Opinion
W.C. No. 4-432-175
January 22, 2002
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Felter (ALJ) which dismissed the claimant's application for hearing on the issue of penalties with prejudice. We set aside the order and remand the matter for further proceedings.
The claimant suffered a work-related injury on February 8, 1999. The respondents admitted liability for temporary disability benefits. On June 26, 2001, the respondents filed a General Admission of Liability which terminated temporary total disability benefits effective June 14, 2001, based upon a June 15 return to work. The Admission was accompanied by a letter dated June 12, 2001, which indicated the claimant was scheduled to return to modified employment on June 15.
Thereafter, the claimant filed an Application for Hearing on the issue of penalties. The claimant alleged the June 26 General Admission did not comply with the Rules of Procedure, Part IX(C)(1)(c), 7 Code Colo. Reg. 1101-3 (March 2, 2001), because the letter attached to the admission reflected a projected return to work instead of stating the claimant had returned to employment.
The respondents subsequently filed a Motion for Summary Judgment seeking denial of the penalty claim. The respondents asserted there was no violation of Rule IX(C)(1)(c), because the Admission was not filed until after the claimant actually returned to employment. Alternatively the respondents argued their actions were objectively reasonably because at the time the June 12 letter was written the claimant had accept an offer of modified employment.
In an order dated September 26, 2001, the ALJ granted the Motion for Summary Judgment and struck the claimant's application for hearing with prejudice. The claimant timely appealed.
On review the claimant contends the ALJ's order is not supported by the applicable law. We agree.
Summary judgment is proper where the alleged facts, even if true, would not present a basis for granting the requested relief. 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). In other words, summary judgment is proper where the moving party is entitled to judgment as a matter of law. Thus, where the pertinent facts are undisputed, an ALJ may dispose of an issue without conducting a hearing. See Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969). However, if there are disputed issues of material fact, due process requires that the parties be afforded a reasonable opportunity in which to present evidence and confront adverse evidence. Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076 (Colo.App. 1990).
Although the ALJ's order does not contain any specific findings of fact, it is obvious the ALJ was persuaded by the arguments in the respondents' motion and determined as a matter of law the respondents are not subject to penalties. Consequently, the ALJ's order is sufficient to permit appellate review and we deny the claimant's request that we remand the matter for additional findings of fact. See George v. Industrial Commission, 720 P.2d 624 (Colo.App. 1986) (ALJ's findings of fact are sufficient if the basis for the ALJ's determination is apparent from the order).
Although the claimant did not identify the penalty statute he relied upon, we agree with the respondents that the claimant implicitly sought an order imposing penalties under § 8-43-304(1), C.R.S. 2001. That statute provides that an insurer who fails or refuses to perform any duty lawfully enjoined within the time prescribed by the director or panel, may be subject to penalties of up to $500 per day. Further, the court has held that the failure to comply with the Rules of Procedure is a failure to perform a "duty lawfully enjoined" within the meaning of § 8-43-304(1). See Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997); Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996).
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 procedural rule. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). If a rule was violated, the ALJ must determine whether the violator's actions which resulted in the violation were objectively reasonable. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995).
We first consider whether the evidence establishes a violation. In interpreting Rule IX(C)(1)(c), the ordinary rules of statutory construction are applicable. Consequently, the words and phrases in the regulation should be given their plain and ordinary meaning. Anheuser Busch Inc. v. Industrial Claim Appeals Office, 28 P.3d 969 (Colo.App. 2001). If the statutory language is clear and unambiguous, the regulation must be applied as written, and it is unnecessary to resort to other rules of statutory construction. Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, 26 P.3d 546 (Colo.App. 2001). Further, the regulation, to the extent possible, should be interpreted to effect a purpose which is consistent with the authorizing statute. See Riley Family Trust v. Hood, 874 P.2d 503 (Colo.App. 1994).
There is no dispute the respondents' unilateral termination of temporary disability benefits was based on Rule IX(C)(1)(c). Rule IX(C)(1)(c) provides, in pertinent part, that an insurer may terminate temporary disability benefits without a hearing by filing an admission of liability form with:
"A written report from an employer or the claimant stating the claimant has returned to work and setting forth the wages paid for the work to which the claimant has returned." (Emphasis added).
The parties dispute the meaning of the term "has returned." The respondents contend the term includes the situation where the claimant has agreed to return to employment, even if the return has not actually occurred. We disagree. Had the Director intended to allow the unilateral termination of temporary disability under these circumstances, the Director would have promulgated a rule which requires the insurer to file a report that states the claimant is returning or will be returning to modified employment. However, the rule is worded in the past tense, and we presume the Director intended a corresponding construction. Cf. § 2-4-104, C.R.S.(2001) (words in present tense include the future tense). We have no authority to read non-existent provisions into the rule. See Schelly v. Industrial Claim Appeals Office, 961 P.2d 547 (Colo.App. 1997). Furthermore, if Rule IX(C)(1)(c) is read to allow the termination of temporary disability benefits based on evidence of a proposed return to work, the rule would improperly shift the burden of proof to the claimant to obtain a reinstatement of benefits where the offer of modified employment is withdrawn prior to the actual commencement of work or the claimant suffers a disabling deterioration of the condition before the scheduled return to work date. See Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 18 P.3d 790 (Colo.App. 2000). As a result, the respondents' construction is contrary to § 8-42-105(3), C.R.S. 2001, which provides that temporary disability payments "shall continue" until the respondents prove grounds for the termination of benefits.
Rather, Rule IX(C)(1)(c) requires the respondents to file an admission accompanied by a report which states the claimant "has returned" to employment. Because the rule contemplates proof that the return to work has been completed, evidence of an anticipated return to work is insufficient to fulfill the requirements of Rule IX(C)(1)(c). Accordingly, we conclude the June 12 letter attached to the respondents' General Admission did not comply with the requirements of Rule IX(C)(1)(c) and, therefore, the record establishes as a mater of law that the respondents violated Rule IX. Consequently, the ALJ erred insofar as he adopted the respondents' contention that there was no violation of Rule IX.
Moreover, it is the written report attached to the admission, and not the admission itself, which must establish the claimant has returned to work. Thus, the fact that the admission was filed after the claimant actually returned to work does not compel the conclusion the insurer complied with the requirements of Rule IX(C)(1)(c). The filing of the admission and the contents of the report concerning the return to work were clearly separate requirements of the rule.
However, as stated above, the insurer is not subject to penalties if the actions which resulted in the violation were objectively reasonable. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra. The reasonableness of the violator's actions depends upon whether the actions were predicated on a rational argument based in law or fact. Diversified Veterans Corporate Center v. Hewuse, supra. Generally, the question of whether the insurer advanced a rational argument is one of fact for resolution by the ALJ based upon the particular circumstances presented. See Pueblo School District No. 70 v. Toth, supra; cf. Miller v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 00CA1739, May 24, 2001) (in determining whether an insurer's conduct is "wrongful" for the purpose of imposing a penalty under § 8-43-401(2)(a), the reasonableness of the insurer's actions must be "evaluated as of the time of the conduct."). It follows that if the parties present any material issue of fact concerning the reasonableness of the insurer's actions, it is improper to resolve the issue without affording the party seeking the penalty an evidentiary hearing.
The claimant contends the respondents' prematurely prepared the June 12 report and filed the General Admission not because they believed it complied with Rule IX(C)(1)(c), but solely for their own convenience to avoid a potential overpayment. The respondents deny the allegation. Under these circumstances, we conclude there is a material issue of fact concerning the reasonableness of the insurer's actions which cannot be resolved without affording the parties an evidentiary hearing. Therefore, the ALJ erred in striking the claimant's application for hearing and the matter must be remanded for further proceedings which afford the parties an opportunity to present evidence concerning the reasonableness of the insurer's actions.
For purposes of our remand we also agree with the claimant that the reasonableness of the respondents' actions is not dependent on the relative harm to the claimant. Rather, evidence the violation was harmless may be relevant in determining the amount of penalties to be imposed if the violation is found to be objectively unreasonable. Martinez v. Flying J. Inc., W.C. No. 4-374-856 (June 22, 2000); cf. Pueblo School District No. 70 v. Toth, supra.
IT IS THEREFORE ORDERED that the ALJ's order dated September 26, 2001, is set aside and the matter is remanded for further proceedings on the claimant's application for hearing.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
Copies of this decision were mailed January 22, 2002 to the following parties:
Narcisco Guerin, 3817 Canterbury Ln., Pueblo, CO 81005
Board of Water Works of Pueblo Colorado, P. O. Box 400, Pueblo, CO 81002
Curt Kriksciun, Esq., Colorado Compensation Insurance Authority d/b/a Pinnacol Assurance — Interagency Mail (For Respondents)
Lawrence D. Saunders, Esq., 125 W. "B" St., Pueblo, CO 81003 (For Claimant)
Craig R. Anderson, Esq., 101 N. Tejon, #410, Colorado Springs, CO 80903
BY: A. Pendroy