Opinion
W.C. No. 4-804-152.
June 28, 2011.
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Mottram (ALJ) dated January 27, 2011, that imposed penalties against the respondents. We affirm.
Several of the ALJ's findings of fact are summarized as follows. The claimant sustained an admitted occupational disease. The respondents eventually filed a general admission of liability admitting for temporary total disability (TTD) benefits at an average weekly wage of $518.44 and payable from January 25, 2010 for an open period of time. The claimant contested the admitted average weekly wage and another administrative law judge increased the average weekly wage to $938.44. The order adjusting the claimant's average weekly wage became final. The respondents paid TTD benefits through April 18, 2010, but did not pay TTD benefits again from May 2, 2010 until September 10, 2010. During the lapse in TTD payments, the claimant "was put in a very precarious position financially." He had to sell personal property, moved in with a relative, and became depressed because of his financial situation and his reliance on the charity of friends and family. During the period of nonpayment, the claimant's attorney wrote to the respondents' counsel nine times regarding the status of the case and the respondents' failure to pay TTD benefits. The respondents switched third party administrators shortly after the relevant time period, but an adjuster testifying in the case "could not adequately explain why no temporary disability benefits were paid in this claim despite the open admission of liability."
In light of the correspondence from the claimant's counsel and the adjustor's inability to explain why benefits were not paid pursuant to the admission, the ALJ characterized the respondents' failure to pay benefits when due as "at least willful, if not deliberate" and having no reasonable basis or rational argument in law or in fact. The ALJ noted that the respondents appeared to concede that the third party administrator's failure to pay benefits subjected them to penalties.
The ALJ further observed that the penalty statute, § 8-43-304(1), C.R.S., had been amended effective August 11, 2010 to double the maximum daily penalty from $500 to $1,000. The ALJ was persuaded that it was appropriate to increase the amount of the daily penalty after the effective date of the statutory amendment. The ALJ therefore assessed a daily penalty of $350 from May 3, 2010 through August 10, 2010 and a daily penalty thereafter of $700 through September 10, 2010, for total penalties of $56,350. The ALJ determined that the total penalties assessed were about 8.5 times the amount of wrongfully withheld benefits. The ALJ apportioned the penalties as provided by statute.
I.
The respondents make two arguments on appeal. First they argue that the increase in the daily penalty from $350 to $700 impermissibly applies the substantive statutory amendments to § 8-43-304(1) retroactively. See Colorado Compensation Ins. Authority v. Industrial Claim Appeals Office, 907 P.2d 676, 678 (Colo. App. 1995) (imposition of penalty a substantive right and liability). We disagree.
The General Assembly amended § 8-43-304(1) to increase the maximum fine from $500 to $1,000 and changed the parties between whom payment was apportioned from the claimant and the subsequent injury fund to the aggrieved party and the workers' compensation cash fund. Also, the legislature changed the apportionment so that the aggrieved party received at least 50 percent of the penalties. Colo. Sess. Laws 2010, § 8-43-304(1), Ch. 287 sec. 1 at 1340.
The respondents assert that the ALJ violated the general prohibition against the retroactive application of statutory amendments by applying the increased penalty provisions in this matter. A statute is applied prospectively if it operates on transactions occurring after its effective date and retroactively if it operates on transactions that already occurred or on rights and obligations existing before its effective date. A statute is presumed to operate prospectively absent legislative intent to the contrary. Furthermore, a statute may operate retroactively if the General Assembly clearly intends it to and if it does not violate the constitutional prohibition against retrospective application. A statute is retrospective if it takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. Specialty Restaurants Corp. v. Nelson, 231 P.3d 393, 399 (Colo. 2010) (internal quotations omitted).
However, the ALJ merely applied the statutory amendments to the period of nonpayment that occurred after the effective date of those amendments. This is consistent with each day of nonpayment constituting a separate and distinct violation. Section 8-43-305, C.R.S. Moreover, the General Assembly expressly made the statutory amendments applicable "to conduct occurring on or after the applicable effective date of this act." Ch. 287, § . 3(2), 2010 Colo. Sess. Laws 1341. That is how the ALJ applied the new limits for penalties and the changes to the apportionment of those penalties. The ALJ assessed a daily penalty of $700 only for the period of nonpayment after the effective date of the statutory amendments. The respondents argue that they could not reasonably have known that the statutory provisions would change when they first failed to pay TTD benefits in May 2010; however, they were presumed to know of the statutory changes after the effective date of those changes. See Pagosa Lakes Property Owners Ass'n, Inc. v. Caywood, 973 P.2d 698, 702 (Colo. App. 1998) (person presumed to know law and publication of statutes sufficient to give notice). We therefore find no impropriety in the ALJ's adjustment of the daily penalty amount.
II.
The respondents also argue that the total amount of the penalties is impermissibly excessive. We review the ALJ's penalty award for an abuse of discretion. Associated Business Products, Inc. v. Industrial Claim Appeals Office, 126 P.3d 323, 325 (Colo. App. 2005). An abuse of discretion occurs when the ALJ's order is beyond the bounds of reason, as where it is unsupported by the evidence or contrary to law. Jarosinski v. Industrial Claim Appeals Office, 62 P.3d 1082, 1084 (Colo. App. 2002).
The ALJ expressly considered the following factors articulated by the court of appeals in Associated Business Products: 1) the degree of reprehensibility of the offending conduct; 2) the disparity between the harm or potential harm suffered and the fine imposed; and 3) the difference between the penalty awarded and penalties authorized or imposed in comparable cases. Associated Business Products, Inc., 126 P.3d at 326. The ALJ considered the respondents' failure to pay TTD benefits for no good reason and its failure to remedy the situation despite the claimant's repeated attempts to correct the situation by corresponding with the respondents about the lack of payments. He also considered the claimant's need to sell property, move in with family, and defer loans. In addition, the ALJ compared his imposition of penalties with the penalties assessed against the respondents in Associated Business Products, Inc., where the court upheld $24,900 in penalties at the daily rate of $300 under the same statute for a failure to pay $107.79 in bills. The ALJ concluded his analysis by stating that, but for the effective arguments of the respondents' counsel, he would have imposed the maximum penalty allowed by law. As in Associated Business Products, Inc., the ALJ considered the financial impact of the respondents' conduct on the claimant and the lack of response from the respondents to the several inquiries made by the claimant's attorney. Id.
Furthermore, the ALJ doubled the daily penalty to $700 after the effective date of the statutory amendment, which doubled the maximum daily amount from $500 to $1,000. The ALJ explained that the legislative change in the amount of the daily penalty supported a commensurate increase in the penalty for the respondents' repeated conduct throughout the period of nonpayment of TTD benefits. The ALJ's interpretation of the change in the law conforms to the court's observation that an earlier statutory increase in the daily penalty from $100 to $500 suggested a legislative intent to increase the level of punishment for those who violate the Workers' Compensation Act and necessitate litigation. Id. at 327.
In support of its contention that the penalties imposed should have been less, the respondents refer to factors such as the claimant having already moved in with family before the respondents began failing to pay TTD benefits. However, the ALJ considered such assertions in deciding not to impose the maximum daily penalties available under the statute. We find no abuse of discretion in the circumstances and uphold the ALJ's assessment of penalties.
IT IS THEREFORE ORDERED that the ALJ's order dated January 27, 2011 is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ John D. Baird
______________________________ Dona Rhodes
MICHAEL KILPATRICK, PARKER, CO, (Claimant).
EXPRESS EMPLOYMENT PROFESSIONALS, Attn: NINA ANDERSON, GRAND JUNCTION, CO, (Employer).
INSURANCE OF THE STATE OF PA, Attn: WENDY SCHELLER, C/O: CLAIMETRICS, OKLAHOMA CITY, OK, (Insurer).
WITHERS, SEIDMAN, RICE MUELLER, PC, Attn: DAVID MUELLER, ESQ., GRAND JUNCTION, CO, (For Claimant).
TREECE, ALFREY, MUSAT BOSWORTH, PC, Attn: JAMES B. FAIRBANKS, ESQ., DENVER, CO, (For Respondents).