W.C. No. 4-217-926Industrial Claim Appeals Office.
June 4, 1999.
ORDER OF REMAND
The respondents seek review of a final order of Administrative Law Judge Stuber (ALJ) which awarded penalties of $100 per day based on the respondents’ denial of prior authorization for medical treatment. The respondents argue that the ALJ erred in finding that the insurer violated Rules of Procedure XVI (I) and (J), 7 Code Colo. Reg. 1101-3 at 77-80, concerning prior authorization for medical treatment. In any event, the respondents contend that failure to grant prior authorization for medical treatment is not subject to the general penalty provisions of § 8-43-304(1), C.R.S. 1998, but instead is subject to the specific penalty provisions of § 8-43-401(2)(a), C.R.S. 1998. We set the order aside and remand for entry of a new order.
The claimant sustained a compensable ankle injury in November 1993. By late 1997, the claimant was receiving treatment from Dr. Colliton, Dr. Lee, and Dr. Disorbio. In December 1997, Dr. Lee and Dr. Disorbio recommended that the claimant be referred to Dr. Bograd, a psychiatrist, for management of her psychiatric medications.
The ALJ found that on January 5, 1998, the claimant’s attorney wrote to the insurance adjuster questioning the adjuster’s “refusal” to authorize treatment by Dr. Bograd. The ALJ also found that by January 5, the adjuster had “received actual notice of the referral and request for authorization by phone contact from the staff at Dr. Bograd’s office.”
The ALJ determined that the insurance adjuster responded to the request for authorization of Dr. Bograd by “indicating that claimant needed to finish the psychiatric independent examination” by Dr. Gutterman. On March 31, 1998, the parties agreed that the claimant would receive the prescribed treatment from a mutually agreeable physician.
Under these circumstances, the ALJ concluded that the claimant proved that the respondents violated Rules of Procedure XVI (I) and (J) concerning the proper procedures for denying prior authorization for medical treatment. In so doing, the ALJ stated that nothing in Rule XVI precludes a request for prior authorization even if the treatment is not of the type requiring prior authorization under Rule of Procedure XVI (I) (1) (a)-(c), 7 Code Colo. Reg. 1101-3 at 77-78. The ALJ found that counsel’s letter of January 5 constituted a request for prior authorization, and the respondents failed to reply in accordance with provisions of Rule XVI (J). Further, the ALJ determined that the respondents failed to advance a reasonable explanation for their failure to comply with Rule XVI, and therefore, concluded that the respondents should be assessed a penalty of $100 per day, from January 8, 1998, through March 30, 1998, in accordance with Rule of Procedure XVI (I) (3), 7 Code Colo. Reg. 1101-3 at 79, and §8-43-304(1), C.R.S. 1998.
I.
On review, the respondents first contend the ALJ erred in assessing penalties under § 8-43-304(1). The respondents argue that because the “gravamen” of the alleged misconduct involves delay or stoppage of payment for medical treatment, the ALJ was obliged to apply the specific penalty provision found that §8-43-401(2)(a). We agree with the respondents.
In Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997), the court held that the specific penalty set forth in §8-43-401(2)(a) supersedes the general penalty provisions of §8-43-304(1) when an employer delays or stops payment of medical expenses. The court also held that § 8-43-401(2)(a) applies even if the delay or stoppage encompasses underlying actions or omissions such as failure to investigate. Further, in cases where § 8-43-401 (2)(a) applies, a penalty may not be assessed unless the ALJ determines that the respondents’ conduct was both “willful” and “wrongful.” Willful means that the action was the result of “deliberate intent,” and the term wrongful connotes “unlawful” or “unjust” acts.
Here, the “gravamen” of the claimant’s request for penalties is that the respondents improperly delayed payment for her reasonable and necessary medical treatment by improperly handling a request for prior authorization of treatment. Thus, the request for penalties is governed by § 8-43-401(2)(a), and the ALJ erred in applying the general penalty provisions of § 8-43-304(1). On remand, the ALJ shall consider the request for penalties under the appropriate statute and legal standard.
Our decision in Isom v. Wheat Ridge Painting, W.C. No. 4-154-741 (Dec. 24, 1997), is not authority to the contrary. In that case, we upheld an award of penalties under § 8-43-304(1) based on the respondents’ violation of Rule XVI. However, in Isom
we explicitly stated that the “respondents do not contest the ALJ’s determination that the penalty issue is governed by §8-43-304 (1).” Thus, Isom does not consider the issue presented by this case.
In reaching this result, we recognize that Rule XVI (I) (3) states that a violation of Rule XVI “may subject the payer to penalties under section 8-43-304.” However, as the court held i Sears v. Penrose Hospital, supra, § 8-43-304 has been superseded by § 8-43-401(2)(a) where the issue involves delay or stoppage of payment for medical treatment. An administrative rule may not be interpreted in a manner contrary to the authorizing statute. City of Englewood v. Industrial Claim Appeals Office, 954 P.2d 640
(Colo.App. 1998).
We have considered the claimant’s assertion that the respondents failed to raise the applicability of § 8-43-401(2). However, the claimant, as advocate for the imposition of the penalty, had the burden of proof to establish facts and circumstances justifying assessment of a penalty under § 8-43-304
(1). See Lori’s Family Dining, Inc., 907 P.2d 715 (Colo.App. 1995). Thus, when the ALJ initially determined that the claimant proved the claim for penalties under § 8-43-304 (1), the respondents were free to argue on appeal that the award was inconsistent with the law. This is not a case in which the respondents are attempting to raise an affirmative defense on appeal.
II.
The respondents also argue that the ALJ erred in determining that they violated Rules XVI (I) and (J). Because the alleged violation of the rules may be pertinent in determining whether the respondents’ conduct was “wrongful” under § 8-43-401(2)(a), we shall consider the issues raised by the respondents.
The respondents first contend that Rule XVI was enacted subsequent to the claimant’s injury, and therefore, cannot afford the basis for imposing penalties. However, Rule XVI is essentially procedural in nature, and therefore, was immediately applicable to pending cases. See Kinninger v. Industrial Claim Appeals Office, 759 P.2d 766 (Colo.App. 1988). Section 8-43-401(2)(a), the substantive authority for imposing penalties based on delay or stoppage of medical treatment, was in existence at the time of the claimant’s injury. Therefore, the ALJ may consider the respondents’ alleged violation of Rule XVI in determining whether the respondents’ conduct was “wrongful” within the meaning of §8-43-401(2)(a).
The respondents next contend that the January 5 letter from claimant’s counsel to the adjuster does not constitute a request for “prior authorization” because Rule XVI (I) (1) requires that the request be made by telephone or facsimile. We disagree.
Words and phrases in regulations should be given their plain and ordinary meanings. Gerrity Oil Gas Corp. v. Magness, 923 P.2d 261 (Colo.App. 1995). Rule XVI (I) (1) provides that prior authorization “shall not be unreasonably denied or delayed by the payer.” The rule goes on to provide that “practice standards indicate the majority of all requests for prior authorization can be accommodated by the payer within 48-72 hours of the initial telephone or facsimile request.” In our view, the rule merely establishes a general standard of reasonableness concerning the time of the insurer’s response to a request for prior authorization, and gives examples of “reasonableness” in cases of telephone and facsimile requests. The rule in no way purports to prohibit other types of requests, such as written or electronic requests, to which the overall standard of reasonableness would apply. Further, Rule XIV (J) (1) (a) allows the insurer five business days to respond to a request without differentiating between the forms of request.
The respondents next contend that the ALJ erred in finding that any request for prior authorization triggers the obligation to respond in accordance with Rule XVI (J). Rather, the respondents assert that the duty to respond is limited to the circumstances where a request for prior authorization is required by Rule XVI (I) (1) (a)-(c). We agree with the respondents that the ALJ’s interpretation of the rule is overly broad.
In Terrones v. St. Francis Hospital, W.C. No. 3-887-322
(April 15, 1997), we noted that Rule XVI (I) (1) (b) provides that prior authorization “shall be obtained” when the “prescribed service is identified within the medical fee schedule as requiring prior authorization for payment.” We interpreted this rule in light of Rule of Procedure XVI (D) (1), 7 Code Colo. Reg. 1101-3 at 72, which states that services falling within the fee schedule are subject to the fee schedule, while services falling outside the fee schedule are subject to the rules concerning prior authorization for payment. Finally, we noted that the fee schedule requires prior authorization for some types of services, but does not require it for all services. Thus, we held that the respondents were not subject to a penalty for “violating” Rule XVI (J) where the service for which the claimant requested prior authorization fell under the fee schedule, but the fee schedule did not require prior authorization.
It follows that the ALJ erred insofar as he held that all requests for prior authorization are subject to the dictates of Rule XVI. However, the claimant explicitly alleged that prior authorization was required by Rule XVI (I) (1) (a) because the requested psychiatric treatment exceeded the limitations established by the medical treatment guidelines. The ALJ did not address this issue, and did not make specific findings of fact necessary to resolution of the issue. Because some evidence exists which could support the claimant’s contention, the ALJ should consider the issue on remand.
We disagree with the respondents’ argument that only the provider who expects to render the service may request prior authorization. We have examined the rules and find no specific textual support for this assertion. Thus, the plain and ordinary meaning of the rules does not require the result for which the respondents argue.
Next, we reject the respondents’ assertion that the ALJ erred in permitting the claimant’s attorney to testify concerning mailing practices at the attorney’s office. First, the respondents made no objection to this testimony at the hearing. Consequently, the respondents may not now claim that admission of the testimony constitutes a basis for reversing the ALJ’s order. C.R.E. 103 (a) (1). Second, this conclusion appears to be consistent with C.R.P.C. 3.7 governing attorney conduct as a witness. Comment 2 to the rule states that “the opposing party has proper objection where the combination of roles [as attorney and witness] may prejudice the party’s rights in the litigation.” Here, because the respondents did not raise any objection to the testimony, we conclude that they waived objection to any potential conflict.
Finally, we reject the respondents’ assertion that the attorney’s testimony does not afford a basis for imposing the “presumption” of receipt which follows proper posting of a letter. The respondents’ assertion notwithstanding, it is not required that a witness actually post the letter in order to establish the presumption. All that is required is that the witness possess “direct, personal knowledge that the mailings in question were handled in the usual course of business.” United Bank of Denver v. Don, 527 P.2d 1184 (Colo.App. 1974) (not selected for publication); Billinger v. Apple One Temporary Employment Services, Inc., W.C. No. 4-115-764 (June 16, 1993).
Here, the attorney testified that she was the author of the January 5 letter, and that her “staff” was responsible for posting it the same day in accordance with established procedures. Although the attorney did not personally mail the January 5 letter, she testified that it was handled in accordance with the established procedures. Thus, there was a sufficient basis for imposing the presumption of receipt.
IT IS THEREFORE ORDERED that the ALJ’s order dated June 18, 1998, is set aside, and the matter is remanded for entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Bill Whitacre
Copies of this decision were mailed June 4, 1999 to the following parties:
Eloise Briscoe, P.O. Box 655, Morrison, CO 80465
Linda Siedow, The Denver Post, 1560 Broadway, Denver, CO 80202
Leona Zuffoletto, Liberty Mutual Insurance Company, P.O. Box 3539, Englewood, CO 80155-3539
Shelly P. Dodge, Esq., 1763 Franklin St., Denver, CO 80218 (For Claimant)
Jonathan S. Robbins, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)
Barbara Carter, Subsequent Injury Fund, P. O. Box 300009, Denver, CO 80203-0009
By: A. Pendroy