Penalties for Failure to Reimburse Claimant for Medical Treatment

In Ringler v. King Soopers, W.C. No. 4-121-888-11 (ICAO, March 13, 2013), the ICAO affirmed an Order of the ALJ which granted a penatly of 8% of the amount of a medical bill for which the claimant sought reimbursement, and denied the claimant's request for a penalty of up to $1,000 per day for each day the respondent failed to reimburse the claimant timely. The attending physician recommended a health club membership. The claimant paid for the membership out of her pocket, and then sought reimbursement from the respondent. Respondent retained an IME who opined that the health club membership was not reasonably necessary. Respondent denied reimbursement, and claimant filed an application for hearing on reimbursement. Respondent then retained a second IME who opined that the health club membership was reasonably necessary, at which point respondent reimbursed claimant. Claimant then filed another application for hearing seeking penalties pursuant to both the late medical payment provision at C.R.S. 8-43-401(2)(a) (8% of the amount wrongfully withheld) and the general penalty provision at C.R.S. 8-43-304(1) (up to $1,000 per day for each day the payment was late). The ALJ ultimately awarded a penalty of 8% of the total amount of the health club membership pursuant to C.R.S. 8-43-401(2)(a), but denied the penalty pursuant to C.R.S. 8-43-304(1). Claimant then appealed the failure to award a general penalty pursuant to C.R.S. 8-43-304(1).

It is important to note that claimant’s second application for hearing did not cite the statute, rule or order that the respondent allegedly violated in connection with C.R.S. 8-43-304(1). For the first time on appeal, claimant referenced a procedural rule that she claimed was violated. Because claimant failed to allege the specific rule that was violated prior to or at hearing, ICAO determined that the only valid penalty allegation was the one made pursuant to C.R.S. 8-43-401(2)(a). This decision further strengthens the requirement of specificity that claimants often overlook when seeking a general penalty pursuant to C.R.S. 8-43-304(1).

ICAO went on to explain the difference between a penalty for late payment of a medical bill pursuant to C.R.S. 8-43-401(2)(a) and a general penalty for failure to provide medical treatment pursuant to C.R.S. 8-43-304(1) and presumably C.R.S. 8-42-101(1). In order to rise to the level of a general penalty for failure to provide medical treatment, the underlying conduct must impede or delay the provision of medical treatment. This was not the case in the present matter, where claimant paid for the health club membership in advance and therefore was free to use its services irrespective of respondent’s initial refusal to reimburse her. Therefore, the Administrative Law Judge correctly awarded a penalty pursuant to C.R.S. 8-43-401(2)(a) and not C.R.S. 8-43-304(1) because the underlying conduct did not violate the claimant’s right to receive medical treatment.

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