Sunny Acres Villa, Inc. v. Cooper

• Decision Date: 29 May 2001
• Docket Number: No. 99SC865.,99SC865.
• Citation: 25 P.3d 44
• Parties: SUNNY ACRES VILLA, INC., Petitioner, v. Charla Sue COOPER, Respondent.
• Court: Colorado Supreme Court

25 P.3d 44

SUNNY ACRES VILLA, INC., Petitioner, v. Charla Sue COOPER, Respondent.

No. 99SC865.

Supreme Court of Colorado, En Banc.

May 29, 2001.

Rehearing Denied June 25, 2001.¹

Ritsema & Lyon P.C., Susan Kurachi Reeves, Colorado Springs, CO, Attorneys for Petitioner.

Susan D. Phillips, Denver, CO, Attorney for Respondent.

Justice COATS delivered the Opinion of the Court.

Sunny Acres Villa, Inc., the employer in the underlying action for permanent total disability benefits, sought review of the court of appeals' decision in Cooper v. Industrial Claim Appeals Office, 998 P.2d 5 (Colo.App. 1999), by writ of certiorari. The court of appeals set aside the order of an administrative law judge ("ALJ"), which denied permanent total disability ("PTD") benefits to claimant Charla Cooper on the ground that her injuries were not substantially work-related. The court of appeals held instead that the doctrine of collateral estoppel operated to foreclose any inquiry into causation, which it considered already to have been determined in connection with Cooper's application for temporary total disability ("TTD") benefits. Because a claim for a temporary disability award does not present an employer with the same incentive to litigate as does a claim for a permanent award, issues presented with regard to the latter cannot be deemed fully and fairly litigated at a prior proceeding for the former. Accordingly, the judgment of the court of appeals is reversed and the case is remanded for further proceedings consistent with this opinion.

I.

The incident giving rise to this action occurred on May 13, 1992. It was uncontested that Respondent Charla Cooper, a nurse employed by Sunny Acres, slipped and fell while at work and sustained injuries to her head, hip, back, pelvis, foot, ankle, knee and shoulder. Cooper submitted a claim for TTD benefits², in response to which Sunny Acres admitted liability and agreed to pay TTD benefits and other related medical expenses. On February 3, 1993, Cooper returned to work, thereby terminating her entitlement to TTD benefits, see § 8-42-105(3)(b), but continued to experience physical and psychological problems. In June of 1993, Cooper attained maximum medical improvement ("MMI")³ with a 5% overall impairment according to her treating physician. Over the next several months, however, Cooper's physical and psychological condition deteriorated, and she requested a review and reopening of her TTD award, pursuant to section 8-43-303(2)(a), as of December 8, 1993. Sunny Acres contested this request, arguing that Cooper's deteriorating condition was not attributable to her work-related injury.

Following a hearing on Cooper's condition, the presiding ALJ issued an order dated August 12, 1994, in which he found that Cooper had proven by a preponderance of the evidence that her condition had worsened to the point that she had again become temporarily and totally disabled as of December 8, 1993. Finding nothing in the Workers' Compensation Act to the contrary, the ALJ explained that he did not consider an independent medical exam necessary for purposes of adjudicating a claim for temporary disability benefits based on a worsened condition. Included in the order was a finding that Cooper's physical and psychological impairment had been proximately caused by the work-related injury she sustained on May 13, 1992. Accordingly, Sunny Acres was ordered to provide Cooper with medical and TTD benefits as of December 8, 1993.

Cooper continued to receive TTD benefits until March 4, 1996, at which time she was again found to have attained MMI. She subsequently requested a hearing to determine her entitlement to permanent total disability ("PTD") benefits.⁴ At this point, Sunny Acres requested that a division-sponsored, independent medical exam be performed on Cooper. The physician who performed that exam concluded that as of March 4, 1996, Cooper had attained MMI from a psychiatric standpoint, leaving her with a sixty percent psychiatric impairment. The physician noted, however, that Cooper's work-related injury was not a significant factor relative to her overall disability, and that the psychiatric impairment was the result of her pre-existing psychological function.

After considering several conflicting medical opinions, a second ALJ concluded that Cooper had failed to prove by a preponderance of the evidence that the work-related injury was a significant factor contributing to her permanent total disability. Without referring specifically to either collateral estoppel or the "law of the case" doctrine, Cooper argued that the second ALJ was bound by the first ALJ's finding regarding the causation of her injuries. In response, the ALJ characterized Cooper's contention as raising the "law of the case" doctrine, and found that the first ALJ's findings, made in connection with Cooper's claim for TTD benefits, were not entitled to deference because they did not concern PTD benefits specifically. As such, Cooper's claim for PTD benefits was denied.

Cooper appealed the second ALJ's rulings to the Industrial Claim Appeals Office ("ICAO"), which affirmed, and then to the court of appeals, which on rehearing set aside the order. Cooper v. Indus. Claim Appeals Office, 998 P.2d 5 (Colo.App.1999). Although Cooper raised the issue whether the ALJ was bound by the earlier causation finding under the doctrine of "law of the case," the court of appeals addressed the substance of Cooper's argument under collateral estoppel principles.⁵ As it found all of the elements of collateral estoppel satisfied, the court of appeals concluded that the initial finding that the injuries were work-related, made in connection with Cooper's claim for TTD benefits, was binding on the second ALJ for purposes of adjudicating Cooper's claim for PTD benefits. Accordingly, the court of appeals set aside the final order of the ICAO and remanded the matter for reconsideration in light of the initial finding that the injury was work-related. Sunny Acres' petition for certiorari followed.⁶

II.

Collateral estoppel, or issue preclusion, is a judicially created, equitable doctrine that operates to bar relitigation of an issue that has been finally decided by a court in a prior action. Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84 (Colo.1999); 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction § 4403 (1981). The doctrine serves to relieve parties of multiple lawsuits, conserve judicial resources, and promote reliance on the judicial system by preventing inconsistent decisions. Bebo Constr., 990 P.2d at 84. Although originally developed in the context of judicial proceedings, issue preclusion is just as viable in administrative proceedings and may bind parties to an administrative agency's findings of fact or conclusions of law. Id. at 85; Indus. Comm'n v. Moffat County Sch. Dist. RE No. 1, 732 P.2d 616, 620 (Colo.1987).

Issue preclusion bars relitigation of an issue if: (1) the issue sought to be precluded is identical to an issue actually determined in the prior proceeding; (2) the party against whom estoppel is asserted has been a party to or is in privity with a party to the prior proceeding; (3) there is a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Bebo Constr., 990 P.2d at 85; Guar. Nat'l Ins. Co. v. Williams, 982 P.2d 306, 308 (Colo. 1999); Indus. Comm'n, 732 P.2d at 619-20. Only when each of these elements has been satisfied are the equitable purposes of the doctrine furthered by issue preclusion.

It is settled law that a full and fair opportunity to litigate an issue requires not only the availability of procedures in the earlier proceeding commensurate with those in the subsequent proceeding, Maryland Cas. Co. v. Messina, 874 P.2d 1058, 1062 (Colo.1994), but also that the party against whom collateral estoppel is asserted have had the same incentive to vigorously defend itself in the previous action, Salida Sch. Dist. R-32-J v. Morrison, 732 P.2d at 1166-67; Restatement (Second) of Judgments § 28(5)(c) & cmt. j (1982).⁷ A party necessarily lacks the same incentive to defend where its exposure to liability is substantially less at the earlier proceeding. Salida, 732 P.2d at 1166-67. In addition to the amount of potential money awards, significant variations in exposure may arise from differences in the finality or permanence of judgments, see In re C.M., 675 N.E.2d 1134, 1137-38 (Ind.Ct.App.1997)

(recognizing that parent's incentive to defend in a "Child in need of supervision" proceeding, where resulting order is temporary in nature and entitles parent and child to government services, is dramatically different from incentive to vigorously litigate same issues in parental-termination proceeding, where the result is permanent and completely severs parent-child relationship); In re Frederick, 405 Mass. 1, 537 N.E.2d 1208, 1211-1212 (1989) (recognizing that even though standards of proof and findings in "care and protection" proceeding are identical to those in subsequent "consent to adoption" proceeding, collateral estoppel inapplicable because incentive to litigate custody or appeal findings from earlier proceeding, which are limited and do not carry same degree of finality, may be substantially less than incentive to litigate or appeal findings in adoption proceeding, which permanently terminates legal parent-child relationship), as well as from differences in the potential duration of orders to provide installments of a fixed amount, rendering the party's overall exposure a direct consequence of the order's duration. See, e.g., Ferris v. Hawkins, 135 Ariz. 329, 660 P.2d 1256, 1259 (App.1983) (noting marked difference in available remedies where one was limited in compensation and duration and the other posed much greater...