W.C. No. 4-155-609Industrial Claim Appeals Office.
May 16, 1996
ORDER OF REMAND
Attorney Douglas Thomas (Thomas) and the Colorado Compensation Insurance Authority (CCIA) seek review of an order of Administrative Law Judge Wells (ALJ) which denied their claim for attorney fees. We affirm the order in part, set aside the order in part and remand for further proceedings.
This case has a complex procedural history. In an order dated October 14, 1994, the ALJ authorized a change in the treating physician and ruled that certain medical treatment was compensable. Both the claimant and the CCIA petitioned to review that order.
While the petitions to review were pending, the claimant filed an application for hearing seeking to impose penalties against the CCIA, and against Thomas as attorney for the CCIA, alleging that they were delaying medical care and adjudication of the claim. Subsequent discovery revealed that the claimant was arguing, in effect, that the CCIA’s appeal from the October 14 order was frivolous and designed to undermine the claimant’s entitlement to the medical treatment ordered by the ALJ.
A hearing was set for July 1995, but both Thomas and the CCIA moved to dismiss the claim for penalties. Thomas argued that he is not personally subject to penalties, and in any event there is no basis for imposing a penalty based upon a “good faith appeal” from an ALJ’s order. The CCIA argued that it could not be penalized for failing to obey an order during the pendency of a good faith appeal.
In response to these motions, the claimant filed a “Response and Partial Confession” of the motions to dismiss. The claimant reiterated her position that the CCIA’s appeal from the October 14 order “was taken in bad faith.” However, the claimant did “confess” that the “penalty issue should be held in abeyance pending the outcome of the [CCIA’s] appeal.” The ALJ then “dismissed” the claims for penalties against Thomas and the CCIA.
Subsequently, the CCIA moved for an award of attorney fees incurred in responding to the claim for penalties. The CCIA argued that claimant’s counsel violated § 8-43-211(2)(d), C.R.S. (1995 Cum. Supp.), because he applied for a hearing on penalties prior to the time the issue was “ripe.” The CCIA reasoned that the claim for penalties could not be determined until its appeal from the October 14 order was resolved.
The CCIA also alleged that claimant’s counsel filed the claim for penalties with a view towards harassing Thomas and the CCIA, as well as CCIA employees who were subpoenaed as witnesses. Thus, the CCIA also asserted that attorney fees should be assessed under § 8-43-216(1), C.R.S. (1995 Cum. Supp.).
The claimant filed an “objection” to the motion for attorney fees. The claimant alleged that she agreed to withdraw her application for a hearing on the penalties issue in the interests of “judicial economy.” The claimant also denied all the “factual assertions” contained in the CCIA’s motion for attorney fees, and requested a hearing on the motion.
On October 4, 1995, the ALJ entered an order denying the CCIA’s motion for attorney fees. The denial was issued without benefit of a hearing.
In the order, the ALJ ruled that, “in light of Claimant’s belief that the Respondents’ appeal of the Order authorizing medical care was taken in bad faith,” the issue concerning assessment of penalties was “ripe” at the time the respondents filed the appeal. The ALJ further stated that he did not view the claimant’s decision to withdraw the application for hearing as a “confession” that the “issue was not ripe.” Thus, the ALJ denied the claim for attorney fees under § 8-43-211(2)(d).
The ALJ also ruled that attorney fees were not appropriate under §8-43-216(1). The ALJ stated that he did not consider the claimant’s arguments concerning the CCIA’s denial of medical treatment to be “spurious or frivolous.” The ALJ stated that the CCIA’s refusal to provide medical treatment “based on Industrial Claim Appeals Panel decisions which were not controlling and which are apparently contrary to decisions of the Court of Appeals” might properly be the subject of a claim for penalties.
I.
On review, the CCIA and Thomas first contend that the ALJ erred in denying their claim for attorney fees under § 8-43-211(2)(d). They reason that the question of whether they should be penalized for filing a bad faith appeal from the October 14 order is not “ripe” for determination until the appeal is ultimately resolved. We reject this argument.
Section 8-43-211(1)(d) provides as follows:
“If any person requests a hearing or files a notice to set a hearing on issues which are not ripe for adjudication at the time such request or filing is made, such person shall be assessed the reasonable attorney fees and costs of the opposing party in preparing for such hearing or setting.”
In interpreting this statute, we note that § 8-43-301(12), C.R.S. (1995 Cum. Supp.), provides that, if a petition to review an order is filed, a “hearing may be held and orders entered on any other issue in the case during the pendency of the petition to review.” Thus, the Act does not prohibit the conduct of a hearing when the results of a prior hearing are on appeal.
Here, the claimant has alleged that, if the hearing proceeded, she could establish that the respondents’ petition to review the order of October 14, 1994 was taken in bad faith. The CCIA’s argument notwithstanding, is it possible that the claimant could produce evidence which would support this conclusion regardless of the results of the pending appeal. Put another way, it is conceivable that the claimant could produce evidence that the appeal was not made for the purpose of advancing a legitimate argument, but for some improper reason such as to delay treatment.
Therefore, we agree with the ALJ’s conclusion that the mere fact that an appeal was pending does not establish that the penalty issue was not “ripe” within the meaning of § 8-43-211(d). Further, the claimant’s decision to delay adjudication of the issue until the appeal is resolved does not necessarily constitute an admission that adjudication of the appeal is a prerequisite to establishing the right to a penalty.
II.
The CCIA and Thomas next contend that the ALJ erred in denying their claim for attorney fees without conducting a hearing. The respondents assert that there are questions of fact concerning the claimant’s conduct in filing the application for penalties, and that a hearing would establish that the request was imposed for improper reasons. We agree that a hearing is appropriate, at least with respect to issues raised under § 8-43-216(1).
Under § 8-43-216(1), an ALJ may impose attorney fees against an attorney or party if a claim or defense lacks “substantial justification,” or if “any part thereof” is “interposed for delay or harassment or [the ALJ] finds that an attorney or party unnecessarily expanded the proceeding by other improper conduct.” Thus, imposition of attorney fees is not limited to cases where a claim or defense lacks “substantial justification,” but fees may also be assessed if the conduct of the claim is designed to delay, harass, or unnecessarily expand the proceedings.
As the respondents argue, it is appropriate to conduct a hearing whenever there are disputed issues of fact which govern administrative determinations. Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076
(Colo.App. 1990). It is proper to forego a hearing only where there is no dispute concerning the material facts. See Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969). Moreover, Rule of Procedure VIII(M), 7 Code Colo. Reg. 1101-3 at 29, suggests that, although an ALJ may rule on a motion for attorney fees without a hearing, he should conduct a “formal hearing on the record to resolve the disputed issues.”
Here, the CCIA’s motion for attorney fees alleges conduct which, if proved, might establish grounds for the imposition of attorney fees regardless of whether the claim for penalties has “substantial justification.” Specifically, the CCIA made allegations of fact suggesting that there was an improper use of subpoenas, and that claimant’s counsel unnecessarily prolonged his decision to agree that the hearing should be vacated.
Under these circumstances, the ALJ should have conducted a hearing to resolve the disputed issues of fact. The claimant’s argument notwithstanding, we see no evidence that the CCIA waived its right to a hearing on these issues. In fact, the claimant’s objection to the motion for attorney fees requested a hearing for the purpose of disputing the CCIA’s assertions of fact. See “Objection to Motion for Attorneys’ Fees and Costs” (Paragraph 3.).
In reaching this result, we should not be understood as expressing any opinion concerning the evidence or the proper disposition of the claim for attorney fees.
IT IS THEREFORE ORDERED that the ALJ’s order dated October 4, 1995, is set aside insofar as it denied the claim for attorney fees under §8-43-216(1), C.R.S. (1995 Cum. Supp.). The matter shall be remanded for further proceedings and entry of a new order consistent with the views expressed herein.
IT IS FURTHER ORDERED that the ALJ’s order is affirmed insofar as it denied the claim for attorney fees based on § 8-43-211(1)(d).
INDUSTRIAL CLAIM APPEAL PANEL
___________________________________ David Cain
___________________________________ Kathy E. Dean
Copies of this decision were mailed May 16, 1996 to the following parties:
Latonya Edelen, 3830 Patrick Dr., Apt. 26, Colorado Springs, CO 80916
BCW Enterprises, Ltd., 1617 Bonforte Blvd., Pueblo, CO 81001-1602
Douglas Thomas, Esq., 1700 Broadway, Ste. 1700, Denver, CO 80290-1701
Colorado Compensation Insurance Authority, Attn: Legal Dept. (Interagency Mail)
Steven U. Mullens, Esq., P.O. Box 2940, Colorado Springs, CO 80901-2940 (For the Claimant)
Douglas P. Ruegsegger, Esq., 1700 Broadway, Ste. 1700, Denver, CO 80290-1701 (For Thomas and CCIA)
By: _________________________