In re Simpson v. Benchmark, W.C. No

Full title: IN THE MATTER OF THE CLAIM OF RICHARD SIMPSON, Claimant, v…

Court: Industrial Claim Appeals Office

Date published: Aug 7, 2007

W.C. No. 4-467-097 (Colo. Ind. App. Aug. 7, 2007)

Opinion

W.C. No. 4-467-097.

August 7 2007.

FINAL ORDER

The claimant seeks review of an order of Administrative Law Judge Friend (ALJ) dated February 20, 2007 that allowed the insurer to reduce the permanent total disability (PTD) benefits payable as a result of overpayments. The ALJ in an order dated March 16, 2007 denied claimant's motion for reconsideration and stay of enforcement of the February 20, 2007 order. The ALJ's order dated February 20, 2007, as opposed to his subsequent procedural order, constitutes a final order for the purposes of our review pursuant to § 8-43-301(2), C.R.S. 2006. We affirm the February 20, 2007 order.

The claimant was injured in a compensable accident on April 25, 2000. The insurer admitted and paid temporary total disability (TTD) benefits and eventually permanent partial disability benefits and later admitted liability for PTD benefits. The Director of the Division of Workers' Compensation entered a lump sum award order on June 20, 2006. The lump sum award provided that the respondents were to pay the claimant a lump sum of $27,560, that remaining benefits were to be reduced by $31.09, less applicable offsets, and the respondents could take a credit for any overpayment. Exhibit 3. The respondents did not pay the lump sum. Instead the insurer took a credit of an overpayment against the lump sum. The indemnity benefits actually paid to the claimant from June 22, 2000, through December 19, 2006 totaled $191,447.84. The total amount owed to the claimant by law was $163,018.40.

The parties entered into a stipulation in which it was acknowledged that the respondents' had filed a final admission of liability dated March 21, 2002 that the claimant had not objected to. Exhibit E. The stipulation provided that upon the Division's approval of the stipulation the respondents would file a general admission of liability and pay TTD benefits until terminated pursuant to law, subject to all offsets and overpayments. The stipulation was approved by the Division on September 16, 2005.

The claimant continued to receive TTD benefits until once again he was placed at maximum medical improvement (MMI) on November 14, 2005 and the respondents filed a final admission of liability dated December 28, 2005. Exhibit H. The claimant filed an objection to the final admission. Exhibit 6. The respondents filed another final admission of liability dated April 12, 2006 admitting for PTD benefits and documenting an overpayment of $37,996.16. Exhibit J. The claimant objected to the final admission of liability dated April 12, 2006. Exhibit 4. The respondents filed a revised final admission of liability on July 5, 2006 in light of the Director's lump sum award entered on June 20, 2006, and took credit for the overpayment against the lump sum award. Exhibit M. The claimant objected to the revised final admission of liability. Exhibit 1. The claimant filed an application for hearing and the matter proceeded to hearing before ALJ Friend, who entered an order dated February 20, 2007.

In his February 20, 2007 order the ALJ found that the respondents, by a preponderance of the evidence, had established that the claimant was overpaid in the amount of $28,429.44 and required that it be repaid. The ALJ determined it was reasonable for the overpayment to be recovered over five years at the rate of $109.34 per week. The claimant filed a motion for reconsideration or in the alternative a motion for stay of the February 20, 2007 order. In an order dated March 16, 2007 the ALJ denied the claimant's motion for reconsideration and denied the claimant's motion for stay of enforcement of the February 20, 2007 order. The claimant filed petitions to review both the February 20, 2007 and March 16, 2007 orders. On or about April 5, 2007, the claimant filed another motion for stay both the February 20, 2007 and March 16, 2007 orders. The claimant's motion for stay does not appear to have been ruled on by the ALJ. Instead, the parties submitted briefs and the ALJ forwarded the matter to the Panel on June 19, 2007 for its consideration.

The claimant's most recent motion requests that we issue an order for stay pursuant to § 8-43-301(9), which grants us power to issue such procedural orders as may be necessary to carry out our appellate review, such as to enter orders concerning completion of the record and filing of briefs. The claimant had made similar arguments in a motion to the ALJ requesting a motion for stay of the February 21, 2007 order. We question whether we have statutory authority which permits us to enter such a "stay." See generally, Ramirez v. Excel W. C. No. 3-990-123 (October 26, 1995). Cf. Section 8-43-301(12)-(13) (providing for certain subsequent issues to proceed pending review). In any event, we deny the motion for stay and proceed to address the merits of the claimant's appeal.

I.

On appeal the claimant does not question the mathematical computations or the underlying factual basis of the ALJ's determination that there was an overpayment. Instead the claimant first argues that the ALJ's order violates established case law by improperly providing the respondents retroactive relief from their mistake. We disagree.

The claimant relies heavily on the1990 case of HLJ Management Group, Inc. v. Kim, 804 P.2d 250 (Colo.App. 1990), which held that an admission may not be withdrawn retroactively unless procured by fraud, but did permit the prospective withdrawal of an erroneous admission. However, in 1997, the General Assembly amended subsections (1) and (2)(a) of § 8-43-303 to permit reopening of an award on grounds of "fraud" and "overpayment," in addition to the traditional grounds of error, a mistake, or change in condition. The 1997 amendments also provide that "no such reopening shall affect the earlier award as to moneys already paid except in cases of fraud or overpayment." (Emphasis added). Further, the 1997 amendments added § 8-40-201(15.5), defining "overpayment" as "money received by a claimant." 1997 Colo. Sess. Laws, vol. 1, ch. 45 at 112-116.

Thus, under the plain language of the statute "overpayment" constitutes a distinct ground for reopening. 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). This interpretation is consistent with the legislative intent of the 1997 amendments. The 1997 legislation is designated as an act "concerning the recovery from claimants of workers' compensation benefits to which such claimants are not entitled." Ashley v. King Soopers, W. C. Nos. 4-573-332, 4-584-481 (October 28, 2004).

The claimant contends the ALJ erroneously allowed the respondent to recover an overpayment because HLJ Management Group, Inc. prevents a reopening from affecting an earlier award as to moneys already paid. The claimant further argues that allowing recovery of the overpayment would permit the respondents to retroactively withdraw an admission of liability concerning the claimant's rate of disability benefits. We disagree that the ALJ erred in allowing the recoupment of overpayments.

In Cody v. Industrial Claim Appeals Office, 940 P.2d 1042 (Colo.App. 1996), the court of appeals held that, in cases of reopening, § 8-43-303(1) does not preclude recoupment of overpayments by the mechanism of reducing future benefits. Rather, the statute precludes the ALJ from ordering the claimant "actually to pay back moneys from his initial award." Id. at 1043. This conclusion is consistent with the statutory objective of reopening to permit equitable adjustments in a previous award of benefits. See Kuziel v. Pet Fair, Inc., 931 P.2d 521 (Colo.App. 1996 ). Consequently, in our opinion the ALJ had authority to diminish the claimant's future permanent total disability benefits as a method for recovery of the overpayment.

We also note that HLJ Management Group, Inc. did not involve a claim that had been reopened. In the present case the parties entered into a stipulation that reopened the case after the respondents had filed a final admission of liability and provided that the respondents would pay TTD benefits until terminated by law, subject to all offsets and overpayments. Our courts have held that even a final admission may constitute an "award" subject to reopening under § 8-43-303(1). See Safeway, Inc. v. Industrial Claim Appeals Office, 968 P.2d 162 (Colo.App. 1998); Lewis v. Scientific Supply Co. Inc., 897 P.2d 905 (Colo.App. 1995); Brown Root, Inc. v. Industrial Claim Appeals Office, 833 P.2d 780 (Colo.App. 1991). These decisions are fully consistent with § 8-43-203(2)(d), C.R.S. 2006, which provides that issues closed by final admissions may be reopened. In our opinion, the ALJ did not violate established case law by allowing the respondents to recover overpayments as provided for in § 8-42-113.5, C.R.S. 2006, after the matter had been reopened by stipulation of the parties. See Town of Ignacio v. Industrial Claim Appeals Office, 70 P.3d 513, 514 (Colo.App. 2002) (employer voluntarily reopened claim by filing general admission of liability); Bowman v. JVK Enterprises, Inc., W.C. No. 4-130-743 (November 20, 1996) (allowing offset in voluntarily reopened claim).

II.

The claimant next argues that the ALJ allowed the respondents to offset PTD benefits against permanent partial disability and temporary disability benefits, contrary to established case law. We again disagree. The ALJ noted the following:

Respondents have not argued that Claimant is not entitled to PPD benefits and future PTD benefits as separate benefits due and payable in the same claim. The Respondents have further not argued that the Claimant received concurrent PPD and PTD benefits such that Claimant received illegal duplicate payments. Instead, the Respondents presented evidence at hearing and argued in their Position Statement that Claimant received significant double payments of TTD benefits at the outset of the claim, and that he was paid PPD benefits at an incorrect, and significantly higher, rate than was permitted by law. The result was an overpayment of indemnity benefits that existed prior to Claimant being awarded PTD benefits. The cases of National Fruit and United Airlines, Inc. addressed facts and arguments that are not on point in this case.

Findings of Fact, Conclusions of Law, and Order at 4 (unpaginated), ¶ 7. The claimant has not challenged the ALJ's factual finding on the amounts of overpaid indemnity benefits claimant and we perceive no evidence that the ALJ in his calculations allowed the respondents to offset PTD benefits by permanent partial disability benefits. The claimant argues against a justification for offset that was neither made by the respondents nor considered by the ALJ. Therefore, the authorities cited by the claimant on this issue are inapposite.

III.

The claimant next argues that the ALJ's order allows the respondents to circumvent the Workers' Compensation Act and the Workers' Compensation Rules of Procedure by the use of the word "overpayment." We disagree.

The claimant cites the case of Rocky Mountain Cardiology v. Industrial Claim Appeals Office, 94 P.3d 1182 (Colo.App. 2004) for the proposition that a payment made pursuant to an admission does not constitute an "overpayment" under the Worker's Compensation Act. Rocky Mountain Cardiology involved a case where the employer properly suspended benefits after the claimant failed to attend a medical appointment, but then did not automatically reinstate disability benefits as required by statute once the employee appeared at a rescheduled appointment. The employer also had sought to withdraw the previously filed admission of liability by disputing that the claimant suffered a work-related injury. The court of appeals noted the employer sought relief only as of the date of the hearing and did not seek retroactive relief. The court of appeals found the disputed payment did not constitute an "overpayment" under § 8-40-201 (15.5), C.R.S. 2006, because the temporary disability benefits were owed as a matter of law until the ALJ's order granted prospective relief.

Here, the ALJ found, and the claimant does not dispute, that Superior National was paying temporary disability checks to the claimant at the same time the respondent insurer was paying temporary disability checks. In our view this constitutes the type of duplicate benefits defined as an overpayment within the meaning of § 8-40-201 (15.5). The claimant here received money he was not entitled to receive as opposed to the situation in Rocky Mountain Cardiology where the claimant lawfully received benefits under an admission from which the respondents later sought only prospective relief.

The claimant also contends that the only overpayment recoverable against PTD benefits is an overpayment based on social security or retirement benefits under § 8-42-113.5. We disagree. The payment of temporary disability checks from Superior National represented a "payment" from a "source" which resulted in a double payment of the original award of TTD benefits. § 8-42-113.5(1). See Reinwald v. TRC Companies W. C. No. 4-622-388 (April 6, 2006); Scruggs v. United Parcel Service, W.C. No. 4-490-474 (January 27, 2004) (wages received from a third-party employer are a "payment" from a "source" as contemplated by § 8-42-113.5).

The claimant also relies on Leprino Foods Co. v. Industrial Claim Appeals Office 134 P.3d 475 (Colo.App. 2005). In that case the employer was required to continue paying benefits without application of the benefits cap until such time as the claimant reached MMI, thereby raising the possibility of an overpayment to the claimant that could not be recouped. The present situation does not involve the benefit cap. To the extent that Leprino Foods Co. is instructive on the present situation it is for the general proposition that "[o]ffsets provided by the Workers' Compensation Act operate to prevent a windfall of duplicative disability benefits." Id. at 481. This is the situation in the present case.

The claimant contends the order of the ALJ violated the Workers' Compensation Rules of Procedure. We again disagree. W.C. Rule of Procedure 5-9; 7 Code Colo. Reg. 1101-3 at 18, which concerns "revising admissions," states the following:

Within the time limits for objecting to the final admission of liability pursuant to 8-43-203, the director may allow a carrier to amend the admission for permanency, by notifying the parties that an error exists due to miscalculation, omission, clerical error, or misapplication of the statute.

The principles governing the interpretation of administrative regulations are the same as those concerning statutes. Gerrity Oil and Gas Corp. v. Magness, 923 P.2d 261 (Colo.App. 1995), affd. in part, rev'd. in part on other grounds, 946 P.2d 913 (Colo. 1997). Thus, the overall objective is to interpret the rules in a manner which effects the Director's intent. Ray v. New World Van, W. C. No. 4-520-251(October 12, 2004). Because the language used is the best indicator of intent, the rules should be given their plain and ordinary meanings unless the result is absurd. Further, the rules should be read to give a consistent, harmonious and sensible effect to all their parts. Spracklin v. Industrial Claim Appeals Office, 66 P.3d 176 (Colo.App. 2002).

Rule 5-9 provides that within thirty days after filing a final admission of liability, the insurer may amend the admission on the basis that an error exists due to a miscalculation, omission or clerical error. The purpose of this provision is to provide the insurer an opportunity to revise the admission for an error that the insurer later noticed or that was brought to the attention of the insurer by the Division or by the claimant. We are unpersuaded that Rule 5-9 prevents the insurer from recovering an overpayment in a situation such as here where the claim has been reopened. The claimant's assertion notwithstanding, we do not consider the provision for revising an admission contained in Rule 5-9 as inconsistent with the conclusion that an insurer may recoup overpayments made to the claimant as provided by the amendments made by the General Assembly to subsections (1) and (2)(a) of § 8-43-303, which permit reopening an award on the ground of an overpayment.

In our opinion Rule 5-9 was not designed to create a windfall of TTD benefits based on the respondents' mistaken admission of liability for benefits. Indeed the definition of "overpayment" in § 8-40-201(15.5), refutes the notion that the claimant is entitled keep TTD benefits overpaid by mistake. Nelson v. Payless Drug Store Inc. W. C. No. 4-190-449 (April 20, 1999).

Under these circumstances, we conclude that the rule should be construed in a manner consistent with the authorizing statute. Therefore, Rule 5-9, which authorizes revision of admissions for certain types of errors discovered within thirty days of filing, does not prevent the insurer from recovering an overpayment in a reopened claim where the insurer has filed a new admission admitting for PTD benefits. In our view the present case does not involve a situation of revising an admission as contemplated by Rule 5-9.

IV.

The claimant next argues that the ALJ erred in determining that PTD benefits are to be paid at the maximum rate payable for TTD as of the date of injury, as opposed to the date on which PTD benefits were first paid or raising the rate yearly.

The claimant, citing Pubanz v. State of Colorado, W.C. No. 3-070-168, (September 9, 1997), acknowledges that we have previously ruled that in general the maximum TTD rate in effect on the date of the injury limits the amount of disability benefits. The claimant also acknowledges that our order in Salazar v. Nelson W. C. No. 4-213-910, (October 29, 1998) is contrary to the position he now takes.

We must note that the court of appeals set aside our decision in Salazar v. Industrial Claim Appeals 10 P.3d 666 (Colo.App. 2000). However, as we read the court of appeals decision, the court found there was an irreconcilable conflict between the benefit cap for PTD found in § 8-42-111(1), C.R.S. 2006 and § 8-42-105(1), C.R.S. 2006 and the cost of living adjustment provision found in § 8-42-111(4). The cost of living adjustment being last enacted, the court of appeals found it prevailed and gave it effect. Here, there is no involvement of the cost of living adjustment since the accident occurred on April 25, 2000, which is after the effective window for receiving the statutory cost of living adjustment. Therefore, as we understand the guidance provided by the court of appeals, except in the relatively rare case of a claim that involves a cost of living adjustment, the court agrees that there is a benefit cap for PTD benefits as mandated by the maximum TTD rate in effect on the date of the injury.

As the court in Salazar noted, two provisions of the Workers' Compensation Act, taken together, form the benefit cap for PTD benefits. Section 8-42-111(1) provides that for PTD, "the award shall be sixty-six and two-thirds percent of the average weekly wages of the injured employee . . . but not in excess of the weekly maximum benefits specified in this article for injuries causing temporary total disability." (emphasis added). In turn, TTD benefits are calculated under § 8-42-105(1), which provides that "the employee shall receive sixty-six and two-thirds percent of said employee's average weekly wages . . . not to exceed a maximum of ninety-one percent of the state average weekly wage per week." (Emphasis added).

In Guido v. Industrial Claim Appeals Office 100 P.3d 575 (Colo.App. 2004), the court of appeals explained that the claimant's cost of living allowance was to be calculated by reference to the maximum rate payable for PTD, rather than to her actual average weekly wage. Furthermore, the rights and liabilities of parties in a workers' compensation claim are governed by the substantive law in effect on the day of injury. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). In our opinion the ALJ did not error in refusing to award PTD benefits calculated upon a TTD rate that exceeds the maximum rate in effect on the date of the claimant's injury. See also, Bobett v. KMart, W. C. No. 4-309-712 (October 12, 2005).

With regard to the claimant's further contentions on this issue the parties acknowledge that we lack jurisdiction to address constitutional challenges to the statute based on equal protection. Kinterknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971); Celebrity Custom Builders v. Industrial Claim Appeals Office, 916 P.2d 539 (Colo.App. 1995).

V.

The claimant next argues that the ALJ erred by refusing to allow penalty issues to go forward, erred by allowing TTD to be litigated and further erred by allowing respondent to proceed on evidence that it had not disclosed in its interrogatories. We disagree.

The amended application for hearing penalties received by the Office of Administrative Courts on August 1, 2006 states as follows: "Inappropriate application of lump sum by applying to overpayment to lump sum order: C.R.S. § 8-43-304." At the time of the hearing the ALJ struck the penalty issue on the ground that the application for hearing did not specifically plead the issue as required by the Workers Compensation Act. Tr. at 45. However, the claimant had filed a motion dated November 20, 2006 to amend and clarify hearing issues. In the motion the claimant stated that penalties pursuant to § 8-43-304, C.R.S. 2006 are based on violations of § 8-42-113.5, § 8-42-103 and Rule 5-9 of the Workers' Compensation Rules of Procedure. The claimant stated specifically that the accounting on the final admission was not correct in determining any alleged overpayment and that the adjuster alleges overpayments where there are no overpayments. The motion to amend and clarify hearing issues was granted by a Designee Clerk on December 5, 2006.

Assuming, without deciding, that the claimant is correct and the ALJ did err or abuse his discretion in refusing to let the claim of penalties go forward at the hearing, the error is harmless. See § 8-43-310, C.R.S. 2006. For the imposition of penalties under § 8-43-304 there first must be a determination that the respondents' conduct violated the Act, a rule, or an order. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d (Colo.App. 1995). We have affirmed the ALJ's decision that pursuant to the Workers' Compensation Act, the claimant was overpaid and the respondents are entitled to recover the overpayment. Therefore, since there was no violation of the Act, a rule, or an order no penalty could be imposed regarding the respondents recovery of the overpayment. Any procedural error in not allowing the claimant to go forward on penalties was harmless.

The claimant argues that the ALJ erred by allowing respondents "to proceed on evidence that it had not disclosed in its interrogatories." Claimant's Brief at 12. The witness for the respondents testified that the day before the hearing he discovered that Superior National had actually paid the claimant $24,606.12 for TTD benefits instead of the $6,000 figure previously thought. Tr. 61. This apparently occurred as a result of a subpoena the claimant had served on the respondents' witness requesting that payment logs be produced. Tr. 63-64. The claimant objected because the $24,606.12 amount had not been disclosed in response to interrogatories. The ALJ ruled in the claimant's favor that testimony could not go beyond the scope of the interrogatories. However, since the documents upon which the proposed new figure of $24,606.12 figure had been based were introduced into evidence, the respondents were given leave to argue from these documents in their closing. Tr. 65. The respondents' post-hearing position statement includes arguments based on Exhibit Q, which is the indemnity payment history from both Superior National Insurance and the respondent Colorado Insurance Guaranty Association. Exhibit Q was admitted into evidence without objection from the claimant. Tr. 51.

The ALJ has broad discretion in the conduct of evidentiary proceedings. IMPC Transportation Co. v. Industrial Claim Appeals Office, 753 P.2d 803 (Colo.App. 1988). We therefore review the ALJ's ruling in this instance under the abuse of discretion standard. See Rennaissance Salon v. Industrial Claim Appeals Office, 994 P.2d 447 (Colo.App. 1999) (reviews of orders concerning the conduct of administrative hearings are subject to the abuse of discretion standard). An abuse of discretion does not occur unless the ALJ's order is beyond the bounds of reason, as where it is unsupported by the record or contrary to the law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo.App. 1993).

We again note that the claimant does not question the ALJ's calculations of the amount involved, but only that the ALJ should not have considered matters not disclosed in the interrogatories. We cannot say the ALJ's abused his broad discretion by allowing argument to be made from documents admitted into evidence.

VI.

The claimant finally contends that ALJ's order allows the respondent to double dip and that the recoupment schedule is onerous. The ALJ found that the claimant was overpaid indemnity benefits in the amount of $28,429.44. The claimant does not appear to challenge the amounts involved in these calculations. Instead the claimant argues that because the respondents did not pay the lump sum, yet reduced the benefits owed to the claimant by the amount of the lump sum, the respondents enjoyed a double recovery. We disagree.

The claimant requested a lump sum payment of future compensation. The Director of the Division of Workers' Compensation ordered that the respondents pay to the claimant a lump sum of $27,560 and that the balance owed the claimant be paid at the regular weekly rate, less $31.09. The ALJ found the respondents did not pay the lump sum but instead took a credit of the overpayment against the lump sum. In essence the claimant, because of overpayment, had already been paid the amount ordered by the Director in the lump sum order. The lump sum order specifically provided that the respondents were allowed to take credit for any overpayment, which they did. We perceive no allowance in the ALJ's order for the respondents to double dip.

The claimant also argues that the ALJ erred by allowing the respondents to recover the overpayment by $109.34 over the next five years. The claimant argues that any recoupment schedule should be based on the life expectancy of the claimant and not be limited to five years. The claimant cites no authority for such a repayment schedule. The parties do not appear to have litigated whether notice of the receipt of the overpayment was given by the claimant under § 8-42-113.5(1). Thus, under § 8-42-113.5(1), the respondents might have been entitled to an order immediately terminating all of the claimant's disability benefits until the overpayment is recovered in full. See Scruggs v. United Parcel Service, W.C. No. 4-490-474 (January 27, 2004) (respondents may unilaterally terminate benefits under this statute when claimant fails to give notice of receipt of other benefits subject to offset).

However, § 8-42-113.5(1)(c) provides that if for any reason recovery of overpayment as contemplated in paragraph (a) or (b) is not practicable, the insurer is authorized to seek an order for repayment. In the present case the ALJ entered an order for repayment. The ALJ had discretion to fashion a remedy, and we may not interfere with his determination unless there was an abuse of discretion. Louisiana Pacific Corp. v. Smith, 881 P.2d 456 (Colo.App. 1994). An abuse is not shown unless the order is beyond the bounds of reason, as where it is contrary to law or unsupported by the evidence. Pizza Hut v. Industrial Claim Appeals Office, 18 P.3d 867 (Colo.App. 2001). We cannot say the order concerning the rate of recoupment constitutes an abuse of discretion. We have considered the claimant's remaining arguments and find them to be without merit.

IT IS THEREFORE ORDERED that the ALJ's order dated February 20, 2007 is affirmed.

INDUSTRIAL CLAIM APPEALS PANEL

___________________________________ John D. Baird

__________________________________ Thomas Schrant

Richard Simpson, CO, Benchmark/Elite Inc., CO, Colorado Insurance Guaranty Assoc. c/o Western Guaranty Fund Svcs Michael Kramish, Denver, CO, Chris Forsyth, Esq. Denver, CO, (For Claimant).

Overturf, McGath Hull Doherty PC Christopher W. Crabtree, Esq., Denver, CO, (For Respondents).