Opinion
W.C. No. 4-481-843
April 7, 2004
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which denied her request for the assessment of penalties under § 8-43-304(1), C.R.S. 2003. We set aside the order and remand for the entry of a new order.
On June 23, 2000, the claimant was admitted to the Penrose Hospital (Penrose). The ALJ found that in April 2001, the respondents acknowledged receipt of a summary billing statement from the Penrose, but denied payment for the bill on grounds the treatment was unrelated to the industrial injury. There is no indication the respondents disputed the reasonableness of the charges for the treatment or the necessity for the treatment. See (Tr. May 1, 2002, p. 5; Claimant Hearing Exhibit 3).
In an order dated May 2, 2002, the ALJ found the hospitalization was a compensable consequence of the industrial injury. Therefore, the ALJ ordered the respondent-insurer to "pay for the costs for the June 23, 2000 hospitalization at Penrose Hospital." No appeal was taken from the order.
The Penrose hospitalization costs were not paid until July 16, 2003. Consequently, the claimant applied for a hearing on the issue of penalties.
The ALJ found the respondent-insurer received an itemized billing statement from the claimant's counsel on May 22, 2003, which was sufficient to permit fee scheduling and payment of the bill. However, the ALJ also determined the May 2 order did not direct the respondents to pay any specific dollar amount to Penrose and did not impose a deadline for the payment of the Penrose hospitalization. Further, the ALJ determined the order did not deprive the respondents of their right to an itemized billing statement and payment in accordance with the medical fee schedule. Therefore, the ALJ determined the claimant failed to prove a violation of the order which would support the imposition of penalties under § 8-43-304(1).
On review, the claimant contends the ALJ's finding that the respondents did not violate the May 2 order is not supported by the applicable case law. We conclude the ALJ's findings of fact are insufficient to permit appellate review.
Section 8-43-304(1) provides for imposition of a penalty where a party "fails, neglects, or refuses to obey any lawful order." In Holliday v. Bestop Inc., 23 P.3d 700 (Colo. 2001), the Supreme Court concluded penalties may be imposed under § 8-43-304(1) where the penalty claim is based on the insurer's failure to comply with a lawful order for the payment of medical benefits regardless of whether another penalty is specifically provided by the Workers' Compensation Act.
The imposition of penalties under § 8-43-304(1) requires a two-step analysis. The ALJ must first determine whether the disputed conduct constituted a violation of a lawful order. See Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo.App. 1995). Where a violation is found, the violator is subject to a penalty if the violator's actions which resulted in the violation were objectively unreasonable. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d 676 (Colo.App. 1995). The violator's actions are measured by an objective standard based on what steps a reasonable insurer would take to comply with a lawful order. Jiminez v. Industrial Claim Appeals Office, ___ P.3d ___ (Colo.App. No. 02CA2283, September 11, 2003); Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 907 P.2d at 679.
In Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra, an ALJ ordered an insurer to provide a "hot tub consistent with the requirements of claimant's authorized treating physician. The insurer did not provide the tub until three months later because it delayed obtaining information concerning spa designs and did not promptly respond when the treating physician advised the insurer that the hot tub selected by the insurer was unsuitable. Although the order did not specify the amount of money the insurer was to pay for the hot tub, an ALJ found the insurer violated the order because a reasonable insurer would have taken action to contact the claimant, obtain specifications from the treating physician, and provide the physician with the specifications of the hot tub the insurer sought to purchase. The court upheld the imposition of penalties for violation of the order stating the ALJ's findings concerning the actions the insurer did not take reflected the ALJ's "implicit determination that a reasonable insurer would have taken such action." Id. at 679.
Here, the May 2 order required the respondents to pay "for the costs for the June 23, 2000 hospitalization at Penrose Hospital." The ALJ did not exclude any specific treatment and, therefore, the order implicitly required the respondents to pay all costs of the hospitalization. See Giddings v. Northern Telecom, W.C. No. 4-293-203 (September 30, 2002) (order which determined that all authorized psychiatric treatment was reasonable and necessary required respondents to pay "all of the Claimant's reasonable and necessary psychiatric care and treatment related to the admitted compensable injury," and was violated by respondents' failure to pay psychiatric bills in the amount of $412.40); Moland v. Roadway Package System Inc., W.C. No. 4-282-792 et. seq. (August 26, 2002) (respondents' failure to provide MRI violated order approving settlement agreement). Therefore, we disagree with the ALJ's determination that the respondents could not violate the order because it did not specify a particular amount of benefits for payment or set a deadline for payment. Rather, the order was sufficiently definite to require the respondents to take reasonable steps to comply. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra.
Furthermore, the ALJ explicitly found that as of April 11, 2001, the respondents had a summary bill which stated the total amount charged by Penrose for the June 23, 2000 hospitalization. Consequently, the ALJ's findings compel the conclusion that payment of a specific amount of benefits was ordered, and to the extent the respondents claim entitlement to fee scheduling they could have acted to obtain the necessary information.
The Rules of Procedure Part XVI(K)(1), 7 Code Colo. Reg. 1101-3 at 81 (2001), requires the insurer to pay that medical bills within 30 days after receipt from the provider unless the insurer contests liability in accordance with the rules. Under Rule XVI(K) an insurer may in the first instance, contest liability on grounds the treatment is unrelated to the industrial injury. Rule XVI(K) also allows an insurer to contest liability due to the absence of correct billing codes. However, this claim does not involve an initial denial of liability after receipt from the provider. To the contrary, the May 2 order explicitly resolved the issue of compensability against the respondents.
Rule XVI(K) does not address the payment of medical bills after the issue of compensability has been adjudicated against the insurer by an order of an ALJ. Consequently, Rule XVI(K) does not govern this claim.
Moreover, there is no evidence the respondent-insurer took any action to notify Penrose that it was denying liability for lack of accurate or sufficient billing codes. Therefore, the ALJ erred insofar as he denied the penalty claim based upon his determination that the respondents were entitled to deny payment until they received an itemized bill from Penrose.
To the contrary, § 8-43-401(2)(a), C.R.S. 2003 provides that:
"After all appeals have been exhausted or in cases where there have been no appeals, all insurers and self-insured employers shall pay benefits within thirty days of when any benefits are due."
Similarly, Rule IV(E)(1), 7 Code Colo. Reg. 1101-3 at 5 (2001), states that "benefits awarded by order are due on the date of the order" or when the order becomes final if a petition to review is filed.
Here is it undisputed the respondents failed to pay Penrose within 30 days of May 2, 2002. Indeed the respondents did not even pay the bill within 30 days of May 22, 2003, when they received the itemized billing from claimant's counsel Under these circumstances, the pertinent issue is whether the respondents reasonably failed to pay the bill until July 16, 2003. In other words, did the respondents act as a reasonable insurer would have acted to comply with the May 2 order. Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, supra.
Because the ALJ found no violation of a lawful order, he did not make any specific findings of fact concerning whether the respondents actions were reasonable. Therefore, the ALJ's order is insufficient to permit appellate review and the matter must be remanded for additional findings concerning the reasonableness of the respondents' actions and the entry of a new order concerning the respondents' liability for penalties.
IT IS THEREFORE ORDERED that the ALJ's order dated October 14, 2003, is set aside and the matter is remanded to the ALJ for the entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Kathy E. Dean
Copies of this order were mailed to the parties at the addresses shown below on April 7, 2004 by A. Hurtado.
Cynthia J. Green, P. O. Box 5051, Woodland Park, CO 80866
DSM ENT, Inc., 251 E. Ridge Dr., Woodland Park, CO 80863
Kay Rakow, CR, Truck Insurance Exchange, P. O. Box 372660, Denver, CO 80237
Kat Pennucci, Subsequent Injury Fund, Tower 2, #630, Division of Workers' Compensation — Interagency Mail
Patrick C. H. Spencer, II, Esq., 830 Tenderfoot Hill Rd., #320, Colorado Springs, CO 80906 (For Claimant)
Raymond A. Melton, Esq., 1801 Broadway, #1500, Denver, CO 80202 (For Respondents)