Opinion
W.C. No. 4-272-301
December 17, 1997
FINAL ORDER
The respondent-insurer, Colorado Compensation Insurance Authority (CCIA), seeks review of an order of Administrative Law Judge Friend (ALJ), which reopened the issue of insurance coverage and ordered the CCIA to pay the claimant's workers' compensation benefits. We affirm.
On April 25, 1996, the ALJ entered an order permitting the CCIA to withdraw an admission of liability for the claimant's industrial injury of October 18, 1995. In that order, the ALJ found that claimant, as president and sole owner of the respondent-employer (A M), executed a valid "rejection of coverage by a corporate officer" in accordance with § 8-41-202(1), C.R.S. 1997. Thus, the ALJ determined that the CCIA mistakenly admitted liability, and was not obligated to pay further workers' compensation benefits. We subsequently affirmed this order.
In September 1996, the claimant petitioned to reopen the claim based on "error." The claimant alleged, and the ALJ found, that after the April 1996 hearing the CCIA conducted an audit of A M's workers' compensation policy. Following the audit, the CCIA charged A M a premium for the period of time during which the claimant sustained the injury, and included the claimant's salary in the premium calculation. The ALJ also found that the CCIA threatened legal action against A M if it did not make timely payment of the additional premium, and the claimant made the payment on July 12, 1996. Although the CCIA attempted to return part of the premium in October 1996, the warrant was not negotiated.
Under these circumstances, the ALJ concluded that the CCIA waived, or is estopped from asserting, that the claimant was not insured under A M's policy at the time of the injury. The ALJ determined that the CCIA had full knowledge, at the time of the audit, that the claimant had elected not to be covered under the corporate officer statute. Nevertheless, the CCIA demanded payment of a premium based on the claimant's salary, threatened legal action if payment was not forthcoming, collected the premium, but then withheld coverage. The ALJ also held that these circumstances constituted an "error or mistake" justifying reopening of the coverage issue under § 8-43-303(1), C.R.S. 1997.
I.
On review, the CCIA contends that the ALJ erred in reopening the claim because an order concerning insurance coverage does not constitute an "award" within the meaning of § 8-43-303. The CCIA reasons that the ALJ's authority to "reopen" pertains to benefits, and coverage is not a benefit. We are not persuaded.
An order which grants or denies benefits constitutes an "award" for purposes of the reopening statute. Burke v. Industrial Claim Appeals Office, 905 P.2d 1 (Colo.App. 1994). The power to reopen extends to all cases terminated by final agency action, including any case closed by the entry of an order denying a claim for benefits, expenses, or compensation. Standard Metals Corp. v. Gallegos, 781 P.2d 142 (Colo.App. 1989). Further, the power to reopen is permissive, and we may not interfere with the ALJ's decision absent an abuse of discretion. Renz v. Larimer County School District Poudre R-1, 924 P.2d 1177 (Colo.App. 1996).
The question of who is liable for compensation benefits falls within the jurisdiction of the ALJ because it affects the payment of benefits. Potomac Insurance Co. v. Industrial Commission, 744 P.2d 765 (Colo.App. 1987). Indeed, a valid order requires the ALJ to determine of "by whom and to whom such benefits shall be paid." Section 8-43-215, C.R.S. 1997.
The ALJ's April 1996 order effectively denied the claim for any further benefits against the CCIA, and placed the claimant at the mercy of his own corporation's assets with respect to further compensation. It follows that the ALJ's April 1996 determination that the CCIA is not liable for the claimant's benefits, and allowing the CCIA to withdraw its admission of liability, constituted an "award" for purposes of the reopening statute.
Conversely, the ALJ's 1997 order determined that, in light of subsequent developments, it was error to relieve the CCIA of its liability for compensation. Consequently, the order reopening the claim "maintained" the payment of compensation, but placed the responsibility for payment in the hands of the CCIA.
We consider the ALJ's 1997 order to be a valid exercise of the reopening power. The 1997 order corrected the 1996 order based on developments which were not known, and could not have been known, at the time of the 1996 order. See Standard Metals Corp. v. Gallegos, supra. It would seem anomalous to permit a finding of coverage by waiver or estoppel based on the insurer's conduct which occurred prior to closure of a claim, but preclude reopening where the insurer's conduct occurs after closure.
II.
CCIA next contends that the evidence does not support the ALJ's application of the doctrines of waiver and estoppel. We disagree with these arguments.
In order to find a waiver, the circumstances must reflect an intentional relinquishment of a known right. A waiver may be explicit, or it may be evidenced by conduct which manifests an intent to relinquish the right or privilege, as where a party acts in a manner inconsistent with assertion of the right. Johnson v. Industrial Commission, 761 P.2d 1140 (Colo.App. 1988).
In State Compensation Insurance Fund v. Wangerin, 736 P.2d 1246 (Colo.App. 1986), the court of appeals held that waiver and estoppel may create insurance coverage when an insurer accepts a premium payment despite possessing the legal right to deny coverage under the policy. Nevertheless, waiver and estoppel are not applicable if the insurer conditionally accepts the premium payment, steadfastly denies liability, or accepts a premium payment before receiving notice of the loss. 736 P.2d at 1248.
The existence of waiver is generally a factual matter for the ALJ. Johnson v. Industrial Commission, supra. Consequently, we must uphold the ALJ's order finding that the CCIA waived its coverage defense if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 1997. In applying this standard, we must defer to the ALJ's resolution of conflicts in the evidence, his credibility determinations and the plausible inferences which he drew from the evidence. Metro Moving Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).
The CCIA asserts that there is no evidence that it "intended" to waive its defense based on the claimant's rejection of coverage. However, the record supports the ALJ's application of the doctrine of waiver based on the CCIA's conduct. At the time the CCIA accepted, in fact demanded, payment of the premium, it was fully cognizant that the claimant had executed a valid election not to accept coverage under the employer's policy. Further, the CCIA was aware that the claimant, as a corporate officer, had sustained an injury during the policy period, and had asserted the election defense in the April 1996 hearing.
Despite these facts, the CCIA audited A M's insurance policy and demanded payment of a premium which was based on the claimant's wages. In fact, the CCIA threatened legal action if the premium was not paid. All of these actions, which occurred after the CCIA successfully withdrew its admission of liability, support the ALJ's conclusion that the CCIA voluntarily, knowingly, and intelligently engaged in conduct inconsistent with its policy defense. The fact that the CCIA subsequently decided that it should not have engaged in this conduct, and attempted to return the premium, does not vitiate the finding of waiver. State Compensation Insurance Fund v. Wangerin, supra.
Moreover, the record supports the ALJ's determination that the CCIA is estopped from asserting the rejection of coverage because it accepted the additional premium. As stated in Johnson v. Industrial Commission, supra, the elements of estoppel are as follows:
"The party to be estopped must know the relevant facts; the party to be estopped must also intend that its conduct be acted on or must so act that the party asserting the estoppel has a right to believe the other party's conduct is so intended; the party asserting the estoppel must be ignorant of the true facts; and the party asserting the estoppel must detrimentally rely on the other party's conduct."
Here, the evidence supports the ALJ's finding that the CCIA knew the relevant facts when it accepted the premium. The CCIA accepted the premium with full knowledge that the claimant had executed a valid rejection of coverage. In fact the CCIA had successfully asserted this defense in seeking to withdraw the admission at the April 1996 hearing. Moreover, the ALJ advised CCIA's counsel at the 1996 hearing that he might reevaluate the matter if it were determined that a premium was paid based on the claimant's wages. (Tr. April 23, 1996, p. 48). The fact that the CCIA later concluded that it was a "mistake" to accept the premium does not alter the fact that it possessed the requisite knowledge of the circumstances when it did so.
Further, the evidence indicates the CCIA intended its conduct to be acted on, or acted in a manner which justified the claimant in believing that CCIA would not enforce the coverage defense. Despite knowing of the claimant's loss, and that the claimant had executed a valid rejection of coverage, the CCIA conducted the audit and demanded payment of a premium under threat of collection litigation against A M. This evidence, taken with the claimant's testimony that he never understood that the rejection of coverage would disqualify him from protection at construction sites, indicates that the claimant reasonably believed that the CCIA had decided it would no longer rely on its coverage defense. Under these circumstances, the ALJ could plausibly infer that the claimant could not know that the CCIA would demand payment of a premium and then refuse to provide the corresponding coverage.
The evidence also supports the finding of detrimental reliance. As the ALJ found, the claimant, in his role as owner and president of A M, paid the demanded premium in July 1996. The corporation, and by implication the claimant, lost the use of the money until such time as the CCIA tendered repayment in October.
Consequently, we conclude that the case falls within the parameters of State Compensation Insurance Fund v. Wangerin, supra. In so doing, we reject the CCIA's assertion that it "steadfastly" relied on its coverage defense. As the ALJ found, the CCIA's conduct from May 1986 through July 1986 does not indicate any "steadfast reliance" on the coverage defense. To the contrary, the conduct creates the inference that CCIA no longer desired to enforce the defense. The fact that the ALJ might have interpreted the evidence differently affords no basis for relief on appeal. May D F v. Industrial Claim Appeals Office, 752 P.2d 589 (Colo.App. 1988).
III.
Lastly, the CCIA next contends that the ALJ erred in reopening the claim because the claimant never provided the CCIA with written notice of his decision to revoke his election to reject coverage. The CCIA reasons that providing a written revocation is mandatory under § 8-41-202(2), C.R.S. 1997. We find no error.
We do not dispute the mandatory nature of § 8-41-202(2), or that the claimant failed to provide any written notice of revocation. However, it is well established that a statutory right cannot stand in the way of waiver and equitable estoppel if the facts of the case justify their application. Johnson v. Industrial Commission, supra. Because we conclude that the evidence supports the ALJ's application of waiver and estoppel, the claimant's failure to give written notice of revocation does not vitiate the ALJ's order.
IT IS THEREFORE ORDERED that the ALJ's order dated July 24, 1997, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Kathy E. DeanNOTICE
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. 1997.
Copies of this decision were mailed December 17, 1997 to the following parties:
Gary Anderson, 2035 S. Newark Way, Aurora, CO 80014
A M Site Services, Inc., 2035 S. Newark Way., Aurora, CO 80014
Colorado Compensation Insurance Authority, B. DeFalco-Galvin, Esq. — (Interagency Mail)
Douglas R. Phillips, Esq., 155 S. Madison, #330, Denver, CO 80209 (For Claimant)
Michael Goodman, Esq., 1700 Broadway, #1700, Denver, CO 80290-1701 (For Respondents)
By: _______________________________