Opinion
W.C. No. 4-530-546
December 13, 2002
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Jones (ALJ) which required them to pay a penalty for the failure to pay temporary disability benefits. We reverse.
The pertinent facts are undisputed. The claimant suffered a work-related injury on July 14, 2001, which rendered her temporarily totally disabled commencing August 21, 2001. On January 18, 2002, the claimant applied for workers' compensation benefits in the State of Tennessee. On January 30, 2002, the respondents paid $4,622.42, on the Tennessee claim for temporary total disability during the period November 20, 2001, to January 30, 2002.
On January 25, 2002, the claimant filed a claim under the Colorado Workers' Compensation Act. In a General Admission of Liability dated April 26, 2002, the respondents admitted liability for temporary total disability benefits commencing August 21, 2001.
The ALJ found the respondents were on notice of the claimant's disabling injury by January 30, 2002, when they paid temporary total disability benefits in the Tennessee claim. Relying on § 8-42-105(2)(a), C.R.S. 2002, which provides that compensation shall be paid at least once very two weeks, the ALJ determined the respondents should have made another payment for temporary total disability on February 14, 2002. Therefore, the ALJ concluded the respondents' failure to resume temporary total disability payments until April 29, 2002, warranted the imposition of penalties under § 8-43-304(1), C.R.S. 2002. The ALJ's order imposed penalties at the rate of $25 per day from February 14, 2002, to April 28, 2002. However, the ALJ expressly denied penalties for an alleged failure timely to admit or deny liability of the claim and failure timely to provide medical benefits. The respondents timely appealed.
On appeal, the respondents contend they had no advance notice the claimant sought penalties for the wrongful termination of temporary total disability benefits. Therefore, the respondents contend the ALJ's order was a denial of due process of law. Alternatively, the respondents contend the ALJ erroneously found a violation of § 8-42-105.
We conclude the ALJ erred in finding the respondents violated a provision of the Colorado Workers' Compensation Act (Act). Consequently, it is not necessary to address the respondents' due process argument.
Section 8-43-304(1) provides for imposition of a penalty where a person or party "violates any provision of articles 40 to 47 of this title, or does any act prohibited thereby." It follows that no penalty may be imposed under § 8-43-304(1) unless the challenged conduct is a violation the Act . Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). In our view, Allison holds that an ALJ must look to the express duties and prohibitions imposed by the statutory language in determining whether the challenged conduct violates the Act, and should not create implied duties and responsibilities.
Section 8-42-103(1), C.R.S. 2002, provides that where the industrial injury causes a disability which results in more than 3 days lost time from work, the respondents shall pay temporary disability benefits in accordance with § 8-42-105. Section 8-42-105(2)(a) prescribes the time for paying compensation once the respondents' liability for temporary disability benefits has been admitted or determined by an ALJ. Subsection 8-42-105(3) provides that the payment of temporary disability benefits must "continue" until the first occurrence of the events listed in § 8-42-105(3)(a)-(d).
However, § 8-42-103(1) does not preclude the respondents from disputing whether the industrial injury has caused a "disability" which warrants the payment of temporary disability benefits for a particular period. Instead, the respondents may deny liability for temporary disability benefits until the claimant establishes the existence of a "disability" during a hearing before an ALJ. See Allison v. Industrial Claim Appeals Office, supra; Gonzalves v. The Aspen Branch Floral Arts, W.C. No. 4-324-403 (May 1, 1998) (respondents' failure voluntarily to reinstate temporary total disability benefits is not a violation of § 8-42-105); cf. Sanchez v. Pueblo Medical Investors, W.C. No. 3-942-960 (December 14, 1998) [insurer's failure voluntarily to admit liability for a higher average weekly wage does not support penalties under § 8-43-304(1)].
In Allison v. Industrial Claim Appeals Office, supra, the respondents admitted liability for temporary total disability benefits, but reduced the otherwise applicable weekly payment based on their contention that they were entitled to offset their liability because of the claimant's receipt of proceeds from a structured settlement. Ultimately, it was determined that the respondents were not entitled to the offset, and the claimant sought penalties because the respondents reduced his benefits, "without legal justification," allegedly in violation of § 8-42-105. The Allison court concluded the challenged conduct did not violate § 8-42-105 because the statute does not require an admission of liability without regard to claimed offsets. In so doing, the court declined to inquire into the respondents' justification for taking the offset.
In Villa v. Wayne Gomez Demolition Excavating, W.C. No. 4-236-951 (January 2, 1997), we considered the question of whether the Act creates an implicit duty of "good faith" to admit liability for temporary disability benefits. Relying on Allison and Travelers Insurance Co. v. Savio, 706 P.2d 1258 (Colo. 1985), we concluded the Act does not create an implicit duty of "good faith" pertaining to all aspects of the adjustment of claims. We reasoned that § 8-43-304(1) makes no reference to implied duties or prohibitions, and we declined to find any ambiguity in the statute which would create an "implied duty" to act in good faith or justify the imposition of penalties for violation of such a duty. See Kraus v. Artcraft Sign Co., 710 P.2d 480 (Colo. 1985) (court should not read non-existent provisions into the Act). Further, we noted that creation of an implied duty to act in good faith would not promote a harmonious reading of § 8-43-304(1), because the imposition of penalties under§ 8-43-304(1) requires both a "violation" of the Act, and a finding that the violation was "unreasonable" under an objective standard. Consequently, the penalty statute itself establishes the respondents' standard of conduct, and it would appear to be illogical to conclude that the General Assembly intended to subject respondents to some other undefined standard resulting from "implied" duties. Therefore, we concluded that the respondents' failure to admit liability for temporary disability benefits did not support the imposition of penalties under § 8-43-304(1).
Here, the respondents had no legal duty voluntarily to admit liability for temporary disability benefits in the Colorado workers' compensation claim, and there was no order prior to April 28, 2002, which held the respondents liable for temporary total disability benefits in the Colorado claim. Therefore, the ALJ erred in finding the respondents' failure voluntarily to pay temporary total disability benefits in the Colorado claim prior to April 28, 2002, the date the respondents filed the General Admission of liability violated any provision of the Act. Moreover, the ALJ's erroneous determination is fatal to the imposition of penalties under § 8-43-304(1).
Further, the respondents' failure to pay continuing temporary total disability benefits in the Tennessee workers' compensation claim does not violate any provision of the Act. Thus, regardless of the respondents' failure to explain their cessation of disability payments in the Tennessee claim, the respondents' conduct does not support the imposition of a penalty under § 8-43-304(1).
IT IS THEREFORE ORDERED that the ALJ's order dated May 20, 2002, is reversed insofar as it assessed a penalty.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for review with the Court, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2002. The appealing party must serve a copy of the petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed December 13, 2002 to the following parties:
Melody Moseley, 4755 Alcott, Denver, CO 80211
U.S. Express, Inc., 4080 Jenkins Rd., Chattanooga, TN 37421
Liberty Mutual Fire Insurance, P. O. Box 168208, Irving, TX 75016-8205
Ligita S. Bardulis, Esq., 1600 Pennsylvania St., Denver, CO 80203 (For Claimant)
David G. Kroll, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)
BY: A. Hurtado