W.C. No. 3-217-330Industrial Claim Appeals Office.
April 4, 1997
FINAL ORDER
The claimant seeks review of a final order of Administrative Law Judge Henk (ALJ) which denied her claim for penalties due to the Colorado Compensation Insurance Authority’s (CCIA) failure to comply with Rules IV(N)(4)(a) (b). We affirm.
Insofar as pertinent, the Rules of Procedure, Part IV(N)(4)(a), 7 Code Colo. Reg. 1101-3 at page 6.02 (1994) [amended effective November 30, 1996, 19 CR 11], requires that within twenty days of receipt of a “finding of maximum medical improvement from the treating physician who has provided the primary care,” the insurer must either file an admission of liability consistent with the treating physician’s finding of MMI or request an IME to establish the date of MMI. Rule IV(N)(4)(b) requires that within twenty days of the “first receipt of an impairment rating from a Level II accredited treating physician,” the insurer must either “file an admission admitting liability for the degree of impairment found to exist by said physician” or request an IME on the issue of medical impairment.
Here, it is undisputed that the claimant suffered compensable wrist injuries on January 1, 1994. On November 2, 1995, the treating physician, Dr. Lilly, determined the claimant to be at MMI with permanent medical impairment of 4 percent of the whole person.
The CCIA received Dr. Lilly’s rating on March 29, 1996. However, during the next twenty days, the CCIA did not file an admission or request an IME. Instead, the CCIA requested that Dr. Lilly convert the whole person impairment rating to a scheduled disability rating. Dr. Lilly subsequently reported that the claimant sustained a 4 percent impairment to each extremity, and on June 19, 1996, the CCIA filed a Final Admission of Liability for the payment of scheduled disability benefits consistent with Dr. Lilly’s extremity rating.
The claimant applied for a hearing and requested an order imposing penalties for the CCIA’s failure to file an admission or request an IME within twenty days of March 29, 1996. The respondents argued that Rule IV(N)(4) does not apply to scheduled injuries, and asserted that the claimant suffered an injury on the “schedule of disabilities” currently codified at § 8-42-107(2), C.R.S. (1996 Cum. Supp.). The claimant did not dispute the respondents’ assertion that she suffered a “scheduled” injury. Rather, the claimant argued that Rule IV(N)(4) applies to both scheduled and non-scheduled injuries.
The ALJ agreed with the respondents, and therefore, determined that Rule IV(N)(4) governs only injuries which result in whole person impairments and are compensated under § 8-42-107(8), C.R.S. (1995 Cum. Supp.) [substantially amended in 1996]. The ALJ also found that the claimant failed to establish that she suffered impairment of the whole person. Consequently, the ALJ determined that the CCIA was not subject to penalties for failing to comply with Rules IV(N)(4)(a) (b).
On review the claimant renews her argument that Rules IV(N)(4)(a) (b) apply to both scheduled and non-scheduled injuries. In support, the claimant points out that Rule IV(N) is not specifically limited to non-scheduled injuries and expressly states that it governs “injuries occurring on or after July 1, 1991.”
We agree with the ALJ that, under the facts of this claim, Rule IV(N)(4)(b) is not applicable. However, we agree with the claimant that the CCIA was required to comply with Rule IV(N)(4)(a). Nevertheless, we conclude that the ALJ did not err in refusing to impose penalties for the CCIA’s failure to comply with Rule IV(N)(4)(a).
I.
As we have previously held, Rule IV(N)(4) was enacted to implement the provisions of § 8-42-107(8)(b) and (c), C.R.S. (1995 Cum. Supp.) Harling v. B.C.R. Industries, Inc., W.C. No. 4-116-168, September 11, 1996; Leigh v. Joe Reed, W.C. No. 3-107-700. Section 8-42-107(8)(b) provides that the primary treating physician shall determine MMI and a party disputing that determination must request an IME. Section 8-42-107(8)(c) requires the treating physician to determine the claimant’s degree of permanent medical impairment as a percentage of the whole person. It follows that Rule IV(N)(4)(b) pertains to the determination of medical impairment under § 8-42-107(8)(c).
As the parties and the ALJ recognize, we have also concluded in a series of cases that § 8-42-107(8)(c) only governs the determination of medical impairment where the claimant suffers a non-scheduled injury Dorsey v. Pace Membership Warehouse, W.C. No. 4-159-062, February 14, 199 ; Chartier v. Stationers Distributing Co., Inc., W.C. No. 4-121-800, October 31, 1994; Mestas v. Curtice Burns Meats Snacks, Inc., W.C. Nos. 4-000-190 4-159-948, May 24, 1994. The Court of Appeals agreed i Mountain City Meat Co, v. Industrial Claim Appeals Office, 904 P.2d 1333
(Colo.App. 1995), which was affirmed by the Supreme Court in Mountain City Meat Co. v. Oqueda, 919 P.2d 246 (Colo 1996). Accordingly, Rule IV(N)(4)(b) is logically limited to cases involving non-scheduled injuries. Therefore, insofar as the ALJ found that the claimant suffered a scheduled injury, and the claimant does not dispute that determination, the ALJ’s finding supports the conclusion that the CCIA was not required to comply with Rule IV(N)(4)(b).
However, the claimant contends that the duty to comply with Rule IV(N)(4)(b) is triggered at the time of the insurer’s “first receipt” of a medical impairment rating. The claimant contends that the CCIA’s receipt of Dr. Lilly’s 4 percent whole person impairment rating was the CCIA’s “first receipt” of a medical impairment rating concerning the claimant’s industrial injury. Because Dr. Lilly’s report indicated that the claimant suffered an injury resulting in whole person impairment, the claimant argues that the CCIA was required to comply with the rules for whole person medical impairment ratings. Consequently, the claimant argues that the ALJ’s subsequent finding of a scheduled injury, is immaterial to whether the CCIA violated Rule IV(N)(4)(b).
We agree with the principle that the requirements of Rule IV(N)(4)(b) are triggered at the time of the insurer’s “first receipt” of a medical impairment rating. However, Rule IV(N)(4)(b) must be construed consistent with underlying statutory scheme for the determinations of medical impairment. See Sterling v. Industrial Commission, 662 P.2d 1096
(Colo.App. 1982) (to extent rule of procedure is enacted to implement a specific statutory requirement, the rule should be deemed in pari materia
with the statute and they should be read together so as to effect the legislative intent). As a result, we do not believe that the requirements of Rule IV(N)(4)(b) are intended to govern circumstances where a party has a rational factual basis for believing that the rating physician incorrectly classified the impairment as affecting the whole person, and desires to litigate that issue.
Section 8-42-107(1), C.R.S. (1996 Cum. Supp.) states that if a claimant suffers an “injury or injuries” listed on the schedule of disabilities the claimant is limited to a scheduled disability award, but if the claimant suffers an “injury or injuries” not on the schedule, the claimant is limited to medical impairment benefits under § 8-42-107(8). In the context of § 8-42-107(1), the term “injury” refers to the part or parts of the body which have been functionally impaired as a result of the industrial accident. Langton v. Rocky Mountain Health Care Corp., ___ P.2d ___ (Colo.App. No. 95CA1984, November 7, 1996); Strauch v. PSL Swedish Healthcare System, 917 P.2d 366 (Colo.App. 1996); but see Morris v. Industrial Claim Appeals Office, ___ P.2d ___ (Colo.App. No. 96CA0863, February 6, 1996) (functional impairment must be “rateable” under AMA Guides to constitute non-scheduled impairment).
Contrary to the claimant’s argument, the treating physician’s medical impairment rating is not determinative of whether the claimant has sustained a scheduled or non-scheduled injury. Rather, it is now well established that, where there is a dispute between the parties, the determination of whether the claimant suffered a non-scheduled “injury” is a question of fact for resolution by the ALJ. Langton v. Rocky Mountain Health Care Corp., supra; Strauch v. PSL Swedish Healthcare System, supra.
Here, the record reveals that prior to the hearing, there was a factual dispute between the parties concerning whether the claimant suffered a scheduled or non-scheduled injury. This is evidenced by the correspondence from the claimant’s attorney to the CCIA requesting that the CCIA file an admission for permanent partial disability benefits in accordance with Dr. Lilly’s whole person impairment rating. See
(correspondence December 20, 1995, March 7, 1996). In contrast, the CCIA asserted that the claimant was limited to scheduled disability benefits, and therefore, requested that Dr. Lilly convert her whole person rating to a an extremity rating. See (“Motion to Stay Rule IV”).
Under these circumstances, we reject the claimant’s contention that Dr. Lilly’s 4 percent whole person impairment rating was dispositive of the CCIA’s obligation to comply with Rule IV(N)(4)(b). To the contrary, at the time of the CCIA’s receipt of Dr. Lilly’s whole person impairment rating, it was undetermined whether the claimant suffered an injury off the schedule, and the CCIA wished to preserve its right to litigate the issue. Therefore, Rule IV(N)(4)(b) did not apply absent a legal determination of whether the claimant sustained a scheduled or whole person impairment.
In reaching this conclusion, we note that a contrary construction of Rule IV(N)(4)(b) would subject the insurer to the choice of admitting liability for benefits in excess of those to which the insurer believes the claimant is entitled, or incurring the cost of IME despite an ultimate determination that the claim is not subject to the IME procedures. Such a construction would be inconsistent with the express legislative intent of providing workers’ compensation benefits “at a reasonable cost” to employers. Section 8-40-102(1), C.R.S. (1996 Cum. Supp.).
Moreover, because the determination of whether the claimant suffered a non-scheduled injury is a matter for the ALJ, and not the IME physician, requesting an IME to ascertain the claimant’s medical impairment would not resolve the predicate issue. Consequently, reading Rule IV(N)(4)(b) as applicable to these circumstances would be inconsistent with the statutory goal of “reducing litigation” concerning medical impairment. Colorado AFL-CIO v. Donlon, 914 P.2d 396 (Colo.App. 1995). We do not believe the General Assembly intended such a result, and therefore, we reject this construction.
II.
We now turn to consideration of Rule IV(N)(4)(a). We have repeatedly held that the provisions of § 8-42-107(8)(b) concerning the determination of MMI apply to all injuries regardless of whether the claimant suffers impairment of the whole person or a scheduled impairment. Houlton v. Gilbert C. Wilson Packed Seed, W.C. No. 4-254-755, March 5, 1997; Lopez v. Westin Hotel, W.C. No. 4-168-893, July 5, 1996 Delants v. Federal Reserve Bank of Kansas City, W.C. No. 4-240-793, June 13, 1996. This conclusion is consistent with Blue Mesa Forest v. Lopez, 928 P.2d 831 (Colo.App. 1996), in which the court held that the provisions of § 8-42-107(8)(b) governed the determination of MMI where the claimant sustained an occupational disease to his upper extremities. Further, because the determination of MMI terminates the right to temporary disability benefits, the type of permanent medical impairment is irrelevant. Section 8-42-105(3)(a), C.R.S. (1996 Cum. Supp.).
It follows that insofar as Rule IV(N)(4)(a) was enacted to implement § 8-42-107(8)(b), Rule IV(N)(4)(a) also applies to scheduled injuries. Consequently, the ALJ erred insofar as she found to the contrary.
Section 8-43-304(1), C.R.S. (1996 Cum. Supp.), provides that an insurer who fails to comply with a rule of procedure is subject to penalties. See Sears v. Penrose Hospital, ___ P.2d ___ (Colo.App. No. 96CA0909, February 20, 1997). However, an insurer is not held to a strict liability standard. Rather, the insurer is not subject to penalties if its failure to comply with the rule was “objectively reasonable.” See § 8-43-304(1), C.R.S. (1996 Cum. Supp.); Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996); Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). Under this standard, the insurer is not subject to penalties if its actions resulting in the violation of a procedural rule were predicated on a “rational argument based in law or fact.” Diversified Veterans Corporate Center v. Hewuse, ___ P.2d ___ (Colo.App. No. 96CA0583, January 9, 1997).
Here, it is undisputed that the CCIA failed to comply with Rule IV(N)(4)(a). The ALJ found that the CCIA’s violation of Rule IV(N)(4)(a) was predicated on its prior experience and belief that Rule IV did not apply to scheduled injuries, as well as its assertion that the claimant sustained a scheduled injury. The ALJ also found that the CCIA’s adjuster was unaware of any case law or other authority which directs the application of Rule IV(N)(4) to extremity injuries. Because these findings are amply supported by the record, they must be upheld. Section 8-43-301(8), C.R.S. (1996 Cum. Supp.). Furthermore, based upon these findings, we cannot say that the CCIA’s actions were objectively unreasonable.
We are unaware of any published decision of the Court of Appeals or Supreme Court which attempts to resolve the relationship between Rule IV(N)(4) and § 8-42-107. Rather, the case law interpreting Rule IV(N)(4) is in an evolutionary phase. Consequently, the CCIA’s argument that Rule IV(N)(4)(a) does not apply to scheduled disabilities constitutes a rational argument based in law and fact. This is particularly true since, at the time in question, the IME procedures for determining MMI appeared in subsection (8) of § 8-42-107, and subsection (8)(a) referred to permanent impairment not set forth on the schedule. Furthermore, the fact that we ultimately rejected the CCIA’s argument concerning Rule IV(N)(4)(a) is not dispositive of whether its violation of Rule IV(N)(4)(a) was objectively reasonable. See Mission Denver, Co. v. Pierson, 674 P.2d 363 (Colo. 1984). Therefore, the ALJ did not err in refusing to impose penalties for the CCIA’s violation of Rule IV(N)(4)(a).
IT IS THEREFORE ORDERED that the ALJ’s order dated July 5, 1996, is 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, 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 this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. (1996 Cum. Supp.).
Copies of this decision were mailed April 4, 1997 to the following parties:
Dyanne L. Lacey, 30731 Gale Rd., Pueblo, CO 81006
Communications Solutions, Inc., 1511 Bahama Dr., Pueblo, CO 81008-2205
Colorado Compensation Insurance Authority, Attn: Brandee L. DeFalco-Galvin, Esq. (Interagency Mail)
Michael W. Seckar, Esq., 402 W. 12th St., Pueblo, CO 81003 (For the Claimant)
By: _______________________________