Opinion
W.C. No. 4-115-551
February 27, 1998
FINAL ORDER
The respondents seek review of a final order of Administrative Law Judge Henk (ALJ), insofar as it denied two separate petitions to suspend benefits, claims for penalties against the claimant and claimant's former attorney (Thomas), and a claim for penalties against a treating physician, Dr. Murphy. The claimant separately seeks review of the ALJ's order as it pertains to the suspension of benefits. We affirm the order in part, set it aside in part, and remand for entry of a new order concerning the claim for penalties against the physician.
The record in this case is exceptionally long, and concerns several distinct fact patterns. Therefore, a separate statement of the facts will appear in connection with each legal issue.
I.
The respondents' first petition to suspend benefits, and their first requests for penalties against the claimant and Thomas, concern an independent medical examination (IME) which was to have occurred on May 4, 1994. The ALJ found that the respondents requested a "Division IME" in January 1994 for the purposes of determining whether or not the claimant was at maximum medical improvement (MMI), and whether the treating physician, Dr. Murphy, was unreasonably delaying MMI. The ALJ also found that the respondents were concerned with whether or not the claimant was "on track" with treatment and was able to return to work.
The claimant appeared for the May 4 IME accompanied by a social worker, Mr. Howells. The ALJ found, on conflicting evidence, that the IME physician refused to conduct the examination with Howells present. Thus, the IME did not take place.
Following these events, the respondents filed a petition to suspend the claimant's temporary disability benefits alleging that the claimant interfered with the respondents' right to obtain the IME under former § 8-42-107(8)(b), C.R.S. (1994 Cum. Supp.), and Rule of Procedure XIV(L), 7 Code Colo. Reg. 1101-3 at 53. The respondents also sought penalties against the claimant and Thomas on the theory that they encouraged Howells' participation in the IME in violation of § 8-43-502, C.R.S. 1997.
However, the ALJ rejected the respondents' petition to suspend benefits, and the related claims for penalties. The ALJ found that the respondents' requests for suspension and penalties were predicated on interference with a Division-sponsored IME pursuant to § 8-42-107(8)(b). The ALJ reasoned that, because the respondents conceded the claimant was not at MMI when they requested the Division IME, they were not entitled to the IME under the decision in Aren Design, Inc. v. Becerra, 897 P.2d 902 (Colo.App. 1995). Therefore, the actions of the claimant and Thomas could not justify suspension of benefits or penalties.
A.
The respondents first contend that the ALJ erred in denying their petition to suspend the claimant's temporary disability benefits under § 8-43-404(3), C.R.S. 1997. The respondents argue that, under § 8-43-502(2), C.R.S. 1997, they had a right to an IME, and that under § 8-43-502(5), C.R.S. 1997, the claimant was limited to bringing a "physician" to the IME. The respondents reason that the claimant refused to cooperate with the IME by bringing Howells to the examination and declining to participate without Howells' presence. We are not persuaded.
Section 8-43-404(3) permits suspension of benefits when the claimant "refuses to submit to medical examination" or "in any way obstructs the same." We have previously ruled that the terms "refuse" and "obstruct" contemplate intentional conduct rising above the level of mere negligence. Thus, the statute presupposes that the employer has scheduled an IME in a fashion which is reasonable as to time, place, and circumstance, and the claimant has intentionally defaulted in attending the IME. See Ramos v. Wal-Mart Stores, Inc., W.C. No. 4-163-653 (December 18, 1995); Ming v. Amalgamated Sugar Co., W.C. No. 4-147-613 (September 8, 1993).
The ALJ implicitly ruled that the claimant did not "refuse" or "obstruct" the IME because, under Aren Design, Inc. v. Becerra, the respondents were not entitled to conduct the IME for the stated purpose. In Becerra, the Court of Appeals held that, under former § 8-42-107(8)(b), respondents are not entitled to an IME on the issue of MMI until such time as the treating physician places the claimant at MMI. The court reasoned that under the plain language of § 8-42-107(8)(b), it is the treating physician's determination of MMI which triggers the right to an IME on the issue of MMI.
Here, the ALJ correctly ruled that § 8-42-107(8)(b) had not been triggered when the respondents requested the 1994 IME because the treating physician had not placed the claimant at MMI. Moreover, the record contains substantial, albeit conflicting, evidence to support the ALJ's determination that the respondents requested the IME for the purpose of determining MMI under § 8-42-107(8)(b). This finding is consistent with the respondents' formal request for an IME, the respondents' petition to suspend benefits, and the testimony of Thomas concerning his understanding of the purpose of the 1994 IME. (Tr. March 10, 1997, Vol. I, p. 98). It follows that we agree with the ALJ's conclusion that the respondents' request for the IME was not reasonable under the circumstances, and that any interference with this IME did not constitute a "refusal" or "obstruction" within the meaning of § 8-43-404(3).
It is true that the respondents now posit additional purposes for requesting the IME, which might be proper purposes under § 8-43-502. However, because plausible inferences from the evidence support the ALJ's determination that the purpose of the 1994 IME was to determine MMI under § 8-42-107(8)(b), we have no basis for interfering with the order. Section 8-43-301(8), C.R.S. 1997. Admittedly, we have previously stated that the statutes and Rules of Procedure do not create a mechanism for objecting to or refusing to participate in IMEs. E.g., James v. Information Handling Services, W.C. No. 4-233-210 (March 27, 1996). However, those rulings came in the context of determining that voluntary participation in a Division IME does not constitute "waiver" of the right to dispute the legal effect of the IME.
B.
The respondents next contend that the ALJ should have assessed penalties against the claimant and Thomas based on their interference with the IME. The respondents reason that penalties are appropriate under § 8-43-304(1), C.R.S. 1997, because the claimant and Thomas "negligently" interfered with their right to an IME under § 8-43-502(2) and (5). We disagree.
Assuming, for the sake of argument, that interference with an IME may subject a party to penalties under § 8-43-304(1), the statute requires proof of a violation of the Act. See Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). Here, the ALJ determined as a matter of fact that the respondents were not requesting the IME under § 8-43-502, but under § 8-42-107(8)(b). Because the ALJ correctly determined that Becerra prohibited the respondents from obtaining the IME under § 8-42-107(8)(b), it logically follows that neither the claimant nor Thomas may be penalized for violating the Act. The respondents themselves had no legal right to the IME, and therefore, the claimant and Thomas did not violate the respondents' rights under the Act.
C.
The respondents also argue that the ALJ's order is premised on an improper retroactive application of Aren Design, Inc. v. Becerra. They point out that Becerra was announced May 18, 1995. They reason that Becerra established a new rule of law, and it would be inequitable to apply Becerra to their 1994 request for an IME. We disagree with this assertion.
Judicial decisions are usually accorded retroactive effect, but our courts have ruled that they need not be given retroactive application in all circumstances. If retroactivity is challenged, a court must first determine whether the judicial decision established a new rule of law. If the decision established a new rule, the court must determine whether or not the purposes of the rule would be furthered by retroactive application. Finally, the court must consider whether inequities might result from retrospective application of the decision. Marinez v. Industrial Commission, 746 P.2d 552 (Colo. 1987).
A decision establishes a new rule of law if it overrules established precedent, or announces a rule not "clearly foreshadowed" by prior decisions or the language of the statutes. Marinez v. Industrial Commission, supra. Here, we do not believe Aren Design, Inc. v. Becerra established a "new rule of law."
First, Becerra did not overrule any prior decision concerning the applicability of the IME procedure when the treating physician refuses to place the claimant at MMI. Moreover, the Becerra court ruled that the "plain language" of § 8-42-107(8)(b) establishes that the IME procedure may not be utilized until such time as the treating physician places the claimant at MMI. Finally, the result reached in Becerra is consistent with the overall statutory purpose of reducing litigation. See § 8-40-102(1), C.R.S. 1997. Thus, we believe the result in Becerra was clearly "foreshadowed" by the statutory language enacted in 1991, and the case did not establish a new rule of law.
However, even if we determined that Becerra created a new rule of law, we would apply the case retroactively. The central purpose of enacting § 8-42-107(8)(b) was to reduce litigation concerning the issue of MMI for injuries occurring on or after July 1, 1991. See AFL-CIO v. Donlon, 914 P.2d 396 (Colo.App. 1995). This statutory purpose would be impaired if Becerra does not apply to circumstances, such as here, where the injury occurred after July 1, 1991, but the IME was requested prior to the date of the decision. Therefore, retroactive application is favored by the underlying statutory purpose.
Finally, respondents assert that inequities will result from retroactive application of Becerra because some insurers assumed that the IME procedure would be available where the treating physician declines to place the claimant at MMI. However, the respondents introduced no evidence concerning the extent of this alleged inequity, and we are not in a position to take administrative notice of any such effect. See Loffland Brothers Co. v. Industrial Claim Appeals Panel, 770 P.2d 1221 (Colo. 1989).
D.
It follows that we conclude that the ALJ made sufficient findings of fact and conclusions of law to resolve the issues concerning the May 1994 IME.
II.
The respondents moved to suspend the claimant's benefits for failure to attend separate IMEs scheduled on April 12 and April 14, 1995. The respondents also asserted that the claimant should be assessed penalties under § 8-43-304(1) because he disobeyed the ALJ's order to attend these IMEs.
The ALJ found that the respondents scheduled the claimant to attend an IME with Dr. Entin on April 12, and Dr. Aschberger on April 14, 1995. The ALJ found that the claimant's attorneys were advised of these IMEs by a notice of March 10, 1995. The ALJ further found that, on April 6, 1995, she issued an order requiring the claimant to attend the IMEs.
However, the claimant did not attend either of the IMEs. The ALJ found that the claimant missed the April 12 IME because his attorneys mistakenly believed it was rescheduled to a later date. The claimant missed the April 14 IME because Thomas was unable to locate a physician to accompany the claimant to the IME, and Thomas believed the claimant's psychological condition required the presence of an independent physician at the IME.
Under these circumstances, the ALJ found that the claimant's temporary disability benefits should be suspended from April 12, 1995 to April 24, 1995. However, the ALJ determined that suspension of the temporary benefits was rendered "moot" by the respondents' subsequent action in filing a final admission of liability. Specifically, in an admission filed October 30, 1996, the respondents admitted that the claimant reached MMI on January 25, 1995, and was entitled to permanent total disability benefits thereafter.
The ALJ also rejected the imposition of penalties against the claimant under § 8-43-304(1). The ALJ found that, since the "gravamen" of the request for penalties was violation of an order to attend the IMEs, the "remedy for failure to comply" was limited to § 8-43-404(3).
A.
The respondents first contend that the ALJ applied the wrong legal standard in assessing the period of suspension of temporary disability benefits for failure to attend the IMEs. Specifically, the respondents assert that the period of suspension should have continued until December 15, 1995, when the claimant "appeared at the follow-up" IMEs. However, we agree with the ALJ that the issue is moot in light of the October 1996 admission.
An issue is moot when the relief sought, if granted, would have no practical effect. Brown v. Colorado Department of Corrections, 915 P.2d 1312 (Colo. 1996). If an issue is moot, a court need not consider it.
Section 8-43-203(2)(d), C.R.S. 1997, provides that, "if any liability is admitted, payments shall continue according to admitted liability." It is true that improvident admissions may be withdrawn, but any relief from an improvident admission may be prospective only. HLJ Management Group, Inc. v. Kim, 804 P.2d 250 (Colo.App. 1990). In this regard, we note that we do not reach the issue of whether the October admission was "final" under § 8-43-203(2)(b), C.R.S. 1997.
In October 1996, the respondents filed a final admission of liability which admitted that the claimant reached MMI on January 25, 1995, and admitted liability for permanent total disability benefits. The respondents did not reserve any issues in this final admission, and did not indicate that they were going to continue with their claim for suspension.
In our view, the respondents' action in filing the October 1996 admission of liability mooted the issue of suspension of temporary disability benefits. The admission for permanent total disability benefits covered the entire period for which the suspension of temporary disability benefits was sought. Further, temporary total and permanent total disability benefits are payable in the same amount. Section 8-42-105(1), C.R.S. 1997; Section 8-42-111(1), C.R.S. 1997. Thus, when the respondents admitted liability for permanent total disability benefits, they were not free to attempt a retroactive retraction of the admission. It follows that any ruling on the suspension of temporary benefits would have no practical effect.
It is true that the respondents subsequently sought to amend the October 1996 admission by filing the January 1997 final admission of liability. The 1997 admission states that the "respondents do not waive their right to continue to pursue the suspension of Claimant's benefits pursuant to two previous Petitions to Suspend, filed May 20, 1994 and April 24, 1995." However, this reservation can have no effect since the respondents had already admitted liability for permanent total disability benefits during the disputed period. A retroactive withdrawal of an admission is not permissible. HLJ Management Group, Inc. v. Kim, supra.
It follows that we need not address the claimant's petition to review since this result is consistent with the outcome sought by the claimant.
B.
The respondents next contend that the ALJ erred in denying their claim for penalties based on the claimant's violation of the ALJ's order to attend the IMEs. In this regard, the respondents assert that they are entitled to suspension under § 8-43-404(3) and penalties under § 8-43-304(1). We disagree.
Section 8-43-304(1) provides for the imposition of penalties for violations of the Act "for which no penalty has been specifically provided." A penalty may also be imposed for failure to obey "any lawful order."
In Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997), the Court of Appeals held that respondents were not subject to a penalty under § 8-43-304(1) where the "gravamen" of the respondents' conduct was their failure to pay medical benefits. This was true because § 8-43-401(2)(a), C.R.S. 1997, provides a specific penalty for failure to pay medical benefits. The court reached this conclusion despite a pre-existing order requiring respondents to pay continuing medical benefits.
Section 8-43-404(3) establishes a two-step process for punishing claimants who fail to attend IMEs. Initially, the claimant's right to collect compensation may be "suspended" if he refuses to attend an IME. If the claimant is then ordered to attend and refuses to do so, his right to collect "weekly indemnity" benefits is "barred." See Matthews v. United Parcel Service, W.C. No. 4-325-652 (December 15, 1997).
Here, the "gravamen" of the claimant's alleged misconduct was his failure to attend the IME after entry of an order requiring him to do so. Because § 8-43-404(3) creates a specific penalty for this conduct, § 8-43-304(1) has no application. Sears v. Penrose Hospital, supra. The mere existence of the April 1995 order requiring the claimant's attendance does not fundamentally alter the nature of the claimant's conduct so as to justify the application of both § 8-43-304(1) and § 8-43-404(3). Cf. Ahlstrom v. Colorado Compensation Insurance Authority, W.C. No. 3-815-100 (April 15, 1997).
Moreover, we disagree with the respondents' assertion that § 8-43-404(3) does not establish a separate "penalty" within the meaning of § 8-43-304(1). To the contrary, the term "penalty" generally connotes a statutory sanction imposed on a party for failure to obey an order or to take required procedural steps. See American Express v. Industrial Commission, 712 P.2d 1132 (Colo.App. 1985). Thus, that provision of § 8-43-404(3) which "bars" a claimant from collecting indemnity benefits if he fails to attend an IME ordered by an ALJ certainly constitutes a "penalty."
III.
Finally, the respondents seek review of the ALJ's order insofar as it denied penalties against Dr. Murphy. The respondents sought penalties against Dr. Murphy alleging that he failed to provide medical documents after numerous requests from the respondents' insurance adjuster. The respondents asserted that these actions violated rules of procedure governing a physician's obligation to provide medical reports. The ALJ denied the claim for penalties at the close of the respondents' case without specifying her reasons for doing so. (Tr. December 18, 1996, p. 57).
However, in her written order, the ALJ entered several findings of fact indicating that the respondents' adjuster did not need the information which was requested from Dr. Murphy, and that the adjuster was aware that the claimant had been referred to other providers. The ALJ then rejected the claim for penalties stating that "assessment of penalties for a party's failure to comply with the Rules is discretionary rather than mandatory and it is the conclusion of the Administrative Law Judge that the facts surrounding Respondents' Motion for Penalties simply do not warrant such an assessment."
On review, the respondents contend that the ALJ erred in dismissing the claim for penalties based on a "directed verdict." We conclude that the order is insufficient to support appellate review, and therefore, we remand for further proceedings.
The ALJ's order notwithstanding, we have previously held that imposition of penalties under § 8-43-304(1) is mandatory 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. Ramos v. Wal-Mart Stores, Inc., supra; Gregory v. Ball Aerospace, W.C. No. 4-176-123 (August 31, 1995); Marple v. Saint Joseph Hospital, W.C. No. 3-966-344 (September 15, 1995). The rationale for these decisions is that § 8-43-304(1) provides that, if a party establishes the requisite preconditions, the offending party " shall also be punished by a fine of not more than $500 per day for each such offense." (Emphasis added). We observed that the word "shall" generally connotes a mandatory requirement, and therefore, ALJs do not have discretion to deny a penalty if a punishable violation has occurred. E.g. Hillebrand Construction Co. v. Worf, 780 P.2d 24 (Colo.App. 1989) (word shall connotes a mandatory requirement). However, these decisions also held that the actual amount of any daily penalty, between one cent and five hundred dollars per day, is within the discretion of the ALJ.
Here, the ALJ did not determine whether Dr. Murphy actually violated the Act or the Rules, and if so, whether he had a reasonable justification for doing so. Instead, the ALJ erroneously concluded that she could excuse any existing violation by exercising "discretionary authority." Under these circumstances, the matter must be remanded for entry of a new order concerning whether or not Dr. Murphy violated the Act, and if so, whether there was a reasonable basis for doing so. If the ALJ determines that there was a violation, she must impose a penalty between one cent per day and $500 per day for each violation.
We recognize that the ALJ issued a "directed verdict" so as to obviate the need for Dr. Murphy to present any defense. Therefore, if the ALJ determines on remand that the respondents presented a prima facie case justifying the imposition of penalties, Dr. Murphy should be afforded the opportunity to present any defense he may have.
IT IS THEREFORE ORDERED that the ALJ's order dated August 21, 1997, is set aside insofar as it denied penalties against Dr. Allan Murphy. The matter is remanded for entry of a new order on this issue, and further proceedings if necessary.
IT IS FURTHER ORDERED that the ALJ's order is otherwise 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. 1997.
Copies of this decision were mailed February 27, 1998 to the following parties:
Daniel F. Rael, P.O. Box 145, Cheraw, CO 81030
Debourgh Manufacturing Company, P.O. Box 981, LaJunta, CO 81050-0981
Zurich-American Insurance Group, Attn: Kimberly Prieb, P.O. Box 20048, Kansas City, MO 64195
Shelley P. Dodge, Esq., 1763 Franklin St., Denver, CO 80218 (For Thomas)
Steven U. Mullens, Esq., P.O. Box 1940, Colorado Springs, CO 80901-2940 (For the Claimant and Dr. Murphy)
Marsha A. Kitch, Esq., 1675 Broadway, Ste. 2100, Denver, CO 80202 (For the Respondents)
Jon Thomas, Esq., 1032 N. Wahsatch Ave., Colorado Springs, CO 80903
By: ________________________________