Opinion
W.C. No. 4-546-848.
May 30, 2007.
ORDER
The claimant seeks review of an order of Administrative Law Judge Cannici (ALJ) dated February 12, 2006, insofar as it denied the claimant's request for penalties. We affirm the order in part, set it aside in part, and remand for entry of a new order.
This case has a lengthy history beginning with an order entered by ALJ Martinez in 2003, which determined the claim was barred by the two year statute of limitations. We affirmed that order in May 2003, but our order was set aside by the Court of Appeals in 2004. Pursuant to the Court's remand, ALJ Stuber entered an order in 2005, which in relevant part determined that the claimant suffered an occupational disease and ordered the insurer to pay for all of the claimant's reasonable and necessary medical treatment. We subsequently affirmed ALJ Stuber's order. The respondents did not appeal our order. ALJ Cannici entered an order in 2006, which is the subject of the present appeal involving the claimant's request for penalties against the respondent insurer.
ALJ Cannici's pertinent findings of fact are as follows. The claimant sought penalties for the respondents' failure to timely reimburse him for co-payments he made to his health insurer and for failure to timely reimburse him for mileage expenses related to his medical treatment. The claimant sought penalties pursuant to §§ 8-43-304(1) and 8-43-401(2)(a), C.R.S. 2006. During the time in which the claim proceeded through litigation, the claimant received medical treatment for his occupational diseases through his private health insurer. The claimant was required to make co-payments in order to receive medical treatment. The claimant sought reimbursement from the respondent insurer for the co-payments in a letter dated February 27, 2006. The insurer did not receive the claimant's February 27, 2006 letter until March 27, 2006. On June 8, 2006, the claimant received a check for co-payment reimbursement. On March 22, 2006, the claimant mailed a mileage reimbursement request to the insurer. On May 18, 2006 the claimant received a mileage reimbursement check and received an additional check for mileage reimbursement on May 23, 2006.
On the issue of claimant's request for mileage reimbursement, the ALJ found that W.C. Rule of Procedure 18-6(E), Code Colo. Reg. 1101-3 at 637 does not contain a time limitation for reimbursement, and therefore the claimant had failed to establish the insurer violated Rule 18-6(E). Accordingly, the ALJ denied the claimant's request for penalties for respondents' failure to timely reimburse him for mileage expenses.
The ALJ further found that because the insurer did not reimburse the claimant for medical co-payments within 30 days of his request, the insurer had violated W.C. Rule of Procedure 16-11(A), Code Colo. Reg. 1101-3 at 93. However, the ALJ found that the claimant had failed to establish by a preponderance of the evidence that the insurer's conduct in failing to timely reimburse him for his medical co-payments was objectively unreasonable. Even if the insurer's actions were objectively unreasonable, the ALJ found, the violation was cured by the respondents pursuant to § 8-43-304(4). The ALJ noted that the claimant had filed several applications for hearing on penalties, but found that the hearing conducted was predicated on the claimant's application for hearing filed on October 17, 2006, and the respondent insurer had reimbursed the claimant prior to that date. The ALJ also found that because the insurer's actions were reasonable, the claimant had failed to sustain his enhanced burden of proof to demonstrate that the insurer knew or should have known of any violation under the cure provisions. Therefore, the ALJ denied the claimant's request for penalties under 8-43-304(4) for respondents' failure to timely reimburse him for medical co-payments.
Finally, the ALJ found pursuant to § 8-43-401(2)(a) that the claimant had failed to demonstrate by a preponderance of the evidence that the insurer acted with deliberate intent in failing to reimburse him for co-payments and mileage expenses within 30 days. The ALJ dismissed the claims for penalties under § 8-43-401(2)(a).
On appeal, the claimant first contends that the ALJ erroneously required the claimant to prove his case beyond a reasonable doubt. We disagree that the ALJ required such proof. In his Findings of Fact, Conclusions of Law, and Order at 6, ¶ 5, the ALJ correctly noted that, in general, a claimant in a Workers' Compensation claim has the burden of proving entitlements to benefits by a preponderance of evidence. Section 8-42-101, C.R.S. 2006. On the specific issue of penalties under § 8-43-304(1), the ALJ analyzed the issue on the basis of whether the insurer's conduct was objectively unreasonable and found the insurer's actions were reasonable. We note the ongoing debate discussed by the court in Pioneers Hospital v. Industrial Claim Appeals Office, 114 P.3d 97 (Colo.App. 2005), regarding whether action predicated on a rational argument based in law or fact or conduct that is merely unreasonable is the proper analysis for assessing penalties. Here, the ALJ used the standard of whether the insurer's conduct was merely unreasonable rather than the more difficult standard of whether the action was predicated on a rational argument. Therefore, we can safely conclude that the ALJ did not, as contended by the claimant, erroneously shift the burden of proof to the detriment of the claimant.
The claimant next contends that the ALJ committed error when he found the claimant had not proved he was entitled to recover penalties pursuant to § 8-43-304(1). Generally, the imposition of penalties under § 8-43-304(1) requires a two-step analysis. First, it must be determined whether a party has violated the Act in some manner, or failed to carry out a lawfully enjoined action, or violated an order. If a violation is found, it must be determined whether the violator acted reasonably. See Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995).
Ordinarily, the existence of a violation and the reasonableness of the violator's conduct are issues of fact for determination by the ALJ. Human Resource Co. v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999). Thus, we must uphold the ALJ's determination of these issues if supported by substantial evidence in the record. Section 8-43-301(8), C.R.S. 2006. In reviewing the ALJ's order refusing to impose penalties, we are bound by his factual findings if they are supported by substantial evidence in the record. Section 8-43-304(8), C.R.S. 2006; City of Durango v. Dunagan, 939 P.2d 496 (Colo.App. 1997). Substantial evidence is probative evidence which would warrant a reasonable belief in the existence of facts supporting a particular finding, without regard to the existence of contradictory testimony or contrary inferences. See F.R. Orr Construction v. Rinta, 717 P.2d 965 (Colo.App. 1985). The substantial evidence standard requires that we view evidence in the light most favorable to the prevailing party, and defer to the ALJ's assessment of the sufficiency and probative weight of the evidence. Thus, the scope of our review is "exceedingly narrow." Metro Moving Storage Co. v. Gussert, 914 P.2d 411 (Colo.App. 2003). This narrow standard of review also requires that we defer to the ALJ's resolution of conflicts in the evidence, as well as credibility determinations and plausible inferences drawn from the record. Wilson v. Industrial Claim Appeals Office, 81 P.3d 1117 (Colo.App. 2003).
Contrary to the claimant's arguments, the ALJ found, with support in the record, that the claimant had failed to establish by a preponderance of the evidence that the insurer's conduct in failing to timely reimburse him for his medical co-payments was objectively unreasonable. The ALJ credited the testimony of the insurer's witnesses that they worked diligently to properly address the claimant's request for medical benefits. In this regard, the witnesses testified that they requested copies of bills and supporting records from the claimant's treatment providers so that they could ascertain whether the claimant's medical care was related to his compensable occupational disease or to a non-industrial condition. Tr. at 12, 51, 95, 96, 106, 113. The insurer then determined that parts of the co-payment reimbursement requested by the clamant lacked medical records to substantiate the claimant's request. Tr. 71, 83, 54. The ALJ also noted that the claimant's co-payment requests covered a lengthy period because the onset of the claimant's occupational disease had occurred in 2002. Tr. 94. The insurer was thus required to investigate the reasonableness and relatedness of the claimant's co-payments for medical treatment. Tr. 83, 89. Further, the complex claims representative from the insurer outlined the difficulties involved in reimbursement of medical co-payments, which he described as a gray area. Tr. at 78. The normal procedure is for the workers' compensation carrier to pay the medical care provider who would then refund the co-payment to the claimant. Tr. 102-103. Here, the witness testified, it was even more complicated because of payments made by the health insurer. Even the claimant's counsel stated on the record that carriers have difficulty with co-payments because they are dealing with unknown factors and they don't have the information up front whether a co-payment was utilized originally to pay the provider or not. Tr. at 79. The ALJ concluded that the insurer's delay in payment was reasonable under the circumstances, and we perceive no basis on which to interfere with the ALJ's finding that the delay in reimbursement of co-payments was reasonable.
The claimant also contends the ALJ erred in denying imposition of penalties under § 8-43-401(2)(a) because the respondents willfully and wrongfully withheld reimbursement of co-payments. However, the ALJ concluded there was no willful or wrongful failure to pay the requested benefits. The ALJ credited testimony from the respondents' witnesses regarding the extended time period of the claimant's case, the sheer volume of documentation, and the variety of issues involved. The ALJ further noted the co-payment reimbursement request covered a lengthy period because the onset of the claimant's occupational disease had occurred in 2002. The insurer was required to investigate the reasonableness and relatedness of the claimant's co-payments for medical treatment, the ALJ found, and the insurer's delay in payment was reasonable under the circumstances and was thus neither willful nor wrongful.
The claimant's arguments notwithstanding, we perceive no error in the ALJ's denial of penalties under § 8-43-401(2)(a) for the delay in reimbursement of co-payments. If an insurer acts reasonably under the circumstances, its failure to pay bills within thirty days is neither willful (intentional) nor wrongful (unlawful and unjust). The question of whether the conduct was reasonable is essentially one of fact for determination by the ALJ. See Miller v. Industrial Claim Appeals Office, 49 P.3d 334,336-337 (Colo.App. 2001). Because the issue is factual in nature, we must uphold the ALJ's determination if supported by substantial evidence in the record. As noted above, the record contains substantial evidence to support the ALJ's finding that the delay in reimbursement of co-payments was not unreasonable, and was therefore neither willful nor wrongful. The mere fact that other evidence and inferences could justify other conclusions affords no basis for relief on appeal. See Wilson v. Industrial Claim Appeals Office, supra.
The claimant also contends the ALJ erred in denying imposition of penalties under § 8-43-304(1) because the respondents wrongfully withheld payment of mileage expenses for more than 30 days. The ALJ concluded that Rule18-6(E) does not contain a time limitation for reimbursement of mileage expenses, and therefore the claimant had failed to establish the insurer violated Rule 18-6(E). Because the ALJ determined that the insurer's conduct regarding mileage reimbursement had not violated the Act, a rule, or an order, he concluded it was unnecessary for him to determine whether that conduct was objectively reasonable.
Rule 18(6)(E) provides that the payer shall reimburse an injured worker for reasonable and necessary mileage expenses for travel to and from medical appointments at a rate of 37 cents per mile. The rule contains no express provision for the time in which such reimbursement must be made. However, the rule is contained in the Medical Fee Schedule, which was promulgated by the Director of the Division of Workers' Compensation to review and establish maximum allowable fees for health care services falling with the purview of the Act. W.C. Rule of Procedure 18 Code Colo. Reg. 1101-3 at 625.
Section 8-42-101(1)(a), C.R.S. 2006, requires the respondents to pay for expenses which are incidental to obtaining reasonable and necessary medical treatment. Mileage expenses are compensable if "incident" to obtaining medical treatment. Country Squire Kennels v. Tarshsis, 899 P.2d 362 (Colo.App. 1995); Sigman Meat Co. v. Industrial Claim Appeals Office, 761 P.2d 265 (Colo.App. 1988); Industrial Commission v. Pacific Employers Insurance Co., 120 Colo. 373, 209 P.2d 908 (1949). Mileage expenses are treated in the nature of a medical benefit.
The Director of the Division of Workers' Compensation has promulgated utilization standards which can be found in W.C. Rule of Procedure 16, Code Colo. Reg. 1101-3 at 84. The stated purpose of the utilization standards is to assure appropriate and timely medical care. Rule 16-11(A) provides that payment of medical benefits are due and payable within 30 days after receipt of the bill by the payer.
In our view, the two rules complement one another. Rule 16-11(A) provides the time in which payment of medical benefits is to be made and Rule 18-6(E) controls the amount that is to be paid for a particular type of benefit. Rule 18-6(E) does not contain a time limitation for mileage reimbursement because such time limit is already contained in Rule 16-11(a). Further, the two rules are consistent with § 8-43-401(2), which provides that insurers shall pay benefits within 30 days of when any benefits are due, and if any insurer willfully delays payment of medical benefits for more than thirty days, such insurer shall pay a penalty.
Under these circumstances, we conclude that the ALJ erred in denying penalties for failure to timely reimburse the claimant for mileage on the ground that Rule 18-6(E) does not contain a time limitation for reimbursement. Even though we note that in some sections of the order, the ALJ made findings that the insurer's delay in reimbursing mileage was reasonable and neither willful nor wrongful, we cannot characterize this error as harmless. It is not clear to us what the ALJ would have ruled if he had not determined that no penalty could be imposed on the mileage issue because Rule 18 6(E) did not contain a time limitation.
The ALJ has already made findings of fact that mileage reimbursement did not occur within 30 days. Accordingly, it is necessary to remand this matter for consideration of whether the actions of the insurer were objectively reasonable pursuant to § 8-43-304(1) or constituted willful failure to pay pursuant to § 8-43-401(2)(a). Of course, the resolution of conflicting evidence and the weight and probative value to be accorded the evidence remains solely within the province of the ALJ, and we should not be understood as expressing any opinion concerning the ALJ's assessment of the evidence on remand.
If penalties are deemed appropriate on the issue of mileage reimbursement, then the defense raised by the respondents under the cure provisions of § 8-43-304(4), C.R.S. 2006 must be considered. However, as we read the claimant's petition to review, the claimant also contends the ALJ erred in limiting the notice provision found in the "cure" section of § 8-43-304(4) to the application for hearing which resulted in the hearing which actually took place. Since this issue may come up on remand, we express our opinion on this issue.
As we previously stated, the ALJ found that the respondents cured any violation pursuant to § 8-43-304(4) by reimbursing the claimant for his medical co-payments and mileage expenses prior to the time the claimant filed his application for hearing. The hearing application the ALJ relied upon is the application filed on October 17, 2006, rather than several other applications for hearing the claimant had filed regarding penalties. In concluding that the respondents had cured any violation, the ALJ relied on § 8-43-304(4), which provides as follows:
In any 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 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.
Section 8-43-304(4) refers to "any application" for hearing for any penalty. The plain meaning of the statute does not restrict the notice provisions contained in the cure section of the Act to only applications which immediately lead to a hearing on the issue of penalties. See § 2-4-101, C.R.S. 2006; Spracklin v. Industrial Claim Appeals Office, 66 P.3d 176 (Colo.App. 2002) (in interpreting statutes, words and phrases are to be given their plain and ordinary meaning unless the result would be absurd). Rather, the purpose of the section is to require notice to the insurer of the alleged conduct which must be corrected so as to afford an opportunity to cure. Anderton v. Hewlett Packard W. C. No. 4-344-781 (July 18, 2005); Stilwell v. B B Excavating Inc., W.C. No. 4-337-321 (July 28, 1999). The ALJ's reading of § 8-43-304(4) as limiting the notice provisions solely to the application for hearing which actually resulted in a hearing is inconsistent with this purpose. Therefore, in our opinion, the ALJ erred in determining that the notice contained in the application for hearing, which triggered the cure period, was limited to the application filed on October 17, 2006.
The record contains earlier applications for hearing, which contain claims for penalties, and the ALJ has already found that mileage reimbursement did not occur within 30 days. Accordingly, if on remand the ALJ finds the actions of the insurer with regard to mileage reimbursement were objectively unreasonable pursuant to § 8-43-304(1) or constituted willful failure to pay pursuant to § 8-43-401(2)(a), then the issue of cure must be reconsidered. We note that it does not appear that there has been an assertion that the claimant failed to specifically plead the basis of the claim for penalties in any of his other applications for hearing. In any event, the earlier applications for hearing should be examined to see if specific notice was given to the insurer of the alleged conduct to be corrected so as to afford an opportunity to cure and, if so, when. If such notice was given, then it must be determined what effect it has on the penalty claims for failure to timely provide mileage reimbursement.
We have considered the claimant's remaining arguments and they do not alter our conclusions. IT IS THEREFORE ORDERED that the ALJ's order dated February 12, 2006 is set aside insofar as it denied penalties for failure to timely reimburse the claimant for mileage expenses. On this issue, the matter is remanded for further proceedings and entry of a new order consistent with the views expressed herein.
IT IS FURTHER ORDERED that in all other respects the ALJ's order dated February 12, 2006, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Dona Halsey
____________________________________ Thomas Schrant
Arthur Ficco, CO, Owens Brothers Concrete Company, Janet Owens, Arvada, CO, Pinnacol Assurance Harvey D. Flewelling, Esq., Denver, CO, Jack A. Kintzele, Esq., Denver, CO (For Claimant).
Ruegsegger, Simons, Smith Stern, LLC Douglas Ruegsegger, Esq., Denver, CO (For Respondents).