Opinion
W.C. No. 3-782-459.
January 9, 2004.
FINAL ORDER
The respondents seek review of a final order of Administrative Law Judge Felter (ALJ Felter) which awarded penalties under § 8-43-304(1), C.R.S. 2003, for an alleged violation of ALJ Rumler's order to pay medical benefits, and a prehearing administrative law judge's (PALJ) order compelling discovery. We reverse the order imposing penalties for violation of ALJ Rumler's order and affirm the award of penalties for violation of the PALJ's order.
I.
We first consider ALJ Felter's order assessing penalties for violation of ALJ Rumler's order to pay medical benefits. The claimant sustained serious injuries, including a crushed pelvis, in 1985. Apparently, the respondent-insurer (Wausau) admitted liability.
The matter proceeded to hearing before ALJ Rumler in 1987, and her order dated February 18, 1987, states the "sole issue" considered "was claimant's rights to medical benefits denied by the respondents." The order further states the claimant was suffering from "bladder disfunction, including uncontrolled urination, infection and bleeding and sexual disfunction." The claimant's treating urologist recommended the claimant be referred to a specialized clinic in Houston, Texas, for evaluation and treatment of a condition known as "sphincter dysenergia," but the respondents denied payment of for those expenses. ALJ Rumler found that the facility in Texas was "uniquely qualified" to treat the claimant's condition and the respondents had "no basis for withholding the treatment recommended by the authorized treating physicians." Consequently, ALJ Rumler ordered the respondents to "pay the claimant's medical expenses for his evaluation and treatment" in Texas and " any other reasonable and necessary expenses incurred at the hands of authorized treating physicians." (Emphasis added).
On April 1, 2002, Dr. Kaufman, an authorized urologist treating the claimant in Denver, Colorado, mailed a letter to Wausau stating the claimant was suffering erectile dysfunction as a result of the industrial injury. Dr. Kaufman requested Wausau to pre-authorize implantation of a penile prosthesis.
ALJ Felter found, on substantial evidence, that the April 1 letter was received by Wausau no later than April 10, 2002, and that under the applicable Rules of Procedure XVI, 7 Code Colo. Reg. 1101-3 at 70, the insurer was required to authorize or contest the requested procedure within 7 days. However, the respondents failed to authorize or contest liability for the treatment, and ALJ Felter found the respondents had no reasonable basis in fact or law to deny authorization for the procedure. It was not until October 24, 2002, that Wausau finally authorized the procedure.
The claimant sought penalties under § 8-43-304(1) based on the theories that Wausau violated Rule XVI by failing to pre-authorize the treatment, and for violation of ALJ Rumler's February 1987 order. ALJ Felter rejected the theory that the respondents violated Rule XVI, and the claimant has not appealed that determination.
However, ALJ Felter ruled that Wausau negligently violated ALJ Rumler's order to "pay for any reasonably necessary medical expenses" by delaying authorization for the implant surgery and failing to respond to the requests for authorization by Dr. Kaufman and claimant's counsel. ALJ Felter concluded that ALJ Rumler's directive to pay reasonably necessary medical expenses was "general, controlling until superseded, and not limited to any specific medical treatment as of 1987." (Finding of Fact 6). Moreover, ALJ Felter found that the 1987 order was "re-affirmed" in 1990 when the respondents filed a Final Admission of Liability (FAL) to pay ongoing medical benefits.
Under these circumstances, ALJ Felter assessed a penalty of $500 per day from April 18, 2002 until October 24, 2002, for a total of $94,500. ALJ Felter found Wausau's conduct was aggravated by its failure to notify the claimant and his counsel of its position concerning authorization for the procedure, the unreasonableness of Wausau's conduct under the circumstances, and the detrimental effect that the delay had on the claimant's physical and mental well-being.
On review, the respondents contend, inter alia, that the ALJ erred in finding that their conduct in 2002 constituted a violation of ALJ Rumler's order. The respondents argue the 1987 order concerned a specific dispute over liability for treatment at the Texas clinic and cannot be construed as governing their liability for medical treatment prescribed by a Denver physician 15 years later. Under the circumstances of this case, we agree.
Section 8-43-304(1) permits the imposition of penalties of up to $500 per day on an insurer that "violates any provision of [the Worker's Compensation Act], or does any act prohibited thereby, or 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. . . ." Violation of an order may be penalized under this statute regardless of whether the Act also imposes a specific penalty for the underlying conduct. Holliday v. Bestop, Inc., 23 P.3d 700 (Colo. 2001). The Holliday opinion did not determine whether penalties of $500 per day may be imposed under § 8-43-304(1) for violation of the Act itself if the Act imposes a specific penalty for the conduct in question. Id. at 707, n. 6. However, we have considered this issue and held that the qualifying phrase "for which no penalty has been specifically provided" does apply to violations of the Act. Therefore, failure to pay medical expenses in accordance with the Act (§ 8-42-101(1), C.R.S. 2003) is governed by the specific penalty provision contained in § 8-43-401(2)(a), C.R.S. 2003 (8 percent of wrongfully withheld benefits payable to Division of Workers' Compensation). Pena v. Family Dollar Stores, Inc., W.C. No. 4-412-966 (February 11, 2003). Thus, ALJ Felter correctly recognized that his decision to impose penalties under § 8-43-304(1) for failure to pay for the implant surgery is dependent on a determination that the respondents violated an "order." (Conclusion of Law g).
The essence of the respondents' argument is that ALJ Rumler's 1987 decision cannot be considered an "order" for purposes of § 8-43-304(1) insofar as it purports to impose a general obligation to pay unspecified medical benefits in the future. Section 8-40-201(15), C.R.S. 2003, defines the term "order" to mean and include "any decision, finding and award, direction, rule, regulation or other determination arrived at by the director or and administrative law judge." Applying this definition, the court in Holliday v. Bestop, Inc., supra, held that a PALJ's notes memorializing an agreement between the parties concerning medical treatment did not constitute an "order" because it "did not resolve or determine any matter in the case." 23 P.3d at 708. Thus, the Holliday opinion suggests that an order, whether couched as an award, direction or other determination, connotes independent decision-making by the ALJ concerning some disputed issue, and the resolution of some matter within the ALJ's statutory jurisdiction. The court apparently reads § 8-40-201(15) as meaning that the term "order" connotes an element of finality to whatever award, determination, or direction is made by the ALJ.
In this regard, we note that an ALJ's general "order" to pay medical benefits is not, in and of itself, a final appealable order which resolves the respondents' liability for any medical benefits. Section 8-43-301(2), C.R.S. 2003; Bestway Concrete v. Industrial Claim Appeals Office, 984 P.2d 680 (Colo.App. 1999) (in order to be reviewable as a final order § 8-43-301(2) requires that order finally dispose of issue presented); Tooley v. Johnson Sons Trucking, W.C. No. 4-376-713 (January 28, 2000) (general order to pay reasonable and necessary medical benefits not final and reviewable because it does not determine amount of respondents' liability for medical benefits). Thus, that portion of ALJ Rumler's order which constitutes a general direction to pay future medical benefits was not a final order which became enforceable against the respondents, and it did not resolve their liability for any future medical benefits except those specifically addressed in the order. See Koch Industries, Inc. v. Pena, 910 P.2d 77 (Colo.App. 1995) (order becomes final when there has been a failure to exhaust administrative review proceedings). Here, if the respondents had sought review of that portion of ALJ Rumler's order directing them to pay unspecified future medical benefits, we presumably would have dismissed the appeal without prejudice for lack of a final order. Moreover, the Supreme Court has held that imposing penalties for violating an interlocutory "order" during the pendency of an appeal would raise substantial constitutional questions. Industrial Commission v. Continental Investment Co., 85 Colo. 475, 277 P. 303 (1929).
Similarly, ALJ Rumler's order presumably would not have collateral estoppel effect with respect to liability for unspecified future medical benefits because she did not actually adjudicate the respondents' liability for any such benefits. M M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574 (Colo.App. 1998) (collateral estoppel may not be applied unless issue in later proceeding is identical to issue actually litigated and necessarily adjudicated in the prior proceeding). Although ALJ Rumler's order took note of the claimant's sexual dysfunction, it did not purport to determine the reasonableness and necessity for a penile implant prescribed by the Denver physician many years after the treatment in Texas.
The Holliday court's conclusion that the term "order" connotes the resolution of a disputed issue is consistent with the holding in Giddings v. Industrial Claim Appeals Office, 39 P.3d 1211 (Colo.App. 2001), where the court considered whether an ALJ's order to pay for specific surgery and psychiatric treatments constituted an "order" of the Director of the Division of Workers' Compensation (Director) for purposes of § 8-43-304(1). In holding that an order of an ALJ is an order of the Director, the court noted that an ALJ has power to "hear and decide all matters arising under articles 40 to 47" of the Act. Section 8-43-201, C.R.S. 2003 (concerning "disputes" arising under the Act). Thus, an ALJ has the power to enter findings and award compensation, make numerous procedural rulings concerning the adjudication of claims, and to review and approve settlements. Section 8-43-103(2), C.R.S. 2003; § 8-43-204(3), C.R.S. 2003; § 8-43-207(1)(a)-(q), C.R.S. 2003.
The order of ALJ Rumler, insofar as it contains general language requiring the respondents to pay "any other reasonable and necessary expenses at the hands of the treating physicians" does not fall within the definition of an "order" because it does not adjudicate or resolve any disputed issue. To the contrary, as ALJ Rumler's order states, the "sole issue" presented for hearing was the respondents' liability for medical benefits which they had denied. Thus, the only matter decided by ALJ Rumler was the respondents' liability for the evaluation and treatment at the Texas clinic. (Finding of Fact 3). Of course this was a proper issue for litigation because the respondents had the right to contest the cause of and the reasonableness and necessity for specific treatments. See Hanna v. Print Expediters Inc., 77 P.3d 863 (Colo.App. 2003); Snyder v. Industrial Claim Appeals Office, 942 P.2d 1337 (Colo.App. 1997).
However, ALJ Rumler's order does not indicate the respondents denied liability for any and all medical treatment. In fact, ALJ Rumler states the respondents admitted liability for the compensable claim. Because the respondents admitted liability, the Act itself imposed on Wausau a general duty to pay reasonable and necessary medical expenses needed to cure and relieve the effects of the injury. Section 8-42-101(1)(a); Grover v. Industrial Claim Appeals Office, 759 P.2d 705 (Colo. 1988); Owens v. Industrial Claim Appeals Office, 49 P.3d 1187 (Colo.App. 2002) (statute imposes on every employer the duty to furnish such medical treatment as is reasonably needed to cure and relieve the effects of the injury). Thus, ALJ Rumler's general direction to pay reasonable and necessary medical expenses beyond those specifically contested by the respondents amounted to nothing more than a direction to do that which the statute already generally required of the respondents. It follows that penalizing the respondents for violating that portion of ALJ Rumler's order would be equivalent to penalizing them for violating the Act.
In this regard, we note the Holliday court concluded that placement of the limiting phrase "for which no penalty has been specifically provided" before that portion of § 8-43-304(1) concerning the violation of orders demonstrates the General Assembly considers the "violation of a statutory provision or an administrative mandate to be a less egregious wrong than disregarding a tribunal's lawful order." 23 P.3d at 706. Thus, the General Assembly sought to emphasize and protect the legitimacy and importance of decisions reached after a hearing conducted before an ALJ. However, if the ALJ's "decision" does not resolve some genuine controversy or fulfill a statutory responsibility, but instead constitutes nothing more than a general entreaty to follow the statutory mandates of the Act, the statutory objectives would not be served by considering the ALJ's decision to be an "order" for purposes of § 8-43-304(1).
Consequently, we agree with the respondents that they may not be penalized under § 8-43-304(1) for what ALJ Felter himself characterized as a general order to pay reasonable and necessary medical benefits. The issue before ALJ Rumler concerned liability for specific medical treatment to be performed in Texas more than fifteen years ago. ALJ Rumler's gratuitous statement requiring the respondents to otherwise perform in accordance with their statutory duty to pay medical benefits cannot be bootstrapped into an order which would subject the respondents to penalties for violation of an order in failing to provide treatment prescribed more than a decade later.
The fact that the respondents filed an FAL in 1990 admitting for PTD benefits and Grover-style medical benefits does not change this result. Arguably, failure to pay in accordance with an admission might be subject to penalties for violation of the Act. See § 8-43-203(2)(d), C.R.S. 2003 (once liability is admitted, payments shall continue according to admitted liability). However, as the claimant admits, he is not seeking penalties for violation of the Act, but instead for violation of ALJ Rumler's order. (Claimant's Brief in Opposition to Petition to Review, p. 6). Consequently, this issue is not before us. Moreover, even if the filing of the FAL may be characterized as "re-affirming" ALJ Rumler's order, we have already determined there was no "order" with respect to the general award of medical benefits.
In light of these determinations, we need not reach the respondents' remaining argument concerning the effect of ALJ Rumler's order after the alleged date of MMI, or the claimant's arguments in response to that issue.
II.
The respondents next contend that ALJ Felter's assessment of penalties for violation of a PALJ's order compelling discovery violates the due process clause and constitutional prohibition against excessive fines. We are not persuaded.
ALJ Felter found that on September 4, 2002, the claimant served Wausau with interrogatories and a request for production of documents. The interrogatories requested the respondents to specify the reasons for failing to authorize the implant procedure and produce related documents. The claimant further requested the respondents to produce "all documents and electronic information regarding the claim."
Wausau failed to respond to the requests for discovery, and the claimant filed a motion to compel discovery on September 27, 2002. On October 16, 2002, a PALJ granted the motion to compel and directed Wausau to provide answers to the interrogatories within 10 days and to produce all requested documents. The order warned that failure to comply with the order could result in the assessment of penalties of up to $500 per day.
ALJ Felter found that Wausau did not attempt to comply with the order to answer the interrogatories until November 5, 2002, which was beyond the deadline established in the PALJ's order. Moreover, the ALJ found the answers were incomplete, inaccurate, and unsigned. In this regard, we note the November 5 answers state "a review of the file seems to indicate that no medical review was made" with regard to Dr. Kaufman's request for pre — authorization. In fact such a review was completed in May 2002. It was not until January 28, 2002, that the respondents complied with the order by providing answers in proper form.
Under these circumstances, ALJ Felter imposed penalties of $150 per day from October 27, 2002, through January 27, 2003, for a total of $13,500. The ALJ noted that the respondents' conduct did not involve a mere failure to follow a rule regarding discovery, but represented violation of a PALJ's order.
ALJ Felter further found the respondents began producing the claimant's claim file, including pertinent electronic communications pertaining to the pre-authorization issue, in a "piecemeal fashion." Although the respondents repeatedly assured claimant's counsel that the file was complete, it was not until January 9, 2003, that they produced a number of relevant e-mails.
ALJ Felter concluded that the PALJ's order afforded the respondents a reasonable time, or until October 26, 2002, to produce the requested materials. However, the respondents violated the order by failing timely to produce all relevant materials as directed by the PALJ's order. The ALJ imposed penalties of $50 per day from October 27, 2002 until January 9, 2003, for a total of $3,750.
On review, the respondents contend ALJ Felter's assessment of penalties violates the due process and excessive fines provisions of the United States and Colorado constitutions. We find no error.
The ALJ's assessment of penalties was within the statutory parameters established by § 8-43-304(1). Consequently, we must uphold the assessment unless there has been abuse of discretion, as where the order is beyond the bounds of reason because it is unsupported by the evidence or the law. Pizza Hut v. Industrial Claim Appeals Office, 18 P.3d 867 (Colo.App. 2001).
The respondents assert that because there is a constitutional question involved, we may conduct a de novo review. We have previously rejected this argument, holding that an abuse of discretion standard applies to review of statutory proceedings. See Giddings v. Northern Telecom, W.C. No. 4-293-203 (September 30, 2002). The Court of Appeals agreed with this determination, although it found the penalties in the Giddings case violated constitutional standards because they were not proportional to the economic loss sustained by the claimant and considering the employer's conduct. Northern Telecom, Inc. v. Industrial Claim Appeals Panel, (Colo.App. No. 02CA052, December 224, 2003) (not selected for publication).
Here, the ALJ found that not only did Wausau fail to respond to the request for discovery in a timely fashion, it did not timely respond to the PALJ's order compelling discovery. When Wausau first responded to the interrogatories on November 5, the "answers" to the interrogatories were not in correct form because the were not complete, were unsigned, and not under oath. C.R.C.P. 33(b). The evidence also supports ALJ Felter's finding that the production of documents was untimely and occurred in a piecemeal fashion despite the PALJ's order. Certainly, the totality of the evidence demonstrates a substantial disregard of discovery obligations. Moreover ALJ Felter considered mitigating factors including the respondents' attempt to comply with the discovery order on November 5, and the fact that the respondents' files were disorganized. The ALJ imposed daily penalties at rates substantially lower than the maximum rate allowed by law. In our opinion, the ALJ's order reflects consideration of relevant factors including the respondents' disregard of the PALJ's authority to order discovery, and is not disproportionate to the respondents' conduct under the circumstances. Thus, we cannot say the penalties constitute an abuse of discretion. In this regard, we agree with the claimant that the respondents' reliance on Reed v. Industrial Claim Appeals Office, 13 P.3d 810 (Colo.App. 2000), is misplaced. That case did not involve violation of an order to compel discovery.
Insofar as the respondents contend the order violates the due process clause and excessive fines clause, we lack jurisdiction to determine that issue. Giddings v. Northern Telecom, supra. Determination of these issues is the province of the judiciary. Celebrity Custom Builders v. Industrial Claim Appeals Office, 916 P.2d 539 (Colo.App. 1995). Although the Court of Appeals determined there was a constitutional violation in the Giddings case, we do not understand it to have instructed us to engage in constitutional analysis to determine whether a particular fine may be considered "excessive."
IT IS THEREFORE ORDERED that ALJ Felter's order dated July 31, 2003, is reversed insofar as it imposed a penalty for the respondents' alleged violation of ALJ Rumler's order.
IT IS FURTHER ORDERED that ALJ Felter's order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Bill WhitacreNOTICE
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, Colorado 80203, by filing a Petition to Review with the Court, within twenty (20) days after the date this Order was mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2003. The appealing party must serve a copy of the Petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this order were mailed to the parties at the addresses shown below on January 9, 2004 by A. Hurtado.
Jackie Martinez, 2124 Federal Blvd., Denver, CO 80211
Thomas Held, Wausau Insurance Companies, P. O. Box 419157, Kansas City, MO 64141-6157
Kat Pennucci, Tower 2, #630, Division of Workers' Compensation — Interagency Mail
David J. Nowak, Esq. and David W. Smiley, Esq., 950 17th St., 21st floor, Denver, CO 80202 (For Claimant)
David G. Kroll, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)