Update on Colorado Appellate Decisions in Workers' Compensation Law

• Jurisdiction: Colorado,United States
• Citation: Vol. 29 No. 6 Pg. 83
• Pages: 83
• Publication year: 2000

29 Colo.Law. 83 Colorado Lawyer 2000.

2000, June, Pg. 83. Update on Colorado Appellate Decisions In Workers' Compensation Law

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83

Vol. 29, No. 6, Pg. 83

The Colorado Lawyer
June 2000
Vol. 29, No. 6 [Page 83]

Specialty Law Columns
Workers' Compensation Report
Update on Colorado Appellate Decisions In Workers' Compensation Law
by Ralph Ogden

This article is an update of recent decisions from the Colorado Supreme Court and Court of Appeals regarding workers' compensation issues. Previous updates were published in the December 1999, May 1999, and January 1999 issues

Compensability: The Exclusivity Rule

Thornbury v. Allen1 is a complicated case involving the exclusivity rule. Thornbury was injured when a glass shelf fell on her foot while she was supervising the cleaning of Allen's condominium. At that time, she was employed by Village Resorts, Inc. ("VRI"). VRI provided cleaning services to condominium owners under a contract with the Beaver Run Homeowners Association ("Association"), which was the statutory employer

Allen had rented out the property, and it was not his private residence. Thornbury received workers' compensation benefits for her injuries through VRI's compensation carrier

Subsequently, Thornbury and her husband brought a tort action against Allen, who moved to dismiss on the ground that he was entitled to the same statutory immunity as VRI and the Association. The district court denied the motion, and Thornbury was awarded damages by a jury.

On appeal, the court held that Allen was Thornbury's statutory employer under CRS § 8-41-402(1). This statute provides that any person "owning any real property or improvements thereon and contracting any work done on and to said property to any contractor, sub-contractor, or person who hires or uses employees in the doing of such work shall be deemed an employer" under the provisions of the Colorado Workers' Compensation Act ("Act").2 Thus, the Court held that because workers' compensation insurance was available through VRI, Allen indirectly satisfied the requirements of the Act for workers' compensation insurance. However, this holding was not dispositive.

The Court went on to hold that another part of CRS § 8-41-402(1) states that the Act "shall not apply to the owner or occupier, or both, of residential real property which meets the definition of a 'qualified residence' under section 163(h)(4) of the Federal Internal Revenue Code . . . unless the person performing the work is otherwise an employee of the owner or occupant, or both."3 Because the trial court did not applyCRS § 8-41-402(1), a remand was necessary for further factual findings about whether Allen was excepted as a statutory employer under CRS § 8-4-402(2) "because he is the owner of a 'qualified residence,' which has a specific definition under the Internal Revenue Code."4

The Colorado Court of Appeals adopted the Utah Supreme Court's holding in Sorensen v. Industrial Commission,5 which states that the point at which ownership of leased or rented property becomes a business within the Utah Workers' Compensation Act was a question of fact. That determination must be made as of the date of injury, and the burden of proof is on the party asserting that the property met the definition of a qualified residence. Thus, if the residence was a qualified residence, Allen would not be entitled to the protection of the Act.

The Court then held that Thornbury could still be "otherwise an employee" of Allen under CRS § 8-42-402(1), which states that the Act does not apply to the owner of a qualified residence unless the injured worker was otherwise an employee of the property owner. "[I]f we assume, without deciding, that Allen was in the rental business, then the trial court did not properly address the Finlay [v. Storage Technology Corp., 764 P.2d 62 (Colo. 1988)] factors to determine whether Allen was entitled to statutory immunity under section 8-41-401(1)(a). . . . Accordingly, the finding that Allen was not Thornbury's statutory employer in the matter is remanded for reconsideration on the issue of whether Thornbury was otherwise an employee" of Allen.6 The district court specifically was ordered to determine whether Allen was in the rental business, and if so, under Finlay, whether the work Thornbury performed was part of Allen's "regular business."7 The Court also held that the trial court should, at a minimum, examine Allen's rental agency agreement with the cleaning contractor to determine whether Thornbury was performing services that fell under that contract on the date of the injury.

In Padron v. Wackenhut Services, LLC,8 a female employee claimed that she was sexually harassed by a male coworker. The employee sued Wackenhut for sexual harassment and retaliation, breach of contract, and intentional infliction of emotional distress/outrageous conduct. Wackenhut moved to dismiss the emotional distress/outrageous conduct claim on the ground that the claim was barred by the exclusivity provisions of the Act. The district court analyzed the various tests articulated in Colorado appellate decisions and held that Ferris v. Bakery, Confectionary and Tobacco Union9 was similar to Padron's case. Thus, because it did not appear that Padron could "prove no set of facts entitling her to relief,"10 dismissal for failure to state a claim upon which relief could be granted, under F.R.C.P. Rule 12 (b)(6), was inappropriate.

Expert Evidence in Mental Stress Claims

In Esser v. Industrial Claim Appeals Office,11 a pro se claimant sought benefits for a "stress" claim within the meaning ofCRS § 8-41-301(2)(a).12 She did not offer "testimony" from a psychologist or psychiatrist. Instead, she offered written reports from an osteopath, cardiologist, and psychologist. At the end of her case-in-chief, respondents moved to dismiss because she had not offered any live testimony, as CRS § 8-41-301(2)(a) requires, and the ALJ granted the motion.

On appeal, the claimant argued that this provision violated her right to equal protection of the law because other claimants could present medical evidence by means of written reports. The Court of Appeals agreed. Applying the rational basis standard of review, the court held that

[w]e have attempted to discover some rational reason for requiring a mental impairment claimant to produce live testimony from his or her expert in every instance, even if the opposing party does not elect to cross-examine, while allowing all other claimants to submit expert reports as evidence and requiring that they produce the expert only if the opposing party seeks to cross examine that expert. We have been unable to divine any rational basis for that distinction, and the respondents have suggested none.13

Under Esser, then, claimants are no longer required to prove a stress claim by the actual testimony (either by deposition or at hearing) of a doctor or licensed clinical psychologist. Instead, as with other claims, they may prove their claims with written reports. One of the possible consequences of Esser is that petitions to reopen stress claims that were dismissed because they were not supported by live testimony may be filed based on a mistake of law.

Penalties

Reed v. Industrial Claim Appeals Office14 deals with two separate penalty claims asserted against respondents' counsel: (1) a claim for violating Division Rule XI (B)(2)15 by not serving the report of an expert medical witness within fifteen days of receipt, and (2) a claim for not timely supplementing discovery responses, as required by Division Rule VIII(E)(3).16The first claim under Rule XI(B)(2) was dismissed in a summary order after oral argument. It appears from the opinion that other issues remained pending after the summary order, including the penalty issue under Rule VIII(E)(3). At any rate, the Court refused to consider the merits of the dismissal of the Rule XI(B)(2) penalty claim because the claimant had not requested specific findings of fact and conclusions of law within fifteen days after entry of the summary order.17

Regarding the penalty claim under Rule VIII(E)(3), the ALJ found that although respondents' counsel had "failed to timely supplement discovery," there was no evidence of a willful violation because the claimant's counsel neither moved to compel nor certifiedthat he had made a good faith effort to resolve the dispute. The Court of Appeals held that sanctions could be imposed only if a party deliberately or intentionally disobeyed a discovery order or if his or her conduct manifested a flagrant disregard of his or her discovery obligations or constituted a substantial deviation from reasonable care in complying with them. It went on to note that a finding of reasonableness necessarily precluded a finding of willfulness and that "under the plain language of C.R.C.P. 37, in determining the propriety of awarding sanctions, the ALJ could properly consider the efforts made by both sides to facilitate...