Opinion
W.C. No. 4-669-749.
May 5, 2010.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) dated January 7, 2010, that imposed a penalty of $100 against the respondents. We affirm.
A hearing was set for December 10, 2008 before ALJ Walsh pursuant to an application for hearing filed by the respondents. Later the respondents' attorney filed a Notice of Withdrawal of Application for Hearing and a Hearing Cancellation form. The claimant filed a motion to retain the December 10, 2008 hearing date. The hearing went forward as scheduled before ALJ Walsh who entered an order on an issue unrelated to the present controversy. The order of ALJ Walsh became final after we affirmed the order. The claimant then sought a penalty against the respondents and the matter was set for hearing before ALJ Stuber. The claimant requested penalties against the respondents based upon Office of Administrative Courts' Rule of Procedure (OACRP) 15, 1 Code Colo. Reg. 104-3 at 7 (2009). The claimant argued that the Notice of Withdrawal of Hearing Application filed by the respondents was filed without her agreement and in the absence of the respondents' counsel conferring with the claimant. ALJ Stuber found that the respondents' former attorney committed an unreasonable violation of OACRP 15 by the filing of the cancellation form with a check in the box to verify that all parities agreed to the cancellation of the hearing. However, ALJ Stuber determined that penalties under § 8-43-304(1) were not available for a violation of the OAC rules of procedure.
The matter was appealed to us and in an order dated October 6, 2009 we remanded the matter to the ALJ for imposition of penalties against the respondents under § 8-43-304(1) C.R.S. for violation of OACRP 15. The ALJ in the January 7, 2010 order, entered pursuant to that remand, found the respondents should be subject to a penalty of $100.
The claimant appealed, contending that the imposition of $100 is grossly disproportionate to the severity of the violation. The claimant requests that the matter be remanded to the ALJ for entry of a larger penalty. The claimant argues that as a matter of fact and as a matter of law, the penalty assessed by ALJ Stuber is insufficient in light of the respondents' conduct and in light of the time and effort required by the claimant to secure redress. The claimant argues that the ALJ entered his penalty order without consideration of the damages, including reasonable attorney fees incurred, suffered by the claimant as a result of the respondents' violation of the rule.
We initially note that the claimant has made statements regarding the size of the employer and its earnings. However, this information was not in the claimant's original position statement and was not argued by the claimant to ALJ Stuber. Johnson v. Industrial Commission, 761 P.2d 1140 (Colo. 1988); Robbolino v. Fischer-White Contractors, 738 P.2d 70 (Colo. App. 1987). Therefore, we may not consider the argument for the first time on appeal. Colorado Compensation Ins. Authority v. Industrial Claim Appeals Office, 884 P.2d 1131 (Colo. App. 1994).
Because the ALJ's authority is discretionary, we may not disturb the ALJ's determination of the amount of the penalty to be imposed in the absence of fraud or an abuse of discretion. See Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo. App. 2005); Hall v. Home Furniture Co., 724 P.2d 94 (Colo. App. 1986); Brunetti v. Industrial Commission, 670 P.2d 1246 (Colo. App. 1983). There is no assertion of fraud in this case. The legal standard for review of an alleged abuse of discretion is whether, under the totality of the factual circumstances at the time of the ALJ's determination, the ALJ's order "exceeds the bounds of reason." Rosenberg v. Board of Education of School District # 1, 710 P.2d 1095 (Colo. 1985). The application of this substantial evidence standard includes consideration of whether the ALJ's determination is supported by substantial evidence and the applicable law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1993).
The ALJ and both parties have cited Associated Business Products. In Associated Business Products the court reviewed a penalty for constitutional excessiveness, to determine whether its amount violated the due process protections of the federal and state constitutions and the excessive fines clause of the Eighth Amendment. The court set forth three factors to be used to determine whether those constitutional limits had been exceeded by the amount of the penalty. Specifically, the court considered (1) the reprehensibility of the conduct, (2) the disparity between the harm caused by the violation and the penalty, and (3) the difference between the penalty and civil damages that could be imposed in comparable cases. As we read Associated Business Products the court held that these factors are appropriate in reviewing whether a penalty is unconstitutionally excessive, or "grossly disproportionate." Associated Business Products, 126 P.3d at 326; See also Pueblo School District No. 70 v. Toth, 924 P.2d 1094, 1100 (Colo. App. 1996). Here the issue is not whether the penalty is constitutionally excessive but whether the penalty was grossly inadequate. However, the consideration of the factors in Associated Business Products is appropriate and the ALJ's decision regarding the amount of the penalty remains highly discretionary. The discretionary nature of the ALJ's determination implies that he may consider a wide variety of factors. Aligaze v. Colorado Cab Co/Veolio, W.C. No. 4-705-940 (April 29, 2009).
The ALJ citing Marple v. Saint Joseph Hospital, W.C 3-966-344 (September 15, 1995) noted that under § 8-43-304 C.R.S. a penalty might range from at least one cent and up to $500 for the insurer's unreasonable one-time violation of the rule. The ALJ citing Associated Business Products noted the following considerations in determining the amount of the penalty. All of the circumstances must be considered in determining the amount. The amount of the penalty should be sufficient to dissuade a violator from future violations, but should not be constitutionally excessive or grossly disproportionate to the violation found. The ALJ should consider the reprehensibility of the conduct involved, the harm to the non-violating party and the difference between the amount of the penalty and civil damages that could be imposed in comparable cases. The claimant has not argued, nor do we perceive any error in the legal principles relied upon by the ALJ in analyzing the issue of penalties. In our view, the ALJ correctly noted factors to be considered.
The ALJ made the following findings of fact relevant to the penalty. The insurer's violation of OACRP 15 arose out of the conflicted, dysfunctional relationship between the two opposing attorneys. The ALJ noted that, from time to time, one party believes an agreement exists to cancel a hearing when, in fact, the opposing party does not agree. The respondents' counsel did not have any reasonable belief that agreement existed. The respondents' counsel apparently did not understand the distinction between his duty to attempt to confer before filing a motion to strike the application and his duty actually to confer and obtain agreement before submitting the hearing cancellation form. If the respondents' counsel actually understood the distinction, but misrepresented the agreement, his violation would warrant the maximum $500 penalty. However, because the respondents' counsel misunderstood his duty, the violation warranted a lesser penalty. The violation did not result in any significant harm. The violation by the insurer was quickly remedied because OAC put the hearing back on the docket. The hearing proceeded as scheduled. Nevertheless, the violation was not de minimus. The ALJ then imposed a penalty of $100 for the violation.
The claimant does not directly challenge these facts. Rather, as we understand the claimant's brief, she argues that the ALJ abused his discretion because he failed to consider the claimant's attorney fees in his calculation of penalties. In his brief, the claimant's counsel estimates the number of hours devoted to the matter. In her petition to review, the claimant informs us of the hourly rate of her attorney. However, the claimant has not directed our attention to evidence in the record on this issue. The exhibits submitted by the claimant at the hearing do not contain documentation of the attorney fees. Exhibits 1-94. The statements made by counsel for the claimant at the close of the hearing do not reference any evidence of attorney fees. Tr. (5/05/2009) at 170-71. We see in the claimant's position statement no citation of evidence relating to attorney fees. Rather in connection with the issue of the proper amount of the penalty, the claimant in her position statement was content with stating that the brazenly dishonest conduct of the respondents' attorney should give rise to penalties of $500 a day between October 22, 2008 and November 4, 2008.
As we noted initially, parties are expected to submit their evidence at the time of the hearing. Frank v. Industrial Commission, supra. Therefore, we may not consider the factual statements regarding attorney fees made for the first time on appeal or made below but without evidentiary support. In any event, we do not view the order as evidencing an abuse of discretion because the ALJ apparently did not consider attorney fees in reaching his decision on the amount of penalties. The ALJ was not compelled to infer that the claimant was billed and paid any particular amount for her attorney's services, nor was he compelled to infer that one of the purposes of the penalty statute was to substitute for an award of attorney fees where one was not available under the applicable law.
As noted above the claimant argues for a daily maximum of $500 per day penalty for the period of October 22, 2008 to November 4, 2008. The claimant's counsel at the time of the hearing although stating that it was a "one-time violation," argued that the penalty should be measured for a total of 14 days from the time the respondents filed their notice of hearing cancellation until the date of November 4, 2008 when the hearing was reinstated. Tr. (5/05/2009) at 6-9. To the extent the claimant maintains in her appeal that a penalty must be imposed for fourteen days we are not persuaded.
We have previously upheld orders imposing penalties for a one-day violation and rejected the contention that a penalty for daily violations as provided in § 8-43-305 must be imposed. See Quintana v. Sunstrand, W.C. No. 3-062-456 (March 20, 2007) (the day the incorrect admission was filed only resulted in one violation and there was no continuing violation); Porras v. World Service Co. Inc., W. C. No. 4-155-161 (October 12, 1995) (ALJ properly restricted penalty against insurer to single day for direct contact with Division-sponsored independent medical examination physician); Smith v. Reliable Roofing Co. W. C. No. 4-174-578 (May 8, 2001) (ALJ imposed penalty under § 8-43-304(1) for perjured testimony for single day and rejected claimant's argument of continuing violation). See also Kennedy v. Industrial Claim Appeals, 100 P.3d 949, (Colo. App. 2004) (ALJ's order affirmed imposing a one-day penalty of $500 based on the claimant's failure to attend the DIME as required by PALJ's order).
Section 8-43-304(1) affords the ALJ wide discretion to impose a penalty up to $500 for each offense. In our view, whether to penalize an act as a continuing violation or as a single violation comes within the discretion afforded the ALJ in the application of § 8-43-305, C.R.S. Heupel v. Academy School District, W.C. No. 4-721-564 (August 20, 2009). We recognize that the statute provides that every day during which a person fails to comply with a lawful order or fails to perform a duty imposed by the Act "shall constitute a separate and distinct violation thereof." Section 8-43-305, C.R.S. However, the ALJ may exercise his discretion in basing a penalty on a single violation or for a period of successive days. As we read the ALJ's order, he considered the respondents' action as a single violation of a rule and we perceive no abuse of discretion in his doing so.
We note that the penalty was within the permissible statutory range and could under the statute have been less. Under these circumstances, we do not view the penalty of $100 dollars for this violation to be an abuse of the ALJ's discretion. We are able to discern the basis for the order, and in our view, the ALJ did not abuse his discretion in setting the amount of the award.
IT IS THEREFORE ORDERED that the ALJ's order issued January 7, 2010 is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Curt Kriksciun
____________________________________ Thomas Schrant
THIS PAGE INTENTIONALLY LEFT BLANK
JOSEPHINE GIANZERO, COLO SPRINGS, CO, (Claimant)
WAL-MART STORES, INC., Attn: BETH MCELROY, S. ACADEMY BLVD, COLO SPRINGS, CO, (Employer)
AMERICAN HOME ASSURANCE, Attn: LEA ANN GAVELLAS, C/O: CMI, BENTONVILLE, AR, (Insurer)
STEVEN U. MULLENS, P.C., Attn: STEVEN U. MULLENS, ESQ., COLO SPRINGS, CO, (For Claimant)
RITSEMA LYON, P.C., Attn: MARGARET A METZGER, ESQ., DENVER, CO, (For Respondents)