In re Claim of Gallego, 061419 COWC, 5-026-699

Case DateJune 14, 2019
CourtColorado
IN THE MATTER OF THE CLAIM OF: DAIRI Y ARDON GALLEGO, Claimant,
v.
WIZBANG SOLUTIONS, Employer,
and
NON INSURED, Respondent.
W.C. No. 5-026-699
Colorado Workers Compensation
Industrial Claim Appeals Office
June 14, 2019
          AD AN CERDA & ASSOCIATES LLC, Attn: A.D. AN CERDA ESQ, (For Claimant)           SPENCER FANE LLP, Attn: JACOB F HOLLARS ESQ, (For Respondents)           ORDER          The respondent seeks review of a supplemental order of the Director of the Division of Workers' Compensation (Director) dated March 8, 2019, that imposed a daily penalty of $71.94 from October 31, 2018, and continuing for its failure to comply with a previous order entered by the Director. We affirm in part, set aside in part, and remand in part for additional findings and a new order regarding the respondent's argument that the penalty imposed is "unconstitutionally excessive."          This matter commenced as a result of the respondent's failure to satisfy its mandatory obligation to maintain workers' compensation insurance coverage. See §§8-43-409, 8-44-101, 8-47-111, C.R.S. After the claimant was injured while working on August 31, 2016, the parties entered into a settlement agreement. The settlement agreement included a set penalty schedule for the respondent's failure to comply with its terms.          The respondent ultimately breached the settlement agreement. Following the breach, the claimant filed with the Division of Workers' Compensation (Division) a motion seeking enforcement of the settlement agreement and a request for penalties. The claimant requested penalties totaling $60,285.55, as of June 29, 2018, and payment of $28,000 pursuant to the settlement agreement. The Director issued an order directing the respondent to show good cause why the claimant's motion should not be granted.          The respondent filed a response, arguing that it had timely mailed payments to the claimant's counsel pursuant to the settlement agreement, and that in any event, the penalties requested by the claimant had been miscalculated. However, the respondent did not provide any supporting documentation in support of its arguments.          The Director subsequently ruled it was not clear if the respondent's response was filed to the claimant's motion or to the show cause order he previously had issued. So, on August 6, 2018, the Director issued another order giving the respondent another opportunity to be heard. He ordered the respondent to respond and provide documentation that all amounts required to be paid pursuant to the settlement agreement had been timely paid. He also noted that all documentation supplied shall be accompanied by an appropriate affidavit.          In response to the Director's August 6, 2018, order, the respondent argued that due to "unforeseen financial difficulties," it initially was unable to make the first few payments under the settlement agreement. But, in March 2018, it began attempting to "catch up the past due payments" by sending $1,000 checks to the claimant at the address the respondent had received. However, it stated those checks were returned undeliverable. And, due to "administrative oversight," those payments were not resent. Yet, once the error was realized, the respondent stated it promptly sent the claimant a check for $5,000. The respondent then sent an additional $1,000 check to the claimant on August 27, 2018. The respondent also stated it sent another check to the claimant in the amount of $4,500 on August 29, 2018, and this demonstrated its best efforts to cure the late payments. Citing to the Colorado Court of Appeals' opinion in Dami Hospitality, LLC v. Industrial Claim Appeals Office, 2017 COA 21 (Feb. 23, 2017)[1], the respondent argued that in determining whether and how much to fine or penalize, the Director must consider whether the fine is constitutionally excessive. The respondent argued that among the several factors to be considered includes its inability to pay. Attaching the affidavit of its president, the respondent stated that if the fine were imposed it "may need to seek bankruptcy protection." The respondent therefore argued that the Director should deny the claimant's motion and not impose a penalty.          On September 10, 2018, the Director entered an order, imposing penalties in accordance with the terms of the settlement agreement entered into by the claimant and respondent. The penalties the Director imposed totaled $71,940.00, which was apportioned 75% to the claimant and 25% to the Colorado Uninsured Employers' (CUE) Fund. As pertinent here, the Director ordered that the respondent...

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