Opinion
W.C. No. 4-201-920
December 18, 1998
FINAL ORDER
The respondent seeks review of an order of Administrative Law Judge Wheelock (ALJ) which awarded interest. We affirm.
Former § 8-43-410(2), C.R.S. (1993 Cum. Supp.) [amended in 1994] provided that:
"Every employer or insurance carrier of an employer shall pay interest at the rate of eight percent per annum upon all sums not paid upon the date fixed by the award of the director or administrative law judge for the payment thereof."
The sole issue before the ALJ was whether the claimant is entitled to interest on admitted permanent partial disability benefits. The parties stipulated to the pertinent facts. The claimant suffered a compensable injury in 1993 and was placed at maximum medical improvement (MMI) in 1994, with fifteen percent impairment of the upper extremity. The respondent admitted liability for scheduled disability benefits. The claimant objected and requested a Division-sponsored independent medical examination (IME). The IME physician determined the claimant was not at MMI.
The claimant was subsequently determined to be at MMI on February 22, 1996. A Division-sponsored IME was conducted by Dr. Polanco on May 19, 1997. Dr. Polanco agreed with the February 22 date for MMI, and rated the claimant's permanent medical impairment as 10 percent of the whole person. The respondent's attorney received Dr. Polanco's IME report on July 28, 1997. On July 31, 1997, the respondent filed a Final Admission of Liability which admitted liability for permanent partial disability benefits in accordance with Dr. Polanco's rating, commencing February 22, 1996, and ending November 19, 1997. The claimant objected to the Final Admission insofar as it did not include accrued interest from February 22, 1996 to July 31, 1997.
The ALJ found that the respondent did not dispute Dr. Polanco's MMI determination or Dr. Polanco's impairment rating. Therefore, the ALJ determined the respondent is liable for interest on the permanent partial disability award for the period February 22, 1996 to July 31, 1997.
I.
On review, the respondent contends that whole person impairment benefits were not due and owing until receipt of Dr. Polanco's IME report. Therefore, the respondents contend the ALJ erred in ordering them to pay interest commencing February 22, 1996. We perceive no error.
Accrued interest under § 8-43-410(2) is calculated from the date benefits are due, not the date the award is determined. Beatrice Food Co. Inc., v. Padilla, 747 P.2d 685 (Colo.App. 1987); Bourn v. T T Loveland Chinchilla Ranch, Inc., 514 P.2d 787 (Colo.App. 1973). Section 8-42-107(8)(d), C.R.S. 1998, expressly states that medical impairment benefits shall be paid "beginning on the date of maximum medical improvement."
The respondent's July 31 Final Admission lists the date of MMI as February 22, 1996, and admits liability for the payment of periodic permanent partial disability benefits commencing February 22, 1996. Therefore, the respondent's Final Admission supports the ALJ's order requiring the payment of interest commencing February 22, 1996.
However, the respondent points out that § 8-42-107(8)(d) was enacted after § 8-43-410(2), and contends that the legislature did not contemplate the payment of permanent disability benefits at MMI, where the determination of permanent disability is delayed due to the IME procedures set forth in § 8-42-107(8)(c), C.R.S. 1998. We are not persuaded.
The General Assembly enacted § 8-42-107(8)(d) at the same time it created the IME provisions in § 8-42-107(8)(c), and thus, must have recognized the potential for a delay in the determination of permanent impairment where a party requests an IME to dispute the treating physician's determination of permanent impairment. See 1991 Colo. Sess. Laws ch. 219. The payment of interest compensates for delays in determining the exact amount of permanent impairment. Cf. Golden Animal Hospital v. Horton, 897 P.2d 833 (Colo. 1995) (under § 8-42-102(4) permanent disability determinable at MMI, not date of hearing on permanent disability). Further, the General Assembly did not amend § 8-43-410(2) when it enacted § 8-42-107(8). This demonstrates that § 8-42-107(8)(d) is not intended to effect any change in the provisions of § 8-43-410(2). Nelson v. Industrial Claim Appeals Office,___ P.2d ___ (Colo.App. No. 98CA0495, December 10, 1998).
If permanent disability benefits are not due until the date the ALJ resolves factual disputes concerning the IME physician's rating, the value of benefits to similarly situated claimants may be inconsistent. Section 8-42-107(8)(d) indicates the General Assembly did not intend this result. Therefore, we reject the respondent's argument that where permanent medical impairment is determined by an IME physician, permanent disability benefits are not due and owing until receipt of the IME physician's report.
The respondent's further argument are not persuasive. The Rules of Procedure, Part IV(N)(6), 7 Code Colo. Reg. 1101-3 at 7, require an insurer to admit liability consistent with the IME physician's impairment rating or apply for a hearing on permanent disability within 20 days of the receipt of the IME report. Rule IV(N)(7) allows an insurer to file an amended admission of liability for additional or lesser medical impairment benefits. However, neither rule addresses the date permanent partial disability benefits become due and payable.
II.
Alternatively, the respondent contends the ALJ erred in refusing to grant relief from the payment of interest. The respondent contends that it could not pay whole person impairment benefits before receiving Dr. Polanco's rating. The respondent also asserts that the claimant is at fault for the delay in obtaining Dr. Polanco's medical impairment rating, and argues that the ALJ's order penalizes the respondent for actions beyond its control. We disagree.
Section 8-43-410(2) provides that:
"Upon application and satisfactory showing to the director or administrative law judge of the valid reasons therefor, said director or administrative law judge, upon such terms or conditions the director administrative law judge may determine, may relieve such employer or insurer from the payment of interest after the date of the order therefor; and proof that payment of the amount fixed has been offered or tenders to the person designated by the award shall be sufficient valid reason."
The respondent's arguments notwithstanding, interest awarded under § 8-43-410(2) is not intended to be punitive. Alstrom v. Colorado Compensation Insurance Authority, W.C. No. 3-815-100 et. seq., (January 26, 1998); Gallegos v. Green Construction Co., W.C. No. 3-033-796 (July 29, 1998). Rather the purpose is to secure to claimants the present value of benefits to which they are entitled by creating an equitable remedy for the loss of use of funds during the accrual period. Subsequent Injury Fund v. Industrial Claim Appeals Office, 899 P.2d 271 (Colo.App. 1994) ; Subsequent Injury Fund v. Trevethan, 809 P.2d 1098 (Colo.App. 1991). Therefore, evidence the respondent was not at fault for the delay is not dispositive.
Furthermore, even though a lump sum payment of benefits may be sufficient to support an order relieving the insurer from the payment of accrued interest, the statute does not require the ALJ to grant relief. Instead, the statutory affords the ALJ wide discretion to determine the circumstances under which it may be appropriate to grant relief from interest. See Harrison Western Corp. v. Claimants, 185 Colo. 142, 5232 P.2d 722 (1974); Beatrice Foods Co., Inc. v. Padilla, 747 P.2d 685 (Colo.App. 1987). The legal standard on review of an alleged abuse of discretion is whether the ALJ's determination exceeds the bounds of reason, as where it is not supported by substantial evidence in the record or the applicable law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1993); Rosenberg v. Board of Education of School District #1, 710 P.2d 1095 (Colo. 1985).
Here, it is undisputed that the respondent made a lump sum payment of whole person impairment benefits on July 31, 1997. However, it is also agreed the respondent had use of the claimant's whole person disability benefits from February 1996 to July 31, 1997. The ALJ was persuaded that the respondent's use of the claimant's permanent partial disability award for almost one and one-half years outweighed the reasons to relieve the respondent from accrued interest. The ALJ's determination does not exceed the bounds of reason. Therefore, we perceive no abuse of discretion.
IT IS THEREFORE ORDERED that the ALJ's order dated August 14, 1998, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Kathy E. Dean
____________________________________ Bill Whitacre
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for 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 this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. 1998.
Copies of this decision were mailed December 18, 1998 to the following parties:
Gloria Fuentez, 5218 Meteor Drive, Colorado Springs, CO 80917
Hewlett Packard Company, Attn: Sylvia Harding, R.N., P.O. Box 2197, Colorado Springs, CO 80901-2197
Hewlett Packard Company Sedgewick James of CO, Inc., Attn: Debbie Baird, 2000 S. Colorado Blvd., Suite 5000, Denver, CO 80222-7911
Susan K. Reeves, Esq., Ritsema Lyon, P.C., 111 S. Tejon, Suite 700, Colorado Springs, CO 80903 (For Respondent — Hewlett Packard)
Cynthia M. Pring, Esq., P.O. Box 60219, Colorado Springs, CO 80960-0219 (For Claimant)
Diane Astourian, Esq., P.O. Box 6094, Colorado Springs, CO 80934-6094 (For Claimant)
BY: ____________