Opinion
W.C. No. 4-619-954.
May 5, 2006.
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Mattoon (ALJ) dated December 16, 2005 that ordered the respondents to pay statutory penalties on account of their wrongful termination of temporary disability benefits (TTD). We affirm.
A hearing was held on the issues of the claimant's entitlement to TTD, and to medical benefits in the form of home health care, and the issue of statutory penalties against the respondents for wrongful termination of TTD. Following the hearing the ALJ entered findings of fact that may be summarized as follows. The claimant was injured in a compensable motor vehicle accident on June 16, 2004, following which the respondents admitted liability for TTD. She received medical treatment from Dr. Olsen, who released her to modified work on June 22, 2005, and placed her at maximum medical improvement on February 11, 2005, without permanent impairment. On February 14, 2005, Dr. Olsen's office telephoned the insurer's claims adjuster and notified her that the claimant reached maximum medical improvement on February 11th. The adjuster immediately terminated temporary disability benefit payments, believing that an overpayment would be created if she waited to receive the report. She received a written report from Dr. Olson's office on February 22, 2005, and filed a final admission on March 21, 2005, admitting for TTD through February 11th with no permanent impairment.
Based upon her factual findings, the ALJ concluded that the respondents violated § 8-42-105(3) C.R.S. 2005 and the then-current Rule of Procedure IX(C)(1)(a). (Since the hearing in this matter the workers' compensation rules of procedure have been renumbered and amended. The present version of Rule IX(C)(1)(a) is found at Rule 6-1(A)(1). We will continue to refer to the rule using the citation applicable at the time of the hearing.) The ALJ determined that penalties were appropriate pursuant to § 8-43-304, C.R.S. 2005. She imposed a penalty upon the respondents of $200 per day for a total penalty of $7800.
On appeal the respondents' sole argument is that the ALJ applied an incorrect legal standard in calculating the amount of the penalty. Specifically, they contend that the ALJ erred in imposing penalties without applying the standards set forth in Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo.App. 2005). We disagree with the respondents' argument.
Under § 8-43-304(1), C.R.S. 2001, the ALJ may impose penalties of up to five hundred dollars per day when an employer fails, neglects or refuses to obey any lawful order made by the panel or director. Holliday v. Bestop Inc. 23 P.3d 700 (Colo. 2001). Because the ALJ's authority is discretionary, we may not disturb the ALJ's determination of the amount of the penalty to be imposed in the absence of fraud or an abuse of discretion. See Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo.App. 2005); Hall v. Home Furniture Co., 724 P.2d 94 (Colo.App. 1986); Brunetti v. Industrial Commission, 670 P.2d 1246 (Colo.App. 1983). There is no assertion of fraud in this case. Further, the legal standard for review of an alleged abuse of discretion is whether, under the totality of the factual circumstances at the time of the ALJ's determination, the ALJ's order "exceeds the bounds of reason." Associated Business Products, supra.; Rosenberg v. Board of Education of School District #1, 710 P.2d 1095 (Colo. 1985). The application of this standard includes consideration of whether the ALJ's determination is supported by substantial evidence and the applicable law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1993).
We disagree with the respondents that the ALJ's failure to specifically cite and discuss the factors set forth in Associated Business Products requires a remand for further findings. We do not read Associated Business Products as setting forth a checklist of factors that must be expressly present in every order imposing a penalty under § 8-43-304(1), and the absence of which compel reversal of the order. Rather, in Associated Business Products the court reviewed a penalty for excessiveness, to determine whether its amount violated the due process protections of the federal and state constitutions and the excessive fines clause of the Eighth Amendment. The court set forth three factors to be used to determine whether those constitutional limits had been exceeded by the amount of the penalty. Specifically, the court considered (1) the reprehensibility of the conduct, (2) the disparity between the harm to the claimant and the penalty, and (3) the difference between the penalty and civil damages that could be imposed in comparable cases. However, neither the Due Process Clause nor the Eighth Amendment are applicable in setting the amount of a discretionary statutory penalty; rather, they merely impose constitutional upper limits which a penalty may not permissibly exceed. Thus, as we read Associated Business Products the court held that these factors are appropriate in reviewing whether a penalty is unconstitutionally excessive, or "grossly disproportionate." Associated Business Products, 126 P.3d at 326; See also Pueblo School District No. 70 v. Toth, 924 P.2d 1094, 1100 (Colo.App. 1996). However, subject to constitutional limitations, the ALJ's decision regarding the amount of the penalty remains highly discretionary, which implies that the ALJ may consider a wide variety of factors. See C. Schneider, "Discretion and Rules: A Lawyer's View," in The Uses of Discretion at 67 (K. Hawkins, ed. 1992) ("Discretion allows decisions to be tailored to the particular circumstances of each particular case. Discretion gives decision-makers flexibility to do justice. It does so partly by allowing them to consider all the individual circumstances that ought to affect a decision but that could not be anticipated by rules.") Here, we are able to discern the basis for the order, and in our view the ALJ's failure to list and discuss the factors set forth in Associated Business Products does not require setting aside the order.
As noted, we reject the respondents' sole argument that the ALJ applied an incorrect legal standard in fixing the amount of the penalty. We do not understand the respondents to argue either that the actual amount is constitutionally excessive or that it otherwise constitutes an abuse of discretion. In any event, we note that neither argument is well taken.
In light of the factors set forth in Associated Business Products we conclude that the penalty does not exceed the bounds of reason, and is not "grossly disproportionate," and therefore does not constitute an abuse of discretion. The burden is on the party who is penalized to show mitigation tending to reduce the amount of the penalty, and here we are unable to locate evidence regarding what civil penalties might have been imposed under similar circumstances. See Associated Business Products, 126 P.3d at 327. Of the other two factors set forth in Associated Business Products, the respondents argued that the claimant was not entitled to TTD following her placement at maximum medical improvement and, therefore, was not harmed by the wrongful termination of those benefits.
However, as to the remaining factor, the ALJ could reasonably have inferred from the record that the degree of "reprehensibility" of the insurer's conduct was high. We presume that the court of appeals used that term in its usual sense of "[w]orthy of censure or rebuke." Webster's II New College Dictionary at 941 (1995). The respondents' witness, Jane Medsen, testified that she was a "senior" claims coordinator, from which the ALJ could reasonably infer that she was knowledgeable concerning the policies and procedures of the carrier. Tr. at 28. She further testified that, although she received the doctor's written report on February 22nd, she had spoken with "Debby Corsentino" on February 14th and been informed that the claimant had reached maximum medical improvement on February 11th. She then stated that it was her "normal practice" to terminate TTD "if I know on a certain date that they are MMI. . . ." Tr. at 32. However, she conceded on cross-examination that Corsentino was merely her "contact" at the employer's place of business, and that she did not know the source of Corsentino's information concerning maximum medical improvement, merely stating that "You'd have to ask Debbie." Finally, when asked whether there was "any way" that Medsen would "normally" pay TTD after the date of maximum medical improvement, the latter replied that there was not: "No. No, we would not." Tr. at 37.
The ALJ could plausibly infer from Medsen's testimony that the carrier's "normal" procedure was to terminate TTD immediately upon its "knowledge," from whatever source, that maximum medical improvement had been reached, apparently even where the source of that knowledge was a contact at the employer's business. Given the record, the ALJ could certainly reason that a significant penalty was necessary in order to dissuade the carrier from following its "normal" procedure where its practice constituted an admitted violation of the Act. We also note that the penalty imposed in this case was significantly less than the maximum permitted by the statute. Under these circumstances we do not view the penalty of $200 per day for this violation to be either constitutionally excessive or otherwise an abuse of the ALJ's discretion.
IT IS THEREFORE ORDERED that the ALJ's order dated December 16, 2005, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Curt Kriksciun
____________________________________ Thomas Schrant
Maria Adakai, Pueblo, CO, Debi Storey, St. Mary Corwin Hospital, Pueblo, CO, Rudy Krasovec, Director, Human Resources, St. Mary Corwin Hospital, Pueblo, CO, PPIC, c/o Jane Madsen, CHI/AIMS, Erlanger, KY,
Brenda Carrillo, Subsequent Injury Fund, Division of Workers' Compensation — Interagency Mail, Stephen M. Johnston, Esq., Pueblo, CO, (For Claimant).
Sue Reeves, Esq. and T. Paul Krueger, II, Esq., Colorado Springs, CO, (For Respondents).