W.C. No. 4-422-332Industrial Claim Appeals Office.
December 6, 2001
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Martinez (ALJ) which required them to pay penalties for violations of the Rules of Procedure, Part IV(N)(1) (3), 7 Code Colo. Reg. 1101-3. We affirm.
The pertinent facts are undisputed. On May 1, 1999, the claimant suffered a work- related injury. In an order dated November 30, 1999, the ALJ determined the injury was compensable and ordered the respondents to pay medical benefits and temporary disability benefits at the rate of $125.55 per week for the period May 9, 1999 to August 26, 1999. All other issues were expressly reserved for future determination. The respondents appealed the November 1999 order. The court of appeals affirmed the order on November 16, 2000. Mandate issued January 8, 2001.
On January 31, 2001, the respondents filed a final admission of liability for the payment of the medical and temporary total disability benefits awarded on November 30. The final admission form did not list a date of maximum medical improvement (MMI), and the section concerning benefits for permanent partial disability was crossed out.
In a letter dated February 15, 2001, the Claims Management unit of the Division of Workers’ Compensation (DOWC) informed the respondents that the final admission was deficient because it was not accompanied by supporting documentation concerning MMI and medical impairment. On April 10, 2001, the respondents filed a general admission of liability similar to the January 31 final admission.
The claimant requested an order imposing penalties under §8-43-304(1), C.R.S. 2001, on grounds that the final admission violated Rule IV(N) and former § 8-43-203(2), C.R.S. 2000.
In response, the respondents conceded the final admission was improvidently filed. However, they argued they were not subject to penalties because they were not required to file any admission under these circumstances. Rather, they contend the final admission was “gratuitous” and not subject to Rule IV(N).
The ALJ determined that even though the respondents were not required to file an admission, the prematurely filed final admission did not conform with the requirements of Rule IV(N)(1) (3) because it was not accompanied by supporting documentation on the issue of permanent medical impairment. The ALJ also determined the respondents’ delay in rectifying the violations after receiving notice from the DOWC warranted the imposition of penalties under § 8-43-304(1). Therefore, the ALJ ordered the respondents to pay a penalty of $1725. The respondents timely appealed.
On review, the respondents contend the ALJ erred in finding the erroneously filed final admission violated Rules IV(N)(1) and (3). In support, the respondents rely upon the holdings in Malloy v. Lincoln Community, W.C. No. 4-148-045 (December 21, 2000) and Leigh v. Joe Reed,
W.C. No. 3-107-700 (December 26, 1995). We disagree.
The imposition of penalties under § 8-43-304(1) is proper if the alleged misconduct constitutes a violation of a provision of the Act, a refusal to perform a duty lawfully enjoined, or failure to obey a lawful order. Allison v. Industrial Claim Appeals Office, 916 P.2d 623
(Colo.App. 1995). The courts have held that the failure to comply with a procedural rule may subject an insurer to penalties under § 8-43-304(1) Monfort Transportation v. Industrial Claim Appeals Office, 942 P.2d 1358
(Colo.App. 1997); Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997).
As recognized by the ALJ, there is no statute or rule which required the respondents to file an admission of liability to document the payment of benefits awarded by the court. Neither is there any statute or rule which prohibits the insurer from filing an admission under these circumstances.
However, a final admission automatically closes the claim on admitted issues in the absence of a timely filed objection. See Dalco Industries, Inc. v. Garcia, 867 P.2d 156 (Colo.App. 1993). Consequently, where a final admission is filed, the contents are governed by special statutes and rules. Former § 8-43-203(2)(b)(II), C.R.S. 2000 [amended 2001 Colo. Sess. Laws, ch. 23 for final admissions issued after March 11, 2001], which applies to this 1999 injury claim provides that: “[w]hen the final admission is predicated upon medical reports, such reports shall accompany the final admission.” Similarly, Rule IV(N)(1) provides that when a final admission is predicated upon medical reports, “such reports shall accompany the admission including any evaluation record (worksheets) associated with an impairment rating.”
We accept the respondents’ contention that the final admission was not predicated on a medical report. Nevertheless, we perceive no error in the ALJ’s determination that the final admission did not conform to the requirements of Rule IV(N)(1).
The respondents’ liability for permanent medical impairment is not determinable until the claimant reaches MMI and a medical impairment rating has been assigned. Donald B. Murphy Contractors, Inc., v. Industrial Claim Appeals Office, 916 P.2d 611 (Colo.App. 1995). The initial determinations of MMI and permanent impairment are medical determinations to be made by an authorized treating physician. See Aren Design, Inc. v. Becerra, 897 P.2d 902 (Colo.App. 1995). Accordingly, the Rules of Procedure inherently preclude the filing of a final admission concerning medical impairment prior to the insurer’s receipt of a medical determination of MMI and permanent impairment. See § 8-42-107(8)(b) (c), C.R.S. 2001; Rule IV(N)(4) (5).
The respondents’ arguments notwithstanding, the ALJ reasonably inferred that the January 31 final admission denied liability for all permanent medical impairment benefits. The final admission stated “a final determination has been made of the amount of benefits to be paid in this case. Benefits have been or will be paid in the amounts shown below.” The admission also contains a line drawn through the section concerning the permanent medical impairment rating.
We have previously held that the language in § 8-43-203(2)(b)(II) concerning the automatic closure of “issues admitted” in an uncontested final admission is not restricted to those “issues” concerning which the respondents have agreed to pay benefits. Instead, we have held that this language must be interpreted as referring to “issues” on which the respondents affirmatively take a position, either by agreeing to pay benefits, or by denying liability to pay benefits. For example, i Dyrkopp v. Denver School District No. 1, W.C. No. 4-287-760 (June 8, 2000), aff’d., Dyrkopp v. Industrial Claim Appeals Office 30 P.3d 821(Colo.App. No. 2001), cert granted 01SC336, (September 10, 2001), we concluded that issues not expressly admitted were closed by the filing of an uncontested final admission which stated “all benefits not admitted are specifically denied.”
The January 31 final admission does not list any permanent partial disability benefits to be paid. Furthermore, the final admission expressly states that it represents the “final determination” of the amount of benefits to be paid in the case. Under these circumstances, the final admission inherently denies all permanent partial disability benefits.
However, the respondents did not attach any supporting documentation to establish the claimant was at MMI. Thus, the final admission does not contain the requisite documentation to prove that permanent medical impairment was determinable. Similarly, the respondents failed to attach any medical documentation to support their implicit assertion that the claimant was assigned a zero rating for permanent medical impairment due to the industrial injury. Consequently, the record supports the ALJ’s determination the final admission violated Rule IV(N)(1).
Rule IV(N)(1) also requires that the final admission state the insurer’s position on medical benefits after MMI. We conclude the respondents’ final admission cannot reasonably be construed as fulfilling this requirement.
In the section of the final admission form designated for the respondents’ position on medical benefits after MMI, is written, “based upon [the] court order.” However, the November 30 order did not address the issue of medical benefits after MMI. In fact, the respondents concede the issue was expressly reserved. Neither was the issue addressed by the court. To the contrary, the court merely affirmed the ALJ’s finding of a compensable injury. Accordingly, the respondents’ admission for future medical benefits pursuant to the “court order” is meaningless and insufficient to satisfy the requirements of Rule IV(N)(1).
Next, Rule IV(N)(3) states that: “[a]dmissions shall be filed with supporting attachments immediately upon termination or reduction in the amount of compensation benefits.” For reasons similar to the reasons previously stated, we perceive no reversible error in the ALJ’s finding that the final admission violated Rule IV(N)(3).
Under Rule IV(N)(5) an admission of liability which denies all permanent medical impairment benefits requires a medical report stating there is no medical impairment from the industrial injury. Similarly, Rule IX(C)(1)(a)-(f) provides that where the insurer seeks to terminate a claimant’s entitlement to temporary disability benefits without a hearing, the insurer must file an admission accompanied by documentation which supports the basis for the termination.
Because the claimant’s entitlement to further temporary disability benefits, future medical benefits, and permanent disability benefits was expressly reserved in the November 30 order, the respondents’ admission of liability for only those benefits expressly listed on the January 31 final admission form is an implicit termination of the claimant’s entitlement to all further benefits. The respondents contend the final admission was predicated on the Court of Appeals order affirming the ALJ’s award of benefits. However, they do not assert they attached the court order to the final admission. Nor did the respondents attach any other documentation in support the termination of benefits. Therefore, the final admission did not comply with Rule IV(N)(3)
The respondents’ reliance on Malloy v. Lincoln Community, supra, an Leigh v. Joe Reed, supra, for a contrary result is misplaced. I Malloy, the facts involved the insurer’s filing of a general admission of liability for permanent total disability benefits. Rule IV(K)(1) requires that where liability for permanent total disability benefits is admitted, the insurer shall file an admission on a final admission of liability form. We concluded that Rule IV(K)(1) did not apply to the circumstances in Malloy because the insurer did not admit liability for permanent total disability benefits. Rather, permanent total disability benefits were awarded by an ALJ following an evidentiary hearing. Because Rule IV(K)(1) did not apply, we concluded the insurer’s filing of a general admission did not subject the insurer to penalties.
In Leigh v. Joe Reed, supra, we upheld an ALJ’s order denying penalties for an alleged violation of Rule IV(N)(4) where the insurer failed to file an amended admission of liability following its receipt of a second determination of MMI by the treating physician. In support, we concluded that under Rule IV(N)(5), the duty to file an amended admission of liability on the issue of MMI is not triggered until the insurer’s receipt of the DIME physician’s determination of MMI. Consequently, we held that Rule IV(N)(4)(a) did not govern the facts of that case.
Here, as in Malloy, and Leigh, the respondents were not required to file any admission. However, this claim is factually distinguishable from Malloy and Leigh, because once the respondents voluntarily elected to file a final admission, they were subject to the statutes and rules governing the contends of final admissions. Thus, the respondents’ failure to comply with the requirements of Rule IV(N)(1) (3) subjected them to the imposition of penalties.
The respondents’ other arguments have been considered and are not persuasive.
IT IS THEREFORE ORDERED that the ALJ’s order dated July 13, 2001, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Kathy E. Dean
____________________________________ Dona Halsey
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 December 6, 2001 the following parties:
Adrian Davis, 3111 I 50 Road, Hotchkiss, CO 81419
Sam’s Club, 1040 Independent Ave., Grand Junction, CO 81505-7133
American Home Assurance Company, Claims Management, Inc., P. O. Box 1288, Bentonville, AR 72712-1288
Kathleen Pennucci, Special Funds, Tower 2, #630, Division of Workers’ Compensation — Interagency Mail
Christopher Seidman, Esq., P. O. Box 3207, Grand Junction, CO 81502 (For Claimant)
James R. Clifton, Esq., Cheryl A. Martin, Esq. and Harvey D. Flewelling, Esq., 5353 W. Dartmouth Ave., #400, Denver, CO 80227 (For Respondents)
BY: A. Pendroy