Opinion
W.C. No. 4-785-983.
April 12, 2011.
ORDER OF REMAND
The respondents seek review of an order of Administrative Law Judge Walsh (ALJ) dated October 21, 2010 that found a Final Admission of Liability (FAL) to be void ab initio, ordered the insurer to reinstate benefits and imposed penalties. We set the order aside and remand for entry of a new order.
The claimant sustained an industrial injury on February 12, 2009. The respondents filed an FAL on November 12, 2009 terminating temporary total disability (TTD) and denying liability for any permanent disability. The FAL was supported by a Physician's Report of Workers' Compensation Injury from the claimant's treating physician, Dr Satt, dated November 10, 2009. However, the ALJ found that the report attached to the FAL had been altered and additional information added. The ALJ found that information was added to the report to the: effect that the claimant was at MMI and that there was no permanent impairment. The ALJ inferred that once the report had been filled out some outside influence was responsible for having that information added to the already complete document, thus purporting to provide a medical report satisfying the requirements for filing an FAL.
The ALJ found that the FAL filed by the insurer did not comply with the Workers' Compensation Act (Act) or Workers' Compensation Rules of Procedure. The ALJ found that the insurer violated W.C. Rule of Procedure 5-5, 7 Code Colo. Reg. 1101-3. The ALJ imposed a penalty of $150.00 per day from the date of the filing of the FAL to the date of the order. The ALJ imposed a penalty in the amount of $49,050.
The ALJ further found that although the claimant had suffered a fracture to his left wrist in the industrial injury, which was the focus of his treatment in the beginning, the claimant's treatment progressed to his neck, elbow and shoulder and that they were related to the original injury. The ALJ ordered the insurer to reinstate the claimant's benefits pursuant to the Act. The respondents bring this appeal.
I.
The respondents first contend that the ALJ violated their due process rights by making factual findings and assessing penalties based upon the issue of authenticity of the report attached to the FAL. The respondents argue that the ALJ essentially found that the insurer had altered the medical report to suit its own purpose but that the issue of authenticity or alteration of the report had not been an issue endorsed for hearing or litigated. The respondents note that this is significant because the insurer's purported reliance on the altered report directly impacted the amount of penalties assessed against it and was the basis for the finding that the respondents' conduct was willful. The respondents argue that they had no notice prior to the hearing, or during the hearing that the authenticity of the document attached to the FAL was at issue. The respondents request that the matter be reversed or remanded for additional proceedings on this issue.
The fundamental requirements of due process are notice and an opportunity to be heard. Due process contemplates that the parties will be apprised of the evidence to be considered, and afforded a reasonable opportunity to present evidence and argument in support of their positions. Inherent in these requirements is the rule that parties will receive adequate notice of both the factual and legal bases of the claims and defenses to be adjudicated. See Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076, 1077 (Colo. App. 1990). We conclude that the ALJ's consideration of the issue of the authenticity or alteration of the medical report did interfere with the respondents' right to a fair hearing and deprived them of due process and therefore a remand is: necessary.
We note initially that the claimant has argued that we are without jurisdiction to entertain this argument by the respondents. The claimant, citing Kinterknecht v. Industrial Commission, 175 Colo. 60, 485 P.2d 721 (1971) contends that this concerns a constitutional issue and therefore we are deprived of jurisdiction. We disagree.
The Panel, citing Kinterknecht v. Industrial Commission, supra, has repeatedly noted its lack jurisdiction to consider a facial attack on the constitutionality of any section of the Act. See also Celebrity Custom Builders v. Indus. Claim Appeals Office, 910 P.2d 539 (Colo. App. 1995), However, the Supreme Court has indicated that administrative agencies have the authority to determine whether "an otherwise constitutional statute has been unconstitutionally applied." Horrell v. Department of Administration, 861 P.2d 1194, i 198 (Colo. 1993); see Dickson v. Pueblo Transportation Company, W. C. Nos. 3-777-995 3-857-321 (July 31, 1995). We do not view the present controversy as involving a facial attack on the constitutionality of some section of the Act.
Regarding whether the respondents received adequate notice of the issue of alteration of the medical report we note the following. The medical record contains two reports from Dr. Satt, both dated November 12, 2009. Exhibit 1 at 5 and Exhibit 3 at 24. One of these reports was left blank on the section regarding the issue of MMI and the section regarding permanent medical impairment. The other report indicates the claimant reached MMI and there was no permanent impairment. Regarding these reports, the ALJ found that once the original medical report form had, been filled out originally, some outside influence was responsible for having information added regarding MMI to the already completed document and thus purporting to provide a medical report to satisfy the need for filing with the FAL. The ALJ found that it was not clear, why the original report was altered but later found that the form was altered to support the respondents' belief that the claimant was at MMI for all of his work-related injuries and had no permanent impairment for any of his injuries. The ALJ inferred that the insurer's actions in filing the FAL with an altered document raised serious questions as to their intent and at a minimum the ALJ found the actions to be willful. Based in part upon the willful nature of the conduct the ALJ imposed a penalty of $ 150.00 per day.
We note that at the inception of the hearing the claimant, although noting differences in the medical reports, stated that the basis for the claimant contending that the final admission was void ab initio was that he had not reached MMI for all of his work-related injuries. Tr. at 7-8. No claim was made that the medical forms had been altered, Instead the claimant asked for penalties under Rule 5-5(e) for failure to attach a report to the FAL denoting MMI because the report attached did not account for all of the body parts at issue. Tr. at 8.
Further in the claimant's post-hearing Position Statement there is no claim that the medical forms had been altered. To the contrary the claimant specifically states that Dr. Satt authored two notes dated November 10, 2009. This is consistent with the testimony of Dr. Satt, in which he, responding to a question from.; the claimant's counsel, specifically acknowledged authoring the medical report attached to the FAL which stated the claimant was at MMI with no impairment., Satt, Depo. at 7-8; Exhibit 2. Dr. Satt stated that with regard to the November 10, 2009 report, while he remembered authoring the one with the opinion on MMI, he did not recall issuing any other report on November 10, 2009. Satt Depo, at 15.
In our opinion the respondents were not provided with notice and an opportunity to be heard on the issue raised by the ALJ regarding possible alteration of medical reports. Although an ALJ has authority to raise issues and is not barred from addressing or raising an issue simply because the parties have not, the parties are nonetheless entitled to notice that an issue will be considered. Compare ISG, LLC v. Aransas Valley Ditch Ass'n, 120 P.3d 724, 731 (Colo. 2005) (where party "had sufficient opportunity . . . to argue its theories and to present evidence on the very issue that the . . . court found dispositive in the consolidated cases," the court committed no error in dismissing the party's claims upon a sua sponte entry of summary judgment), with Gates Rubber Co. v. Industrial Comm'n, 647 P.2d 244, 245-46 (Colo. App. 1982) (ALJ abused his discretion by sua sponte considering reopening claim where parties were not given proper notice that issue would be considered).
Here, because the respondents were unaware that the ALJ would consider the possibility of alteration of medical documents, they did not focus on this issue during their presentation; of evidence at the hearing and we are not persuaded that the issue was subsumed into the penalty issue raised by the claimant. We are therefore persuaded that the ALJ abused his discretion by failing to provide the insurer., with a fair opportunity to respond to the accusation that it altered medical reports. On remand the insurer must be given an opportunity to present evidence on this issue.
II.
The respondents contend that in light of the specific admission for a specific injury the ALJ's order improperly shifted the burden of proof on causation to them. The respondents note that they filed a General Admission of Liability on March 3, 2009 in which they accepted liability for a left wrist injury. The respondents point out that they did not admit liability for any of the other condition. The respondents, citing Dowd v. V.F.W. Post 1247, W.C. No. 3-106-845 (May 14, 1998), concede that where a single injury has multiple components an admission cannot be filed until the claimant reaches MMI for all components. However, here the respondents argue that it had never been determined prior to the claimant reaching MMI that the industrial injury involved multiple components. The respondents argue that the ALJ applied the case law in a manner that had the effect of shifting; the. burden of proof on causation to the respondents. The respondents argue that under the ALJ's interpretation they are prohibited from filing an FAL for an admitted' injury that has reached MMI because of the existence of other conditions whose cause was unknown and had not been causally related to the admitted industrial injury.
In addressing the respondents' contention we first examine the penalty imposed by the ALJ. The ALJ imposed penalties pursuant to § 8-43-304(1) C.R.S. Under § 8-43-304(1), penalties may be imposed against an insurer who violates any provision of the Act: (2) does any act prohibited by the Act; (3) fails or refuses to perioral any duty lawfully mandated within the time prescribed by the director or the Panel; or (4) fails, neglects, or refuses to obey any lawful order of the director or the Panel The failure to comply with a procedural rule is a failure to obey an "order" within the meaning of section 8-43-304(1). Pioneers Hosp. v. Industrial. Claim Appeals Office, 114 P.3d 97, 98 (Colo. App. 2005). The ALJ specifically found that the insurer violated W.C. Rule of Procedure 5-5, 7 Code Colo. Reg. 1101-3. Rule 5-5(a) provides as follows:
When the final admission is predicated upon medical reports, such reports shall accompany the admission along with the worksheets or other evaluation information associated with an impairment rating. The admission shall specify and describe the insurer's position on the provision of medical benefits after MMI, as may be reasonable and necessary within the meaning of the Act. The admission shall make specific reference to the medical report by listing the physician's name and the date of the report.
Here, the FAL was. predicated upon a medical report that accompanied the admission and described the insurer's position. However, the claimant contends that the report did not place the claimant at MMI for all of his work-related conditions nor express an opinion regarding whether he suffered permanent impairment as a result of all of his work-related conditions. The respondents argue; that prohibiting them from filing an FAL after the claimant had reached MMI for the injury they had admitted for improperly shifted the burden of proof to the respondents.
Guidance on this issue has been provided by the Colorado Court of Appeals in Paint Connection Plus v. Industrial Claim Appeals Office 240 P.3d 429 (Colo. App. 2010). In Paint Connection Plus the respondents had made similar arguments regarding shifting the burden of proving compensability in a case involving imposition of penalties for filing an invalid FAL in violation of Rule 5-5(A). In Paint Connection Plus the respondents had filed several general admissions for a right shoulder condition and then filed an FAL using a report from a physician who found the claimant had reached MMI for that injury but also opined that the claimant suffered from a cervical condition probably related to his work injury and was not at MMI for the cervical problem. The ALJ found the FAL was invalid and imposed penalties under. 8-43-304(1) C.R.S. for violation of Rule 5-5(A) because the FAL was inconsistent with the physician's narrative report.
In Paint Connection Plus the ALJ found that the respondents filed an FAL asserting that the claimant was at MMI and that his cervical condition was unrelated to the admitted accident based upon a medical report that supported neither of those propositions. In contrast here the November 10, 2009 medical report attached to the FAL at least arguably identifies the claimant as having reached MMI for the left radial fracture and in the body of the report the work-related medical diagnosis, although difficult to read, appears again to state that the claimant has a left radial fracture, although it may include left upper extremity pains. We note that Dr. Satt in his deposition, when asked about the November 10, 2009 report, stated that he had placed the claimant at MMI for the left wrist but not for the neck or shoulder. Satt Depo. at 8. In affirming the imposition of penalties in Paint Connection Plus the court relied upon the fact that the rating physician made a specific medical finding in the medical report supporting the FAL that the condition for which the claimant was not at MMI was related to the work injury.
Here, we are not persuaded that the ALJ made sufficient findings of fact to support a conclusion that the respondents: knew as of November 10, 2009 that the disputed conditions were related to the industrial injury and ignored the opinion of Dr. Satt. In imposing penalties the ALJ must consider the reasonableness of the respondents' actions, which requires consideration of their knowledge at the time the FAL was filed. An insurer or employer fails to obey an order if it fails to take the action that a reasonable insurer or employer would take to comply with the order. The conduct of an insurer or employer is "measured by an objective standard: of reasonableness," Jiminez v. Industrial Claim Appeals Office, 107 P.3d 965, 967 (Colo. App. 2003), and its reasonableness depends on whether it was predicated on a rational argument based on law or fact. Diversified Veterans-Corporate Ctr. v. Hewuse, 942 P.2d 1312, 1313 (Colo. App. 1997).
Whether an insurer's conduct was reasonable is a question of fact for the ALJ. Paint Connection plus v. Industrial Claim Appeals, Office supra. Because the issue is factual in nature, we must uphold the ALJ's determination if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. In our view further factual determinations are necessary to determine whether the FAL filed here complied with Rule 5-5.
The respondents point to evidence that indicates that at the time of filing of the FAL they understood that the claimant had a healed work-related left wrist fracture and that the cause of the new complaints was not determined. . We note that Dr. Satt stated that he only arrived at the opinion that the claimant's neck and shoulder pains were a result of the industrial injury in February of 2010. Satt Depo, at 12. It must be kept in mind that the FAL was filed on November 12, 2009 based upon the November 10, 2009 report. Dr. Satt acknowledged that in a report dated February 12, 2010 he had stated that although the patient asserted his neck and shoulder and left arm were all violently injured during the industrial injury he was unable to determine from exams if that were true. Satt Depo, at 12. Dr. Satt testified that between October 22, 2009 and November 10, 2009 he did not issue any report or statement relating the neck and shoulder to the `February 17. 2009 industrial accident. Satt Depo, at 14-15. Dr. Satt reiterated that as of November 10, 2009 the claimant was at MMI for the original wrist fracture. Satt Depo, at 15. The FAL in question was based upon this opinion.
Because we cannot serve as finders of fact, the case must be remanded for the ALJ's determination of whether the insurer complied with Rule 5-5(A) at the time they filed the FAL and, if the insurer did not, whether the insurer's conduct was objectively reasonable given the physician's reports and testimony regarding the causality and the timing of those determinations relating to the neck or shoulder conditions. We note that because of our remand it is unnecessary to address other issues raised by the respondents.
IT IS THEREFORE ORDERED that the ALJ's order dated October 21, 2010 is set aside, and the matter is remanded for further proceedings and entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ John D Baird
______________________________ Curt Kriksciun
RAYMOND JOHNSON, 701 COLORADO AVENUE, LA JUNTA, CO, (Claimant).
CHAMP, LLC, LAS ANIMAS, CO, (Employer).
ZURICH NORTH AMERICA, Attn: VALERIE BURKE, SCHAUMBERG, IL, (Insurer).
HASSLER LAW FIRM, LLC, Attn: STEPHEN M. JOHNSTON, ESQ, PUEBLO, CO, (For Claimant).
THE KITCH LAW FIRM, P.C., Attn: MICHELLE L. PRINCE, ESQ, EVERGREEN, CO, (For Respondents).