NOVEMBER

2004
Text Box: CURRENT EVENTS, ARTICLES, AND SUMMARIES OF RECENT CASES AND LEGISLATION IN THE AREAS OF WORKERS’ COMPENSATION, LIABILITY, INSURANCE, AND EMPLOYMENT LAW

Penalty Imposed For Refusal to Provide Taxi to Treatment

Susan Pena v. ICAO, 03CA387 (November 18, 2004): Claimant sustained a compensable ankle injury in 1999.  The treating physician restricted Claimant, who did not drive, from using public transportation to travel to treatment appointments.  Insurer filed a general admission of liability and began providing taxi vouchers so Claimant could travel to her appointments.  In 2001, Claimant ran out of taxi vouchers and the insurer refused to send more to Claimant. 

   Following a hearing, the administrative law judge (ALJ) ruled that insurer’s failure to provide transportation was a willful refusal to provide medical treatment and, citing § 8-43-304 (1), C.R.S., imposed penalties of $100 per day, totaling $11,000. 

The Industrial Claim Appeals Office (ICAO) set aside the award of penalties based on its conclusion that penalties under § 8-43-304 (1) may not be imposed because § 8-43-401(2)(a) specifically provided a penalty for the insurer’s conduct.  The ICAO found that Claimant failed to prove entitlement to the penalty under § 8-43-401(2)(a).

   The Court of Appeals set aside the order from ICAO and reinstated the penalty imposed by the ALJ.  The Court of Appeals agreed with ICAO that penalties under § 8-43-304 (1) may only be imposed when no penalty has been specifically provided.  However, the Court of Appeals concluded that § 8-43-401(2)(a) does not specifically provide a

penalty for insurer’s failure to provide treatment.  The Court of Appeals held that § 8-43-401(2)(a) provides a penalty for failure to pay medical benefits, not for failure to provide medical treatment. 

   In this case, when insurer did not send more taxi vouchers to Claimant, Claimant was prevented from receiving medical treatment because she had no other means of transportation.  The Court of Appeals agreed with ICAO and the ALJ that Claimant was not entitled to an award of penalties under § 8-43-401(2)(a) because there were no unpaid medical bills.  However, because medical treatment was not provided, the Court of Appeals held that Claimant was entitled to an award of penalties under § 8-43-304 (1).

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Independent Contractor Coverage Must Meet or Exceed Act

USF Distribution Services v. ICAO, 04CA44 (November 18, 2004):  Claimant was a truck driver and entered an independent contractor agreement (agreement) with employer.  The agreement required Claimant to obtain a “work accident insurance policy.”  Claimant obtained an accident insurance policy (policy) negotiated by employer. 

   In 2002, Claimant sustained severe injuries in a motor vehicle accident during a delivery for employer.  Employer denied compensation under the Workers’ Compensation Act (Act) because Claimant was an independent contractor, not an employee. 

   Following a hearing, the administrative law judge (ALJ) awarded benefits to Claimant and ruled that the policy in which

Claimant participated was substantially more limited than comparable coverage under the Act, and therefore, the policy failed to satisfy the requirements of providing “similar coverage” under  § 40-11.5-102(5), C.R.S. 

   The Industrial Claim Appeals Office (ICAO) upheld the ALJ’s award of benefits.  The Court of Appeals affirmed and  determined that Claimant’s policy contained caps to medical benefits that were lower than those imposed by the Act.  The Court of Appeals agreed with ICAO in that the purpose of § 40-11.5-102(5) is to ensure the employer is not relieved of liability for workers’ compensation benefits unless the independent contractor has comparable benefits available.   

   The Court of Appeals recognized that § 8-40-301(5) evidences clear legislative intent to exclude leased drivers from the definition of “employee.”  However, when that statute is viewed in combination with both § 8-40-301(6) and  § 40-11.5-102(5), the Court of Appeals held the exclusion takes effect only when the lease agreement includes complying coverage that is comparable  to the ACT.

   The Court of Appeals held that Claimant could establish his status as an “employee” either by overcoming the presumption of an independent contractor created under § 40-11.5-102(4) with clear and convincing proof, or by showing that he was not offered coverage that was at least comparable to the Act as set forth in  § 40-11.5-102(5).