Opinion
W.C. No. 4-214-079
October 19, 2001
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Snider (ALJ Snider) which permitted a "retroactive" offset for Social Security Disability Insurance (SSDI) benefits, and denied penalties for the filing of an allegedly improper admission of liability and for the respondents' failure to file an admission. The respondents seek review of the order insofar as it assessed penalties for failure timely to pay benefits pursuant to an admission of liability. We affirm.
This case has a complex procedural history. This history will be reviewed as necessary to resolve individual issues.
I.
We first consider the claimant's arguments that the ALJ erred in permitting the respondents to take a "retroactive" SSDI offset, and by permitting the respondents to reduce the award of medical impairment benefits based on the retroactive offset. The claimant sustained a compensable back injury on December 1, 1993. The respondents filed a general admission of liability (GAL) for this injury on April 10, 1995. ALJ Snider found that shortly before the admission, the claimant advised the insurance adjuster that he was receiving SSDI benefits. However, the adjuster did not claim an offset based on the SSDI benefits.
On October 28, 1996, the respondents filed a final admission of liability (FAL) admitting for approximately $20,000 in temporary disability benefits and $40,000 in medical impairment benefits. The claimant's impairment rating was 25 percent of the whole person, and, therefore, total benefits were capped at $60,000. Section 8-42-107.5, C.R.S. 2001.
On April 17, 1998, a second adjuster filed a revised FAL stating that, "per attached information we are taking Social Security offset." On May 13, 1998, the respondents filed a new GAL admitting the claimant was again temporarily disabled on April 13, 1998, when he was "off work due to surgery." This GAL reduced the temporary disability rate to reflect the SSDI offset.
The claimant reached maximum medical improvement from the worsened condition on November 3, 1998. A dispute arose concerning the claimant's medical impairment rating, and the claimant underwent a Division-sponsored independent medical examination (DIME). The DIME physician assessed a 38 percent whole person impairment rating, and the respondents sought to overcome this rating at a hearing. On January 25, 2000, ALJ Harr determined the claimant's impairment rating was 32 percent of the whole person and ordered the respondents to pay accordingly. In February 2000, the respondents paid additional benefits to the claimant, but reduced the award by offsetting all SSDI payments, including those which the claimant received prior to closure of the claim in October 1996.
The claimant argued to ALJ Snider that permitting the respondents to reduce the claimant's medical impairment benefits (based on the 32 percent rating) by retroactively offsetting SSDI payments made prior to October 1996 constitutes an improper withdrawal of an admission of liability, in violation of a line of cases exemplified by HLJ Management Group, Inc. v. Kim, 804 P.2d 250 (Colo.App. 1990). However, the ALJ rejected this contention, citing Johnson v. Industrial Commission, 761 P.2d 1140 (Colo. 1988). The claimant renews his argument on appeal, but we are not persuaded.
Initially, we note this case is not governed by the 1997 amendments to § 8-43-303, C.R.S. 2001, which permit reopening to recover overpayments. Those provisions apply only to injuries incurred on or after July 1, 1997. 1997 Colo. Sess. Laws, ch. 45 at 116.
In Johnson v. Industrial Commission, the court permitted an insurer to offset SSDI payments against future workers' compensation benefits even though the disputed SSDI payments were received prior to the date the offset was first asserted. The court reasoned the offset statute prescribes no "precise point at which an insurer must claim its right of offset." Further, the court rejected an argument that permitting the offset was "tantamount to allowing an insurer to withdraw its admission" in violation of the statute currently codified at § 8-43-203(2)(d), C.R.S. 2001. The court concluded that allowing the offset neither abrogated the insurer's admission of liability, nor did it discontinue benefits.
The only differences between Johnson v. Industrial Commission and the facts in this case are that Johnson involved a GAL and the claim had never been closed prior to the time the respondents asserted the offset. However, the Johnson court stated that had the claim been reopened, the offset would not run afoul § 8-43-303, C.R.S. 2001 (reopening statute) to the extent the offset reduced future benefits and did not require the claimant to repay benefits previously received. Subsequently, in Cody v. Industrial Claim Appeals Office, 940 P.2d 1042 (Colo.App. 1996), the court permitted a "retroactive offset" of SSDI benefits where the claim had been closed, but was subsequently reopened based on a worsened condition. The Cody court expressly cited Johnson and said the "prospective reduction imposed here does not violate [former] § 8-53-113 since claimant is not being required actually to pay back monies from his initial award." See also, Kuziel v. Pet Fair, Inc., 948 P.2d 103 (Colo.App. 1997).
Thus, we conclude relevant case law supports the ALJ's order permitting the respondents to take a "retroactive offset" based on the SSDI benefits which the claimant received prior to closure of the claim in 1996. It follows that we reject the claimant's theory concerning the proper calculation of medical impairment benefits under these circumstances. Insofar as the claimant asserts the respondents "waived" the offset by failing to assert it earlier, the initial adjuster's failure to assert the offset was not shown to be the product of voluntary, knowing and intelligent conduct. Indeed, this was an issue on which the claimant had the burden of proof. Johnson v. Industrial Commission, supra.
II.
The claimant next contends ALJ Snider erred in rejecting his claim for penalties based on an alleged violation of Rule of Procedure IV (L) (1), 7 Code Colo. Reg. 1101-3. The claimant reasons the respondents violated the rule when they claimed the SSDI offset by filing the amended FAL on April 17, 1998. However, ALJ Snider concluded that because the respondents were entitled to apply the SSDI offset retroactively, and because permitting the offset was "not tantamount to allowing the retroactive withdrawal of an admission," the respondents' "action in this case did not amount to an amendment of the admission" within the meaning of the rule. We find no error.
Violation of a Rule of Procedure may be the basis for imposition of penalties under § 8-43-304(1), C.R.S. 2001. Human Resource Co. v. Industrial Claim Appeals Office, 984 P.2d 1194 (Colo.App. 1999). Rule IV (L) (1), which concerns "revising admissions," states the following:
Within the time limits for objecting to the final admission of liability pursuant to 8-43-203, the director may allow a carrier to amend the admission for permanency, by notifying the parties that an error exists due to miscalculation, omission, clerical error, or misapplication of the statute.
In interpreting this regulation, the ordinary rules of statutory construction are applicable. Consequently, the words and phrases in the regulation should be given their plain and ordinary meaning. Further, the regulation should be read in connection with other provisions so that the regulation may be interpreted as a whole. Williams v. Colorado Department of Corrections, 926 P.2d 110 (Colo.App. 1996). The regulation should also be interpreted, to the extent possible, to effect a purpose which is consistent with the authorizing statute. See Riley Family Trust v. Hood, 874 P.2d 503 (Colo.App. 1994).
The plain and ordinary meanings of the word "amend" include "to change for the better," "to remove the faults or errors in," and "to alter." American Heritage College Dictionary, Third Edition, 1993. Although the admission of April 17, 1998 notified the claimant that the respondents claimed entitlement to an SSDI offset, it does not appear that the April 17 FAL materially altered or changed the October 1996 FAL. This is true because, as the claimant himself admits, he had already received the $60,000 in disability benefits for which the respondents admitted liability in October 1996, and the April 17 amendment did not seek to alter the "grand total" of admitted disability benefits. Consequently, we do not view the April 17 FAL as constituting an attempt to "amend the admission for permanency" within the meaning of Rule IV (L) (1).
Further, the apparent purpose of the rule is to afford respondents some relief from the finality provisions of § 8-43-203(2)(b)(II) and (d), C.R.S. 2001, if they file a final admission of liability which is erroneous in some material respect. Without such relief, the respondents might be bound to pay benefits consistent with an erroneous admission. Eg., Cibola Construction v. Industrial Claim Appeals Office, 971 P.2d 666 (Colo.App. 1998). Here, however, the April 17 admission did not constitute an attempt to modify the amount of benefits payable to the claimant as a result of the October 1996 final admission. Hence, we perceive no violation of the rule.
Concerning admissions subsequent to April 17, we conclude there was no violation. As previously established, the respondents were entitled to claim the offset against future benefits once the claim was reopened. Further, the offset may be claimed by way of an admission of liability. Rule of Procedure IX (E), 7 Code Colo. Reg. 1101-3. Thus, once the respondents admitted liability for additional benefits on reopening, they were not attempting to modify the prior final admission, but, as the ALJ held, seeking a lawful offset against future benefits.
III.
The claimant next contends ALJ Snider erred in not assessing penalties based on the respondents' failure to file an FAL when, in February 2000, they resumed payment of benefits pursuant to ALJ Harr's order. According to the claimant, the respondents were obligated to file a final admission in accordance with the provisions of Rule of Procedure IV (N) (3), 7 Code Colo. Reg. 1101-3. However, ALJ Snider held the rule was not applicable because the claimant's rights had been determined by order, and because no legitimate controversy existed regarding the impairment rating after ALJ Harr's order. We perceive no error.
The pertinent portion of Rule IV (N) (3) provides that: "An admission shall be filed within 30 days of resumption or increase of benefits." The claimant argues this provision is unambiguous and applies regardless of whether benefits are resumed or increased pursuant to an order or because of a voluntary admission by the respondents. The respondents argue the ALJ correctly ruled the provision is limited to voluntary admissions.
In our view, the intended scope of Rule IV (N) (3) is ambiguous and subject to either interpretation. Hence, we may resort to interpretive rules of construction to assist in resolving the issue. In this regard, the rule should be construed in its entirety to give consistent and harmonious effect of all of its parts. See Henderson v. RSI, Inc., 824 P.2d 91 (Colo.App. 1991). Further, as noted previously, the rule should be construed in a manner consistent with the underlying statutory scheme.
Historically, the Act distinguishes between benefits paid pursuant to "admissions" and benefits paid pursuant to an order. Admissions are considered the result of voluntary action by respondents, while orders are the product of litigation. Representative of this distinction is § 8-43-203(2)(d), which states that hearings "may be held to determine any matter, but, if any liability is admitted, payment shall continue according to admitted liability." In HLJ Management Group, Inc., v. Kim, supra, the court noted this provision is part of a statutory scheme designed to "promote, encourage, and insure prompt payment of compensation to an injured worker without the necessity of a formal administrative determination of the employer's duty to provide benefits in cases that do not present a legitimate controversy." 804 P.2d at 252. In Brown and Root, Inc. v. Industrial Claim Appeals Office, 833 P.2d 780 (Colo.App. 1992), the court determined that an "award," for purposes of determining whether a claim must be reopened under § 8-43-303, may be the result of an admission or a contested hearing. In view of this history, we agree with the ALJ that the requirement to file "an admission" within 30 days of the resumption or increase of benefits refers to voluntary admissions of liability, not a resumption or increase in benefits which is the product of an ALJ's order. Cf. Lightle v. Sonic Drive In, W.C. No. 4-416-606 (June 30, 2000) (imposing penalties under Rule IV (N)(3) against insurer which unilaterally decreased and reinstated benefits without filing any admissions of liability).
The claimant's argument notwithstanding, the vast majority of cases involving final orders clearly state the amount and type of benefits to be paid, and there is no need to file an admission of liability restating the order. If the claimant disputes the benefits awarded in the order, the claimant is free to appeal. In this case, the claimant sought to dispute the respondents' payment of additional benefits by seeking a hearing before ALJ Snider. We fail to perceive how litigation would have been avoided if the respondents had filed an FAL detailing the basis of their payment. In fact, it appears the claimant fully understood the respondents diminished the benefits ordered by ALJ Harr based on the SSDI offset, and sought legal redress to correct the alleged impropriety.
In any event, we note that Rule of Procedure IV (G) (3), 7 Code Colo. Reg. 1101-3, provides that when a "claim has been closed by final order of the director, administrative law judge, Industrial Claim Appeals Panel or court, the insurance carrier shall file a final payment notice within 30 days of the date of the final order." Thus, in litigated cases the claimant will receive notice within 30 days that the insurer considers the case closed and no benefits beyond those ordered will be paid. Consequently, the claimant receives a final accounting, and may seek to reopen if an error or mistake is detected.
IV.
The respondents seek review of that portion of the order which penalized them for late payment of temporary disability benefits. In this regard, the respondents concede they filed an admission for retroactive temporary disability benefits on May 13, 1998, but did not pay the benefits for 21 days. The ALJ found the failure to pay the benefits immediately constituted a violation of Rule of Procedure IV (E) (2), 7 Code Colo Reg. 1101-3. That Rule provides temporary disability benefits "awarded by admission are due on the date of the admission and payable once every two weeks thereafter."
On review, the respondents argue the time for payment is controlled by § 8-43-401(2)(a), C.R.S. 2001. The statute provides that: "After all appeals have been exhausted or in cases were there have been no appeals, all insurers and self-insured employers shall pay benefits within 30 days of when any benefits are due." As the claimant argues, we rejected an identical argument in Bennett v. Slade Glass Co., W.C. No. 4-353-893 (March 1, 2001). In Bennett, we held that § 8-43-401(2) "does not govern the payment of benefits based upon an admission," but "applies to the payment of benefits required by an order." We see no reason to depart from our prior ruling. Indeed, this conclusion is consistent with the distinction between benefits paid by an admission and those paid by order which is discussed in Part III above. Therefore, we affirm the penalty.
IT IS THEREFORE ORDERED that ALJ Snider's order dated October 13, 2000, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Dona Halsey
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, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2001. The appealing party must serve a copy of the petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed October 19, 2001 to the following parties:
Maxie Jiminez, 1263 Lipan Dr., Denver, CO 80221
Amax Henderson Project, Cyprus Empire Corp., P. O. Box 68, Craig, CO 81626-0068
Barbara Carter, Subsequent Injury Fund, Tower 2, #630, Division of Workers' Compensation — Interagency Mail
Curt Kriksciun, Esq., Colorado Compensation Insurance Authority d/b/a Pinnacol Assurance — Interagency Mail (For Respondents)
Roger Fraley, Jr., Esq., 517 E. 16th Ave., Denver, CO 80203 (For Claimant)
Lisa Simons, Esq., 600 17th St., #1600N, Denver, CO 80202
BY: A. Pendroy