In the Matter of Claim of Reinwald v. TRC Companies, Inc., W. C. No. 4-622-388 (CO 4/6/2006), W. C. No. 4-622-388.
| Decision Date | 06 April 2006 |
| Docket Number | W. C. No. 4-622-388. |
| Parties | IN THE MATTER OF THE CLAIM OF PAUL REINWALD, Claimant, v. TRC COMPANIES, INC., Employer, and HARTFORD CASUALTY INSURANCE CO., Insurer, Respondents. |
| Court | Colorado Supreme Court |
The claimant seeks review of an order dated October 26, 2005, of Administrative Law Judge Harr (ALJ) that awarded penalties against the insurer for unilaterally terminating the claimant's temporary total disability benefits (TTD). The claimant contends that the ALJ abused his discretion in not imposing greater penalties. We affirm.
The claimant sustained an admitted injury to his hand on June 28, 2004. The insurer filed a General Admission of Liability (GAL) on September 22, 2004, denying liability for TTD. The parties proceeded to a hearing before ALJ Friend, who ordered the insurer to pay TTD benefits commencing July 16, 2004 and continuing until terminated pursuant to law.
On November 28, 2004, the claimant began working for the United States Postal Service (USPS). The claimant failed to inform the insurer that he was working until January 12, 2005. The insurer unilaterally terminated the claimant's TTD benefits on January 28, 2005, in order to recover an overpayment of TTD occasioned by the claimant's return to work, but failed to file a GAL until March 25, 2005. In the March 25th GAL the insurer apprised the claimant that it was applying the overpayment of TTD against its liability for temporary partial disability (TPD) benefits.
On June 13, 2005, the claimant underwent surgery on his wrist, and has essentially been unable to work since the surgery. The insurer lacked notice of this wage loss until the hearing on August 3, 2005. On August 15, 2005, the insurer reinstated the claimant's TTD for the period of time from June 13, 2005, and ongoing.
Based upon these findings of fact the ALJ determined that the claimant had proven that the insurer violated Rule of Procedure IX(C)(1), 7 Code Colo. Reg 1101-2. The ALJ found that, by unilaterally terminating the claimant's TTD benefits without filing an admission, the insurer violated Rule IX(C)(1) and continued to do so until the insurer later filed the March 25th GAL. In assessing the penalty the ALJ considered the fact that the claimant waited until January 17, 2005, to notify the insurer that he had returned to work on November 28, 2004, and this delay resulted in the insurer overpaying TTD benefits. The ALJ found that a reasonable penalty for the insurer's violation of Rule IX(C)(1) was $2,635.36 (50 percent of the claimant's daily TTD rate, or $47.06 per day multiplied by the 56 days from January 17, 2005 until the March 25th GAL).
On review the claimant contends that the ALJ erred by awarding penalties only up to March 25, 2005 instead of to June 13, 2005, which was the date of the claimant's surgery when he was restricted from returning to work with the USPS. The ALJ concluded that the penalties should be terminated on March 25, 2005 which is the date the insurer filed the March 25th GAL. The ALJ found that in the March 25th GAL the insurer reasonably apprised the claimant it was applying the overpayment against its liability for TPD benefits.
Rule IX(C)(1)(c) provides that an insurer may terminate TTD benefits without a hearing by filing an admission of liability along with a written report from an employer or the claimant stating the claimant has returned to work and setting forth the wages paid for the work. In addition, the admission of liability must contain an admission for temporary partial disability (TPD) benefits, if any. As the ALJ recognized, Rule IX constitutes an exception to the rule that when the respondents have admitted liability for temporary disability benefits, they may not terminate such benefits without obtaining a hearing to establish the factual and legal predicates for termination. § 8-43-203(2)(d), C.R. S. 2005; Colorado Compensation Insurance Authority v. Industrial Claim Appeals Office, 18 P.3d 790 (Colo. App. 2000).
Here, temporary disability benefits were terminated on January 28, 2005, when the insurer unilaterally stopped the TTD payments in order to recover the overpayment. This termination of benefits was motivated by the claimant's return to work and resultant overpayment of temporary benefits. Finding of Fact, Conclusions of Law, and Order at 4 ¶5, 6. However, the termination of temporary benefits could not be effected legally without filing an admission together with a wage report and an admission for TPD "if any," as required by Rule IX (C)(1)(c). Here, the ALJ found the insurer unilaterally terminated the claimant's temporary benefits on January 28, 2005, and failed to file a GAL until March 25, 2005. Therefore the ALJ imposed a penalty for violation of Rule IX(C)(1)(c). Jakel v. Northern Colorado Paper, W.C. No 4-524-991(October 6, 2003).
The ALJ, in assessing the amount of the penalty, found that the claimant waited until January 17, 2005, to notify the insurer that he had returned to work on November 28, 2005, and that this delay resulted in the insurer overpaying claimant TTD benefits in the amount of $6,400. Finding of Fact, Conclusions of Law, and Order at 6. On review the claimant contends that the ALJ erred by issuing findings based on the respondent's overpayment because that issue had not been listed as one for hearing. The claimant also argues that the respondents failed to meet their burden of proof regarding the amount of the overpayment, since they presented no witnesses to explain the calculation.
The claimant did object to the issue of overpayment being heard. The ALJ initially determined that, although he would not consider overpayment as an issue, he was nonetheless being asked to calculate temporary disability benefits. He reasoned that in order to do so he needed to compare what was paid to what should have been paid. Tr. at 11. The issue of the overpayment was thus necessarily included in the broader issue of temporary benefits owed the claimant. Tr. at 18-19. The claimant agreed that evidence was in the record as to what had been paid and that the ALJ had all the evidence he needed to make this determination. Tr. at 19, 45. The claimant in her position statement, submitted before the order was issued, noted that the parties were in the process of determining the amount owed to the claimant and asked that the ALJ's order on TPD be "in an amount to be determined by the parties". The respondents put into evidence, without objection, Exhibit A (identified in the record as pages 1 through 6) which contains the payment log from the insurer. Tr. at 5, 8. See Cox v. Bertsch, 730 P.2d 889 (Colo. App. 1986); Walker v. Excel Corp. W. C. No. 4-535 (September 24, 2003) ().
The ALJ determined the amount of the overpayment only to the extent necessary to impose a reasonable penalty, and noted that the delay by the claimant in notifying the insurer of his return to work resulted in the insurer overpaying the claimant's TTD benefits. Under these circumstances, we conclude the issue of overpayment, to the extent necessary to determine what was owed the claimant and its impact on the penalty claims, was sufficiently raised and tried by consent of the parties. Cf. Robbolino v. Fischer-White Contractors, 738 P.2d 70 (Colo. App. 1987). Barron-Tapia v. Swift Foods W. C. No. 4-597-844 (December 8, 2004).
It is undisputed that the claimant received an "overpayment" of benefits because the USPS wages unquestionably represented a "payment" from a "source" which required a reduction in the original award of TTD benefits. § 8-42-113.5(1), C.R.S. 2005; Scruggs v. United Parcel Service, W.C. No. 4-490-474 (January 27, 2004) (). The claimant agreed there was an overpayment but disputed the amount. Tr. at 15. Therefore, the claimant was required to give notice of the receipt of the USPS wages to the respondents within twenty days after "learning of the payment." § 8-42-113.5(1)(a) C.R.S. 2005.
Section 8-42-113.5(1) establishes different consequences depending on whether the claimant provides the requisite notice. Subsection (1)(a) provides:
If the claimant or legal representative gives such notice, any overpayment that resulted from the failure to make the appropriate reduction in the original calculation of such disability benefits or death benefit shall be recovered by the employer or insurer in installments at the same rate as, or a lower rate than, the rate at which the overpayments were made.
Subsection (1)(b) provides as follows:
If the claimant or legal representative of a claimant who is a minor was receiving benefits in excess of the amounts that should have been paid under articles 40 to 47 of this title and failed to give the notice required by paragraph (a) of this subsection (1), the employer or insurer is authorized to cease all disability or death benefit payments immediately until the overpayments have been recovered in full.
Here, the ALJ found that the claimant failed to give notice of the receipt of the USPS wages for more than 20 days after they were first received. Thus, under the plain language of subsection (1)(b), the respondents were entitled to an order immediately terminating all of the claimant's disability benefits until the overpayment is recovered in full. Scruggs v. United Parcel Service, supra (). Yates v. Lafarge Corporation ,W.C. No. 4-527-450 (November 4, 2004).
The respondent's March 25th GAL...
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