Opinion
W.C. No. 3-665-793
August 7, 1995
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Wells (ALJ) which ordered the Colorado Compensation Insurance Authority (CCIA) to pay a penalty for its failure to comply with an order issued by Administrative Law Judge Wheelock (ALJ Wheelock). We affirm.
The claimant was found eligible for vocational rehabilitation in connection with injuries suffered in 1981. On December 29, 1988, ALJ Wheelock ordered the CCIA, within 30 days of the date of the order, to refer the claimant to a vocational rehabilitation vendor to initiate a vocational rehabilitation plan.
The ALJ interpreted ALJ Wheelock's order as requiring the respondents to provide vocational rehabilitation services within 30 days of the date of the order, and not merely to make a referral. The ALJ found that the CCIA failed to provide vocational rehabilitation services between January 29, 1989 and February 6, 1991, and asserted no defense or explanation for this failure. Therefore, the ALJ ordered the CCIA to pay a penalty of $1.00 per day for each day during this period that it failed to comply with ALJ Wheelock's order.
The ALJ also found that the CCIA failed to provide a vocational rehabilitation "plan" between July 15, 1992 and August 19, 1992. Therefore, the ALJ ordered the CCIA to pay a penalty at the rate of $50.00 per day for every day during this period that no "plan" was provided.
Lastly, the ALJ found that against the claimant's desires, the CCIA respondents unilaterally terminated the vocational rehabilitation services of Doug Prutting from IntraCorp, and did not provide alternative rehabilitation services agreeable to the claimant until April 29, 1993. Therefore, the ALJ ordered the CCIA to pay a penalty at the rate of $100 per day from December 21, 1992 to April 29, 1993.
I.
On review, the respondents contend that the ALJ's assessment of penalties is not supported by the applicable law, because the claimant failed to prove that the CCIA acted in "bad faith." By this, the respondents mean that there was no showing that the CCIA's conduct was reckless or intentional. We reject this argument.
The ALJ's imposition of penalties was pursuant to former § 8-53-116 C.R.S. (1986 Repl. Vol 3B) [currently codified with changes at § 8-43-304(1), C.R.S. (1994 Cum. Supp.)]. Former § 8-53-116 provides that:
"Any employer or insurer . . . . who violates any provision of articles 40 to 54 of this title, 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 or any judgment or decree made by any court as provided by said articles shall be punished by a fine of not more than one hundred dollars for each such offense."
In Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995), the court rejected the notion that former § 8-53-116 required the claimant to prove that an insurer acted in "bad faith." Rather, the court held that an insurer's failure to comply with a lawfully entered order is governed by a "negligence" standard, and thus, concluded that "penalties may be assessed against an insurer that neglects to take the action a reasonable insurer would take to comply with a lawful order."
Moreover, as the respondents argue, we have held that an insurer's adjustment of a claim is not unreasonable under the objective standard if predicated on a "rational argument based on law or evidence." See Tozer v. Scott Wetzel Services, Inc., 883 P.2d 496 (Colo.App. 1994); Brown v. Gosney and Sons, Inc., W.C. No. 3-104-140, August 30, 1994. Thus, we have held that an insurer is not liable for penalties if its failure to provide benefits is predicated upon a rational legal argument or rational argument based in fact. Brown v. Gosney and Sons, Inc., supra; Toth v. Pueblo School District No. 70, W.C. No. 3-878-236, 3-793-718, January 13, 1995.
We also reject the respondents' argument that the claimant was required to present evidence of "industry standards" in support of her claim for a penalty. No such requirement was mentioned in Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra. In any case, ALJ's are sufficiently familiar with the practice of insurers in workers' compensation cases to make judgments concerning reasonableness of an insurer's actions relative to "industry standards." Cf. Weirman v. Tunnel, 108 Colo. 544, 120 P.2d 638 (1941) (ALJ's considered to have special expertise in the evaluation of medical evidence in matters relating to causation).
II.
Next, the respondents do not dispute the ALJ's imposition of penalties prior to December 20, 1992. Rather, the respondents' sole focus is the ALJ's assessment of a penalty for the period December 21, 1992 to April 29, 1993. Specifically, the respondents dispute the ALJ's determination that the CCIA is liable for penalties due to its unilateral termination of vocational rehabilitation services from Intracorp. We perceive no basis to disturb the ALJ's determination.
The Rules of Procedure Part V(7), Code Colo. Reg. 1101-3 at 15 (1992) state that if the parties indicate an area of dispute concerning the submission or implementation of a vocational rehabilitation plan, "the director shall attempt to resolve the differences and upon obtaining agreement, order the plan approved. If the differences cannot be resolved the director shall set the case for hearing to resolve the areas of disagreement." We have previously held that because Rule V(7) sets forth the procedure to be followed in the event of a dispute concerning the choice of a vocational rehabilitation vendor, the insurer is precluded from unilaterally changing the rehabilitation vendor without a showing of good cause. Moore v. Tidewater Compression Services, Inc., W.C. No. 3-045-284, May 12, 1988. Consequently, we conclude that the CCIA is subject to a penalty if it changed the vocational rehabilitation vendor in violation of Rule V(7), and its actions were not predicated upon a rational argument based in law or fact.
The respondents concede that the CCIA changed the vocational rehabilitation vendor, and do not assert that the change complied with Rule V(7). However, the respondents' argue that the CCIA's termination of vocational rehabilitation services from Intracorp was predicated upon a rational argument that Intercorp refused to serve the claimant. Specifically, the respondents contend that Doug Prutting at Intercorp, unilaterally terminated his services to the claimant as a result of "extreme confusion" generated by a letter from the claimant's attorney to Prutting in November 1992. Prutting testified that he misinterpreted the letter as precluding all contact with the CCIA, which he considered vital to providing vocational rehabilitation services to the claimant. Tr. 23. Prutting stated that he then closed his file and notified the CCIA of the same. Tr. pp. 23, 64. The respondents argue that the CCIA logically concluded that Intracorp was unwilling to serve the claimant and therefore, referred the claimant to another vendor for services.
However, as we read the ALJ's order, he did not impose penalties for the CCIA's initial termination of vocational rehabilitation services from Intracorp. Tr. pp. 108, 111; CAN-USA Construction, Inc. v. Gerber, 767 P.2d 765 (Colo.App. 1988) rev'd on other grounds at 783 P.2d 269 (1989) (ALJ's oral findings are properly considered to interpret the written order). Rather, the ALJ found that although Prutting voluntarily closed his file in November 1992, Prutting later determined that he misunderstood the limitations imposed by claimant's counsel and advised the CCIA's attorney of his willingness to continue to provide services to the claimant. The ALJ found that the respondent's attorney did not return the call, nor did the respondents reinstate Prutting's services as of December 20, 1992. Instead, the ALJ determined that the CCIA unilaterally changed the vocational rehabilitation vendor without notice to or the consent of, the claimant. Tr. pp. 108, 109, 111. Under these circumstances, ALJ found that the CCIA was subject to a penalty for unreasonably refusing to reinstate Prutting's services after December 20, 1992, when it was aware of Prutting's willingness to provide services.
The reasonableness of the CCIA's actions was a factual determination for the ALJ. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra. Consequently, we must uphold the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. (1994 Cum. Supp.); Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra. In so doing, we must defer to the ALJ's credibility determinations, and the plausible inferences which the ALJ drew from conflicts in the evidence. General Cable Co. v. Industrial Claim Appeals Office, 878 P.2d 118 (Colo.App. 1994).
Here, the ALJ's determination that the CCIA terminated the claimant's vocational rehabilitation services without notice to the claimant, and in violation of the claimant's wishes, is supported by the record. Tr. pp. 23,-25, 31, 44, 46, 64, 68, 75-76, 79-80. Furthermore, at hearing, the respondents did not present any evidence to explain their failure to reinstate Prutting's services. In fact, the CCIA's adjuster testified that the CCIA's attorney had not made her aware of Prutting's offer to reopen his file. Tr. pp. 79, 80. Under these circumstances, we cannot say that the record compels a conclusion that the respondents termination of vocational rehabilitation services was predicated upon a rational argument based in law or fact.
III.
The CCIA also contends that former § 8-53-116 is unconstitutional on its face, and as applied. Specifically, the CCIA argues that the statute denies due process of law, and results in the imposition of "excessive" fines. However, the respondents recognize that we lack jurisdiction to consider their facial attack on the constitutionality of § 8-43-304(1). Kinterknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971); Celebrity Custom Builders v. Industrial Claim Appeals Office, ___ P.2d ___ (Colo.App. No. 94CA1937, June 15, 1995).
With regard to the respondents' "as applied" challenge to the statute, the Supreme Court has indicated that administrative agencies have the authority to determine whether "an otherwise constitutional statute has been unconstitutionally applied." Horrell v. Department of Administration, 861 P.2d 1194, 1196 (Colo. 1993). Furthermore, we previously rejected similar "as applied" arguments by the CCIA. See Hrabczuk v. Industrial Claim Appeals Office, W.C. No. 3-993-396, September 29, 1993 and Toth v. Pueblo School District No. 70, W.C. Nos. 3-878-236, 3-793-718, January 13, 1995. However, in Selvage v. Colorado Department of Highways, W.C. No. 3-632-483, July 28, 1995, we concluded that the CCIA's "facially" and "as applied" challenges to the penalty statutes are so intertwined that we cannot consider the "as applied" challenge without addressing the "facial" constitutionality of the statute. We further stated that "to do so would violate the principle of separation of powers, and cause us to engage in constitutional decision-making beyond our area of expertise." See Denver Center for Performing Arts v. Briggs, 696 P.2d 299, 305 (Colo. 1985) (administrative rulings concerning "facial" challenges to statutes will not be considered "authoritative" on judicial review). Therefore, we declined to consider the "as applied" challenge in Selvage.
We adhere to our conclusion in Selvage. Consequently, we decline to consider the respondents' "as applied" challenge to the constitutionality of § 8-43-304(1), and insofar as this result is inconsistent with Hrabczuk and Toth, we have reconsidered the matter.
IT IS THEREFORE ORDERED that the ALJ's order dated June 25, 1993, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. DeanNOTICE
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. (1994 Cum. Supp.).
Copies of this decision were mailed August 7, 1995 to the following parties:
Nancy J. Roache, 4825 Astrozon, #A-118, Colo. Springs, CO 80916
Irrigation Industries, Inc., P.O. Box 790, Colo. Spgs., CO 80901
Colorado Compensation Insurance Authority, Attn: C. Boyd, Esq., — Interagency Mail
Ralph Ogden, Esq., 1120 Lincoln St., Suite 1306, Denver, CO 80203
(For the Claimant)
Steven U. Mullens, Esq., 90 S. Cascade St., Ste. 300, Colorado Springs, CO 80903
BY: _______________________