W.C. No. 4-210-382Industrial Claim Appeals Office.
October 3, 1995
FINAL ORDER
The respondent-employer (Access), and its putative insurer (Liberty), have filed separate petitions seeking review of a final order of Administrative Law Judge Gandy (ALJ). Both Access and Liberty contest the order insofar as it increased the claimant’s compensation by fifty percent due to the failure of Access to have required insurance, and insofar as the order penalized Access for failure timely to admit or deny liability. We affirm in part and reverse in part.
This case has a complex procedural history and an understanding of this history is necessary for resolution of the issues involved. In September 1994, the claimant filed an Application for Hearing listing Access as a “non-insured” employer. The application sought a hearing on compensability, medical benefits, and temporary disability benefits. The application also listed the issues of penalties for failure timely to admit or deny liability, and failure to insure. A hearing was set for January 9, 1995, and notice of the hearing was mailed to Access, but not Liberty.
The hearing was held as scheduled, and neither Access nor Liberty appeared. The claimant testified that she sustained a compensable injury on August 13, 1993, and reported the injury to a supervisor. The claimant also gave testimony concerning her disability and need for medical treatment.
Concerning the issue of penalties, the only testimony was as follows:
“Q From your understanding, Access Graphics was not insured on October 13, 1993; is that right?
A Yes.
Q What I mean by not insured, they did not insure you specifically for workers’ compensation insurance.
A Yes, correct.” (Tr. p. 9).
On January 19, 1995, the ALJ entered a Summary Order imposing “penalties” under § 8-43-408(1), C.R.S. (1995 Cum. Supp.), based on the failure of Access to carry workers’ compensation insurance. The order also imposed penalties on Access for failure timely to admit or deny liability, as provided in § 8-43-203(1) (2), C.R.S. (1995 Cum. Supp.)
Following entry of the Summary Order, an attorney appeared for Access and filed a request for specific findings of fact and conclusions of law. A separate attorney entered an appearance on behalf of Liberty and Access, and requested specific findings of fact and conclusions of law. On February 22, 1995, the ALJ issued a written order containing specific findings and reaching the same conclusion as the Summary Order. Significantly, Finding of Fact 6 of the written order states that the “claimant stated that respondent was not insured . . . at the time of her August 13, 1993 problems.”
Following entry of the February order, both Access and Liberty filed petitions to review. Liberty asserted that, because it had not appeared, the ALJ should hold an additional hearing.
The claimant responded by filing a “Motion to Strike Party.” This motion alleged that Liberty asserted no interest in the case prior to the ALJ’s Summary Order, and was not properly a party to the appeal. Liberty responded that it had a “real and articulable interest” in the case, implying that it may have been the insurer of Access at the time of the injury. The ALJ denied the “Motion to Strike Party” and Liberty’s request for an additional hearing.
The claimant also filed a “Motion to Correct the Record.” This motion averred that the portion of the transcript where the claimant testified that the employer was not insured on “October 13” was either incorrect or mistaken. The claimant asserted that the record should reflect that the claimant was referring to the employer’s lack of insurance on “August 13,” the date of the injury. However, the ALJ denied the Motion to Correct the Record on July 7, 1995.
Subsequently, the matter has been transmitted to us for review of the petitions to review and briefs filed by Access and Liberty.
I.
Liberty asserts that imposition of penalties against Access for lack of insurance and failure timely to admit or deny liability was improper because Access was, in fact, insured by Liberty. Liberty concedes that the record does not show that it was the insurer, but argues that it was denied due process because it was not properly notified of the hearing. Consequently, Liberty reasons that the matter should be remanded for an additional hearing so that it can prove it is the insurer for Access.
For her part, the claimant argues that Liberty had no right to file a brief on behalf of Access because Access filed its own brief. Further, the claimant contends that Liberty lacks “standing” to appeal because it was not a party to the claim, and is not adversely affected by the ALJ’s order. In any event, the claimant asserts that Liberty’s failure to receive notice does not justify a new hearing to establish that Liberty insured Access. Because we agree with the claimant’s substantive position, we do not consider her arguments concerning Liberty’s “standing” and right to file a brief on behalf of Access.
Here, Access was notified of the hearing, and the application explicitly advised Access that the claimant was seeking an increase in compensation for lack of insurance, and a penalty for failure timely to admit or deny liability. Obviously, proof that Access carried workers’ compensation insurance would have negated increased compensation under §8-43-408(1), and relieved Access of any responsibility to admit or deny liability under § 8-43-203(1). See U.S. Fidelity Guaranty, Inc. v. Kourlis, 868 P.2d 1158 (Colo.App. 1994); Campion v. Barta Builders, 780 P.2d 23 (Colo.App. 1989) (insured employers may not be penalized for failure to admit or deny).
In our view, the question is whether, considering that Access failed to appear at the hearing and assert the existence of insurance, Liberty must now be allowed to enter the case and negate the penalties on the ground that Access was insured. We conclude that the ALJ was not obliged to hold an additional hearing for this purpose.
Generally speaking, the ALJ has wide discretion in determining whether to allow the presentation of additional evidence following a hearing. Section 8-43-301(5), C.R.S. (1995 Cum. Supp.); IPMC Transportation Co. v. Industrial Claim Appeals Office, 753 P.2d 803 (Colo.App. 1988). In determining whether to take additional evidence, the ALJ may consider whether, through the exercise of due diligence, the evidence could have been presented at the time of the original hearing. See Henderson v. Fischer Imaging, W.C. No. 4-181-304, April 17, 1995.
Here, the record is devoid of any explanation as to why Access failed to appear at the hearing, or request that its putative insurer, Liberty, appear on its behalf. Neither is there any assertion that, prior to the hearing, the claimant knew or reasonably should have known that Liberty was the insurer of Access. Thus, we do not believe the ALJ abused his discretion in failing to allow the presentation of additional evidence on the issue of insurance.
Moreover, under the facts of this case, we are not persuaded that Liberty was entitled to a separate notice of hearing. Under § 8-44-105, C.R.S. (1995 Cum. Supp.), the payment of benefits by a workers’ compensation insurer discharges “to the extent of such payment the obligation of the employer to the employee.” Section 8-44-105 also requires policies to state that jurisdiction of the employer is jurisdiction over the insurance carrier, and “in all things, [the carrier] shall be bound by and subject to the orders, findings, decisions, or awards rendered against the employer.” It may be gleaned from this statute that the primary responsibility for payment of workers’ compensation benefits rests with the employer, and “that it was the policy of the legislature to place the obligation of compensation in the first instance on the employer.” Tri-State Insurance Company v. Industrial Commission, 151 Colo. 494, 379 P.2d 388 (1963). In a similar vein, employers and insurers are generally considered to be “identified in interest.” Consequently, the admission of one is binding on the other. A. Larson, Workmen’s Compensation Law, § 79.42 (1994).
It follows that we do not believe the claimant had any independent obligation to ascertain whether Access was insured and to join Liberty prior to the time the hearing was held. Rather, it was the responsibility of Access to notify the claimant of the existence of insurance and provide for Liberty’s participation in the case. Because Access failed to discharge this obligation, we do not believe the statute confers any separate right on Liberty to intervene in the case and relieve the employer of liability for penalties which could have been avoided if Access had acted to protect its own interests. Cf. Industrial Commission v. Riley, 653 P.2d 723 (Colo. 1982) (failure to name insurance carrier as an “adverse party” on appeal did not warrant dismissal of appeal where the issue was the claimant’s alleged right to receive penalty from the employer for its failure to admit or deny liability).
Of further significance, we note that the employer will generally be in the best position to determine whether it carried workers’ compensation insurance at the time of the injury. Thus, the onus should be on the employer to assert the existence of insurance, not the claimant to discover its existence.
II.
Both Liberty and Access argue that the ALJ’s assessment of additional compensation based upon non-insurance, and imposition of a penalty on Access for failure timely to admit or deny liability, are not supported by substantial evidence in the record. In particular, they argue that the claimant’s testimony was not “competent” on the issue of insurance. Further, Access points out that the claimant never testified whether Access was insured on August 13, the date of the injury; she merely testified that Access was not insured on October 13. We conclude that the evidence is insufficient to support an award of additional compensation under §8-43-408(1), but is sufficient to support a penalty for failure timely to admit or deny liability.
As an initial matter, we again decline to discuss the procedural matters surrounding Liberty’s standing to raise the sufficiency of the evidence. Access has filed its own brief and independently raised the sufficiency of the evidence to support the order. Therefore, we must consider the issue regardless of Liberty’s brief.
Section 8-43-408(1) provides for a fifty percent increase in compensation where the employer “at the time of an injury has not complied with the insurance provisions” of the Act. Because application of this statute requires a showing that the employer did not maintain insurance, the claimant bore the burden to prove that Access lacked insurance at the time of the injury. See Cowin Co. v. Medina, 860 P.2d 535 (Colo.App. 1992); § 8-43-201, C.R.S. (1995 Cum. Supp.).
Here, as Access argues, the only evidence in the record is the claimant’s testimony. The claimant did not testify concerning whether or not the employer had insurance on August 13, the date of the injury. Instead, the claimant was merely asked whether the employer had insurance on October 13, and she replied negatively. It follows that the ALJ’s Finding of Fact 6 is not supported by substantial evidence because the claimant did not testify that Access lacked insurance on August 13. Since the claimant failed to satisfy her burden of proof, the claim for increased compensation under § 8-43-408(1) must fail.
We have considered the claimant’s assertion that, under C.R.C.P. 8(d), the failure of Access to file a response to the application for hearing constitutes an “admission” that it was not insured. However, the rules of civil procedure do not apply in workers’ compensation cases insofar as they are inconsistent or in conflict with procedures and practices established by the Act. Nova v. Industrial Claim Appeals Office, 754 P.2d 800
(Colo.App. 1988). Section 8-43-211, C.R.S. (1995 Cum. Supp.), and Rule of Procedure VIII(A), 7 Code Colo. Reg. 1101-3 at 21-22, both set forth provisions concerning requests for a hearing. Neither the statute, nor Rule VIII(A), provides that failure to file a response to application for hearing constitutes an “admission” of all issues raised in the application. However, Rule VIII(A) (5) and (6) prohibit the addition of witnesses or issues not listed in the response, except on approval of the ALJ. Consequently, we conclude that C.R.C.P. 8(d) is inconsistent with the provisions of the Act and Rules of Procedure, and therefore, not applicabl Cf. Gardner v. Friend, 849 P.2d 817 (Colo.App. 1992).
III.
However, the sufficiency of the evidence with respect to the penalty for failure timely to admit or deny liability poses a different issue. Section 8-43-203(1) states that the “employer or, if insured, the employer’s insurance carrier will notify in writing the division and the injured employee” whether liability is admitted or denied. As noted previously, the Court of Appeals has held that an insured employer may not be penalized under this statute because the responsibility to admit or deny falls to the insurance carrier.
We can find no cases which address the question of whether the claimant must affirmatively prove lack of insurance under this statute, or whether proof of insurance is in the nature of an affirmative defense which the employer may assert to rebut the claimant’s prima facie case for a penalty. We conclude that proof of insurance is in the nature of an affirmative defense for purposes of this statute, and therefore, the claimant presented a prima facie case for imposition of a penalty against Access.
In Cowin Co. v. Medina, supra, the Court of Appeals set forth several factors to be considered in determining which party has the burden of proof on a particular issue. The court indicated that a “party relying upon a statutory exception has the burden of establishing the factual predicate for its application.” The court also stated that “consideration should be given to which party would prevail in the absence of any evidence upon the subject,” with the burden “normally placed upon the adverse party.” Cowin and Co. v. Medina, 860 P.2d at 538.
As we have already noted, the Act establishes that the initial obligation to pay compensation runs from the employer to the employee. Further, a claimant is required to report his injury to the employer. Section 8-43-102, C.R.S. (1995 Cum. Supp.). The duty to notify the insurer falls to the employer. Section 8-43-102(2), C.R.S. (1995 Cum. Supp.); §8-43-103(1), C.R.S. (1995 Cum. Supp.).
Consequently, we believe where, as here, the claimant presents testimony that she suffered an injury, reported the injury to the employer in a timely fashion, and that no admission or denial of liability was filed, the claimant has made a prima facie case for imposition of a penalty against the employer under § 8-43-203(1). We view the existence of insurance as a “statutory exception” which vitiates the employer’s responsibility to admit or deny liability under § 8-43-203(1). Consequently, we conclude that, in the absence of any evidence concerning insurance, the claimant must prevail against the employer. Cowin Co. v. Medina, supra.
It follows that, in this case, the ALJ properly imposed the penalty. The claimant presented sufficient evidence of an injury, notice to the employer and the absence of an admission or denial of liability. The employer presented no evidence that it was insured, and therefore, the statutory exception in cases of insurance is not applicable.
IT IS THEREFORE ORDERED that the ALJ’s order, dated February 22, 1995, is reversed insofar as it assessed additional compensation based upon §8-43-408(1), C.R.S. (1995 Cum. Supp.).
IT IS FURTHER ORDERED that the ALJ’s order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Bill Whitacre
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 October 3, 1995 to the following parties:
Rachelle A. Smedley, 1459 W. Pinedale Ave., Fresno, CA 93711
Access Graphics Technology, Inc., 1426 Pearl St., #400, Boulder, CO 80302-5340
Liberty Mutual Insurance Company, 13111 E. Briarwood Ave., #100, Englewood, CO 80112
Jeff Francis, Esq., 1900 Grant St., Ste. 1030, Denver, CO 80203 (For the Claimant)
Robert M. Burdick, Esq., 1881 9th St., Ste. 102, Boulder, CO 80302 (For Access)
Raymond A. Melton, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Liberty/Access)
By: ______________________