Opinion
W.C. No. 4-471-768
July 18, 2003
FINAL ORDER
The claimant and the respondents separately petitioned for review of an order of Administrative Law Judge Martinez (ALJ) dated August 23, 2002. The respondents contest the ALJ's imposition of penalties for a violation of the Rules of Procedure, Part IX(C)(1), 7 Code Colo. Reg. 1101-3. The claimant contends the ALJ erroneously denied further surgery and penalties for the respondents' violation of Rule IV(E)(2) and Rule IV(N)(5). We affirm the order in part, set aside the order denying penalties for a violation of Rule IV(E)(2) and remand the matter for a new order on that issue.
On July 25, 2000, the claimant suffered admitted injuries to her neck and shoulder. On September 8, 2000, the claimant underwent cervical surgery. The surgeon then referred the claimant to Dr. Russell, who placed the claimant at maximum medical improvement (MMI) on December 4, 2001. Dr. Hall agreed the claimant reached MMI on December 4, 2001 and assigned a rating of 22 percent whole person impairment. Dr. Russell subsequently referred the claimant to Dr. Richards who recommended arthroscopic surgery to treat the claimant's shoulder injury.
The respondents admitted liability for temporary disability benefits. However, the respondents made no payments between February 13, 2002, and June 13, 2002.
On April 15, 2002, the claimant filed an application for hearing on the issue of penalties. On July 19, 2002, the respondents filed a Final Admission of Liability which terminated temporary disability benefits effective December 6, 2001, and admitted liability for permanent partial disability benefits based on Dr. Hall's whole person impairment rating.
Based upon the evidence presented at a hearing on July 23, 2002, the ALJ denied the claimant's request for the shoulder surgery recommended by Dr. Richards. The ALJ also found the claimant failed to prove the respondents violated Rules IV(E)(2), XVI(J)(2) and IV(N)(5). However, the ALJ ordered the respondents to pay penalties at the rate of $100 per day between February 13 and June 12, 2002, for violation of Rule IX(C)(1).
I.
On review, the respondents contend they did not have adequate notice the claimant was seeking penalties for a violation of Rule IX(C)(1). Therefore, they argue the ALJ's order violated due process of law. We reject this argument.
Section 8-43-304(1), C.R.S. 2002, authorizes the imposition of penalties up to $500 per day where the insurer fails or refuses to carry out a duty imposed by the Director of the Division of Workers' Compensation. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996). The courts have also held that an insurer may be penalized for the violation of a Rule of Procedure. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997).
Section 8-43-304(4), C.R.S. 2002, provides that:
"In any application for hearing for any penalty pursuant to subsection (1) of this section, the applicant shall state with specificity the grounds on which the penalty is being asserted."
Under § 8-42-105(3)(a), C.R.S. 2002, liability for temporary disability benefits terminates at MMI. However, where the respondents have admitted liability for temporary disability benefits, such benefits may only be terminated in accordance with Rule IX or pursuant to an ALJ's order. Rule IX(C)(1)(a) provides that an insurer may terminate temporary disability benefits without a hearing by the filing of an "admission of liability" form accompanied by a medical report from an authorized treating physician which states the claimant has reached MMI.
Rule IX(D)(1) states that:
"When an insurance carrier seeks to suspend, modify or terminate temporary disability benefits pursuant to a provision of the act, but is not able to proceed under sections A, B, C, E, F or G herein, the insurance carrier may file a petition to suspend, modify, or terminate temporary disability benefits on a form prescribed by the Division."
The claimant's application for hearing alleged the respondents violated Rule IX by terminating temporary disability benefits without filing a petition to suspend, modify or terminate compensation. However, the application did not expressly allege the respondents' unilateral termination of temporary disability benefits violated Rule IX(C)(1)(a). Under these circumstances, the respondents contend the pleadings were insufficient to advise them the basis of the claim for penalties. We disagree.
The claimant's assertion that the respondents violated Rule IX by failing to file a petition to suspend or terminate necessarily alleges the respondents failed to comply with any provision of Rule IX authorizing the unilateral termination of temporary disability benefits, including the provisions of Rule IX(C)(1). Consequently, we conclude the claimant's application for hearing afforded the respondents adequate notice of the basis for the claim for penalties. At the time the application for hearing was filed the claimant was not obligated to speculate concerning the precise theory on which the respondents might attempt to justify the termination.
II.
The claimant contends the ALJ erred as a matter of law in failing to impose penalties for the respondents' violation of Rule IV(E)(2) and Rule IV(N)(5).
A.
Rule IV(E)(2), provides that "temporary disability benefits awarded by admission are due on the date of the admission and payable once every two weeks thereafter." (Emphasis added). The ALJ determined that Rule IV(E)(2) must be read in conjunction with § 8-42-105(3)(a). Because the claimant was placed at MMI on December 4, 2001, and the claimant did not request a Division-sponsored independent medical examination (DIME) to contest the finding of MMI, the respondents argue, and the ALJ found, that the respondents' liability for temporary disability benefits terminated December 4, 2001, when Dr. Russell and Dr. Hall placed the claimant at MMI. Therefore, the ALJ reasoned that no temporary disability benefits were due for the period between February 13 and June 13, 2002, and the respondents did not violate Rule IV(E)(2) by failing to pay temporary disability benefits for the intervening two week periods.
The claimant argues that because the respondents' General Admission of Liability dated June 4, 2001, admitted liability for ongoing temporary disability benefits the respondents were required to pay temporary disability benefits at least every two weeks such benefits were legally terminated pursuant to Rule IX or by order of the ALJ. We agree with the claimant's position.
Section 8-43-203(2)(d), C.R.S. 2002 provides that: "[H]earings may be set to determine any matter, but, if any liability is admitted, payments shall continue according to admitted liability." Thus, if liability for temporary disability benefits is admitted, payments must continue in accordance with the admission until properly terminated in accordance with Rule IX or by order of the ALJ. Further, an ALJ's ultimate determination that temporary disability benefits terminated by operation of § 8-42-105(3)(a) does not alter the respondents' liability to pay continuing benefits under their admission prior to the ALJ's determination, except that any overpayment may be offset against liability for permanent disability benefits. Monfort Transportation v. Industrial Claim Appeals Office, 942 P.2d 1358 (Colo.App. 1997); see also Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 18 P.3d 790 (Colo.App. 2000) (admission for "closed period" of temporary disability benefits must comply with § 8-42-105(3) and Rule IX); Rule of Procedure IV(G)(2), 7 Code Colo. Reg. 1101-3 at 5-6.
Here, the ALJ did not adjudicate the respondents' liability for temporary disability benefits until August 23, 2002. Further, the ALJ determined the respondents did not properly terminate temporary disability benefits in accordance with Rule IX until July 19, 2002. Accordingly, we hold the ALJ erred insofar as he concluded the respondents did not violate Rule IV(E)(2) by failing to pay temporary disability benefits every two weeks between February and June 2002. Consequently, we set aside the ALJ's order which denied penalties for a violation of Rule IV(E)(2) and remand the matter for a new order on this issue. However, we do not express an opinion on any other issue involved the propriety of imposing a penalty for violation of this rule, nor do we express an opinion on the amount of any penalty to be imposed. Eg. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo.App. 2003) (no penalty if violator's actions were objectively reasonable).
B.
Rule IV(N)(5) requires that within 30 days "after the date of mailing or delivery of a determination of medical impairment by an authorized level II accredited physician" the insurance carrier shall file an admission of liability consistent with the physician's determination of medical impairment or request a DIME.
The claimant contends the requirements of Rule IV(N)(5) are triggered by the date of mailing of the medical impairment rating. Therefore, the claimant contends the ALJ erroneously shifted the burden of proof by requiring the claimant to prove the respondents received the physician's report.
It is the claimant's burden to prove her entitlement to penalties. See Postlewait v. Midwest Barricade, 905 P.2d 21 (Colo.App. 1995); Long v. DBF L.L.C., W.C. No. 4-264-006 (June 5, 1997). Further, 8-43-304(4), provides that if the violation is cured within twenty days of an application for hearing on the issue of penalties, no penalty may be imposed in the absence of "clear and convincing evidence" that the violator "knew or reasonably should have known" of the violation.
We have previously concluded that the cure provisions commence the date of an order adding the issue to hearing. Mackins v. Pete Leins Sons Inc., W.C. NO. 4-320-228 (October 13, 2000). The claimant's arguments do not persuade us to depart from our prior conclusions.
On June 14, 2002, the claimant moved to add a request for penalties under Rule IV(N)(5) to the hearing scheduled for July 23. The claimant's motion was granted July 8, 2002. Therefore, the ALJ did not err in finding the 20 day period to cure began July 8. Because the respondents filed a Final Admission of Liability on July 19, 2002, which admitted liability for permanent partial disability benefits consistent with Dr. Hall's medical impairment rating, the ALJ correctly determined the respondents cured the violation of IV(N)(5) and, thus, the burden of proof shifted to the claimant to establish the respondents knew or should have known of the violation.
Further, due process of law requires that all parties receive notice of administrative proceedings and determinations which could result in the deprivation of a significant property interest. See Bowlen v. Munford, 921 P.2d 59 (Colo.App. 1996) (mailing of a Final Admission to the employer's premises is not sufficient to notify the claimant of the effect of his failure to object to the Final Admission); Owens v. Ready Men Labor, Inc., W.C. No. 4-178-276, August 25, 1995, aff `d Ready Men Labor, Inc. v. Industrial Claim Appeals Office, (Colo.App. No. 95CA1590, April 25, 1996) (not selected for publication) (where an employer seeks to terminate temporary disability benefits pursuant to a written offer of modified employment, it is required that the claimant have actual notice of the written offer of employment). The obligation to pay workers' compensation benefits affects a property interest for due process purposes. Colorado Compensation Insurance Authority v. Nofio, 886 P.2d 714 (Colo. 1994).
Notice by mail suffices for purposes of due process only if it is reasonably calculated to provide notice in light of the relevant circumstances. Ault v. Department of Revenue, 697 P.2d 24 (Colo. 1985). It follows that Rule IV(N)(5) is inherently premised on an assumption that the medical impairment rating report will be mailed in a manner that is reasonably calculated to provide the insurer notice of the need to act.
Here, the record contains evidence that Dr. Hall's report was mailed to the insurer at "P.O. Box 40024 in Fresno," California on December 6, 2001. However, there is evidence the insurer's actual address is P.O. Box 3539 in Englewood, Colorado. Within his sole prerogative, the ALJ resolved the conflict in favor of the respondents by finding the report was not mailed to the insurer in a manner consistent with the purpose of Rule IV(N)(5). Under these circumstances, the ALJ could, and did reasonably infer, that the evidence was insufficient to find the respondents knew or reasonably should have known they were in violation of Rule IV(N)(5).
The claimant's arguments notwithstanding, Le v. White Wave, W.C. No. 4-338-577 (March 31, 1999) is not authority to the contrary. In Le written notice of an offer of modified employment was sent by mail. There was no dispute in Le that the claimant was entitled to actual notice of a written offer of modified employment. Rather, the issue in Le was whether the evidence was sufficient to overcome the presumption that mail is received by the addressee if there is proper evidence of its mailing to the claimant's correct address, with adequate prepaid postage. See Olson v. Davidson, 142 Colo. 205, 350 P.2d 338 (1960). Here, as in Le, the ALJ found the rating report was not mailed to the correct address and therefore, the presumption of receipt was overcome.
III.
Finally, the claimant contends the ALJ erroneously denied the arthroscopic surgery recommended by Dr. Richards. The claimant contends, inter alia, the ALJ mistakenly determined he lacked jurisdiction to determine whether the claimant is at MMI. To the contrary, the claimant argues there were multiple treating physicians with conflicting opinions on MMI, and which the ALJ should have resolved the conflict to find the claimant was not at MMI. We perceive no basis to set aside the ALJ's order.
The respondent is obligated to provide treatment which is "reasonably needed" to cure and relieve the claimant from the effects of the injury. Section 8-42-101(1)(a), C.R.S. 2002. The obligation to provide medical benefits terminates when the claimant reaches MMI.
MMI is defined as the point in time when the claimant's condition is "stable and no further treatment is reasonably expected to improve the condition." Section 8-40-201(11.5), C.R.S. 2002. Sections 8-42-107(8)(b)(I) (II), C.R.S. 2002, which govern this claim, provide that the initial determination of MMI is to be made by "an authorized treating physician," and if either party disputes that determination, the claimant must undergo a DIME.
Admittedly a DIME is not a prerequisite to the ALJ's resolution of a dispute concerning whether or not a particular authorized treating physician found the claimant to be at MMI. Blue Mesa Forest v. Lopez, 928 P.2d 831 (Colo.App. 1996) (decided under predecessor statute); cf. MGM Supply Co. v. Industrial Claim Appeals Office, 62 P.3d 1001 (Colo.App. 2002) (ALJ may resolve ambiguities in DIME physician's report regarding whether claimant is at MMI). However, in Town of Ignacio v. Industrial Claim Appeals Office, ___ P.3d __(Colo.App. No. 01CA2024, November 7, 2002) a division of the court held that an ALJ lacks jurisdiction to resolve conflicts between multiple authorized treating physicians on the issue of MMI in the absence of a DIME. Thus, the ALJ correctly found he lacked jurisdiction to resolve the conflicting medical opinions concerning whether the claimant reached MMI.
Further, the ALJ found that the recommended shoulder surgery is designed to improve the claimant's condition from the industrial injury to her shoulder. This finding supports the conclusion that the disputed treatment is an implicit challenge to Dr. Hall's determination of MMI. Because there was no DIME on the issue of MMI, the ALJ properly held that he lacked jurisdiction to award additional treatment designed to cure the industrial injury. Story v. Industrial Claim Appeals Office, 910 P.2d 80 (Colo.App. 1995).
Moreover, the claimant's motion to add the issue of medical benefits to the hearing on July 23 requested an award of the "surgery Dr. Russell has proposed." However, at hearing the claimant presented no evidence of any proposed surgery by Dr. Russell. Rather, the claimant concedes the surgery was recommended by Dr. Richards. Under these circumstances, the ALJ reasonably inferred the claimant failed to prove her entitlement to the medical benefits which were endorsed for hearing. Therefore, the ALJ did not err in denying the disputed medical treatment.
IT IS THEREFORE ORDERED that the ALJ's order dated August 23, 2002, is set aside insofar as it denied penalties for the alleged violation of Rule IV(E)(2). On this issue the matter is remanded for entry of a new order consistent with the views expressed herein. This order does not authorize a new evidentiary hearing, but the ALJ is free to consider any pertinent arguments advanced by the parties.
IT IS FURTHER ORDERED that the ALJ's order is otherwise affirmed.
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 July 18, 2003 to the following parties:
Jerri Varela, 966 2150 Road, Austin, CO 81410
Cedaredge Mercantile, P. O. Box 90, Cedaredge, CO 81413-0090
Liberty Mutual Insurance Company, 13111 E. Briarwood Ave., #100, Englewood, CO 80112
Amy K. Eaton, Esq., P. O. Box 4859, Grand Junction, CO 81502 (For Claimant)
Scott M. Busser, Esq., 300 S. Jackson St., #570, Denver, CO 80209 (For Respondents)
BY: A. Hurtado