Whiteside v. Smith

• Decision Date: 07 April 2003
• Docket Number: No. 01SA399.,01SA399.
• Citation: 67 P.3d 1240
• Parties: Mary Ann WHITESIDE, in her official capacity as Director of the Division of Workers' Compensation, State of Colorado; and Dona Halsey, David Cain, Kathy E. Dean, Bill Whitacre, and Robert Socolofsky, in their official capacities as Examiners of the Industrial Claim Appeals Office, Department of Labor and Employment, State of Colorado, Defendants-Appellants, v. Marvin SMITH, individually and on behalf of all other persons similarly situated, Plaintiff-Appellee.
• Court: Colorado Supreme Court

67 P.3d 1240

Mary Ann WHITESIDE, in her official capacity as Director of the Division of Workers' Compensation, State of Colorado; and Dona Halsey, David Cain, Kathy E. Dean, Bill Whitacre, and Robert Socolofsky, in their official capacities as Examiners of the Industrial Claim Appeals Office, Department of Labor and Employment, State of Colorado, Defendants-Appellants, v. Marvin SMITH, individually and on behalf of all other persons similarly situated, Plaintiff-Appellee.

No. 01SA399.

Supreme Court of Colorado, En Banc.

April 7, 2003.

Ken Salazar, Attorney General, John D. Baird, First Assistant Attorney General, Eric Rothaus, Assistant Attorney General, State Services Section, Denver, Colorado, Attorneys for Defendants-Appellants.

Wilcox & Ogden P.C., Ralph Ogden, Goldstein & Dodge, Shelley P. Dodge, Denver, Colorado, Attorneys for Plaintiff-Appellee.

Justice BENDER delivered the Opinion of the Court.

I. INTRODUCTION

In this case, we determine the constitutionality of a fee requirement mandated by certain provisions of Colorado's Workers' Compensation Act and its implementing regulations. Under the pertinent statutory sections and implementing workers' compensation rule, before an injured worker can challenge the termination of his temporary disability benefits and medical treatment, he must pay a $675 fee to obtain a Division Independent Medical Examination. We hold that such a fee provision, which requires an indigent worker to prepay a fee before he can obtain either administrative or judicial review of an adverse decision of the employer-selected treating physician, violates due process of law guarantees.

Martin Smith, an injured indigent claimant, filed suit against the Director of the Division of Workers' Compensation and the Examiners of the Industrial Claim Appeals Office in their official capacities under 42 U.S.C. § 1983, claiming that the statutory scheme was unconstitutional under the due process and equal protection clauses of the Fourteenth Amendment. Smith alleged that his inability to pay the fee prevented him from challenging the termination of his temporary total disability benefits and medical treatment. The district court certified a class of present and future injured indigent claimants and struck down the fee provisions as unconstitutional on due process and equal protection grounds as applied to the certified class. The defendants appealed the district court's ruling directly to this court.

Although the fee requirement found in sections 8-42-107(8)(b)(II), 8-42-107(8)(c), 8-42-107.2(5), 3 C.R.S. (2002) and 7 C.C.R. 1101-3 ("Division Rule XIV(L)(4)") is valid on its face, it is unconstitutional as applied to the particular class of injured indigent claimants.¹ For such claimants, the statutory scheme prevents any administrative or judicial review of the termination of their right to temporary disability benefits and medical treatment, based solely on their inability to pay the fee. We hold that the fee requirement deprives injured indigent claimants of their property interests without due process as mandated by the Fourteenth Amendment. Because our holding disposes of this case, we do not reach the question of whether this fee requirement also violates the equal protection clause of the Fourteenth Amendment.

Thus, we affirm the judgment of the district court on the due process issue and return this case back to it for further proceedings consistent with this opinion.

II. FACTS AND PROCEEDINGS

On November 8, 1991, Marvin Smith injured his back while in the scope and course of his employment. Smith's exclusive remedy for those injuries was under Colorado's Workers' Compensation Act ("Act"). See §§ 8-40-101 to 8-47-209, 3 C.R.S. (2002).

Following Smith's injuries, Smith's employer and its insurance carrier filed a general admission of liability in which they admitted full responsibility for his injuries. As a result, Smith received temporary total disability benefits ("TTD") and medical treatment, as provided under the Act. See §§ 8-42-105, 8-42-106, 8-42-101(1)(a). Smith's pre-injury weekly wage was $458.09 and his temporary total disability rate was $305.39, which was two-thirds of his average weekly wage.

Pursuant to its statutory right, the employer's insurance company selected the physician who treated Smith. § 8-43-404(5)(a). Smith had no choice in selecting this doctor. Thereafter, the employer and its insurance carrier filed a final admission of liability in 1992. This final admission stated that the employer-selected, treating physician determined that Smith had reached maximum medical improvement ("MMI")² and that his permanent medical impairment rating was five percent of the whole person. As a result, Smith's employer reduced his disability benefits—now permanent benefits—to a rate of $120 a week. The insurance carrier also denied any responsibility for post-MMI treatment for Smith's back injuries.

Smith filed a timely objection to the final admission of liability which preserved his right to challenge all matters set forth in the admission, including the employer-selected physician's determination of MMI and his impairment rating. At that time, Smith did not request a Division Independent Medical Examination ("DIME"), which was a prerequisite to any administrative hearing challenging the findings of the employer-selected physician. See §§ 8-42-107(8)(b)(II); 8-42-107(8)(c). The statutory provisions and the implementing regulation mandated at the time that the party challenging the treating physician's determination pay a $450 fee for the DIME.³

In 1999, Smith filed a motion with the Director of the Division of Workers' Compensation.⁴ In his motion, Smith requested that the Director find that he was indigent and therefore unable to pay the required fee for the DIME. Without a DIME, Smith could not challenge the employer-selected physician's determination of MMI and medical impairment rating. An administrative law judge denied the motion.

In 2000, Smith filed an application for a hearing with the Division of Administrative Hearings. Smith again requested a ruling that he was indigent and that either the Division or the insurance carrier pay for the cost of the DIME because he was unable to pay for it.

Upon reviewing Smith's application, an administrative law judge determined that Smith was indigent pursuant to Chief Justice Directive 98-01. However, the judge also determined that he lacked authority to waive the DIME fee or otherwise assess it. The judge ordered the denial and dismissal of Smith's request but noted that his ruling might deny, "in the constitutional sense," indigent claimants "a full opportunity to develop and litigate the issue of permanent disability." Smith appealed this ruling to the Industrial Claim Appeals Office but his claim was dismissed as premature.

Smith brought this action in the district court pursuant to 42 U.S.C. § 1983, claiming that the DIME fee requirement found in the statutory and regulatory provisions of the Act violated the constitutional rights of indigent workers' compensation claimants to due process and equal protection. Smith argued that the fee requirement unconstitutionally deprived indigent claimants of a hearing to challenge the MMI and medical impairment decisions of their employer-selected treating physicians.

The district court certified the case as a class action pursuant to C.R.C.P. 23(a) and (b)(2) and described the class as those entitled to compensation and who were found to be indigent.⁵ On cross-motions for summary judgment, the court held that the fee requirement found in sections 8-42-107(8)(b)(II), 8-42-107(8)(c), 8-42-107.2(5) and Division Rule XIV(L)(4) were unconstitutional as applied to the class of indigent workers on two grounds.⁶

First, the district court held that the plaintiff class, as recipients of statutorily created temporary disability benefits, had a property interest in the continued receipt of those benefits. Because such benefits terminated upon the employer-selected physician's determination of MMI, there were due process considerations applicable to the procedures surrounding the MMI determination. The district court concluded that the fee provisions violated the due process clause of the Fourteenth Amendment by requiring indigent claimants to pay a fee to obtain a DIME as a jurisdictional prerequisite to any opportunity to be heard on the employer-selected treating physician's determinations of MMI and permanent impairment ratings.

Second, the district court applied a rational basis test and sustained Smith's equal protection challenge. The district court held that while the statutory requirement for a DIME and the imposition of the cost of a DIME on the requesting party were rationally related to the state interest in the delivery of disability and medical benefits to injured workers at a reasonable cost to employers without the necessity of litigation, see § 8-40-102(1), there was no legitimate state interest in pursuing those goals at the cost of denying the plaintiff class any opportunity to be heard as occurs under the statutory scheme as a whole.⁷ The state appealed the district's court judgment declaring the fee provisions unconstitutional as to the class of indigent claimants directly to this court. We now affirm the district court and hold that the fee provisions are unconstitutional under the due process clause of the Fourteenth Amendment. We do not reach the equal protection issue because our holding invalidating the fee provisions on due process grounds disposes of this case.

III. COLORADO'S WORKERS' COMPENSATION ACT

To explain the full ramifications of the fee requirement and how it operates to deny a particular class of claimants—those indigent claimants unable to pay the $675 fee for a DIME—their constitutional rights to due process, we provide a brief overview of Colorado's Workers' Compensation Act.

The General Assembly created the substantive...