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Mosley v. Industrial Claim Appeals Office of the State of Colorado5/5/2005
ORDER AFFIRMED
Marquez and Carparelli, JJ., concur
Sherry L. Mosley (claimant) seeks review of a final order of the Industrial Claim Appeals Office (Panel) denying her request for the assessment of penalties against the Colorado Insurance Guaranty Association (CIGA). CIGA assumed the liability of Great States Insurance Company, the insurer of the employer, Asphalt Paving Company, on May 8, 2001, when Great States became insolvent. We affirm.
This case has a lengthy history, and only the relevant facts will be discussed. Claimant was injured in a compensable work-related motor vehicle accident in 1998, and Asphalt Paving admitted liability for temporary disability benefits based on an average weekly wage (AWW) of $294.18. In November 2000, claimant was awarded permanent partial disability (PPD) benefits based on a thirty-one percent whole person impairment rating, which included twenty-five percent impairment for nonthoracic (cervical and mental impairment) injuries, and eight percent for impairment to the thoracic spine. On review, the PPD rating was ultimately upheld. See Mosley v. Indus. Claim Appeals Office, 78 P.3d 1150 (Colo. App. 2003).
In the meantime, claimant sought the imposition of penalties under § 8-43-304(1), C.R.S. 2004, of the Workers' Compensation Act, based upon the failure of Asphalt Paving, Great States, and CIGA to pay the uncontested twenty-five percent PPD benefits calculated using the admitted AWW. The administrative law judge (ALJ) initially denied the request because a final order on benefits had not yet been entered. On April 29, 2003, the ALJ determined that penalties should be imposed because Asphalt Paving, Great States, and CIGA had failed to pay PPD benefits based on the undisputed twenty-five percent PPD.
CIGA petitioned for review of the April 2003 order and filed a motion requesting that it be substituted as a party-respondent for Great States in the caption. CIGA also filed a separate motion for a corrected order determining that it was immune from liability for penalties because a penalty is not a "covered claim" under § 10-4-503(4), C.R.S. 2004, of the CIGA Act. Claimant opposed these motions.
In an order dated July 16, 2003, the ALJ ultimately determined that there was no evidence that CIGA had committed any malfeasance. However, the ALJ determined that CIGA need not be substituted as a party because, regardless of its status, it was liable only to the extent of the insolvent insurance carrier's contractually covered benefit obligations, excluding penalties.
On review, the Panel concluded that claimant's construction of § 8-43-304(1) was inconsistent with § 10-4-517, C.R.S. 2004, the more specific, and more recently enacted, statute governing immunity of CIGA from all liability. The Panel also relied upon authority from other states that had broadly interpreted similar statutes and precluded the imposition of penalties against an insurance guaranty fund.
The Panel therefore determined that CIGA was liable for penalties only if they "ar se out of" and were "within the coverage" of the insurance policy issued by Great States. The record did not contain a copy of Great State's policy, and no testimony was presented concerning the policy's coverage provisions. Accordingly, the Panel concluded that the ALJ correctly determined that CIGA was immune from penalties.
On appeal, claimant concedes that CIGA is not responsible for paying penalties assessed against Great States for its misconduct before the date of its insolvency. The only issue on appeal is whether CIGA is immune from penalties for its own alleged misconduct in delaying payment of benefits to claimant
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