W.C. No. 4-261-472Industrial Claim Appeals Office.
September 24, 1996


The claimant and the respondents separately petition for review of an order of Administrative Law Judge Hopf (ALJ) dated January 29, 1996. The respondents contest the ALJ’s order insofar as it requires them to request a Division-sponsored independent medical examination (IME) under the Rules of Procedure, Part IV(N)(4)(d), 7 Code Colo. Reg., 1101-3 at 7. The claimant contests the ALJ’s order insofar as it denied his motion for penalties in connection with the respondents’ refusal to request a Division IME. We affirm the ALJ’s order insofar as she denied the penalty claim, and dismiss the respondents’ petition for lack of a final order.

The essential facts are undisputed. The claimant suffered a compensable injury in 1995, which was treated by Dr. Schaut. On June 21, 1995, Dr. Schaut reported that the claimant reached maximum medical improvement (MMI), and had “no impairment from this injury.” Because Dr. Schaut is not a Level II accredited physician, the claimant requested that the respondents provide a Division IME in accordance with Rule IV(N)(4)(d). Insofar as pertinent, Rule IV(N)(4)(d) states that:

“If none of the treating physicians has level II Accreditation, or, if no rating from a level II accredited physician is received by the carrier within twenty (20) days from the receipt of the finding of MMI from the treating physician that has provided the primary care, the carrier shall have twenty (20) days to request a Division IME in order to ascertain claimant’s medical impairment.”

The respondents refused to provide a Division IME based upon their assertion that Rule IV(N)(4)(d) does not apply to this claim. Specifically, the respondents took the position that Rule IV(N)(4)(d) requires a Division IME only if the primary treating physician determines that the claimant has permanent impairment. Conversely, the respondents asserted that the rule does not apply where, as here, the treating physician opines that the claimant has not sustained any impairment.

The ALJ determined that under § 8-42-107(8)(c), C.R.S. (1995) [significantly amended at 1996 Colo. Sess. Laws, ch. 112 at 269-271] all medical impairment ratings must be performed by a Level II accredited physician. The ALJ further determined that Dr. Schaut’s finding of “no impairment” is the equivalent of a medical impairment rating of zero percent of the whole person. (See Summary Order, #7, January 6, 1996); Conclusions of Law, paragraph 3, January 29, 1996. Because Dr. Schaut is not a Level II accredited physician, the ALJ determined that Rule IV(N)(4)(d) required the respondents to request a Division IME to ascertain the claimant’s medical impairment rating. Therefore, the ALJ concluded that Rule IV(N)(4)(d) is applicable to the facts of this claim, and ordered the respondents to request a Division IME under the provisions of Rule IV(N)(4)(d).

The ALJ also determined that the respondents violated Rule IV(N)(4)(d) by failing to request a Division IME. However, the ALJ determined that the respondents had an “objective basis” for their actions. Consequently, the ALJ denied the claimant’s motion for the imposition of penalties under § 8-43-304(1), C.R.S. (1996 Cum. Supp.).

Under § 8-43-301(2), C.R.S. (1996 Cum. Supp.), a party may file a petition for review of an order “which requires any party to pay a penalty or benefits or denies a claimant a benefit or penalty.” However, orders which do not require the payment of benefits or penalties, or deny the claimant benefits or penalties are interlocutory and not subject to review. United States Fidelity and Guaranty, Inc. v. Kourlis, 868 P.2d 1158
(Colo.App. 1994); Natkin Co. v. Eubanks, 775 P.2d 88 (Colo.App. 1989). Similarly, orders concerning procedural issues, including discovery matters, do not satisfy the statutory definition of an appealable order. See American Express v. Industrial Commission, 712 P.2d 1132 (Colo.App. 1985); Jones v. Chicken-N-Pasta, W.C. No. 4-197-841, February 3, 1995 (order denying motion for protective order is not subject to review); Figal v. City of Pueblo, W.C. No. 3-690-844, September 12, 1994 (order declining to hold hearing on a motion for protective order) (Court of Appeals dismissed appeal in 94CA1596, because neither ICAP order nor underlying order was final).

In a series of cases, we have previously concluded that an order requiring a party to pay for an IME is not an order granting or denying a “benefit” or “penalty” within the meaning of § 8-43-301(2). Fernandez v. City and County of Denver, W.C. No. 4-122-784; Martinez v. CIGNA Insurance, W.C. No. 4-153-571, April 21, 1994. Rather, we concluded that an IME serves an evidentiary function.

Accordingly, that portion of the ALJ’s order which requires the respondents to request a Division IME is not a final order. Parra v. Sonnenalp Properties, Inc., W.C. No. 3-108-875, May 17, 1994 (order denying claimant’s motion that the insurer pay the costs of an IME was not appealable) (petition for writ subsequently dismissed by the Court of Appeals on July 6, 1994, for lack of a final order by the ICAP and the ALJ). Therefore, we currently lack jurisdiction to review this portion of the ALJ’s order, and must dismiss the respondents’ petition to review without prejudice. See Oxford Chemicals Inc., v. Richardson, 782 P.2d 843
(Colo.App. 1986) (orders may be partially reviewable and partially interlocutory).

As a result of our disposition, it is premature to determine whether the ALJ properly interpreted § 8-42-107(8)(c) as requiring the application of Rule IV(N)(4)(d) to the facts of this claim. Therefore, we do not consider the respondents’ arguments on this issue.

The claimant contends that § 8-43-304(1) compels the imposition of penalties where the ALJ finds that the insurer has violated a procedural rule. Therefore, the claimant argues that the ALJ erred in failing to assess penalties against the respondent-insurer. We disagree.

Contrary to the claimant’s contention, insurers are not held to a strict liability standard under § 8-43-304(1). Pueblo School District No. 70 v. Toth, ___ P.2d ___ (Colo.App. No. 95CA0189, January 25, 1996); Colorado Compensation Insurance Authority, Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995)(Sallee). In both Sallee and Toth, the court concluded that the imposition of penalties under § 8-43-304(1) is governed by a “negligence” standard, and that “negligence, as opposed to recklessness and other standards of misconduct, connotes an objective standard measured by the reasonableness of the insurer’s action.” Therefore, in Sallee and Toth the court held that an insurer is not subject to penalties under § 8-43-304(1) if the insurer’s actions were objectively reasonable. Further, both courts indicated that the inquiry is essentially a factual matter for resolution by the ALJ.

We have previously concluded that the “reasonableness” of an insurer’s actions depends on whether the action was predicated on a “rational argument based on law or evidence.” See Tozer v. Scott Wetzel Services, Inc., 883 P.2d 496 (Colo.App. 1994); Halbritter v. Colorado Professional Counseling Services, P.C., W.C. No. 4-160-869, August 3, 1995, aff’d. Colorado Compensation Insurance Authority v. Halbritter, (Colo.App. No. 95CA1356, June 6, 1996) (not selected for publication); O’Grady v. Denver Public School District, W.C. No. 4-151-533, November 18, 1994. Consequently, we have held that an insurer is not subject to penalties for a violation of an order, rule or duty lawfully enjoined if the record establishes that the insurer’s actions were predicated on a rational argument, based in law or evidence, that it was excused from performance.

Here, the ALJ found that the respondent-insurer’s actions in declining the claimant’s request for a Division IME, were based upon a prior order of the Director of the Division of Workers’ Compensation (Director), as well as a newsletter article published by the Director. (Finding of Fact 2). These items support the respondents’ argument that Rule IV(N)(4)(d) was not intended to apply to these circumstances. Accordingly, we do not reach the issue of whether there was an actual violation of Rule IV(N)(4)(d), because even if there was a violation, the record supports the ALJ’s finding that the respondent-insurer’s actions were plausibly based in law and fact, and were objectively reasonable. (Tr. pp. 17, 19; Respondents’ Exhibit 1). This determination supports the ALJ’s order denying the motion for penalties, and the order must be upheld on review. Section 8-43-301(8), C.R.S. (1996 Cum. Supp.).

IT IS THEREFORE ORDERED that the ALJ’s order dated January 29, 1996, denying the claimant’s motion for penalties, is affirmed.

IT IS FURTHER ORDERED that the respondents’ petition for review of the ALJ’s January 20 order is dismissed without prejudice.


____________________________________ David Cain
____________________________________ Kathy E. Dean


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 September 24, 1996 to the following parties:

Blake Adams, 5531 Eagle St., Denver, CO 80239

Sunburst Realty Financial, 9215 W. 140th Terrace, Overland, KS 66221

Colorado Compensation Insurance Authority, Attn: Laurie A. Schoder, Esq., (Interagency Mail)

Jordan S. Levine, Esq., 3515 S. Tamarac Dr., #200, Denver, CO 80237 (For the Claimant)

BY: _______________________