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...