Delta Cnty. Mem'l Hosp. v. Indus. Claim Appeals Office of Colo.

• Decision Date: 17 June 2021
• Docket Number: Court of Appeals No. 20CA1523
• Citation: 2021 COA 84,495 P.3d 984
• Parties: DELTA COUNTY MEMORIAL HOSPITAL, Petitioner, v. INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado, Robert C. Adams d/b/a Bob Adams Trucking, and Edith Keating, Respondents.
• Court: Colorado Court of Appeals

495 P.3d 984

2021 COA 84

DELTA COUNTY MEMORIAL HOSPITAL, Petitioner,

v.INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado, Robert C. Adams d/b/a Bob Adams Trucking, and Edith Keating, Respondents.

Court of Appeals No. 20CA1523

Colorado Court of Appeals, Division IV.

June 17, 2021

Rehearing Denied July 8, 2021

Ritsema & Lyon, P.C., Douglas L. Stratton, Fort Collins, Colorado, for Petitioner Delta County Memorial Hospital

No Appearance for Respondent Industrial Claim Appeals Office

No Appearance for Respondent Robert C. Adams d/b/a Bob Adams Trucking

Law Office of Donald Kaufman, Donald Kaufman, Glenwood Springs, Colorado; The McCarthy Law Firm, P.C., John D. McCarthy, Arvada, Colorado for Respondent Edith Keating

Opinion by JUDGE HAWTHORNE^*

¶ 1 This workers’ compensation action raises two questions: (1) whether a non-party to a case — here, a hospital — can be penalized for violating a provision of the Workers’ Compensation Act (Act); and (2) in a matter of first impression, whether discrete hospital bills can give rise to a continuing violation. For the reasons addressed below, we do not reach the first question and answer the second question in the negative.

¶ 2 The hospital, Delta County Memorial Hospital (the hospital), violated section 8-42-101(4), C.R.S. 2020, by billing its patient, claimant Edith Keating, for medical procedures related to her work injury. An administrative law judge (ALJ) imposed penalties against the hospital even though the hospital had not been joined as a party to the action under C.R.C.P. 19(a). The hospital challenges the ALJ's order, arguing that penalties cannot be imposed against a non-party. But we need not answer this question. By entering a general appearance in the proceedings, the hospital voluntarily submitted itself to the jurisdiction of the Office of Administrative Courts (OAC). The OAC thereby acquired personal jurisdiction over the hospital, and we affirm the decision of the Industrial Claim Appeals Office (Panel) upholding this portion of the ALJ's order on this basis.

¶ 3 Claimant cross-appeals the Panel's decision, contending that the penalty amount affirmed by the Panel should have been greater. Penalties under the Act accrue daily. See § 8-43-304(1), C.R.S. 2020. The Panel limited the daily penalty to those specific dates on which the hospital issued medical bills to claimant after learning that her injuries were work-related. But claimant maintains that the hospital's violation should be regarded as a "continuing violation" for which daily penalties can be imposed over a range of dates. We agree with the Panel that each bill constitutes a distinct violation that cannot be cured. Such violative billing practices therefore do not fit within the definition of a continuing violation. Penalties could be imposed, then, only for those dates on which the hospital improperly billed claimant. We therefore conclude that the Panel correctly limited the penalty and affirm the imposition of penalties on discrete dates when the hospital billed claimant. However, we set aside that portion of the Panel's order excluding two collection attempts by the hospital from claimant's penalty award.

I. Background

¶ 4 Claimant worked for Robert C. Adams, doing business as Bob Adams Trucking. In 2017, she sustained serious injuries while loading a pickup truck onto a tilt-bed tow truck. After initially being treated at another hospital, claimant received ongoing treatment for her injuries at the hospital.

¶ 5 Claimant sought workers’ compensation benefits from her employer, Mr. Adams, who has not entered an appearance. In October 2018, an ALJ found claimant's claim compensable and awarded her medical and disability benefits against Mr. Adams, who lacked statutorily required workers’ compensation insurance. The ALJ ordered Mr. Adams to deposit $130,000.00 with the Division of Workers’ Compensation (division) "to secure the payment of all unpaid compensation and benefits awarded" and file a bond with the division in the same amount. Claimant testified that Mr. Adams never paid any funds to her; never paid any of her medical providers, including the hospital; and, to the best of her knowledge, never paid any sum to the division as ordered.

¶ 6 Claimant provided the hospital a copy of the order. Having not received payment for the services it rendered, the hospital still attempted to collect the debt from claimant. It admittedly sent bills directly to her. But, as her attorney explained to the hospital in a letter dated April 10, 2019, once an ALJ has found the claim compensable, section 8-42-101(4) makes it "unlawful ... for a medical provider to bill an injured worker" for medical services treating the work-related injury. The hospital's billing manager testified that she became aware of the letter and order in May 2019, and a note dated May 7, 2019, in the hospital's file for claimant's account indicates it had received a copy of claimant's "Work Comp lawsuit."

¶ 7 Despite being advised of the law and the order, on June 13, 2019, counsel for the hospital responded to claimant's counsel, writing that because Mr. Adams never paid into the division's fund "as ordered by the Court," the hospital had no other available avenue to recoup its expenses and its "only recourse in recovering its costs/fees is through continued collection efforts against [claimant]." The record shows that the hospital thereafter sent claimant several billing statements between June 18 and September 12, 2019.

¶ 8 Soon after receiving the first hospital bill, claimant filed an application for hearing with the division seeking penalties against the hospital. She first filed a hearing application on June 18, 2019, naming the hospital as the respondent in the caption. A copy was sent to the hospital and its counsel the same day. The division rejected that application because the hospital was not the respondent-employer. Claimant filed and served on the hospital and its counsel a second application for hearing on June 19, 2019, listing both the hospital and Robert C. Adams as respondents, but it, too, was rejected. Finally, the division accepted claimant's third application for hearing, filed June 20, 2019. The third application identified Robert C. Adams as the respondent, and under its endorsement of the issue of penalties stated,

8-42-101(4) DELTA MEMORIAL HOSPITAL[:] No Recovery From Employee, Once there has been an admission of liability or the entry of a final order finding that an employer or insurance carrier is liable for the payment of an employee's medical costs or fees, a medical provider shall under no circumstances seek to recover such costs or fees from the employee.

As with the two rejected applications for hearing, claimant's counsel served the third application on the hospital and its counsel that day.

¶ 9 At the ensuing hearing, the hospital's counsel argued that it had not been properly joined and that penalties therefore could not be imposed against it. Noting that the penalties statute, section 8-43-304(1), may be asserted against an employee, employer, insurer or "any other person," the ALJ disagreed. The ALJ instead concluded that the hospital violated the Act by sending claimant medical bills despite being informed of the ALJ's October 2018 order finding the claim compensable. Because the ALJ considered the hospital's actions a "continu[ing] statutory violation," she imposed penalties of $750 per day "for the period of June 13, 2019 through and including October 9, 2019" — i.e., from the date the hospital's counsel responded to claimant's counsel's letter advising the hospital of the October 2018 order and the statutory prohibition against billing claimant through the date of the hearing before the ALJ — a period of 119 days, resulting in a total penalty award of $89,250.

¶ 10 On review, the Panel affirmed that claimant had properly asserted her penalty claim against the hospital, that the hospital need not be joined as a party to have penalties imposed against it, and that claimant had pleaded her penalty claim with sufficient specificity. But the Panel concluded that because the hospital could not cure its violation after sending the bills, the violation was not "continuing" as the ALJ had found. And because the violations were not continuing, penalties could only be imposed for those dates on which the hospital improperly billed claimant. So the Panel remanded the matter to the ALJ for additional findings determining which specific bills violated section 8-42-101(4).

¶ 11 On remand, the ALJ found that the hospital improperly billed claimant on eight separate occasions: June 18, July 2, July 8, July 18, July 31, August 7, August 13, and September 12, 2019. The ALJ also found "two additional instances of the respondent hospital attempting to collect from the claimant when two bills were forwarded to collections on September 20, 2019." Having found these ten discrete instances of violative billing, the ALJ imposed penalties of $750 per day for each of the ten instances, totaling $7,500 in penalties.

¶ 12 The Panel affirmed the imposition of penalties on the eight dates on which the hospital sent bills to claimant but set aside that portion of the ALJ's order awarding penalties for the two bills forwarded to collections on September 20, 2019. The bills sent to collections, the Panel determined, were beyond the scope of claimant's application for hearing. A penalty cannot be assessed "for activity not properly noticed" in an application for hearing. The Panel then amended the ALJ's order "to apply a daily penalty to eight instances of violations," resulting in a total penalty award of $6,000. The hospital and claimant both appeal the Panel's order.

II. The Hospital's Appeal

¶ 13 The hospital contends that (1) the ALJ and the Panel erred by finding that the hospital, a non-party to the action, could be assessed penalties without being joined as an indispensable party under C.R.C.P. 19(a), and thus imposing the...