W.C. Nos. 3-777-995 3-857-321Industrial Claim Appeals Office.
July 31, 1995
FINAL ORDER
The respondents seek review of a final order of Administrative Law Judge Barringer (ALJ), which ordered the Colorado Compensation Insurance Authority (CCIA) to pay a penalty of $100 per day from August 12, 1992 through March 4, 1993, inclusive. We affirm.
These consolidated claims involve industrial injuries which the claimant sustained in 1985 and 1987. In an order dated September 27, 1990, the ALJ determined that, as a result of these injuries, the claimant is entitled to ongoing medical benefits pursuant to the Supreme Court’s decision in Grover v. Industrial Commission, 759 P.2d 705 (Colo. 1988).
In the order concerning penalties, the ALJ found that, on August 12, 1992, the CCIA sent out two letters refusing to pay medical expenses in accordance with the ALJ’s prior order of September 1990. The CCIA refused to pay a medical bill submitted by Dr. Crosson, and a pharmacy bill submitted by Belmont Pharmacy. Both letters notified the medical providers that the basis of the CCIA’s refusal to pay was that the claims were “closed.”
Ultimately, the CCIA paid the pharmacy bill on December 17, 1992, and paid Dr. Crosson’s bill on March 4, 1993. The ALJ stated, in his oral remarks, that there was “no reason” for the CCIA’s failure to pay the bills sooner except the fact that the CCIA “negligently” made a computer entry reflecting that the claims were closed. (Tr. p. 50).
Under these circumstances, the ALJ concluded that the CCIA should be fined $100 per day for each day that it failed to pay the medical bills in compliance with the September 1990 order. The ALJ’s assessment of the amount of the penalty was influenced by CCIA’s prior failure to pay medical benefits in a timely manner, as well as the inconvenience and pain which the claimant experienced as a result of the CCIA’s failure to pay.
I.
On review, the CCIA contends that the ALJ’s assessment of a penalty is not supported by applicable law. Specifically, the CCIA asserts that its failure to pay the bills was predicated on a “rational argument based on law and evidence” that the claims were closed. We reject this argument.
Under former § 8-53-116, C.R.S. (1986 Repl. Vol. 3B) [currently codified with changes at § 8-43-304(1), C.R.S. (1994 Cum. Supp.)], a party may be penalized if it “fails, neglects, or refuses to obey any lawful order.” Because the statute uses the term “negligence,” the insurer’s conduct is to be measured by an “objective standard,” and a penalty may be imposed where the insurer neglects to take “the action a reasonable insurer would take to comply with the lawful order.” Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676
(Colo.App. 1995). The CCIA correctly points out that we have further defined the objective standard to mean that insurers are entitled to take actions, in defense of a claim, if predicated on a “rational argument based on law or evidence.” See Tozer v. Scott Wetzel Services, Inc., 883 P.2d 496 (Colo.App. 1994); Toth v. Pueblo School District No. 70, W.C. No. 3-878-236, 3-793-718, January 13, 199 ; Brown v. Gosney and Sons, Inc., W.C. No. 3-104-140, August 30, 1994.
In this case, the CCIA asserts that it had a rational basis in law and fact for refusing to pay the bills because it was not be liable if the claims were closed. We do not dispute that, if the CCIA had a good faith basis for asserting that the claims were closed, its refusal to pay the bills would have been rationally based in law and fact. However, the CCIA points to no evidence whatsoever, nor does it advance any legal argument, which would support the conclusion that the claims were “closed” at any time subsequent to the ALJ’s September 1990 order.
To the contrary, the ALJ found, and the CCIA’s testimony at the hearing supports the finding, that the bills were not paid because of a “mistaken” entry made on the CCIA’s computer system. In fact, during closing arguments, the CCIA’s counsel conceded that the entry was “mistaken.” (Tr. p. 47). Consequently, the record supports the ALJ’s finding that the failure to pay the bills was not predicated on any rational legal or factual argument, but was the result of the CCIA’s own negligence in keeping records. Thus, the law supports application of a penalty under § 8-53-116 based on the CCIA’s failure to obey the ALJ’s order. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra.
II.
The CCIA next contends that the ALJ erred in failing to apply former Rule of Procedure Part XIV(6), 7 Code Colo. Reg. 1101-3, (1988). The CCIA asserts that failure to apply the rule is significant because the claimant failed establish the date the CCIA received the bills by proof of a “date stamp.” The CCIA also argues that the ALJ miscalculated the penalty period because the rule allowed forty-five days to pay the bills. We reject these arguments.
In our view, Rule XIV(6) has no application to the ALJ’s order in this case. The ALJ’s assessment of a penalty was not predicated on the CCIA’s failure to pay the bill in a timely fashion. To the contrary, the ALJ’s order was based on the CCIA’s negligent failure to obey the order to pay the medical benefits.
Here, the claimant has not asserted that the CCIA’s action in failing to pay the bills was “untimely.” Rather, the claimant argued, and the ALJ found, that as of August 12, 1992 the CCIA expressly declined to pay the bills. Thus, the gravamen of the ALJ’s order was the CCIA’s failure to advance any reasonable basis for failing to comply with the order.
The CCIA has stated that our previous rulings in this matter “determine that Rule XIV(6) was applicable to this case.” We have reviewed those orders and find no basis for the CCIA’s assertion. To the contrary, our order of March 31, 1994 stated that Rule XIV(6) did not “affect the result” of the decision. Our order of April 12, 1994 stated that we did not consider Rule XIV(6) as “governing the interest portion of the case.”
III.
The CCIA also contends that the penalty statutes are unconstitutional on their face, and as applied. Specifically, the CCIA argues that the statutes deny due process of law, and result in the imposition of “excessive” fines. However, we may not address these issues because we lack jurisdiction to consider the constitutionality of the provisions of the Workers’ Compensation Act. Kinterknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971); Celebrity Custom Builders v. Industrial Claim Appeals Office, ___ P.2d ___ (Colo.App. No. 94CA1937, June 15, 1995).
We are aware that the CCIA asserts that it is posing both “facial” and “as applied” challenges to the penalty statutes. Further, the Supreme Court has indicated that administrative agencies have the authority to determine whether “an otherwise constitutional statute has been unconstitutionally applied.” Horrell v. Department of Administration, 861 P.2d 1194, 1198 (Colo. 1993). However, the arguments supporting the CCIA’s “facial” and “as applied” challenges are so intertwined that we do not perceive how we can consider the “as applied” challenges without addressing the “facial” constitutionality of the statutes. To do so would violate the principle of separation of powers and cause us to engage in constitutional decision-making beyond our area of expertise. See Denver Center for Performing Arts v. Briggs, 696 P.2d 299, 305 (Colo. 1985) (administrative rulings concerning “facial” challenges to statutes will not be considered “authoritative” on judicial review). To the extent this decision is inconsistent with any prior rulings, we have reconsidered our prior rulings.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
NOTICE
This Order is final unless an action to modify or vacate the Order iscommenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver,Colorado 80203, by filing a petition to review with the court, withservice of a copy of the petition upon the Industrial Claim Appeals Officeand all other parties, within twenty (20) days after the date the Orderwas mailed, pursuant to §§ 8-43-301(10) and 307, C.R.S. (1995 Cum.Supp.).
Copies of this decision were mailed July 31, 1995 to the following parties:
Patricia Dickson, 17 MacGreagor, Pueblo, CO 81001
Pueblo Transportation Co., City Hall, Pueblo, CO 81003
Colorado Compensation Insurance Authority, Attn: C. Boyd, Esq. D.A. Thomas, Esq. Interagency Mail
Ralph Ogden, Esq., 1120 Lincoln St., Suite 1306, Denver, CO 80203 (For the Claimant)
Steven U. Mullens, Esq., 90 S. Cascade St., Ste. 300, Colorado Springs, CO 80903 (For the Claimant)
By: ________________________________