W.C. No. 4-324-280Industrial Claim Appeals Office.
November 26, 2002
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Henk (ALJ Henk) which assessed penalties for failure timely to pay benefits in accordance with an order of ALJ Stuber. The respondents contend that, in light of previous payments to the claimant, there was no disobedience of the order. We affirm.
The history of this case is complex and the record is sketchy. However, the following facts are gleaned from the record made at the time of the hearing on the penalty issue.
The claimant sustained a compensable back injury in November 1996. In October 1997, the claimant underwent spinal fusion surgery at L4-5. On April 2, 1998, the claimant was placed at maximum medical improvement (MMI) and assigned a 24 percent whole person impairment rating, some of which was apportioned to a prior injury. (Order of ALJ Stuber, Exhibit 1). Apparently, the respondents admitted liability for temporary disability benefits from November 1996 through April 1, 1998.
The claimant continued to experience symptoms, and another fusion surgery was performed in December 1999. The respondents admitted liability for temporary disability benefits commencing December 7, 1999, and continued to pay them until the claimant reached MMI for the second time on September 14, 2000. (Exhibit 5). The respondents then filed a final admission of liability (FAL) on December 6, 2000, admitting for permanent partial disability benefits based on a 24 percent whole person impairment. The claimant requested a Division-sponsored medical examination (DIME). On April 2, 2001, a DIME physician opined the claimant sustained a 33 percent whole person impairment. (Order of ALJ Stuber, Exhibit 1).
The respondents challenged the DIME physician’s failure to apportion the impairment rating, and the matter proceeded to hearing before ALJ Stuber on July 9, 2001. In an order dated August 1, 2001, ALJ Stuber found the record did not support apportionment. Thus, he ordered the respondents to pay medical impairment benefits based on the DIME physician’s 33 percent rating while “taking credit for all previous payments of medical impairment benefits in this case.” (Order of ALJ Stuber, Exhibit 1). ALJ Stuber’s order was not appealed.
On October 3, 2001, the respondent-insurer issued a check to the claimant in the amount of $13,383.76. (Exhibit 4). On October 15, 2001, the respondents filed an FAL admitting for permanent partial disability benefits in the amount of $68,590.37 “beginning” September 14, 2000. The FAL also reflected “PREVIOUS PPD PAID OF $20,045.43” and “$2581.28 TTD OVERPMT.” (Exhibit 5).
The claimant sought a hearing, arguing the respondents should be penalized for failure timely to pay benefits in accordance with ALJ Stuber’s order. Relying on § 8-43-401(2)(a), C.R.S. 2002, ALJ Henk concluded that because the respondents did not appeal ALJ Stuber’s order, they had 30 days (or through September 1, 2001), to pay the permanent partial disability benefits ordered by ALJ Stuber. However, because no payment was made until October 3, 2001, the ALJ assessed a penalty of $100 per day for a period of 32 days (September 2, 2001 through October 3, 2001). In so doing, ALJ Henk found the respondents provided “no appropriate explanation” for their conduct, and the conduct was not objectively reasonable.
On appeal, the respondents’ only argument is that no benefits were due the claimant under ALJ Stuber’s order prior to October 3, 2001, because of the previous payments of permanent partial disability benefits and the overpayment of temporary disability benefits claimed in the October 15 FAL. The respondents reason that from September 14, 2000 (second MMI date) to September 19, 2001 (2 weeks before October 3 payment issued), there are 52 weeks and 5 days. Therefore, the respondents argue, the prior payments of permanent partial disability and overpaid temporary disability (totaling $22,626.81) exceeded their maximum potential liability for permanent partial disability benefits. Hence, the respondents contend there was no violation of ALJ Stuber’s order for purposes of imposing penalties under § 8-43-304(1), C.R.S. 2002.
In order to impose a penalty under § 8-43-304(1), it must be found that there was a violation of an order, and that the violation was not objectively reasonable. See Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). Thus, the ALJ must determine whether the insurer offered a reasonable factual or legal explanation for its actions. Human Resource Co. v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999). Determination of these issues is for the ALJ as fact-finder, and we may not interfere if the order is supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 2002; Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996).
Rule of Procedure IV (E)(1), 7 Code Colo. Reg. 1101-3 at 5, provides that “benefits awarded by order are due on the date of the order, except when a petition to review the order is filed.” Section 8-43-401(2)(a) provides that in cases where no appeal has been filed, an insurer “shall pay benefits within thirty days of when any benefits are due.” In our view, ALJ Stuber’s order implicitly incorporates these provisions. Hence, if any permanent partial disability benefits were due on August 1, 2001 (date of ALJ Stuber’s order), the respondents may be penalized for failing to obey the order because no payment was made until October 3, 2001, 32 days after ALJ Stuber’s order was mailed. See Holliday v. Bestop, Inc., 23 P.3d 700 (Colo. 2001).
Here, ALJ Henk ruled the respondents’ contention that the previously paid benefits offset their liability, and that the claimant “didn’t miss anything between August and October” (Transcript p. 13) was not objectively reasonable. (Finding of Fact 5). In our view, the evidence fully supports ALJ Henk’s determination because the respondents’ argument ignores the fact that the claimant was owed permanent partial disability benefits for the period from April 2, 1998, when he first reached MMI, through December 6, 1999, when his condition worsened and he again became temporarily disabled.
MMI is the point in time when the claimant’s condition becomes stable and impairment becomes determinable. Section 8-40-201(11.5), C.R.S. 2002. Hence, MMI establishes the line of demarcation between temporary disability and permanent disability. See Monfort Transportation v. Industrial Claim Appeals Office, 942 P.2d 1358 (Colo.App. 1997). Consistent with this rule, § 8-42-107(8)(d), C.R.S. 2002, provides that medical impairment benefits are paid beginning on the date of MMI. Indeed, that is why temporary disability and permanent disability benefits are usually paid in a consecutive fashion. U.S. West Communications, Inc. v. Industrial Claim Appeals Office, 978 P.2d 154
(Colo.App. 1999). Further, once a claimant reaches MMI, his disability is considered permanent. The disability again becomes temporary if the claimant demonstrates a worsened condition which results in additional temporary impairment of the claimant’s earning capacity. City of Colorado Springs v. Industrial Claim Appeals Office, 954 P.2d 637 (Colo.App. 1997).
Here, the respondents’ theory concerning the previously paid permanent partial disability and overpaid temporary disability benefits ignores the claimant’s disability from April 2, 1998, when the claimant first reached MMI, through December 6, 1999. During this period, the claimant’s condition worsened and the respondents again admitted for temporary disability benefits. In our view, the claimant was permanently and partially disabled during this period of time, and he was entitled to receive compensation for the permanent loss of earning capacity which occurred during this time frame. Cf. National Fruit Product v. Crespin, 952 P.2d 1207 (Colo.App. 1997) (respondents not entitled to offset previously paid permanent partial disability benefits against subsequent permanent total disability benefits because the claimant would receive no compensation for period of time he was permanently and partially disabled). Hence, the permanent partial disability and temporary disability benefits for which the respondents claimed credit in the October 15 FAL must be viewed as first discharging the respondents’ liability for permanent partial disability benefits for the period of April 2, 1998 through December 6, 1999, not the period from September 14, 2000 through the date of ALJ Stuber’s order.
Further, we have no doubt that this method of accounting means that additional permanent disability benefits were due and owing on August 1, 2001, when ALJ Stuber issued his order. Section 8-42-107(8)(d) provides that medical impairment benefits “shall be paid at the temporary disability rate but not less than one hundred fifty dollars per week and not more than fifty percent of the state average weekly wage.” Here, the claimant’s temporary disability rate exceeded fifty percent of the 1996 state average weekly wage of $514.76. Hence, the claimant’s permanent disability benefits were payable at the weekly rate of $257.38. (Note this is consistent with permanent partial rate mentioned in Exhibit 4). Thus, by our calculation, the claimant was owed approximately $22,574 for the first period of permanent disability. This amount exceeds the credit claimed by the respondent in the FAL.
Indeed, the documentation contained in Exhibit 4, which includes the check issued on October 3, supports this conclusion. The document may be interpreted to mean the check was issued for permanent partial disability benefits owed for the period of October 12, 2000 through October 10, 2001. Certainly, this suggests the respondent insurer believed that ALJ Stuber’s order resulted in immediate liability for additional permanent disability benefits.
IT IS THEREFORE ORDERED that the ALJ Henk’s order dated February 12, 2002, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________
David Cain
___________________________________
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. 2002. 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 Street, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed _______November 26, 2002____ to the following parties:
Gregory Porter, 3640 St. Paul, Denver, CO 80205
Res-Care, Inc., 10184 W. Belleview, #300, Littleton, CO 80127
Mary Anders, Liberty Mutual Group, P. O. Box 168208, Irving, TX 75016-8205
Liberty Mutual Group, 10770 E. Briarwood Ave., #200, Englewood, CO 80112-3853
Renee C. Ozer, Esq., 18 E. Monument St., Colorado Springs, CO 80903 (For Claimant)
David G. Kroll, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)
By: A. Hurtado