PLUS v. Indus. CLAIM APPEALS OFFICE of The State of Colo.

• Decision Date: 07 January 2010
• Docket Number: No. 09CA0598.,09CA0598.
• Citation: 240 P.3d 429
• Parties: PAINT CONNECTION PLUS and Twin City Fire Insurance Company, Petitioners, v. INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado and Donald Sinkey, Respondents.
• Court: Colorado Court of Appeals

240 P.3d 429

PAINT CONNECTION PLUS and Twin City Fire Insurance Company, Petitioners,

v.INDUSTRIAL CLAIM APPEALS OFFICE of the State of Colorado and Donald Sinkey, Respondents.

No. 09CA0598.

Colorado Court of Appeals,Div. I.

Jan. 7, 2010.

Hall & Evans, L.L.C., Megan E. Coulter, Douglas J. Kotarek, Denver, Colorado, for Petitioners.

No Appearance for Respondent Industrial Claim Appeals Office.

Dawes & Harriss, P.C., Robert C. Dawes, Durango, Colorado, for Respondent Donald Sinkey.

Opinion by Judge DAILEY.

In this workers' compensation proceeding, petitioners, Paint Connection Plus (employer) and Twin City Fire Insurance Company (insurer), seek review of that part of the final order issued by the Industrial Claim Appeals Office (Panel) which upheld the imposition of penalties for the filing of an invalid final admission of liability (FAL). We affirm.

I. Background

Donald Sinkey (claimant) was injured on January 12, 2007, when he fell from a ladder while working for employer. Petitioners filed several general admissions of liability (GAL) admitting for medical and temporary disability benefits for a “right shoulder rotator cuff tear and right shoulder SLAP tear only.” ¹ Claimant's treatment included two surgeries.

In January 2008, claimant's surgeon referred him to another physician for an impairment rating to his right upper extremity. The physician found that claimant had reached maximum medical improvement (MMI) for that injury and had sustained a nine percent total permanent partial impairment due to the loss of range of motion, which equated to a whole-person impairment rating of five percent.

However, the rating physician further opined that claimant was suffering from “probable C6-7 right facet syndrome, chronic” ² related to his work injury and subsequent surgery, including physical therapy. The physician reported that claimant was not at MMI for this lesser problem and recommended one to three chiropractic mobilizations. The physician stated that he felt the recommended treatment would “greatly improve” the condition and that no permanent impairment would likely result.

In their FAL, petitioners asserted that claimant was at MMI and admitted for permanent partial disability (PPD) benefits based on the rating for claimant's right upper extremity impairment. The FAL also stated:

Position on Medical Benefits after Maximum Medical Improvement (MMI): The carrier will consider reasonable and necessary medical treatment only as related to the compensable injury of right shoulder rotator cuff tear and right shoulder SLAP tear. Chronic facet syndrome at C6-7 is not part of the compensible [sic] injury and maintenance care for this condition will not be covered.

Remarks and basis for permanent disability award: [The rating physician] has placed the injured worker at MMI with a 9% impairment to the upper extremity on 01/ 17/2008 (please see attached report).

Claimant objected to the FAL and applied for a hearing on several issues, including the striking of the FAL and penalties. The ALJ found the FAL invalid because the rating physician's worksheets were not attached and its assertion of MMI was inconsistent with the rating physician's report, which stated that claimant was not at MMI for the chronic facet syndrome.

The ALJ imposed penalties against the insurer for a violation of the Workers' Compensation Act pursuant to section 8-43-304(1), C.R.S.2009.

On review, the Panel affirmed both the determination that the FAL was invalid and the imposition of penalties.

II. Validity of FAL

Petitioners first contend that the ALJ erred in determining that their FAL was invalid because it complied or substantially complied with the necessary requirements set forth in the pertinent statutes and rules. We disagree.

A. Standard of Review

When an ALJ's findings of fact are supported by substantial evidence, we are bound by them. Section 8-43-308, C.R.S.2009. However, an agency's decision that misconstrues or misapplies the law is not binding. Pena v. Indus. Claim Appeals Office, 117 P.3d 84, 88 (Colo.App.2004).

B. FAL Requirements

Section 8-43-203 (b)(I), C.R.S.2009, requires that an admission of liability specify the amount of compensation to be paid, the person to whom compensation will be paid, the period in which compensation will be paid, and the disability for which compensation will be paid. Section 8-43-203(2)(b)(II), C.R.S.2009, sets forth the necessary components of an FAL and specifically mandates that when an FAL “is predicated upon medical reports, such reports shall accompany” it. Department of Labor and Employment Rule 5-5(A), 7 Code Colo. Regs. 1101-3, requires attachment of not only the supporting medical reports, but also the worksheets and other evaluation information associated with the impairment rating.

Rule 5-5(A) further requires that the FAL “specify and describe the insurer's position on the provision of medical benefits after MMI, as may be reasonable and necessary within the meaning of the Act” and “shall make specific reference to the medical report by listing the physician's name and the date of the report.” Department of Labor and Employment Rule 5-5(E), 7 Code Colo. Regs. 1101-3, requires that the FAL be “consistent with the physician's opinion.”

These requirements are part of a statutory scheme designed to promote, encourage, and ensure prompt payment of compensation without the necessity of a formal administrative determination in cases not presenting a legitimate controversy. Olivas-Soto v. Indus. Claim Appeals Office, 143 P.3d 1178, 1179 (Colo.App.2006). In light of that intent, one purpose of the requirements is to put the claimant on notice of the exact basis of the admitted or denied liability so that the claimant can make an informed decision whether to accept or contest the final admission. See Smith v. Myron Stratton Home, 676 P.2d 1196, 1200 (Colo.1984) (an admission of liability serves to notify an injured worker of the legal ramifications associated with a claim).

C. Consistency with Rating Physician's Report

Petitioners maintain that the FAL complied with the necessary requirements by clearly expressing their admission of liability for the injury to claimant's right upper extremity and their denial of compensability for the chronic facet syndrome. They dispute the Panel's conclusion that they chose to ignore both the rating physician's MMI opinion and his finding that the chronic facet syndrome was related to the industrial injury.

However, as the Panel found, the FAL created inconsistencies with the rating physician's narrative report in violation of Rule 5-5(E) by failing to indicate that claimant had not yet been placed at MMI for the chronic facet syndrome or that the MMI date on the FAL form pertained exclusively to claimant's injury to his right upper extremity. Indeed, petitioners' denial of the compensability of the chronic facet syndrome included in the explanation of its position on post-MMI medical benefits conflicts with the rating physician's specific medical finding that the condition was related to the work injury.

1. Partial MMI

Petitioners nevertheless argue that the FAL requirements, as applied by the ALJ and the Panel, place them in a predicament whereby they cannot admit liability for an uncontested injury to one body part without abandoning their challenge to the compensability of an injury to another body part. However, petitioners' argument necessarily presupposes that MMI can be parceled out among the various components of an industrial injury, a premise we reject.

MMI is defined as that point in time when any medically determinable physical or medical impairment resulting from an injury has become stable and when no further treatment is reasonably expected to improve the condition. § 8-40-201(11.5), C.R.S.2009; MGM Supply Co. v. Indus. Claim Appeals Office, 62 P.3d 1001, 1005 (Colo.App.2002). It represents the optimal point at which the permanency of a disability can be discerned and the extent of any resulting impairment can be measured. Singleton v. Kenya Corp., 961 P.2d 571, 574 (Colo.App.1998). It also marks the point when permanent disability benefits become available and temporary disability benefits become unavailable. Mountain City Meat Co. v. Oqueda, 919 P.2d 246, 254 n. 1 (Colo.1996), superseded on other grounds by § 8-42-107(7)(b)(I), C.R.S.2009, as stated in United Airlines, Inc. v. Indus. Claim Appeals Office, 993 P.2d 1152, 1158 n. 7 (Colo.2000); City of Colorado Springs v. Indus. Claim Appeals Office, 954 P.2d 637, 639 (Colo.App.1997) (once a claimant reaches MMI, any temporary wage loss ceases and the continuing wage loss becomes permanent and is to be compensated by permanent benefits under section 8-42-107, C.R.S.2009, not by the continued payment of temporary benefits).

In Rodriguez v. Hirschbach Motor Lines, 270 Neb. 757, 707 N.W.2d 232, 238 (2005), the Nebraska Supreme Court addressed the issue of whether MMI is to be determined by reference to the date of healing for each injury resulting from an accident, or by reference to the date on which all of the claimant's injuries from the accident have reached maximum recovery. The court observed that a given condition cannot be both temporary and permanent at the same time and that allowing partial MMI creates the possibility of simultaneous permanent and temporary disability awards for the same accident, a result inconsistent with the workers' compensation scheme and established precedent. Rodriguez, 707 N.W.2d at 238. The court concluded that, even if the medical evidence establishes that a claimant's different injuries have different dates of maximum medical recovery, the legally significant date, that is, the date of MMI for purposes of ending a claimant's temporary disability, is the date upon which the claimant has attained maximum medical recovery from all of the injuries sustained in a particular compensable accident. Rodriguez, 707 N.W.2d at 239.

We agree...