W.C. No. 4-383-624Industrial Claim Appeals Office.
March 26, 2001
FINAL ORDER
The claimant’s estate seeks review of an order of Administrative Law Judge Schulman (ALJ) insofar as the order denied penalties. The claimant contends the respondents should be penalized under § 8-43-304(1), C.R.S. 2000, based on their refusal to pre-authorize medical treatment. The claimant also alleges the respondents should be penalized for violating § 8-43-503(3), C.R.S. 2000, because they attempted to “dictate” the claimant’s medical treatment. We affirm.
The claimant sustained a compensable back injury in December 1997. An ALJ issued a summary order requiring the respondents to provide reasonable and necessary medical treatment “as stipulated by the parties.” In May 1999, an authorized surgeon recommended the claimant undergo a decompressive laminectomy at L5 and L4. Prior to surgery a blood test revealed a low platelet count, and the claimant was referred to a hematologist. The hematologist attributed the claimant’s low platelet count to “immune system dysregulation and chronic hepatitis C,” and recommended the claimant undergo WhinRho therapy prior to surgery. This therapy was recommended to increase the claimant’s platelet count and avoid uncontrolled bleeding during surgery. However, on August 20, 1999, the respondents refused to authorize WhinRho therapy because they considered it unrelated to the industrial injury, and because they considered the proposed surgery to be “elective” in nature.
Following a hearing, the ALJ credited the claimant’s medical evidence that WhinRho therapy is a reasonable and necessary precursor to surgery for the industrial injury. Further, the ALJ found the evidence did not establish that WhinRho therapy was unreasonably expensive, or that a blood transfusion was a reasonable and less expensive alternative. The ALJ also rejected the respondents’ argument that the claimant’s various non-industrial medical problems, including hepatitis and chronic liver disease, rendered him an unfit candidate for surgery. Thus, the ALJ ordered the respondents to pay for the WhinRho therapy and back surgery.
However, the ALJ denied the claimant’s request for the imposition of penalties under § 8-43-304(1), C.R.S. 2000. First, the ALJ determined there was no violation of the summary order since it was not sufficiently definite concerning the respondents’ duties. The ALJ also rejected the claimant’s argument that penalties should be imposed under § 8-43-304(1) based on the respondents’ violation of Rule of Procedure XVI (J), 7 Code Colo. Reg. 1101-3, pertaining to the denial of prior authorization for medical treatment. The ALJ ruled the gravamen of the claimant’s request for penalties was the delay or stoppage of payment for medical treatment. Therefore, the ALJ concluded any claim for penalties should have been brought under § 8-43-401(2)(a), C.R.S. 2000, but was not. Finally, ALJ rejected the claim for penalties based on the respondents’ alleged violation of § 8-43-503(3). The ALJ found that, although the respondents erroneously refused to authorize reasonable and necessary care, their conduct did not “dictate” the type or duration of treatment or the degree of physical impairment.
I.
On review, the claimant first contends the ALJ erred in denying the claim for penalties under § 8-43-304(1), based on the respondents’ alleged violation of Rule XVI (J). The claimant argues a distinction must be made between cases involving the mere delay or stoppage of payment for medical treatment, and cases involving violation of a Rule of Procedure pertaining to the payment of medical benefits. We disagree.
Section 8-43-304(1) authorizes the imposition of penalties against an insurer “who violates any provision of articles 40 to 47 of this title, or does any act prohibited thereby, or fails or refuses to perform any duty lawfully enjoined within the time prescribed by director or panel, for which no penalty has been specifically provided.” Section 8-43-401(2)(a) imposes a specific penalty if any insurer “willfully delays payment of medical benefits for more than thirty days or willfully stops payments.” In Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997), the court held that where the “gravamen of the disputed conduct” involves the delay or stoppage of payment for medical benefits, penalties must be assessed under the specific provisions of §8-43-401(2)(a), not the general provisions of § 8-43-304(1). The court further determined that § 8-43-401(2)(a) also applies to underlying acts or omissions because such conduct is “necessarily encompassed in the broader question whether the employer willfully delayed or stopped payment.” Id. at 1347. More recently, i Holliday v. Industrial Claim Appeals Office, 997 P.2d 1212
(Colo.App. 1999), cert. granted May 15, 2000, the court held that a failure to pre-authorize treatment “was related to and encompassed within the failure to pay medical benefits.” The court stated that it could “perceive no difference, for practical purposes, between a failure to authorize and a failure to pay.” Id. at 1214.
We have previously held that the improper denial of a request for pre-authorization in violation of Rule XVI is subject to penalties under § 8-43-401(2)(a), not § 8-43-304 (1). Briscoe v. The Denver Post, W.C. No. 4-217-926 (June 4, 1999), aff’d., Briscoe v. Industrial Claim Appeals Office, (Colo.App. No. 00CA0414, August 24, 2000) (not selected for publication). None of the claimant’s arguments persuade us to depart from the published decisions of the Court of Appeals, or our holding i Briscoe. Consequently, we conclude the ALJ correctly denied the claim for penalties under § 8-43-304(1) based on the claimant’s argument that the respondents violated Rule XVI by improperly denying pre-authorization for medical treatment.
We recognize that Rule of Procedure XVI (N) (1) (a), 7 Code Colo. Reg. 1101-3, provides that where a party violates Rule XVI the director may impose penalties under § 8-43-304. However, subsection (d) of the same rule provides the director may “impose penalties otherwise authorized by the act.” Thus, we do not read the rule as an attempt to impose a liability for penalties not contemplated by the authorizing statute. If the director had attempted to do so, the rule would be invalid. City of Englewood v. Industrial Claim Appeals Office, 954 P.2d 640 (Colo.App. 1998).
II.
The claimant next contends the ALJ erred in failing to penalize the respondents for violating § 8-43-503(3). The claimant argues that by refusing to authorize the medical treatment proposed by the claimant’s physicians, the respondents “dictated” the type and duration of treatment. We find no error.
Section 8-43-503(3) provides that employers and insurers “shall not dictate to any physician the type or duration of treatment or degree of physical impairment.” We assume, arguendo, that violation of the statute is punishable under § 8-43-304(1), not § 8-43-401(2)(a).
Nevertheless, imposition of penalties under § 8-43-304(1) requires a finding that the respondents violated the Act. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). Here, the ALJ determined the respondents resisted payment for the proposed treatment on grounds that the need for treatment was not caused by the injury, that the claimant was no longer a candidate for surgery in view of his preexisting illnesses, and that WhinRho therapy was unreasonably expensive.
In our view, the ALJ’s conclusion is supported by the record. Respondents are always entitled to challenge the reasonableness and necessity for proposed medical treatment. Further, the burden of proof is on the claimant to establish entitlement to medical benefits. Snyder v. Industrial Claim Appeals Office, 942 P.2d 1337
(Colo.App. 1997). Respondents are not subject to penalties during the time they engage in good faith litigation concerning their liability for benefits. BCW Enterprises v. Industrial Claim Appeals Office, 964 P.2d 533 (Colo.App. 1997); Industrial Commission v. Continental Investment Co., 85 Colo. 475, 277 P. 303
(1929).
Here, the ALJ implicitly determined the record presented questions of fact concerning whether or not the proposed surgery was reasonable, whether the platelet therapy was unreasonably expensive, and the cause of the need for various tests and procedures. We understand the ALJ to have found that, although the evidence favored the claimant and he carried his burden of proof, the respondents did not engage in bad faith litigation and thereby attempt to “dictate” the claimant’s course of treatment. Rather, the respondents exercised their statutory right to contest liability concerning issues on which the claimant had the burden of proof. Indeed, at one point in the hearing, the surgeon testified he did not know if the claimant was a “reasonable surgical candidate” in view of preexisting medical problems. (Tr. p. 62).
In light of these determinations, we need not reach the respondents’ assertion that the claimant’s estate lacks standing to assert the claim for penalties.
IT IS THEREFORE ORDERED that the ALJ’s order dated April 5, 2000, 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, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2000. 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 March 26, 2001 to the following parties:
Mary P. Brodeur, 8330 Country Circle, Elizabeth, CO 80107
Interstate Distributor Company, P. O. Box 45999, Tacoma, WA 98445-0999
American Home Insurance, Tina Gustafson, AIG Claim Services, P. O. Box 32130, Phoenix, AZ 85064
Chris L. Ingold, Esq., 501 S. Cherry St., #500, Denver, CO 80246 (For Claimant)
Kathleen M. Fairbanks, Esq., 999 18th St., #1600, Denver, CO 80202 (For Respondents)
BY: A. Pendroy