Opinion
W.C. No. 4-217-926
February 7, 2000
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which denied a request for penalties based on the respondent-insurer's failure to pre-authorize medical treatment. We affirm.
This matter was before us previously. Our Order of Remand dated June 4, 1999, contains a statement of the facts, and we will not repeat them here.
On remand, the ALJ found that by January 8, 1998, the insurer had received a letter from claimant's counsel requesting pre-authorization for treatment by Dr. Bograd. The ALJ determined that because the requested services would exceed the time limit for psychiatric treatment contained in the Medical Treatment Guidelines, the request for treatment required pre-authorization under Rule of Procedure XVI (I) (1) (a), 7 Code Colo. Reg. 1101-3 at 78. Finally, the ALJ determined that the adjuster for the insurer made "no reply to claimant, Dr. Bograd, or claimant's attorney" concerning the request for pre-authorization. Therefore, the ALJ determined the insurer violated Rule of Procedure XVI (J) (1), 7 Code Colo. Reg. 1101-3 at 79, because it did not respond to the request within five days.
The ALJ also determined, in accordance with our Order of Remand, that the respondent-insurer's failure to comply with the rule concerning pre-authorization was neither wrongful nor willful within the meaning of § 8-43-401(2)(a), C.R.S. 1999. In support of this determination, the ALJ found that the record is "devoid of any evidence as to why he insurer delayed from December to February 4 in authorizing the [medical] services." The ALJ also found that between February 4 and February 11, 1998, the insurer requested that the claimant undergo examination and treatment by Dr. Gutterman, who previously conducted a respondents-sponsored independent medical examination. The ALJ determined that the respondents' efforts to provide treatment through Dr. Gutterman demonstrate the insurer was not wrongfully and willfully delaying or stopping payment of medical benefits. Consequently, the ALJ denied the claim for penalties pursuant to § 8-43-401(2)(a).
I.
On review, the claimant first contends the ALJ erred in failing to impose penalties under § 8-43-304(1), C.R.S. 1999 (general penalty provision). The claimant argues the ALJ's finding that the insurer violated a rule of procedure warrants imposition of penalties under the general penalty provision rather than § 8-43-401(2)(a). The claimant also points out that Rule of Procedure XVI (N) (1) (a), 7 Code Colo. Reg. 1101-3 at 84, states that failure to comply with Rule XVI "may" result in the imposition of penalties under § 8-43-304. We find no error.
Our Order of Remand addressed the essence of the claimant's arguments and determined that denial of pre-authorization for treatment constitutes a delay or stoppage of payment for medical benefits within the meaning of § 8-43-401(2)(a). Therefore, we concluded that § 8-43-401(2)(a) governs the imposition of penalties for denial of pre-authorization. We specifically held that the "gravamen" of the claimant's request for penalties was that "the respondents improperly delayed payment for [the claimant's] reasonable and necessary medical treatment by improperly handling the request for prior authorization of treatment." Since the "gravamen" of the request was the delay or denial of payment for medical treatment, we reasoned that in Sears v. Penrose Hospital, 914 P.2d 1345 (Colo.App. 1997), was essentially dispositive of the issue.
Subsequent to our Order of Remand, the Court of Appeals issued its decision in Holliday v. Industrial Claim Appeals Office, ___ P.2d ___ (Colo.App. No. 98CA 2199, August 19, 1999). In that case, the issue concerned whether or not the respondents were subject to penalties under § 8-43-304 where they failed to pre-authorize medical treatment in accordance with an order of a prehearing administrative law judge. Although § 8-43-304(1) permits the imposition of penalties for failure to obey lawful orders, the court held that the statute did not govern the claim for penalties because the gravamen of the respondents' conduct was the failure to pay for medical treatment. The court explicitly stated that it perceived "no difference, for practical purposes, between a failure to authorize and failure to pay." Consequently, the court held that the claim for penalties fell within the ambit of § 8-43-401(2)(a), not the general penalty provision.
Although the claim for penalties in this case is based on the violation of a rule of procedure rather than violation of an order, the applicable analysis is no different than it was in Holliday. As a general matter, § 8-43-304 authorizes the imposition of penalties where the Act does not impose a specific penalty for the violation. However, § 8-43-401(2)(a) imposes a penalty for a delay or stoppage of payment of medical expenses. Further, § 8-43-401(2)(a) extends to acts or omissions underlying the delay or stoppage of payment. Holliday v. Industrial Claim Appeals Office, supra. Consequently, regardless of the fact that the specific conduct which forms the basis of the claim for penalties constitutes a rule violation, the gravamen of the claimant's request for penalties remains delay or stoppage of payment of medical expenses.
Further, it would make little sense to impose substantially greater penalties for violation of a rule concerning pre-authorization of payment than for outright refusal to pay once authorized medical expenses are already incurred. Either type of conduct on the part of respondents is likely to produce serious interference with the claimant's receipt of necessary treatment. Moreover, Rule of Procedure XVI (J) (2), 7 Code Colo. Reg. 1101-3 at 80, provides that in cases where there is no expedited hearing (after a denial of pre-authorization), failure to comply with subsection (J) (1) (a) "shall be deemed authorization for payment of the treatment requested." Thus, we conclude that Holliday v. Industrial Claim Appeals Office is dispositive of the claimant's argument.
We are unpersuaded that Rule XVI (N) (1) (a), in any way affects our holding. It is true that the rule states the director "may" impose penalties under § 8-43-304 for violations of Rule XVI. However, subsection (N) (1) (d) also states the director may "impose penalties otherwise authorized by the act." Under these circumstances, we conclude that the rule should be construed in a manner consistent with the authorizing statute. Therefore, the applicable penalty under the rule is § 8-43-401(2)(a). In any event, as we previously noted, rules which conflict with the authorizing statute are not valid. City of Englewood v. Industrial Claim Appeals Office, 954 P.2d 640 (Colo.App. 1998).
II.
The claimant next contends the respondents may not raise the applicablity of § 8-43-401(2)(a) on appeal because the issue was not presented to the ALJ. The claimant also asserts she was not given a fair opportunity to address the higher standard of proof necessary to establish entitlement to a penalty under § 8-43-401(2)(a).
In this case the application of § 8-43-401(2)(a) does not constitute an affirmative defense which the respondents were required to plead and prove, but was raised in the respondents' brief as legal authority for the proposition that the claimant was not entitled to the relief originally awarded by the ALJ. Indeed, the burden of proof was on the claimant to establish the factual and legal predicates for imposition of penalties under § 8-43-304. See Postlewait v. Midwest Barricade, 905 P.2d 21 (Colo.App. 1995) (party seeking to impose penalty bears burden of proof.). The respondents' argument concerning § 8-43-401(2)(a) was a legal argument tending to refute the claimant's assertion that she was entitled to relief under § 8-43-304. As such, we hold the argument was timely raised and may properly be considered on appeal.
Moreover, we reject the assertion that the applicability of section 8-43-401(2)(a) was not raised before the ALJ. As the respondents point out, at the commencement of the hearing the ALJ explicitly asked counsel for claimant "what penalties" would apply to the facts of the case. Counsel for the claimant replied there was a "split" of authority as evidenced by our decisions in Isom v. Wheatridge Painting, W.C. No. 4-154-741 (December 24, 1997), and Seguera v. Martin Music, W.C. No. 4-244-640 (September 30, 1997). (Tr. pp. 4-5) (note the transcript incorrectly refers to" Eisen" rather than the " Isom"). The Isom decision upheld the imposition of penalties under § 8-43-304 for violation of the pre-authorization provisions of Rule XVI (J). However, our decision in Isom explicitly stated that the respondents did not "contest the ALJ's determination that the penalty issue is governed by § 8-43-304 (1)." In contrast, the Seguera decision held that § 8-43-401(2)(a) governed the imposition of penalties where the claimant argued that the respondents violated § 8-42-101, C.R.S. 1999, by relying on the pre-authorization provisions to delay payment for necessary services.
Thus, claimant's counsel highlighted for the ALJ the legal question of whether a violation of the rules governing pre-authorization is subject to a penalty under § 8-43-304 or § 8-43-401(2)(a). Although counsel for the claimant stated the claimant was seeking penalties under § 8-43-304, she was certainly aware of the risk that the ALJ, or the Industrial Claim Appeals Office, could hold that any penalty should be applied under § 8-43-401(2)(a). Indeed, the issue was arguably inherent in the Court of Appeals decision in Sears v. Penrose Hospital, which was decided more that a year before the hearing in this case. Therefore, the claimant was aware the ALJ would be required to decide whether the facts are governed by the general penalty provision or section 8-43-401(2)(a), and was afforded a reasonable opportunity to present evidence supporting imposition of a penalty under both provisions. Therefore, we disagree with the claimant's contention that she is entitled to an additional hearing to present evidence to establish a penalty under § 8-43-41(2)(a).
III.
The claimant next disputes the ALJ's determination that the respondent-insurer's conduct was not "willful" within the meaning of § 8-43-401(2)(a). The claimant argues the circumstantial evidence in the case compelled the ALJ to conclude that the respondent-insurer's failure to respond to the January 5 request for pre-authorization was willful. We disagree.
Conduct is not considered willful for purposes of § 8-43-401(2)(a) unless it is the product of "deliberate intent." Sears v. Penrose Hospital, supra. Willfulness is not demonstrated by mere thoughtlessness, forgetfulness, or negligence. See Johnson v. Denver Tramway Corp., 115 Colo. 214, 171 P.2d 410 (1946). The question whether the claimant proved willfulness was one of fact for determination by the ALJ. See Lori's Family Dining, Inc. v. Industrial Claim Appeals Office, 907 P.2d 715 (Colo.App. 1995). Because the issue is factual in nature, we must uphold the ALJ's determination if supported by substantial evidence in record. Section 8-43-301(8), C.R.S. 1999.
Here, as the ALJ found, the record lacks any direct evidence concerning the respondent-insurer's intentions or thought processes from December through February 4, 1998. Considering this state of the evidence, the ALJ was certainly not required to infer that the respondent-insurer was engaged in a deliberate pattern of conduct designed to delay the claimant's receipt of medical treatment, as opposed to mere thoughtlessness or negligence. Further, as the ALJ found, the insurer made efforts to refer the claimant to psychiatric treatment between February 4 and February 11. Although the record might support other inferences and conclusions, we cannot say the ALJ was compelled to find the respondents' failure properly to respond to the request for pre-authorization was the product of "deliberate intent."
In light of this conclusion, we need not consider the separate question of whether the ALJ correctly ruled that the respondents' conduct was not "wrongful."
IT IS THEREFORE ORDERED that the ALJ's order dated August 2, 1999, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________ David Cain
___________________________ Bill Whitacre
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. 1999.
Copies of this decision were mailed February 7, 2000 to the following parties:
Eloise Briscoe, P.O. Box 655, Morrison, CO 80465
Linda Siedow, The Denver Post, 1560 Broadway, Denver, CO 80202
Barbara Carter, Subsequent Injury Fund, Division of Worker's Compensation — Interagency Mail
Leona Zuffoletto, Liberty Mutual Insurance Company, P.O. Box 3539, Englewood, CO 80155-3539
Shelley P. Dodge, Esq., 1763 Franklin St., Denver, CO 80218 (For Claimant)
Jonathan S. Robbins, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)
BY: A. Pendroy