W.C. No. 4-481-711Industrial Claim Appeals Office.
November 26, 2001
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Coughlin (ALJ) on the issues of temporary disability benefits, and penalties. We affirm the order in part, reverse the order in part, set aside part of the order and remand.
In a previous order dated February 17, 2001, the ALJ found the claimant suffered a compensable injury to his left hand on November 7, 2000, while fighting with a co-worker. The February 17 order required the respondents to pay medical benefits of $650.35 for treatment provided by Metro Denver Anesthesia. Neither party appealed the February order.
As a result of the injury, the claimant was unemployed from November 7, 2001 to December 22, 2001, when he obtained part-time employment. The claimant requested temporary total disability benefits commencing November 7, 2000 and continuing until May 2001. The claimant also requested penalties for the respondents’ failure to comply with the February 17 order and the failure to carry workers’ compensation insurance.
The ALJ imposed penalties at the rate of $20 per day for the respondents’ failure to pay the bill to Metro Denver Anesthesia. However, the ALJ denied all other penalty claims.
Further, the ALJ found the claimant “quit” the employment on the day of the injury. Under these circumstances, the ALJ determined the claimant was “responsible” for the termination of the employment, and barred from receiving temporary disability benefits under § 8-42-105(4), C.R.S. 2001.
I.
On review the claimant first contends the ALJ erred in denying temporary disability benefits. The claimant contends the ALJ misapplied the law in finding the claimant was “responsible” for the termination of employment. We agree, and remand the matter for a new order on the issue of temporary disability benefits.
To establish an entitlement to temporary disability benefits, the claimant must prove that the industrial injury caused a disability, and that he left work as a result of the disability. Section 8-42-103(1)(b), C.R.S. 2001; Lymburn v. Symbios Logic, 952 P.2d 831 (Colo.App. 1997). In this context, the term “disability” refers to the claimant’s inability to perform his regular employment. McKinley v. Bronco Billy’s, 903 P.2d 1239
(Colo.App. 1995). If the claimant establishes his initial entitlement to temporary disability benefits, temporary disability benefits are due as long as there is a causal relationship between the wage loss and the industrial injury, and none of the circumstances described in §8-42-105(3)(a)-(d), C.R.S. 2001, or § 8-42-105(4) occurs. See PDM Molding, Inc. v. Stanberg, 898 P.2d 542 (Colo. 1995).
The termination of the employment out of which the injury arose may sever the causal connection between the industrial injury and the subsequent wage loss. In PDM Molding, Inc. v. Stanberg, supra, the Supreme Court held that where the claimant loses modified employment, an initial determination must be made as to whether the claimant was “at fault” for the separation from employment. Ibid at 547. If the claimant was “at fault” for the termination, the claimant is precluded from receiving further temporary disability benefits unless he proves that the injury contributed “to some degree” to the subsequent wage loss.
However, § 8-42-105(4), provides that “where it is determined that a temporarily disabled employee is responsible for termination of employment, the resulting wage loss shall not be attributable to the on-the-job injury.” In a series of cases we have held that in the context of § 8-42-105(4), the term “employment” is ambiguous because it could refer to any job the claimant possessed, including the one held at the time of the industrial injury itself. It could also refer to modified employment which the claimant obtains subsequent to a determination that the claimant has become a “temporarily disabled employee” as a result of the injury. See Patchek v. Colorado Department of Public Safety, W.C. No. 4-432-301 (September 27, 2001); McGaffey v. Assured Transportation Delivery, Inc., W.C. No. 4-434-706 (April 27, 2001); Martinez v. Colorado Springs Disposal, W.C. No. 4-437-497 (March 7, 2001). Our review of the legislative history indicates the General Assembly enacted § 8-42-105(4) [and identical language in §8-42-103(1)(g), C.R.S. 2001] to overturn PDM Molding, Inc. v. Stanberg supra, insofar as PDM permitted an injured claimant to recover temporary disability benefits despite being responsible for the loss of post-injury modified employment. See House Business, Affairs Labor Committee,
January 14, 1999, at 2:00 p.m.; Senate Committee on State, Veterans Military Affairs, February 2, 1999, 1:39 p.m. Therefore, the legislature adopted language which precludes the ALJ from finding that a claimant’s post-separation wage loss is “to some degree” the result of the industrial injury where the claimant is “responsible” for the termination of employment regardless of whether the industrial injury is to some degree the cause of the subsequent wage loss. We adhere to our holdings i Martinez, McGaffey and Patchek.
Here, the record supports the ALJ’s finding that the claimant “quit” the employment on the day of the injury. Therefore, the finding must be upheld on review. Section 8-43-301(8), C.R.S. 2001. However, the claimant did not “quit” modified employment. Therefore, § 8-42-105(4) is not applicable to this claim and the ALJ erred in denying temporary disability benefits based upon § 8-42-105(4).
Because the claimant’s entitlement to temporary disability benefits is not governed by § 8-42-105(4), the claimant’s rights must be determined under the PDM analysis. This is true because PDM remains good law to the extent it was not supplanted by the statute. Therefore, the ALJ’s order denying temporary disability benefits is must be set aside and the matter is remanded to the ALJ for the entry of a new order on the issue.
On remand the ALJ must determine whether the claimant sustained his initial burden to prove that the medical restrictions imposed following the industrial injury rendered him physically unable to perform the duties required of his regular employment. If the ALJ finds the claimant sustained his burden of proof the ALJ must determine when the claimant became temporarily disabled and the duration of the disability. In this regard, the claimant concedes he returned to part-time employment on December 22, 2000 and the wage loss became less than total. (See Tr. p. 17). Thus, any entitlement to temporary total disability necessarily terminated on December 22, 2000. See § 8-42-105(3)(b), and §8-42-106 C.R.S. 2001. Furthermore, the claimant admits he was released to return to his regular employment on January 11, 2001. (Tr. p. 25). Therefore, the claimant’s entitlement to all temporary disability benefits terminated not later than January 11, 2001 by operation of § 8-42- 105(3)(c), C.R.S. 2001.
The ALJ must also determine whether the claimant was “at fault” for the termination of the employment on November 7, 2000. If the ALJ finds the claimant was at fault, the ALJ must determine whether the claimant proved the subsequent wage loss was “to some degree” the result of the industrial injury. We note that evidence the employer would have accommodated the claimant’s medical restrictions is not dispositive. In fact, in PDM there was evidence the employer would have provided modified employment had the claimant not separated from the employment on the day of the injury. Rather, if the claimant is determined to be a temporarily disabled employee who was “at fault” for the loss of the employment, the burden shifts to the claimant to prove the subsequent wage loss is “to some degree” the result of the industrial injury. See Horton v. Industrial Claim Appeals Office, 942 P.2d 1209 (Colo.App. 1996) (temporary disability benefits only precluded where injury “plays no part” in the wage loss).
In view of our remand, we do not consider the claimant’s remaining arguments on this issue.
II.
Next, the claimant contend the ALJ erred in failing to impose penalties for the respondents’ failure to carry workers’ compensation insurance. We agree.
Section 8-44-401 (1), C.R.S. 2001 states that any employer subject to the Colorado Workers’ Compensation Act [Act] shall secure compensation for its employees in one of three methods. The employer must either secure compensation with self-insurance, private insurance or public insurance through the Colorado Compensation Insurance Authority. United States Fidelity and Guaranty, Inc. v. Kourlis, 868 P.2d 1158, 1161
(Colo.App. 1994).
Section 8-43-408(2), C.R.S. 2001 provides that:
“In any case where the employer is subject to the provisions of [the Act] and at the time of an injury has not complied with the insurance provisions of said articles, or has allowed the required insurance to terminate, or has not effected a renewal thereof, . . . .the amounts of compensation or benefits provided in said articles shall be increased fifty percent. (Emphasis added).
Interpreting a predecessor statute, the court in United States Fidelity and Guaranty, Inc. v. Kourlis, 868 P.2d at 1161, concluded that the employer’s liability for penalties for the failure to carry insurance is determined by whether the employer had “insurance in effect for the benefits due the injured employee.” In so doing the Kourlis court expressly relied on Anderson v. Dutch Maid Bakeries, 102 P.2d 740, 711 (Colo. 1940), The facts in Anderson involved the sale of a bakery. At the time of the sale the seller had workers’ compensation coverage for the bakery. The purchaser paid the seller the amount of the unearned premium on the policy but did not notify the insurer of the change of ownership and thus, did not effect an assignment of the policy. When an employee of the purchaser suffered a work related injury, the insurer denied liability. The court in Anderson held the employer’s “good faith” belief that it had insurance coverage did not obviate the imposition of penalties for the failure to carry insurance. Rather, the court concluded the only issue was “has the employer insurance?” Because the purchaser did not make sure it had actual coverage for its injured employee, the court held that penalties were proper.
Here, it is undisputed the employer made a premium payment on October 25, 2000, to Commercial Compensation Insurance Company (Commercial) which, the ALJ found to be a subsidiary of Superior National Commercial Corporation (Superior) and, that Commercial deposited the premium payment. Under these circumstances, the ALJ determined the employer had a good faith belief that it had workers’ compensation insurance coverage.
However, the ALJ also found that on September 26, 2000, an order was entered by the Superior Court of the State of California which determined that Commercial and Superior were insolvent. The September order appointed a liquidator to cancel all insurance policies and wind up the business of the insurers. It follows that regardless of whether the liquidator properly notified the employer that the workers’ compensation policy was being canceled due to the insurer’s insolvency, or the employer had a “good faith” belief that it complied with § 8-44-401, there was in fact, no insurance coverage to pay the workers’ compensation benefits due on account of the November 7 injury.
Moreover, under § 8-44-408(2) penalties are mandatory where there is no insurance coverage. Melnick v. Industrial Commission, 656 P.2d 1318 (Colo.App. 1982). Therefore, the ALJ erred in denying penalties under § 8-44-408(2) and we reverse that portion of the ALJ’s order.
In reaching our conclusions we are mindful of the ALJ’s finding that the Colorado Insurance Guaranty Association (CIGA) might accept the claim in the future and pay the workers’ compensation benefits due the claimant. See § 10-4-501 C.R.S. 2001 (CIGA exists to pay the “covered claims” of insolvent insurers). However, there is no finding or assertion that CIGA satisfies the employer’s duty to secure compensation through one of the three methods listed in § 8-44-401(1). Therefore, we do not consider that issue.
III.
The claimant’s remaining arguments concern the ALJ’s order imposing penalties for the respondents’ failure to pay medical benefits. The claimant contends the respondents’ failure to comply with the February 17 order warranted penalties at a rate greater than $20 per day under §8-43-304(1), C.R.S. 2001, and additional penalties under § 8-43-401(2), C.R.S. 2001. We disagree.
Section 8-43-304(1) allows ALJs to impose penalties up to $500 per day for each day an employer fails, neglects, or refuses to obey any lawful order. 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 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. Further, 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 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 found the respondents failure to comply with the February 17 order to pay the $650.35 bill for treatment from Metro Denver Anesthesia was objectively unreasonable. However, as we read the ALJ’s order she determined the violation was mitigated by the employer’s good faith belief that the respondent-insurer should pay the benefits and, the employer efforts to obtain payment from an insurance guarantor. Under these circumstances, and in view of the relatively small amount of the medical bill ordered to be paid, we cannot say the imposition of penalties at the rate of $20 per day exceeds the bounds of reason. Therefore, we may not disturb the ALJ’s determination of the rate of penalties to be paid under § 8-43-304(1) for the respondents’ failure to comply with the February order.
B.
Section 8-43-401(2)(a) provides that:
“If any insurer or self-insured employer willfully
delays payment of medical benefits for more than thirty days or willfully stops payments such insurer or self-insured employer shall pay a penalty to the division of eight percent of the amount of wrongfully withheld benefits.” (Emphasis added.)
In the context of workers’ compensation, the term “willful” has been defined to mean acting “with deliberate intent.” Miller v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 00CA1739, May 24, 2001). The statute also limits the imposition of penalties to “wrongfully” withheld medical benefits. As our courts have previously concluded, the term “wrongfully” means “unlawful” or “unjust.” Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997); rev’d on other grounds Holliday v. Bestop Inc. 23 P.3d 700 (Colo. 2001). Accordingly, §8-43-401(2)(a) does not support the imposition of penalties unless the failure timely to pay medical benefits is deliberate and unjust.
Applied here, the ALJ’s findings reflect her implicit determination that the employer’s failure to pay the $650.35 bill from Metro Denver Anesthesia was not “willful.” Because the ALJ’s finding is a plausible inference from the record it is binding on review. Further, the ALJ’s findings support her conclusion the claimant failed to sustain his burden of proof for the imposition of penalties under § 8-43-401(2).
C.
The February 17 order also determined the claimant is entitled to “reasonable and necessary medical benefits” to cure and relieve the effects of the industrial injury. Accordingly, the claimant contends that the employer’s failure to pay any medical benefits also warranted the imposition of penalties. Again we disagree.
Although the February 17 order directed the respondents to pay for all reasonably necessary medical treatment to cure or relieve the effects of the industrial injury, the ALJ only determined the reasonableness of the November 7, 2000 treatment provided by the Metro Denver Anesthesia. The respondents remained free to contest the reasonableness and necessity of specific future treatment. Cf. Snyder v. Industrial Claim Appeals Office, 942 P.2d 1337 (Colo.App. 1997). Under these circumstances, the employer was required voluntarily to pay all other medical expenses incurred for the industrial injury.
IV.
For its part, the employer contends the claimant’s petition to review is frivolous and therefore, the employer requests costs and attorney fees as provided by § 8-43-301(14), C.R.S. 2001.
We do not view the claimant’s petition to review as frivolous. Consequently, we deny the employer’s request for costs and attorney fees.
IT IS THEREFORE ORDERED that the ALJ’s order dated July 24, 2001, is reversed insofar as the ALJ denied penalties under § 8-44-408(2).
IT IS FURTHER ORDERED that the ALJ’s order is set aside insofar as the ALJ denied temporary disability benefits and the matter is remanded to the ALJ for a new order on the issue which is consistent with the views expressed herein. Except as specifically reversed or set aside the ALJ’s order is affirmed.
IT IS FURTHER ORDERED that the employer’s request for costs and attorney fees is denied.
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. 2001. 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 November 26, 2001 to the following parties:
Bobby L. Bateman, 10692 Loren Ln., Northglenn, CO 80233
Avanti Marble Granite, 1450 Grove, Denver, CO 80204
Superior National — Commercial Corp., Theodore P. Coates, Esq., 6200 S. Syracuse Way, #430, Englewood, CO 80111
Colorado Insurance Guaranty Assoc., 1720 S. Bellaire St., #408, Denver, CO 80222
Jack Kintzele, Esq., 1317 Delaware St., Denver, CO 80204 (For Claimant)
Theodore P. Coates, Esq., 6200 S. Syracuse Way, #430, Englewood, CO 80111 (For Respondents)
BY: A. Pendroy