FINAL ORDER

The respondents seek review of an order of Administrative Law Judge Stuber (ALJ) insofar as it ruled the respondents are not entitled to recover from the claimant the value of medical expenses which the respondents paid to third-party medical providers. The respondents contend the 1997 amendments to § 8-43-303(2)(a), C.R.S. 1998, authorize them to recover the value of medical benefits which the claimant fraudulently procured. We reverse.

The facts in this case are undisputed. On December 29, 1997, the claimant told her supervisor that she fell at work and sustained an injury. The supervisor then completed a first report of injury which was transmitted to the insurer. As a result of the information provided by the claimant and transmitted by the employer, the insurer filed a general admission of liability for medical benefits and temporary total disability benefits. The respondents made payments to medical providers under this admission.

Subsequently, the respondents obtained information indicating the claimant injured herself at home and falsely reported the workers' compensation injury because she did not have personal health insurance. The respondents then sought a hearing seeking "recovery of all payments made to or on behalf of claimant per section 8-43-303 (2)(a), C.R.S."

Following a hearing, at which the claimant did not appear, the ALJ found the claimant "fraudulently induced the admission of compensation and medical benefits in this case." Under these circumstances, the ALJ concluded that § 8-43-303(2)(a) entitled the respondents to recover the "overpayment" of temporary disability benefits. However, the ALJ held the respondents are not entitled to recover the value of medical benefits paid to third-party medical providers. In support of this conclusion, the ALJ cited § 8-40-201(15.5), C.R.S. 1998, which defines an "overpayment" as "money received by a claimant that exceeds the amount that should have been paid, or which the claimant was not entitled to receive."

On review, the respondents contend the ALJ erred in failing to order the claimant to repay the value of benefits which the respondents paid directly to the claimant's medical providers. The respondents argue that, regardless of whether the medical benefits paid to third parties constitute an "overpayment" as defined by § 8-40-201 (15.5), § 8-43-303(2)(a) authorizes an independent remedy for "fraud." In any event, the respondents argue the statutory definition of the term "overpayment" should be construed broadly enough to include payments made to third-party medical providers. We conclude the respondents are entitled to repayment of benefits paid to the medical providers, but for reasons slightly different than those argued by the respondents.

In 1997, the General Assembly amended § 8-43-303(1), C.R.S. 1998, and § 8-43-303(2)(a), to permit reopening of an award on grounds of "fraud" and "overpayment," in addition to the traditional grounds of error, a mistake, or change in condition. The 1997 amendments also provide that "no such reopening shall affect the earlier award as to moneys already paid except in cases of fraud or overpayment." (Emphasis added). Further, the 1997 amendments added § 8-40-201(15.5), defining "overpayment" as "money received by a claimant." 1997 Colo. Sess. Laws, Vol. 1, ch. 45 at 112-116.

Initially, we hold that the respondents' rights are not, as a procedural matter, directly controlled by the reopening provisions of § 8-43-303. A reopening is required only where the claim has been closed by a final admission of liability or the entry of an order which has become final by the exhaustion of, or the failure to exhaust, administrative review procedures. Brown Root, Inc. v. Industrial Claim Appeals Office, 833 P.2d 780 (Colo.App. 1991). Here, the respondents did not file a final admission of liability, nor has the claim been closed by an order adjudicating the claimant's right to benefits. In these circumstances, the respondents were entitled to seek withdrawal of their admission of liability without complying with the reopening provisions. Cf. Lewis v. Scientific Supply Co., Inc., 897 P.2d 905 (Colo.App. 1995) (motion to withdraw admission appropriate if case remains open, otherwise petition to reopen must be filed).

Indeed, the facts presented here are controlled by the Court of Appeals decision in Vargo v. Industrial Commission, 626 P.2d 1164 (Colo.App. 1981). In Vargo, the claimant made fraudulent representations concerning his condition prior to the industrial injury, and these representations induced the respondents to file a general admission of liability for temporary disability and medical benefits. When the respondents discovered the fraudulent representations, they filed a "denial of liability," ceased payment of medical benefits, but continued temporary disability benefits until the claimant returned to work. In these circumstances, the court upheld an order of the Industrial Commission which declared the admission of liability "void from the date of filing." In reaching this result, the court recognized that the statute currently codified at § 8-43-203(2)(d), C.R.S. 1998, provides that, "Hearings may be set to determine any matter, but, if any liability is admitted, payment shall continue according to admitted liability." The court observed that neither this statute, nor any other provision of the Act, authorizes "retroactive withdrawals of an admission of liability." Nevertheless, the court stated that the "beneficial intent" of the Act is predicated on claimants providing accurate information. Therefore, the court held that where the claimant supplies "materially false information upon which his employer and its insurer relied in filing an admission of liability, the referee is justified in declaring the admission void ab initio." Id. at 1166.

Although the Vargo decision does not expressly state that a claimant may be ordered to repay the insurer for benefits obtained prior to withdrawal of the fraudulently induced admission, the court's reference to "retroactive withdrawal" of the admission indicates that repayment is the intended remedy. Cf. HLJ Management Group, Inc. v. Kim, 804 P.2d 250 (Colo.App. 1990) (holding that admission may not be withdrawn retroactively unless procured by fraud, but permitting prospective withdrawal of an erroneous admission). Indeed, the court in Lewis v. Scientific Supply Co., Inc., supra, went to substantial effort to distinguish Vargo on the grounds that Vargo, unlike Lewis, involved facts where there was no final admission of liability nor any formal adjudication of the respondents' liability. Although the Lewis court stated that ALJs lack "inherent authority" to remedy fraud, the court reached this ruling in the context of the reopening statute as it existed prior to 1997, and without explicitly overruling Vargo. Thus, when read together, Vargo and Lewis stand for the proposition that the authority of an ALJ to remedy fraud is limited to the express provisions of the statute, except where the fraud occurs prior to entry of a final admission or closure of the claim by way of an order. In circumstances where no final adjudication has occurred, "retroactive withdrawal" is a permissible remedy. Cf. Johnson v. Industrial Commission, 761 P.2d 1140 (Colo.App. 1988) (holding that equitable doctrines of waiver and estoppel may be invoked to prohibit exercise of statutory right to an offset).

Here, the circumstances are identical to those present in Vargo. The respondents filed a general admission of liability which was induced by the claimant's fraudulent representations. As a result of the fraud, the respondents paid temporary disability and medical benefits. Under these circumstances, we conclude that Vargo authorizes the respondents "retroactively to withdraw" their admission of liability, and the remedy in these circumstances is entry of an order requiring the claimant to repay all fraudulently obtained benefits, including medical benefits paid to third parties.

Even if Vargo was overruled sub silentio by Lewis v. Scientific Supply Co., Inc., supra, concerning an ALJ's "inherent" or equitable power to remedy fraud in the absence of express statutory authority, we would not reach a different result in this case. Lewis stands for the proposition that jurisdiction of an ALJ to remedy fraud is limited to the statutory provisions contained in the Act. We agree with the respondents that the 1997 amendments to the reopening statute grant ALJs definitive statutory authority to remedy fraud by ordering repayment of fraudulently obtained benefits, regardless of whether such benefits constitute an "overpayment" as defined by § 8-40-201(15.5).

As a general matter, statutes should be construed to effect the legislative intent. The best indicator of legislative intent is the language of the statute itself, and words and phrases contained in the statute should be given their plain and ordinary meanings. Snyder Oil Co. v. Embree, 862 P.2d 259 (Colo. 1993). Insofar as there is an ambiguity, we may consider the state of the law prior to the legislative enactment, and the statutory remedy created to cure the problem. Further, we should construe the entire statutory scheme in a manner that gives consistent, harmonious, and sensible effect to all its parts. Henderson v. RSI, Inc., 824 P.2d 91 (Colo.App. 1991).

The 1997 amendments to § 8-43-303(1) and § 8-43-303(2)(a) state that a claim maybe reopened "on the ground of fraud, an overpayment, an error, a mistake, or change in condition." Thus, under the plain language of the statute, "fraud" and "overpayment" constitute distinct grounds for reopening. Moreover, the statute provides that a reopening may not "affect moneys already" paid except in cases of fraud or overpayment. Separation of the terms fraud and overpayment by the word "or" connotes the disjunctive sense. Burns v. Robinson Dairy, Inc., 911 P.2d 661 (Colo.App. 1995). Consequently, the statute contemplates that fraud and overpayment constitute distinct legal circumstances, and the ALJ has authority to remedy either circumstance even if it requires the claimant to repay benefits already received. See Cody v. Industrial Claim Appeals Office, 940 P.2d 1042 (Colo.App. 1996) (reduction of future benefits does not violate the provision of § 8-43-303 which prohibits a reopening from affecting "moneys already paid" since it does not require the claimant actually to pay back money from his initial award).

It may be that an order requiring the claimant to reimburse the respondents for medical benefits paid to third parties does not qualify as one involving an "overpayment" under § 8-40-201(15.5). Nevertheless, because fraud constitutes a separate ground for reopening, and because the statute authorizes a remedy for fraud without regard to "moneys already paid," the ALJ possesses independent authority to remedy fraud even if no "overpayment" occurred.

This interpretation is consistent with the legislative intent of the 1997 amendments. The 1997 legislation is designated as an act "concerning the recovery from claimants of workers' compensation benefits to which such claimants are not entitled." In our view, an arbitrary distinction between cash benefits received by the claimant and medical benefits paid to third parties would not make sense in terms of the stated legislative objective. Moreover, the General Assembly was presumably aware of the result in Lewis v. Scientific Supply Co., Inc., supra, when it enacted the 1997 amendments. Because the General Assembly authorized fraud as a ground to reopen, and explicitly provided that the remedy for fraud may affect moneys already paid, it presumably intended to change the result in Lewis. See United States Fidelity Guaranty, Inc., 868 P.2d 1158 (Colo.App. 1994) (legislature presumably aware of judicial precedent when it enacts legislation, and judicial interpretation is approved to the extent the statutory language remains unchanged).

Because we hold that § 8-43-303 authorizes ALJs to remedy fraud by ordering repayment of fraudulently obtained benefits, we conclude the ALJ misinterpreted the statute when he refused to order repayment of medical benefits paid to third parties. Further, because ALJs possess authority to order a remedy for fraud in the reopening context, they necessarily possess authority to remedy fraud before the case becomes final and subject to the reopening provisions. Therefore, we reverse the ALJ's order and hold the claimant is obliged to reimburse the respondents for all medical benefits paid to third parties.

IT IS THEREFORE ORDERED that the ALJ's order dated September 30, 1998, is reversed insofar as it denied and dismissed the respondents' request that the claimant repay "any medical benefits paid to third parties." The claimant shall reimburse the respondents for all medical benefits paid to third parties as a result of the claimant's fraudulent misrepresentations. To the extent there is a dispute concerning the amount of such benefits, the ALJ may enter an order based on the existing record.

INDUSTRIAL CLAIM APPEALS PANEL

__________________________________ David Cain

__________________________________ Dona Halsey

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 August 31, 1999 to the following parties:

Terry A. Stroman, 1311 Baylor St., Colorado Springs, CO 80909

Southway Services, Inc., P.O. Box 22683, Oklahoma City, OK 73123-2683

Bea Calvert, Business Insurance Company, P.O. Box 101630, Denver, CO 80250

James R. Clifton, Esq. and Harvey D. Flewelling, Esq., 5353 W. Dartmouth Ave., #400, Denver, CO 80227 (For Respondents)

By: A. Pendroy