W.C. No. 3-069-881Industrial Claim Appeals Office.
November 14, 1996
The claimant seeks review of an order of Administrative Law Judge Martinez (ALJ) which denied his claim for penalties based on the respondents’ delay in paying medical benefits, and determined that the claimant was overpaid benefits due to his receipt of a retroactive award of social security disability insurance (SSDI) benefits. We set aside that portion of the order denying the claim for penalties and remand for entry of a new order on this issue. We dismiss without prejudice the claimant’s petition insofar as it pertains to the overpayment issue.
I.
Concerning the claim for penalties, the ALJ found that the claimant sustained a compensable injury in December 1990. In January 1995, the ALJ entered an order awarding ongoing medical benefits pursuant to Grover v. Industrial Commission, 759 P.2d 705
(Colo. 1988).
Between January 11, 1996 and February 14, 1996, the CCIA denied payment of three separate medical bills, at least two of which were submitted by the claimant’s treating physicians. On February 22, 1996, the claimant filed an application for hearing seeking penalties on the ground that the respondents’ denial of payment constituted a violation of the January 1995 order fo Grover medical benefits.
However, the ALJ found that neither the claimant nor his counsel “communicated with CCIA at any time between the denial of these bills and filing of the Application for Hearing in an attempt to resolve the situation.” Moreover, the ALJ stated that the CCIA had no prior notice of a “problem or dispute regarding the bill denials.” Under these circumstances, the ALJ concluded that imposition of penalties was not “warranted” because the “denied medical bills were paid within twenty (20) days after Respondents were first notified by Claimant’s Application for Hearing.”
On review, the claimant contends that the ALJ’s denial of penalties is not supported by applicable law. Specifically, the claimant argues that the respondents’ denial of payment of the medical bills was unreasonable, and justifies penalties for violation of an order as provided in § 8-43-304(1), C.R.S. (1996 Cum. Supp.). The claimant also asserts that § 8-43-304(1) does not create any requirement that he “notify” the respondents of the violation, or attempt to “negotiate” any resolution prior to seeking penalties. Conversely, the respondents assert that the ALJ “implicitly” determined that their conduct was reasonable and not subject to penalties. We conclude that the ALJ’s findings of fact are insufficient to permit appellate review, and therefore, remand for entry of a new order. Section 8-43-301(8), C.R.S. (1996 Cum. Supp.).
Section 8-43-304(1) provides for imposition of a penalty against a party who “fails, neglects, or refuses to obey any lawful order.” Under this statute, an insurer’s violation of an ALJ’s order is subject to penalties if, when measured by the objective standard of negligence, the insurer’s action was unreasonable. Moreover, this standard does not require the insurer to “know” that its conduct in violating the order was unreasonable or in bad faith. Pueblo School District No. 70 v. Toth, ___ P.2d ___ (Colo.App. No. 95CA0189, January 25, 1996) Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). Finally, each day that the insurer fails to comply with an order constitutes a “separate and distinct violation” for purposes of calculating the penalties. Section 8-43-305, C.R.S. (1996 Cum. Supp.).
It follows that we agree with the claimant that, insofar as the ALJ held that determination of the reasonableness of the respondents’ conduct in denying payment for the bills depended on notice from or negotiation with the claimant, he erred. There is no requirement that an insurer be notified that the claimant believes the insurer’s conduct to be in violation of an order prior to imposing penalties. To the contrary, the statute does not turn on the respondents’ awareness that their conduct is considered unreasonable. Similarly, there is no requirement that the claimant attempt to negotiate with the insurer in an attempt to gain compliance with an order. Rather, a violation occurs on each day that an insurer unreasonably disobeys an order.
On remand, the ALJ shall make specific findings concerning whether the insurer’s refusal to pay the medical benefits constituted a violation of the ALJ’s 1995 order. In determining this issue, the ALJ shall make specific determinations, commencing with the date each bill was first denied, of whether the insurer’s conduct was unreasonable under the “objective standard.” Needless to say, these determinations should be made without regard to whether or not the claimant subsequently notified the insurer that he considered its conduct to be unreasonable and in violation of the ALJ’s 1995 order. Cf. Adkinson v. National Rooter,
W.C. No. 4-197-635, August 11, 1995 (right to cure provisions found at §8-43-304(4) do not preclude imposition of a penalty for periods prior to the time the claimant filed an application for hearing requesting penalties).
Although it is not clear, it is possible that the ALJ was applying the “cure” provisions found at § 8-43-304(4), C.R.S. (1996 Cum. Supp.). This statute provides in pertinent part that:
“After the date of mailing of such an application, an alleged violator shall have twenty days to cure the violation. If the violator cures the violation within such twenty-day period, and the party seeking such penalty fails to prove by clear and convincing evidence that the alleged violator knew or reasonably should have known such person was in violation, no penalty shall be assessed.”
We have previously held that the right to cure provision is substantive. Therefore, it has no application in cases, such as this, where the injury occurred prior to the June 1, 1994 enactment of the cure provision. See 1994 Colo. Sess. Laws, ch. 309, pp. 1878-1879, 1881; Kinninger v. Industrial Claim Appeals Office, 759 P.2d 766 (Colo.App. 1988). The basis for this conclusion is discussed in Wells v. Town of Breckenridge,
W.C. 4-429-859, May 18, 1995, where we reasoned that § 8-43-304(4) caused a substantive change in the law because it requires the claimant to prove, after evidence of cure, that the violator had “actual or constructive knowledge of the violation.” We pointed out that prior to the statute there was no requirement that the claimant prove the violator’s state of mind in order to prove a penalty claim. Pueblo School District No. 70 v. Toth, supra; Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra. It follows that, insofar as the ALJ intended to apply the cure provision, he erred.
II.
The claimant next contends that the ALJ erred in determining that he was overpaid benefits due to the retroactive award of SSDI benefits. However, we conclude that the ALJ’s order is not final with respect to this issue, and therefore, dismiss the petition to review on the issue.
Section 8-43-301(2), C.R.S. (1996 Cum. Supp.), provides that a party dissatisfied with an order may file a petition to review an order with requires any party to pay a penalty or benefits or denies a claimant any benefit or penalty. Orders which do not require payment of benefits or penalties or deny the claimant benefits or penalties are interlocutory and not subject to review See Director of the Division of Labor v. Smith, 725 P.2d 1161
(Colo.App. 1986). Moreover, orders may be partially final and reviewable, and partially interlocutory. Oxford Chemicals, Inc. v. Richardson, 782 P.2d 843 (Colo.App. 1989).
Here, the ALJ’s order determined that the claimant has been overpaid benefits due to his receipt of retroactive SSDI benefits. However, the ALJ expressly declined to rule on the method of recovery of the overpayment, and stated that “if a dispute in the collection process arises, either party may file an application for hearing on the issue.” Consequently, the ALJ’s order does not diminish the claimant’s entitlement to ongoing temporary disability benefits, and has not resulted in an actual denial of benefits at this time. Consequently, this portion of the order is interlocutory and not currently subject to review.
IT IS THEREFORE ORDERED that the ALJ’s order dated July 18, 1996, is set aside insofar as it denied the claim for penalties. The matter is remanded for entry of a new order consistent with the views expressed herein.
IT IS FURTHER ORDERED that the claimant’s petition to review is dismissed without prejudice insofar as it pertains to the overpayment issue.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Bill Whitacre
NOTICE
An action to modify or vacate the Order may be commenced inthe Colorado Court of Appeals, 2 East 14th Avenue, Denver,Colorado 80203, by filing a petition to review with the court,with service of a copy of the petition upon the Industrial ClaimAppeals Office and all other parties, within twenty (20) daysafter the date the Order was mailed, pursuant to §§ 8-43-301(10)and 307, C. R. S. (1996 Cum. Supp.).
Copies of this decision were mailed November 14, 1996 to the following parties:
Charles D. Stevens, 519 Rockaway, Grand Junction, CO 81505
Monument Well Service Co., P.O. Box 2641, Grand Junction, CO 81502-2641
Colorado Compensation Insurance Authority, Attn: Curt Kriksciun, Esq. (Interagency Mail)
Thomas W. Blake, Esq., 744 Horizon Ct., Ste. 360, Grand Junction, CO 81506
(For the Respondents)
Christopher Seidman, Esq., P.O. Box 3207, Grand Junction, CO 81502 (For the Claimant)
By: __________________________