workers' Compensation — Interagency Mail, Eric W. Truhe, Esq., Denver, CO, (For Respondents).