The Legal Buzz – Lee & Brown Newsletter and Case Law Update October 2019

Lee and Brown Partners
Thank you for taking the time to read our Firm newsletter. Our newsletter provides a monthly update
on recent developments within our Firm, as well as in the insurance defense community in
Colorado, Arizona and Utah.
Lee and Brown Denver AttorneysFollow us on LinkedIn

 


 In The News

Lee & Brown was well-represented this year by Members Joshua D. Brown and John Abraham at the NAMWOLF Annual Meeting and Law Firm Expo held in Los Angeles September 22-25th.  A member of the National Association of Minority and Women Owned Law Firms since 2013, Lee & Brown is proud to be a part of this outstanding organization and its efforts to promote diversity in the legal community by connecting companies who support this fundamental initiative with the minority and women-owned law firms and legal vendors who embody it and seek opportunities to succeed.

Josh and John’s very well received contribution to the conference was the screening of their video, “THIS is NAMWOLF”, shown at the conference awards banquet.  The video was an entertaining sequence of NAMWOLF member interviews conducted by the dynamic duo during the conference exposition.  In it, members themselves were able to express and share with all attendees their personal insights into what this national organization means to them and its profound impact in creating a more diverse culture throughout the legal community.  Click here to watch the video.

 

 

Lee & Brown was a platinum sponsor at the Professionals in Workers’ Compensation Annual Golf Tournament, held this year at Raccoon Creek Golf Course on September 20th.  Out representing the Firm in style were Members Katherine Lee and Josh Brown; Of Counsel, Frank Cavanaugh, Jessica Melson and Angela Lavery; as well as Associate Matt Boatwright.  Lee & Brown regularly sponsors this event which promotes the camaraderie and fellowship amongst workers’ compensation professionals from both sides of the Bar and in related fields and businesses.  This year, the PWC held a funniest hole contest, which Lee & Brown took very seriously and won!  Our Caddyshack theme was a huge success and we want to thank everyone who visited us at the Bushwood Country Club, hole no. 17!

 

 

 

 


   Noteworthy Cases – Colorado

 

Member Joshua D. Brown and Associate Kristi M. Robarge successfully defended a claim for TTD benefits and proved Claimant was terminated for cause in Hansen v. J-R Motors Company North, W.C. 5-101-017. Claimant sustained an admitted injury when she slipped and fell in the car sales lot while showing a vehicle to some customers.  When Claimant sought treatment for her injury, she underwent a post-accident drug screen.  Claimant tested positive for marijuana and was terminated by Respondent-employer for violation of the drug policy.  Claimant sought TTD benefits. Respondents argued that Claimant was terminated for cause and was not entitled to TTD benefits.  Claimant argued that her employer knew about her drug use because she took a pre-employment drug screen and was still hired; however, evidence showed that Respondent-employer did not test for marijuana in the pre-employment drug screens.  Since Respondent-employer had a strict drug policy and Claimant admitted knowledge of the policy, the ALJ found that Claimant was terminated for cause and not entitled to TTD benefits.

 

Member Karen Gail Treece, successfully defended a full contest claim in Lopez-Pando v Martin Marietta Materials, W.C. No. 5-081-406. Claimant alleged depression as well injuries to his low back, bilateral shoulders and cervical spine, which he claimed resulted from moving a frozen mud/rock clod from a conveyor belt into a chute on April 9, 2018. Claimant’s testimony of the size of the clod was inconsistent with that described by the credible employer witnesses. Ms. Treece elicited testimony that Claimant was using short term disability and did not report this as a work injury claim until the day after the expiration of his short term disability. Claimant’s testimony attributing his injury to a specific event was inconsistent with what he had told his physicians. Medical records demonstrated Claimant had underlying pre-existing conditions affecting his left shoulder, low back and neck. The ALJ did not find the Claimant’s alleged multiple injuries from the described mechanism of injury credible, and found no persuasive evidence of an acute injury. The ALJ determined Claimant failed to prove he suffered a compensable injury or occupational disease.

 

Member Fran McCracken successfully defended against Claimant’s attempt to reopen his claim in Luszko v. Allied Universal, W.C. 5-034-956. Claimant originally filed a claim for compensation and an Application for Hearing in January 2017. The case was closed following Respondents’ Motion to Close for Failure to Prosecute in January 2018, pursuant to the Director’s Show Cause Order. In June 2019, Claimant filed a second Application for Hearing endorsing multiple issues, including compensability and a petition to reopen on the basis of a change in condition. Because there was no determination of compensability of the injury prior to claim closure, Respondents filed a Motion for Summary Judgement arguing the Claimant was precluded from reopening his case on the basis of a change in condition, having never established a compensable injury for the condition to have changed. The ALJ agreed with Respondents’ interpretation of the facts and law, granted Respondents’ Motion for Summary Judgment and struck Claimant’s June 2019 Application for Hearing with prejudice.


 

Where’s My DIME?

One of the main strategies in workers’ compensation claims involves the selection of a particular venue for the DIME process. For numerous years, Rule 11 was silent on the selection of a location for the Division IME. The party requesting the DIME had the option of selecting any venue in Colorado for the appointment to take place. From there, the DIME unit would select 3 physicians in the geographic location that the selecting party indicated on its Application and the DIME process would move forward. Essentially, any part of Colorado was “fair game”  as the location in which to conduct a DIME. Continue reading the article

 


Cases You Should Know

Keep an Eye on the Statute of Limitations: In Packard v. Industrial Claim Appeals Office of the State of Colorado and City and County of Denver, Colorado, 2019COA146 (Colo. App. 2019), Claimant appealed the Panel’s holding that his claim was barred by the statute of limitations. Claimant claimed a workplace injury arising from his job duties as a firefighter for the City and County of Denver. On August 5, 2013, the City filed a report of Injury. On August 6, 2013, the City filed a Notice of Contest. On October 6, 2017, Claimant applied for hearing seeking medical and TTD benefits. Section 8-43-103 provides a 2-year general statute of limitations. The Court of Appeals held that a Notice of Contest, a First Report of Injury, and assignment of a W.C. number do not constitute notification that a Claimant is claiming entitlement to indemnity benefits within the meaning of the statute of limitations. Thus, the Court of Appeals found that Claimant’s Application for Hearing, filed 4 years after the date of injury, was untimely and his claim for indemnity benefits was barred by the statute of limitations.

Moral of the story: In order to satisfy the statute of limitations, a Claimant seeking compensation must file an Application for Hearing or Claim for Workers’ Compensation within 2 years.

 

If Benefits are Granted, File the GAL: In Miller v. Industrial Claim Appeals Office of the State of Colorado and City and County of Denver, Colorado, 18CA1894 (Colo. App. 2019), Claimant appealed the Panel’s affirmation of the denial and dismissal of her claim for penalties. The parties had gone to hearing on Claimant’s claim for entitlement to medical and indemnity benefits. The ALJ ruled in Claimant’s favor. Under Rule 5-5(C)(1) of the Colorado Workers’ Compensation Rules of Procedure, an employer has thirty days to file a general admission of liability following an ALJ’s resumption or increase of benefits. The Employer filed the GAL more than thirty days after the ALJ’s Order. Claimant subsequently applied for hearing on penalties for the Employer’s alleged failure to comply with Rule 5-5(C)(1). The Court of Appeals held that the rule was not triggered because the ALJ’s Order did not cause a resumption or increase in benefits, as no benefits had been previously paid to Claimant. Thus, the Court of Appeals affirmed that Claimant was not entitled to penalties.

This opinion is an unpublished opinion of the Court of Appeals meaning it is not binding upon lower courts. Nevertheless, following its issuance, an amendment to the rule was proposed altering its language to state that a GAL must be filed “[f]ollowing any Order (except for Orders which only involved disfigurement) becoming final which alters OR AWARDS benefits.” A public hearing regarding the adoption of this rule has not been set as of the publication of this newsletter.

Moral of the story: To avoid exposure for penalties, file a GAL after an ALJ’s order instituting payment of benefits to claimant.

 

Can you earn it?: In Jose Cruz Verdeja v. Bakers Transmission Service, W.C. No. 5-047-467 (ICAO August 19, 2019), the Claimant sought review of the ALJ’s Order denying his entitlement to PTD benefits. The Claimant sustained a compression fracture to the low back on May 19, 2017.  The Claimant underwent conservative care; however, surgery was not recommended. The Claimant was placed at MMI on March 29, 2018.  The Claimant was assigned permanent work restrictions in the light duty category.  The Claimant contended that he was permanently and totally disabled and unable to earn any wages. In preparation of hearing, Respondents retained an IME and vocational evaluation.  Respondents’ vocational evaluator identified multiple positions within the Claimant’s permanent work restrictions.  The positions considered the Claimant’s education, skills, and commutable labor market.  The ALJ credited the opinions of Respondents’ experts.  The Claimant argued that the positions identified by Respondents’ vocational evaluator were beyond his work restrictions.  ICAO affirmed the ALJ’s ruling finding that the issue of PTD is primarily factual and that her ruling was supported by substantial evidence in the record.

Moral of the story:  PTD is determined on a factual basis and an ALJ’s order will only be overruled if not supported by substantial evidence in the record.

 

Shifting Burdens and the DIME: In James Jones v. The Mitre Corporation, W.C. No. 5-034-047 (ICAO August 27, 2019), the Pro Se Claimant’s claim was found compensable for injury sustained to the neck and ears in the form of tinnitus, but not for his alleged hearing loss, as the result of being exposed to a loud noise. The Pro Se Claimant was placed at MMI on June 26, 2018 and assessed a 4% whole person permanent impairment rating of the cervical spine.  Respondents requested a DIME.  At the DIME, the Pro Se Claimant, without leave of court, presented the prior ALJ’s Order regarding compensability/causation for review by the DIME doctor. The doctor assessed a 14% whole person permanent impairment award for the cervical spine but did not address causation.   Respondents filed an Application for Hearing to overcome the DIME and requested a Samms conference with the DIME doctor to clarify her opinion and to determine whether she used the prior Order to influence her assessment and opinions on causation pertaining to the cervical spine.  The doctor changed her opinion after the Samms conference and assessed no permanent impairment rating for the cervical spine. At hearing, the ALJ ruled that the Pro Se Claimant improperly influenced the DIME doctor by presenting her with the prior ALJ’s Order. In addition, the ALJ ruled that the Pro Se Claimant reached MMI as of February 26, 2017, with no permanent impairment based on the DIME doctor’s subsequent testimony from the Samms conference.  On appeal, the Pro Se Claimant argued that the ALJ misapplied the burden of proof as it was Respondents who appealed the opinions of the DIME.  ICAO affirmed the ALJ’s Order and indicated that once an ALJ determines the DIME opinion concerning MMI and impairment, then the party seeking to overcome those opinions bears the burden of proof by clear and convincing evidence.

Moral of the story:  When a DIME physician offers conflicting opinions on MMI, impairment or causation, the ALJ is to resolve the conflict and to determine the true opinion of the DIME physician. As such, the burden may shift to the party who disagrees with the ALJ, not necessarily the party who initially sought to overcome the DIME.

 

An Unjoyful, Joy Ride: In Rush v. Enterprise Leasing, W.C. No. 5-081-615 (ICAO September 6, 2019), the Claimant was injured as a  passenger in a motor vehicle accident. The Claimant and a co-worker drovethe company vehicle to another location to pick up more vehicles.  En route, the co-worker drove down a dirt road and took off traction control before accelerating rapidly, which caused the vehicle to flip over several times.  Respondents argued that the Claimant’s activities in the vehicle constituted horseplay and was a personal deviation from his employment.  The Claimant testified that he believed they were traveling to the second location to pick up vehicles and did not have any part in the joy ride down a dirt road.  The ALJ credited the Claimant’s testimony and found the claim compensable.  The Respondents appealed the decision, arguing that the ALJ cannot rely on the Claimant’s subjective beliefs about the joy ride and deviation in her decision.  ICAO disagreed and found that there was substantial evidence to support the ALJs findings that the Claimant was not involved in a deviation from work.

Moral of the story: Non-participating victims of horseplay are entitled to workers’ compensation benefits because the employment placed them in the “zone of danger” created by the horseplay.

 

Covering your tracks: In Hansen v. Bavarian Inn Restaurant, Inc., W.C. No. 5-061-844 (ICAO September 4, 2019), the Claimant appealed a decision of the ALJ that he was terminated for cause and not entitled to TTD benefits.  Claimant worked at a bar in downtown Denver where a fight occurred between employees of the bar and patrons entering the establishment.  During the fight, Claimant was hit in the head several times and a co-worker was shot.  While filling out an incident report, the Claimant was permitted to review the surveillance video of the incident.  The following day, the employer was unable to access the surveillance video and noted that the Claimant’s Google drive was open on the computer.  The Claimant admitted to uploading the surveillance videos to his Google drive account. Claimant was charged with tampering with evidence. The employer had a written policy prohibiting disclosure, distribution, transmission or copying of confidential information and the Claimant had signed a document affirming his knowledge of this policy.  The ALJ found that the Claimant was provided permission to view the surveillance video but not upload any files to his personal Google drive account. The ALJ found that the Claimant’s actions violated the company’s written policy, which led to his termination.  The ALJ denied and dismissed the Claimant’s claim for TTD benefits.  ICAO upheld the ALJ’s Order.

Moral of the story: Having written policies that employees review, with receipt acknowledgment of same, helps prove termination for cause.

Where’s my DIME?

One of the main strategies in workers’ compensation claims involves the selection of a particular venue for the DIME process. For numerous years, Rule 11 was silent on the selection of a location for the Division IME. The party requesting the DIME had the option of selecting any venue in Colorado for the appointment to take place. From there, the DIME unit would select 3 physicians in the geographic location that the selecting party indicated on its Application and the DIME process would move forward. Essentially, any part of Colorado was “fair game” as the location in which to have a DIME. From a strategy perspective, selecting a specific geographical location for the DIME to take place could prove advantageous for the requesting party depending on the pool of physicians within that location. For example, it was not uncommon for residents from Fort Collins to request a DIME in Colorado Springs. One of the most common requests involved residents of Grand Junction traveling to Denver for their DIME appointment.

Respondents in certain geographical regions also had the strategy of requesting a pre-emptive DIME on a claim in which the treating physician placed the claimant at MMI with no impairment. For example, if a claimant in Colorado Springs was placed at MMI without impairment and was almost certain to request a DIME in Colorado Springs, Respondents would have the option of going for the DIME themselves as a pre-emptive measure and to take away claimant’s right to select a particular, more liberal venue to have the DIME.

Rule 11 is still silent on the venue for a DIME to take place. However, the recent changes to the Application for a DIME have added a specific portion to the Application form regarding venue selection. On the Application for a DIME, it states as follows, “preferred geographical location of examination. (The location in which the claimant resides may take precedence over the preferred location).” Of note is the use of the word “preferred” and specifically noting that claimant’s residence may take precedence instead of the preferred location selected. This is a new change that the DIME unit is focusing on and it appears in the past several months that the DIME unit is using a reasonableness standard when selecting physicians in a particular geographic location. For example, Respondents may want to challenge a treating physicians’ rating from the western slope and request a DIME in Denver. Gone are the days in which a three-doctor Denver panel was guaranteed. Instead, the DIME unit may put a combination of Denver and western slope physicians on the panel for selection. The process involves many variables as to which physicians are on the panel, including but not limited to, available physicians, specialties, current physicians performing DIMEs, timing, etc.

This new approach by the DIME unit is a topic of discussion and poses many issues. One issue is whether the venue preference will be applied equally to both parties and if bias is removed from the panel selection process. If Respondents are getting physicians from a select geographical location but claimants are not, (and vice-versa), it doesn’t present fairness to the DIME process for both parties. Another issue is the amount of physicians present in one geographic location and whether the pool of DIME physicians throughout the state are performing examinations routinely. For example, if Colorado Springs is frequently selected as a venue, and physicians within that pool are performing DIMEs more frequently than other physicians, does it eliminate the concerns that the new changes to the Rule hoped to address in having a wider variety of physicians participate in the process? Yet another issue is either party wanting a specific venue due to a fact specific reason in the claim, and not particularly receiving it despite the request of one or both parties. The new Rule allows the parties to agree to a number of issues, including the physician to perform the DIME and the cost. However, can the parties agree to a venue when there is a disagreement to the physician and cost?

Major changes to any Rule are usually met with many questions about its implementation. Venue selection for the DIME process has always been a strategic focus for both parties and now poses even more questions based on the changes to the Application for DIME. Now that the DIME unit is exercising some control over the venue selection, it may change the focus of the strategy for the DIME in a different direction. Respondents may want to rely upon the fact that a DIME panel may not entirely be composed of physicians within one region, but instead, focus on the potential for obtaining a panel with more variety that could ultimately impact the case in different ways. Employers and carriers may want to focus the fight on a different aspect of the DIME such as cost. In light of the changes to Rule 11, it is important to discuss the DIME strategy with counsel and the client to ensure that all of the facts and potential options are being discussed to best forward the claim to resolution. Always remember that the Prehearing Unit retains jurisdiction to resolves issues pertaining to the DIME. Once a Motion is filed, the DIME is held in abeyance pursuant to Rule 11. If the parties are able to agree on the venue, it may be worthwhile to reduce the agreement to a stipulated Order and provide a copy of it to the DIME unit so that there is no question as to which physicians can be selected from a certain geographical region.

If you have any questions regarding the changes to the Rules or the updated statutes, feel free to contact any of the attorneys at Lee & Brown, LLC.

The Legal Buzz – Lee & Brown Newsletter and Case Law Update September 2019

Lee and Brown Partners
Thank you for taking the time to read our Firm newsletter. Our newsletter provides a monthly update
on recent developments within our Firm, as well as in the insurance defense community in
Colorado, Arizona and Utah.
 
Lee and Brown Denver AttorneysFollow us on LinkedIn

 


 

   Noteworthy Cases – Colorado

 

Members John Abraham and Fran McCracken successfully defended against Claimant’s claim of a compensable occupational disease in Vargas v. Cargill Meat Solutions, W.C. 8-093-534-001.  Claimant worked as a snout trimmer and alleged to have suffered bilateral carpal tunnel syndrome as a result of an occupational disease.  At hearing, Ms. McCracken elicited testimony from Respondents’ expert that Claimant’s duties as a snout trimmer did not meet the causation requirements for carpal tunnel syndrome.  Furthermore, Claimant’s job duties lacked the sufficient force to cause a work-related condition pursuant to Rule 17, Exhibit 5 of the Division’s Medical Treatment Guidelines. The ALJ credited the opinion of Respondents’ expert and found Claimant failed to prove that he suffered an occupational disease in the form of bilateral carpal tunnel syndrome.  The claim was denied and dismissed.

 

 In Gammill v. Walmart Associates Inc., Member Fran McCracken successfully defended against Claimant’s claim of compensability for a back injury. Respondents sought to withdraw a General Admission of Liability, based on prior medical records indicating that Claimant’s back injury was pre-existing. Respondents’ medical expert also testified that Claimant’s congenital deformity was an incidental finding not related to the work injury and that  fusion surgery to treat low back pain should only be considered after conservative treatment was exhausted. The ALJ found that Claimant failed to meet his burden of proving entitlement to workers’ compensation benefits by a preponderance of the evidence. Respondents were therefore permitted to withdraw the GAL as improvident.

 

Member Fran McCracken also successfully defended against a claim for penalties for the alleged failure to timely pay a lump sum settlement amount to Claimant within fifteen days in McDonald v. Walmart Associates Inc. The ALJ found that Claimant failed to demonstrate that penalties should be assessed for Respondents’ untimely payment of the settlement check. Specifically, the ALJ noted that Respondents acted reasonably in ensuring that Claimant timely received the check by stopping payment on a first check that was issued and requesting a new check be overnighted to Respondents’ counsel while consistently communicating with Claimant’s counsel regarding the arrival of the check. Additionally, the ALJ found that Respondents cured the issue of delayed settlement prior to Claimant filing the Application for Hearing and Amended AFH, which resulted in the curing of the alleged violation as allowed by statute.

 

Noteworthy Cases – Arizona

 

Before The Industrial Commission of Arizona, Associate Daniel Mowrey defended Claimant’s full contest claim in Johnson v. KWD Enterprise, Inc., ICA No. 20183310358.  Claimant alleged a low back injury as a result of her employment as a home health care nurse.  Claimant stated that she was injured while lifting a patient in her bed. At hearing, Mr. Mowrey elicited testimony from Claimant that she did not initially report the injury or seek treatment for over two weeks following the alleged injury.  Claimant further admitted to not filing a claim for workers’ compensation until her unemployment benefits were denied. Mr. Mowrey also submitted an expert medical opinion that the claim was not compensable. The ALJ found the testimony and corresponding medical records did not meet the standard to establish an industrial injury.  The ALJ denied and dismissed the claim.

 


Working from Home and Workers’ Compensation

 While telecommuting is not realistic for every company, many jobs have at least some component that employees can perform flexibly, even if a job requires an employee to be onsite for specific hours. The question then arises, “What is an employer’s liability for injuries occurring at an employee’s home or when traveling between the home and work?”  A compensable injury is one which “arises out of” and “in the course of” the employment.   An injury “arises out of” a work-related activity if it is “sufficiently interrelated to the conditions and the circumstances under which the employee usually performs his job functions that the activity may reasonably be characterized as an incident of employment, even though the activity itself is not a strict obligation of employment and does not confer a strict benefit on the employer.” City of Boulder v. Streeb, 706 P.2d 786 (Colo. 1985). Continue reading the article

 


Cases You Should Know

Enough of this Horseplay!: In Rifle Tequilas, Inc. and Truck Insurance Exchange v. Pena Alvarez, No. 18CA1367 (July 11, 2019), Claimant was a restaurant employee who sustained injuries to his facial area as a result of an altercation with another employee. Claimant, as permitted by the employer, had a beer after the restaurant closed. The altercation regarding the beer arose while Claimant was washing dishes. The ALJ found the claim to be compensable, notwithstanding the Respondents’ argument that Claimant was engaged in horseplay at the time of injury. Specifically, the ALJ used the four factor test from Lori’s Family Dining, Inc. v. ICAO to determine whether the horseplay deviated so substantially that Claimant’s resulting injury was not compensable: (1) the extent and seriousness of the deviation; (2) the completeness of the deviation, i.e. whether it was commingled with the performance of a duty or involved in an abandonment of duty; (3) the extent to which the practice of horseplay had become an accepted part of the employment; and (4) the extent to which the nature of the employment may be expected to include some horseplay. The ALJ found the claim to be compensable, noting that Claimant was permitted to drink beer while working, the altercation involved the beer, and there was “no credible evidence” that Claimant was reprimanded for prior altercations. Thus, the ALJ concluded that horseplay was “an inherent part of the workplace.” The Court of Appeals noted that the finding of the extent of a deviation is a question of fact for the ALJ and that a claimant is not required to prove every element of the four-part test. Rather, the ALJ’s finding only needs to be sound and readily discernible based on the factors.

 

Moral of the story: Horseplay may be considered an inherent part of the workplace when there are no consequences for prior acts of horseplay.

 
 

Grant or Deny? The Director Will Decide: In Webster v. Czarnowski Display Service Inc., W.C. No. 5-009-761 (July 16, 2019), Claimant sought to change his physician under C.R.S. § 8-43-404(5)(a). The Director of the Division of Workers’ Compensation denied Claimant’s request, as Claimant sought treatment for injuries and conditions not related to his work injury. The ICAO held that the Director has broad discretionary authority to grant a Claimant’s request for a change of physician. In this case, Claimant’s request was based on his personal dissatisfaction with his physician. The ICAO upheld the Director’s denial of Claimant’s request, as there was no abuse of discretion.

 

Moral of the story: The Director and ALJ have broad discretion in granting a request for change of physician under C.R.S. § 8-43-404(5)(a).

 
 

IME on My Way: In Wanner v. Patterson UTI Drilling Co, W.C. No. 5-065-967-001 (July 17, 2019), ICAO affirmed an ALJ’s Order that found Claimant’s claim compensable.  Claimant was initially injured at work on December 22, 2017, when he was struck by a board on his left side. Claimant sustained additional injuries on March 28, 2018, while driving home from an IME.  There were two primary issues in this claim: 1) whether the initial injury on December 22, 2017 was a compensable claim; and 2) whether Claimant was entitled to ongoing medical benefits following the motor vehicle accident on March 28, 2018. Respondents argued on appeal that the motor vehicle accident was an intervening event that severed the causal connection.  The ALJ opined that Respondents’ intervening event argument was based on the mistaken premise that an injury during travel to an IME appointment is an intervening event. The ALJ ruled, and the ICAO agreed, that under the “quasi-course of employment” doctrine, an injury occurring during travel to and from authorized medical treatment is compensable.  The ALJ’s Order was affirmed.

 

Moral of the story: Injuries that occur during travel to and from authorized medical treatment are compensable.

 
 

Safety First? Sometimes: In Burd v. Builder Services Group Inc., d/b/a Mato, W.C. No. 5-058-572-01 (July 9, 2019), Respondents sought review of the ALJ’s Order that denied a reduction in disability benefits due to a safety rule violation and increased the average weekly wage (AWW).  Claimant was injured when he fell off a roof while installing fire insulation products.  Claimant was not attached to a safety line, as was required; therefore, Respondents reduced his temporary benefits by 50% due to the imposition of the safety rule penalty pursuant to C.R.S. § 8-42-112(1)(b).  The ALJ found that the employer did not prove Claimant willfully violated the safety rule, as the employer’s management did not consistently understand the rule itself. Additionally, the ALJ found that the employer did not enforce the safety rule.  The ICAO found that there was substantial evidence to support the ALJ’s ruling.  The ALJ’s Order was affirmed.

 

Moral of the story: If the safety rule is not regularly understood and enforced, you will not be successful in taking the 50% safety rule violation reduction.

Working From Home and Workers’ Compensation

In 2019, Colorado earned the top spot for the highest percentage of employees Working From Homewho work from home, according to Flex.Jobs  https://www.flexjobs.com/blog/post/infographic-which-stateshave-most-full-time-telecommuters.  While telecommuting is not realistic for every company, many jobs have at least some component that employees can do flexibly even if a job requires an employee to be onsite for specific hours.  Perhaps the employee reconciles call logs or works on quarterly reports on a Sunday afternoon.  The question then arises, “What is an employer’s liability for injuries occurring at an employee’s home or when traveling between the home and work?”  A compensable injury is one which “arises out of” and “in the course of” the employment.   An injury “arises out of” of a work-related activity if it is “sufficiently interrelated to the conditions and the circumstances under which the employee usually performs his job functions that the activity may reasonably be characterized as an incident of employment, even though the activity itself is not a strict obligation of employment and does not confer a strict benefit on the employer.” City of Boulder v. Streeb, 706 P.2d 786 (Colo. 1985). For example, in Schwindt v. Red Roof Delivery Inc., W.C. No. 4-009-534 (September 14, 1992), the Claimant, a restaurant manager, was injured when she fell down a stairway in her home at approximately 4:30 a.m., sustaining significant injuries.  The Claimant had been working on schedules for the employer, and was authorized, but not required, to do so at home.  The Claimant was performing this work in her living room, but began to fall asleep, so she gathered her materials to go to an office adjoining her bedroom.  Just prior to approaching the stairway, the Claimant closed a door.  The resultant reduced lighting impeded the Claimant’s visibility. Claimant lost her step in the hallway and fell down the stairs.  The Claimant testified she “probably” would have taken a shower and returned to scheduling had the fall not occurred.  The ALJ concluded the injury was compensable.  He found the Claimant’s work demands permitted her to complete administrative work at home, and that, at the time of the fall, the Claimant “would have been asleep in bed” had she not been working on the schedules.  The Respondents made several arguments on appeal, including that the connection between the fall and the Claimant’s employment was too remote, and that the Claimant’s act of closing the door severed the causal connection.  The Panel rejected the Respondents’ arguments, holding there was a sufficient nexus between the conditions of employment and the injury.  The Panel reasoned, the claimant “need only have been acting in a manner consistent with, or incidental to, the employment” to establish compensability.

 

Similarly, in Bates v. Coors Brewing Co., W. C. No. 4-348-224, 1998 WL 872454, (Nov. 13, 1998), the Claimant worked as a plant manager for the employer. On May 14, 1997, the Claimant left the employer’s plant in her personal vehicle to travel home, where she was going review work-related material she was taking on a business trip the following day. On her way home, the Claimant was injured in a motor vehicle accident.  The ALJ found the claim compensable, holding the Claimant’s travel home on this occasion was in pursuit of the employer’s business and conferred a benefit to the employer beyond her own presence at work.  On appeal, Respondents contended that the facts of this case did not fall within the travel status exception because the Claimant was not required to work at home and was not required to bring her personal vehicle to work. The Panel rejected Respondents’ arguments, holding an injury does not have to be the result of a mandatory employment activity to be compensable. University of Denver v. Nemeth, 127 Colo. 385, 257 P.2d 423 (1953);  Rather, it is sufficient if the injury arises out of a risk which is reasonably incidental to the conditions and circumstances of the particular employment.  This includes discretionary or “optional” activities on the part of the employee which are devoid of any duty component.

 

The case Roe v. Alpine Plumbing & Heating, Inc., W.C. No. 3-766-435, 1987 WL59197, (July 20, 19987), had similar facts, but a contrary result.  In Roe, the Claimant who was employed by Respondent as a plumber, was injured in an automobile accident.  The Claimant testified that the accident occurred while he was “driving up to the job” near Boulder. As a result of a previous injury, the Claimant was performing light-duty work for the Respondent.   The Claimant’s duties included working on plans at his home. However, the ALJ found that the Claimant was “allowed to work at home for his own convenience” and that “the Claimant’s home was not an alternative job site.” Consequently, the ALJ concluded that the Claimant was not within the course and scope of his employment at the time of the accident.

 

Finally, in Sedgwick CMS v. Valcourt-Williams, in a 12-2 decision, the District Court of Appeals of Florida, reversed an ALJ’s decision awarding worker’s compensation  benefits to an at home worker.  During working hours on  April 27, 2016, Valcourt-Williams, a workers’ compensation claims adjuster, reached for a cup of coffee in her kitchen and tripped over one of her dogs, fell and sustained injuries to her knee, hip and shoulder.  She filed a worker’s compensation claim, which the employer denied, contending her injuries did not arise out of employment.  The ALJ held the Claimant’s injuries were compensable because the work from home arrangement meant the employer “imported the work environment into the claimant’s home”.  On appeal, the District Court held the Claimant’s non-employment life—her dog, her kitchen, reaching for her coffee cup—caused the accident, not her employment.  The court, however, said their decision would not “immunize” employers from workers’ compensation claims in work-at-home arrangements.  Two judges issued dissenting opinions.  One dissenter said it was “expected that employees who work from home will take periodic breaks and may suffer compensable injuries from falls from a variety of causes”.   The second dissenter argued that workplace injury from a neutral risk has been “undoubtedly compensable” and that the majority erred in their decision.  The judge found that tripping over the dog was “no different than if the claimant had slipped on a liquid substance on the floor” and was consistent with a decade of case law holding that a trip and fall in the workplace is compensable.

 

The trend to allow employees to work from home raises many wrinkles in the event of  injury, including applicability of the “dual purpose doctrine”, travel status, and obvious problems with proof.  In certain factual situations, the dual purpose doctrine has been applied to cover injuries sustained while the claimant is traveling between home and the job site. One such instance exists when the nature of the claimant’s employment is such that “it can genuinely and not fictitiously be said that the home has become part of the employment premises.” In those circumstances “travel between two parts of the employer’s premises is in the course of employment.” 1 Larson’s Workers’ Compensation Law, § 16.10[1]. Larson adds the following at § 16.10[2]:  When reliance is placed upon the status of the home as a place of employment generally, instead of or in addition to the existence of a specific work assignment at the end of the particular homeward trip, three principal indicia may be looked for: the quantity and regularity of work performed at home; the continuing presence of work equipment at home; and special circumstances of the particular employment that make it necessary, and not merely personally convenient, to work at home.

 

The reported cases  suggest compensability of injuries suffered by an employee permitted to work from home are highly fact specific.  If you have questions about the compensability of such an injury, or any injury, contact one of the attorneys at Lee & Brown.

 

The Legal Buzz – Lee & Brown Newsletter and Case Law Update August 2019

Lee and Brown Partners
Thank you for taking the time to read our Firm newsletter. Our newsletter provides a monthly update
on recent developments within our Firm, as well as in the insurance defense community.
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In The News

It is with great pride that we announce the Attorneys of Lee & Brown, LLC, who have been selected by their peers for inclusion in The Best Lawyers in America 2020® in the field of Workers’ Compensation Law – Employers.


 

   Noteworthy Cases – Colorado

In Metcalf v. Caterpillar Incorporated Co., Of Counsel Sheila Toborg and Of Counsel William Sterck successfully defended  against Claimant’s claim of compensability. Claimant argued that she sustained a compensable injury and that she was entitled to medical care, temporary total disability benefits, and temporary partial disability benefits. During hearing, Ms. Toborg argued, and presented evidence, that the Claimant did not establish she sustained an injury in the course and scope of her employment and that the Claimant’s condition was not an occupational disease, but rather the result of trauma. Mr. Sterck further argued, in Respondents’ Position Statement, that Claimant had no basis for her claim in either law or in fact.  Due to the combined efforts of Ms. Toborg and Mr. Sterck, the ALJ found that Claimant failed to meet her burden of proving her claim compensable and the claim was dismissed.

 
Noteworthy Cases – Arizona

Before The Industrial Commission of Arizona, Associate Daniel Mowrey successfully defended Claimant’s Appeal in Szach v. SW Ambulance, ICA No. 20160-260291.  Claimant protested the closure of his claim and sought continuing medical benefits. Claimant also sought to link upper body injury and subsequent surgery to the admitted claim.  The ALJ relied upon testimony from Respondents’ medical expert, who opined that the upper body injury and subsequent surgery was not related to the admitted knee injury.  The ALJ denied and dismissed the claim. The Claimant appealed. Upon appeal, the Panel found the evidence supported the ALJ’s findings and affirmed.

Also before The Industrial Commission of Arizona, Associate Daniel Mowrey successfully defended against Claimant’s full contest claim in Selby v. Cornet Limited DBA Medstar, ICA No. 20180-70036.  Claimant alleged a traumatic hernia as a result of transferring a patient at work.  Mr. Mowrey elicited testimony from Claimant that he could not pinpoint the specific time or act which directly caused the hernia.  Claimant further admitted that he did not feel pain until 4:00 a.m. the next morning.  Mr. Mowrey argued that the testimony did not meet the requirements of a compensable hernia under A.R.S. Section 23-1043. The ALJ found the testimony and corresponding medical records did not meet the standard outlined in A.R.S. Section 23-1043 to establish an industrial hernia.  The ALJ denied and dismissed the claim.

 


Alligators, Burritos and Bears – Oh My!

Having litigated several “assault” cases, nothing ceases to amaze this author more than the vast number of unfortunate ways people find themselves in the most bizarre and unforeseeable situations. Courts across the United States adjudicating assault-based cases in the workers’ compensation context are faced with determining whether the events leading to the assault arose out of an injured workers’ employment or whether the event was purely personal in nature. Here are some of the more inexplicable events that could give rise to a claim — you decide whether these claims would be compensable. Continue reading the article

 


Cases You Should Know

Don’t FAL to Take Notice: In Dickens v. Wagner Equipment, No. 18CA1806 (June 20, 2019), Claimant sought review of a final Order by ICAO affirming the decision of an ALJ denying his Petition to Reopen and dismissing his claim for additional benefits. Claimant had sustained an admitted, compensable injury to his right knee in 2006 while working for Respondents. He underwent extensive authorized medical treatment and reached MMI in 2010. Because Claimant continued to experience pain, the claim was voluntarily reopened by Respondents. Claimant reached MMI a second time in August 2013 and Respondents filed a FAL based on the ATP finding Claimant at MMI. It was undisputed that neither Claimant, nor his Counsel, were properly served the 2013 FAL. Claimant’s Counsel eventually obtained a copy of the FAL directly from the Division on April 28, 2014. On May 22, 2014, within 30 days of receiving the FAL from the DOWC, Claimant filed an Objection to the FAL, but did not file an Application for Hearing at that time, as required by Section 8-43-203(2)(b)(II)(A), C.R.S. 2018. Instead, more than 30 days later, on June 23, 2014, Claimant filed an Application for Hearing on the sole issue of, “whether Respondent’s FAL was properly served, and if so, when and based upon such whether Claimant’s Objection was timely.” The matter was heard before an ALJ, who held that the claim had not closed because Claimant did not receive proper notice. Claimant filed another Application for Hearing on August 22, 2017, endorsing new issues not previously endorsed. Respondents argued that Claimant’s claim was closed by operation of law because Claimant failed to file within 30 days of receiving the FAL. The ALJ agreed and held Claimant’s claim automatically closed per statutory rules. Claimant appealed and the Colorado Court of Appeals held that the claim closed in 2014 when Claimant’s Counsel received actual notice of the FAL by obtaining a copy from the Division.  Because Claimant failed to file an Application for Hearing challenging the issues raised in the FAL within 30 days of receiving it, the claim closed.

Moral of the Story: The 30-day statutory time-frame for Claimant to file an Application for Hearing in connection with an objection to the FAL begins to run at the time of notice of the FAL. Even if initially improperly served, the time-frame begins when Claimant receives actual notice, or receipt of notice, of the FAL.
 

DIME flies when you are having fun: In Suomie v. Spectrum Retirement Communities, W.C. 5-050-347 (June 14, 2019), Claimant sought review of an Order that denied Claimant the statutory right to request a DIME.  Respondents filed a medica-only FAL in July 2017.  Because Claimant had lost no time as a result of the injury and received no impairment rating, no temporary benefits or PPD benefits were admitted on the FAL. Claimant objected to the FAL and sought a DIME. Respondents filed a Motion to Strike the DIME Application based on the finding of Loofburrow 320 P.3d 327 (Colo. 2014). The ALJ agreed with Respondents and struck the DIME Application, noting it was not ripe. Claimant appealed. The Panel disagreed with the ALJ’s finding that Claimant did not have a statutory right to a DIME. The Panel noted that the ALJ did not follow the proper legal standard for denial of a DIME as noted in Martinez v. Energy Savings Crew, LLC, W.C. No. 5-055-251 (May 31, 2019). The Panel did not follow the reasoning noted in Loofburrow because it involved a claim where no FAL was filed. The Panel held that a medical-only FAL has the same legal effectiveness as any other FAL and was sufficient to trigger the right to challenge an ATP’s decision through a DIME.

Moral of the Story: Filing any FAL triggers the statutory time requirements to request a DIME.  Even when a medical-only FAL has been filed, the claimant has a statutory right to a DIME.
 

The Penalty Box: In Conger v. Johnson Controls W.C. 4-981-806 (July 1, 2019), Respondents sought review of an ALJ’s Order requiring Respondents to pay penalties in the amount of $22,800. Respondents failed to timely authorize medical treatment, as Ordered by a prior ALJ, and thus were penalized for violation of said Order. The Panel, citing Supreme Court precedent holding that the correct test to determine whether a fine or penalty is excessive, is whether the amount of the fine is grossly disproportional to the gravity of the offense.  The Panel determined that the ALJ correctly determined, based upon the evidence, Respondents’ actions were objectively unreasonable in failing to provide the specific medical treatment noted in the Order. The Panel noted that the case highlighted the proportionality of penalties imposed for the gravity of the actions of the party. Here, the Panel applied the gross proportionality test in determining whether the penalties imposed by the ALJ on Respondents, were supported by substantial evidence of unreasonable conduct by Respondents in authorizing and paying for medical treatment. The Panel upheld the finding of the ALJ that the Respondents’ conduct in violation of the Order was objectively unreasonable, but remanded to the ALJ to review whether his finding of the amount of the penalty imposed was proportional to the harm, or risk of harm, by Respondents’ failure to comply with the Order.
 
Moral of the story: It is imperative to timely comply with court orders. Failure to comply with an order subjects respondents to potential penalties which are at the judge’s discretion and proportional to the offense.

 
Survey Says: “Compensable”:  In Olvera v. Air Cleansheen LLC, W.C. 5-073689 (June 4, 2019), Claimant sought review of an Order by an ALJ that denied compensability of the claim. Claimant worked for the employer laundering sheets and towels through a commercial laundry. The employer’s business provided clean linens to bed and breakfast locations. Claimant was injured in an automobile accident on November 8, 2017, while transporting the employer’s laundry in her car. While driving in what was deemed to be the course and scope of her employment, she was involved in auto accident when another driver ran a stop sign. Claimant reported the accident to her supervisor and went to the ER complaining of injuries to her back. Claimant’s treatment was paid for by the other driver’s auto insurance, but when those funds reached their policy limit, Claimant filed a workers’ compensation claim in April 2018. On the issue of compensability, the ALJ found that Claimant was not credible because of irregularities in her submitted evidence and held that she disclaimed and excluded any work relationship to her accident because she was not being truthful or credible, dismissing the claim. The ICAO held that the Findings of Fact did not support the ALJ’s Order under C.R.S. § 8-41-293(1)(a).  The Panel noted that the ALJ did not identify any statements that were not believed that would also support a denial of the claim’s compensability. They held that an employee who suffers a compensable injury at the hands of a third party can pursue remedies against the third person and also file a claim under the Workers’ Compensation Act.  The ALJ’s Order was set aside and the matter remanded for additional findings to determine compensability.
 
Moral of the Story: A claimant may file a workers’ compensation claim even if they have already pursued, and received, benefits from a third party.

Alligators, Burritos and Bears – Oh My!

Having litigated several “assault” cases, nothing ceases to amaze this author more than the vast number of unfortunate ways people find themselves in the most bizarre and unforeseeable situations. Courts across the United States adjudicating assault-based cases in the workers’ compensation context are faced with determining whether the events leading to the assault arose out of an injured workers’ employment or whether the event was purely personal in nature. Here are some of the more inexplicable events that could give rise to a claim — you decide whether these claims would be compensable.

 

In 2007, an individual was feeding a bear at the Great Bear Adventure in northern Montana. It was undisputed that the individual had smoked pot prior to entering the bear cage with food. The manager of the park had told the individual not to feed the bear as the food was being tapered due to hibernation. When the individual entered the enclosure, he was mauled by the bear.  Although the employer argued that the individual was outside the scope of the employment, the Montana appellate court found that the bear was “an equal opportunity mauler” who attacked regardless of the marijuana use. As noted by the decision, the use of drugs (which the court admonished at best) had no bearing on the actual animal attack.

 

More traumatically, in August 2018, police were called to a construction scene in Wisconsin. The police discovered that a co-worker allegedly attacked and killed another co-worker with a circular saw. The co-worker was arrested at the scene. A subsequent investigation documented that the co-worker assailant had told other crew members during the day of the attack that other crew members were teasing him about a one-night stand he had had the evening before.  The legal question, other than the criminal liability of the assailant, is whether the decedent’s estate/dependents would be entitled to workers’ compensation death benefits? Was the attack work related, or did it arise out of a direct personal dispute between the assailant and decedent? Based upon the facts of this case, you be the judge.

 

Although the case above could be on the border of compensability depending on the facts, a more clear-cut assault occurred in January 2018 in South Carolina. During that event, the manager of a fast food restaurant got into a heated verbal altercation with an employee over shift scheduling. When the manager told the employee to “stop being a crybaby,” the employee wrapped up the argument by throwing a hot, “loaded burrito” at the manager. According to the manager, melted cheese stuck onto the manager’s left side and leg. Apparently, the manager recovered from the hot cheese injuries, but could a mental impairment injury also be included in this type of event?

 

Finally, imagine yourself working as a fast food drive through employee. It’s a typical day of serving food and drinks, handing the items to customers through an open window. Now imagine serving a soft-drink, and, while the window is open, the customer throws a three-and-a-half-foot alligator through the window at you. In 2016, that is exactly what happened to a fast food employee in Florida. The customer was later apprehended and claimed that he threw the alligator into the restaurant as a funny prank. While it is unclear whether the employee sustained any physical injuries, the assault by semi-aquatic reptile exemplifies what a neutral force assault is in terms of workers’ compensation liability for injuries arising out of employment.

 

The above cases raise unique issues concerning assaults, whether by an animal, a co-employee, or a random person who just happened to pick up an alligator from the side of the road prior to getting lunch, that can be tricky and fact dependent.  When you need help untangling the facts and details surrounding a claim, please contact one of the attorneys at Lee & Brown.

The Legal Buzz – Lee & Brown Newsletter and Case Law Update July 2019

Lee and Brown LLC Partners and Certifications

Thank you for taking the time to read our Firm newsletter. Our newsletter provides a monthly update
on recent developments within our Firm, as well as in the insurance defense community.
Lee and Brown Denver AttorneysFollow us on LinkedIn

 


 

Congratulations are in Order!

 

Lee & Brown has recognized the daily commitment, dedication and professionalism of three of its own.  We are very happy to make the following announcements:

L&B welcomes M. Frances McCracken to the Firm as Partner.  Ms. McCracken has been with L&B for 4 years after the dissolution of her previous Firm.  Her 30 years of experience in insurance defense is a great asset to our Firm, as is her commitment to her profession and her clients.  Ms. McCracken’s practice over the years has involved all aspects of the litigation process, including success in trials and appeals, arbitration, mediation and case settlement.  She has defended cases in the Colorado State District Courts, Court of Appeals, the Supreme Court, as well as U.S. District Court.  Her expertise as a legal writer and litigator raises the bar for not only our Firm, but in the insurance defense and legal community as a whole.  Please join us in congratulations to Fran, for a well-deserved lifetime achievement.

 

L&B announces the promotion of Associate Jessica Melson to Of Counsel.  Ms. Melson joined L&B in February 2012 with previous insurance defense experience. Since that time, she has grown tremendously as an attorney in her dedication and her commitment to provide the best legal defense for her clients while developing into a strong example as a professional to the Firm’s Jr. Associates and in the legal community.  Ms. Melson regularly shares her knowledge of insurance defense by providing educational counseling to clients. She has volunteered pro bono legal services for the Colorado Lawyers Committee and Metro Volunteer Lawyers. The Firm congratulates you, Jessica, on your achievements thus far in the legal profession.

 

L&B promotes Associate Angela M. Lavery to Of Counsel.  Ms. Lavery came to L&B in 2011 as a Paralegal.  It soon became apparent that Ms. Lavery, who earned her law degree from the University of Denver Sturm College of Law in 1995, was capable of much more.  Since receiving her license from the State of Colorado in 2012, Ms. Lavery has been diligently working to provide excellent legal defense to her clients, to whom she also regularly counsels on the ever-changing and evolving analysis of legal issues and the law.  Ms. Lavery has blossomed into a patient and knowledgeable mentor for the Jr. Associates and Law Clerks in the Firm, as well as in the legal community.  Outside of the Firm, she still makes time to contribute pro bono as a Court-Appointed Special Advocate for Children with Denver CASA.  Congratulations, Angela, on a job well done.  The Firm is proud to have you join us as Of Counsel.

You have all made L&B a better place by your contributions and your dedication and we look forward to sharing in your future accomplishments.

 


Noteworthy Cases

In Tremain v. Caterpillar, Inc. and Liberty Mutual Insurance, W.C. No. 5-092-748, Of Counsel Sheila Toborg and Of Counsel William Sterck successfully defended against Claimant’s claim of compensability for an injury he believed to be in the course and scope of his employment. Claimant argued that he sustained a compensable injury and that he was entitled to medical care and disability benefits. During hearing, Ms. Toborg argued that, per Respondents’ expert report, Claimant’s exhibited symptoms were chronic and not work-related. Mr. Sterck argued in the Respondents’ Position Statement that Claimant had no claim in fact, or in law, for the relief he was seeking. Because of the combined efforts of Ms. Toborg and Mr. Sterck, the ALJ found that Claimant failed to prove by a preponderance of the evidence that he had a compensable claim. The claim was dismissed.

 

In Thompson v. The Home Depot and Liberty Mutual Insurance, W.C. No. 4-886-616, Of Counsel Sheila Toborg and Associate Jessie M. Tasselmyer successfully defended against Claimant’s attempt to overcome the Division Independent Medical Examination for injuries sustained as a result of a May 2012 admitted work injury.  ICAO affirmed the ALJ’s ruling and found that they had no basis to overturn the prior ruling. The ALJ appropriately credited the opinion of Respondents’ expert and that there was no perceivable error of law.

 


 

In May of this year the Colorado Court of Appeals rendered an opinion that focused on the admissibility of past medical expenses when the claimant/plaintiff is injured on the job and sues the third-party tortfeasor. The Court considered whether “billed” medical expenses versus what was actually “paid” were to be considered by the court and jury in awarding damages to a claimant/plaintiff. Before trial, the defendant had extinguished the insurer’s subrogation interest in the amounts paid by paying off the insurer’s claim for those damages.  Continue reading the article

 


Cases You Should Know

You Get a Fine, I Get a Fine, Everybody Gets a Fine: In Colorado Department of Labor and Employment v. Dami Hospitality, 2019CO47M (June 3, 2019)(awaiting publication), the DOWC fined Dami $841,200 for failure to carry workers’ compensation insurance for 1,698 days. Dami appealed. ICAO affirmed; however, the Supreme Court reversed the decision deciding the fine violated the Excessive Fines Clause of the 8th Amendment because the DOWC failed to consider Dami’s ability to pay the fine. The Colorado Supreme Court found the Court of Appeals applied the incorrect test to determine whether the fine was excessive. It held that the correct test to determine whether a fine is excessive is whether the amount of the fine is grossly disproportional to the gravity of the offense. The Court ruled, “The court of appeals’ ruling is thus reversed and the case is remanded to that court for return to the Division of Workers’ Compensation to determine whether the per diem fines at issue are proportional to the harm or risk of harm caused by each day of the employer’s failure to comply with the statutory requirement to carry workers’ compensation insurance.”

Moral of the Story: It is imperative to have workers’ compensation insurance coverage. Failure to do so can result in substantial fines.

 

Is it a Cure? In Rajabi v. ICAO; Arvada Fire Protection District…, 2018CA1599 (May 16, 2019)(unpublished), Claimant sustained an admitted injury to the right hand in April 2017 and was diagnosed with complex regional pain syndrome. Claimant requested help with housekeeping and yard work. The ATP recommended in-home housekeeping and yard services. Nonetheless, the ATP did not assign Claimant restrictions pertaining to the right hand.

The Colorado Court of Appeals affirmed ICAO’s Order finding that Claimant’s request for in-home housekeeping and yard services was not reasonable, necessary, and related to the claim. Specifically, the request for in-home housekeeping and yard services was not “medical in nature or incidental to obtaining such medical or nursing treatment.”  The Court opined that Claimant’s request for in-home housekeeping and yard work did not relieve and or cure Claimant’s condition. As such, the request was not medically reasonable or necessary.  The Colorado Court of Appeals affirmed the credibility determinations and legal standards utilized by the ALJ.

Moral of the Story:  Treatment recommended by an ATP must cure and/or relieve a claimant of his/her symptoms resulting from a work-related injury.

 

Make it Count. In Humphrey v. FedEx Freight Inc., W.C. No. 4-911-782, the Claimant sought review of an Order denying his Motion to Strike the Respondents’ Final Admission of Liability (FAL).  Respondents allegedly failed to attach the proper MMI medical report when filing the FAL. As such, the claim was never administratively closed and the Claimant was not required to pursue a reopening of his claim.  ICAO set aside the ALJ’s Order and remanded the case to the ALJ for further findings.  ICAO ruled that FALs are a jurisdictional requirement “and their inadequacy may be raised at any time…” The ALJ was instructed to address his findings of fact and conclusions of law as to why Claimant’s Motion was denied.

Moral of the Story: A FAL must be filed with the proper medical report to administratively close the claim.

 

Better to Be Assertive: In the Matter of the Claim of Quincy Bryant v. Transit Mix Concrete and Traveler’s Indemnity Company, W.C. no. 5-058-044-001 (ICAO June 5, 2019), ICAO affirmed in part, and remanded in part, an ALJ’s Order that Respondents overcame the DIME. First, the Panel held that the ALJ erred in reversing the DIME physician with respect to the Table 53 diagnosis. The ALJ incorrectly held that the law requires objective rigidity in order to assign a Table 53 diagnosis when rating the cervical spine. The law has no such requirement: the requisite rigidity may arise from the Claimant’s subjective complaints or objective evidence. Secondly, the Panel held that the ALJ properly found that Respondents did not waive their ability to assert a safety violation. Although Respondents did not assert a safety rule violation in the FAL, they did timely assert it in their Application for Hearing challenging the findings of the DIME. Ultimately, the Panel reversed the ALJ’s findings with respect to the Table 53 diagnosis and remanded for further findings on whether there was evidence, subjective or objective, of rigidity.  The Panel affirmed the ALJ’s finding that Respondents did not waive the ability to assert a safety rule violation.

Moral of the Story: A Table 53 diagnosis requires objective evidence with respect to pathology, but not with respect to rigidity. Respondents must make sure to assert all implicated affirmative defenses on their pleadings in order to prevent waiver.

 

Smacking Some Sense into Loofbourrow: In this next case, Respondents filed a medical-only FAL. Seventy five days later, Claimant objected to the FAL and filed a Notice and Proposal to Select a DIME. Respondents moved to strike Claimant’s request for a DIME as untimely because it was filed outside of the 30-day time requirement. The ALJ agreed and struck Claimant’s request for DIME. Claimant appealed and argued, according to Loofbourrow, 320 P.3d 327 (Colo. 2014), a medical-only FAL does not close a claim, has no statutory significance, and does not trigger the statutory time requirements to request a DIME. The Panel disagreed. It distinguished Loofbourrow because it involved a claim where no FAL was filed. The Panel affirmed the ALJ and held that a medical-only FAL has the same legal effectiveness as any other FAL. Martinez v. Energy Savings Crew, LLC, W.C. No. 5-055-251 (May 31, 2019).

Moral of the Story: Filing a FAL triggers the statutory time requirements to request a DIME. Without a FAL, a claim may remain open indefinitely.

 

No Alter Ego Here: In McRobbie v. Estate of Mary E. Wales, W.C. No. 5-052-934 (May 24, 2019), Claimant worked as a caregiver to Mary Wales. She was seating Ms. Wales on a shower bench when she felt shooting pain going through her left arm into her fingers. Claimant was later diagnosed with a cervical disc herniation. Ms. Wales subsequently passed away. The ALJ found that Mary Wales and Carolyn Cargile (Mrs. Wale’s daughter who held Power of Attorney) were joint employers and that each were personally liable for Claimant’s injury. The ALJ found that Ms. Cargile was personally liable as Claimant’s employer based on the theory of an alter ego. The ICAO reversed, finding that when an individual is acting through a power of attorney as an agent and identifies as such, she cannot be named as an employer for a contract of employment or be personally liable. The ICAO further explained that the theory of an alter ego does not apply when an agent discloses that she is acting on behalf of an employer through a power of attorney. The ALJ’s Order was corrected to designate the sole employer to be the Mary E. Wales Revocable Trust.

Moral of the story: An individual acting as an agent to an identified principal cannot be held personally liable for a workers’ compensation claim.

 

Explanation is Key: In Gil De Prieto v. Spirit Hospitality II LLC, W.C. No. 5-019-619 (May 24, 2019), Claimant sustained a left shoulder injury while working as a housekeeper. As a procedural matter, Respondents were permitted to take a post-hearing deposition of a physician. Claimant then filed an Opposed Motion to Submit Rebuttal Evidence via a Deposition of another physician in order to rebut Respondents’ post-hearing deposition. The ALJ summarily denied Claimant’s Motion. The ICAO found that the denial of Claimant’s Motion was an abuse of discretion because the ALJ did not provide any basis or reasoning behind his Order. The ALJ’s Order was set aside and remanded for further findings.

Moral of the story: An ALJ’s findings of fact and conclusions of law are an abuse of discretion if they are not supported by the evidence or fail to provide an explanation behind the order.

 

Read Between the Lines: In Lopez v. Holsinger Drywall Inc., W.C. No. 5-066-416 (May 16, 2019), Claimant sustained several injuries, including fractures of his pelvis and vertebrae in his back, after falling 12 feet to the ground while working on an apartment construction project. Claimant’s claim for compensation was denied by Respondents on the basis that he was an independent contractor as defined by C.R.S. § 8-40-202(2)(b). At hearing, the ALJ found that Claimant was an independent contractor, not Respondents’ employee. ICAO reversed the ALJ’s Order, finding that the ALJ misapplied the legal standard when he placed undue reliance on two documents signed by Claimant wherein he declared himself an independent contractor. The Panel explained that “the nature of the working relationship” must be examined as a whole rather than relying exclusively on the requirements of the controlling statute. The Panel analyzed Claimant’s actual working relationship with the parties and found that the undisputed record showed that he was not engaged in operating an independent business and, therefore, was not an independent contractor. The ALJ’s Order was reversed and the claim was ordered to be compensable.

Moral of the story: Simply meeting the statutory requirements to establish an independent contractor status does not necessarily mean an individual is an independent contractor. Other circumstances surrounding a claimant’s employment relationship should also be considered when determining his/her employment status.

“Wind” Will This Ever End?

As we recently celebrated the 4th of July with family and friends, we must not lose sight of the Founding Fathers and formation of the Constitution. Interestingly, John Hancock was the only one to sign on July 4, 1776, while the others signed at a later date. We are fortunate that the Founding Fathers drafted the Constitution to incorporate a judicial system that allows people the opportunity to be heard as that luxury does not exist in many other places in the world. Often, the higher courts will have to decide issues from the lower courts to interpret a statute, applicability of the law, admissibility of evidence, etc. The workers’ compensation laws are subject to the same scrutiny as any other law or statute.

 

The Workers’ Compensation Act and system was created to provide a quick and efficient resolution to injured workers and the ability through the administrative courts to avoid the long delays that could ensue in the trial courts. Ironically, workers’ compensation claims can be tied up in litigation much longer than the trial courts which was not the intent of the legislature. While the hope and intent are clear, due to the many nuances and different interpretation of the workers’ compensation laws, there will continue to be disputes that arise.

 

While different in each state, workers’ compensation medical benefits are subject to a fee schedule set by the legislature. By statute, a medical provider could not collect payment for medical expenses beyond those paid by the plaintiff’s workers’ compensation insurer. The intent (hopefully) is to have a level playing field and no disputes over what fee is to be charged to avoid any delay to the injured worker for medical care.

 

Plain and simple, the cost for a medical benefit under a workers’ compensation claim is subject to a set fee by the legislature regardless of what the provider may charge outside of the system for the same service. This also, for policy reasons, provides some relief to the carriers given the volume of workers’ compensation claims. They will not be burdened with extreme medical costs providing medical benefits to claimants as medical providers are limited to the amounts under the fee schedule.

 

With that said, in May of this year the Colorado Court of Appeals rendered an opinion that focused on the admissibility of past medical expenses when the claimant/plaintiff is injured on the job and sues the third-party tortfeasor. The Court considered whether “billed” medical expenses versus what was actually “paid” were to be considered by the court and jury in awarding damages to a claimant/plaintiff. Before trial, the defendant had extinguished the insurer’s subrogation interest in the amounts paid by paying off the insurer’s claim for those damages.

 

The case was brought before the Court based on claimant/plaintiff’s appeal that the trial court erred in excluding evidence of the amounts “billed” by his medical providers and only admitted the amounts “paid” by the carrier for his medical care and treatment. The Court was to determine whether billed versus paid medical benefits were permitted in a third-party lawsuit.

The Court held:

  • The collateral source rule barred admissibility of the medical expenses paid by the workers’ compensation carrier.
  • The plaintiff could present evidence at trial of the higher i.e. “billed” medical expenses by the providers.

 

Briefly, claimant worked for United Airlines (“United”) and was struck by an employee of Delta Airlines (“Delta”) at Denver International Airport – both were driving similar luggage tug vehicles. Claimant’s injuries were in the course and scope of employment, therefore, admitted and his indemnity and medical benefits were paid by his employer pursuant to statute.

 

Claimant’s employer sought reimbursement and sued Delta and its at-fault driver. Claimant sued the same defendants to recover for his personal injuries related to his work injury. United’s claim against Delta was settled for $328,799.16 and the case was dismissed with prejudice leaving only claimant and Delta as parties. Delta admitted liability but disputed claimant’s claimed damages so the case went to trial. At the first trial, claimant was awarded $1.5 million but a new trial was granted due to misconduct by claimant’s attorney.

 

At the second trial (which interestingly was a bench trial), plaintiff was not allowed to provide evidence of the higher “billed” amounts from the providers for medical expenses but only the amounts actually “paid” by the employer. The plaintiff was awarded $259,176 in damages of which $194,426 was for economic damages. The court subsequently entered an order to set-off claimant’s economic damages by the amount defendant had paid to settle the workers’ compensation claim. Plaintiff argued this was not fair since his award for economic damages was reduced to zero.

 

The injured worker appealed. In its decision, the Court ruled that the collateral source rule applied to workers’ compensation benefits. The collateral source rule, or collateral source doctrine, is an American case law evidentiary rule that prohibits the admission of evidence that the plaintiff or victim has received compensation from some source other than the damages sought against the defendant. In Colorado, the first component requires a trial court to set off tort verdicts by the amount of certain collateral source payments received by the plaintiff unless the payments were made because of a contract entered into and paid for on the plaintiff’s behalf. § 13-21-111.6, C.R.S. 2018. The second component bars evidence of a plaintiff’s receipt or entitlement to benefits received from a collateral source, most often an insurance company, “because such evidence could lead the fact-finder to improperly reduce the plaintiff’s damages award on the grounds that the plaintiff already recovered his loss from the collateral source. Wal-Mart Stores, Inc. v. Crossgrove, 276 P.3d 562 (Colo. 2012).

 

The Court noted that “even though claimant did not personally pay premiums toward his workers’ compensation insurance, he gave consideration for the same in the form of his employment services.” Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070, 1074 (Colo. 1992). The same holds true to the defendant, who did not contribute in any way to the premiums paid to him and, therefore, the benefits paid were wholly collateral to the defendant. Therefore, the collateral source rule applies, and the defendant may be responsible for plaintiff’s damages regardless of what was paid by the workers’ compensation carrier. “The Court rationalized this will prevent a wrongdoer from reaping the benefits of a contract to which he is not a party.” The National Law Review, Colorado Court of Appeals Permits Evidence of Billed Workers’ Compensation Benefits at Trial.

 

In further reasoning of its decision, the Court acknowledged the workers’ compensation statute provides that amounts billed in excess of the statutory fee schedule are “unlawful, void, and unforceable.” This statutory language effectively prevents the plaintiff, as a matter of law, from having any legal obligation to pay such billed amounts. The Court cited a decision from the Colorado Supreme Court that stated, “the fact a bill is uncollectable does not render it entirely irrelevant to the reasonable value of the medical services provided.” Volunteers of America v. Gardenswartz, 242 P.3d 1080 (Colo. 2010).

 

There was a dissenting opinion issued by the Court which identifies the effect this ruling will have for claims in the future. “To allow injured workers to pursue expenses against the defendant in excess of what workers’ compensation already paid for his/her injuries contravenes the intent and purpose of the Workers’ Compensation Act. In part, this now affords the injured worker a windfall which the Act was not designed to do.” The dissenting opinion also makes note that the court is in the position of enforcing unenforceable contracts since the billed amounts are void and unenforceable based on the fee schedule specific to workers’ compensation claims.

 

The opinion of the Court has certainly created a stir as it now essentially creates a windfall in favor of the injured worker and settlement with workers’ compensation carriers before trial essentially meaningless.

 

We will wait to see if the Court’s decision is brought before the Colorado Supreme Court for further review and determination of this now complicated, and to be highly debated, topic.

The Legal Buzz – Lee & Brown Newsletter and Case Law Update June 2019

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In the News
The Colorado Self-Insured Association (CSIA) held their annual membership luncheon on June 18, 2019. Lee and Brown, LLC, a professional member of CSIA, was proud to be a sponsor of this year’s luncheon. Attending on behalf of Lee and Brown, LLC were Of Counsel Bradley Hansen, Esq. and Associate Angela Lavery, Esq.   CSIA is an association of Colorado employers approved by the State of Colorado to insure their workers’ compensation benefits internally. Members include representatives of self-insured entities in both the public and private sectors, as well as other professionals involved in the workers’ compensation system. CSIA’s mission is to educate members, provide networking opportunities, and promote legislative action that maintains a cost-benefit balance. CSIA also promotes the goal of promoting timely and effective programs to return injured employees to work.

 


 

Noteworthy Cases

In Lasater v. Walmart Stores, Inc., W.C. No. 5-078-097, Member John M. Abraham successfully defended against Claimant’s entitlement to maintenance medical care. Claimant argued that she required ongoing treatment, after being placed at MMI, for her low back injury due to continued complaints of pain and physical restrictions.  Claimant had a pre-existing history of low back pain prior to the industrial injury. Respondents’ expert credibly testified that the Claimant’s medical records documented a pre-existing history of low back pain that was supported by objective medical evidence. Respondents’ expert further testified that her condition remained unchanged and any ongoing complaints were the result of her pre-existing low back condition.  The ALJ found that the Claimant’s need for ongoing maintenance medical care was the result of her pre-existing condition and not the industrial injury. As such, the ALJ denied and dismissed Claimant’s claim for maintenance medical care.

 

Fran McCrackenIn Misenhimer v. Walmart Associates, W.C. nos. 5-038-861 & 5-089-956, Of Counsel M. Frances McCracken successfully defended against Claimant’s consolidated claims for additional medical benefits for her admitted right hip injury and compensability for her denied left hip injury. In 2017, Claimant injured her right hip falling from a six-foot ladder. Respondents admitted liability for this injury. In 2018, Claimant alleged she sustained injury to her left hip while lifting bags of cat and dog food. Respondents’ expert credibly and persuasively testified that right hip surgery would not lessen Claimant’s pain or improve her function and that a pre-existing condition caused Claimant’s left hip symptoms. The ALJ found that Claimant failed to prove she was entitled to ongoing medical benefits for her right hip and compensability for her left hip injury. Thus, the ALJ denied and dismissed Claimant’s request for prior authorization for right hip surgery and claim for the left hip injury.

 

Brad HansenIn Benavidez, Sr. v. Xtreme Drilling Coil Service,, W.C. No. 4-952-617, Of Counsel Bradley Hansen successfully defended against Claimant’s attempt to overcome the DIME opinion regarding MMI and entitlement to additional TTD benefits. Claimant sustained a back injury while working on an oil rig for the Employer. Claimant had a previous work injury to his back but claimed all of his current complaints and symptoms were due to the injury on the oil rig. The ALJ found that Claimant’s testimony, and the testimony of his expert, did not prove by clear and convincing evidence that the DIME should be overcome.

In Bryan v. Steamboat Ski & Resort Corporation, W.C. No. 5-029-664, Of Counsel Bradley J. Hansen and Associate Kristi Robarge Krisit Robargesuccessfully defended a full contest claim. Claimant alleged that she sustained an injury to her low back and neck when she was bumped by a housekeeping cart.  Claimant had a prior low back injury and was actively receiving treatment at the time of the new alleged injury. Claimant’s ATP and Respondents’ expert all opined that Claimant’s current symptoms were related to the prior injury and chronic pain syndrome.  The ALJ found that the accident did not create a disability or need for medical treatment and any ongoing need for treatment was related to Claimant’s chronic pain and prior injury.  Claimant’s claim was denied and dismissed.

 

Jessica MelsonIn Comfort v. Community Education Centers, W.C. No. 5-037-333, Associate Jessica Melson successfully defended Claimant’s Application for Hearing to Overcome the DIME. In the DIME, Claimant was found to have sustained 6% permanent impairment to her jaw from a board falling on her. Claimant sought to overcome the DIME alleging she was not at MMI because she required additional treatment for her jaw. She also alleged the DIME erred because she sustained additional impairment to her cervical spine and shoulder. Ms. Melson presented persuasive evidence of the extensive medical treatment and evaluations Claimant had that found she had no additional injury. Dr. Striplin credibly testified the DIME was correctly performed and there were no errors. The ALJ found Claimant failed to overcome the DIME.


 

Fine, Fine Everywhere a Fine – Excessive Fines by the DOWC

Dami Hospitality, LLC., is the owner of a hotel in Denver that employs between 4 and 10 people at any given time.  Dami let its workers’ compensation policy lapse more than once. DOWC discovered the lapses and issued a notice requiring Dami to answer a compliance questionnaire and advised that Dami could request the prehearing conference over this issue.  Dami did not respond to this notification so a second notification was sent on June 25, 2014, with a compliance questionnaire and an option to set a prehearing conference.  On July 11, 2014 Dami sent in a certificate of insurance covering Dami from July 10, 2014 to July 10, 2015.

DOWC issued a specific findings of fact, conclusions of law and order dated October 30, 2014 fining Dami $841,200!  Under Section 8-43-409(1),(b), C.R.S.  Continue reading this article
 


Cases You Should Know

Theories Are Not Scientific Evidence: In Lorenzen v. Pinnacol Assurance, 2019COA54 (April 18, 2019)(awaiting publication), the Colorado Court of Appeals upheld a district court’s judgment in favor of the defendant-insurer against a bad faith claim brought by the Claimant.  Claimant alleged that the insurer’s denial of authorization resulted in a 13-day delay of Claimant’s spinal cord surgery causing permanent impairment to the spine due to prolonged nerve compression.  Claimant presented multiple medical experts who were generally in agreement that, while “sooner is better” is a sound medical principle when providing treatment, there was no definitive medical evidence that the 13-day delay actually caused any impairment.  The district court excluded the testimony based on Colorado Rule of Evidence 702, which requires that medical evidence be reliable, relevant and not based on unsupported speculation.  The Court of Appeals agreed, finding that because Claimant could not prove the insurer’s conduct caused impairment, he could not prove bad faith.
 
Moral of the story: A party seeking to prove that an insurer’s conduct caused a medical condition must offer actual medical evidence of a relationship between the conduct and the condition, not just a theory that a causal relationship is possible.

  

The Clock is Ticking, Or Is It?: In McGlothlen v. ICAO, 18CA0763 (April 25, 2019)(nsfop), the Colorado Court of Appeals set aside an ALJ’s Order which dismissed a claim for a work injury on the basis that the statute of limitations had run.  Claimant first reported symptoms in 2012, but did not file a claim.  The employer filed a First Report of Injury and Notice of Contest in 2013.  Instead of pursuing workers’ compensation benefits, Claimant filed a lawsuit in federal court against her employer.  The suit was dismissed on the basis that Claimant’s only relief was through workers’ compensation.  When Claimant filed a workers’ compensation claim in 2017, the ALJ dismissed on the grounds that the two-year statute of limitations had run without a reasonable excuse to extend an additional year.  The Court of Appeals disagreed, noting that the Act acknowledged a First Report from an employer as notice of a claim unless specifically objected to by a Claimant.  In the federal court lawsuit, the employer argued that the First Report was a claim for workers’ compensation, while later arguing to the ALJ that the Report was insufficient notice of a claim for purposes of the statute of limitations.  The Court of Appeals remanded to the ALJ to reconsider whether there was a reasonable excuse allowing for extension of the statue of limitations under the facts.
 
Moral of the story: By creating a First Report of Injury, an employer acknowledges that an employee may have reported a work injury and therefore, this may be considered a “notice claiming compensation.”  Arguing that a First Report is notice in one court proceeding, while denying it in another, will not help your statute of limitations defense.

 

Tortfeasors Can’t Reap the Windfall: In Scholle v. Delta Air Lines, Inc., 2019COA81, 18CA0049 & 18CA0760 (May 23, 2019), a division of the Colorado Court of Appeals reversed the district court’s admission of evidence of the amount of workers’ compensation benefits paid by the insurer. The injury at issue arose from a collision between William Scholle, a United Air Lines employee, and Daniel Moody, a Delta employee, during the course and scope of the two men’s respective employment. United Air Lines, a self-insured employer, settled its subrogation interests with Delta. Mr. Scholle initiated a personal injury lawsuit against Delta in district court, and the case went to trial to determine the amount of damages Mr. Scholle incurred. The trial court judge allowed Delta to present evidence of the amount of workers’ compensation benefits paid because the trial court held that the collateral source rule did not apply. Under the collateral source rule, evidence of payment by a third-party or collateral source, typically an insurance company, cannot be admitted. The purpose of the rule is to prevent the tortfeasor from benefiting from the payment by the collateral source. The Court of Appeals held that workers’ compensation payments still constitute payments by a collateral source when the insurer has settled with the tortfeasor. Thus, the Court of Appeals held that the trial court erred in allowing evidence of the amount of workers’ compensation benefits paid. The Court of Appeals reversed and remanded to the trial court for a new trial.
 
Moral of the story: Parties in a subrogation action cannot sidestep the collateral source rule by settling the insurer’s subrogation interests before proceeding to trial in district court. At trial, only evidence of the amount of medical benefits billed will be admitted, not the amount actually paid per the workers’ compensation fee schedule.

FINE, FINE EVERYWHERE A FINE – EXCESSIVE FINES BY DOWC

BACKGROUND

On June 3, 2019 the Colorado Supreme Court issued a published opinion captioned Colorado Department of Labor and Employment, Division of Workers’ Compensation v. Dami Hospitality, LLC, 2019SC47.  The decision involved a fine handed down by the DOWC against an uninsured employer.

FACTS

Dami Hospitality, LLC., (Dami) is the owner of a hotel in Denver that employs between 4 and 10 people at any given time.  Dami let its workers’ compensation policy lapse on July 1, 2005.  When notified of the violation for failing to maintain coverage Dami conceded the violation and paid a settlement in June 2006.  Just 2 months later Dami’s coverage lapsed again and it went without coverage from August 10, 2006 to June 8, 2007.  Dami maintained coverage from June 9, 2007 to September 11, 2010, but it’s coverage lapsed on September 12, 2010 and Dami went without coverage until July 9, 2014.

DOWC discovered the lapses and issued a notice requiring Dami to answer a compliance questionnaire and advised that Dami could request the prehearing conference over this issue.  Dami did not respond to this notification so a second notification was sent on June 25, 2014, with a compliance questionnaire and an option to set a prehearing conference.  On July 11, 2014 Dami sent in a certificate of insurance covering Dami from July 10, 2014 to July 10, 2015.

DOWC issued a specific findings of fact, conclusions of law and order dated October 30, 2014 fining Dami $841,200!  Under Section 8-43-409(1),(b), C.R.S.

For every day the employer fails or has failed to ensure to keep the insurance required by articles 40 to 47 of this title in force, allows or has allowed insurance to lapse, or fails or has failed to affect the renewal of such coverage: impose a fine of: (I) not more than two hundred and fifty dollars for an initial violation; or (II) not less than two hundred and fifty dollars or more than five hundred dollars for a second and subsequent violation.

A separate schedule of funds was promulgated under Rule 3-6(D) in conjunction with the statutory section classifying second and subsequent violations as follows:

Class VII 1-20 Days $250/Day

Class VIII 21-25 Days $260/Day

Class IX 26-30 Days $280/Day

Class X 31-35 Days $300/Day

Class XI 36-40 Days $400/Day

Class XII 41 Days $500/Day

The DOWC fine was based on this classification process.  Dami explained that its lapse in coverage was based on its reliance that others maintain coverage and that given its $50,000 a year payroll, it was unable to pay the fine.  DOWC treated Dami’s response as a petition to review and, in an effort to settle the fine dispute, offered to decrease the fine amount to $425,000.  Dami claimed, among other things, that the fine was in violation of the Eighth Amendment prohibiting excessive fines.  DOWC declined DAMI’s leniency request citing that the reasons for coverage lapse were within Dami’s control, that discretion on fine amount was not within its power and that it could not address the constitutional arguments.  Dami appealed and at the Industrial Claim Appeals Office (ICAO) level the issue was sent back to DOWC to consider various mitigating and non-mitigating factors.  The DOWC issued a subsequent Order declining the issue on remand, essentially stating that the graduated fines under the Rule take into account these mitigating and non-mitigating factors.  Dami again appealed to the ICAO which then simply affirmed the DOWC.

The case was ultimately appealed to the Colorado Court of Appeals which found that the DOWC abused its discretion by not considering various mitigating and non-mitigating factors as required by applicable case law.  The DOWC then petitioned for certiorari to the Colorado Supreme Court.

RULING

The Colorado Supreme Court considered whether the Eighth Amendment excessive fines clause applies to companies.  It concluded that this clause does apply to companies, finding that companies are subject to similar protections against excessive fines just as individuals.  The Colorado Supreme Court further found that fines are subject to proportionality test to determine if they are excessive.  The Court held that when a fine is imposed on a per diem basis, with each day being a separate violation, evaluation of whether the fine is excessive must be done with each daily fine.  Therefore, the whole matter was sent back to DOWC so the parties could have a potential evidentiary hearing over proportionality considerations.

IMPLICATIONS

The DOWC has been in the habit of issuing compliance/show cause orders and subsequent fines against noncomplying employers.  Many of these orders have appeared excessive and were the subject of newspaper articles.  In addition, the DOWC maintains a recently created uninsured fund designed to provide coverage for injured workers hurt on the job working for noncomplying employers.  This fund is, in part, funded by DOWC fines levied against noncomplying employers.  These orders are issued without any mechanism for an evidentiary hearing over the mitigating factors identified by the court in this Dami decision.  Given this decision, it appears evidentiary hearings may now need to be held in conjunction with the compliance/show cause orders issued by DOWC.  Other possible implications include finding or creating new funding mechanisms to help build-up the uninsured employers fund outside of fines and penalties.

If you have any questions about fines, or any other topics, please contact any of the attorneys at Lee & Brown.

 

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