Opinion
W.C. No. 4-248-648
October 20, 1998
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Rumler (ALJ) which dismissed the claimant's application for hearing on a claim for penalties under § 8-43-304(1), C.R.S. 1998. We affirm.
In 1994, the claimant suffered a compensable injury. During a pre-trial/settlement conference before Prehearing Administrative Law Judge Purdie (PALJ), the respondents agreed to pay for an evaluation by Dr. Lane. The claimant argues that the respondents also agreed to pay for any medical treatment Dr. Lane found to be necessitated by the industrial injury. Following an exam on March 31, 1997, Dr. Lane diagnosed the claimant with chronic daily headaches related to the industrial injury and recommended additional treatment. However, the respondents refused to authorize the treatment.
In an order dated July 14, 1997, Administrative Law Judge Stuber (ALJ Stuber) ordered the respondents to pay for the treatment provided by Dr. Lane "as stipulated." However, the respondents did not authorize Dr. Lane's treatment until August 26, 1997. Thereafter, the claimant sought an order imposing penalties under § 8-43-304(1) for each day the respondents failed to provide Dr. Lane's treatment between March 31, 1997 and August 26, 1997.
The ALJ found that the "gravamen" of the penalty request was "medical benefits." Therefore, the ALJ determined that the penalty claim is governed by the provisions of § 8-43-401(2)(a), C.R.S. 1998, and entered "summary judgment" in favor of the respondents on the request for the imposition of penalties under § 8-43-304(1).
On review, the claimant contends the ALJ erred in finding that the claim is governed by § 8-43-401(2)(a). We disagree.
Section 8-43-304(1) allows ALJs to impose penalties up to $500 per day for each day the insurer:
"fails or refuses to perform any duty lawfully enjoined within the time prescribed by the director or panel, for which no penalty has been specifically provided, or fails, neglects, or refuses to obey any lawful order made by the director or panel . . . ."
Section 8-43-401(2)(a), which applies to claims arising on or after July 1, 1991, provides that:
"If any insurer or self-insured employer willfully delays payment of medical benefits for more than thirty days or willfully stops payments such insurer or self-insured employer shall pay a penalty to the division of eight percent of the amount of withheld benefits."
In Sears v. Penrose Hospital, 942 P.2d 1345 (Colo.App. 1997), cert. denied, September 15, 1997, the Court of Appeals concluded that the specific penalty provisions of § 8-43-401(2)(a) supersede the general penalty provisions of § 8-43-304(1) where the "gravamen" of the disputed conduct is the insurer's failure to pay medical benefits in a timely fashion. In so doing, the court rejected the notion that the General Assembly intended to create two penalties for the late payment of medical expenses. Rather, the court concluded that the general penalty provisions in § 8-43-304(1) apply only when the Act does not create a "specific penalty" for the violation in question.
The claimant concedes that § 8-43-401(2)(a) is the exclusive remedy for an insurer's delay or failure to pay a medical benefit. However, the claimant contends that § 8-43-401(2)(a) is not applicable to this claim because the gravamen of the disputed conduct is the respondents' failure to provide medical treatment and not the failure to pay for treatment. Furthermore, the claimant contends that application of § 8-43-401(2)(a) to these circumstances creates an absurd result. In support, the claimant asserts that because the respondents refused to provide treatment no medical bills were incurred with Dr. Lane between March 31 and August 28, 1997. Moreover, the claimant contends that no medical bills were submitted to the respondents for payment. Under these circumstances, the claimant argues that the "amount of withheld benefits" cannot be determined, and it is impossible to calculate an 8 percent penalty. Thus, the claimant argues that § 8-43-401(2)(a) is unenforceable under these circumstances, and leaves the claimant without a remedy. We reject this argument.
In Sears v. Penrose Hospital, supra, the claimant argued that § 8-43-401(2)(a) did not govern a claim for penalties based on the insurer's failure to investigate the reasonableness of prescribed treatment. Although the court did not establish a method for determining the "gravamen" of a claim for penalties, the Sears court rejected the argument that the "gravamen" of the disputed conduct in that case was something other than the failure to pay medical benefits. The court held that although the insurer failed to investigate the reasonableness of the unpaid medical expenses it was the insurer's failure to pay the expenses, and not the failure to investigate the expenses which triggered the request for penalties.
Further, the Sears court concluded that the insurer's failure to investigate the expenses was "necessarily encompassed in the broader question whether the employer willfully delayed or stopped payment" of medical benefits. Id. at 1347. Consequently, the court concluded that § 8-43-402(2)(a) is applicable if the conduct to be penalized is an "underlying act or omission" involving the failure or refusal to provide medical benefits. Id. at 1347.
We know of no published court opinion, and the claimant cites none, which conflicts with Sears. Furthermore, we must follow published opinions of the Court of Appeals. C.A.R. 35(f). Accordingly, we have previously held that § 8-43-402(2)(a) is applicable to penalty claims based on the insurer's failure to approve or guarantee payment for prescribed medical treatment. See Powers v. Skyhook Company, Inc., W.C. No. 4-368-596 (November 13, 1997); Segura v. Martin Music, W.C. No. 4-244-640 (September 30, 1997). We adhere to our prior conclusions, and therefore, conclude that Sears is determinative of the claimant's arguments.
Here, the conduct which the claimant seeks to punish is the insurer's failure to pre-authorize payment for Dr. Lane's treatment. Regardless of the semantics, the conduct which triggered the claimant's penalty request is the respondents' failure to authorize Dr. Lane to provide treatment at their expense. Therefore, the underlying conduct the claimant seeks to punish is related to the respondents' failure to pay medical benefits.
Moreover, we reject the claimant's contention that it is impossible to enforce § 8-43-401(2)(a) where the disputed conduct involves the insurer's failure to authorize treatment. To the contrary, insofar as a claimant seeks to penalize an insurer for failing to preapprove the payment of treatment, the claimant may establish the "amount of withheld benefits" by obtaining evidence from the provider as to the cost of the proposed treatment. Based upon that evidence an ALJ can determine the amount of the 8 percent penalty.
Nevertheless, the claimant alleges that this matter is distinguishable from Sears because the respondents violated the PALJ's order and the order of ALJ Stuber by refusing to authorize Dr. Lane's treatment. Again, we disagree.
Expressly relying upon Sears v. Penrose Hospital, supra, we rejected a similar argument in Ahlstrom v. Colorado Compensation Insurance Authority, W.C. Nos. 3-815-100 et al., (April 15, 1997). In Ahlstrom, the claimant argued that Sears is not determinative where penalties are sought for the failure to comply with a lawful order. See also, Winters v. Cowen Transfer Storage, W.C. No. 4-153-716 (July 24, 1997). However, we noted that Sears itself involved the insurer's failure to pay medical benefits following the entry of an order requiring the payment of medical benefits. Nevertheless, the court reasoned that the gravamen of the disputed conduct was still the failure to pay medical benefits. Consequently, Sears reflects the court's conclusion that § 8-43-401(2)(a) governs a claim for penalties based on the failure to pay medical benefits even if the failure also constitutes a violation of a final order.
The claimant's remaining arguments have been considered and do not alter our conclusions.
IT IS THEREFORE ORDERED that the ALJ's order dated May 28, 1998, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Kathy E. Dean
____________________________________ Bill Whitacre
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 October 20, 1998 to the following parties:
Sondra A. Holliday, 12368 Monroe Dr., Thornton, CO 80241
Bestop, Inc., P.O. Box 307, Broomfield, CO 80038-0307
Colorado Compensation Insurance Authority, Attn: Curt Kriksciun, Esq. (Interagency Mail)
Joan W. Froede, Esq., 368 S. McCaslin Blvd., #130, Louisville, CO 80027 (For the Claimant)
Douglas A. Thomas, Esq. Douglas P. Reugssegger, Esq., 1700 Broadway, #1700, Denver, CO 80290-1701 (For the Respondents)
BY: _______________________