Opinion
W.C. No. 4-497-515.
July 12, 2004.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) insofar as the ALJ determined that the claimant's industrial injury did not cause or aggravate multiple sclerosis (MS), and denied a claim for home health care services. The respondents seek review of the order insofar as it assessed penalties for failure timely to submit a lump sum application (LSA) to the Division of Workers' Compensation (Division). We affirm the denial of medical benefits and remand the matter for entry of a new order concerning the imposition of penalties.
I.
We first consider the claimant's appeal. The claimant sustained compensable injuries to his right shoulder, left elbow, neck and low back when he fell on February 18, 2001. The claimant also struck his head in the fall. In March 2001 the claimant underwent surgery for the right shoulder, and subsequently developed multiple pulmonary emboli. The pulmonary emboli aggravated preexisting diabetes. The claimant later developed symptoms of blacking out which were diagnosed as MS in July 2001.
In December 2001 the authorized treating physician (ATP) placed the claimant at maximum medical improvement (MMI) for the physical aspects of the injury and assigned a 69 percent whole person rating . This rating included nothing for MS because the ATP did not, at that time, consider MS to be work-related. In April 2002 the ATP placed the claimant at MMI for all aspects of the injury and added a 50 percent rating for psychological impairment associated with depression. On August 28, 2002, the respondents filed a Final Admission of Liability (FAL) admitting for permanent partial disability benefits (PPD) based on total impairment of 85 percent of the whole person. However, on September 24, 2002, the respondents admitted liability for permanent total disability (PTD) benefits.
The claimant filed an application for hearing seeking medical benefits, including twenty-four hour per day home health care. The claimant argued that the MS is compensable because that condition was aggravated by the head trauma or the pulmonary emboli. The claimant argued that even if the MS is not work-related, treatment of that condition, including home health care, is necessary to provide optimum treatment for the underlying industrial injuries.
However, relying principally on the testimony of the respondents' medical expert, Dr. Pitzer, the ALJ found that the claimant failed to prove any causal relationship between the industrial injury and the development or aggravation of MS. The ALJ further found that the MS has substantially deteriorated, and that it is the cause of the need for home health care. Finally, the ALJ found the claimant failed to prove that treatment of MS is necessary or incident to providing treatment for the claimant's industrial injuries. Instead, the ALJ found that MS and the industrial injuries can be treated independently.
A.
On review, the claimant first contends that the ALJ erred in finding that MS is unrelated to the industrial injury. The claimant asserts the ALJ "ignored" the opinions of two physicians, including the ATP, concerning the cause of the MS. We disagree.
In order to establish compensability of the MS the claimant was required to prove that MS was caused by an injury arising out of and in the course of the claimant's employment. Faulkner v. Industrial Claim Appeals Office, 12 P.3d 844 (Colo.App. 2000). The question of whether the claimant met the burden of proof is one of fact for determination by the ALJ. Consequently, we must uphold the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301 (8), C.R.S. 2003; Faulkner v. Industrial Claim Appeals Office, supra.
This standard of review requires that we consider the evidence in a light most favorable to the prevailing party. Further, we must defer to the ALJ's resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. Wilson v. Industrial Claim Appeals Office, 81 P.3d 1117 (Colo.App. 2003); Cordova v. Industrial Claim Appeals Office, 55 P.3d 186 (Colo.App. 2002). Further, inferences and evidence not discussed in the order are presumed to have been rejected by the ALJ. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000).
The testimony of Dr. Pitzer amply supports the ALJ's finding that the MS was not caused or aggravated by the industrial injury. Dr. Pitzer testified that the cause of MS is unknown, although it appears to be an immune reaction, and no epidemiological studies support an inference that trauma causes or aggravates MS. (Pitzer Depo. Pp. 10-12). The ATP initially refused to ascribe the MS to the industrial injury, although he later changed the opinion based on the temporal relationship between the injury and the diagnosis of MS. Thus, the ALJ was certainly not required to find the claimant proved the requisite causal relationship. The fact that some evidence would support a contrary conclusion affords no basis for relief on appeal. Wilson v. Industrial Claim Appeals Office, supra. Such evidence was implicitly rejected.
B.
Relying on Public Service Co. v. Industrial Claim Appeals Office, 979 P.2d 584 (Colo.App. 1999), the claimant next contends that treatment of MS is a necessary precondition to treatment of the claimant's industrial injuries. Again we perceive no error.
Public Service Co. v. Industrial Claim Appeals Office, supra, held that preoperative treatment of a non-industrial medical condition may be compensable if such treatment is necessary to "achieve optimum treatment of the compensable injury." The Public Service Co. court emphasized the factual nature of this determination. 979 P.2d at 585. In contrast, if the need for treatment results from an intervening injury or disease unrelated to the industrial injury, treatment of the subsequent condition is not compensable. This also presents a question of fact. Owens v. Industrial Claim Appeals Office, 49 P.3d 1187 (Colo.App. 2002).
Here, the ALJ credited Dr. Pitzer's testimony that the MS is a condition which developed independently, and subsequent to, the industrial injury and requires its own treatment regimen independent of the industrial injury and its sequelae. In particular, Dr. Pitzer opined that the claimant's need for home health care and assistance with activities of daily living is associated with the MS, not the industrial conditions. (Pitzer Depo. Pp. 9-10, 14, 42-43). Although some evidence, including the testimony of the ATP, would support a contrary inference, we may not interfere with he ALJ's resolution of conflicts in the evidence. Indeed, the ATP expressed conflicting opinions on this issue. (Tr. P. 103).
C.
Finally, the claimant contends that because the respondents filed an FAL which admitted for the ATP's rating, including the psychological rating based on moderate to severe limitations on the performance of activities of daily living, the respondents necessarily admitted the need for home health care was caused by the injury. We are not persuaded.
The fact that the respondents may have admitted for the ATP's rating did not bind them to admit that all future medical treatment is, as a matter of law, causally related to the industrial injury. Rather, the issue was the claimant's entitlement to ongoing medical benefits after MMI, and the respondents retained the right to contest the compensability of particular medical treatments. Grover v. Industrial Commission, 759 P.2d 705 (Colo. 1988); Hanna v. Print Expediters Inc., 77 P.3d 863, 866 (Colo.App. 2003). This is particularly true since the claimant's physical impairment rating alone was far over the twenty-five percent impairment rating which entitled him to the $120,000 benefits cap rather than the $60,000 cap. See § 8-42-107.5, C.R.S. 2003. Under these circumstances, the respondents may have had little or no incentive to challenge the overall impairment rating, even if they disagreed with the implication that the claimant had a severe psychological impairment affecting his activities of daily living. In any event, the respondents ultimately admitted for PTD.
Insofar as the claimant makes other arguments, we find them to be without merit.
II.
The respondents challenge the ALJ's assessment of penalties under § 8-43-304 (1), C.R.S. 2003, for a violation of Rule XI (C) (1), 7 Code Colo. Reg. 1101-3 at 39.01. Rule XI (C) (1) states that a request for a lump sum payment shall be made by submitting an LSA to the insurer. The rule further provides that within "fifteen (15) days of the date the application was mailed, the insurance carrier shall file the required benefit payment information with the Division."
The record reveals that the claimant did not, in the application for hearing, seek a penalty for violation of Rule XI (C) (1). However, the claimant filed a motion seeking to add the issue by motion filed in August 2003. The motion alleged that the claimant "completed an Application for Lump Sum and submitted it to Respondents' counsel on June 30, 2003." However, the motion averred, the insurer did not submit the LSA to the Division until July 22, 2003, seven days beyond the deadline. The ALJ granted the request to add this issue by order dated August 18, 2003.
At the commencement of the hearing, claimant's counsel stated that she intended to prove that the LSA was originally mailed to respondents' counsel on May 30, 2003, and the respondent insurer was "more like, about a month and a half late." (Tr. P. 12). Respondents' counsel stated that the insurer had no defense to imposition of a seven day penalty, but argued there was no "willful violation" because the adjuster's failure to mail the LSA to the Division within 15 days was a mere oversight and quickly corrected. Counsel also asserted that the LSA was not received by his office until June 30, 2003, thereby denying the factual premise of the claimant's allegation. (Tr. Pp. 10-13).
Nancy Valvano (Valvano), a paralegal for claimant's counsel, testified that she mailed the LSA to respondents' counsel on May 30, 2003, and called respondents' counsel's paralegal to ascertain the status of the request on June 16 and June 26, but received no information. Thus, on June 30 Valvano faxed the LSA to respondents' counsel. During cross-examination, Valvano testified that it was common practice to send a cover letter with an LSA, but failed to produce such a letter at the hearing. At the conclusion of the hearing the ALJ directed claimant's counsel to provide the letter to respondents' counsel. The ALJ indicated the letter could then be submitted as evidence by agreement of the parties, or by motion. No such letter was ever submitted into evidence.
The ALJ, crediting Valvano's testimony, found that the "most reasonable inference is that the insurer misplaced the first request and delayed handling the second." Thus, the ALJ concluded the insurer unreasonably delayed filing the LSA with the Division from June 16, 2003, until July 22, 2003. The ALJ found this delay was not harmless, and ordered penalties of $100 per day for the period June 16 to July 22, 2003.
On review, the respondents make several contentions which are, in our opinion, related in important ways. First, the respondents argue they were denied due process of law because they did not receive sufficient notice that the claimant would seek penalties based on the allegation that the LSA was mailed to respondents' counsel on or about May 30, 2003, rather than June 30, 2003. Indeed, the respondents argue the assessment of penalties for any time before July 16 is "contradicted" by the allegations contained in the claimant's motion to add the issue of penalties for violation of Rule XI (C) (1). Finally, the respondents assert the ALJ applied the wrong standard of proof because the evidence establishes the violation was "cured," but the ALJ did not find by clear and convincing evidence that the respondents knew or reasonably should have known they were in violation of the rule. Section 8-43-304 (4), C.R.S. 2003.
Initially, we conclude that none of the respondents' arguments preclude the imposition of penalties for the seven day period from July 16 through July 22, 2003. Indeed, respondents' counsel conceded he had no defense to a claim for penalties for this period, but merely requested the ALJ to award minimal amounts. (Tr. P. 12). Counsel's remarks constitute a judicial admission, and he may not now seek to retract that admission on appeal. Schlage Lock v. Lahr, 870 P.2d 615 (Colo.App. 1993).
A.
However, the penalty assessed for the period from June 16 through July 15 presents different issues. When the claimant filed the motion to add the issue of penalties he did not raise any issue or factual allegation which would entitle him to penalties before July 16. Indeed, the claimant asserted as a matter of fact that he provided the LSA to the respondents on June 30, not May 30.
Under these circumstances, the respondents due process rights are implicated. This is true because, when issues turn on factual determinations, parties are entitled to notice of the evidence to be presented and considered, an opportunity to confront adverse evidence, and an opportunity to present evidence and argument in support of their positions. Major Medical Insurance Fund v. Industrial Claim Appeals Office, 77 P.3d 867 (Colo.App. 2003). However, the right to notice may be waived and issues tried by consent. Such a waiver may be inferred where a party is notified before the hearing that the opposing party seeks to raise an issue, the party does not object to consideration of the issue, and the party proceeds to litigate the matter. Robbolino v. Fischer-White Contractors, 738 P.2d 70 (Colo.App. 1987); Woodruff World Travel, Inc. v. Industrial Commission, 38 Colo. App. 92, 554 P.2d 705 (Colo.App. 1976).
Here, at the commencement of the hearing claimant's counsel expressly notified the ALJ and respondents' counsel that the claimant would seek penalties based on the factual allegation that he LSA was first provided to the respondents about May 30. Respondents' counsel did not object to consideration of this new factual allegation or the consequent expansion of the possible penalty period. Instead, respondents' counsel denied the factual premise by asserting that LSA was not received in his office until June 30, and pointing out that delay in submission of the LSA to the Division was quite minimal and the result of mere oversight. Further, respondents' counsel cross-examined Valvano concerning the alleged May 30 mailing, and requested production of the cover letter allegedly sent with the May 30 LSA. The ALJ ultimately directed claimant's counsel to produce the cover letter and allowed it to be filed after the hearing. No such letter was ever submitted. Under these circumstances, we conclude that the issue of penalties based on the alleged mailing of the LSA on May 30 was tried by consent of the parties, and the respondents were not deprived of due process by the ALJ's consideration of this matter.
B.
The respondents next contend the ALJ erred by failing to apply the clear and convincing standard of proof as required by the "cure" provision of § 8-43-304 (4). Specifically, the respondents argue it is undisputed the respondents "cured" the failure to file the LSA when the adjuster submitted it to the Division of July 22. Thus, the respondents argue that in order to impose penalties the ALJ was required to find by clear and convincing evidence that the insurer knew or reasonably should have known that it was in violation of Rule XI (C) (1) to assess penalties for any period prior to July 16. We conclude the matter must be remanded for proper application of the burden of proof.
Section 8-43-304 (4) provides as follows:
In an application for hearing for any penalty pursuant to subsection (1) of this section, the applicant shall state with specificity the grounds on which the penalty is being asserted. After the date of mailing of such an application, an alleged violator shall have twenty days to cure the violation. If the violator cures the violation within such twenty-day period, and the party seeking such a penalty fails to prove by clear and convincing evidence that the alleged violator knew or reasonably should have known such person was in violation, no penalty shall be assessed. The curing of the violation within the twenty-day period shall not establish that the violator knew or should have known that such person was in violation. (Emphasis added).
Here, the respondent asserted at the hearing that the alleged violation, failure to submit the LSA within 15 days of mailing, had been remedied no later than July 22 when the adjuster submitted it to the Division. Further, counsel asserted the failure to submit the LSA to the Division was mere oversight and the adjuster complied as soon as she recognized the requirement. Indeed, the claimant has never disputed that factual assertion that the LSA was submitted on or about July 22.
It follows that the respondent was implicitly raising the cure defense with respect to the assessment of any penalties prior to July 16. As we have held, the claimant never specifically pled the issue of penalties prior to July 16 until the day of the hearing, and thus, never afforded the respondents an opportunity to raise the defense until the day of the hearing. Thus, the respondents failure to raise the cure issue in a pleading was reasonable. Moreover, the claimant did not object to introduction of evidence that the violaton was cured on July 22, and in fact introduced evidence to that effect through the testimony of Valvano. (Tr. P. 20). Under these circumstances, the issue of when the violation was "cured" was tried by consent of the parties and the "cure" statute should have been applied by the ALJ.
It follows that the matter must be remanded to the ALJ to determine whether the claimant presented clear and convincing evidence that the insurer knew or should have known that it was in violation of Rule XI (C) (1) before Valvano faxed the LSA to respondents' counsel on June 30. See Atlantic Pacific Insurance Co. v. Barnes, 666 P.2d 163 (Colo.App. 1983) (proper application of the burden of proof is a substantial right of the parties) to litigation). The ALJ expressly found that the claimant proved by a "preponderance of the evidence that claimant's attorney mailed the application for lump sum to respondents on May 30, 2003." (Conclusion of Law 9). However, as we have held, the correct burden of proof was clear and convincing evidence with respect to the issue of whether the insurer knew or should have known it was in violation. Clear and convincing evidence is stronger than preponderance, and is such evidence that makes a proposition highly probable and free from serious doubt. Metro Moving and Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 1995).
Here, the ALJ found Valvano's testimony was sufficiently persuasive to establish, by a preponderance of the evidence, that the LSA was mailed to respondents' counsel on May 30. However, the ALJ did not determine whether Valvano's testimony was so credible and persuasive that it established mailing on May 30 by "clear and convincing" evidence. Thus, the ALJ did not determine whether the claimant proved by clear and convincing evidence that the insurer knew or should have known it was in violation of Rule XI (C) (1) before July 16. Put another way, the ALJ has not found the claimant proved by clear and convincing evidence that the "first request" was ever sent to the respondents.
Under these circumstances, the matter must be remanded to the ALJ for application of the correct burden of proof with respect to the imposition of penalties prior to July 16. Since resolution of this issue might affect the amount of penalties imposed for the admitted seven day violation, we also set aside that portion of the order awarding penalties of $100 per day from July 16 through July 22. In reaching this result, we should not be understood as expressing any opinion on the weight or credibility of the evidence, or the amount of penalties to be imposed. Insofar as the respondents raise other issues, we need not reach them in light of this ruling.
IT IS THEREFORE ORDERED that the ALJ's order dated December 16, 2003, is set aside insofar as it awarded penalties for violation of Rule XI (C) (1). On this issue the matter is remanded for entry of a new order consistent with the views expressed herein.
IT IS FURTHER ORDERED that the ALJ's order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
__________________ David Cain
__________________ Kathy E. Dean
James R. Cherrington, Fairplay, CO., Pinnacle Pizza, Fort Collins, CO., Clarendon Insurance Company, Sarasota, FL, Pattie J. Ragland, Esq., Colorado Springs, CO., for Claimant.
Harvey D. Flewelling, Esq., Denver, CO, for Respondents.