Opinion
W.C. No. 4-265-034
November 20, 1998
FINAL ORDER
The respondents seeks review of an order of Administrative Law Judge Atencio (ALJ), imposing penalties of one hundred dollars per day based on the respondents' failure to file an admission of liability for whole person medical impairment benefits in accordance with Rule of Procedure IV (N) (5), 7 Code Colo. Reg. 1101-3 at 6.03. The respondents argue that the rule did not require them to file an admission of liability for whole person medical impairment benefits because they had already filed an admission for scheduled medical impairment benefits. We modify the order, and as modified affirm it.
In September 1994 the claimant sustained and industrial injury which ultimately caused impairment of both knees. The claimant also suffered depression as a result of the injury.
Dr. Schmeh, the primary treating physician, placed the claimant at maximum medical improvement (MMI) on September 18, 1997. He also referred the claimant to Dr. Reichhardt to rate the claimant's physical impairment, and to Dr. Entin to rate the claimant's psychological impairment. It is undisputed that all three physicians were authorized and level II accredited.
On August 28, 1997, Dr. Reichhardt issued a physical impairment rating for the claimant's lower extremities and converted these ratings to an eleven percent whole person impairment. He also and stated that "any additional work related psych impairment would be combined with this." The respondent-insurer (Liberty) received Dr. Reichhardt's report on September 11, 1997. Utilizing this report, Liberty filed a Final Admission of Liability on September 24, 1997, and admitted liability for scheduled impairments of both lower extremities.
Meanwhile, on September 22, 1997, Dr. Entin issued a report rating the claimant as suffering a four percent whole person psychiatric impairment. However, Dr. Entin apportioned two percent of the impairment to what he believed were non-industrial factors. Liberty received Dr. Entin's report on October 3, 1997.
On October 23, 1997, Dr. Schmeh issued a report stating the claimant sustained an "11% whole body rating with restrictions by Dr. Reichhardt and 4% PPI rating for his psychological discharge." Liberty received Dr. Schmeh's report on October 24, 1997. Despite receiving these reports from Dr. Entin and Dr. Schmeh, the respondents did not file an admission for whole person medical impairment benefits until March 16, 1998.
Under these circumstances, the claimant sought penalties under § 8-43-304(1), C.R.S. 1998, arguing that Liberty's failure to file a second admission of liability within twenty days of receiving Dr. Entin's report constituted a violation of Rule of Procedure IV (N) (5). The ALJ found that the rule required Liberty to file a new admission of liability for whole person medical impairment benefits, or request a Division-sponsored independent medical examination (IME) within twenty days of receiving the report. Further, based on the testimony of the insurance adjusters who handled the claim, the ALJ found that Liberty had no reasonable basis for refusing to file the admission, and that it acted wantonly and willfully in disobeying the rule. Consequently, the ALJ imposed penalties of one hundred dollars per day from October 3, 1997, until March 16, 1998, for a total of $16,200.
On review, the respondents do not deny that they willfully delayed filing the admission for whole person medical impairment benefits until March 16, 1998. However, they argue that they are not subject to any penalties under § 8-43-304(1) because their conduct did not violate Rule IV (N) (5). The respondents reason that once they filed the September 24 admission, they fulfilled their duty under the rule, and the rule does not create an obligation to file an amended admission if additional information is received. We disagree with this argument.
Section 8-43-304(1) authorizes the imposition of penalties in cases where an insurer unreasonably fails to carry out a duty imposed by the Director of the Division Workers' Compensation. Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996). In addition to demonstrating that the insurer acted with the requisite state of mind, it must be shown that there was a violation of a legally mandated duty imposed by the Act or the Rules of Procedure. See Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995).
The entire text of Rule of Procedure IV (N) (5) is as follows:
"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.
In interpreting Rule IV (N) (5), we must apply the usual rules of statutory construction. See Gerrity Oil and Gas Corp. v. Magness, 923 P.2d 261 (Colo.App. 1995). Further, the rule should be construed in a manner consistent with the underlying statute which authorizes it. See City of Englewood v. Industrial Claim Appeals Office, 954 P.2d 640 (Colo.App. 1998). Finally, procedural rules relating to the same subject matter are deemed in pari materia and must be construed together. McFarlen v. Eckhardt, 878 P.2d 11 (Colo.App. 1994).
It may be, as the respondents argue, that Rule IV (N) (5) imposes no legal duty to file a second admission for whole person medical impairment benefits once an initial admission for whole person benefits has been filed. However, in this case, the respondents' September 24 admission of liability did not admit liability for whole person medical impairment benefits, and therefore, was not filed under Rule of Procedure IV (N) (5). To the contrary, the respondents' September 24 admission of liability was for scheduled impairment benefits, and therefore, was filed under Rule of Procedure IV (N) (8), 7 Code Colo. Reg. 1101-3 at 7. That rule provides that in cases of injuries subject to § 8-42-107(2), C.R.S. 1998 (scheduled injuries), respondents are required to file an admission of liability or set the matter for a hearing within twenty days of receiving a scheduled impairment rating from an authorized level II accredited physician.
Reading Rule IV (N) (5) and (8) together, it is apparent that they create distinct responsibilities with respect to the filing of admissions of liability. In cases where respondents obtain sufficient evidence to admit liability for a scheduled injury, they must comply with the provisions of subsection (8). However, nothing in subsection (8) relieves respondents of the responsibility to comply with subsection (5) should they subsequently come into possession of a report from an authorized level II physician demonstrating that the claimant has been rated with a whole person medical impairment separate and apart from the scheduled impairment. See Mountain City Meat Co. v. Oqueda, 919 P.2d 246 (Colo. 1996) (setting forth circumstances under which separate scheduled and whole person ratings must be combined into a single whole person impairment rating).
Further, this construction of the rules is consistent with the underlying statute found at § 8-42-107. As the Court of Appeals recently noted in Egan v. Industrial Claim of Appeals Office, ___ P.2d ___ (Colo.App. No. 98CA0821, November 13, 1998), impairment ratings for scheduled injuries and whole person injuries are subject to different review procedures. If the treating physician assesses a whole person impairment, the IME procedures contained in § 8-42-107(8) are triggered. In contrast, scheduled injuries are not subject to the IME process. In fact, this distinction explains the differences between Rule IV (N) (5), pertaining to injuries under § 8-42-107(8), and Rule IV (N) (8) pertaining to scheduled injuries under § 8-42-107(2).
It follows that there was no error in the ALJ's general assessment of penalties in this case. Although the respondents properly admitted liability for a scheduled extremity injury on September 24, they subsequently came into possession of a report from Dr. Entin, an authorized level II physician, opining that the claimant had whole person medical impairment attributable psychological impairment caused by the injury. At that point, the provisions of Rule IV (N) (5) were triggered, and the respondents were obliged to comply with the rule.
However, we conclude that the period for which penalties were assessed should be modified. The ALJ apparently imposed penalties commencing on or about October 3, 1998, the date Dr. Entin's report was received by Liberty. However, under Rule IV (N) (5) the respondents had twenty days from the date they received Dr. Entin's report to either file an admission of liability or request an IME. Therefore, noncompliance did not commence until October 24, 1997. See Rule of Procedure II (A)(8), 7 Code Colo. Reg. 1101-3 at 2 (importing C.R.C.P. 6(a) as method for calculating days under Rules of Procedure).
Under these circumstances, the penalty should commence October 24, 1997, and run through March 15, 1996. Thus, the penalty should be $14,300 (one hundred forty-three days times one hundred dollars per day). Cf. Hunger v. Luxury Wheels, W.C. No. 4-280-340 (May 16, 1997) (Copy contained in file).
IT IS THEREFORE ORDERED that the ALJ's order dated June 11, 1998, is modified to provide for a penalty of $14,300.
IT IS FURTHER ORDERED that the ALJ's order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Bill Whitacre
NOTICE
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. 1998.
Copies of this decision were mailed November 20, 1998 to the following parties:
Timothy Baca, 996 Toledo Street, Aurora, CO 80011
Human Resources Company, 7600 Orchard Road, #230-S, Englewood, CO 80111
Liberty Mutual Insurance Company, Attn: Tanya Avedovech, 13111 East Briarwood Avenue, Suite 100, Englewood, CO 80112
Daniel B. Galloway, Esq., 1777 South Harrison Stree, #906, Denver, CO 80210 (For Claimant)
David G. Kroll, Esq., 1120 Lincoln Street, #1606, Denver, CO 80203 (For Respondents)
BY: ______________________