Opinion
W.C. No. 4-192-809
April 17, 1998
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Wheelock (ALJ) which determined that the claim is closed and denied the claimant's petition to reopen. We modify the ALJ's order.
The claimant sustained a work-related back injury and reached maximum medical improvement (MMI) on December 6, 1993. The respondents filed a Final Admission of Liability dated January 9, 1995, which provided for the payment of permanent partial disability benefits of $25,869.84, based upon 11 percent impairment of the whole person. The claimant did not object to the Final Admission and subsequently received a lump sum award of permanent partial disability benefits.
The claimant's condition subsequently worsened. In a General Admission of Liability dated February 1, 1996, the respondents admitted that the claimant was no longer at MMI and reinstated temporary disability benefits commencing January 30, 1996. In the "General Remarks" section of the February 1 admission, the respondents indicated that the previously paid permanent partial disability benefits "will be applied to any future permanent disability benefits."
The claimant reached MMI from the worsened condition on March 7, 1996. Dr. Struck rated the claimant's permanent impairment as 16 percent of the whole person. Relying on Dr. Struck's rating, the respondents filed a Final Admission of Liability dated September 6, 1996, which admitted liability for permanent partial disability benefits of $36,568.90 to be paid at the rate of $227.49 per week commencing March 6, 1996. The General Remarks section of the 1996 Final Admission explained how the permanent disability award was calculated under § 8-42-107(8)(d), C.R.S. 1997, but did not explicitly claim an offset for the previously paid permanent disability benefits, or otherwise notify the claimant that the respondents intended to pay a lesser amount than $36,568.90.
The claimant understood the 1996 Final Admission as an admission for permanent partial disability benefits of $36,568.90 in addition to all previously paid permanent partial benefits, and therefore, he did not object to the Final Admission. However, when the respondents paid permanent disability benefits of $10,699.06 (the difference between $36,568.90 and $25, 869.84), the claimant petitioned to reopen the claim on the grounds of error or mistake.
At the hearing before the ALJ, the claimant argued that the 1996 Final Admission was not a "valid" final admission because it did not advise him that the respondents intended to credit all previously paid permanent disability benefits against their liability for permanent partial disability benefits of $36,568.90. Accordingly, the claimant argued that the absence of a timely objection did not close the claim. Alternatively, the claimant argued that, to the extent the 1996 Final Admission is valid, it must be enforced as written. Therefore, the claimant took the position that the respondents are liable for permanent partial disability benefits of $36,568.90, without credit for previously paid benefits. The claimant further asserted that because the respondents only paid benefits of $10,699.06, there is an error or mistake which justifies reopening the claim.
The ALJ rejected the claimant's challenges to the validity of the 1996 Final Admission. To the contrary the ALJ found that the respondents paid all benefits the claimant was entitled to receive under Dr. Struck's impairment rating. Consequently, the ALJ determined that the absence of a timely filed objection automatically closed the claim.
The ALJ also determined that there was no error or mistake in the 1996 Final Admission. However, the ALJ added that, to the extent that there was an error or mistake, it was based upon the "claimant's confusion alone," which was not sufficient to warrant reopening the claim. Therefore, the ALJ declined to reopen the claim and precluded the claimant from presenting evidence on the issue of medical impairment.
On review, the claimant reasserts the alternative arguments which he made before the ALJ. Because we conclude that the Final Admission was "valid" and must be enforced without regard to the claimed offset, we do not reach the issue of whether the ALJ erred in denying the claimant's petition to reopen based on the claimant's "mistaken" failure to object to the admission.
It is well established that the claimant's failure timely to object to a final admission of liability renders the final admission binding on all parties and automatically closes the claim with respect to the issues admitted. Section 8-43-203(2)(b), C.R.S. 1997; Lewis v. Scientific Supply Co. Inc., 897 P.2d 905 (Colo.App. 1995). Under these circumstances, no further benefits may be paid in the absence of establishing grounds to reopen the claim under § 8-43-303 C.R.S. 1997. See Dalco Industries, Inc. v. Garcia, 867 P.2d 15 (Colo.App. 1993); Brown Root, Inc. v. Industrial Claim Appeals Office, 833 P.2d 780 (Colo.App. 1991).
As a general matter, we do not dispute that respondents are entitled to offset previously paid permanent partial disability benefits against liability for additional permanent partial disability benefits paid for the same injury. However, the ALJ erred insofar as she determined that the respondents are entitled to the offset without notifying the claimant of the offset in the Final Admission of Liability.
An offset is in the nature of an affirmative defense because it reduces the insurer's liability for benefits. See Johnson v. Industrial Commission, 761 P.2d 1140 (Colo. 1988). Consequently, the respondents bear the burden to prove that they are entitled to an offset. Moreover, where not affirmatively asserted a claim for an offset is subject to procedural waiver. Id. 761 P.2d 1146.
If the claim remains open, the insurer may assert an offset by seeking an order from an ALJ or filing an admission of liability in accordance with the Rules of Procedure. Johnson v. Industrial Commission, supra. However, once a claim has been closed by a final award, the respondents may not assert an offset or an overpayment without showing circumstances justifying a reopening under § 8-43-303. See Cody v. Industrial Claim Appeals Office, 940 P.2d 1042 (Colo.App. 1996); Brown Root, Inc. v. Industrial Claim Appeals Office, 833 P.2d 780 (Colo.App. 1991); Baca v. Summit Pressed Brick Tile, W.C. No. 3-596-325 (October 12, 1994); aff'd, Summit Pressed Brick Tile v. Baca, (Colo.App. No. 94CA1857, November 30, 1995) (not selected for publication). In this regard, we note that this claim is not subject to the 1997 amendments to § 8-43-303(1) because the claimant's injury occurred prior to July 1, 1997. See 1997 Colo. Sess. Laws, ch. 45 at 112-116.
Section 8-43-203(2)(b) provides that a final admission of liability must specify, "the amount of compensation to be paid, to whom compensation will be paid, the period for which compensation will be paid, and the disability for which compensation will be paid." It follows that where the respondents intend to claim an offset by the filing of a final admission of liability, the final admission must affirmatively identify the nature and amount of the offset, or the offset will be considered to have been waived and is not available to reduce admitted benefits.
Here, the 1996 Final Admission does not purport to reduce the award of $36,568.90 in permanent partial disability benefits on account of the previously paid permanent partial disability benefits. In fact, the 1996 Final Admission does not contain any reference to permanent partial disability benefits which were paid between December 14, 1993 and January 1996. Neither does the 1996 Final Admission reserve any credit for previously paid benefits. Under these circumstances, the uncontested 1996 Final Admission is legally insufficient to reserve an offset against permanent partial disability benefits on account of the $25,869.54 previously paid to the claimant. Section 8-43-203(2)(b); Lewis v. Scientific Supply Co., Inc., supra. Instead, the uncontested admission closed the issue of permanent disability, and § 8-43-203(2)(b) required the respondents to make payment "forthwith" in accordance with the admitted liability.
In reaching this result, we are mindful of the ALJ's finding that the General Admission of Liability dated February 1, 1996, "notified" the claimant of the respondents' intent to claim an offset for previously paid permanent disability benefits. However, general admissions of liability are not determinative of the respondents' ultimate liability under § 8-43-203(2)(b). It is the benefits described in the final admission of liability which are dispositive of the respondents' liability, and it is the claimant's failure to object to the final admission which closes the claim. Lewis v. Scientific Supply Co., supra. In fact, it is not uncommon for a respondent to file a general admission which is inconsistent with a subsequent final admission. Accordingly, a general admission does not "notify" the claimant of the respondents' intent to claim an offset in a final admission unless the final admission explicitly asserts the same. Section 8-43-203(2)(b). This policy insures that pro se claimants, who are unfamiliar with the intricacies of admissions, may rely on a final admission as a comprehensive statement of benefits and make an informed decision whether to object.
It follows that we need not determine whether the ALJ erred in denying the claimant's petition to reopen. The claimant argued that he "mistakenly" failed to object to the Final Admission because he did not realize the respondents could reduce the admitted benefits by the amount of the previously paid permanent disability benefits. Since we hold that the respondents may not claim the offset, the claimant's failure to object may not be viewed as "mistaken." Therefore, the petition to reopen is moot.
This order should not be understood as prohibiting the respondents from now seeking to reopen the matter and claim the disputed offset.
IT IS THEREFORE ORDERED that the ALJ's order dated April 28, 1997, is modified to reflect that the respondents may not claim any offset based on permanent partial disability benefits paid to the claimant prior to the filing of the Final Admission of Liability dated September 6, 1996.
INDUSTRIAL CLAIM APPEALS PANEL ____________________________________ David Cain ____________________________________ Kathy E. DeanNOTICE 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. 1997.
Copies of this decision were mailed April 17, 1998 to the following parties:
David D. Cash, 18440 Black Squirrel Road, Black Forest, CO 80908
Jack F. Buhl, P.O. Box 5611, Colorado Springs, CO 80931-5611
Colorado Compensation Insurance Authority, Attn: Michael J. Steiner, Esq. (Interagency Mail)
Thomas M. Stern, Esq., 1700 Broadway, Ste. 1700, Denver, CO 80290-1701 (For the Respondents)
William A. Alexander, Jr., Esq., 3608 Galley Rd., Colorado Springs, CO 80909-4349 (For the Claimant)
BY: _______________________