Opinion
W.C. No. 4-009-257
December 26, 1995
FINAL ORDER
The claimant seeks review of a final order of Administrative Law Judge Friend (ALJ) which ordered the claimant to reimburse the respondent-insurer, Colorado Compensation Insurance Authority (CCIA), $5,669.16 to enforce the CCIA's subrogation rights. We affirm the order in part, and set it aside in part.
The ALJ's findings of fact may be summarized as follows. On February 6, 1991, the claimant sustained a compensable industrial injury while operating a vehicle. The automobile accident involved a third-party tort-feasor who was insured by State Farm Insurance (State Farm). The claimant initiated a lawsuit against the tort-feasor.
The claimant's employer was insured for workers' compensation by the CCIA. In August 1992, the CCIA advised the claimant's attorney that the CCIA would pursue its own subrogation interests against the tort-feasor.
In June 1993, the CCIA admitted liability for maximum permanent partial disability benefits and temporary disability benefits. However, the CCIA claimed that there was an overpayment of temporary disability benefits because, as a result of ongoing litigation, the claimant's average weekly wage had been reduced.
In November 1993, the CCIA demanded payment of its subrogation interest from State Farm, and State Farm paid $46,505. However, the CCIA did not waive any subrogation rights it might "acquire in the future."
In July 1994, the Court of Appeals issued an opinion which remanded the matter for redetermination of the claimant's average weekly wage. Consequently, on August 30, 1994, the CCIA filed a "final admission" admitting liability for additional temporary disability benefits based upon an increase in the claimant's average weekly wage.
However, the claimant believed he was entitled to an even higher average weekly wage, and the issue proceeded to a hearing. By order of November 30, 1994, the ALJ ordered an increase in the wage. Consequently, the CCIA filed additional admissions of liability in December 1994 reflecting corresponding increases in the claimant's average weekly wage and temporary disability rate. However, the CCIA also asserted that the claimant had been "overpaid" medical and temporary total disability benefits, and that the CCIA was entitled to "reimbursement" of these overpayments from the proceeds of the third-party lawsuit. The claimant had settled the third-party suit for $250,000 on September 7, 1994.
The ALJ found, from evidence in the record, that the CCIA paid $4,176.22 in medical benefits beyond the $50,000 limitation for personal injury protection (PIP) medical benefits. In addition, the ALJ found that the CCIA paid temporary total disability benefits in excess of the fifty-two week limitation for PIP wage reimbursement. Consequently, the ALJ concluded that the CCIA had a subrogation interest in the proceeds of the third-party settlement and ordered the claimant to reimburse the CCIA for $5,669.16.
I.
On review, the claimant first contends that the CCIA's subrogation rights extend to "future benefits," not benefits which were due but unpaid prior to the third-party settlement. The claimant's argument is predicated on the litigation surrounding the average weekly wage, as well as the CCIA's admission of liability filed on August 30, 1994. We are not persuaded.
Under the subrogation provisions of § 8-41-203(1), C.R.S. (1995 Cum. Supp.), a workers' compensation insurer obtains subrogation rights, with respect to a third-party tort-feasor, to the extent it actually pays workers' compensation benefits. This is true because the payment of compensation benefits is the act which effectively "assigns" the claimant's cause of action to the workers' compensation insurer. Metcalfe v. Bruning Division of AMI, 868 P.2d 1145 (Colo.App. 1993). Prior to the payment of compensation, the third-party cause of action remains with the claimant. Metcalfe v. Bruning Division of AMI, supra.
Moreover, § 8-41-203(1) contemplates three separate methods of enforcing the compensation insurer's subrogation rights. First, the claimant may elect to receive workers' compensation benefits, and the compensation insurer is subrogated to the claimant's rights against the third-party tort-feasor to the extent it pays benefits. Second, the claimant may elect to receive workers' compensation benefits and also sue the tort-feasor for tort damages in excess of the amount of compensation benefits paid. Third, the claimant may sue the tort-feasor, in which case the compensation insurer is liable for any "deficiency" between the recovery and the amount of compensation benefits owed.
However, as pointed out in Tate v. Industrial Claim Appeals Office, 815 P.2d 15 (Colo. 1991), "in general practice these remedies have been combined by allowing the injured employee to file for workers' compensation benefits and sue the tort-feasor for the full amount of damages allowable in tort." In these circumstances, the claimant "reimburses" the compensation insurer for benefits actually paid, and the compensation insurer retains a right to offset any portion of the third-party recovery not used to reimburse the insurer for past benefit payments against any future benefits the insurer may have to pay. This scheme permits the claimant to receive "interim workers' compensation benefits" while protecting the subrogation rights of the workers' compensation insurer. Tate v. Industrial Claim Appeals Office, 815 P.2d at 17.
Here, the claimant concedes that the temporary total disability benefits at issue had not been "paid" by the CCIA prior to the September 7, 1994 settlement with the third-party tort feasor. Consequently, the CCIA had no subrogation interest in those benefits prior to the settlement, and the claimant retained the right to negotiate for the benefits as part of the third-party settlement. Metcalfe v. Bruning Division of AMI, supra. It follows that the disputed benefits were "future" benefits vis-a-vis the third-party settlement, and there was no error in the ALJ's order. Bacorn v. North Colorado Medical Center, W.C. No. 4-000-205, September 14, 1994, aff'd., Bacorn v. Industrial Claim Appeals Office, Colo. App. No. 94CA1685, May 4, 1995 (not selected for publication).
It may be, as the claimant argues, that the CCIA should have been more prompt in the payment of some of the benefits, including those for which it admitted liability in August 1994. However, there are separate remedies for failure to pay benefits in a timely fashion, and loss of subrogation rights is not one of those remedies.
II.
The claimant next contends that the ALJ erred in ordering him to reimburse the CCIA for medical expenses which it paid in excess of the $50,000 medical limitation established by the PIP statute. The claimant's argument is that some of the medical procedures paid for by the CCIA constitute "rehabilitation procedures" rather than "medical" expenses under the PIP statute. Therefore, the claimant argues that the CCIA has not exceeded the limits of the PIP coverage and no subrogation interest arises under Tate v. Industrial Claim Appeals Office, supra. Because the findings are insufficient to permit appellate review, we remand for further proceedings.
The ALJ's order was apparently predicated on respondents' Exhibit 18, which indicates that the CCIA paid $54,176.22 for "medical" benefits. The ALJ correctly found that some of these payments were "for physical therapy and similar services." However, the ALJ concluded that such expenses are "medical costs and not rehabilitation procedures or treatment."
Under § 10-4-706(1)(b), C.R.S. (1994 Repl. Vol. 4A), PIP coverage includes $50,000 for "all reasonable and necessary expenses for medical" treatment, as well as "X-rays, dental, surgical, ambulance" and other services. Section 10-4-706(1)(c)(I) provides an additional $50,000 coverage for the "cost of rehabilitation procedures or treatment and rehabilitative occupational training." Section 10-4-706(c)(II)(A), C.R.S. (1994 Repl. Vol. 4A), defines "rehabilitation procedures" to include "any system, treatment, operation, diagnosis, prescription, or practice for the prevention, ascertainment, relief, palliation, adjustment, or correction of any human disease."
In Hays v. Mid-Century Insurance Co., ___ P.2d ___ (Colo.App. No. 94CA0353, July 13, 1995), the Court of Appeals held that there is a distinction between medical treatments contemplated by § 10-4-706(1)(b) and "rehabilitation procedures" under § 10-4-706(1)(c)(I). The court stated that "rehabilitation" is designed to accomplish "restoration of an injured person to daily living through therapy and education." The court also stated that, in contrast to payment "of medical benefits for the treatment of the physical injury itself, rehabilitation benefits are paid for treatment of the effects of such injury." (Emphasis in the original). Finally, the court made this observation:
"Accordingly, and contrary to plaintiff's contention, although rehabilitation may include medical treatment, logic does not permit a corollary inference that all medical treatment is necessarily rehabilitation. The terms are not synonymous."
As we understand the Hays case, the Court of Appeals has determined that the question of whether treatment is "medical" for purposes of § 10-4-706(1)(b), or constitutes "rehabilitation" under § 10-4-706(1)(c)(I), cannot be answered by simply determining the type or name of the procedure or service involved. Rather, the distinction between "medical" treatment and "rehabilitation procedures" must be determined by a factual examination of the purpose for which the treatment or service was rendered. Moreover, because of the broad definition of medical benefits under the Workers' Compensation Act, it is possible that certain treatments are compensable as workers' compensation medical benefits, but are properly classified as "rehabilitation procedures" under the PIP statute.
Here, the ALJ's decision was issued prior to the court's decision in Hays. Consequently, the ALJ did not attempt to determine the exact nature and purpose of the treatments for which the CCIA paid. However, resolution of these factual issues is necessary as a preliminary to determining whether the CCIA exceeded the combined limitations for medical and rehabilitative expenses created by the PIP statute.
It follows that the ALJ's findings of fact are insufficient to permit appellate review of his conclusion that the CCIA is entitled to reimbursement for medical expenses. Section 8-43-301(8), C.R.S. (1995 Cum. Supp.). However, because the hearing and order were issued prior to the decision of the Court of Appeals in Hays, we conclude that the ALJ may hold an additional hearing to afford the parties the opportunity to present evidence concerning the nature and purposes of the medical treatment provided by the CCIA.
The claimant's receipt of $10,800 from State Farm as settlement of his claim for rehabilitation expenses does not alter our conclusion. The claimant may well have been settling his claim for vocational training, a benefit not available in the workers' compensation case.
III.
The claimant next contends that the CCIA is estopped from claiming the right to reimbursement from the third-party settlement. However, we agree with the CCIA that the claimant did not raise the issue of estoppel before the ALJ. Consequently, the claimant waived the argument, and we need not consider it on appeal. See Lewis v. Scientific Supply Co., Inc., 897 P.2d 905 (Colo.App. 1995).
IV.
The claimant's final argument is that the ALJ erred in determining that the claimant was "overpaid" benefits. However, our review of the ALJ's order does not reflect that he found an "overpayment" of benefits. Rather, the ALJ determined that the CCIA paid workers' compensation benefits in excess of the PIP limitations, and therefore, had a subrogation right with respect to the claimant's third-party settlement proceeds. The ALJ determined that he would enforce this right by ordering "reimbursement" to the CCIA. There was no error.
IT IS THEREFORE ORDERED that the ALJ's order, dated May 2, 1995, is affirmed insofar as it ordered the claimant to reimburse the CCIA for temporary total disability benefits.
IT IS FURTHER ORDERED that the ALJ's order is set aside insofar as it ordered reimbursement for medical benefits, and the matter is remanded for further proceedings consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEAL PANEL
___________________________________ David Cain
___________________________________ Bill WhitacreNOTICE
This Order is final unless an action to modify or vacate the Order is commenced in the 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 Claim Appeals Office and all other parties, within twenty (20) days after the date the Order was mailed, pursuant to §§ 8-43-301(10) and 307, C.R.S. (1995 Cum. Supp.).
Copies of this decision were mailed December 26, 1995 to the following parties:
Craig A. Sneath, 11239 E. Alaska Pl., Aurora, CO 80012
Express Messenger, 1200 W. Evans, Denver, CO 80223
Colorado Compensation Insurance Authority, Attn: M. Steiner, Esq. (Interagency Mail)
Richard J. Lesch, Esq., 1120 Lincoln St., Ste. 1000, Denver, CO 80203-2138
(For the Claimant)
By: ____________________