Opinion
W.C. No. 4-662-890.
April 2, 2007.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) dated October 31, 2006, that imposed penalties for claimant's refusal to obey a Pre-Hearing Administrative Law Judge's (PALJ) order to provide authorizations for release of medical information. We affirm.
The ALJ's pertinent findings of fact are as follows. The claimant suffered an admitted industrial injury on August 23, 2005. The employer's claims adjuster received information that the claimant had suffered previous work injuries to his low back as early as 1993. The employer requested the claimant to provide a list of medical providers and medical authorization releases for all earlier injuries. The claimant's attorney provided releases, but restricted them to information pertaining to the August 23, 2005 injury. On March 13, 2006, the employer wrote to the claimant's attorney requesting a list of medical providers who treated the claimant since 1993 and releases for those providers. The claimant did not respond to the request. The employer filed a motion to compel the claimant to provide that information. The claimant, through his attorney, provided releases that were limited to information pertaining to the August 23, 2005, injury. On April 19, 2006, a PALJ ordered the claimant to provide within 10 days a list of medical providers who treated the claimant since 1993 as well as a corresponding medical authorization for each provider. On April 24, 2006, the claimant's attorney sent the employer a list of providers but did not provide the names of any additional providers and did not provide any additional releases for information since 1993. The employer filed an application for hearing seeking statutory penalties against the claimant for his failure to comply with the PALJ's order.
The ALJ found that the claimant refused to provide authorizations for release of medical information prior to August 23, 2005, and that the claimant refused to obey the PALJ's order. The ALJ concluded that a penalty of $ 25 per day was appropriate for the claimant's violation of the PALJ's order from Monday May 1, 2006 (10 days after the PALJ's order) through October 17, 2006 (the day of the hearing)and continuing until the claimant complied with the PALJ's order.
I.
On appeal the claimant first contends that the ALJ was without jurisdiction to proceed with the hearing as a consequence of the respondent's failure to comply with § 8-43-211(2)(e), which provides that the party filing an application for a hearing shall certify on the application that the party attempted to resolve with the other parties all issues listed in the application for a hearing.
The ALJ found that the employer's application for hearing filed with the Office of Administrative Courts did contain a certification that the employer had attempted to resolve all issues listed in the application for hearing, although the ALJ noted that the copy sent to the claimant did not contain the certification. The ALJ determined that because the application filed with the Office of Administrative Courts contained the required certification, the application was not stricken and the hearing was set. The ALJ reasoned that the statute contains only a narrow requirement of certification on the application and that the employer had complied with the statutory requirement.
At the time of the hearing the ALJ clarified that the respondent had attempted to resolve the issue listed, which was a penalty claim involving a discovery dispute. Tr. at 13-14. Although there is some confusion as to what exhibits were received into evidence, there is record support for the ALJ's conclusion that the employer attempted to resolve the dispute prior to filing the application. The respondent in a letter dated May 5, 2006, followed up on the PALJ's order, requesting that the claimant provide the requested medical authorizations. Exhibit F. Counsel for the respondent testified that the May 5, 2006, letter had been sent to the claimants counsel. Tr. at 72. There was also an earlier letter from the respondent to the claimant's counsel dated March 13, 2006, regarding the requested medical releases and raising the issue of whether a pre-hearing was necessary on the issue. Exhibit K; See Tr. at 69 (claimant's counsel admits to having received the correspondence).
Under the circumstances, we cannot say the ALJ abused his discretion in proceeding with the hearing. See Renaissance Salon v. Industrial Claim Appeals Office, 994 P.2d 447 (Colo.App. 1999) (ALJ has broad discretionary authority in the conduct of hearings and ALJ's rulings will not be disturbed unless an abuse is shown); IPMC Transportation Co. v. Industrial Claim Appeals Office, 753 P.2d 803 (Colo.App. 1988) Zapiecki v. Exabyte Corporation W.C. No. 4-539-081 (July 30, 2004).
II. The claimant next contends that the ALJ lacked jurisdiction to proceed to hearing on the issue of penalties because of the respondent's failure to state with specificity the alleged violation committed by the claimant.
Section 8-43-304(4), C.R.S. 2006 provides that an application for hearing on penalties shall state with specificity the grounds on which the penalty is being asserted. We have previously determined that the requirement for specificity serves two functions. First, it notifies the putative violator of the basis of the claim so that the violator may exercise its right to cure the violation. The specificity requirement also ensures the alleged violator will receive notice of the legal and factual bases for the penalty claim so that their rights to present evidence, confront adverse evidence, and present argument in support of their position are protected. See Major Medical Insurance Fund v. Industrial Claim Appeals Office, 77 P.3d 867 (Colo.App. 2003); Jakel v. Northern Colorado Paper Inc., W.C. No. 4-524-991 (October 6, 2003); Gonzales v. Denver Public School District No. 1, W.C. No. 4-437-328 (December 27, 2001); Stilwell v. B B Excavating Inc., W.C. No. 4-337-321 (July 28, 1999). The fundamental requirements of due process are notice and an opportunity to be heard. Due process contemplates that the parties will be apprised of the evidence to be considered, and afforded a reasonable opportunity to present evidence and argument in support of their positions. Inherent in these requirements is the rule that parties will receive adequate notice of both the factual and legal bases of the claims and defenses to be adjudicated. See Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076, 1077 (Colo.App. 1990); Carson v. Academy School District #20, W.C. No. 4-439-660 (April 28, 2003).
The specific ground for the penalty listed by the respondent in its application for hearing was that "Claimant has failed to provide respondents with a provider list and with less restrictive releases as Ordered by ALJ De Marino on April 19, 2006." The ALJ found that the respondent's statement provided the claimant with sufficient information to notify him of the basis of the penalty claim and to enable the claimant to defend against the penalty claim. The ALJ noted that the reference to the April 19, 2006, PALJ's order was sufficient to notify the claimant that the alleged violation began on April 29, 2006. Findings of Fact, Conclusions of Law, and Order at 5, ¶ 3.
We conclude the respondents' application for hearing supports the ALJ's determination that the respondents' statement provided the claimant with sufficient information to know the basis of the penalty claim and to be able to defend the claim. In our view, even a cursory reading of the application is sufficient to alert the claimant of the action required to cure the potential violation and to give notice of the legal and factual bases for the penalty claim so that the claimant's rights to present evidence, to confront adverse evidence, and to present argument in support of his position are protected.
III.
The claimant next contends that the ALJ erred in using the wrong standard of proof when deciding whether the claimant had "cured" the violation. We disagree.
The ALJ found that the claimant failed to prove he had cured the violation, noting that as of the date of the hearing, the claimant still had not provided authorizations for providers to release medical information except regarding the August 23, 2005 injury.
Section 8-43-304(4), C.R.S. 2006 provides that if the alleged violator cures the violation within a twenty-day period, and the party seeking such a 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. Accordingly, no penalty may be imposed if, first, the violation is cured within twenty days and, second, the respondent failed to prove by clear and convincing evidence that the claimant knew or should have known of the violation.
The cure statute adds an element of proof to a claim for penalties in cases where a cure is proven. In the ordinary case, it is not necessary for the party seeking penalties to prove that the violator knew or reasonably should have known they were in violation. All that is necessary is that the party seeking penalties prove the putative violator acted unreasonably under an objective standard. See Jiminez v. Indus. Claim Appeals Office, 107 P.3d 965 (Colo.App. 2003); Pueblo School District No. 70 v. Toth, 924 P.2d 1094 (Colo.App. 1996). Section 8-43-304(4) modifies this rule and adds an extra element of proof when a cure has been effected. Specifically, the party seeking penalties must prove the violator had actual or constructive knowledge that its conduct was unreasonable. Diversified Veterans Corporate Center v. Hewuse, 942 P.2d 1312 (Colo.App. 1997); Ray v. New World Van Lines of Colorado W.C. No. 4-520-251 (October 12, 2004)
Here, the ALJ simply found that the violation had not been cured by the claimant. That determination is amply supported by the record and we are unpersuaded to disturb it. Therefore, since there was no "cure," the issue of the respondents' requirement to prove by clear and convincing evidence that the claimant knew or should have known of the violation did not properly arise and no error occurred.
IV.
The claimant finally contends that the ALJ erred in failing to make findings on the reprehensibility of the claimant's behavior, further arguing that the evidence does not demonstrate the claimant received the PALJ's order or that the claimant had actual knowledge of the requirement to provide releases or a list of providers.
Under § 8-43-304(1), C.R.S. 2006, the ALJ may impose penalties of up to five hundred dollars per day when an individual fails, neglects or refuses to obey any lawful order made by the panel or director. Holliday v. Bestop Inc. 23 P.3d 700 (Colo. 2001). See also § 8-43-207.5(3), C.R.S. 2006 (PALJ's order is an order of the Director). Because the ALJ's authority is discretionary, we may not disturb the ALJ's determination of the amount of the penalty to be imposed in the absence of fraud or an abuse of discretion. See Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo.App. 2005); Hall v. Home Furniture Co., 724 P.2d 94 (Colo.App. 1986); Brunetti v. Industrial Commission, 670 P.2d 1246 (Colo.App. 1983). There is no assertion of fraud in this case. The legal standard for review of an alleged abuse of discretion is whether, under the totality of the factual circumstances at the time of the ALJ's determination, the ALJ's order "exceeds the bounds of reason." Associated Business Products, 126 P.2d 323 (Colo.App. 2005); Rosenberg v. Board of Education of School District #1, 710 P.2d 1095 (Colo. 1985). The application of this substantial evidence standard includes consideration of whether the ALJ's determination is supported by substantial evidence and the applicable law. Coates, Reid Waldron v. Vigil, 856 P.2d 850 (Colo. 1993).
In Associated Business Products the court reviewed a penalty for constitutional excessiveness, to determine whether its amount violated the due process protections of the federal and state constitutions and the excessive fines clause of the Eighth Amendment. The court set forth three factors to be used to determine whether those constitutional limits had been exceeded by the amount of the penalty. Specifically, the court considered (1) the reprehensibility of the conduct, (2) the disparity between the harm caused by the violation and the penalty, and (3) the difference between the penalty and civil damages that could be imposed in comparable cases. As we read Associated Business Products the court held that these factors are appropriate in reviewing whether a penalty is unconstitutionally excessive, or "grossly disproportionate." Associated Business Products, 126 P.3d at 326; See also Pueblo School District No. 70 v. Toth, 924 P.2d 1094, 1100 (Colo.App. 1996). However, subject to constitutional limitations, the ALJ's decision regarding the amount of the penalty remains highly discretionary, which implies that the ALJ may consider a wide variety of factors. Here, we are able to discern the basis for the order, and in our view the ALJ did not abuse his discretion in setting the amount of the award.
The burden is on the party who is penalized to show mitigation tending to reduce the amount of the penalty. The claimant did not testify nor did the claimant present any witnesses. The claimant in his brief in support of his petition to review has presented some cases regarding amounts of penalty imposed for discovery violations but we are unable to locate evidence presented at the hearing regarding what penalties were imposed in comparable cases. It is clear that in Colorado severe sanctions have been imposed for failure to comply with discovery orders. See e.g, Sheid v. Hewlett Packard, 826 P.2d 396 (Colo.App. 1991) (claim dismissed for failure to comply with discovery orders). We also note that the penalty imposed in this case was significantly less than the maximum permitted by the statute, amounting to only slightly more than five percent of the amount that might have been imposed. We cannot say that the penalty was excessive considering the difference between the penalty imposed and penalties that could be imposed in comparable cases.
Of the other two factors set forth in Associated Business Products, the ALJ did find that the employer had not demonstrated any actual harm to date from the failure of the claimant to comply with the order. However, the courts of Colorado have recognized the need for the production of medical information during the discovery phase of a workers' claim for compensation. Sheid v. Hewlett Packard, supra. Further, considering the significance of medical information to the adjudicative process the ALJ could and did reasonably conclude that the claimant's violation was a substantial one and was not de minimus. See Barnes v. Colorado Department of Human Services, W.C. No. 4-632-352 (August 17, 2005).
As to the remaining factor set forth in Associated Business Products, the ALJ could reasonably have inferred from the record that the degree of "reprehensibility" of the claimant's conduct was high. The ALJ expressly noted that the claimant's refusal to comply appears to be nothing but obstinate, and effectively precluded the employer from researching the impact of the previous work injuries. Findings of Fact, Conclusions of Law, and Order at 3, ¶ 6. In our view these are plausible inferences drawn from the record.
Given the record, the ALJ could certainly reason that a significant penalty was necessary in order to persuade the claimant of the importance of compliance with orders issued by an administrative law judge. Under these circumstances we do not view the penalty of $ 25 per day for this violation to be either constitutionally excessive or otherwise an abuse of the ALJ's discretion.
The claimant also contends that the evidence does not demonstrate the claimant received the PALJ's order. However, notice to the attorney is notice to the client if the notice, or knowledge of it, relates to the proceedings for which the attorney has been employed. Dickman v. DeMoss, 660 P.2d 1 (Colo.App. 1982); see also Padilla v. D.E. Frey Co., 939 P.2d 475 (Colo.App. 1997) (applying this rule to notice of judgments). Therefore, we conclude that the mailing of the PALJ's written order to the attorney appearing in the proceedings for the claimant satisfies the notice requirement of mailing the order to the claimant as a party in interest. Brodeur v. Industrial Claim Appeals Office___P.3d ___(Colo.App. No. 05CA2176 March 8, 2007).
Finally, the claimant's reliance on Dworkin, Chambers Williams, P.C. v. Provo, 81 P.3d 1053 (Colo. 2003) is misplaced. In Dworkin the court determined that penalties could not be imposed on an attorney who advised an insurer to violate an order. The court reasoned that an attorney is not "any other person" within the meaning of § 8-43-304, if the order was not directed to the attorney and if the attorney had no power to bind the insurer. The court stated that it would be improper to extend the statute "to a class of persons and a category of conduct not specifically covered by the statute," especially because "insurers and claimants who participate in the Workers' Compensation Act waive their common law rights and remedies.' Id. at 1060. Here, unlike the facts in Dworkin, it is the claimant who was found to have violated a specific provision of the Act and in our view the claimant is among the class of persons covered by the Workers' Compensation Act. Again considering the significance of medical information to the adjudicative process, we believe the ALJ correctly found the claimant is subject to penalties for failure to comply with the PALJ's order.
IT IS THEREFORE ORDERED that the ALJ's order dated October 31, 2006, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
_________________________ Curt Kriksciun
_________________________ Thomas Schrant
City of Colorado Springs, Lori Stillmunks, Colorado Springs, CO, Steve Mullens, PC, Pattie J. Ragland, Esq., Colorado Springs, CO, (For Claimant).
Ritsema Lyon, PC, Joseph Irwin, Esq., Colorado Springs, CO, (For Respondents).