W.C. No. 4-451-683Industrial Claim Appeals Office.
September 21, 2001
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Schulman (ALJ) which imposed penalties for the respondent-insurer’s wrongful termination of temporary disability benefits. We affirm.
On January 13, 2000, the claimant suffered a work-related injury. The claimant’s average weekly wage was $862.97. Shortly after the injury the claimant returned to part-time, modified employment at a reduced wage. The respondent-insurer hired Cambridge Integrated Services Groups Inc. (Cambridge) to adjust the claim. Cambridge filed a General Admission of Liability dated February 22, 2000, for payment of temporary partial disability benefits commencing January 26, 2000 at the rate of $559.23 per week. An initial payment was made on February 21, 2000. In March 2000, the claim was transferred to Cambridge adjuster Nicholas Strauser (Strauser) in Las Vegas.
The ALJ’s order contains extensive findings of fact. In so far as pertinent, the ALJ found Strauser applied the wrong formula to calculate the claimant’s temporary partial disability rate, and that the error was not corrected until the claimant retained an attorney. On April 21, 2000, the claimant underwent authorized surgery for the industrial injury. As a result the claimant was off work from April 21, 2000 to May 18, 2000. The claimant resumed modified employment at a lower wage on May 19, 2000, which he continued to perform until August 2000.
Although Strauser verbally authorized the surgery, Strauser did not pay temporary partial disability benefits for the period April 16 to April 20, 2000, until June 13, 2000 and he did not pay temporary total
disability benefits for the period April 21, to May 18 until October 19, 2000. Strauser then delayed the payment to temporary partial disability benefits due after May 19.
Stauser testified he did not pay benefits because he did not have adequate information to confirm the April 21 surgery and the resulting disability until June 13. However, Strauser’s testimony was directly controverted by a memo he authored on May 5, 2000, and a conversation with the claimant on that date. Therefore, the ALJ determined that Strauser’s explanation for the delayed payment was “patently unsustainable and transparently pretextual.” (Finding of Fact 7).
The claimant again spoke to Strauser on May 18 at which time he requested temporary disability benefits. The ALJ found Strauser knowingly and falsely told the claimant he would not get benefits for the past 3 weeks because the claimant failed to return to work on the Monday following the surgery. Based upon Strauser’s statement that he would not be paid until he returned to work, Strauser returned to modified work on May 19.
Thereafter, Strauser faxed a “Restricted Duty Job Offer” to the treating physician for his signature. The offer was approved by signature of a nurse practitioner. Strauser admitted he knew the law required the treating physician to sign the restricted duty offer. Under these circumstances, the ALJ determined Strauser could not reasonably assume the Restricted Duty form included a statement from the authorized treating physician as required by the Rules of Procedure IX(C)(1)(d), 7 Code Colo. Reg. 1101-3, prior to the unilateral termination of temporary disability benefits.
The ALJ also found the written offer was a poor copy of a reduced pre-printed form which was difficult to decipher. The form notified the claiming he would forfeit his right to workers’ compensation benefits if he declined the offer of employment. On May 30 the claimant and his supervisor signed the offer. Both intended to indicate by their signatures that the claimant accepted the offer of modified employment consistent with the duties the claimant was already performing. However, both mistakenly signed in the space designated to “Decline” the offer.
However, the claimant’s supervisor notified Strauser that the claimant had accepted the offer. Further, on July 17, 2000 the employer faxed Stauser a record of the claimant’s wages showing the wage loss on modified employment, with a note which stated the claimant missed three days of work “due to family/personal reasons.” The ALJ reasoned that by virtue of the employer’s actions Strauser knew the claimant was performing modified employment because, had the claimant declined the offer of modified employment, the employer would not have been sending wage and attendance records. However, Strauser did not pay temporary partial disability benefits in conjunction with the claimant’s wage loss. Rather, the ALJ found Strauser decided no later than July 19, 2000, unilaterally to terminate temporary disability benefits on grounds the claimant failed to comply with the offer of modified employment by taking time off for personal reasons. (Finding of Fact 36).
Crediting the testimony of the claimant’s supervisor that the claimant’s personal absences were approved, and that the supervisor reported this to Strauser, the ALJ found Strauser’s unilateral termination of benefits was inexcusable. The ALJ also found Strauser “knowingly and purposely embellished the extent of Claimant’s personal lost time from work as a smokescreen to obscure Strauser’s failure to comply with his obligations to make timely benefit payments.” (Finding of Fact 32). Further, the ALJ determined that even if the evidence supported the adjuster’s belief that the claimant was not compliant with the modified duty offer, that did not support the unilateral termination of temporary disability benefits under Rule IX(C)(1). Because the ALJ found Strauser decided to terminate temporary disability benefits prior to the date he received the claimant’s signature on the Restricted Job Offer, the ALJ also rejected Strauser’s assertion that he terminated benefits because the claimant declined a written offer of modified employment.
Under these circumstances, the ALJ determined the adjuster’s violation of Rule IX(1)(C) was objectively unreasonable. Further, ALJ determined Strauser failed timely to file admissions of liability when benefits were changed from temporary partial to temporary total disability. The ALJ imposed six separate penalties. The ALJ imposed a penalty at the rate of $350 per day from July 19, 2000 through March 15, 2001 for the improper termination of temporary disability benefits; three separate penalties at the rate of $250 per day for late payments of temporary disability benefits; a penalty of $250 per day from July 19, 2000 to October 10, 2000 for the failure timely to file an admission of liability reflecting the termination of temporary partial disability benefits; and a penalty of $50 per day from July 13, 2000 to October 24, 2000 for the failure timely to file an admission of liability for temporary total disability benefits. The order also required the respondents to pay temporary partial disability benefits from September 18, 2000 to August 22, 2000.
I.
On review, the respondents dispute only 2 of the 6 penalties but also contend that the ALJ erred by imposing multiple penalties for the same periods of time. We perceive no basis to disturb the ALJ’s order.
Initially, we note that the respondents’ Designation of Record includes the “entire Division of Workers’ Compensation file.” The record transmitted to us on appeal apparently does not include the entire Division of Workers’ Compensation file. However, our review is limited to the evidentiary record before the ALJ, and there is no evidence in the record which tends to suggest the respondents requested the ALJ to consider the entire Division of Workers’ Compensation file as part of the evidentiary record for the hearing. See City of Boulder v. Dinsmore, 902 P.2d 925 (Colo.App. 1995); Rules of Procedure, Part VIII(A)(7), 7 Code Colo. Reg. 1101-3 at 22. Consequently, we have not obtained or considered the Division of Workers’ Compensation file, but restricted our review to the record made at the hearing.
Section 8-43-304(1), C.R.S. 2001 authorizes the imposition of penalties up to $500 per day where the insurer unreasonably “fails or refuses to perform any duty lawfully enjoined within the time prescribed by the director.” The court has held that penalties may be imposed under § 8-43-304(1) for the failure to comply with a procedural rule Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312
(Colo.App. 1997).
To assess penalties under § 8-43-304(1), it must be established that the violator’s conduct was unreasonable under an “objective standard.” Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). This determination depends on whether the party advances a rational argument based in law or fact for its actions. 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).
The question of whether the respondents advanced a rational argument is generally one of fact for the ALJ. See Pueblo School District No. 70 v. Toth, supra. We must uphold the ALJ’s factual determinations if supported by substantial evidence and plausible inferences drawn from the record. Section 8-43-301(8), C.R.S. 2001; Arenas v. Industrial Claim Appeals Office, 8 P.3d 558 (Colo.App. 2000).
The respondents contest several of the ALJ’s factual determinations concerning Strauser’s actions and the reasonableness of those actions. The respondents contend those findings are contrary to the record. In particular, the respondents contend Strauser reasonably refused to pay temporary total disability benefits after the April surgery because he did not have adequate information to confirm the claimant’s entitlement to such benefits. They also contend the record does not support the ALJ’s findings that Strauser believed he was excused from paying benefits during this period, and that Strauser unreasonably believed the claimant declined a written job within the meaning of Rule IX(C)(1)(d).
The respondents did not designate the March 15, 2001 hearing transcript as part of the record on review. See § 8-43-301(2), C.R.S. 2001. Under these circumstances, we are required to assume the ALJ’s findings of fact are supported by substantial evidence in the record. Nova v. Industrial Claim Appeals Office, 754 P.2d 800
(Colo.App. 1988).
Moreover, the ALJ’s findings are supported by substantial evidence in Strauser’s deposition testimony, the partial transcript containing the testimony of the claimant’s supervisor and documentary evidence in the record. Therefore, we reject the respondents’ challenges to the ALJ’s factual determinations.
The respondents also contend the ALJ erred as a matter of law in determining Strauser wrongfully terminated temporary partial disability benefits because § 8-42-106 and Rule IX(C)(1)(d) allow an insurer to terminate temporary disability benefits based upon a written offer of modified employment. We disagree.
The statutory language currently codified at § 8-42-106(2)(b)(I), C.R.S. 2001, terminates temporary disability benefits where the claimant refuses a written offer of modified employment. However, these statutes apply to the termination of temporary disability benefits following an evidentiary hearing. The issue on review is whether the respondents were subject to penalties for a unilateral termination of benefits. Consequently, the issue is governed by Rule IX.
Under Rule IX(C)(1)(d) an insurance carrier may terminate temporary disability benefits without a hearing by filing an admission of liability form with:
“a certified letter to the claimant or copy of a written offer delivered to the claimant with a signed certificate of service, containing both an offer of modified employment, setting forth duties, wage and hours and a statement from an authorized treating physician that the employment offered is within the claimant’s physical restrictions.”
The ALJ explicitly rejected the respondents’ contention that they terminated temporary disability benefits based upon a written offer of modified employment. Instead, the ALJ determined Strauser terminated temporary disability benefits because he believed the claimant was not complying with the terms of the modified employment which he had already accepted. For the reasons stated above, the ALJ’s determination is binding on review. See Nova v. Industrial Claim Appeals Office, supra.
Moreover, Rule IX(C) does not permit the unilateral termination of temporary partial disability benefits where the claimant loses time from modified work for personal reasons. Rather, the ALJ correctly noted that the claimant’s absences were only relevant in calculating the amount of temporary partial disability benefits due. Consequently, the ALJ did not err in determining the respondents’ failed to prove grounds to support the unilateral termination of temporary disability benefits. Cf. Miller v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 00CA1739, May 24, 2001) (in determining whether an insurer’s conduct is “wrongful” for the purpose of imposing a penalty under §8-43-401(2)(a), the reasonableness of the insurer’s actions must be “evaluated as of the time of the conduct” so as to prevent imposing a strict liability standard dependent on the ultimate outcome of the case).
The respondents’ arguments notwithstanding, Laurel Manor Care Center v. Industrial Claim Appeals Office, 964 P.2d 589 (Colo.App. 1998) is not authority to the contrary. Laurel Manor holds that § 8-42-105(3)(d) terminates temporary disability benefits where the claimant fails to begin work after an offer of modified employment. See Liberty Heights v. Industrial Claim Appeals Office, ___ P.3d __(Colo.App. No. 00CA2213, July 19, 2001); Vaughn Concrete Products, Inc. v. Industrial Claim Appeals Office (Colo.App. No. 98CA1491, June 17, 1999) (not selected for publication).
Here, the ALJ was persuaded the claimant began modified employment consistent with the written offer. Therefore, Laurel Manor is not applicable.
Even if Rule IX(C)(1)(d) were applicable, the result is unchanged. The ALJ determined as a matter of fact that the respondents could not reasonably believe they were entitled to terminate temporary disability benefits in accordance with Rule IX(C)(1)(d) because the written offer was signed by a nurse practitioner and not an “authorized treating physician.” The ALJ also determined the respondents could not reasonably believe the claimant declined modified employment where the employer provided wage records showing the claimant’s earnings from modified employment. These findings, which are binding on review, support the ALJ’s determination that respondents’ unilateral termination of benefits was not based upon a rational argument concerning the application of Rule IX(C)(1)(d).
However, the respondents contend the ALJ erroneously imposed penalties after October 10, 2000, where the adjuster attempted to cure the violation by the filing of a general admission of liability dated August 14, 2000, which admitted liability for disability benefits up to June 10, 2000. Again we disagree.
The ALJ found the admission was based upon an assertion Strauser knew was false concerning the claimant’s refusal to accept modified employment. The ALJ also determined Strauser falsely represented that the Admission was prepared on August 14 when it was not prepared until October 6, 2000. Further, the ALJ determined that the subsequent Final Admission of Liability dated October 19, 2000, also incorrectly listed the amount and duration of benefits due the claimant and erroneously asserted an offset based upon the claimant’s alleged refusal of modified employment. Under these circumstances, we cannot say the ALJ was compelled to find the violation ended on October 10 when the October 6 admission was received at the Division of Workers’ Compensation.
II.
Next, the respondents contend the ALJ erred in taking judicial notice of decisions issued by the Industrial Claim Appeals Panel (ICAP) in Shepherd v. Costco Wholesale, W.C. No 4-400-162. Again, we disagree.
Over the respondents’ objection, the ALJ admitted copies of our decisions in Shepherd v. Costco Wholesale, supra, which involved the same third party administrator. The file indicates that on January 24, 2000, the Director of the Division of Workers’ Compensation (Director) issued an order which determined Cambridge violated Rule IX(C)(1)(a)-(f) by unilaterally terminating temporary disability benefits and, thus, the Director ordered Cambridge to pay temporary disability benefits for the entire period in dispute. No appeal was taken from that order.
On June 8, 2000, the Director entered another order in Shepherd
which imposed penalties against Cambridge for the termination of temporary disability benefits in violation of Rule IX. The Director also ordered Cambridge to provide:
“written assurances its claim handlers understand the requirements of Rule IX and provide a written description of corrective measures it will take and the effective date of the corrective measures,”
to ensure future terminations of temporary disability benefits comply with Rule IX. The Cambridge appealed the penalty order. On November 3, 2000, we affirmed the Director’s order and the matter is currently pending before the Court of Appeals.
On February 26, 2001, we affirmed an order of ALJ Stuber i Shepherd which imposed penalties against Cambridge for failure to comply with the Director’s order dated January 24, 2000. That matter is currently pending before the Court of Appeals.
An ALJ may take judicial notice of adjudicative facts that are not subject to reasonable dispute and are either generally known within the territorial jurisdiction of the trial court or capable of “accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” See C.R.E. 201(b); § 8-43-210, C.R.S. 2001 (rules of evidence are applicable in workers’ compensation proceedings); Prestige Homes, Inc. v. Legouffe, 658 P.2d 850 (Colo. 1983). One Hour Cleaners v. Industrial Claim Appeals Office, 914 P.2d 501 (Colo.App. 1995).
It is implicit in the ALJ’s order she was aware that decisions issued by the ICAP are published and readily available from more than one legal research program. See Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000) (we may consider findings which are necessarily implied by the ALJ’s order). We agree with the ALJ and conclude that the accuracy of those publications cannot reasonably be questioned. Cf. Weld County School District RE-12 v. Bymer, 955 P.2d 550 (Colo. 1998) (where supreme court cited an ICAP decision in another case as authority concerning ICAP belief that ALJ’s are capable of making reasonable judgments on claimant’s employability). Therefore, the ALJ did not abuse her discretion in taking judicial notice of our decisions in Shepherd.
The respondents further arguments on the issue have been considered and do not alter our conclusions. The ALJ’s 26 page order makes it sufficiently clear the ALJ imposed penalties for the respondents’ wrongful termination of this claimant’s temporary disability benefits and not Shepherd’s benefits, and the respondents’ bald assertions to the contrary are not persuasive. Moreover, the ALJ’s factual determinations constitute reasonable inferences from the final orders in Shepherd.
We also reject the respondents’ contention that Shepherd is inapposite because it did not involve identical facts, the same adjuster or the same Cambridge office. The ALJ did not purport to find that the facts of this case were identical to the circumstances in Shepherd. Neither did the ALJ determine the respondents were unilaterally estopped from arguing that the unilateral termination of benefits in this case was proper. Rather, the ALJ merely cited our decisions in Shepherd as some evidence that prior to the respondents’ unilateral termination of temporary disability benefits in this claim, Cambridge was on notice that its practices concerning the unilateral termination of temporary disability benefits were “considered illegal” by the Director and ICAP. (Finding of Fact 51). Accordingly, it is immaterial whether the ICAP orders considered by the ALJ are currently on appeal to the Court of Appeals. However, we note that Cambridge did not appeal the Director’s order dated January 24, 2000, which required them to reinstate temporary disability benefits based upon her determination that such benefits where wrongfully terminated. Neither did Cambridge appeal the Director’s order which required Cambridge to take remedial action to train its adjusters on the requirements of Rule IX.
III.
The respondents contend that the penalties imposed by the ALJ total $149,800 and that the disputed temporary total disability benefits total $3,800. Relying on language in Holliday v. Bestop Inc., 23 P.3d 700
(Colo. 2001), the respondents contend that the violation of a procedural rule is “less egregious” than the violation of a lawful order. Therefore, they argue the ALJ’s penalty order violated their due process rights under the Fourteenth Amendment of United States Constitution, as well as Eighth Amendment protection from “excessive fines.”
Section 8-43-304(1) affords the ALJ discretionary authority to impose a penalty of up to $500 a day, for each “offense” See §8-43-305, C.R.S. 2001. 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).
In Pueblo School District No. 70 v. Toth, supra, the court indicated that the financial harm to the claimant is not determinative of the rate of penalties to be imposed. Rather, in Toth the Court held that the ALJ’s consideration of the CCIA’s “repeated and stubborn refusal to respond” to requests from claimant’s counsel for the payment of medical benefits supported the ALJ’s imposition of a penalty over $6000 for the failure to pay a medical bill which was less than $20.
As we read the ALJ’s order she determined that the respondents’ repeated violations of Rule IX, after the adjusting company had previously been warned that the unilateral termination of temporary disability benefits in violation of Rule IX would subject them to penalties, warranted a substantial penalty to deter future violations. In support the ALJ found Strauser is the sole adjuster for Colorado workers’ compensation claims in Cambridge’s Las Vegas office, that there was no supervisor on site and that no supervisor ever reviewed Strauser’s file following the claimant’s application for hearing on the issue of penalties, or if it was reviewed that no remedial action was taken. The ALJ also determined the failure to correct the improper practices regarding the termination of temporary disability benefits after being ordered to take corrective action in Shepherd suggested an “institutional responsibility for the adjuster’s violations” and a “tacit company policy of willful disregard of Colorado law in general as well as a disregard of the rights of this claimant in particular.” (Discussion and Conclusions of Law p. 21).
The ALJ also found that as a result of the delayed payment of benefits the claimant had to borrow money at 24 percent interest to pay his living expenses which, in turn, caused the claimant serious financial and emotional strain. For the reasons previously stated, we presume the ALJ findings are supported by the record. Consequently, we are bound by the ALJ’s factual determinations concerning the pertinent circumstances.
We also note that the respondents only disputed two of the six penalties imposed by the ALJ. The disputed penalties total less than $100,000.
The ALJ’s imposed penalties far below the maximum daily rate allowed by the statute. Therefore, under the totality of circumstances found by the ALJ, we decline to conclude that the amount of penalties imposed by the ALJ exceeds the bounds of reason. See Pueblo School District No. 70 v. Toth, supra. Consequently, we will not disturb the ALJ’s order.
Finally, we reject the respondents’ contention that the ALJ’s imposition of multiple penalties for the same dates is contrary to §8-43-305. The principal rule of statutory construction is that statutes must be construed to effect the legislative intent. United Airlines, Inc. v. Industrial Claim Appeals Office, 993 P.2d 1152 (Colo. 2000); Weld County School District Re-12 v. Bymer, 955 P.2d 550 (Colo. 1998). To discern the legislative intent we must first give the words in the statute. Snyder Oil Co. v. Embree, 862 P.2d 259 (Colo. 1993); Popke v. Industrial Claim Appeals Office, 944 P.2d 677 (Colo.App. 1997). Where statutory language is clear and unambiguous, we must give the words their plain and ordinary meaning, and we need not resort to interpretive rules of statutory construction. Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, 26 P.3d 546 (Colo.App. 2001).
Section 8-43-305 provides that every day during which an insurer or its agent fails to perform a duty required by the Workers’ Compensation act “shall constitute a separate and distinct violation” and in any penalty provided for in said articles “shall be considered cumulative and may be joined in such action.”
We conclude the statute is unambiguous. Webster’s II New College Dictionary, 1995, defines the term “cumulative” as “enlarging or increasing by successive addition.” Accordingly, § 8-43-305
contemplates the assessment of multiple penalties for the same violation.
We also note that in Holliday v. Bestop Inc., the court concluded § 8-43-401(2)(a) was not the exclusive remedy for the imposition of penalties where the insurer fails to pay medical benefits. Moreover, it is contrary to the purpose of deterring procedural violations to limit the respondents’ liability to a single, per diem penalty, were there are multiple violations of the Workers’ Compensation Act. This is true because the various rules protect different interests. Cf. Smith v. Myron Stratton Home, 676 P.2d 1196, 1201 (Colo. 1984) (purposes of requiring respondents to admit or deny liability are to alert the claimant that he is involved in a “situation with legal ramifications” and assist the Division in executing its administrative functions).
To the extent the respondents have further arguments they have been considered and are not persuasive.
IT IS THEREFORE ORDERED that the ALJ’s order dated May 7, 2001, 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. 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 September 21, 2001 to the following parties:
Clayton Brown, 863 S. Pine Dr., Bailey, CO 80421
Kim Dunford, Manfredi Motor Transit, 14841 Sperry Rd., Newbury, OH 44065
Virginia Surety Company, 123 N. Wacker Dr., Chicago, IL 60606
Tony Cipriano, Claims, Cambridge Integrated Services, P. O. Box 52106, Phoenix, AZ 85072-2106
Barbara Carter, Special Funds, Tower 2, #630, Division of Workers’ Compensation — Interagency Mail
Erica West, Esq., 837 E. 17th Ave., #102, Denver, CO 80218 (For Claimant)
Kathleen Mowry Fairbanks, Esq. and Derek Regensburger, Esq., 999 18th St., #1600, Denver, CO 80202 (For Respondents)
BY: A. Pendroy