W.C. No. 4-304-561Industrial Claim Appeals Office.
December 11, 1997
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Rumler (ALJ) which denied his request for an order assessing penalties against Republic Indemnity of California (Republic) for their failure to pay temporary disability benefits in a timely manner. We affirm.
The claimant suffered a compensable injury on July 19, 1996. Republic filed a General Admission of Liability admitting liability for temporary total disability benefits commencing July 20, 1996, at a rate of $178.83 per week.
On September 27, 1996, Republic issued a check for past due temporary disability benefits in the amount of $1,788.30. The claimant deposited the check in his credit union account. It was later discovered that, due to a computer programming error the check was invalid because it was drawn on the wrong bank account. The check was not replaced until January 1997.
The ALJ’s findings of fact may be summarized as follows. Ms. Pierce, an adjuster for Crawford Company, Republic’s third party administrator, learned of the check “mix-up” and called Republic to report the mistake. Republic represented that the problem would be fixed “immediately,” but indicated that the invalid check had to returned and exchanged for a corrected check. Ms. Pierce also called the claimant’s attorney and the claimant’s credit union to explain the problem. The credit union represented to Ms. Pierce that, under the circumstances they would not freeze the claimant’s account and would allow him to write checks against the deposit.
In November and December, Ms. Pierce called credit union to find out if Republic’s bank had honored the invalid check. The bank had not honored the check. However, Ms. Pierce did not take immediate steps to replace check because she believed another check which was identical to the wrongfully issued check except for the bank account number would also be rejected by Republic’s bank.
Thereafter, the credit union froze the claimant’s account. When she learned of the freeze, Ms. Pierce then called the credit union to get the freeze removed. On January 7, 1997, Ms. Pierce delivered a replacement check to the claimant’s credit union.
Based upon these findings, the ALJ determined that Republic and its computer programmer were responsible for the check “mix-up.” However, the ALJ found that the claimant failed to sustain his burden to prove that Republic was subject to penalties for failing to replace the check before January 7, 1997. Consequently, the ALJ refused to impose a penalty.
On review, the parties agree on the applicable law. Section 8-43-304(1), C.R.S. 1997, allows an ALJ to impose penalties against an insurer who violates any provision of the Workers’ Compensation Act (Act). However, § 8-43-304(1) does not impose a strict liability standard. Rather, the insurer’s actions are subject to a negligence standard, measured by what a reasonable insurer would have done under similar circumstances Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). Further the reasonableness of the insurer’s actions depends on whether the actions were predicated on a rational argument based in law or fact. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997).
It is also undisputed that Republic violated the Act by failing to replace the check before January 1997. See §8-43-203(2)(d), C.R.S. 1997. However, the claimant contends that Republic knew of the invalid check by October 1996, and that its three-month delay in replacing the check was objectively unreasonable. Therefore, the claimant argues that the ALJ erred in failing to find that the Republic was “negligent.” We reject this argument.
Insofar as the claimant was seeking penalties for Republic’s failure to replace the invalid check before January 1997, it was the claimant’s burden to prove that Republic’s actions were objectively unreasonable. Postlewait v. Midwest Barricade, 905 P.2d 21 (Colo.App. 1995). Whether the claimant sustained his burden of proof is a question of fact for resolution by the ALJ. We must uphold the ALJ’s determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 1997; Coven v. Industrial Commission, 694 P.2d 366 (Colo.App. 1984).
Further, on review the issue is whether the evidence, when viewed in the light most favorable to the prevailing party, is sufficient to support the ALJ’s pertinent findings. Industrial Commission v. Royal Indemnity Co., 124 Colo. 210, 236 P.2d 293
(1951). In this regard, we must defer to the ALJ’s credibility determinations, and the plausible inferences she drew from the record. Monfort Inc. v. Rangel, 867 P.2d 122 (Colo.App. 1993). Moreover, where there is no direct evidence, the issue is whether the ALJ’s inferences were permissible ones in light of the totality of the circumstances. Lantern Inn v. Industrial Commission, 624 P.2d 929 (Colo.App. 1981).
Here, the evidence is subject to conflicting inferences. However, the ALJ was not persuaded that Republic’s actions to replace the wrongfully issued check were objectively unreasonable. To the contrary, the ALJ’s findings of fact reflect her implicit determinations that Ms. Pierce made a reasonable effort to replace the check and to prevent the claimant from being inconvenienced by the mistake. We also understand the ALJ as finding that Ms. Pierce had a rational argument based in fact for not attempting to have a replacement check issued before the invalid check was available for exchange.
Admittedly, the evidence could have been interpreted differently, however, the ALJ’s inferences are a plausible interpretation of the record. Furthermore, we cannot substitute our judgment for that of the ALJ concerning the sufficiency and probative weight of the evidence. City of Durango v. Dunagan, 939 P.2d 496 (Colo.App. 1997. Therefore, we decline the claimant’s invitation to do so.
The record also supports the ALJ’s finding that the claimant failed to present evidence concerning what a reasonable insurer would have done under similar circumstances, and how Republic’s actions fell below that standard. See Conclusions of Law. Under these circumstances, we cannot say that the record compelled a finding that Republic was negligent in failing to replace the invalid check before January 1997. Consequently, we may not disturb the ALJ’s order.
IT IS THEREFORE ORDERED that the ALJ’s order dated March 5, 1997, 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, with service of a copy of the petition upon the Industrial Claim Appeals Office and all other parties, within twenty (20) days after the date this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. 1997.
Copies of this decision were mailed _____________________________ _________________________ to the following parties:
Joseph N. Seawell, 2836 Gaylord St., Denver, CO 80205
Foto Fast, Inc., 1558 California St., Denver, CO 80202-4215
Republic Indemnity, — Crawford Co., Attn: Terri Thornburg, P.O. Box 6502, Englewood, CO 80155-6502
Thomas J. Roberts, Esq., 1650 Emerson St., Denver, CO 80218-1412 (For the Claimant)
Michael A. Perales, Esq., 999 18th St., Ste. 3100, Denver, CO 80202 (For the Respondents)
BY: __________________________