Opinion
W.C. No. 4-434-051
March 18, 2003
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Jones (ALJ) which denied claims for penalties. The claimant contends the ALJ erred in determining that a letter issued by a claims manager is not an "order" of the Director of the Division of Workers' Compensation (Director) for purposes of § 8-43-304(1), C.R.S. 2002. The claimant further contends the ALJ erred in concluding the respondent-insurer (Liberty) did not violate § 8-42-107.2(4), C.R.S. 2002, despite its failure to file an amended admission or request a hearing after a Division-sponsored independent medical examination (DIME) physician issued an impairment rating. We affirm the order insofar as it determined Liberty did not violate an order of the Director. We set the order aside and remand for entry of a new order concerning the alleged violation of § 8-42-107.2(4).
No testimony was introduced at the hearing, and the parties relied solely on documents submitted into evidence. The claimant injured both knees. Based on the submitted documents, the ALJ found Liberty filed a Final Admission of Liability (FAL) on June 27, 2001. The FAL was based on a medical report issued by an authorized treating physician. The treating physician's report placed the claimant at maximum medical improvement on June 13, 2001, and, on the first page, assigned a 7 percent lower extremity impairment rating.
On July 12, 2001, a claims manager of the Division of Workers' Compensation (DOWC) sent a letter to Liberty stating that review of the June 27 FAL indicated the treating physician actually assigned an overall 17 percent lower extremity rating (12 percent for the left extremity and 5 percent for the right extremity). The letter requested Liberty to "please file a corrected admission within 15 days."
The claimant requested a DIME on the issues of MMI and medical impairment, and a DIME was performed in October 2001. The DIME physician assigned an impairment rating of 24 percent of the lower extremities, which "converted" to a 10 percent whole person impairment. However, the DIME physician stated there was no evidence of lower back impairment and no evidence the lower extremity problems caused functional impairment to the trunk of the body. The DIME physician also gave the claimant a 2 percent whole person rating for depression. Thus, the overall whole person impairment was 12 percent whole person. The DIME physician did not alter the date of MMI.
On November 2, 2001, Liberty filed a second FAL. This FAL did not alter the date of MMI, but increased the admission for permanent disability benefits to 17 percent of the lower extremities.
The claimant argued Liberty violated an order of the Director because Liberty did not file a corrected FAL within 15 days of the letter issued by the claims manager. However, the ALJ rejected this argument because the ALJ concluded claims managers are not the statutory equivalent of the Director, and because claims managers do not have the authority to resolve disputed legal and factual issues under the Act.
The claimant also argued Liberty violated § 8-42-107.2(4) because it did not, within 30 days of the DIME report, file either an amended FAL admitting for the scheduled rating issued by the DIME physician or an application for a hearing to challenge the DIME physician's rating. However, the ALJ found that both the treating physician and the DIME physician provided scheduled ratings. Consequently, the ALJ held that § 8-42-107.2(4) does not apply in this case, and the respondents were not obliged to file an amended FAL or request a hearing upon receipt of the DIME report.
I.
On review, the claimant first contends the letter of the claims manager is equivalent to an action by the Director, and constituted a "direction" to Liberty to file an amended FAL. This is true, the claimant argues, because claims managers are appointed by the Director and work under the Director's ultimate supervision. Therefore, the argument goes, letters of claims managers are "orders" of the Director under § 8-40-201(15), C.R.S. 2002, and failure to comply with such an "order" is punishable under § 8-43-304(1), C.R.S. 2002.
As Liberty points out, in McDaniel v. Vail Associates Inc., W.C. No. 3-111-363 (August 1, 2002), a panel of the Industrial Claim Appeals Office rejected the argument that letters issued by claims managers requesting respondents to file amended admissions are equivalent to "orders" of the Director for purposes of § 8-43-304(1). No argument of the claimant persuades us to depart from the holding in McDaniel, and the reasoning of that decision is incorporated herein as if fully set forth. It follows the ALJ did not err in refusing to impose a penalty based on Liberty's failure to file an amended FAL in response to the claims manager's letter.
II.
The claimant next contends the ALJ erred in refusing to impose a penalty based on Liberty's failure to request a hearing or file an amended FAL within 30 days of the date of mailing of the DIME physician's report. The claimant reasons that once she requested a DIME to challenge MMI, the provisions of § 8-42-107.2 became applicable to the case. The claimant further argues Liberty was required to file an amended admission or a request for hearing because the DIME physician assessed mental impairment. Liberty replies that the DIME procedure does not apply to scheduled impairments, such as the one found by the DIME physician. Liberty further argues that it was not required to admit for mental impairment benefits because the claimant had already received more than she was entitled to receive under the applicable statute. We agree with the claimant's argument that the DIME physician's assessment of mental impairment required Liberty to file an amended admission or request a hearing.
Section 8-42-107.2(4) provides that within 30 days after the mailing of the DIME physician's report, the insurer "shall either file its admission of liability pursuant to section 8-43-203 or request a hearing before the division contesting one or more of the IME's findings or determinations contained in the report." This statute is implemented by Rule of Procedure IV(N)(6), 7 Code Colo. Reg. 1101-3 at 7.03. See City Market, Inc. v. Industrial Claim Appeals Office, __ P.3d __ (Colo.App. No. 02CA1437, March 13, 2003). Rule IV(N)(6) provides as follows:
Within 30 days after the date of mailing of the IME's report determining medical impairment pursuant to Section 8-42-107(8), the insurance carrier shall either admit liability consistent with such report or file an application for hearing. This section does not pertain to IMEs rendered under Section 8-43-502.
In City Market, Inc. v. Industrial Claim Appeals Office, supra, the treating physician assessed a scheduled impairment, and the respondents filed an FAL relying on the rating. The claimant requested a DIME, and the DIME physician assessed a scheduled rating which was converted to a "final/combined" whole person impairment rating. However, the respondent did not file an amended FAL, nor did it request a hearing to contest the DIME.
The claimant sought penalties arguing the respondent violated § 8-42-107.2(4) and Rule IV (N)(6). The respondent argued it relied on the scheduled rating of the treating physician and was not obliged to respond to the DIME physician's rating. The City Market court acknowledged that the question of whether the claimant sustained a scheduled or whole person rating is one of fact for the ALJ, and is not determined by the "rating physician." However, the court held the respondent was not excused from complying with the statutory and regulatory duty to respond to the DIME physician's rating. The court reasoned the purpose of § 8-42-107.2(4) and Rule IV (N)(6) is to require employers and insurers to "respond and either admit liability or initiate the process by which such questions [scheduled versus whole person impairment] can be addressed." Thus, when the respondent "received the DIME report, it was required under the Act and the rule to respond and either admit that the DIME report was valid or request a hearing at which it could raise its objections to the report." Slip. Op. at 4.
Here, as in City Market, the DIME physician issued a report assessing a whole person impairment rating, at least to the extent the DIME physician found a 2 percent whole person mental impairment. Thus, Liberty was required to either file an admission "consistent with" the DIME physician's rating, or request a hearing to raise its objections to the DIME physician's report. Because Liberty did neither, it violated § 8-42-107.2(4), and the ALJ erred in finding to the contrary.
Liberty seeks to avoid this result by contending that under §§ 8-42-107(7)(b)(I) and (III), C.R.S. 2002, "mental or emotional stress shall be compensated pursuant to section 8-41-301(2) and shall not be combined with a scheduled or a nonscheduled injury." Liberty asserts that under § 8-41-301(2)(b), C.R.S. 2002, it had already exceeded the twelve-week limitation and could not be liable for any additional mental impairment benefits.
Whatever the merits of Liberty's argument concerning its potential liability for mental impairment benefits, it was not excused from responding to the DIME report under § 8-42-107.2(4). Section 8-42-107(8)(a), C.R.S. 2002, provides that in cases of injury resulting in permanent medical impairment "not set forth in the schedule in subsection (2) of this section, the employee shall be limited to medical impairment benefits calculated as provided in this subsection (8)." Of course, subsection (8)(c) requires a DIME to challenge an authorized treating physician's determination concerning non-scheduled medical impairment. Delaney v. Industrial Claim Appeals Office, 30 P.3d 691 (Colo.App. 2000). It is true that §§ 8-42-107(7)(b)(I) and (III) have altered the amount of compensation which is payable for mental impairment, and altered prior caselaw concerning the combination of mental impairment with non-scheduled impairments for the purpose of establishing whole person impairment. However, that does not change the fact that mental impairment is not found on the schedule and the rating of mental impairment remains subject to the DIME procedure under § 8-42-107(8)(c). See also, Rule of Procedure XIV (L)(3)(b)(3), 7 Code Colo. Reg. 1101-3 at 53 (providing that party may request DIME physician to address mental impairment).
It follows that to the extent Liberty wished to assert the DIME physician was incorrect in rating mental impairment, or that its liability for any mental impairment was offset by the payment of temporary disability benefits, it was required to file a new FAL or request a hearing to present its defenses. The possibility of valid defenses or offsets did not relieve Liberty of its procedural duty to respond to the DIME report. City Market, Inc. v. Industrial Claim Appeals Office, supra.
Because the ALJ found there was no violation of the statute the ALJ did not determine whether Liberty acted as a reasonable insurer in failing to respond to the DIME report. Therefore, the matter must be remanded for that determination, and the assessment of penalties if appropriate. City Market, Inc. v. Industrial Claim Appeals Office, supra. In light of this determination, we need not reach the claimant's other arguments.
IT IS THEREFORE ORDERED that the ALJ's order dated May 30, 2002, is set aside insofar as it determined that Liberty is not liable for penalties based on its failure to respond to the DIME report. On this issue, the matter is remanded for entry of a new order consistent with the views expressed herein. A new hearing is not authorized by this order.
IT IS FURTHER ORDERED that the ALJ's order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Kathy E. Dean
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. 2002. 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 Street, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed March 18, 2003 to the following parties:
Angela Anderson Schenck, 1050 S. Pierce St., #18, Lakewood, CO 80226
The Deer Creek Corp., 1500 W. Hampden Ave., #3D, Englewood, CO 80110
Jennifer Fincher, Liberty Mutual Insurance Company, P. O. Box 168208, Irving, TX 75016-8205
Thomas J. Roberts, Esq., 940 Wadsworth Blvd., 4th Floor, Lakewood, CO 80214 (For Claimant)
David G. Kroll, Esq., 1120 Lincoln St., #1606, Denver, CO 80203 (For Respondents)
By: A. Hurtado