Opinion
W.C. No. 4-314-848
March 2, 1999.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which awarded medical benefits, apportioned permanent partial disability benefits and denied penalties for the respondents' late admission of liability for permanent partial disability. We affirm the awards of medical and permanent disability benefits, reverse the penalty order and remand for the entry of a new order concerning the amount of penalties to be imposed.
In 1990, the claimant suffered a back injury while employed for the respondent-employer. Following the injury, the claimant resumed his job as a delivery driver. The claimant reached maximum medical improvement (MMI) in 1991, and Dr. Fitzgerald rated the claimant's permanent medical impairment as 15 percent of the whole person.
On March 15, 1995, the claimant suffered a new back injury, which is the subject of this claim. On July 15, 1997, Dr. Hall rated the claimant's permanent medical impairment as 24 percent of the whole person. Dr. Hall subsequently apportioned all but 9 percent of the impairment to the 1990 injury. On October 29, 1997, the respondents filed a Final Admission of Liability for permanent partial disability benefits based upon 9 percent whole person impairment. We shall address additional facts in relation to the specific arguments on review.
The matter was heard by the ALJ at a hearing on February 3, 1998. The issues endorsed for adjudication were medical benefits, the apportionment of permanent partial disability benefits and penalties for the respondents' violation of Rule IV(N), Code Colo. Reg. 1101-3. The ALJ determined that the respondents are liable for the cost of the lowest of three hot tub bids submitted by the claimant. The ALJ also apportioned permanent partial disability benefits and denied the claimant's request for penalties.
I.
On review, the claimant contends the ALJ erroneously apportioned permanent disability. We disagree.
The applicable law is undisputed. Section 8-42-104(2), C.R.S. 1998, provides that:
"In case there is a previous disability, the percentage of disability for a subsequent injury shall be determined by computing the percentage of the entire disability and deducting therefrom the percentage of the previous disability as it existed at the time of the subsequent injury."
As argued by the respondent, the application of § 8-42-104(2) is governed by the principles established in Askew v. Industrial Claim Appeals Office, 927 P.2d 1333 (Colo. 1996) [copy in record]. In Askew, the Supreme Court held that when apportioning permanent partial disability benefits, "medical impairment" cannot be equated to "disability." In so holding, the Askew court relied on the American Medical Association Guides to the Evaluation of Permanent Impairment, Third Edition (Revised), for the proposition that "impairment" relates to an alteration of an individual's health status as assessed by medical means, while "disability" pertains to a person's ability to meet "personal, social or occupational demands," and is assessed by non-medical means. The Askew court held that under § 8-42-104(2), apportionment is only appropriate if the preexisting condition constitutes a "disability."
At the commencement of the hearing, the parties agreed that if the 1990 injury did not result in a "disability" within the meaning of § 8-42-104(2), the claimant is entitled to medical impairment benefits for the 1995 injury based upon 24 percent whole person impairment. (Tr. pp 3-9). Conversely, the parties agreed that if apportionment is proper, the claimant suffered 9 percent whole person impairment from the 1995 injury.
On conflicting evidence, the ALJ determined that the 1990 injury resulted in a "disability" within the meaning of § 8-42-104(2) and Askew. Therefore, the ALJ denied the claim for permanent partial disability benefits in excess of the admitted benefits.
The claimant contends that the respondents' request for apportionment of the 1990 injury effectively allows them to advance inconsistent positions. In support, the claimant relies on former § 8-42-110(3), C.R.S. 1990 [reemployment statute], which provides that if the employer reemploys the claimant at his pre-injury rate of pay and extends the usual wage adjustments, the respondents' liability for permanent partial disability is limited to permanent medical impairment. The claimant argues that the 1990 injury is subject to the provisions of former § 8-42-110(3). The claimant also argues that the respondents' defense under the reemployment statute is inconsistent with their assertion that the 1990 injury constitutes a "disability" under § 8-42-104(2). We disagree.
There is no evidence the respondents asserted the reemployment statute to limit their liability for permanent partial disability benefits in the 1990 claim. To the contrary, the claimant admitted that he did not disagree with Dr. Fitzgerald's 15 percent impairment rating and that he was paid permanent partial disability benefits in accordance with that rating. (Tr. pp. 32, 33). Therefore, the record does not support the claimant's contention that the respondents have asserted inconsistent positions.
The claimant also contends that there is no evidence to support the ALJ's finding that the 1990 injury resulted in a "disability" within the meaning of § 8-42-104(2). We disagree.
Because the issue is factual in nature, we must uphold the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 1998; Mountain Meadows Nursing Center, ___ P.2d ___ (Colo.App. No. 98CA0469, February 4, 1999). Furthermore, under the substantial evidence standard, it is the ALJ's sole prerogative to assess the sufficiency and probative weight of the evidence and resolve conflicts in the record. Metro Moving Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).
Here, the ALJ explicitly recognized the claimant's testimony that he fully recovered from the 1990 injury. However, the ALJ was persuaded to the contrary based upon a June 3, 1992, report from Dr. Brown, in which Dr. Brown indicated that after attaining maximum medical improvement for the 1990 injury, the claimant continued to receive steroid injections without relief. (Finding of Fact 2). The June 3 report also contains Dr. Brown's opinion that the claimant "should continue non-operative care and adjustment in his life-style and work program" to treat the effects of the 1990 injury. The ALJ reasonably inferred that the alteration of lifestyle and work programs reflects an impairment of the claimant's ability to meet "personal, social or occupational demands," and constitutes evidence of a "disability" under Askew.
The claimant has made no further arguments on the issue of apportionment. Therefore, the claimant has failed to establish grounds which afford us a basis to interfere with the ALJ's order for the apportionment of permanent partial disability benefits.
II.
Next, the claimant challenges the ALJ's order which requires the respondents to purchase the least expensive of three hot tubs for which bids were submitted. The claimant contends the ALJ should have ordered the respondents to pay the claimant an amount equal to the least expensive hot tub and allow the claimant to apply that payment to a higher priced model chosen by the claimant. We reject this argument.
Counsel may not take one position before ALJ and argue a contrary position on appeal. Schlage Lock v. Lahr, 870 P.2d 615 (Colo.App. 1993). Further, issues may not be raised for the first time on appeal. See Broadmoor Hotel v. Industrial Claim Appeals Office, 939 P.2d 460 (Colo.App. 1996).
Here, it is undisputed that the claimant is entitled to a medically prescribed hot tub, but the parties were unable to agree on the purchase of a particular hot tub. On October 27, 1997, the parties entered into a written stipulation, which states that "[t]he claimant will present three reasonable bids to the carrier and the carrier will select one of those bids." (Emphasis added).
At the February hearing, the issue was whether the three hot tub bids submitted by the claimant were reasonable, and whether the respondents could purchase a less expensive model from the bids they submitted. (Tr. p. 13). Claimant's counsel argued for an order requiring the respondents to purchase a hot tub based on one of the three bids submitted by the claimant. (Tr. p. 16). See also claimant's Position Statement, February 3, 1998. Therefore, the claimant's argument that the respondents should pay the claimant the price of a hot tub is not properly before us on review.
Nevertheless, even if the issue were properly before us, we would conclude that it is without merit. Section 8-42-101(1), C.R.S. 1998, requires the employer to provide medical treatment reasonably necessary to cure or relieve the effects of the industrial injury. However, we know of no authority, and the claimant cites none in support of his contention that the respondents may be ordered to pay the claimant directly for the cost of medical expenses before they are incurred. Consequently, we perceive no error in the ALJ's failure to order the respondents to pay the claimant an amount equal to the cost of the claimant's lowest bid.
III.
The claimant also contends the ALJ erred in failing to impose penalties for the respondents' failure timely to admit liability for permanent disability benefits. We agree.
Section 8-43-304(1), C.R.S. 1998, authorizes the imposition of penalties up to $500 per day where the insurer fails or refuses to carry out a duty imposed by the Director of the Division of Workers' Compensation. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996). The courts have also held that an insurer may be penalized for the violation of a Rule of Procedure. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997). However, the insurer is not subject to penalties if the failure to comply with the rule is "objectively reasonable." Pueblo School District No. 70 v. Toth, supra. Furthermore, § 8-43-304(4), C.R.S. 1998, provides that if the violation is cured within twenty days of an application for hearing on the issue of penalties, no penalty may be imposed in the absence of "clear and convincing evidence" that the violator "knew or reasonably should have known" of the violation.
The claimant requested penalties for the respondents' violation of the Rules of Procedure, Part IV (N)(4)(b), 7 Code Colo. Reg. 1101-3 at 6.03, and the ALJ denied the claim for penalties under Rule IV(N)(4)(b). However, Rule IV(N)(4)(b), prescribes the procedure for obtaining a determination of medical impairment where the claimant is not a resident of the state of Colorado at the time of MMI, and there is no finding or allegation that the claimant was not a Colorado resident at the time of MMI. Therefore Rule IV(N)(4)(b) is not applicable.
Rather, the procedural requirements applicable to this claim are set forth in Rule IV(N)(5), which provides in pertinent part that:
"For those injuries required to be filed with the Division with dates of injury on or after July 1, 1991, and subject to Section 8-42-107(8), C.R.S., medical impairment:
Within 20 days after receipt of a determination of medical impairment from an authorized level II accredited physician, or a determination by the authorized treating physician providing primary care that there is no impairment, the insurance carrier shall either: (1) file an admission of liability consistent with the physician's opinion, or (2) request a division IME on the issue of medical impairment. The requirement to file an admission or request a Division IME shall be superseded by an agreement signed by the insurance carrier and the claimant to a binding IME on the issue of permanent impairment."
Here, it is apparently undisputed that Dr. Hall is a Level II accredited physician. Further, the ALJ found and it is undisputed that the respondents failed to file an admission of liability or request an IME within twenty days of the receipt of Dr. Hall's July 15, 1997, medical impairment rating. The ALJ determined that the delay was due to the respondents' request that Dr. Hall apportion the claimant's medical impairment, and that the respondents' promptly admitted liability upon receipt of Dr. Hall's apportionment. The ALJ also determined that "even if" the respondents violated Rule IV(N), they cured the violation within 20 days of the application for hearing on the issue of penalties and the claimant failed to present "clear and convincing" evidence that the respondents knew or should have known they were in violation. In fact the ALJ determined that the record was "largely devoid of any indication of respondents' knowledge of the violation." Consequently, the ALJ determined the respondents are not subject to a penalty.
We conclude the ALJ's implicit finding that the respondents actions were "objectively reasonable" is not supported by the record. Similarly, the record does not support the ALJ's determination that the record is devoid of evidence that the respondents knew or should have known of the violation.
The reasonableness of the insurer's actions depends on whether the actions were predicated on a rational argument based on law or fact. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997). In this regard, the issue is not whether the respondents' had a reasonable explanation for their actions. Instead, the issue is whether the respondents' failure to comply with the rule was predicated on a rational argument in law or fact that they were not required to comply with the rule. See Porras v. World Service Co., Inc., W.C. No. 155-161 (October 12, 1995).
Here, the record contains evidence that upon receipt of Dr. Hall's July 15 report, the respondents wrote to Dr. Hall and requested that he apportion part of the claimant's permanent medical impairment to the 1990 injury. As found by the ALJ, the record also contains evidence that on October 29, 1997, the respondents filed a Final Admission of Liability consistent with Dr. Hall's apportionment. Thus, the ALJ could reasonably infer that the respondents' delay in filing an admission of liability for permanent partial disability benefits was due to their' request for an apportionment.
However, it is now well established that apportionment is an inherent part of the treating physician's medical impairment rating. Askew v. Industrial Claim Appeals Office, supra. It follows that, the receipt of a medical impairment rating where the physician has not apportioned the impairment, constitutes the receipt of a medical impairment rating for purposes of triggering the respondents' obligations under Rule IV(N)(5).
Furthermore, there no exception to the requirements of Rule IV(N)(5) where the insurer is dissatisfied with the medical impairment rating and wants the treating physician to apportion the impairment or issue a lower, revised rating. Moreover, the respondents do not assert any exception. In fact, the respondents do not assert that their failure to comply with the rule was predicated on a rational argument in law or fact that the rule does not apply to this claim. Consequently, the record does not support the ALJ's conclusion that the respondents' actions were "objectively reasonable."
Next, the claimant concedes that the respondents cured the violation within the time prescribed by § 8-43-304(4). However, the claimant contends that insofar as the ALJ determined that the respondents are not subject to a penalty because the claimant failed to present evidence concerning the respondents' knowledge of the law, he erred. We agree.
Section 8-43-304(4) requires "clear and convincing" evidence that the "violator knew or should have known that such person was in violation." Admittedly, the claimant did not introduce specific evidence concerning the respondents' "knowledge" of the violation. However, parties to a workers compensation claim are presumed to know the applicable law. Midget Consol. Gold Mining Co. v. Industrial Commission, 64 Colo. 218, 193 P. 493 (Colo. 1920); Paul v. Industrial Commission, 632 P.2d 638 (Colo.App. 1981). This presumption aids a party in meeting its burden of proof. Union Ins. Co. v. RCA Corp., 724 P.2d 80 (Colo.App. 1986). Furthermore, C.R.E. 301 provides that the party against whom the presumption is directed must come forward with evidence to rebut the presumption.
Here, there is no factual or legal dispute that the respondents' did not comply with Rule IV(N)(5). Further, in the absence of specific evidence to the contrary, the ALJ was required to presume that the respondents knew the requirements of Rule IV(N)(5). Because the respondents' knew the rule and did not present any factual or legal argument that their actions did not violate the rule, the record compels the conclusion that the respondents' knew or should have known that their actions violated Rule IV(N)(5). See Schrieber v. Brown Root, Inc., 888 P.2d 274 (Colo.App. 1993) (where undisputed facts lead to only one conclusion the issue is a question of law).
Moreover, the record establishes that the respondent-insurer is in the business of adjusting workers' compensation claims and Rule IV(N) is itself a rule concerning the adjustment of claims. Under these circumstances, we conclude that the only reasonable inference from the record is that the respondents knew or should have known that their failure timely to admit liability for permanent partial disability benefits violated Rule IV(N). See Federal Life Insurance Co. v. Wells, 98 Colo. 455, 56 P.2d 936 (Colo. 1936) (insurance adjuster presumed to understand the meaning of the word "coverage" which is used generally in the insurance business and was used regularly by the adjuster). Therefore, the ALJ erred in refusing to impose a penalty, and the matter must be remanded to the ALJ for the assessment of a penalty up to $500 per day, for each day the respondents failed timely to admit liability for permanent partial disability benefits.
IT IS THEREFORE ORDERED that the ALJ's order dated February 26, 1998, is reversed insofar as it denies the request for penalties and the matter is remanded to the ALJ for a determination of the amount of penalties to be imposed. In all other respects, the ALJ's order is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
________________________________ David Cain
________________________________ Kathy E. Dean
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. 1998.
Copies of this decision were mailed MARCH 2, 1999 the following parties:
Dennis R. Rogan, 1620 MacArthur, Colorado Springs, CO 80909
United Parcel Service, Inc., 5020 Ivy Street, Commerce City, CO 80022
Liberty Mutual Fire Insurance, 13111 E. Briarwood Avenue, Suite 100, Englewood, CO 80112
William A. Alexander, Jr., Esq., 3608 Galley Road, Colorado Springs, CO 80909 (For Claimant)
John M. Connell, Esq. and Mark A. Neider, Esq., 1675 Larimer Street, Suite 710, Denver, CO 80203 (For Respondents)
BY: ______________