W.C. No. 4-148-045Industrial Claim Appeals Office.
August 24, 2001
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which dismissed her application for hearing on the issue of penalties. We affirm.
This matter was previously before us, and a brief procedural history is necessary to understand our resolution of the issue presented here. The claimant suffered a compensable injury in 1992. The respondents admitted liability for temporary disability benefits. In 1996, the respondents filed a Final Admission of Liability for the payment of permanent partial disability benefits. In December 1997, the respondents filed a General Admission of Liability for the payment of additional temporary disability benefits and asserted a credit for previously paid permanent partial disability benefits.
Following an evidentiary hearing, the ALJ issued an order dated March 31, 1998, which awarded permanent total disability benefits commencing February 1998. Thereafter, the respondents filed a General Admission of Liability dated November 9, 1999, which asserted an overpayment of benefits. An overpayment in a different amount was listed in a subsequent General Admission of Liability dated January 3, 2000.
The claimant contested the overpayment. The claimant also requested penalties under § 8-43-304(1), C.R.S. 2000, on grounds the respondents’ November 1999 and January 2000 General Admissions of Liability violated the Rules of Procedure, Part IV(K)(1), 7 Code Colo. Reg. 1101-3 at 6.01. That rule provides that where the insurer admits liability for permanent total disability benefits, the insurer shall file “an admission of liability for permanent total disability on a final admission of liability form prescribed by the Division.”
The ALJ determined the General Admissions of Liability did not violate Rule IV(K)(1) because the ruled governed “admitted” liability for permanent total disability benefits. Therefore, on April 14, 2000, the ALJ denied the claim for penalties. The claimant appealed.
On review we concluded Rule IV(K)(1) imposed no duty to file an admission where the respondents’ liability for permanent total disability benefits was the result of an order by an ALJ rather than the respondents’ voluntary agreement to pay. We reasoned that the purpose of Rule IV(K)(1) is to provide notice to the claimant and the Division of Workers’ Compensation (Division) that the claimant’s entitlement to permanent total disability benefits is uncontested as to the rate and payment schedule contained in the admission, and that purpose is fulfilled by an order which requires the respondents to pay permanent total disability at a particular rate, commencing on a date certain and continuing for the remainder of the claimant’s life.
Because the ALJ’s order explicitly awarded permanent total disability benefits at the rate of $335.95 per week commencing February 5, 1998, and continuing for the remainder of the claimant’s life, we held that the respondents’ failure to file a separate Final Admission of Liability which admitted liability for permanent total disability benefits did not violate Rule IV(K)(1). Therefore, we upheld the ALJ’s order denying penalties. Our order was issued on November 21, 2000, and there was no appeal from that order.
In the interim, the Claims Management department of the Division sent the insurer a letter dated August 22, 2000, which stated “please file a Final Admission, per Rule IV(K)” on the permanent total claim. It is undisputed the insurer did not file a Final Admission of Liability following the receipt of the August letter.
The claimant then filed an application for hearing which requested the imposition of penalties under § 8-43-304(1) due to the respondents’ alleged failure to comply with an “order from the Division dated August 22, 2000.”
The respondents moved to dismiss the penalty claim on grounds the letter was not an “order” from the Division. The respondents also argued the claimant was collaterally estopped from seeking penalties for the alleged violation of Rule IV(K)(1).
The ALJ determined that the issue of whether the respondents were subject to penalties for the violation of Rule IV was already decided by our November 21, 2000 order. Under these circumstances, the ALJ determined the claimant was collaterally estopped from relitigating the issue. In so doing, the ALJ rejected the claimant’s contention that the penalty claim was different because it was based upon the violation of an “order.” rather than Rule IV. Consequently, the ALJ dismissed the claim for penalties, and the claimant appealed.
On this appeal, the claimant contends that because the claim for penalties is predicated on the violation of an “order,” not the violation of a procedural rule, it is not governed by the doctrine of collateral estoppel. We conclude the respondents complied with Rule IV(K)(1) and, therefore, the ALJ did not err in dismissing the claim for penalties.
Initially, we note the claimant’s petition to review designates the “entire files maintained by the Division of Workers’ Compensation and the Division of Administrative Hearings” as part of the record on review. However, the record transmitted to us for review does not include the Division of Workers’ Compensation file and there is nothing in the record which indicates that the Division of Workers’ Compensation file was part of the record before the ALJ. See Rules of Procedure, Part VIII(A)(7), 7 Code Colo. Reg. 1101-3 at 22. Therefore, we have not considered the Division of Workers’ Compensation file on review.
Section 8-43-304(1) allows an ALJ to impose penalties against an insurer which “fails, neglects, or refuses to obey any lawful order made by the director.” The determination of whether an insurer is subject to penalties under § 8-43-304(1) requires a two- step analysis. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). First, the ALJ must find a violation of an order. If the ALJ finds a violation, the ALJ must determine whether the challenged conduct was unreasonable as measured by an objective standard. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996).
Contrary to the claimant’s contention, the ALJ expressly considered whether the August letter was an “order” within the meaning of §8-43-304(1). The ALJ determined that even if the letter was an order, it “merely orders compliance with Rule IV.” Further, the ALJ relied upon our final order to conclude that the respondents complied with Rule IV. Therefore, the ALJ determined the claimant failed to prove a “violation” of the order.
Next, the doctrine of collateral estoppel is directed to “issue preclusion.” M M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574 (Colo.App. 1998). The doctrine bars relitigation of an issue previously determined if the issue “in the later proceeding is identical to an issue actually litigated and necessarily adjudicated in the prior proceeding; the party against whom estoppel is asserted has been a party to or was in privity with a party to the prior proceeding; there was a final judgment on the merits in the prior proceeding; and the party against whom estoppel is asserted has had a full and fair opportunity to litigate the issue in the prior proceeding.” Id. at 576.
The identity of issues requirement is actually composed of two distinct elements. First, the issue which is to be precluded must have been “actually litigated” in the prior proceeding. Second, the issue must have been “necessarily adjudicated.” An issue is “necessarily adjudicated” when a determination of that issue was necessary to the judgment in the sense that resolution of the issue was necessary in determining the final outcome of the case. Bebo Construction Co. v. Mattox O’Brien, P. C., 990 P.2d 78, 86 (Colo. 1999).
Applying these principles here, we assume arguendo that the August 22 letter is an order which required the respondents to file a final admission of liability “per Rule IV(K).” We previously held as a matter of law that Rule IV(K)(1) does not require the filing of a final admission of liability where, as here, the respondents are ordered to pay permanent total disability benefits after a full contest hearing. Because we concluded that no penalties may be imposed under § 8-43-304(1) due to the respondents’ failure to file a final admission, we necessarily resolved the respondents’ liability for penalties due to the failure to comply with an order which requires the filing of a final admission of liability in accordance with Rule IV(K). The claimant did not appeal our order. Therefore, we agree with the ALJ that the claimant is collaterally estopped from relitigating that issue.
Finally, the claimant contends she had no notice the ALJ would treat the respondents’ “Motion to Dismiss” as a motion for summary judgment. The claimant contends that as a result she was denied due process of law. We are not persuaded.
Due process requires that the parties be afforded an opportunity to confront adverse witnesses and present evidence and argument in support of their position. Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076 (Colo.App. 1990). However, an evidentiary hearing is not required where the ALJ determines that the alleged facts, even if true, would not present a basis for granting the requested relief. Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969).
The respondents’ Motion to Dismiss put the claimant on notice the respondents sought an order dismissing the penalty claim on grounds we previously decided Rule IV(K) did not apply to the facts of this claim. The claimant was afforded an opportunity to respond and asserted that the respondents were liable for penalties for the failure to comply with the August letter because the letter constituted a lawful order. Further, the claimant requested a hearing to determine whether the letter was a “lawful” order within the meaning of § 8-43-304(1).
In dismissing the claim, the ALJ assumed the letter was a lawful order. However, the ALJ determined the respondents had complied with Rule IV and thus there was no violation of the order which would subject the respondents to penalties. Under these circumstances, we fail to perceive how the claimant was prejudiced by the absence of a hearing to present evidence that the letter was a lawful order.
IT IS THEREFORE ORDERED that the ALJ’s order dated March 19, 2001, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Kathy E. Dean
____________________________________ Bill Whitacre
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 August 24, 2001 to the following parties:
Karen S. Malloy, 351 7th St., #19, Limon, CO 80828
Lincoln Community Hospital, 7335 E. Orchard Rd., #200, Englewood, CO 80111-2512
Colorado Hospital Association Trust, Mary Anne Donelson, Support Services, Inc., P. O. Box 3513, Englewood, CO 80155-3513
Andrew C. Gorgery, Esq. and Steven U. Mullens, Esq., P. O. Box 2940, Colorado Springs, CO 80901-2940 (For Claimant)
Fred Ritsema, Esq., 999 18th St., #3100, Denver, CO 80202 (For Respondents)
BY: A. Pendroy