Opinion
W.C. No. 4-424-488.
August 21, 2008.
ORDER
The claimant and respondents both seek review of an order of Administrative Law Judge Harr (ALJ) dated December 21, 2007, but mailed to the parties on February 7, 2008 that allowed the insurer to modify prospectively the claimant's average weekly wage (AWW) and dismissed the claimant's request for penalties. We affirm in part, set the order aside in part, and remand for entry of a new order on the issues of back due benefits, if any, owed to the claimant and any overpayment by the respondents.
This case has a complex procedural history, which will be summarized only to the extent necessary to resolve the pending appeal. The ALJ found the following pertinent findings of fact. The claimant sustained an admitted back injury on June 3, 1999, resulting in permanent total disability (PTD). The claimant pursued an appeal on the issue of the inclusion of the cost of continuing the employer's group health insurance in the claimant's AWW. The Colorado Court of Appeals in an opinion dated November 23, 2005 concluded that the ALJ and the Panel had erred in excluding the cost of health insurance in the computation of the claimant's AWW. The court remanded with directions to include in the claimant's AWW the cost of continuing the employer's group health insurance. In an order of remand dated January 9, 2007 the Panel, following remand from the court of appeals, further remanded the matter ordering that the claimant's cost of continuing the employer's group health insurance was to be included in the claimant's AWW and to the extent that there was an unresolved dispute concerning the amount of that cost, the parties might apply for a hearing with an ALJ. On January 22, 2007 the insurer filed a final admission of liability (FAL) admitting liability for an AWW of $566.94. The claimant agrees that this is the correct figure when the cost of continuing the employer's group health insurance is added to the AWW.
However, the claims adjuster testified that the January 22, 2007 FAL mistakenly admitted for an AWW that was too high because she had lacked information about the Medicare premium. The Social Security Administration determined on January 27, 2004 that the claimant and her children were eligible for disability insurance (SSDI) benefits, retroactively effective from July 1, 2001. Effective in January 2004, the Social Security Administration began deducting a Medicare premium payment in the monthly amount of $66.60, or $15.37 per week. The claimant's AWW, using a Medicare premium payment, is $452.79. The claimant objected to the January 22, 2007 FAL and on February 19, 2007 the insurer, in response to a letter from Division of Workers' Compensation, filed a second FAL stating that the AWW and PTD benefits would be adjusted based on the Medicare cost of insurance once documentation was received from the claimant. The claimant objected to the February 19, 2007 FAL and filed an application for hearing endorsing the issue of penalties as follows:
C.R.S. § 8-304 305, Respondents failed to obey an order of the Court of Appeals and the Industrial Claim Appeals Office, concerning the addition of COBRA benefits to Claimant's [AWW]. Respondents continue to underpay Claimant's permanent total disability benefits and have improperly taken offsets against Claimant's benefits. Failure to timely pay benefits as ordered in violation of W.C.R.P. 5-6.
Crediting the claim adjuster's testimony the ALJ found that the insurer filed the FALs of January 22 and February 19, 2007 admitting for a higher AWW based upon a mistake. The ALJ found that the two FALs should be reopened based upon mistake and overpayment. The ALJ found the claimant's benefits from June 1, 2001 through December 31, 2003 should be based upon an AWW of $566.97. The claimant's benefits from January 1, 2004, ongoing, should be based upon an AWW of $452.79. However, the ALJ only granted the insurer prospective relief to modify the claimant's AWW because the basis for reopening was mistake under § 8-43-303(2)(a), C.R.S. 2007. The ALJ therefore ordered the insurer to modify prospectively the claimant's AWW to $452.79 as of the date of the order. The ALJ denied the claimant's request for penalties or for attorney fees incurred in seeking SSDI benefits.
I.
On appeal, the claimant first contends that the ALJ erred when he permitted the respondents to reopen the issue of AWW after the issue was appealed and remanded from the court of appeals. The claimant argues that the respondents' January 19, 2007 FAL correctly added to the claimant's AWW the cost of the claimant's group health insurance, and that the respondents should not be allowed to substitute the claimant's Medicare premiums for the claimant's cost of continuing the employer's group health insurance as an element of her AWW.
(A)
The claimant does not dispute that under Schelly v. Industrial Claim Appeals Office 961 P.2d 547 (Colo.App. 1997) and Sears Roebuck Co. v. Industrial Claim Appeals Office, 140 P.3d 336 (Colo.App. 2006) the employee's cost for conversion to Medicare should be used to calculate the claimant's AWW. Instead, the claimant contends that the employer did not timely raise the argument that the claimant's cost of Medicare, rather than the cost of continuing the employers' group health insurance, should be used for calculation of her AWW. The claimant argues that the respondents raised the issue of Medicare for the first time after remand from the court of appeals. Therefore, the claimant, citing Leprino Foods v. Industrial Claim Appeals Office, 134 P.3d 475 (Colo.App. 2005), contends the respondents waived the issue of Medicare benefits as controlling on the issue of AWW. We are not persuaded that the ALJ erred in allowing the respondents to modify the claimant's AWW based on the Medicare cost of insurance.
Here the issue of AWW was initially heard before ALJ Coughlin who entered an order on August 11, 2004 finding that the COBRA cost of continuation of medical insurance was properly not included in the computation of the claimant's AWW. There was no determination in ALJ Coughlin's order of what the COBRA costs would be. The Panel affirmed the ALJ's order. The court of appeals set aside the order of the Panel and remanded the case with directions to include in the claimant's AWW the cost of continuing the employer's group health insurance. On January 9, 2007 the Panel entered an order of remand ordering that the claimant's cost of continuing the employer's group health insurance coverage be included in the claimant's AWW and stated that to the extent that there was an unresolved dispute concerning the amount of that cost, the parties could apply for a hearing with an ALJ. The respondents on January 19, 2007 filed a FAL increasing the claimant's AWW by the amount of the claimant's cost of continuing the employer's group health insurance coverage. The claimant filed an application for hearing on the issue of penalties and the respondents filed a response to application for hearing endorsing AWW as an issue. A prehearing administrative law judge entered a prehearing order permitting the respondents to add the issue of reopening and seek both relief from the FAL and a determination of the AWW based on Medicare as opposed to the cost of COBRA. In the order presently under appeal the ALJ permitted the respondents to reopen the issue of AWW prospectively to reflect the cost of conversion to the Medicare plan.
We first note that the claimant quotes extensively from the dissent in Leprino Foods. However, we are bound by the majority's opinion. The court in Leprino determined that the claimant's request for a lump sum payment of permanent partial disability benefits did not constitute a waiver of her right to contest maximum medical improvement through the Division Independent Medical Examination process. The court in Leprino cited Johnson v. Industrial Comm `n, 761 P.2d 1140 (Colo. 1988) for authority that waiver is the intentional relinquishment of a known right and presented a question of fact. The court found that the record supported the ALJ's finding that the claimant's conduct did not demonstrate the kind of knowing, intelligent and unambiguous conduct required to imply waiver.
The ALJ made no specific finding on the issue of whether the respondents had waived the issue of Medicare benefits as controlling on the issue of AWW. The lack of a finding by the ALJ appears to be the result of the claimant's failure to adequately raise the issue. We do not see the issue of waiver listed in the claimant's application for hearing nor do we find that it was raised in the claimant's post-hearing position statement. However, the claimant did discuss waiver at the inception of the hearing when the parties were asked to state the issues, but it was in the context of issue preclusion. Tr. at 19.
The claimant filed a motion before the hearing to add the affirmative defense of res judicata/issue preclusion in response to the respondents' designated issue of AWW. This motion was granted by Prehearing Administrative Law Judge Purdie in a written order dated June 5, 2007. We address issue preclusion in another part of this order.
In our opinion, the claimant's argument on waiver was not raised by her before the ALJ. Therefore, we need not consider the argument for the first time on appeal. Johnson v. Industrial Comm'n, supra; Colorado Compensation Ins. Authority v. Industrial Claim Appeals Office, 884 P.2d 1131 (Colo.App. 1994); Robbolino v. Fischer-White Contractors, 738 P.2d 70 (Colo.App. 1987). Further, we note that an argument of waiver may also be waived. See Lewis v. Scientific Supply Co., 897 P.2d 905 (Colo.App. 1995); Brickell v. Business Machines, Inc., 817 P.2d 536 (Colo.App. 1990); Parker v. Autonation USA Corporation, W. C. No. 4-429-351 W. C. No. 4-429-351 (June 10, 2004). The claimant waived the issue of the respondents' alleged waiver of the issue of Medicare benefits as controlling on the issue of AWW.
(B)
The claimant cites the case of City of Colorado Springs v. Industrial Comm'n, 720 P.2d 601(Colo.App. 1985) for the proposition that respondents may not challenge the finality of an order from the court of appeals. We agree that when an issue has been fully litigated in a prior administrative proceeding, collateral estoppel may be applicable to preclude the parties from relitigating that issue in subsequent administrative proceedings.
The claimant argues that the ALJ's order failed to honor the order of the court of appeals and conflicts with both the law of the case doctrine and the public policy in favor of finality of judgments. We are not persuaded. We note initially that the court of appeals has previously determined that the reopening provisions are indicative of a strong legislative policy that the goal of achieving a just result overrides the parties' interests in finality. Renz v. Larimer County School District, 924 P.2d 1177 (Colo.App. 1996).
As noted above the court of appeals and the Panel, in turn, remanded the case with directions to include in the claimant's AWW the cost of continuing the employer's group health insurance. The Panel's remand further provided that to the extent there was an unresolved dispute concerning the amount of that cost, the parties could apply for a hearing with an ALJ.
The ALJ's order was entered pursuant to that remand, which directed the respondents to include in the claimant's AWW the cost of continuing employer's group health insurance. In our view, the court of appeals decision constitutes the law of the case and is, of course, binding concerning the issue of whether the cost of continuing the employer's group health insurance should be included in the claimant's AWW.
However, in our opinion the previous adjudication of the issue of inclusion of the cost of the employer's group health insurance in the claimant's AWW does not bar a reopening of the claim. The ALJ allowed the claim to be reopened for consideration of whether the claimant's AWW should be calculated based on the cost of Medicare. The ALJ's reopening of the claim was not barred by the doctrine of law of the case under the applicable statutory scheme for reopening. Under § 8-43-303(1)(a) the ALJ has the power to review any award. Coursey v. Industrial Comm'n, 83 Colo. 490, 267 P.202 (1928). The ALJ's decision to calculate the AWW based on the cost of Medicare is supported by the law. See Schelly v. Industrial Claim Appeals Office, supra; Sears Roebuck Co. v. Industrial Claim Appeals Office, supra (cost of Medicare used to calculate AWW).
In our view, the ALJ did not act inconsistently with the court of appeals' order when he reopened the matter and allowed the respondents to modify prospectively the claimant's AWW to $452.79 from the $566.97 admitted to in the January 22, 2007 FAL that had been based on the cost of the COBRA health insurance benefits. The ALJ found with record support based on crediting the testimony of the claims adjuster that the FALs of January 22 and February 19, 2007 admitting for a higher AWW were based upon mistake. Therefore the ALJ found that the FALs of January 22, and February 19, 2007 should be reopened based upon mistake and overpayment.
Here the court of appeals addressed an order of ALJ Coughlin that dealt specifically with the issue of whether AWW should include COBRA costs after the employer stopped paying its portion of the claimant's health insurance premium. Exhibit 18. The court of appeals' decision is binding on that issue. However, the issue before ALJ Harr was whether and for what period of time, the claimant's AWW should be calculated based on the cost of Medicare. The supreme court has stated that:
Issue preclusion bars relitigation of an issue if: (1) the issue sought to be precluded is identical to an issue actually determined in the prior proceedings; (2) the party against whom estoppel is asserted has been a party to or is in privity with a party to the prior proceeding; (3) there is a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding.
Sunny Acres Villa, Inc. v. Cooper, 25 P.3d 44, 47 (Colo. 2001)
The issue of whether the claimant's AWW should include the cost of COBRA cost after the employer stopped paying its portion of the claimant's health insurance premium is not identical to the issue of whether the claimant's AWW should be adjusted based on the Medicare cost of insurance after there was a conversion to the Medicare plan. Therefore, we reject the claimant's argument that issue preclusion prohibited the ALJ from reopening the claim on the issue of AWW.
To the extent that the claimant relies upon the principle that issues that could have been litigated are precluded from being raised later, in our view, the court of appeals' opinion in Berg v. Industrial Claim Appeals Office, 128 P.3d 270 (Colo.App. 2005) resolves this issue against the claimant. In Berg, the claimant petitioned to reopen the claim on the basis that the DIME physician was "mistaken" regarding the claimant's having reached maximum medical improvement. The court of appeals held that permissive reopening was available to the claimant to attack the DIME physician's report after the respondents filed a final admission of liability and the claim closed. The court reasoned that the statutory authority to reopen "any award" is broad.
Further, in Burnes v. United Airlines, W.C. No. 4-679-526 (February 28, 2008), we recognized that there may be some tension between the strict application of the preclusive doctrines and the broad discretion afforded the Director and the ALJs in deciding whether to reopen a claim for the adjustment of benefits previously awarded. See, e.g., Wallace v. Industrial Comm'n, 629 P.2d 1091 (Colo.App. 1982) (reopening statute is purely permissive and vests broad discretion regarding whether to reopen); Renz v. Larimer County School District, W.C. No. 2-896-485 (July 12, 1995), aff'd, 924 P.2d 1177 (Colo.App. 1996) (ALJ's authority to reopen is broad). In this respect, we note that reopening is sometimes permitted even when a previous order closing an issue was not appealed and was therefore permitted to become final. Martinez v. Durango 4-C Council, W.C. No. 3-101-724 (January 27, 1995). Moreover, we have previously rejected the application of the principle of res judicata to a case involving reopening, based upon the broad discretion afforded in the area of reopening. Hernandez v. Cattle King Beef Company, 3-714-045 (February 26, 1988) (noting that the ALJ had the discretion to reopen sua sponte in the absence of a petition to reopen). In our view, our resolution of this issue furthers the legislative policy incorporated in the Workers' Compensation Act that favors a just result over the interest of the litigants in a final resolution of the claim. Padilla v. Industrial Comm'n, 696 P.2d 273 (Colo. 1985). Thus, despite the doctrine of issue preclusion the ALJ here retained the discretion to reopen the claim.
(C)
The claimant contends that the ALJ erred when he ruled that issue preclusion was inapplicable. The claimant argues that even though ALJ Coughlin did not determine the amount of the claimant's AWW the court of appeals' order that the cost of the employer's group health coverage was to be included in the claimant's AWW precludes re-litigation of the issue of the claimant's AWW. As noted above we are not persuaded that the ALJ erred in rejecting the claimant's argument that the respondent was precluded from seeking reopening by the principles of issue preclusion.
Further, in our opinion the claimant's reliance upon citing Mattox v. Hub Distributing Inc., W. C. No. 4-471-963 (November 7, 2005) is misplaced. The claimant contends Mattox supports a determination that further hearing on the issue of the claimant's AWW was barred by the doctrine of issue preclusion. However, in Mattox, the Panel affirmed an order of the ALJ that permitted the respondents to withdraw their admission despite the claimant's argument that the ALJ erred by not barring litigation of the issue of compensability based upon the principles of collateral estoppel and waiver.
We further note that the ALJ found that issue preclusion was inapplicable because ALJ Coughlin never determined the amount of the increase of the claimant's AWW in the prior proceeding. The ALJ's determination is consistent with our view there is no identity of issues between whether the claimant's AWW should include the cost of COBRA cost after the employer stopped paying its portion of the claimant's health insurance premium and the issue of whether the claimant's AWW should be adjusted based on the Medicare cost of insurance after there was a conversion to the Medicare plan.
(D)
The claimant next argues that the ALJ lacked jurisdiction under the reopening statute to reopen the issue of AWW. The claimant contends that because the respondents admitted that the claimant was permanently and totally disabled they are restricted to reopening pursuant to § 8-43-303(3), C.R.S. 2007 for the limited circumstances of determining if the claimant has returned to employment and whether the claimant is earning more than $4,000 per year. We disagree.
It is provided in § 8-43-303(3) as follows:
In cases where a claimant is determined to be permanently totally disabled, any such case may be reopened at any time to determine if the claimant has returned to employment. If the claimant has returned to employment and is earning in excess of four thousand dollars per year or has participated in activities which indicate that the claimant has the ability to return to employment, such claimant's permanent total disability award shall cease and the claimant shall not be entitled to further permanent total disability benefits as a result of the injury or occupational disease which led to the original permanent total disability award. Any subsequent permanent partial disability benefits awarded for the same injury or occupational disease shall be decreased by the amount of permanent total disability benefits previously received by the employee.
However, § 8-43-303(1) provides as follows:
At any time within six years after the date of injury, the director or an administrative law judge may, after notice to all parties, review and reopen any award on the ground of fraud, an overpayment, an error, a mistake, or a change in condition, except for those settlements entered into pursuant to section 8-43-204 in which the claimant waived all right to reopen an award; but a settlement may be reopened at any time on the ground of fraud or mutual mistake of material fact. (Emphasis supplied)
In our view "any award" includes an award of PTD. We are not persuaded that a claim involving a permanently and totally disabled claimant can be reopened only to determine if the claimant has returned to employment and is earning in excess of four thousand dollars per year. Such an interpretation would lead to absurd results. See § 2-4-201(1)(c), C.R.S. 2007 (just and reasonable result intended in enactment of statutes); Bowland v. Industrial Claim Appeals Office, 984 P.2d 660, 663 (Colo.App. 1998) (statutory construction producing absurd results must be avoided).
The claimant also argues that the respondents failed to petition to reopen within six years of the date of injury and therefore the ALJ lacked jurisdiction to reopen the claim. We disagree.
It is provided in § 8-43-303(2), C.R.S. 2007 that at any time within two years after the date of the last temporary or permanent disability benefits become due or payable, an administrative law judge may reopen an award. Here the claimant continued to receive payments for permanent disability benefits. Inasmuch as claimant had been receiving permanent total disability benefits a petition to reopen the claim was timely under § 8-43-303(2). See Lewis v. Scientific Supply Co., Inc., supra.
The claimant argues that this provision does not apply because the claimant continued to receive PTD benefits and the claimant reiterates her argument made above that a PTD case may be reopened only to determine if the claimant has returned to employment. We remain unpersuaded.
(E)
Moreover, under § 8-43-303(1)(a), C.R.S. 2007, an ALJ may reopen any award on the grounds of error or mistake of law or fact. State Compensation Insurance Fund v. Industrial Comm'n, 80 Colo. 130, 249 P. 653 (1926); Renz v. Larimer County School District Poudre R-1, supra. The computation of an injured worker's AWW is subject to reopening under section § 8-43-303 upon a showing of a mistake of fact or law. Benjamin Hernandez, Claimant, v. Cattle King Beef Company, W.C. 3-714-045 (February 26, 1988).
Where the respondents allege a mistake the ALJ is required to determine "whether a mistake was made, and if so, whether it was the type of mistake which justifies reopening a case." Travelers Insurance Co. v. Industrial Comm'n, 646 P.2d 399, 400 (Colo.App. 1981). Because the ALJ's authority is discretionary, we may not interfere with the ALJ's decision to reopen a prior award unless the ALJ's rule constitutes an abuse of discretion. Renz v. Larimer County School District Poudre R 1, supra; Osborne v. Industrial Comm'n, 725 P.2d 63 (Colo.App. 1986). An abuse of discretion is not shown unless the ALJ's order is beyond the bounds of reason, as where it is unsupported by the evidence or is contrary to the applicable law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1994).
The ALJ, crediting the testimony of the claims adjuster, found that the insurer's FALS of January 22 and February 19, 2007 admitting for a higher AWW were based upon mistake. The ALJ found that these FALs should be reopened based upon mistake and overpayment. The ALJ allowed the respondents to modify the claimant's AWW based on conversion to Medicare. In our opinion, this is consistent with HLJ Management Group, Inc. v. Kim, 804 P.2d 250 (Colo.App. 1990) (granting relief from employer's improvidently filed admission on the issue of AWW). We do not find an abuse of discretion in the ALJ's decision to reopen the issue of average weekly wage based on mistake.
Claims may be reopened on the grounds of error, a mistake, or change in condition. Section 8-43-303(1). The respondents here had the burden of proof in seeking to reopen a claim. Richards v. Industrial Claim Appeals Office, 996 P.2d 756 (Colo.App. 2000). The reopening authority is permissive, and whether to reopen a prior award when the statutory criteria have been met is left to the sound discretion of the ALJ. Renz v. Larimer County Sch. Dist. Poudre R-1, supra; see Osborne v. Industrial Commission, 725 P.2d 63 (Colo.App. 1986). An abuse of discretion is not shown unless the ALJ's order is beyond the bounds of reason, as where it is unsupported by the evidence or is contrary to the applicable law. Coates, Reid Waldron v. Vigil, supra.
In our view, the ALJ acted within his discretion in reopening the claim and so we perceive no basis for interfering with the ALJ's reopening of the case. Therefore, we are not persuaded by the claimant's arguments that that the ALJ's order failed to honor the order of the court of appeals and the ALJ's order is not in conflict with the law of the case doctrine.
II.
The claimant next contends that the ALJ erred when he failed calculate properly the back due benefits and the proper offsets and credits, to establish the proper payment of benefits owed by the respondents. The claimant argues that she sought an award of back due benefits in the amount of $45,587.07 and the proposed order prepared by respondents' counsel and signed by the ALJ failed to examine and calculate the back due benefits alleged to be owed.
The respondents, citing Lewis v. Scientific Supply Co., Inc., contend that the claimant failed to preserve her objections to the proposed Specific Findings of Fact, Conclusions of Law and Order submitted by the respondents. We are not persuaded by the respondents' contention that the claimant waived any right to file a petition to review the final order of the ALJ by failing to file an objection to the proposed order.
Further, there is no statutory requirement to object to the proposed Specific Findings of Fact, Conclusions of Law and Order as a prerequisite to filing a petition for review. See § 8-43-301(2), C.R.S. 2007; cf Ortiz v. Industrial Comm'n, 734 P.2d 642 (Colo.App. 1986) (failure to file a brief is not jurisdictional defect, absent a specific statutory provision or rule the court will decline to legislate the same). The ALJ was required to issue an order, which is supported by the record and is consistent with applicable law. The claimant's failure to state a position on the proposed order prior to the ALJ entering his order does not establish "invited error" which would preclude the claimant from challenging the basis of the order. See Aviso v. San Juan Insulation Supply, W.C. 3-066-887 (January 10, 1992).
As we understand the respondents' argument, they concede that the ALJ's order did not address the claimant's request for the ALJ to calculate back due benefits and the proper offsets and credits, to establish the proper payment of benefits alleged by the claimant to be owed by the respondents. However, the respondents argue that the ALJ's order for respondents to re-calculate benefits and file an Amended Final Admission resolved this issue. We disagree.
The ALJ ordered the "Insurer shall recalculate Claimant's benefits as determined in this order and shall file an amended FAL within 30 days of the date this order becomes final." Findings of Fact, Conclusions of Law, and Order at 9 (unpaginated), ¶ 4. As we read the ALJ's order this section of the order only refers to the determination that the insurer could prospectively modify the claimant's AWW to $459.79 as of the date the order. We do not read the order as directing the insurer to file a new admission based on a recalculation of the claimant's benefits due to any back due benefits, proper offsets and credits. Even if we should read the order as suggested by the respondents we do not find sufficient guidance in the ALJ's order on the issue of the alleged underpayment or overpayment of benefits for the respondents to file such an admission.
The claimant raised the issue of underpayment of benefits in her application for hearing and at the inception of the hearing. Tr. at 14-16. The claimant raised the issue in her position statement submitted prior to the entry of the order under appeal. She presented evidence from the claims adjuster and the claimant on this issue. We note that the ALJ found that the claimant had not proved by the preponderance of the evidence that the respondents untimely paid or underpaid the claimant's PTD benefits.
However, the findings on the issue of back due benefits, to the extent that they exist, are not sufficient to permit appellate review. Section 8-43-301(8), C.R.S. 2007. See generally, Womack v. Industrial Comm'n; 168 Colo. 364, 451 P.2d 761 (1969) (where the findings of fact do not afford an adequate basis for review, the matter must be remanded for additional findings); see also, Hall v. Industrial Claim Appeals Office, 757 P.2d 1132 (Colo.App. 1988) (basis for an order, including credibility determinations, must be articulated); Morales v. Adams Count, W.C. 3-929-095 (October 19, 1990).
The claimant has asked that we examine the records, the payment history and enter findings on the issue of back due benefits owed to the claimant. However, we may not make findings of fact. Section 8-1-102(2), C.R.S. 2007. Therefore, this matter must be remanded to the ALJ to address the issue of back due benefits owed to the claimant.
III.
The claimant seeks penalties pursuant to § 8-43-304, C.R.S. 2007 and W. C. Rule of Procedure 5-6(A), 7 Code Colo. Reg. 1101-3 at 16, based upon the respondents' alleged failure to obey the order of the court of appeals to properly calculate back due benefits and the remand from the Panel. The claimant contends that the ALJ erred when he found that respondents were not liable for penalties for an alleged underpayment of benefits and improper calculation of offsets and overpayments. The claimant argues that the Panel's remand on January 9, 2007 triggered the respondents' obligation to file a FAL in which a proper payment of back due benefits was made pursuant to the order of the court of appeals. We are not persuaded that the ALJ erred in denying penalties.
Section 8-43-304 allows an ALJ to impose penalties up to $500 per day against any employer or insurer who commits one of four types of violations. A person may be penalized "who violates any provision of articles 40 to 47 of [title 8], or does any act prohibited thereby, or fails or refuses to perform any duty lawfully enjoined within the time prescribed by the director or panel, for which no penalty has been specifically provided, or fails, neglects, or refuses to obey any lawful order made by the director or panel or any judgment or decree made by any court . . ." Moreover, a failure to comply with the Workers' Compensation 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) is a two step process. The ALJ must first determine whether the disputed conduct constituted a violation of the Act, of a duty lawfully enjoined, or of an order. If the ALJ finds such a violation, the ALJ may impose penalties if he also finds that the party's actions were objectively unreasonable. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo.App. 2003). The amount of the penalty is discretionary up to a maximum of $500 per day for each offense.
The ALJ credited the testimony of the claims adjuster that she believed there was an agreement between counsel for respondents and counsel for the claimant, and based on such belief she issued the claimant's lump sum award check, taking credit for an SSDI overpayment. We cannot say that the ALJ erred in failing to impose penalties for violation of the lump sum order given the ALJ's implicit finding that the insurer's actions were predicated on a rational argument based in law or fact. See Jiminez v. Industrial Claim Appeals Office, 107 P.3d 965, 967 (Colo.App. 2003) (an insurer fails to obey an order if it fails to take the action that a reasonable insurer would take to comply with the order). The insurer's action is therefore "measured by an objective standard of reasonableness." Id. The reasonableness of an insurer's action depends on whether the action was predicated on a rational argument based in law or fact.
The ALJ made the following findings of fact on the issue of penalties. The claimant requested penalties against the insurer due to its alleged failure to obey an order of the court of appeals and the Panel, concerning the addition of COBRA benefits to the claimant's AWW. However, the respondents did file FALs on January 22 and February 19, 2007, including an admission for an increased AWW based on the cost of health insurance under COBRA. The claimant did not demonstrate that the respondents violated the order of the court of appeals or of the Panel. The claimant did not prove by the preponderance of the evidence that the respondents untimely paid or underpaid the claimant's PTD benefits. The ALJ further found, crediting the testimony of the claims adjuster, that the insurer properly offset an overpayment paid to the claimant due to a retroactive determination of the claimant's eligibility for SSDI benefits.
The claimant concedes that following the remand the respondents filed a timely amended FAL on January 22, 2007 and the claimant further concedes that the respondents complied with the order of the court of appeals and the Panel by admitting for the correct AWW and paying ongoing benefits consistent with the FAL. However, the claimant argues that the respondents made no effort to reconcile benefits owed nor made a proper payment of back-due benefits triggered by the increase in the claimant's AWW.
A review of the court of appeals' opinion demonstrates that the court only concluded that the cost of health insurance was to be included in the computation of the claimant's AWW. The court made no determination of what periods of time the claimant would be entitled to the increased AWW nor did the court direct what was the cost of continuing the employer's group health insurance. The Panel, after the remand from the court of appeals, in turn, remanded the matter ordering that the claimant's cost of continuing the employer's group health insurance coverage was to be included in the claimant's AWW. The Panel further directed that to the extent that there was an unresolved dispute concerning the amount of that cost, the parties could apply for a hearing with an ALJ.
Ordinarily, the existence of a violation and the reasonableness of the violator's conduct are issues of fact for determination by the ALJ. Human Resource Co. v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999). Thus, we must uphold the ALJ's determination of these issues if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 2007. This standard of review requires us to defer to the ALJ's resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. Wal-Mart Stores, Inc. v. Industrial Claim Appeals Office, 989 P.2d 251 (Colo.App. 1999).
Here the ALJ found that the claimant had not demonstrated that the respondents violated the order of either the court of appeals or the Panel. In our opinion, this is a reasonable inference to be drawn from the actions of the respondents in filing the admissions following the remands. Under these circumstances, we perceive no basis on which to interfere with the ALJ's denial of the requested penalties because the insurer's conduct did not constitute a violation of the Workers' Compensation Act, a rule, or an order.
On the issue of a penalty for an alleged underpayment of the amount due under a lump sum order, the ALJ found that the one-year limitation on actions for penalties under § 8-43-304(5), C.R.S. 2007 applied. The ALJ made the following findings of fact. The ALJ credited the testimony of the claims adjuster that she believed there was an agreement between counsel for respondents and counsel for the claimant, and based on such belief she issued the claimant's lump sum award check, taking credit for an SSDI overpayment. On July 19, 2004, the claims adjuster issued a check to the claimant for the lump sum, and she typed: "Credit taken for overpayment of $25,618.99." The claimant neither objected to the lump sum payment with offset for overpayment, nor did the claimant apply for a hearing on the issue until February 21, 2007. Moreover, the insurer's offset of its overpayment against the claimant's lump sum was proper under the Director's lump sum award order dated June 1, 2004.
The claimant disputes that she did not object to the lump sum payment with offset for overpayment. However, the issue was whether the one-year limitation on actions for penalties under § 8-43-304(5), C.R.S. 2007 applied, not whether there was an objection to the lump sum payment. Under § 8-43-304(5), a request for penalties must be filed within one year of the date a party "first" knows or reasonably should know "the facts giving rise to a possible penalty." Section 8-43-304(5) requires a request for penalties to be filed within one year after the requesting party first became aware of the circumstances that constitute a violation and support the imposition of a penalty, even if that violation was ongoing. Spracklin v. Industrial Claim Appeals Office, 66 P.3d 176 (Colo.App. 2002). As we read the ALJ's order, the claimant failed to request penalties within one year after the alleged underpayment of the amount due under the lump sum order in 2004.
IV.
The claimant finally contends that the ALJ erred when he found that the respondents' underpayment of the Director's lump sum order constituted an "accord and satisfaction." We note initially that we do not read the ALJ's order as resting on the doctrine of accord and satisfaction. In fact, we do not see doctrine of accord and satisfaction even mentioned in the order although the respondents had argued it.
However, the ALJ made the following findings regarding the lump sum. On May 7, 2004, the claimant filed an Application for Lump Sum with the Director of the Division of Workers' Compensation (DOWC). DOWC sought factual input from the claims adjuster by letter dated May 18, 2004. The claims adjuster responded on May 26, 2004, asserting an overpayment of $25,718.99. The Director entered a Lump Sum Award Order on June 1, 2004 ordering the insurer to pay the claimant a lump sum of $37,560 and allowing insurer to reduce the claimant's weekly PTD benefits by $34.39. The Lump Sum Award Order also provided that the insurer was permitted to take credit for any overpayment. On July 19, 2004, the insurer issued the claimant a lump sum payment in the amount of $11,941.01. At that time the claims adjuster calculated an overpayment of $25,618.99 as an offset against the lump sum award ordered by the Director. The claims adjuster persuasively testified that this overpayment occurred because the claimant received a large retroactive award of SSDI benefits. The claims adjuster understood that counsel for the claimant and for insurer had agreed to this offset. On the remarks section of the check stub, the claims adjuster typed: "Credit taken for overpayment of $25,618.99." The claimant neither objected to the lump sum payment with offset for overpayment, nor did the claimant apply for a hearing on the issue. Insurer's offset of its overpayment against the claimant's lump sum was proper under the Director's Lump Sum Award Order dated June 1, 2004.
The claimant argues that the ALJ erred because she did in fact object to the offset and proceeded to hearing before ALJ Coughlin on June 22, 2004 on this and other issues. However, we note that in her order of August 11, 2004 ALJ Coughlin found that the claimant admitted in her position statement that the respondents had correctly calculated the SSDI offset. Exhibit 18 at 30. The claimant did appeal ALJ Coughlin's order, but apparently not on the issue of SSDI offset because the Panel's order does not address the SSDI issue. Exhibit 19. Further, the court of appeals' opinion addresses only the issue of whether the claimant's AWW should include the cost of continuing her health insurance benefits. Exhibit 20.
We acknowledge that the final determination of the amount owed to the claimant, including the issue of overpayments, may well be affected by the court of appeals' resolution of the issue of the claimant's AWW. However, in our view this does not mean that the ALJ erred in determining that that the insurer acted properly in offsetting the SSDI overpayment against the sum owed under the Director's Lump Sum Award Order issued over a year before the court of appeals issued its opinion.
V.
On appeal, the respondents first contend that the ALJ erred in ordering that the respondents may only modify the claimant's AWW prospectively from the date of the order and not allowing the respondents to claim an overpayment from January 1, 2004 to account for Medicare premiums. We agree.
The ALJ in his order relied on HLJ Management Group v. Kim, 804 P.2d 250 (Colo.App. 1990), and found that the insurer was bound by its admission of liability until entry of an ALJ's order granting prospective relief. However, the respondents argue that the issue is one of recovering an "overpayment." At the time HLJ Management Group v. Kim was decided the reopening statute provided that benefits might be ended, diminished, maintained, or increased except as to "moneys already paid." The reopening statute was subsequently changed and now provides that "[N]o such reopening shall affect the earlier award as to money already paid except in cases of fraud or overpayment." (Emphasis supplied). Colo. Sess. Laws 1997, Ch. 45 at 114. The effective date of this change was for all injuries occurring after July 1, 1997. The date of injury here was June 3, 1999 and so the change is applicable. The term overpayment is broadly defined in § 8-40-201(15.5), C.R.S. 2007 as:
"Overpayment" means money received by a claimant that exceeds the amount that should have been paid, or which the claimant was not entitled to receive, or which results in duplicate benefits because of offsets that reduce disability or death benefits payable under said articles. For an overpayment to result, it is not necessary that the overpayment exist at the time the claimant received disability or death benefits under said articles.
Thus, under the plain language of the reopening statute "overpayment" constitutes a distinct ground for reopening. Section 8-43-303(1), C.R.S. 2007; Simpson v. Benchmark/Elite, Inc., W.C. No. 4-467-097 (August 8, 2007). Moreover, the statute provides that a reopening may not "affect moneys already paid except in cases of fraud or overpayment." Consequently, the statute contemplates that in the case of overpayment the ALJ has authority to remedy the situation. Stroman v. Southway Services, Inc., W. C. No. 4-366-989 (August 31, 1999). In our opinion HLJ Management Group v. Kim, under the present statute, does not limit the ALJ to granting prospective relief when the claimant has received an "overpayment."
As noted earlier in this order we have remanded the matter to the ALJ to address the issue of back due benefits, if any, owed to the claimant. While it is not clear that there was an overpayment or an underpayment of benefits, in this case the contentions of the respondents arguably support a claim for an overpayment. Therefore, on remand the ALJ will determine the appropriate AWW either prospectively or retroactively depending on the periods that the claimant's AWW should include the COBRA benefits or based on the cost of Medicare. Schelly v. Industrial Claim Appeals Office 961 P.2d 547 (Colo.App. 1997) Sears Roebuck Co. v. ICAO, 140 P.3d 336 (Colo.App. 2006) (cost of Medicare used to calculate AWW). On remand, the ALJ should make explicit findings of fact concerning whether there has been an overpayment or underpayment of benefits.
VI.
The respondents next contend that the ALJ erred in not allowing the respondents to modify the claimant's AWW to account for Medicare premiums from the date of their Response to Application for Hearing on March 22, 2007 to seek relief from their final admissions dated January 22, 2007 and February 19, 2007. However, given our determination that the ALJ may grant retroactive change in the AWW we need not address this issue.
IT IS THEREFORE ORDERED that the ALJ's order issued December 21, 2007 is set aside insofar as it did not address the issue of back due benefits, if any, owed to the claimant, together with any overpayment by the respondents, and is remanded for entry of a new order on those issues based on a determination of the AWW, with appropriate consideration of COBRA and Medicare costs.
IT IS FURTHER ORDERED that the order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
_____ John D. Baird
_____ Thomas Schrant
MARIQUITA MORAN-BUTLER, DENVER, CO, (Claimant).
HEALTHONE/SPALDING REHABILITATION HOSPITAL, Attn: KATHY WILLIAMS, AURORA, CO, (Employer).
TRANSPORTATION INSURANCE, Attn: MONICA WESTLAND, C/O: BROADSPIRE, DENVER, CO, (Insurer).
BISSET LAW FIRM, Attn: JENNIFER E BISSET, ESQ., ENGLEWOOD, CO, (For Claimant).
SENTER GOLDFARB RICE, Attn: JOANNE CREBASSA, DENVER, CO, (For Respondents).