Need to Join Third Parties to an Action? Be Sure to Give Notice.

While it is well known in workers’ compensation law that penalties may be assessed for violation of the Workers’ Compensation Act, the Industrial Claims Appeals Office was tasked with determining whether penalties could be assessed against a third party.

In Keating, the respondent hospital provided medical care to claimant after she sustained a work-related injury in July 2017. An ALJ entered an order on October 11, 2018 finding the injury compensable and the employer uninsured in violation of Colorado law. The ALJ ordered the employer to pay penalties for failure to maintain workers’ compensation insurance, to pay the cost of claimant’s medical treatment, and to pay a closed period of temporary disability benefits. The employer did not comply with the order.

In June 2019, claimant began receiving bills from the respondent hospital. Claimant’s counsel promptly notified the hospital’s counsel that it was unlawful for a medical provider to bill an injured worker in a compensable workers’ compensation claim, and informed hospital counsel that penalties would be sought if the hospital did not cease its billing activity. Claimant’s counsel also provided a copy of the ALJ’s October 2018 order. Counsel for the hospital responded stating the employer never paid into the Workers’ Compensation Fund as ordered by the Court and the only recourse in recovering its fees was to collect against claimant. The claimant then filed an application for hearing endorsing penalties against the hospital for unlawfully sending medical bills from the date it sent its reply letter to the date of hearing. At hearing in October 2019, the hospital argued it was not a party to the claim and lacked notice of the penalty being asserted by the claimant. The ALJ agreed with claimant that the hospital had adequate notice of the penalties asserted as provided in the June letter to hospital’s counsel. The ALJ also imposed penalties for the 119 days that elapsed between the June 2019 cease and desist letter and the October 2019 hearing.

On appeal, the hospital reasserted the court lacked of jurisdiction over the hospital because it was not a party to the claim. The hospital also argued that the penalties were not proportional and they should have only been penalized for those days that involved billing activity.

The Panel held that under workers’ compensation law, it is not necessary for a person or entity to be joined as a party to the claim pursuant to Civil Rules of Procedure 19 and 20, which governs the process for joining a party in a civil claim. The Panel held it is sufficient if the person is joined as a party to the hearing and also stated that in the event the party sought to be joined was given fair notice and was given a full and complete opportunity to defend against the action, the person was adequately joined as a party to the hearing.

As for the issue of proportionality, the Panel held that the ALJ may only assess penalties for the days the billing activity took place. The Panel opined that the violations were one time offenses that could not be undone as opposed to a continuous violation requiring daily penalties.

The Panel affirmed the ALJ’s imposition of penalties but remanded the case to determine the number of days the hospital actively billed for claimant’s treatment in order to assess penalties for those days.

Keating v. Robert C. Adams d/b/a Bob Adams Trucking and Delta County Memorial Hospital, W.C. 5-065-586-002 (ICAO March 13, 2020)

Would you like to know more? Contact Karina Prigge at or 877-259-5693.

From the April 2020 Newsletter