Leprino Foods v. Ind. Claim Appeals Office, No. 04CA1379.

Decision Date01 December 2005
Docket NumberNo. 04CA1379.
Citation134 P.3d 475
PartiesLEPRINO FOODS COMPANY and Ace, U.S.A., Petitioners, v. INDUSTRIAL CLAIM APPEALS OFFICE OF the STATE of Colorado and Brenda Rivera, Respondents.
CourtColorado Court of Appeals

Karen E. Ford, Denver, Colorado, for Petitioners.

John W. Suthers, Attorney General, Eric S. Rothaus, Assistant Attorney General, Denver, Colorado, for Respondent Industrial Claim Appeals Office.

Tim Guill, Denver, Colorado, for Respondent Brenda Rivera.


In this workers' compensation proceeding, Leprino Foods Company and its insurer, Ace, U.S.A. (collectively employer), seek review of a final order of the Industrial Claim Appeals Office (Panel) determining that Brenda Rivera (claimant) (1) had not waived the right to a division-sponsored independent medical examination (DIME) on the issue of maximum medical improvement (MMI) by seeking and accepting a lump sum payment of permanent partial disability (PPD) benefits; (2) was not yet at MMI; and (3) was entitled to additional temporary total disability (TTD) benefits for her industrial injury and related subsequent shoulder symptoms without application of a statutory cap on benefits. We affirm the order in part and set it aside in part.

Claimant sustained an injury to her right elbow in February 2001, and employer filed a general admission of liability admitting that the injury was compensable. An authorized treating physician (ATP) surgically repaired a tendon in May 2001. Employer accommodated the restrictions that the ATP imposed and returned claimant to work with modified duties.

In October 2001, the ATP referred claimant to another physician for an impairment rating. The rating physician issued a March 2002 report placing claimant at MMI with a twenty-seven percent impairment of the right upper extremity. Claimant was placed under permanent restrictions that precluded her from returning to her regular employment.

On April 16, 2002, an insurance adjuster prepared a final admission of liability (FAL), which admitted liability for PPD benefits based on the rating physician's extremity rating. Employer's safety supervisor testified that at a meeting on April 18, 2002, claimant asked him whether these PPD benefits could be paid in a lump sum, but because he did not know the answer, he called the adjuster, who spoke to claimant. Following that conversation, claimant sent a handwritten note dated April 18 to the adjuster stating, "I would like to receive my disability rating in one lump sum of $8,431.76."

On April 23, 2003, claimant again met with the employer's safety supervisor. Following this meeting, the supervisor terminated claimant from employment because she could not perform her regular duties and employer had no jobs available that were within her restrictions.

Thereafter, claimant retained counsel who, on April 29, filed an objection to the FAL and a notice and proposal to select a physician to conduct a DIME. Also on April 29, employer paid the lump sum claimant requested in her handwritten note, which represented the discounted and remaining balance of the admitted PPD award. These two actions—accepting PPD benefits while at the same time contesting MMI—underlie much of the controversy in this case.

Employer did not object to the request for a DIME physician. In an August 2002 report, the DIME physician opined that claimant was not yet at MMI. He made several diagnoses, including right radial nerve entrapment and "chronic right shoulder pain and decreased range of motion with evidence of possible frozen right shoulder . . . due to the chronic pain and reduced usage of her right arm." The DIME physician recommended further diagnostic studies and various drug therapies.

Employer took no action on the DIME physician's report. It did not contest the DIME physician's finding on MMI or file an amended FAL for TTD benefits. Claimant then applied for a hearing, seeking TTD benefits from the date she was terminated from employment.

The administrative law judge (ALJ) found that claimant had not reached MMI and was therefore entitled to the requested TTD benefits. The ALJ further determined that employer failed either to admit or to contest liability within thirty days of the DIME physician's report. Consequently, the ALJ found that, pursuant to §§ 8-42-107.2(4) and 8-43-203(2)(b)(II), C.R.S.2005, employer was precluded from challenging the DIME physician's finding that claimant was not at MMI, including the DIME physician's findings regarding the cause of claimant's upper extremity symptoms. Alternatively, the ALJ found that employer had failed to overcome, by clear and convincing evidence, the DIME physician's determination that the claimant was not at MMI.

The ALJ also rejected employer's contention that, by accepting the lump sum payment on April 29, claimant had waived her right to request the DIME. In support, the ALJ found that claimant's April 18 note contained no statement indicating that, by accepting the lump sum payment, she intended to surrender her rights to challenge the FAL and request a DIME. Further, the ALJ found there was no written agreement establishing a waiver, and that claimant in fact challenged the FAL by filing an objection to it on April 29, together with a notice and proposal for the DIME.

The Panel agreed that, by accepting the lump sum, claimant had not waived the right to request a DIME, and that employer, through its inaction, had lost the right to contest the DIME physician's findings. The Panel affirmed the award of TTD benefits, including compensation for the shoulder injury, and it concluded that employer had waived the statutory cap issue by failing to timely raise it, or alternatively, that application of the cap was premature because claimant had not reached MMI.


Employer first contends that the Panel erred in concluding that claimant's request for the lump sum payment of PPD benefits did not constitute a waiver of her right to contest MMI through the DIME process. Asserting that claimant is proceeding inconsistently in pursuing concurrent claims for PPD and TTD, employer argues that acceptance of lump sum PPD benefits constitutes an admission by claimant that she has reached MMI and estops her from seeking further TTD benefits. Employer further asserts that the General Assembly, in changing the statutes governing lump sum payments, did not intend to alter the effect of a lump sum as a settlement. Under the circumstances present here, we disagree.

Lump sum payments of PPD benefits less than $10,000 are authorized by § 8-42-107(8)(d), C.R.S.2005, which provides, in pertinent part, that

[u]p to ten thousand dollars of the total amount of any such award [for medical impairment benefits] shall be automatically paid in a lump sum less the discount as calculated in section 8-43-406[, C.R.S. 2005,] upon the injured employee's written request to the employer or, if insured, to the employer's insurance carrier.

See Cooper v. Indus. Claim Appeals Office, 109 P.3d 1056 (Colo.App.2005)(recognizing that PPD benefits are the equivalent of medical impairment benefits).

Employer argues that the holding in Brunetti v. Industrial Commission, 670 P.2d 1246 (Colo.App.1983), compels the conclusion that a claimant's acceptance of a lump sum implies acceptance of a FAL and therefore constitutes a settlement or waiver of the right to challenge the FAL. We reject this argument for two reasons.


First, in Brunetti, the claimant failed timely to object to the FAL, the case was therefore closed, and the claimant tried to obtain additional benefits without a reopening. The claimant's acceptance of the lump sum payment was considered a "settlement" partly because the claimant was notified the claim would be considered closed if he filed no objection, the claimant did not object within the allotted time, and the claimant accepted payment under the admission.

Here, in contrast, claimant exercised her right to challenge the FAL on April 29 by objecting to it and requesting a DIME. Indeed, the FAL itself provided notice that the claim would be final only if she failed to object and did not request a DIME. It did not advise claimant that the claim would be final if she accepted the lump sum. See Lobato v. Indus. Claim Appeals Office, 105 P.3d 220 (Colo.2005)(§ 8-43-203(2)(b)(II) establishes notice requirements for a FAL); Peregoy v. Indus. Claim Appeals Office, 87 P.3d 261 (Colo.App.2004). Thus, as the ALJ recognized, this is not a case in which claimant, after receiving adequate notice of her rights, declined to challenge the admission and tacitly accepted a lump sum payment as a "settlement" of her claim. See Johnson v. McDonald, 697 P.2d 810, 811 (Colo.App.1985)(failure to contest an admission of liability containing notice of thirty-day contest period did not bar claimant from subsequently litigating issue of PPD benefits where admission and payment made was for TTD benefits; noting that contrary result would occur only where "claimant, by his conduct, tacitly agreed to accept the payments made under an admission of liability in settlement of his claim").

Accordingly, neither claimant's action in objecting to the FAL and filing a notice requesting a DIME, nor the content of her April 18 letter, reflects claimant's knowing and intelligent decision to surrender her rights to dispute the FAL and request a DIME. Furthermore, the adjuster's testimony suggests that claimant was not advised that employer would consider the acceptance of the lump sum as a surrender of all rights to challenge the FAL. Consequently, the record fully supports the ALJ's finding that claimant's conduct does not demonstrate the kind of knowing, intelligent, and unambiguous conduct required to imply a waiver. See Johnson v. Indus. Comm'n, 761 P.2d 1140 (Colo.1988)(waiver is the intentional relinquishment of a known right and presents a question of fact).


Second, Brunetti v....

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