Opinion
W.C. No. 4-531-613.
January 24, 2005.
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which denied penalties for the respondents' violation of Rule XVI(K)(2)(b), 7 Code Colo. Reg. 1101-3 at 80 (2004). We reverse and remand for a determination of the amount of penalties to be imposed.
Rule XVI(K)(1), requires that medical bills be paid within 30 days of receipt unless the employer contests liability in accordance Rule XVI(K)(2). Rule XVI(K)(2)(b) requires an employer to dispute payment of a medical bill by submitting a written notification of contest within 30 days of its receipt of the bill.
In February 2002 the claimant suffered a compensable injury to her right upper extremity. On November 13, 2002, the treating physician referred the claimant to the Memorial Hospital for chest x-rays. On December 13, 2002, the respondents received an itemized billing statement dated November 29, 2003, for chest x-rays taken on November 18 in the total amount of $229. In early 2003, the insurer's adjuster requested medical records pertinent to the x-rays to determine the causal relationship between the x-rays and the industrial injury. The respondents received the records in February 2003. Thereafter, the claimant made numerous requests for payment of the Memorial Hospital bill but no payment was made and the matter was referred to a collections agency for recovery from the claimant. The respondents paid the bill on December 24, 2003.
In February 2004, the claimant applied for a hearing on the issue of penalties. At the hearing, the respondents argued the November 2002 itemization was not a bill which would trigger the requirements of Rule XVI(K)(2)(b) because the statement lacked sufficient billing codes and the statement did not establish a causal relationship between the x-rays and the industrial injury. (Tr. p. 6). Further, the respondents' adjuster denied any error in failing to either pay the bill or contest payment in writing under these circumstances.
The ALJ found the November 2002 billing statement listed the services provided, the date of service, and the fee charged. Therefore, the ALJ determined the statement was a "bill" and the adjuster's insistence that she handled the statement properly was incorrect. Instead, the ALJ determined the respondents' duty to comply with Rule XVI(K) was triggered by their receipt of the November 2002 billing statement. Consequently, the ALJ found the respondents violated Rule XV(K)(2) and that the respondents failed to demonstrate any reasonable justification for the violation.
However, the ALJ also determined the respondents cured the violation prior to the filing of the Application for Hearing on penalties and that the claimant failed to prove by clear and convincing evidence that the adjuster "reasonably should have known that the November 29, 2002 document triggered the duty to pay or contest within 30 days." Therefore, the ALJ denied the claim for penalties.
On review the claimant contends the ALJ erred in finding the adjuster's refusal to admit any mistake precluded a finding that the adjuster reasonably should have known what was required by Rule XVI(K)(2). We agree.
Section 8-43-304(1), C.R.S. 2004, allows ALJs to impose penalties up to $500 per day against any employer or insurer who violates a provision of the Workers' Compensation Act (Act), or fails or refuses to perform any duty lawfully enjoined within the time prescribed by the director or panel. A failure to comply with the Rules of Procedure is a failure to perform a "duty lawfully enjoined" within the meaning of § 8-43-304(1). See Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997); Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996). However, subsection 8-43-304(4) provides that if the violation is cured within 20 days of the filing of the application for hearing on the issue of penalties, no penalties may be imposed unless the party seeking penalties proves by "clear and convincing evidence that the alleged violator knew or reasonably should have known such person was in violation."
Here, the ALJ rejected the argument that the respondents had any reasonable basis to believe the November 2002 billing statement was not a "bill" within the meaning of Rule XVI. However, the ALJ apparently accepted the adjuster's testimony that she did not know the rules required the filing of a written contest within 30 days of receipt of the bill where causation was disputed.
The adjuster's testimony is sufficient to support the ALJ's implicit finding that the claimant failed to prove it was highly probable the adjuster knew her inaction violated Rule XVI(K)(2). However, the adjuster's testimony does not support the ALJ's finding that the claimant failed to prove the respondents should reasonably have known of the violation. This is true because, parties to a workers compensation claim are presumed to know the applicable law. Midget Consol. Gold Mining Co. v. Industrial Commission, 64 Colo. 218, 193 P. 493 (Colo. 1920); Paul v. Industrial Commission, 632 P.2d 638 (Colo.App. 1981). The presumption aids a party in meeting its burden of proof. Union Ins. Co. v. RCA Corp., 724 P.2d 80 (Colo.App. 1986). Further, a party may not use ignorance of the law as a defense to its legal duties.
For example, in Rogan v. United Parcel Service, Inc., W.C. No. 4-314-848 (March 2, 1999), it was undisputed the respondents violated Rule IV(N). Moreover, the respondent-insurer was in the business of adjusting workers' compensation claims and Rule IV(N) is itself a rule concerning the adjustment of claims. Under these circumstances, we concluded that in the absence of specific evidence to the contrary, the ALJ was required to presume that the respondents knew or reasonably should have known the requirements of Rule IV(N)(5). See also Federal Life Insurance Co. v. Wells, 98 Colo. 455, 56 P.2d 936 (Colo. 1936) (insurance adjuster presumed to understand the meaning of the word "coverage" which is used generally in the insurance business and was used regularly by the adjuster); Schrieber v. Brown Root, Inc., 888 P.2d 274 (Colo.App. 1993) (where undisputed facts lead to only one conclusion the issue is a question of law); Varga v. Al Sewer Master Mountain Water, W.C. No 4-508-548 (July 1, 2004).
Applied here, Rule XVI(K)(2)(a) states that non-medical reasons an insurer may assert to contest payment of a medical bill include "the billed services are not related to the admitted injury" or a billing code error. In either case, the employer must issue the written contest within 30 days of receipt of the bill. Similarly, Rules XVI(G)(4) and (G)(5)(f) at 76 allow an insurer to refuse payment until the provider submits supporting documentation and proper billing codes. Nevertheless, the insurer remains obligated to comply with Rule XVI(K) when payment is contested on grounds the provider has failed to submit required documentation or proper billing codes. See Copeland v. Vrooman Constructors, Inc., W.C. No. 3-860-458(May 25, 2004) [for purpose of contesting payment the term "bills" includes statements which do not comply with the formatting requirements of Rule XVI(G)(2)(a)(1)]. Consequently, the respondents' contention that they lacked adequate information to conclude the x-rays were reasonably necessitated by the industrial injury does not support a finding the claimant failed to prove the respondents reasonably should have known that they were required to contest payment in writing within 30 days. See Gant v. Etcetra, W.C. No. 4-586-030 (September 17, 2004) (Rule XVI(K) requires contest if payment denied because "provider is not authorized to treat," so ALJ erred insofar as she determined that the employer could not be penalized for failing to comply with Rule XVI(K) based on argument provider was unauthorized).
Rather, the record compels a finding that the respondent-insurer is in the business of adjusting claims, the adjuster was an experienced claims adjuster, and that the respondents failed to present evidence it was reasonable for the adjuster to be unaware that Rule XVI(K) applied to this claim. (Tr. p. 37-38). Under these circumstances, the ALJ erred in denying the claimant's request for penalties and the matter must be remanded to the ALJ for the assessment of a penalty up to $500 per day, for each day the respondents failed timely to comply with Rule XVI(K)(2).
IT IS THEREFORE ORDERED that the ALJ's order dated July 19, 2004, is reversed and the matter is remanded to the ALJ for the imposition of a penalty for the violation of Rule XVI(K).
INDUSTRIAL CLAIM APPEALS PANEL
____________________ David Cain
____________________ Kathy E. Dean
Sandra Whitman Grant, Security, CO, Professional Contract Services, Colorado Springs, CO, Commerce Industry Insurance Company, c/o Dawn Chambers, AIG Claim Services, Phoenix, AZ, Steven U. Mullens, Esq., Colorado Springs, CO, (For Claimant).
W. Berkeley Mann, Jr., Esq., Denver, CO, (For Respondents).