Opinion
W.C. No. 3-760-978
April 28, 1997
FINAL ORDER
The Colorado Compensation Insurance Authority (CCIA) seeks review of a final order of Administrative Law Judge Wells (ALJ) which penalized it for failure to pay a medical bill. We affirm.
The claimant sustained a compensable injury in 1984, and was later found to be permanently and totally disabled. In June 1994 the claimant's authorized treating physician, Dr. Rook, hospitalized the claimant due to hip pain associated with the industrial injury. In a note dated June 23, 1994, Dr. Rook stated that the claimant "also has a history of Meniere's disease and his Meniere's symptoms seem to worsen when he has painful exacerbations." In the same note, Dr. Rook stated that he was referring the claimant to Dr. Barrs "to get a better feel for his problem related to Meniere's disease," and for "any treatment and recommendations."
The claimant was examined by Dr. Barrs on June 24, 1994. In his report, Dr. Barrs stated that "the most likely ear diagnosis and diagnosis causing his imbalance of a recurrent nature is Meniere's disease."
The ALJ found that by July 14, 1994 the CCIA's insurance adjuster had received Dr. Rook's June 23 report. However, in a letter dated August 10, 1994, the adjuster denied payment for Dr. Barrs' examination on the ground that "services rendered were not related to" the industrial injury.
Subsequently, on September 15, 1994, counsel for the claimant sent a letter to the adjuster demanding payment of Dr. Barrs' bill. On March 30, 1995, counsel for the claimant sent the adjuster a report authored by Dr. Rook on March 15, 1995. In this report, Dr. Rook stated that the claimant's "Meniere's would not have gotten so severe had he not had the exacerbation," and that it was the exacerbation of the injury-related pain and Meniere's symptoms which "resulted in the referral for consultation from Dr. Barrs." The CCIA's adjuster then submitted Dr. Barrs' bill for payment on April 4, 1995.
Under these circumstances, the ALJ concluded that the CCIA should be penalized $25.00 per day commencing August 4, 1994 through April 4, 1995. In so doing, the ALJ stated that he could not find "that the adjuster's failure to pay [Dr. Barrs'] bill was at all reasonable." In support of this conclusion, the ALJ noted that the referral to Dr. Barrs was initiated by Dr. Rook, the authorized treating physician. Moreover, the ALJ found that Dr. Rook's June 1994 report indicated a causal connection between the exacerbation of the claimant's injury-related pain, and the aggravation of his Meniere's disease symptoms. Moreover, the ALJ found that Dr. Rook's March 1995 report was "substantially identical" to the June 1994 report, and the CCIA agreed to pay Dr. Barrs' bill after receiving the March 1995 report.
I.
On review, the CCIA contends that its conduct is not subject to a penalty. Analogizing this case to Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995), the CCIA argues that it had no duty to pay Dr. Barrs' bill without regard to its "right to contest payment of any particular medical benefit." The CCIA reasons that it could only be penalized if it refused to pay the bill after litigating the causation issue. We disagree.
This case is governed by former § 8-53-116, C.R.S. (1986 Repl. Vol. 3B) [currently § 8-43-304(1)]. This statute provides for imposition of a penalty against an insurer that violates "any provision of articles 40 to 54 of this title, or does any act prohibited thereby." Former § 8-49-101(1)(a), C.R.S. (1986 Repl. Vol. 3B), provides that every employer "shall furnish" medical treatment reasonably needed to cure and relieve the effects of the injury. As the insurer, CCIA was "primarily liable" to provide the medical benefits mandated by § 8-49-101(1). Former § 8-44-105, C.R.S. (1986 Repl. Vol. 3B).
Use of the word "shall" is generally understood to create a mandatory requirement. See Aren Design, Inc. v. Becerra, 897 P.2d 902 (Colo.App. 1995). Consequently, we view § 8-49-101(1)(a) as creating an affirmative duty for workers' compensation insurers to pay for medical treatment which is reasonable and necessary to cure and relieve from the effects of the injury.
Moreover, this case is distinguishable from Allison v. Industrial Claim Appeals Office, supra. In Allison, the court held that § 8-42-105(1), C.R.S. (1996 Cum. Supp.), which sets the rate for payment of temporary total disability benefits, does not "mandate a legal duty upon the employer to pay that rate without regard to any claimed offset prior to the ALJ's determination of benefits."
Thus, Allison stands for the proposition that, when determining whether to impose penalties for a violation of the Act, the ALJ "must look to the express duties and prohibitions imposed by the statutory language, and should not create implied duties and responsibilities." Villa v. Wayne Gomez Demolition Excavating, Inc., W.C. No. 4-236-951 (January 7, 1997). Here, unlike the situation in Allison, § 8-49-101(1)(a) creates an express duty to pay reasonable and necessary medical expenses. Having decided not to pay Dr. Barrs' medical bill, the CCIA risked the imposition of penalties under § 8-53-116 unless its failure to pay was reasonably grounded on a rational argument based in law or fact. Diversified Veterans Corporate Center v. Hewuse, ___ P.2d ___ (Colo.App. No. 96CA0583, January 9, 1997).
II.
The CCIA next contends that the ALJ applied an incorrect legal standard in determining that its conduct was subject to a penalty. Relying on Tozer v. Scott Wetzel Services, Inc., 883 P.2d 496 (Colo.App. 1994), the CCIA argues that the question of whether its conduct is subject to a penalty is a "legal issue" which we may consider independent of the ALJ's findings and conclusions. Further, the CCIA argues that it was improper for the ALJ to consider the relatively small amount of Dr. Barrs' bill in assessing the reasonableness of its conduct. We perceive no error.
It is now well established that the question of whether an insurer's conduct is subject to a penalty under § 8-53-116 is based on the objective standard of negligence, which is measured by what a reasonable insurer would have done under similar circumstances. This standard does not require that the insurer engage in knowing or intentional conduct in order to be subject to a penalty. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996); Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). Further, in the context of workers' compensation proceedings, the reasonableness of the insurer's conduct is a question of fact for resolution by the ALJ. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra; Halbritter v. Colorado Professional Counseling Services, P.C., W.C. No. 4-160-869 (August 3, 1995) aff'd., Colorado Professional Counseling Services, P.C. v. Halbritter, (Colo.App. No. 95CA1356, June 6, 1996) (not selected for publication) ( Tozer involved civil proceedings, and the problem of lay jurors considering the "reasonableness" of an insurer's conduct is not present in workers' compensation proceedings before an ALJ).
It follows that we decline to hold as a matter of law that the ALJ erred in finding that the CCIA's conduct was unreasonable. To the contrary, we must uphold that the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. (1996 Cum. Supp.). Applying this standard, we are obliged to defer to the ALJ's resolution of conflicts in the evidence, his credibility determinations and the plausible inferences which he drew from the evidence. Metro Moving Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).
Here, viewing the evidence in a light most favorable to the claimant, the record establishes that, by August 4, 1994, the CCIA's adjuster was in possession of Dr. Rook's June 1994 report. A plausible interpretation of the June 23 report is that Dr. Rook referred the claimant to Dr. Barrs because, in Dr. Rook's opinion, pain caused by the industrial injury was aggravating the claimant's preexisting Meniere's disease. Under these circumstances, the ALJ could conclude that a reasonable insurer would have paid Dr. Barrs' consultation fee, or made further inquiry of Dr. Rook concerning the reason for the referral to Barrs. This conclusion is bolstered by the fact that the CCIA paid the bill after receiving Dr. Rook's March 1995 report, a report which the ALJ found was not substantially different than the June 1994 report.
Moreover, we disagree with the argument that the ALJ's order is vitiated because it notes that the amount of Dr. Barrs' bill is small when compared to the amount of attorney time and administrative resources devoted to resolution of the penalty issue. As the claimant points out, the ALJ expressly stated that he would not judge the reasonableness of the CCIA's conduct based on the amount of the medical bill in dispute. (Tr. pp. 39-40). Although the written order contains a comment on the amount of the bill, Findings of Fact 9 and 10 reflect that the ALJ judged the reasonableness of the insurer's conduct based on its investigation of the causation issue, not the amount of Dr. Barrs' bill. Consequently, the ALJ's reference to the amount of Dr. Barrs' bill is, at most, harmless error.
III.
The CCIA's final contention is that the penalty was excessive as a matter of constitutional law. As the claimant points out, it appears that the Court of Appeals has held that the CCIA does not have standing to raise this issue. Pueblo School District No. 70 v. Toth, supra. In any event, consideration of this constitutional argument is beyond our jurisdiction. Kinterknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971).
IT IS THEREFORE ORDERED that the ALJ's order dated July 3, 1996, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. DeanNOTICE
This Order is final unless an action to modify or vacate the Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, Colorado 80203, by filing a petition to 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 the Order was mailed, pursuant to §§ 8-43-301(10) and 307, C. R. S. (1996 Cum. Supp.).
Copies of this decision were mailed April 28, 1997 to the following parties:
Raymond F. Edmonds, 4444 Fenton Rd., Colorado Springs, CO 80916
Snyder Services, Inc., P.O. Box 440638, Aurora, CO 80044-0638
Colorado Compensation Insurance Authority, Attn: Curt Kriksciun, Esq. (Interagency Mail)
Steven U. Mullens, Esq., P.O. Box 2940, Colorado Springs, CO 80901-2940 (For the Claimant)
By: _______________________________