Opinion
W.C. No. 4-810-095.
January 18, 2011.
ORDER
The respondent insurer seeks review of an order of Administrative Law Judge Felter (ALJ) dated July 12, 2010 to the extent that the ALJ declined to order the employer to repay the insurer disability and medical benefits that the insurer paid to the claimant according to its admission of liability, which the ALJ found to be based on the employer's false representations. We set aside that portion of the ALJ's decision and remand this matter to the ALJ.
Several of the ALJ's findings are summarized as follows. The insurer cancelled the employer's workers' compensation policy effective November 10, 2009, due to the employer's nonpayment of the premium. The insurer sent the employer a letter notifying it of the cancellation. The claimant sustained a compensable injury on November 20, 2009. The employer sought to reinstate its policy and submitted a Statement of No Loss certifying that the employer was not aware of any accidents that may give rise to a claim and that occurred between November 10, 2009 and November 23, 2009; however, the employer was aware of the claimant's injury. The insurer reinstated the policy. The employer contacted the insurer's agent and reported the claimant's injury and incorrectly advised the insurer that the injury occurred on November 25, 2009. The insurer filed a general admission of liability and paid $10,079.91 in temporary total disability benefits and $17,492 in medical benefits and fees. The employer's failure to advise the insurer of the claimant's actual date of injury at the time the insurer reinstated the policy was either a deliberate omission of a material fact or an omission made with a reckless disregard of the actual facts.
The ALJ concluded that the employer committed fraud and that the employer was uninsured at the time of the claimant's injury because the insurer's admission of liability for the injury was void. However, the ALJ further determined that he had no authority to order the employer to repay the insurer for amounts the insurer paid to the claimant. In support of that determination the ALJ concluded that repayment by the employer to the insurer was not a dispute arising under the Workers' Compensation Act, § 8-40-101 to 8-47-209, C.RS. (Act).
Consistent with the ALJ's determinations, the employer maintains that the ALJ properly determined he lacked jurisdiction to order reimbursement. In support of its contention the employer indicates that reimbursements have only been approved when they are ordered to be made either by claimants or between insurers. See, e.g., Oxford Chemicals, Inc. v. Richardson, 782 P.2d 843 (Colo. App. 1989) (ALJ had jurisdiction to order insurer to pay portion of claimant's benefits to no-fault carrier); West v. Lab Corp., W.C. No. 4-684-982 (February 27, 2009) (respondents allowed to withdraw admission and claimant ordered to repay disability benefits). According to the employer the insurer is limited to whatever relief is afforded to it under the terms of its contract with the employer and the employer argues that no contractual relief is available.
The insurer appeals the ALJ's denial of its request that the employer repay it for benefits paid to the claimant due to the employer's fraudulent inducement. The insurer argues that there is no distinguishable difference between this case and cases in which an ALJ was found to have properly ordered reimbursement between insurance carriers. The insurer notes that reimbursements have been ordered between an employer and health carrier. See Martin v. Hyams, W.C. No. 4-781-144 (May 11, 2010) (approving of ALJ ordering the employer to reimburse a claimant's health insurer).
The parties do not identify any cases directly on point or any statutory authority that expressly provides for reimbursement of an insurer by an employer who defrauds it. However, we are persuaded that the reimbursement sought by the insurer is sufficiently related to the relief ordered by the ALJ — the retroactive withdrawal of its admission of liability based on the employer's fraudulent acts — to come within the purview of the Act. We therefore conclude that the ALJ has authority to order reimbursement of the insurer by the offending employer.
The ALJ has "original jurisdiction to hear and decide all matters arising under [the Act]." Section 8-43-201(1), C.R.S. Accordingly, the ALJ may conduct a hearing "to determine any controversy concerning any issue arising under [the Act]." Section 8-43-207(1), C.R.S. Prior to the Act's enactment relief for a worker's injuries was grounded in tort claims alleging negligence. Dee Enterprises v. Industrial Claim Appeals Office, 89 P.3d 430, 436 (Colo. App. 2003). Now, a case arising out of the Act is not considered to constitute "ordinary civil disputes between `private parties litigating private rights' that must be resolved in a trial court." Id. at 439.
Under the Act the parties relinquish other actions or proceedings and the "broad language" used in the Act to surrender their rights to other forms of relief "articulates a legislative decision to establish exclusive as well as comprehensive remedies for injuries that are covered by the Act." Colorado Compensation Ins. Auth. v. Baker, 955 P.2d 86, 88 (Colo. App. 1998). In Baker, the appellate court upheld the dismissal of an insurer's action in district court seeking the repayment of benefits from claimants and their attorneys. The insurer had paid the claimants benefits. After all benefits were paid the claimants were found eligible for social security disability benefits and the insurer filed a complaint in district court seeking reimbursement of its overpayments. The court of appeals determined that since the insurer "sought to recover excess moneys paid for personal injuries that undisputedly were covered by the provisions of the Act, its claims arose under the Act." Id. at 88. The court concluded that "exclusive jurisdiction over the insurer's claims "rested with the director and administrative law judges." Id. at 89. See also Aviado v. Industrial Claim Appeals Office, 228 P.2d 177, 180-81 (Colo. App. 2009) (workers' compensation cases not civil cases that must be heard in a judicial court). We find no statutory provision that expressly directs repayment of benefits to an insurer that are fraudulently induced by an employer's conduct. However, we consider the matter of reimbursement for improperly paid workers' compensation benefits at issue in this case to constitute a controversy concerning an issue arising under the Act and a proper subject for the ALJ's consideration. See Hawes v. Colorado Div. of Ins., 65 P.3d 1008, 1013 (Colo. 2003) (agency had implicit powers to do all necessary to effectuate its express mandate, including authority to award attorneys' fees pursuant to legislation).
Here the ALJ granted the insurer permission to retroactively withdraw admissions of liability as improvidently filed because they were induced by the employer's fraud. In our view the request for reimbursement for amounts paid to the claimant under those same admissions is ancillary to the ALJ's determination of the claimant's right against the insurer based on those admissions. See Larson, Workers Compensation Law, § 150.04(1).
There are instances in which a party involved in a workers' compensation must seek relief in a court of general jurisdiction. For instance, in Jorgensen v. Colorado Compensation Ins. Auth, 967 P.2d 172 (Colo. App. 1998), the appellate court determined that the trial court had jurisdiction to apportion settlement proceeds from tortfeasor between economic and non-economic damages. The court recognized that the district court's jurisdiction was grounded in the nature of the claim as a tort and was careful to acknowledge the jurisdictional limitations of the trial court under the circumstances:
This issue highlights the difficulty in adjudicating a settlement in a tort case, over which the district courts have jurisdiction, when a workers' compensation case, which is the sole province of the Division of Labor, underlies that tort case. However, since the district court does have jurisdiction to apportion a settlement reached in a tort case, the court would not technically be determining the amount of the workers' compensation medical benefits, but rather only that portion of the settlement which represents the non-economic losses.
Id. at 174. Accord Harrison v. Pinnacol Assurance, 107 P.3d 969, 971-72 (Colo. App. 2004) (apportionment of tort settlement is separate cause of action properly before district court and subject to statute of limitations for civil actions). We do not understand the employer to be asserting that the insurer has available a civil action independent from these workers' compensation proceedings. Thus, the subject of reimbursement in the present case does not arise from circumstances supporting an action distinct from the present claim arising under the Act. Cf. Colorado Ins. Guar. Ass'n v. Menor, 166 P.3d 205, 210 (Colo. App. 2007) (recognizing cause of action to enforce rights under Colorado Insurance Guaranty Association Act).
IT IS THEREFORE ORDERED that the ALJ's order dated July 12, 2010 is set aside to the extent that the ALJ declined to order the employer to reimburse the insurer for amounts paid to the claimant and this matter is remanded for the ALJ to consider ordering reimbursement by the employer to the insurer, subject to any available defenses raised below.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________ John D. Baird
___________________________ Thomas Schrant
ROBERTO FUENTES, 1120 HANOVER STREET, AURORA, CO, (Claimant).
RIVERA CONSTRUCTION, Attn: PEDRO PABLO RAMIREZ RIVERA, DENVER, CO, (Employer).
PINNACOL ASSURANCE, Attn: HARVEY D. FLEWELLING, ESQ., DENVER, CO, (Insurer).
MIGUEL VELASCO, Attn: MIGUEL VELASCO, ESQ., DENVER, CO, (For Claimant).
HALL EVANS, LLC, Attn: FRANK M. CAVANAUGH, ESQ., DENVER, CO, (For Respondents)
RUEGSEGGER SIMONS SMITH STERN, LLC, Attn: THOMAS M. STERN, ESQ., DENVER, CO, (Other Party).