City Market, Inc. v. ICAO, 02CA1437 (March 13, 2003): Claimant sustained a compensable injury to her left shoulder. After claimant reached maximum medical improvement, the treating physician provided claimant with a 16% upper extremity impairment rating, which she converted to a 10% whole person rating. Based on this report, employer filed a final admission of liability (FAL) for a 16% scheduled rating. Claimant objected to the FAL and requested a division-sponsored independent medical examination (DIME). The DIME physician assigned a 35% upper extremity rating, which he converted to a 21% whole person rating. Employer did not file an amended FAL consistent with the DIME or an application for hearing to dispute the DIME physician's rating.
Claimant applied for a hearing on the issues of penalties, based on employer's failure to file a FAL or an application for hearing after the DIME, and for permanent partial disability (PPD) benefits. The administrative law judge (ALJ) found that claimant proved she suffered functional impairment to the whole person and that employer failed to overcome the DIME rating. The ALJ awarded PPD benefits based on the whole person rating. The ALJ also found that employer's refusal to file a FAL or an application for hearing within 30 days of the date of mailing of the DIME report was unreasonable. The ALJ assessed a penalty against employer under C.R.S. § 8-43-304(1).
The court of appeals affirmed. The court held that C.R.S. § 8-42-107.2(4) and Workers' Compensation Rule of Procedure IV(N)(6) require an employer to respond to a DIME report within 30 days by either filing a FAL consistent with the DIME or an application for hearing to contest the DIME. The court rejected employer's argument that it was not obligated to respond to the DIME where it alleged that claimant's impairment was scheduled because the DIME process does not apply to scheduled injuries. The original FAL did not satisfy the statutory requirement to respond to the DIME. The issue of whether the claimant sustained a scheduled or whole person impairment is for an ALJ and not a rating physician. The court declined to address whether in all cases an ALJ must find that an employer's conduct was unreasonable before imposing penalties. The court also concluded that, prior to imposing a penalty, an ALJ is not required to determine whether employer's conduct was predicated on a rational argument based in fact or law.