SUNNY ACRES VILLA, INC., Petitioner, v. Charla Sue COOPER, Respondent.
No. 99SC865.
Supreme Court of Colorado, En Banc.
May 29, 2001.
Rehearing Denied June 25, 2001.*
Susan D. Phillips, Denver, CO, Attorney for Respondent.
Justice COATS delivered the Opinion of the Court.
Sunny Acres Villa, Inc., the employer in the underlying action for permanent total disability benefits, sought review of the court of appeals’ decision in Cooper v. Industrial Claim Appeals Office, 998 P.2d 5 (Colo.App. 1999), by writ of certiorari. The court of appeals set aside the order of an administrative law judge (“ALJ“), which denied permanent total disability (“PTD“) benefits to claimant Charla Cooper on the ground that her injuries were not substantially work-related. The court of appeals held instead that the doctrine of collateral estoppel operated to foreclose any inquiry into causation, which it considered already to have been determined in connection with Cooper‘s application for temporary total disability (“TTD“) benefits. Because a claim for a temporary disability award does not present an employer with the same incentive to litigate as does a claim for a permanent award, issues presented with regard to the latter cannot be deemed fully and fairly litigated at a prior proceeding for the former. Accordingly, the judgment of the court of appeals is reversed and the case is remanded for further proceedings consistent with this opinion.
I.
The incident giving rise to this action occurred on May 13, 1992. It was uncontested that Respondent Charla Cooper, a nurse employed by Sunny Acres, slipped and fell while at work and sustained injuries to her head, hip, back, pelvis, foot, ankle, knee and shoulder. Cooper submitted a claim for TTD
Following a hearing on Cooper‘s condition, the presiding ALJ issued an order dated August 12, 1994, in which he found that Cooper had proven by a preponderance of the evidence that her condition had worsened to the point that she had again become temporarily and totally disabled as of December 8, 1993. Finding nothing in the Workers’ Compensation Act to the contrary, the ALJ explained that he did not consider an independent medical exam necessary for purposes of adjudicating a claim for temporary disability benefits based on a worsened condition. Included in the order was a finding that Cooрer‘s physical and psychological impairment had been proximately caused by the work-related injury she sustained on May 13, 1992. Accordingly, Sunny Acres was ordered to provide Cooper with medical and TTD benefits as of December 8, 1993.
Cooper continued to receive TTD benefits until March 4, 1996, at which time she was again found to have attained MMI. She subsequently requested a hearing to determine her entitlement to permanent total disability (“PTD“) benefits.3 At this point, Sunny Acres requested that a division-sponsored, independent medical exam be performed on Cooper. The physician who performed that exam concluded that as of March 4, 1996, Cooper had attained MMI from a psychiatric standpoint, leaving her with a sixty perсent psychiatric impairment. The physician noted, however, that Cooper‘s work-related injury was not a significant factor relative to her overall disability, and that the psychiatric impairment was the result of her pre-existing psychological function.
After considering several conflicting medical opinions, a second ALJ concluded that Cooper had failed to prove by a preponderance of the evidence that the work-related injury was a significant factor contributing to her permanent total disability. Without referring specifically to either collateral estoppel or the “law of the case” doctrine, Cooper argued that the second ALJ was bound by the first ALJ‘s finding regarding the causation оf her injuries. In response, the ALJ characterized Cooper‘s contention as raising the “law of the case” doctrine, and found that the first ALJ‘s findings, made in connection with Cooper‘s claim for TTD benefits, were not entitled to deference because they did not concern PTD benefits specifically. As such, Cooper‘s claim for PTD benefits was denied.
Cooper appealed the second ALJ‘s rulings to the Industrial Claim Appeals Office (“ICAO“), which affirmed, and then to the court of appeals, which on rehearing set aside the order. Cooper v. Indus. Claim Appeals Office, 998 P.2d 5 (Colo.App.1999). Although Cooper raised the issue whether the ALJ was bound by the earlier causation finding under the doctrine of “law of the case,” the court of appeals addressed the substance of Cooрer‘s argument under collat
II.
Collateral estoppel, or issue preclusion, is a judicially created, equitable doctrine that operates to bar relitigation of an issue that has been finally dеcided by a court in a prior action. Bebo Constr. Co. v. Mattox & O‘Brien, P.C., 990 P.2d 78, 84 (Colo.1999); 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction § 4403 (1981). The doctrine serves to relieve parties of multiple lawsuits, conserve judicial resources, and promote reliance on the judicial system by preventing inconsistent decisions. Bebo Constr., 990 P.2d at 84. Although originally developed in the context of judicial proceedings, issue preclusion is just as viable in administrative proceedings and may bind parties to an administrative agency‘s findings of fact or conclusions of law. Id. at 85; Indus. Comm‘n v. Moffat County Sch. Dist. RE No. 1, 732 P.2d 616, 620 (Colo.1987).
Issue preclusion bars relitigation of an issue if: (1) the issue sought to be precluded is identical to an issue actually determined in the prior proceeding; (2) the party against whom estoppel is asserted has been a party to or is in privity with a party to the prior proceeding; (3) there is a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Bebo Constr., 990 P.2d at 85; Guar. Nat‘l Ins. Co. v. Williams, 982 P.2d 306, 308 (Colo.1999); Indus. Comm‘n, 732 P.2d at 619-20. Only when each of these elements has been satisfied are the equitable purposes of the doctrine furthered by issue preclusion.
It is settled law that a full and fair opportunity to litigate an issue requires not only the availability of procedures in the earlier proceeding commensurate with those in the subsequent proceeding, Maryland Cas. Co. v. Messina, 874 P.2d 1058, 1062 (Colo.1994), but also that the party against whom collateral estoppel is asserted have had the same incentive to vigorously defend itself in the previous action, Salida Sch. Dist. R-32-J v. Morrison, 732 P.2d 1160, 1166-67 (Colo.1987); Restatement (Second) of Judgments § 28(5)(c) & cmt. j (1982).6 A party necessarily lacks the same incentive to defend where its exposure to liability is substantially less at the earlier proceeding. Salida, 732 P.2d at 1166-67. In addition to the amount of potential money awards, significant variations in exposure may arise from differences in the finality or permanence of judgments, see In re C.M., 675 N.E.2d 1134, 1137-38 (Ind.Ct.App.1997) (recognizing that
Although the incentive to vigorously defend might be artificially created by the operation of collateral estoppel principles, augmenting a party‘s incentive to litigate in the first instance would undermine the very purpose behind permitting temporary orders or expedited and inexpensive adjudication of smaller claims in a number of contexts. In the analogous context of unemployment proceedings, this court in Salida recognized that:
If findings entered at an unemployment compensation hearing may be used to establish the employer‘s liability for unlawful discharge in a subsequent lawsuit, the employer would have a strong incentive to use its superior resources consistently to oppose a discharged employee‘s claim for unemployment benefits. Issues presented to the Division will be contested strongly, and the hearings will become lengthy and more detailed, and will no longer be suited to the prompt resolution of unemployment compensation claims.
Salida, 732 P.2d at 1165; see also Williamsen v. People, 735 P.2d 176, 182 (Colo.1987) (recognizing that compelling reasons may exist not to apply collateral estoppel where proceedings are tailored to promote prompt, inexpensive adjudication of smaller claims).
These considerations apply equally to the adjudication of workers’ compensation benefits. See Messina, 874 P.2d at 1066 n. 13 (recognizing that rationale underlying inapplicability of collateral estoppel to unemployment hearings is useful when analyzing same doctrine in workers’ compensation cases). Temporary total disability benefits are limited to statutorily prescribed amounts and may extend only until the occurrence of certain statutorily prescribed events. Permanent total disability benefits continue until the death of the disabled worker. The difference in potential duration of benefits alone demonstrates the difference in exposure to an employer. Furthermore, one of the primary purposes underlying Colorado‘s Workers’ Compensation Act is to “assure the quick and efficient delivery of disability and medical benefits to an injured worker at a reasonable cost to employers, without the necessity of any litigation.”
While not articulating a consistent rationale for doing so,7 courts addressing this issue in other jurisdictions have similarly refused to treat the causation of permanent injuries as having been resolved by determinations of causation relative to temporary injuries. See, e.g., Betts v. Townsends, Inc., 765 A.2d 531, 535 (Del.2000) (holding that determination of causation in permanent disability hearing not barred by estoppel because “[w]hether an industrial accident caused temporary total disability or permanent partial disability are two distinct questions“); In re Bailey, 769 A.2d 360, 362 (N.H.2001) (declining to apply issue preclusion where agency awarded benefits for temporary disability but made nо finding as to permanent disability); Appeal of Hooker, 142 N.H. 40, 694 A.2d 984, 986-88 (1997) (finding collateral estoppel inapplicable even where alleged injury giving rise to both proceedings is the same and allegedly flows from same work-related injury because issue of causation determined in TTD hearing is different from issue of causation relevant to subsequent medical benefits hearing); Tenorio, 931 P.2d at 240 (recognizing the inherent policy problems associated with applying issue preclusion to permanent disability proceedings and construing Wyoming‘s workers’ compensation act as inconsistent with the doctrine in that context).
Because an employer always risks an award of substantially longer duration at a proceeding to determine permanent total disability than it does at a prоceeding to determine temporary total disability, it never has the same incentive to vigorously litigate issues at the latter that it does at the former. Furthermore, augmenting the stakes of the temporary disability hearing by affording collateral estoppel effect to findings made therein would contravene an important purpose of the Workers’ Compensation Act served by treating temporary and permanent disability differently. Whether or not issues involving temporary and permanent injuries are properly treated as identical, the doctrine of collateral estoppel therefore does not apply.
III.
Accordingly, the court of appeals erred by applying collateral estoppеl to preclude Sunny Acres from litigating the issue whether Cooper‘s permanent disability was work-related. The judgment of the court of appeals is therefore reversed and the case is remanded for further proceedings consistent with this opinion.
Justice MARTINEZ dissents, and Chief Justice MULLARKEY and Justice BENDER join in the dissent.
Justice MARTINEZ dissenting:
In this case, two Administrative Law Judges (ALJs) disagreed as to whether the claimant‘s injuries were work-related. Although the ALJ at the hearing on temporary total disability (TTD) benefits found that the physical and psychological injuries suffered by Charla Sue Cooper (Cooper) were work-related, the ALJ at the subsequent hearing on permanent total disability (PTD) benefits made different credibility determinations and concluded that the injuries were not work-related. Eаch ALJ addressed Cooper‘s eligibility to receive workers’ compensation benefits and decided whether her physical and psychological injuries were work-related. The only issue at the PTD hearing that was not previously resolved at the TTD hearing was the greater extent of disability required for a determination of PTD. Nonetheless, the majority finds that the identical issue of whether Cooper‘s injuries were work-related was not fully and fairly litigated at the temporary hearing, and declines to apply issue preclusion to bar the employer from relitigat
As the majоrity explains, Cooper suffered a head injury, and other injuries, when she slipped and fell while working for Sunny Acres Villa, Inc. (Sunny Acres) as a nurse. After initially receiving TTD benefits and participating in a vocational rehabilitation program, Cooper resumed her nursing duties and TTD benefits discontinued. However, she continued to suffer psychologically. After her condition deteriorated to the point that she could no longer work, she requested a hearing on the resumption of TTD benefits. At that hearing, the first ALJ assigned to the case found that Cooper‘s disabling psychological impairment resulted from her occupational head injury. He held that Cooper had established by a preponderance of the evidence that her conditiоn had worsened since the time that benefits were discontinued, and that she had become temporarily and totally disabled.
After Cooper reached Maximum Medical Improvement (MMI) with regard to her worsened condition, she requested a hearing on PTD. Following the hearing, a second ALJ denied Cooper‘s request for PTD benefits and medical benefits. The second ALJ determined that Cooper‘s industrial injury was not a significant factor in her claim for PTD benefits.8 Despite the first ALJ‘s earlier holding that Cooper‘s psychological impairment resulted from her occupational head injury, the second ALJ found that Cooper had not suffered a closed head injury during her slip and fall. In doing so, the second ALJ simply resolved factual issues of credibility differently than the first ALJ had resolved the same issues. Although the second ALJ had before him a second division sponsored independent medical exam, the examining doctors simply relied on the division sponsored independent medical exam submitted at the earlier hearing. Thus, the underly
A preliminary question presented in this case is the contention of Sunny Acres that Cooper failed to raise issue preclusion at the PTD hearing before the second ALJ. The majority finds it unnecessary to decide whether Cooper raised issue preclusion because they conclude that the doctrine does not apply to this case. However, I believe that the question of whether issue preclusion has been adequately raised must first be decided before addressing whether the doctrine should be applied in these particular circumstances.
Addressing this preliminary question, I find that Cooper raised issue preclusion at the hearing on PTD benefits by arguing that Sunny Acres was “prohibited from relitigating” that Cooper‘s psychological symptoms arose from a preexisting psychiatric condition. Further, the record reveals that the parties understood the argument even though the terms “issue preclusion” or “collateral estoppel” were not specifically used. Thus, I conclude that issue preclusion was adequately raised. Therefore, I next discuss whether the doctrine should be applied in the circumstances before us.
Under the doctrine of issue preclusion, the findings of an administrative agency, acting in an adjudicatory capacity, may be binding on the parties in a subsequent proceeding if the agency resolved disputed issues that the parties had an adequate opportunity to litigate. Dale v. Guar. Nat‘l Ins. Co., 948 P.2d 545, 549 (Colo.1997); Md. Cas. Co. v. Messina, 874 P.2d 1058, 1061 (Colo.1994); Indus. Comm‘n v. Moffat County Sch. Dist. Re No. 1, 732 P.2d 616, 620 (Colo.1987). Where issue preclusion applies, the final decision of an adjudicatory body on an issue actually litigated is conclusive as to that issue in a subsequent action. Indus. Comm‘n, 732 P.2d at 620; Salida Sch. Dist. R-32-J v. Morrison, 732 P.2d 1160, 1163 (Colo.1987).
Issue preclusion bars relitigation of an issue if: (1) the issue precluded is identical to аn issue actually determined in the prior proceeding; (2) the party against whom estoppel is asserted has been a party to or is in privity with a party to the prior proceedings; (3) there is a final judgment on the merits in the prior proceedings; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Guar. Nat‘l Ins. Co. v. Williams, 982 P.2d 306, 308 (Colo.1999); Dale, 948 P.2d at 550; Maryland Cas. Co., 874 P.2d at 1061; Indus. Comm‘n, 732 P.2d at 620; Salida Sch. Dist. R-32-J. 732 P.2d at 1163.
In this case, the majority opinion focuses on the fourth element of issue preclusion, whether the employer had a full and fair opportunity to litigate. Before addressing whether the employer had a full and fair opportunity to litigate, I briefly address the other elements.
In determining whether the first element of issue preclusion has been satisfied, I consider thе initial eligibility requirements for any benefits under the Workers’ Compensation Act. Generally, a claimant is eligible for benefits under the Workers’ Compensation Act only after an initial showing that: (1) both the employer and the employee were subject to the Workers’ Compensation Act at the time of the injury; (2) the employee was performing services arising out of and in the course of the employee‘s employment; and (3) the injury or death was proximately caused by an injury or occupational disease arising out of and in the course of employee‘s employment and was not self-inflicted. See
The second element of issue preclusion is satisfied in that both Cooper and Sunny Acres were parties at the TTD and PTD hearings in this case. The third element is established because an order granting TTD benefits is a final order for purposes of applying collateral estoppel in a subsequent proceeding. See Standard Metals Corp. v. Gallegos, 781 P.2d 142 (Colo.Ct.App.1989)(citing Loffland Bros. Co. v. Indus. Claim Appeals Panel, 770 P.2d 1221 (Colo.1989)). It is the fourth element of issue preclusion the majority finds lacking, that is, whether the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding.
The majority does not apply the doctrine of collateral estoppel, and instead holds that an employer does not have a full and fair opportunity to litigate the work-relatedness of an injury at a TTD hearing. Maj. op. at 45, 47-48. Specifically, the majority asserts that an employer‘s incentivе to litigate liability is necessarily greater at a hearing for PTD benefits. Maj. op. at 49. The majority argues that an employer lacks the requisite incentive to vigorously defend itself at a TTD hearing because TTD “benefits are limited to statutorily prescribed amounts” and last only until the occurrence of certain events, while PTD benefits continue until the death of the employee. Maj. op. at 48. In my view, differences in potential recovery, and in the possi
The cases relied upon by the majority to support the argument that an employer does not have a full and fair opportunity to litigate at a TTD hearing involve separate and unrelated proceedings with different purposes. Conversely, workers’ compensation proceedings concern a series of relatеd benefits in a single action. For example, the majority cites Salida Sch. Dist. R-32-J v. Morrison, 732 P.2d at 1160, for the proposition that a party necessarily lacks the same incentive to litigate an issue where its liability exposure is substantially less at the earlier proceeding. However, Salida concerned the preclusive effect of findings made in an unemployment compensation proceeding on a subsequent
The majority also relies upon Ferris v. Hawkins, 135 Ariz. 329, 660 P.2d 1256 (App.1983), to support its argument. In Ferris, the Arizona Court of Appeals declined to apply collateral estoppеl to a final judgment in an unemployment compensation action in a later state personnel board disci
Because the causes of action, the nature of the proceedings, and the potential exposure of the defendants in the above discussed cases are very dissimilar, the parties are not likely to have the same incentive to litigate. In contrast, both claims at issue in this case involve the Workers’ Compensation Act, the purpose of which is to provide an employee with prompt compensation for work-related injuries. Any possible difference in incentive to litigate the work-relatedness of an injury between the TTD and PTD hearings appears to be unpredictable, and in any event, insufficient to justify the majority‘s position. Moreover, issue preclusion would never apply if any difference in potential liability prevented its application. Instead, whether the parties had a similar incentive to litigate is both a question of degree and an exception to be applied on a case-by-case basis. Restatemеnt (Second) of Judgments §§ 28(5) & cmt. j (1982). Here, Sunny Acres participated fully in the TTD hearing and actively opposed Cooper‘s claim that her injuries were work-related.
The majority also relies upon several child welfare cases.9 In these cases, courts refused to apply collateral estoppel to factual findings made at temporary child welfare hearings in trials on the termination of parental rights. The courts deciding these cases suggested that a parent‘s incentive to litigate could be impacted by the lack of finality of the temporary hearing and the difference in the nature of the consequences between temporary orders and termination of parental rights. Such proceedings implicate fundamental rights and society‘s interest in protecting the best intеrests of the child.
The majority also looks for support in several cases in other jurisdictions in which courts have declined to apply issue preclusion without “articulating a clear rationale.” Maj. op. at 49. However, these cases can be distinguished from the case at hand. In Betts v. Townsends, Inc., 765 A.2d 531, 533-34 (Del.2000), the clаimant‘s temporary disability resulted from his work-related injury, but the injury had subsequently resolved and was therefore not the cause of his partial disability. Similarly, the court in Appeal of Hooker, 142 N.H. 40, 694 A.2d 984 (1997), declined to mechanically apply collateral estoppel where claimant‘s condition was a work-related aggravation of his pre-existing but stabilized asthma. Although claimant had established that he suffered from a lung infection, expert testimony presented at a subsequent hearing distinguished claimant‘s asthma from the lung infection. Thus, the claimant‘s condition differed from the medical condition found to be causally related at the earlier hearing. Id. at 987. Finally, in Pet. of Marlene F. Bailey, 769 A.2d 360 (N.H.2001), issue preclusion did not prevent denial of the claimant‘s request for retirement benefits due to a previous award of temporary disability benefits in workers’ compensation proceedings. The court declined to apply issue preclusion for two independent reasons. First, the two proceedings did not involve the same opposing parties. Second, even if the requirement of identity of parties had been satisfied, only the issue of the work-relatedness of the injury would be precluded. This is because the issue of whether the resulting disability was permanent, as required for retirement benefits, differed from the issue of temporary disability resolved in the earlier proceeding. Neither reason supports the majority‘s decision.
I am persuaded instead by cases in other jurisdictions that have specifically addressed issue preclusion in workers’ cоmpensation cases and concluded that after the initial showing of eligibility has been made, relitigation of those issues is barred. Specifically, in Fox-Smythe Transportation Co. v. McCartney, 510 P.2d 686 (Okla.1973), the Oklahoma Supreme Court held that medical evidence demonstrating the causal connection between a claimant‘s injury and his resulting disability at the temporary disability hearing precluded relitigation of this issue at the permanent disability hearing. Similarly, in Van Houten v. Harco Construction, Inc., 655 A.2d 331 (Me.1995), the Maine Supreme Court held that the determination that a claimant suffered a work-related back injury at a hearing awarding partial incapacity benefits had preclusive effect at a subsequent hearing to recover benefits for psychological treatment related to chronic back pain. Likewise, in Smith v. Industrial Commission, 125 Ill.App.3d 999, 81 Ill.Deс. 199, 466 N.E.2d 1001 (1984), a temporary disability award was held conclusive as to the issue of causation. Finally, in Tenorio v. State, 931 P.2d 234 (Wyo.1997), the Wyoming Supreme Court specifically noted that collateral estoppel would have barred relitigation of causation in workers’ compensation cases where the initial award was uncontested, absent a statute modifying the applicability and scope of collateral estoppel in such cases. Because I find the analysis presented in these cases persuasive, I would apply issue preclusion to findings of causation made at a TTD hearing to a subsequent PTD hearing.
Finally, in deciding whether to apply the equitable doctrine of issue preclusion to a PTD hearing in a worker‘s compensation case, I consider the unequal effect of failing to apply the doctrine. Theoretically, issue preclusion applies equally to either party, barring whichever party is not first successful from relitigating an issue. However, in the context of TTD and PTD hearings in workers’ compensation cases, only the employer benefits from the majority‘s holding. As a practical matter, the Workers’ Compensation Act precludes an employee from relitigating the work-relatedness of her injuries if she is not successful in persuading an ALJ
In conclusion, I agree with the court of appeals. Therefore, I would hold that the first ALJ‘s determination that Cooper‘s psychological impairment was work-related precluded the second ALJ from determining that it was not work-related. I also agree with the court of appeals that there are additional issues to be resolved at the PTD hearing that are not precluded. Thus, I believe the case should be remanded for the ALJ to determine whether Cooper‘s work-related psychological impairment rendered her permanently and totally disabled, therefore entitling her to an award of PTD benefits. Accordingly, I would affirm.
Chief Justice MULLARKEY and Justice BENDER join in this dissent.