W.C. No. 4-833-191.Industrial Claim Appeals Office.
April 27, 2011.
ORDER
The respondents seek review of an order of the Director of the Division of Workers, Compensation (Director) dated December 10, 2010 that imposed penalties against them for failing to either admit or deny liability as instructed. We set aside the imposition of penalties and remand this matter to the Director for his further consideration.
The record before us primarily consists of correspondence from the respondents and two orders issued by the Director, together with computer printouts that are ostensibly generated by the Division of Workers’ Compensation (Division) and the Division of Labor. It appears from a review of the file that on November 4, 2010 the Director issued an order to the parties indicating that the respondent insurer filed a first report of injury on August 21, 2010, but failed to either admit or deny liability. According to the order the Division of Workers’ Compensation notified the claimant that it had not received a position statement in this matter. The Director ordered the insurer to file within 15 days from the issuance of the order “a position statement either by an Admission of Liability or an electronic Notice of Contest or submit another appropriate explanation as to why a position statement is not required.”
In the subsequent penalty order under consideration the Director states that the insurer failed to file either an admission of liability or a notice of contest. As we read his order, the Director determined that the insurer was subject to penalties under §§ 8-43-304 and-305, C.R.S. and imposed a penalty of $40 a day from November 22, 2010 and continuing until the insurer filed either an admission of liability, a notice of contest, “or another explanation as to why a position statement is not required.”
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On December 30, 2010 the Division received a letter from the respondents’ counsel dated December 23, 2010 explaining that they were not aware of litigation in Colorado and that the claimant was pursuing a claim in California. The respondents denied all liability in the matter and asked that the letter serve as a petition to review the Director’s order imposing penalties. On January 7, 2011 the Division received a letter from the respondent insurer indicating that it had incorrectly indicated Colorado as the benefit state, which resulted in a first report being issued in error.
Section 8-43-203(l)(a) C.R.S. provides that the employer or, if insured, the employer’s insurance carrier shall notify in writing the Division and the injured employee whether liability is admitted or contested. Rule 5-2(C) reiterates that the insurer shall state whether liability is admitted or contested within 20 days after the first report of injury is filed with the Division. The Director specifically referred to these provisions in his orders.
It appears from the Director’s orders that the Division received a first report of injury from the insurer on August 21, 2010, but no corresponding indication of the insurer’s position regarding admitting or contesting liability. The Director ordered the insurer to respond and either indicate whether it was admitting or contesting liability or explain why it was not required to do so. The insurer failed to respond in a timely manner and the Director imposed penalties under the general penalty provision.
As pertinent here, § 8-43-304(1), C.R.S. provides that any employer or insurer who fails or neglects to obey any lawful order shall be punished by a fine of not more than $500 per day for each such offense. See Holliday v. Bestop, Inc., 23 P.3d 700, 706 (Colo. 2001.) (penalties under general penalty provision available for violation of orders regardless of whether other penalties specifically provided); Section `8-40-201(15) defines an “order” as “any decision, finding and award, direction, rule, regulation, or other determination arrived at by the director or an administrative law judge.” The insurer failed to timely respond to the Director’s initial order following its first report of injury, therefore resulting in the Director issuing his penalty order under § 8-43-304(1), C.R.S.
Although the respondents failed to timely respond as ordered by the Director, we conclude that under the circumstances it is appropriate to remand this matter to the Director in order to consider the respondents’ assertions regarding the underlying proceedings. An employer or insurer fails to obey an order if it fails to take the action that a reasonable employer insurer would take to comply with the order. Jiminez v. Industrial Claim Appeals Office, 107 P.3d 965, 967 (Colo. App. 2003).
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The respondents did not expressly address the lateness of their responses; however, their counsel indicated that the penalty order came as a surprise because the respondents were not aware of any litigation in Colorado. In any event, the Director sought an explanation from the respondents as to whether it was necessary for them to either admit or deny liability in this matter. Their responses strongly suggest that the underlying claim is being litigated in California and that the first report of injury filed here was done in error. In this regard, we also note that the record contains a letter dated December 1, 2010 from the claimant’s attorney addressed to the Department of Labor and Employment’s “claims manager.” The letter is stamped as being received by the Division of Workers’ Compensation on December 8, 2010. It states that the claimant has not filed a claim in Colorado, but rather that his only claim has been filed in California. We conclude that it is therefore appropriate for the Director to determine whether, under the circumstances, it is necessary for the respondents to admit or deny liability in light of their responses:
The Director has original jurisdiction to resolve workers’ compensation claim; however, that authority exists only for cases in which relief is sought under the Workers’ Compensation Act of Colorado, §§ 8-40-101 to 8-47-209, C.R.S. (Act) See § 8-43-201, C.R.S. (Director has original jurisdiction to hear and decide all matters arising under the Act). In this case the only indication of the nature of the underlying claim is from the respondents’ untimely replies in which they assert that the claimant is seeking workers’ compensation benefits for, a claim in California. Documents submitted by the respondents indicate that the claimant resides in Colorado, but that the claimant seeks benefits in California based on an alleged cumulative injury occurring in that state. There is no indication from the file that the claimant is seeking benefits under our Act, which would provide the underlying basis for a penalty action in this matter.
We therefore set aside the penalty assessment and remand this matter to the Director to determine whether, it is necessary for the respondents to admit or deny liability in this matter given their responses concerning the underlying claim for workers’ compensation benefits in another state and their erroneous filing of a first report of injury.
In the event that the Director determines that further proceedings are warranted, we direct the respondents to C.R.C.P. 221.1, governing the appearance of out-of-state counsel before administrative agencies.
IT IS THEREFORE ORDERED that the Director’s order dated December 10, 2010 is set aside and remanded for further proceedings consistent with the foregoing.
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INDUSTRIAL CLAIM APPEALS PANEL
_______________________ John D. Baird
_______________________ Curt Kriksciun
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BEN STEELE, PALISADE, CO, (Claimant).
PACIFIC EMPLOYERS INSURANCE, C/O: ACE ESIS INSURANCE, TAMPA, FL, (Insurer).
LAW OFFICES OF JEFFREY N SARDELL, INC., Attn: JEFFREY N SARDELL, ESQ., CALABASAS, CA, (For Respondents).
XCHANGING, Attn; JIM WENDERING, SACRAMENTO, CA, (Other Party).
DIRECTOR, PAUL TAUREIELLO, DIVISION OF WORKERS’ COMPENSATION, DENVER, CO (Other Party 2).
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