December 11, 2017

Tenth Circuit: Workers’ Compensation Case Reversed Because Interpretation of Policy was Arbitrary and Capricious

The Tenth Circuit Court of Appeals issued its opinion in Owings v. United of Omaha Life Insurance Co. on Tuesday, October 17, 2017.

The plaintiff in this case, Owings, suffered a disabling injury while on the job and was afforded long-term disability benefits by the defendant, United of Omaha Life Insurance Company (United). Owings disagreed with the amount and beginning date of his disability benefits and filed suit. The district court granted summary judgment in favor of United, and Owings appealed.

Owings injured his back at work on July 1, 2013 while moving a surgical chair and cabinet, which left Owings unable to lift, bend, stoop, carry, push, and pull, resulting in Owings experiencing long-term back pain and spasms. The same day of his injury, Owings met with Bratton, the Director of Human Resources at United, who informed Owings that his title would be changed and his salary reduced, effective immediately. Owings went home and did not work for the company thereafter. Owings then applied for short-term disability benefits with United. As part of his application, Owings described the incident and the date it occurred, as well as statements from his employer and treating physician, Dr. McClintick. Dr. McClintick listed the “Date symptoms first appeared” as July 1, 2013, also noting that Owings had been continuously disabled and unable to work from the same date. Bratton, however, completed and signed an “Employer’s Statement” form for United, where she stated that Owings disability resulted from a previous injury and his last day of work was July 2, 2013.

Owings applied for long-term disability and was approved, although the letter stated that Owings became disabled on July 3, 2013. Owings, through his attorney, sent a letter to United asking for the date of disability to be changed to July 1, 2013. In response, United asked for copies of all of Owings’ time sheets. Bratton emailed Union twice with conflicting dates on Owings’ last day, but ultimately concluded that Owings left work at some time on July 2, 2013. Relying on this information, United denied the request to adjust Owings’ disability date, explaining that July 3 was the first day Owings was unable to work, since his employer verified he had worked July 2. United would only pay Owings the discounted salary set forth by Britton on July 1st. Owings subsequently filed suit.

Owings’ complaint is governed by the Employee Retirement Income Security Act (ERISA). A benefits decision under an ERISA-governed plan is generally left to the discretion of the administrator in determining the terms of the plan and of determining eligibility. In this case, the policy afforded United the discretion and final authority to construe and interpret the policy. The Tenth Circuit then examined whether the benefits decision at issue was arbitrary and capricious, limiting the review to determining whether the interpretation of the plan was reasonable and made in good faith.

Owings asserted that United abused its discretion in interpreting the term “disability” when calculating the amount of his monthly long-term disability benefit under the policy. Owings argued that the policy defined disability by reference to the inability to perform at least one of the material duties of his regular occupation, whereas United omitted the phrase “at least one of” to modify the policy to include each and every job duty.

The Tenth Circuit found United’s definition of disability to be inconsistent with the plain language of the policy, which requires only that the injury prevent the employee from being able to perform one material duty of occupation. The Tenth Circuit therefore found United’s definition of disability arbitrary and capricious.

The next issue was that United prohibited an employee from being declared disabled on the last day that he or she worked. United argues that Owings performed his job with no impairment for at least part of the day on July 1, so the earliest possible date disability could begin was on July 2. The Tenth Circuit found that United’s explanation could not be inferred from the policy’s definitional section. Nothing in the policy supported United’s conclusion that an employee cannot become immediately disabled after working for part of the day.

A third issue was whether United erred in relying exclusively on the statements from Bratton. The Tenth Circuit found that the record established, without question, that United rejected Owings’ initial request to adjust his disability date, as well as his subsequent administrative appeal, due to Bratton’s statements. The Tenth Circuit held that United erred in blindly relying on Bratton’s statements, as the determination should not have been based on whether Owings worked on a particular day, but rather on which day he sustained his injury.

The Tenth Circuit found that it was undisputed that Owings became injured on July 1. Owings’ treating physician identified July 1 as the date Owings was first unable to work. The only work Owings did on July 2 consisted of using the company cell phone; he did not physically go to the workplace. For these reasons, the Tenth Circuit concluded that United acted arbitrarily and capriciously in interpreting and applying the policy language. Under plain and ordinary meaning of the policy language, Owings became disabled on July 1, 2013. The proper remedy was to reverse the district court’s grant of summary judgment in favor of United.

The Tenth Circuit Court of Appeals REVERSED and REMANDED with directions to enter summary judgment in favor of Owings.

Discovering Discovery: Building Your Case, Deposition Tips, Expert Witnesses, and More

“Reduced to its essence, discovery is the process of identifying, collecting, producing and/or receiving relevant, nonprivileged materials in connection with pending or reasonably foreseeable litigation. With the advent of notice pleading, civil discovery provides access to the relevant information that litigants and their counsel require to make informed decisions about the merits of their case and the potential for settlement.” -Magistrate Judge Craig B. Shaffer

Discovery is a crucial component of every litigation case. In the last 10 years, civil litigation has changed significantly. The proliferation of electronic data and new rules on both the state and federal level create increasingly difficult challenges for preserving, managing, and producing electronically stored information. Conducting discovery outside Colorado has become mainstream as civil litigation has become more national—even global.

This Friday, CBA-CLE will debut the newest title in our litigation library, Discovery in Colorado, at a full-day program, “Discovering Discovery.” Discovery in Colorado is a practical guide to discovery that brings to life the application of the Colorado and Federal Rules of Civil Procedure governing the discovery process. Discovery in Colorado was written by a variety of different practitioners, overseen by Magistrate Judge Nina Y. Wang and Natalie Hanlon Leh, Esq. Attorneys and judges with backgrounds in private, in-house, and government practice authored individual chapters.

Learn different approaches to discovery and hear distinct perspectives from some of the most experienced trial attorneys and judges in Colorado. Each class attendee receives Discovery in Colorado, 1st Edition, as course materials. Explore the ever-changing state of discovery through this valuable course and companion book. Register using the links below, or call (303) 860-0608.

 

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CLE Program: Discovering Discovery

This CLE presentation will occur on Friday, July 28, 2017, at the CLE Large Classroom (1900 Grant St., 3rd Floor) from 8:30 a.m. to 4:45 p.m. Register for the live program here and the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here — Video OnDemandMP3 Audio

Colorado Supreme Court: Mutual Mistake of Material Fact Allows Reopening Workers’ Compensation Claim After Settlement

The Colorado Supreme Court issued its opinion in England v. Amerigas Propane on Tuesday, May 30, 2017.

Workers’ Compensation—Mutual Mistake of Material Fact—Colorado Workers’ Compensation Act.

In this case, the supreme court considered whether a provision of the mandatory form settlement document promulgated by the Director of the Division of Workers’  Compensation waives an injured employee’s statutory right under C.R.S. § 8-43-204(1) to reopen a settlement based on a mutual mistake of material fact. The court concluded that it does not because provisions of the form document must yield to statutory rights. Accordingly, the court reversed the judgment of the court of appeals.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: District Court Erred in Concluding Injured Worker Not Entitled to UIM Benefits from Personal Insurer

The Colorado Court of Appeals issued its opinion in American Family Mutual Insurance Co. v. Ashour on Thursday, May 18, 2017.

Personal InjuriesWorkers Compensation ActPersonal Automobile Insurance PolicyUninsured Motorist Benefits—Underinsured Motorist Benefits.

Ashour was an employee and co-owner of Nubilt Restoration & Construction (Nubilt). While employed with Nubilt, Ashour was severely injured when he was pinned by a 30-foot truck to a nearby tractor-trailer. The accident was caused by the negligence of his co-employee Peake, who failed to set the airbrake on the truck that rolled backward and pinned Ashour to the other vehicle. After the accident, Ashour submitted a claim to Nubilt’s workers’ compensation carrier and subsequently received benefits. He also submitted a claim to Nubilt’s corporate liability insurance provider and received a settlement for that claim based on a policy rider that allowed for coverage of workplace injuries. Ashour then made a claim under his personal automobile insurance policy with American Family Mutual Insurance Company (AFI) for underinsured (UIM) benefits to recover the remainder of his alleged damages. AFI then filed an action for declaratory relief as to whether Ashour was owed UIM coverage when the policy limited UIM benefits to situations where the insured was “legally entitled to recover” from the owner or operator of an uninsured or underinsured motor vehicle. The district court denied Ashour’s motion for summary judgment and granted AFI’s motion for summary judgment.

On appeal, Ashour contended that the district court erred by ruling, as a matter of law, that his claim for UIM coverage under his automobile insurance policy with AFI was precluded because he was not legally entitled to sue his employer or co-employee in tort for his injuries based on their immunity under the Workers’ Compensation Act of Colorado (the Act). Nubilt and its workers’ compensation insurance carrier are immune from suit by Ashour for his injuries sustained in the course and scope of his employment. By extension, co-employees are also immune from suit for injuries to a fellow employee arising out of the scope of employment. However, this exclusive remedy is limited to suits by an injured employee against his employer or co-employee; an injured employee may receive workers’ compensation benefits and bring suit against a third-party tortfeasor. Here, AFI’s uninsured motorist/underinsured motorist (UM/UIM) policy provides coverage where the tortfeasor is underinsured. Underinsured tortfeasors are those who are covered by insurance at the time of the accident. Thus, Nubilt and Peake are effectively underinsured in that Ashour received benefits up to Nubilt’s workers’ compensation insurance limits but still has additional damages from his workplace injury. It is the exhaustion of Nubilt’s and Peake’s limits of liability coverage (i.e., workers’ compensation insurance) that triggers AFI’s obligation to pay UM/UIM benefits. Therefore, Ashour’s claim for UIM benefits under his policy with AFI is not barred by the exclusivity provisions of the Act or by the “legally entitled to recover” language of the policy.

The judgment was reversed and the case was remanded with directions to enter summary judgment in favor of Ashour, declaring, as a matter of law, that AFI must provide coverage of UM/UIM benefits to Ashour upon his proof that Peake was at fault for causing his injuries and of the extent of his damages in excess of the coverage offered him under the Act.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Mutual Benefit Doctrine Supports Union Member’s Claim for Workers’ Compensation Coverage While at CBA Discussion Meeting

The Colorado Court of Appeals issued its opinion in Pueblo County, Colorado v. Industrial Claim Appeals Office on Thursday, May 18, 2017.

Workers’ Compensation—Injury at a Union Meeting—Mutual Benefit Doctrine.

Claimant was president of the local union. She worked for Pueblo County (employer). Union membership is required for workers in a bargaining unit, and union dues are deducted from workers’ paychecks. Participation in union meetings is voluntary. Claimant stayed after work for a union meeting, which was held immediately after claimant clocked out for the day and took place in a conference room in the building in which she worked. The purpose of the meeting was to review and revise the new collective bargaining agreement.

After the meeting, claimant walked to the adjacent parking lot where she normally parked for work. While getting in her car, she slipped on ice and injured herself. She filed a workers’ compensation claim for her medical expenses. An administrative law judge (ALJ) denied and dismissed the claim, finding the claimant “was not in the course and scope of her employment at the time of her injury.” The Industrial Claim Appeals Office (Panel) disagreed, finding the union activities were “sufficiently incidental” to claimant’s work “as to be properly considered as arising out of and in the course of employment.” It remanded to the ALJ to determine benefits. On remand, the ALJ ordered employer to pay all of claimant’s reasonable, necessary, and related medical expenses. The Panel affirmed.

On appeal, employer argued that the Panel erred in holding that the post-work injury sustained immediately following claimant’s attendance at a union meeting arose out of and in the course of employment. An injury arises out of employment when it originates in an employee’s work-related functions and is sufficiently related to those functions to be considered part of employment. It is not essential that an employee be engaged in an obligatory job function.

This was a case of first impression in Colorado but has been addressed in a number of other states. In general, injuries sustained during “unilateral union activities conferring, if any, only a remote or indirect benefit upon the employing enterprise” are not covered. However, the leading treatise recognizes a trend toward finding a mutual employer-employee benefit in actions of union officers. The court of appeals concluded that union activity cases in Colorado should be analyzed under the mutual benefit doctrine to determine compensability. This doctrine requires courts to examine the circumstances of each case to determine whether a union activity is of mutual benefit to the employer and employee. Here, where a union officer participated in a union meeting that served to facilitate ongoing negotiations between the union and employer concerning a new collective bargaining agreement, there was mutual benefit to employer and employee. Further, once mutual benefit is established, the location of the injury is not determinative. Accordingly, the injuries sustained were compensable.

The order was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: No Constitutional Violation by Using ALJs in Workers’ Compensation Proceedings

The Colorado Court of Appeals issued its opinion in Sanchez v. Industrial Claim Appeals Office on Thursday, May 18, 2017.

Workers’ Compensation Act of Colorado—Constitutionality—Separation of Powers—Equal Protection.

Claimant sustained a back injury at work lifting a hydraulic unit from his truck. Within two months he was back to work and placed at maximum medical improvement. Soon thereafter he complained of excruciating lower back pain, but both his original doctor and a specialist concluded that this new lumbar strain was not work-related but related to normal age-related degenerative changes.

Claimant sought temporary partial disability (TPD) benefits from the date of his injury and temporary total disability (TTD) benefits from when his low back pain flared up. An  administrative law judge (ALJ) rejected the request for benefits, finding that (1) his lower back pain was unrelated to his work injury, and (2) because he had continued working, claimant had not suffered a wage loss and was not entitled to either TPD or TTD benefits. The ALJ dismissed his requests. The Industrial Claim Appeals Office (Panel) affirmed but remanded the case to the ALJ to determine whether claimant was entitled to change his physician.

On appeal, claimant argued the separation of powers doctrine is violated by having workers’ compensation cases heard in the executive branch. In rejecting this argument, the court of appeals followed Dee Enterprises v. Industrial Claim Appeals Office, which held that the statutory scheme for deciding workers’ compensation cases does not violate the separation of powers doctrine.

Claimant then argued his equal protection claims should be analyzed under the strict scrutiny standard. The court held that the rational basis test applies to equal protection challenges in the workers’ compensation context. Under that test, “a statutory classification is presumed constitutional and does not violate equal protection unless it is proven beyond a reasonable doubt that the classification does not bear a rational relationship to a legitimate legislative purpose.”

Claimant argued that his and other workers’ compensation litigants’ rights to equal protection were violated because workers’ compensation cases are not heard by judges. The court concluded that legitimate governmental goals provide a rational basis for employing executive branch ALJs and the Panel to decide workers’ compensation cases. The court rejected claimant’s contention that his right to equal protection was violated because his claim was heard by an ALJ and the Panel.

Claimant then contended that the Panel’s dual role as decision-maker and then-named litigant if a case is appealed “reeks of impropriety.” The requirement that the Panel be added as a party is not arbitrary and serves the purpose of the Workers’ Compensation Act of ensuring thorough and expeditious review and enforcement of ALJ and Panel orders.

Claimant also challenged on equal protection grounds C.R.S. § 8-43-404(5)(a)(II)(A), which exempts governmental entities and health care providers from providing an injured worker with a list of four physicians from whom the worker may seek medical care for his injury. The court concluded that a rational basis exists for excluding employees of those two types of employers from the four-physician referral requirement. Thus, there was no equal protection violation.

The court rejected claimant’s three non-constitutional arguments, which were that: (1) the exemption from the four-physician referral requirement did not apply because claimant’s employer did not meet the requirements of C.R.S. § 8-43-404(5)(a)(II)(A); (2) substantial evidence did not support the ALJ’s factual findings; and (3) the ALJ made numerous evidentiary errors.

The Panel’s order was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Bills Signed Adding Disabilities to Bias-Motivated Harassment, Clarifying Vehicle Title Transfers on Death, and More

On Wednesday, May 3, 2017, the governor signed 14 bills into law. To date, the governor has signed 209 bills and vetoed one bill this legislative session. Some of the bills signed Wednesday include a bill to clarify the process for vehicle title transfers on death, a bill adding disabilities to bias-motivated harassment laws, a bill allowing mandatory reporters access to reports of abuse, a bill extending the agricultural water leasing pilot project, and more. The bills signed Wednesday are summarized here.

  • HB 17-1150“Concerning Disallowing a Court from Granting Bail After Conviction to Offenders who have Committed Certain Felony Crimes,” by Rep. Clarice Navarro and Sen. Owen Hill. The bill adds to the list of crimes for which bail is not allowed a second or subsequent conviction for stalking that occurs within 7 years after the date of a prior offense for which the person was convicted; stalking when there was a protection order, injunction, or condition of bond, probation, or parole or any other court order in effect that protected the victim from the person; and any offense that includes an act of domestic violence if the defendant at the time of sentencing has been previously convicted of three or more prior offenses that included an act of domestic violence.
  • HB 17-1185“Concerning Reports of Suspected Child Abuse or Neglect,” by Rep. Jonathan Singer and Sen. Jim Smallwood. The bill adds officials and employees of county departments of health, human services, or social services to the list of mandatory reporters and specifies that if a mandatory reporter continues to be involved with the child for whom he or she has filed a report, the reporter is entitled to access to records and reports of the abuse or neglect.
  • HB 17-1188“Concerning Bias-Motivated Harassment,” by Rep. Mike Foote and Sens. Dominick Moreno & Don Coram. The bill adds physical or mental disability and sexual orientation to the categories described in the harassment statute to make the statute consistent with Colorado’s law concerning bias-motivated crimes.
  • HB 17-1213“Concerning the Transfer of a Vehicle Title Upon the Death of the Vehicle’s Owner,” by Rep. Kevin Van Winkle and Sen. Chris Holbert. The bill amends the law regarding transfers of vehicle titles on death by clarifying that the Division of Motor Vehicles shall oversee the process, and clarifying that a personal representative or successor is not liable for obtaining a new certificate of title or for transferring title to the vehicle absent actual knowledge of the existence of a valid, unrevoked beneficiary designation form.
  • HB 17-1217“Concerning the Governance Structure of the State Historical Society,” by Reps. Faith Winter & Lori Saine and Sens. Jim Smallwood & Kerry Donovan. The bill repeals certain obsolete provisions of the statutes governing the structure of the State Historical Society and changes the language from establishing the council to allowing the board to establish the council.
  • HB 17-1219“Concerning an Extension of the Agricultural Water Leasing Pilot Program Administered by the Colorado Water Conservation Board,” by Reps. Jeni Arndt & Barbara McLaughlin and Sens. Kerry Donovan & Larry Crowder. The bill extends the agricultural water leasing pilot program.
  • HB 17-1233“Concerning Protection of the Historical Consumptive Use Analysis of a Water Right Involved in a Water Conservation Program,” by Rep. Jeni Arndt and Sen. Larry Crowder. The bill applies a rule statewide that provides that the reduced water usage that results from participation in a government-sponsored water conservation program will not be considered in analyzing the historical consumptive use of the water right.
  • SB 17-148“Concerning the Continuation of the Office of Boxing in the Division of Professions and Occupations in the Department of Regulatory Agencies, and, in Connection Therewith, Implementing the Recommendations of the 2016 Sunset Report of the Department of Regulatory Agencies and Making an Appropriation,” by Sen. Kevin Priola and Rep. Alec Garnett. The bill continues the Office of Boxing and vests the Director of the Division of Professions and Occupations with licensing authority.
  • SB 17-214“Concerning the Creation of the Voluntary Firefighter Cancer Benefits Program,” by Sens. Leroy Garcia & Jim Smallwood and Reps. Brittany Pettersen & Tony Exum. The bill allows an employer to participate in a voluntary firefighter cancer benefits program, as a multiple employer health trust to provide benefits to firefighters by paying contributions into the established trust.
  • SB 17-227: “Concerning the Nonsubstantive Relocation of Laws Related to Attorneys-at-Law from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Sen.  Bob Gardner and Rep. Mike Foote. The bill relocates Article 5 of Title 12, “Attorneys-at-Law,” to a new Article 93 in Title 13, Colorado Revised Statutes.
  • SB 17-247“Concerning the Qualifications of Electricians, and, in Connection Therewith, Allowing Only persons who have Passed the Written Residential Wireman’s Examination to Act as Residential Inspectors and Waiving the Continuing Education Requirement During the First License Period for an Electrician who Passed the Appropriate Written Examination,” by Sen. Kevin Priola and Rep. Don Coram. The bill waives the continuing education requirement, otherwise applicable upon every renewal or reinstatement of an electrician’s license, for the first renewal or reinstatement of the license of an electrician who passed the appropriate written examination in connection with his or her initial license application.
  • SB 17-258“Concerning the Use of Open Educational Resources in Public Institutions of Higher Education, and, in Connection Therewith, Making an Appropriation,” by Sen. Kevin Lundberg and Rep. Bob Rankin. The bill creates the Open Educational Resources Council in the Department of Higher Education. The bill directs the Department to contract with an entity to evaluate the existing use of open educational resources by public institutions of higher education.
  • SB 17-259“Concerning a Transfer of Money from the General Fund to Cash Funds Administered by State Departments for the Protection of the State’s Natural Resources,” by Sen. Kevin Lundberg and Rep. Bob Rankin. The bill requires the state treasurer to transfer money from the general fund to certain state departments.
  • SB 17-268“Concerning an Increase in the Number of Pharmacy Technicians a Pharmacist may Supervise,” by Sens. Andy Kerr & Jim Smallwood and Reps. Joann Ginal & Kim Ransom. The bill allows a pharmacist to supervise up to 6 pharmacy technicians.

For a list of all of the governor’s 2017 legislative decisions, click here.

Colorado Court of Appeals: 42 U.S.C. § 1983 is Not State Employers’ Liability Law

The Colorado Court of Appeals issued its opinion in City of Lakewood v. Safety National Casualty Corp. on Thursday, March 9, 2017.

42 U.S.C. § 1983—Indemnification—Defense Costs—Insurance—Employer Liability Law.

A City of Lakewood (City) police officer was killed by friendly fire, and his widow filed a lawsuit under 42 U.S.C. § 1983, alleging that the City and various fellow officers had violated the deceased officer’s rights under the U.S. Constitution. The City sought indemnification for its own defense costs and those of the officers named in the lawsuit, which the City has an independent statutory duty to cover. The insurance company, Safety National Casualty Corporation, denied coverage. The district court concluded that a § 1983 claim did not arise under an employer liability law of any state and granted summary judgment for the insurance company.

On appeal, the City contended that the district court erred in granting summary judgment to the insurance company because the policy unambiguously covers all defense costs incurred by the City in connection with the § 1983 lawsuit. Specifically, the City argued that the § 1983 municipal liability claim must be covered by the employers’ liability portion of the policy because it is a claim based on work-related injuries that falls outside the ambit of the workers’ compensation laws. However, this overstates the scope of the coverage under the policy. By the policy’s plain terms, the common law claims must arise under the laws of Colorado or “other State(s).” Section 1983 is not a law of Colorado or any other state. Therefore, the City’s defense costs, which were sustained because of liability imposed as a result of the widow’s § 1983 claim, did not arise from a state workers’ compensation or employers’ liability law and were not covered by the policy.

Next, the City contended that it was entitled to reimbursement for amounts it paid to cover the fellow officers’ defense costs. The policy’s definition makes clear that the term “Employee” refers to the injured employee, not to an employee potentially responsible for the injury. “Loss” means payments by the City to the injured employee and the employee’s dependents. Therefore, the City’s indemnification payments to the officers named in the lawsuit do not qualify as losses under the policy and the City is not entitled to reimbursement from the insurance company.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Fine to Employer for Workers’ Compensation Insurance Lapse Unconstitutional As Applied

The Colorado Court of Appeals issued its opinion in Dami Hospitality, LLC v. Industrial Claim Appeals Office on Thursday, February 23, 2017.

Dami Hospitality, LLC, operates a motel in Denver, Colorado. For a period in 2006, Dami failed to carry workers’ compensation insurance. It paid the $1,200 fine and obtained insurance. In 2014, the Division of Workers’ Compensation informed Dami that it was again without workers’ compensation insurance and had been for periods during 2006 and 2007, as well as from September 2010 through the date of the division’s notice. Dami admitted receiving the Division’s June 28, 2014, notice, but denied receiving a notice the Division contended it had mailed four months earlier. Dami obtained the necessary insurance by July 9, 2014, but did not otherwise respond to the Division’s letter.

The Division imposed a fine of $841,200 based on C.R.S. § 8-43-409(1)(b)(II) and 7 CCR 1101-3 (Rule 3-6). Dami’s owner, Soon Pak, sent a letter to the Director captioned “Petition to Review,” asking the Director to reconsider the fine. Ms. Pak claimed that she relied on her insurance agent to obtain the necessary insurance and believed the hotel’s insurance policies contained workers’ compensation coverage. She also asserted that the fine was more than her business grossed in a year and it would bankrupt both the hotel and her individually. Ms. Pak’s insurance agent also submitted a letter claiming personal responsibility for the lapse in coverage. In a supplemental order, the Director again ordered Dami to pay the fine, asserting that the previous lapse in coverage should have put Dami on notice as to the need for insurance.

Dami appealed to the Industrial Claim Appeals Panel, which ruled that the Director had failed to consider the factors in Associated Business Products v. Industrial Claim Appeals Office, 126 P.3d 323 (Colo. App. 2005), to protect against constitutionally excessive fines. On remand, without taking additional evidence, the Director reinstated his original fine, concluding that Rule 3-6 inherently incorporated the Associated Business Products factors. Dami again appealed, but this time ICAO upheld the Director’s order. Dami appealed to the Colorado Court of Appeals.

The court of appeals first considered whether Dami was deprived of procedural due process. Dami argued that notice by mail was unreasonable, and that a hearing should have been held before the fine was imposed. The court of appeals disagreed. Dami did not request a prehearing conference when it received the first notice of the lapse in insurance, and Dami did not show that the address the Division had on file was incorrect. Therefore, the court found that Dami was not denied procedural due process.

Dami next contended that the $841,200 fine was constitutionally excessive in violation of the Eighth Amendment. Dami argued that section 8-43-409 is unconstitutional on its face because the General Assembly removed a penalty cap in 2005 and failed to impose a statutory deadline for notice of missing insurance coverage, which therefore granted the Director “complete discretion regarding the timing of notice and thus the size of the fine.” The court of appeals found no facial constitutional error, noting that other penalty statutes have been upheld despite a lack of cap or statutory deadline.

However, the court of appeals agreed with Dami that the penalty was unconstitutional as applied because the Director abused his discretion in applying the Associated Business Products factors to Dami’s situation. Dami also argued that the fine is grossly disproportionate both to its ability to pay and to the harm caused by the lack of workers’ compensation insurance. It asserts the Director should also have considered its ability to pay when weighing the constitutionality of the fine. The court of appeals again agreed that the fine was unconstitutional as applied.

The court of appeals evaluated whether Eighth Amendment protections apply to corporations, and determined that Dami’s status as a corporation did not deprive it of Eighth Amendment protections. The court cited Citizens United for the premise that individual constitutional protections can apply to corporations.

Evaluating the particular fine, the court of appeals determined that the Director abused his discretion in imposing the fine because he did not make specific findings regarding the Associated Business Products factors. The court of appeals found that the uncontroverted facts put Dami at the low end of the reprehensibility scale, since Ms. Pak relied on her insurance agent to supply all necessary insurance coverage and the agent admitted he had not informed Ms. Pak about workers’ compensation insurance. The court also found that because Dami had not had a single workers’ compensation claim in its existence and it had fewer than ten employees, there was no actual harm from Dami’s lack of workers’ compensation insurance and low risk of potential harm. The court noted that the record lacked any evidence of comparable fines because the Division failed to supply it, but the information Dami supplied showed that in FY 2006-2007 the total amount of fines for failure to carry insurance “would be $200,000.” The court of appeals also recognized that the Director should have considered Dami’s ability to pay before imposing the fine.

The court of appeals remanded for reconsideration of the excessive fine in light of the Associated Business Products factors.

Colorado Supreme Court: No Personal Jurisdiction Over Out-of-State Employer in Workers’ Comp Case

The Colorado Supreme Court issued its opinion in Youngquist v. Miner on Tuesday, February 21, 2017.

Workers’ Compensation—Personal Jurisdiction—Specific Jurisdiction.

In this case, the Colorado Supreme Court considered whether Colorado has jurisdiction to award benefits for out-of-state work-related injuries and impose a statutory penalty on an employer under C.R.S. § 8-41-204 when the employer is not a citizen of Colorado and has no offices or operations in Colorado but hired a Colorado citizen within the state. The court concluded that under the facts of this case, Colorado lacks personal jurisdiction over the employer and therefore the employer cannot be subject to the Workers’ Compensation Act of Colorado, C.R.S. §§ 8-40-101 to 8-47-209. Accordingly, the court reversed the judgment of the court of appeals.

Summary provided courtesy of The Colorado Lawyer.

HB 17-1119: Providing a Workers’ Compensation Payment Mechanism for Uninsured Employers

On January 20, 2017, Reps. Tracy Kraft-Tharp & Lang Sias and Sens. Jake Tate & Cheri Jahn introduced HB 17-1119, “Concerning the Payment of Workers’ Compensation Benefits to Injured Employees of Uninsured Employers.”

The bill creates the ‘Colorado Uninsured Employer Act’ to create a new mechanism for the payment of covered claims to workers who are injured while employed by employers who do not carry workers’ compensation insurance. The bill creates the Colorado uninsured employer fund, which consists of penalties from employers who do not carry workers’ compensation insurance.

The bill creates the uninsured employer board to establish the criteria for the payment of benefits, to set rates, to adjust claims, and to adopt rules. The board is required to adopt, by rule, a plan of operation to administer the fund and to institute procedures to collect money due to the fund.

The bill was introduced in the House and assigned to the Business Affairs and Labor Committee.

Top Ten Programs and Homestudies of 2016: Employment Law and Workers’ Compensation

The year is drawing to a close, which means that the compliance period is ending for a third of Colorado’s attorneys. Still missing some credits? Don’t worry, CBA-CLE has got you covered.

Today we are featuring the Top Ten Programs and Homestudies in Employment Law and Workers’ Compensation. In addition to this sampling of programs and homestudies, CBA-CLE offers several other great books and programs for both employment law and workers’ compensation.

10. Non-compete Agreements, Confidentiality Agreements, and Other Restrictions on Employee Competition
When and how should restrictive covenants like non-compete agreements be used? Can they be enforced? How broad can they be? Should the employer try to enforce them? Is a non-solicit agreement subject to the same rules? Can you sue the new employer? Is there any way to protect the company from “raiding?’ Can I hire a person who has signed a non-compete? Can employees prepare to compete while they are still on my payroll? Are employees free to do what they want after they leave if they do not have a non-compete? Are customer lists trade secrets? Why do I need more than a confidentiality agreement? When is injunctive relief likely to be granted or rejected? What can I expect in non-compete trade secret litigation? These and many other questions are explored in this practical program for all those who draft, enforce or seek to avoid restrictive employment covenants. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 4 general credits.

9. Workplace Discrimination
Join the debate Between the ACLU and Focus on the Family on the Intersection of Religious Freedom and Workplace Anti-Discrimination Laws; Federal Court Judge Christine Arguello WIll Moderate a Panel of State Court Judges from across Colorado Who Will Answer Your Questions Concerning How Individual Districts are Preparing for the Potential Increase of Employment Discrimination Case Filings; Be a Fly on the Wall: Find out What Goes on in the Other Room During a Mediation Moderated by Honorable Michael Hegarty, Magistrate Judge, United States District Court for the District of Colorado; and much more. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 1 ethics credit.

8. Workers’ Compensation Basics: Learn How the System Works
Workers’ compensation is a highly specialized area of the law. It is full of detail and nuance that you have to be aware of if you want to be successful. If you would like to add this area to your practice, register for this program today, so you can lay the groundwork on foundational concepts like medical benefits, indemnity and compensability. Additionally, two judges’ panels and essential ethics rules in workers’ compensation arena are included. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

7. Workers’ Compensation Fall Update 2016
If you practice workers’ compensation law in Colorado, the CBA-CLE Workers’ Compensation Fall Update is the place to be. Register now so you can get the latest information from the Division and the Office of Administrative Courts. Get a thorough understanding of joint replacements, the DIME process, and unemployment insurance in the workers’ compensation context. Get the inside track on the Division’s website, and a tour of Medicaid in the workers’ compensation world. Finally, get a clear understanding of your ethical role when it comes to IMEs. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

6. Whistleblower Litigation, Discrimination, and the First Amendment: Employment Law Fall Update
Is sworn testimony outside of one’s ordinary job duties entitled to First Amendment protection? The United States Supreme Court decided this and related issues in Lane v. Franks, and the case will be discussed at the Fall Program. Federal and state whistleblower litigation has been in the headlines. Not only will a judge from the Merit Systems Protection Board be speaking on The Federal Whistleblower Protection Act, but a national panel will be gathered to discuss what employment lawyers need to know about state law qui tam claims. Also, as the American work force ages, never has the issue of age discrimination been more important. Get the most up-to-date information on the ADEA, and hear discussion on a changed discrimination doctrine for our changed social paradigm. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 8 general credits.

5. The Amended Colorado Anti-Discrimination Act: Best Practices for Small Employers
The Colorado Anti-Discrimination Act (“CADA”) was recently amended to provide enhanced remedies for employees who experience discrimination. Unlike the federal anti-discrimination laws, CADA applies to employers of all sizes, including your firm. Do you know how to prevent and address complaints of discrimination within your firm? This program covers the scope of CADA including the administrative exhaustion process; defenses; and damages, and review best practices for all employers, both to prevent and address claims, including a discussion of real-life examples. Order the Video OnDemand here and the MP3 here. Available for 1 general credit.

4. Key Strategies for your Practice: Employment Law Fall Update
Your day begins with TWO tracks! One for attorneys who are new to the area of labor and employment, and one track if you have some experience under your belt. For the New Lawyer’s Track, learn what employment law state and federal statutes are key to your labor and employment law practice from two of the most experienced law professors in the State. Then enjoy a “how-to” workshop on client intake, complete with a YouTube video! On the Advanced Track, get up to speed on the aspects of representing clients in the marijuana industry: the ethics, the payroll, and other employment-related challenges. Finish the morning on the Advanced Track by discovering the nuances in the use of electronic evidence in an employment law case. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

3. Hot Topics in Employment Litigation: Managing High-profile Cases, Implicit Bias, and Other Issues
The practice of law has never been busier. Listen to Jay Tiftickjian’s insights to get some sanity from the myriad of demands that practicing law makes on us. One of these many demands is implicit bias in the courtroom and on your juries. Join the discussion on how to overcome these prejudices in your employment law cases. A highlight of the day will be the panel presentation on managing high-profile cases in the press! Join reporters from all of the major networks, who will give you the information you need to have when you get a case that’s in the news. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 8 general credits, including 2 ethics credits.

2. Staying Ahead of the Changes: Workers’ Compensation Spring Update 2016
The Planning Committee has been bringing you incomparable CLE programs, and the 2016 Spring Update does not disappoint. As always, get an up-to-the-minute Case Law Update. There is always something new to know about Medicare Set-Asides, so this topic is included on the agenda. Have you ever wondered why the Division of Workers’ Compensation does certain things? Get a glimpse behind the curtain! Then tune in for changes to Rule 9 from the perspectives of the claimant, the respondents and the bench. The all-important medical topic for the Spring Update is about the changes to the upper and lower extremity medical treatment guidelines. Finally, the head of the Office of Attorney Regulation talks about a possible new model of self-regulation in Colorado. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

1. Proactively Prepare for What Lies Ahead: Employment Law Conference 2016
Whether you practice from the plaintiff or defense perspective… Are a solo practitioner or are a member of a large firm… Whether you are new to employment law or a seasoned professional… Choose the Litigation Track, the Counseling Track, or a combination of the two… Your experienced and knowledgeable faculty will give you balanced and comprehensive reviews of cutting-edge topics, regulations, and the most recent cases for you and your clients. Order the CD homestudy here and the MP3 here. Available for 17 general credits, including 1 ethics credit.