Opinion
W.C. No. 4-586-030.
September 17, 2004.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Mattoon (ALJ) which found the claimant suffered a compensable injury, but denied certain medical benefits and penalties. We affirm the order in part, modify part of the order, and set aside part of the order and remand
The ALJ found the claimant suffered a compensable slip and fall injury on April 17, 2003, while employed as a waitress in a bar operated by Etcetra Inc. (employer). The ALJ determined the employer is a Colorado corporation which is owned by Sheri Long (Long) and uninsured for workers' compensation.
On April 19, 2004, the claimant obtained treatment at the Parkview emergency department. The employer did not subsequently designate a treating physician. Therefore, the ALJ determined the right of selection passed to the claimant and the physicians selected by the claimant are authorized to treat the industrial injury. The ALJ also awarded temporary total disability benefits, temporary partial disability benefits and penalties.
I.
The claimant first contends the ALJ erred in failing to require the employer to pay the cost of the emergency room treatment at Parkview. We disagree.
An employer is generally liable only for authorized medical treatment and § 8-43-404(5), C.R.S. 2003, affords the employer the right, in the first instance, to select an authorized treating physician. See § 8-42-101(1), C.R.S. 2003; Pickett v. Colorado State Hospital, 32 Colo. App. 282, 513 P.2d 228 (1973). However, medical services provided in a bona fide emergency are an exception to the requirement for prior authorization. Sims v. Industrial Claim Appeals Office, 797 P.2d 777 (Colo.App. 1990). A medical emergency affords an injured worker the right to obtain immediate treatment without undergoing the delay inherent in notifying the employer and obtaining a referral or approval.
There is no precise legal test for determining the existence of a medical emergency. Rather, the existence of a bona fide emergency is dependent on the particular facts and circumstances of the claim. Consequently, we must uphold the ALJ's determination that the April 19 medical treatment was not an "emergency visit" if supported by substantial evidence and plausible inferences drawn from the record. (Finding of Fact 5).
The industrial injury occurred on the evening of April 17. The claimant completed her work-shift that night and the following night. However, the claimant testified that she was "up all night in pain" after work on April 18; therefore she decided to seek treatment at 8 a.m. on April 19. (Tr. p. December 3, 2003, p. 99). It was not until after the emergency room treatment that the claimant reported the injury to the employer. (Tr. December 3, 2003, p. 69).
The claimant's testimony and the photos of the claimant's bruised knee (Claimant's Hearing Exhibits 8, 9, 10) contain ample evidence to establish the claimant's need for medical treatment for the industrial injury. However, the ALJ reasonably inferred the claimant failed to prove the need for treatment was so urgent that the claimant could not notify the employer of the injury before proceeding to the Parkview emergency department. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000) (we may consider findings which are necessarily implied by the ALJ's order). Further, the claimant's factual assertion on review that she was unable to seek authorization for the 8 a.m. emergency room treatment because the employer's business was closed at that time cannot substitute for testimony not contained in the record. Subsequent Injury Fund v. Gallegos, 746 P. 2d 71 (Colo.App. 1987).
The ALJ's determination is also consistent with the testimony of the claimant's spouse concerning the claimant's condition immediately before he took her to Parkview on April 19. (Tr. March 14, 2004, p. 217). The ALJ's determination is buttressed by the Parkview emergency room report that the claimant presented with significant pain but ambulated without difficulty. (Claimant's Hearing Exhibit 1). The report also indicates that x-rays of the knee were negative and the claimant was released with instructions to obtain follow-up treatment only if her symptoms did not improve.
The claimant's remaining assertions have been considered and are not persuasive. The claimant cites no authority, and we know of none, that the employer's failure to tender the services of a physician upon notice of the injury renders any previous medical treatment compensable emergency treatment. To the contrary the court has held that the employer has an interest in being apprised of the claimant's request for treatment even where the employer denies liability. Yeck v. Industrial Claim Appeals Office, 996 P.2d 228 (Colo.App. 1999). Therefore, the ALJ did not error in refusing to hold the employer liable for the Parkview emergency department expenses.
Nevertheless, we agree with the claimant that the ALJ erred in refusing to impose a penalty for the employer's failure to notify Parkview that it contested liability for the expenses. Penalties may be imposed under § 8-43-304(1), C.R.S. 2003, for failure to comply with a rule of procedure adopted by the Director of the Division of Workers' Compensation (Director). Holliday v. Bestop Inc., 23 P.3d 700 (Colo. 2001). The imposition of penalties under § 8-43-304(1) requires a two-step analysis. The ALJ must first determine whether the disputed conduct constituted a violation of a rule. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). If the ALJ finds a violation, the ALJ must determine whether the violator's actions which resulted in the violation were objectively reasonable. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo.App. 2003); Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). The court has held that where the violator provides no "appropriate" explanation the violation is not "objectively reasonable." See Human Resource Company v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999).
Section 8-42-101(3)(a)(I), C.R.S. 2003, provides that medical treatment for work-related injuries shall be paid in accordance with a medical fee schedule established by the Director. Rule XVI(K)(1), 7 Code Colo. Reg. 1101-3 at 81 (2001), of the Rules of Procedure promulgated by the Director for the administration of § 8-42-101, requires that medical bills be paid within 30 days of receipt unless the employer contests liability in accordance Rule XVI(K)(2).
Rule XVI(K)(2)(a) provides that an employer may contest payment of a medical bill by submitting a written notification of contest within 30 days of its receipt of the bill. The rule expressly allows the employer to contest payment on grounds that compensability has not been established insurance coverage is at issue, the billed services are not related to the industrial injury or the "provider is not authorized to treat." Thus, the plain language of the rule reflects the Director's determination that the efficient and effective administration of the medical fee schedule requires prompt notice to medical providers of the employer's intent to contest payment even where the employer contests compensability and contests authorization of the treatment. See Gerrity Oil and Gas Corp. v. Magness, 923 P.2d 261 (Colo.App. 1995), aff'd. in part, rev'd. in part, 946 P.2d 913 (Colo. 1997) (interpretation of administrative rules are governed by the principles of statutory construction); Monfort Transportation v. Industrial Claim Appeals Office, 942 P.2d 1358 (Colo.App. 1997) (rules must be interpreted to effect the Director's intent and the best indicator of the Director's intent is the plain language of the rule). Consequently, the ALJ erred insofar as she determined that the employer could not be penalized for a violation of Rule XVI(K) merely because the Parkview emergency treatment was not "authorized."
On substantial evidence, the ALJ found the employer received billings from the Parkview emergency room visit and refused to pay the bill by "simply ignoring it." (Finding of Fact 7). The ALJ's finding compels the conclusion the ALJ found the employer violated Rule XVI(K) and neither had nor advanced any rational argument for the violation.
We have previously held that imposition of penalties under § 8-43-304(1) is mandatory, even though the amount is discretionary, if the ALJ finds that there has been a violation of the Act or rules, and that violation was not reasonable under an objective standard. Rael v. Debourgh Manufacturing Co., W.C. No. 4-115-551 (February 27, 1998); Marple v. Saint Joseph Hospital, W.C. No. 3-966-344 (September 15, 1995). We adhere to our prior conclusion. Therefore, the matter is remanded to the ALJ for the assessment of a penalty to determine the amount of the penalty to be imposed under § 8-43-304(1).
III.
In contrast, we reject the claimant's contention the ALJ erroneously refused to impose a fine under § 8-43-409 C.R.S. 2003. Insofar as pertinent, § 8-43-409(1) provides that:
Upon receiving information from any person or entity that an employer is in default of its insurance obligation, the director shall forthwith investigate and, if the information can be substantiated, the director shall notify the employer of the opportunity to request a prehearing conference on the issue of default. Thereafter, if necessary, the director shall set the issue of the employer's default for hearing."
The statute also provides that upon a finding that the employer is in default of its insurance obligations, the director shall either order the employer to cease and desist its business operations during the default or impose a fine of not more than $500 for every day that the employer fails to keep insurance but the fine shall exceed the annual cost of the insurance premium that would have been charged for such employer.
Here, the ALJ found that the actions authorized by § 8-43-409(1) are for the Director and "not this ALJ at the request of a claimant." (Conclusions of Law 19). Therefore, the ALJ denied the claimant's request to impose a fine equal to the workers' compensation premium previously paid by the employer. We agree with the ALJ's reasoning.
Admittedly, the Director and ALJs share concurrent original jurisdiction to decide matters arising under the Act. Section 8-43-201 C.R.S. 2003. For example, ALJs and the Director share the same powers in connection with hearings and both may issue orders. Giddings v. Industrial Claim Appeals Office, 39 P.3d 1211, 1214 (Colo.App. No. 2001); Cornerstone Partners v. Industrial Claim Appeals Office, 830 P.2d 1148 (Colo.App. 1992).
Because subsection 8-43-409(5) expressly requires that the "director or administrative law judge" report to the Division each time a fine is imposed pursuant to subsection (1) of the statute, we are persuaded that ALJs are authorized to conduct hearings and impose fines upon defaulting employers. See Bralish v. Industrial Claim Appeals Office, 81 P.3d 1091(Colo.App. 2003), cert. denied 03SC539, January 12, 2004 (words in a statute to be given their plain and ordinary meanings).
Nevertheless, the powers granted to ALJs and the Director are not identical. Giddings v. Industrial Claim Appeals Office, 39 P.3d at 1214. Subsection 8-43-409(1) provides that the Director shall investigate a claim that an employer is in default and notify the employer of the opportunity to a prehearing. It is also within the Director's discretion to determine whether a hearing is "necessary." Accordingly, we agree with the ALJ that it is the role of the Director to conduct a preliminary investigation and determine whether the matter should be set for a hearing before an ALJ on the issue of whether to impose a fine for an employer's failure to maintain workers' compensation insurance.
Moreover, the statute provides that all fines collected under § 8-43-409(1)(b) are payable to the state treasurer and credited to the workers' compensation cash fund. Thus, fines imposed under § 8-43-409(1)(b) are not intended as a remedy to injured claimants whose employer is uninsured. Rather, insofar as the claimant has suffered an injury in fact by the employer's failure to maintain insurance, the claimant's remedy is a 50 percent increase in compensation under § 8-43-408 C.R.S. 2003. Cf. Bradley v. Industrial Claim Appeals Office, 841 P.2d 1071 (Colo.App. 1992) (a party has standing if it has "both an injury in fact and a cognizable legal right."). It follows, we agree with the ALJ that she did not have authority to set a hearing on the claimant's request for a fine under § 8-43-409(1) in the absence of the Director's determination that a hearing is necessary.
IV.
In a related matter, we reject the claimant's contention the ALJ miscalculated the claimant's temporary total disability rate. The ALJ found the claimant's average weekly wage inclusive of concurrent employment is $538.36. The ALJ also determined the claimant is entitled to a 50 percent increase in temporary disability benefits under § 8-43-408(1), because the employer was not insured for workers' compensation benefits at the time of the injury. Therefore, the ALJ awarded temporary total disability benefits at the rate of $538.36. The employer does not dispute the penalty assessment.
Contrary to the claimant's contention the 50 percent penalty authorized by § 8-43-408(1) increases the "amounts of compensation" awarded to the claimant, not the claimant's average weekly wage. Thus, we disagree with the claimant that he is entitled to benefits at the rate of $807.54. See Eachus v. Cooper, 738 P.2d 383 (Colo.App. 1986)
V.
Further, the claimant contends the ALJ erroneously terminated the penalty imposed for the employer's violation of § 8-43-203(1)(a), C.R.S. 2003, on October 31, 2003. The claimant contends the penalty period is continuing because the employer never filed the written notice required by § 8-43-203(1)(a).
Section 8-43-203(1)(a) requires that within 20 days of notice the claimant has suffered a disabling injury, the employer must admit or deny the injury in writing. Subsection 8-43-203(2)(a) provides that an employ who fails timely to admit or deny liability may be liable for up to one day's compensation for each day's failure to provide the required notice. However, the courts have held that for purposes of avoiding penalties an employer may be found to have "substantially complied" with § 8-43-203(1)(a) even though no written admission or denial was ever filed. Dorris v. Gardner Zemke Co., 765 P.2d 456 (Colo.App. 1987). In Hanson v. Industrial Commission, 716 P.2d 477 (Colo.App. 1986), the court concluded the respondents substantially complied with the statute through an oral admission at hearing.
Here, the ALJ found the employer never filed the required written admission or notice of contest. Therefore, the ALJ imposed a penalty for the employer's failure to comply with § 8-43-203(1)(a) commencing May 12, 2003. However, the ALJ terminated the penalty effective October 31, 2003, based upon her finding that the employer orally contested the claim at the first hearing. Taken as a whole, the ALJ reasonably inferred that Long orally contested the claim during her hearing appearance on October 31. See Ackerman v. Hilton's Mechanical Men, Inc., 914 P.2d 524 (Colo.App. 1996) (ALJ findings may be inferences from circumstantial evidence). Therefore, the ALJ did not err in terminating the penalty on October 31. Hanson v. Industrial Commission, supra,
VI.
The claimant also contests the ALJ's refusal to impose joint and several liability for all benefits and compensation among the named employers under the equitable doctrine of "piercing the corporate veil."
The equitable doctrine of "piercing the corporate veil" allows an ALJ to impose personal liability on a corporate officer where the corporate structure is used so improperly that the continued recognition of the corporation as a separate legal entity is to be disregarded. Micciche v. Billings, 727 P.2d 367 (Colo.App. 1986). Specifically:
"if it is shown that shareholders used the corporate entity as a mere instrumentality for the transaction of their own affairs without regard to separate and independent corporate existence, or for the purpose of defeating, or evading important legislative policy, or in order to perpetuate a fraud or wrong on another, equity will permit the corporate form to be disregarded and will hold the shareholders personally responsible for the corporation's improper actions."
Micciche v. Billings, 727 P.2d at 373; see also Jarnagin v. Busby, Inc., 867 P.2d 63 (Colo.App. 1993); citing Industrial Commission v. Lavach, 165 Colo. 433, 439 P.2d 359 (1968).
The determination of whether the corporate entity was used as a mere instrumentality for the transaction of an individual's affairs is a factual determination for the ALJ to be based upon consideration of the particular circumstances of the matter. See Micciche v. Billings, supra. Consequently, we must uphold the ALJ's determinations if supported by substantial evidence and plausible inferences drawn from the record. Section 8-43-301(8); Prestige Homes, Inc. v. Legouffe, 658 P.2d 850 (Colo 1983).
As alleged by the claimant, the record contains evidence that Long had minimal knowledge about the management of a corporation, and that Long operated Etcetra "in a very loose manner," which included questionable bookkeeping practices. Further, Long conceded that Etcetra obtained a liquor license in her name even though her ex-husband, Darin Trapp, actually managed Etcetra's bar, because her ex-husband cannot legally obtain a liquor license in his own name. Nevertheless, we agree with the ALJ that these facts do not compel a finding that the corporation was a sham for the transaction of the personal affairs of Long or Darin Trapp. Therefore, we are not persuaded the ALJ erred in failing to hold Long or Darin Trapp personally liable for the claimant's injury.
VII.
Finally, the claimant contends the ALJ erred insofar as he required the employer to post a bond "in lieu of payment" of the award of workers' compensation benefits and penalties. We agree and modify the ALJ's order accordingly.
Section 8-43-408(2), C.R.S. 2003 requires that in cases where an uninsured employer is ordered to pay workers' compensation benefits, the ALJ shall compute the amount of the award and order the employer to pay said amount to a trustee "or, in lieu thereof," order the employer to file a bond to guarantee payment of the compensation award. Thus, the ALJ erred in requiring the employer to post a bond, in lieu of paying the award.
IT IS THEREFORE ORDERED that the ALJ's order dated, April 13, 2004, is modified to require the employer to either pay all benefits and penalties to a trustee designated by the Director or the ALJ or post a bond consistent with the requirements of § 8-43-408(2) to guarantee payment of the award.
IT IS FURTHER ORDERED that the ALJ's order denying penalties under § 8-43-304(1) for a violation of Rule XVI(K) is set aside and the matter is remanded to the ALJ for a determination of the amount of penalty to be imposed. In all other respects the ALJ's order is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
Gina Gant, Pueblo West, CO, Etcetra d/b/a Kickers d/b/a Trappers End Zone, Pueblo West, CO, Darin Trapp, Pueblo West, CO, Sheri Long, Pueblo West, CO, and Pattie J. Ragland, Esq., Colorado Springs, CO, (For Claimant)
Kirk Patterson Brown, Esq., Pueblo, CO, (For Respondents)