In the Matter of Claim of Deaton v. Wal-Mart, Inc., W. C. No. 4-599-520 (CO 10/21/2005), W. C. No. 4-599-520.
| Decision Date | 21 October 2005 |
| Docket Number | W. C. No. 4-599-520. |
| Parties | IN THE MATTER OF THE CLAIM OF LANELLE DEATON, Claimant, v. WAL-MART, INC., Employer, and AMERICAN HOME ASSURANCE, Insurer, Respondents. |
| Court | Colorado Supreme Court |
The respondents seek review of an order of the Director of the Division of Workers' Compensation (Director) which imposed penalties under § 8-43-304(1), C.R.S. 2005, at the rate of $100 per day for the respondents' failure to comply with § 8-42-107(2), C.R.S. 2005. We set aside the order.
The claimant suffered an admitted hip injury in 2003. On January 17, 2005, Dr. Danahey placed the claimant at maximum medical improvement (MMI) and assigned permanent medical impairment of 32 percent of the lower extremity which converts to 13 percent whole person impairment. As a result of the claimant's advanced age, the monetary value of the impairment if compensated as a "scheduled disability" is greater than the value of medical impairment benefits for the whole person rating.
On February 18, 2005, the respondents filed a Final Admission of Liability (FAL) for the payment of permanent medical impairment benefits based on 13 percent whole person impairment. The claimant did not timely object.
However, on March 7, 2005, the Division of Workers' Compensation Claims Department directed the respondents to file a corrected FAL to admit liability for scheduled disability benefits based on Dr. Danahey's lower extremity rating.
The respondents promptly responded and asserted the existence of evidence that the industrial injury caused functional impairment to the claimant's back. Therefore, the respondents declined to file a corrected FAL.
The Director then issued an order requiring the respondents to show cause why penalties should not be imposed for their failure to comply with § 8-42-107(2), C.R.S. 2005. In response the respondents argued that Dr. Danahey's MMI report referenced the claimant's complaints of back pain and asserted that the claimant told the respondents' adjuster the industrial injury caused her preexisting back condition to become symptomatic. Under these circumstances, the respondents took the position that the facts established functional impairment which was properly compensated as whole person under § 8-42-107(8), C.R.S. 2005. Further, they asserted that because the FAL denied liability for penalties and the claimant did not object to the FAL, the claim was closed. Therefore, the respondents argued the Director lacked jurisdiction to impose penalties absent an order reopening the claim.
In an order dated May 16, 2005, the Director determined the March 7 letter put the respondents on notice that the FAL was "considered a defective admission." Consequently, the Director rejected the respondents' argument that the claim was closed. The Director also found Dr. Danahey's report did not attribute the claimant's low back pain to the industrial injury and did not assign an impairment rating to the back. The Director added that had Dr. Danahey assigned a separate rating for impairment to the back, that impairment would have to be compensated "in addition" to the scheduled disability award for impairment to the lower extremity. Under these circumstances, the Director determined there were no material facts in dispute and the record compelled a conclusion that the respondents were required to admit liability for a scheduled disability award.
Moreover, the Director determined that it was unreasonable to expect the claimant to understand that her impairment award would be less if paid as a whole person impairment than a scheduled disability. Therefore, in an order dated May 16, 2005, the Director found the respondents' FAL violated § 8-42-107(2) and imposed penalties at the rate of $100 per day commencing March 23, 2005.
The respondents timely appealed the May 16 order. After the matter was briefed the Director entered a Supplemental Order dated July 22, 2005, which additionally found that, because Dr. Danahey's report "clearly establishes a scheduled injury," the respondents refusal to file a FAL for scheduled disability benefits was "not based on a rational argument anchored in fact or law." The respondents timely appealed the Supplemental Order.
On review of the Supplemental Order the respondents contest the Director's findings that the claimant's impairment is fully enumerated on the schedule of disabilities and that their FAL for the payment of whole person impairment benefits was not based on a rational argument in law or fact. The respondents also contend the findings do not support the order and that the order is not consistent with the applicable law. We agree.
Under § 8-43-304(1), C.R.S. 2005, the Direction may impose a penalty up to $500 per day for an insurer's failure to comply with any provision of the Act. Section 8-43-305, C.R.S. 2005, provides that each day the insurer fails to comply is a separate violation.
The imposition of penalties under § 8-43-304(1) is a two-step process. The Director must first determine whether the disputed conduct constituted a violation of a statute. Allison v. Industrial Claim Appeals Office, 916 P.2d 623 (Colo. App. 1995). If the ALJ finds a violation, no penalty may be imposed unless the Director also finds that the actions which resulted in the violation were unreasonable. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo. App. 2003). The reasonableness of the insurer's actions depends on whether it was predicated on rational argument based in law or fact. Jiminez v. Industrial Claim Appeals Office, 107 P.3d 965 (Colo. App. 2003).
Section 8-42-107(1)(a), C.R.S. 2005, provides that permanent disability benefits are limited to benefits under the schedule of disabilities where the claimant suffers an injury or injuries described in § 8-42-107(2). Colorado AFL-CIO v. Donlon, 914 P.2d 396 (Colo. App. 1995). Where the claimant suffers functional impairment which is not listed on the schedule, the claimant is to receive medical impairment benefits for whole person impairment calculated in accordance with § 8-42-107(8)(d), C.R.S. 2005. In this context, the term "injury," refers to the manifestation in a part or parts of the body which have been functionally impaired or disabled as a result of the industrial accident. Langton v. Rocky Mountain Health Care Corp., 937 P.2d 883 (Colo. App. 1996); Strauch v. PSL Swedish Healthcare System, 917 P.2d 366 (Colo. App. 1996). The loss of use of the lower extremity at the hip is a scheduled disability. Section 8-42-107(2)(w), C.R.S. 2005.
It is now well established that the treating physician's opinion on functional impairment is relevant but not dispositive. City Market, Inc. v. Industrial Claim Appeals Office, supra. Indeed there is no requirement to present medical evidence to prove the situs of functional impairment. Smith v. Neoplan USA Corp., W.C. No. 4-421-202 ( October 1, 2002), aff'd., Neoplan USA Corp. v. Industrial Claim Appeals Office, (Colo. App. 02CA2074, July 24, 2003) (not selected for publication). Rather, the determination of whether the claimant suffered impairment which cannot be fully compensated as a scheduled disability is one of fact. Warthen v. Industrial Claim Appeals Office, 100 P.3d 581 (Colo. App. 2004); Strauch v. PSL Swedish Healthcare System, supra; Walter v. Jim Fouco Motor Company, supra; Langton v. Rocky Mountain Health Care Corp., 937 P.2d 883 (Colo. App. 1996). Consequently, the Director erred insofar as she presumed Dr. Danahey's MMI report was determinative of whether the claimant was limited to a scheduled disability award.
Furthermore, functional impairment need not take any particular form. Consequently, the courts have concluded that evidence of pain which interferes with the claimant's ability to use a portion of the body may be considered "impairment." See Guillotte v. Pinnacle Glass Company, W.C. No. 4-443-878 (November 20, 2001), aff'd., Pinnacle Glass Co. v. Industrial Claim Appeals Office, (Colo. App. No. 01CA2386, August 22, 2002) (not selected for publication); Mader v. Popejoy Construction Co., Inc., W.C. No. 4-198-489 (August 9, 1996), aff' d., Popejoy Construction Co., Inc., (Colo. App. No. 96CA1508, February 13, 1997) (not selected for...
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