[00:00:00] Speaker 01:
Submitted.

[00:00:01] Speaker 01:
In the next case is Sanchez versus Travelers, 24-10-09.

[00:00:47] Speaker 01:
All right, we'll hear from the appellant whenever you're ready.

[00:01:08] Speaker 02:
Thank you, Your Honors.

[00:01:09] Speaker 02:
May it please the Court?

[00:01:10] Speaker 02:
My name is Zachary Muggy, and I represent the appellant, Michael Sanchez.

[00:01:15] Speaker 02:
We've all heard the old adage.

[00:01:17] Speaker 02:
that cheaters never win, right?

[00:01:21] Speaker 02:
But it takes a case like this one to maybe force us to take a step back and really question whether that is true.

[00:01:29] Speaker 02:
Because in reality, sometimes cheaters do win, but only if they get away with it.

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And that's why we're here.

[00:01:37] Speaker 02:
Travelers cheated in Michael Sanchez's workers' compensation claim.

[00:01:43] Speaker 02:
They wanted to avoid having to pay him benefits and provide him with medical care.

[00:01:48] Speaker 02:
And Mr. Sanchez brought a bad faith case against Travelers so they wouldn't get away with it.

[00:01:55] Speaker 02:
But unfortunately, Travelers was able to convince the district court down below that Mr. Sanchez is barred from even bringing his claim in the first place based on the doctrine of issue preclusion.

[00:02:07] Speaker 04:
So if you're wrong about the effect of the dime in this case, do you lose?

[00:02:15] Speaker 02:
No, Your Honor.

[00:02:17] Speaker 02:
That is just one of the reasons of many that the district court's ruling was in error.

[00:02:22] Speaker 02:
There are three main reasons that I'd like to address today as to why the district court's ruling was in error and must be reversed.

[00:02:29] Speaker 02:
And the first is that according to Colorado Supreme Court precedent in the Brodeur and Savio cases, workers' compensation claims are an entirely different species than a bad faith claim.

[00:02:42] Speaker 02:
And the language in Brodeur and Savio make clear that

[00:02:45] Speaker 02:
they're separate and distinct causes of action, and that the resolution of a worker's compensation claim does not have any bearing on the bad faith claim.

[00:02:54] Speaker 02:
It's to be resolved differently.

[00:02:57] Speaker 02:
And the reason for that is that the bad faith claim is brought under the duty of good faith and fair dealing, right?

[00:03:05] Speaker 02:
It's a long bedrock legal principle that all insurance companies must abide by the duty of good faith and fair dealing when they're handling the claim.

[00:03:15] Speaker 00:
You've already lost me.

[00:03:17] Speaker 00:
You're arguing bad faith and the issue before us is issue preclusion, that the matter as far as the low back was concerned was determined not to be a result of an injury.

[00:03:32] Speaker 00:
Now, bad faith is one thing, but court proceedings and rulings are another.

[00:03:38] Speaker 00:
As I read the briefs, this matter was determined by an ALJ,

[00:03:45] Speaker 00:
It then was appealed and went to the Colorado Court of Appeals and cert was denied by the Colorado Supreme Court which determined the issue that the back, low back injury was not a part of the injury suffered at work.

[00:04:07] Speaker 00:
Okay, that's not bad faith, that's just a plain ruling.

[00:04:12] Speaker 00:
So, to me, you're going to have to show me how issue preclusion, in the one case which argued that it was not a result of the injury, develops into some kind of bad faith.

[00:04:27] Speaker 00:
I mean, where am I missing this?

[00:04:30] Speaker 02:
Happy to do so, Your Honor.

[00:04:32] Speaker 00:
You better, because that's where I am.

[00:04:34] Speaker 02:
Well, I appreciate you asking me that question then, so that I could

[00:04:37] Speaker 02:
provide the answer.

[00:04:38] Speaker 02:
The bad faith came in the process.

[00:04:41] Speaker 02:
So the initial administrative law judge, I'll call him an ALJ, made a decision that the low back injury was not causally related to the work injury.

[00:04:51] Speaker 02:
We have an admitted work injury, and that's key.

[00:04:53] Speaker 02:
Compensability has already been conceded by travelers and by the employer.

[00:04:58] Speaker 02:
So then the question becomes, was the low back causally related to the work accident?

[00:05:04] Speaker 02:
The ALJ initially said no.

[00:05:07] Speaker 02:
We have to keep in mind the process that the parties went through before they got to that ALJ ruling.

[00:05:13] Speaker 02:
And one of the key facts in this case is that Mr. Sanchez was sent to a second opinion doctor, Dr. Kawasaki.

[00:05:20] Speaker 02:
And when travelers sent Mr. Sanchez's medical records and other records to Dr. Kawasaki, you'll note that they omitted key records documenting clearly the fact that Mr. Sanchez had indeed reported a low back injury immediately after the accident.

[00:05:38] Speaker 02:
Travelers kept those records from the second opinion doctor.

[00:05:42] Speaker 02:
The second opinion doctor, once he got those missing records, said, oh, I had not seen these before.

[00:05:47] Speaker 02:
I changed my mind.

[00:05:49] Speaker 02:
I now conclude that the low back injury was causally related.

[00:05:53] Speaker 02:
That report from Dr. Kawasaki, that corrected report, was not permitted into evidence in that first hearing with ALJ Kinesi.

[00:06:01] Speaker 02:
Travelers wouldn't let it in.

[00:06:03] Speaker 04:
And then they made an objection.

[00:06:05] Speaker 02:
I'm sorry?

[00:06:08] Speaker 01:
The ALJ would let it in.

[00:06:10] Speaker 01:
Travelers objected.

[00:06:11] Speaker 01:
Travelers didn't make the decision.

[00:06:13] Speaker 01:
The ALJ did.

[00:06:15] Speaker 02:
That's correct.

[00:06:16] Speaker 02:
But travelers had the report, right?

[00:06:18] Speaker 02:
So travelers knew that the second opinion doctor had changed his mind, but then took advantage of the fact that ALJ Kameesi was not aware of that because the document didn't come into evidence.

[00:06:29] Speaker 02:
So you're honored to answer your question squarely.

[00:06:32] Speaker 02:
Where does the bad faith come?

[00:06:34] Speaker 02:
If you get an outcome in your favor, that's fine.

[00:06:37] Speaker 02:
But the process matters.

[00:06:38] Speaker 02:
How you go about achieving that result matters.

[00:06:41] Speaker 02:
You can't cheat.

[00:06:43] Speaker 02:
You can't hide documents.

[00:06:44] Speaker 02:
You can't take advantage of errors.

[00:06:47] Speaker 02:
You can't ignore your own records.

[00:06:49] Speaker 01:
I don't think you argued, and I don't think you want to argue, do you, that the ALJ got it wrong?

[00:06:58] Speaker 01:
I mean, this went through the state of federal process.

[00:07:01] Speaker 01:
Rucker versus Feldman would preclude us from re-litigating the correctness of the state court's affirmance of the ALJ's decision.

[00:07:12] Speaker 01:
As I understand, that's not your argument.

[00:07:14] Speaker 01:
Correct.

[00:07:15] Speaker 01:
All right.

[00:07:15] Speaker 01:
So with your argument, I understand you presented it extremely well in your briefing is, well, all the bad faith preceded the ALJ's decision and post-dated the ALJ's decision.

[00:07:28] Speaker 01:
Correct.

[00:07:28] Speaker 01:
And so I think you would agree, would you not?

[00:07:31] Speaker 01:
that a bad faith claim can be predicated on the incorrectness of an insurance denial.

[00:07:41] Speaker 01:
In other words, bad faith breach of an insurance contract, we see it all the time, right?

[00:07:45] Speaker 02:
That's right.

[00:07:46] Speaker 01:
And in that case, it would be a coterminous inquiry, right?

[00:07:50] Speaker 01:
In other words, if that were the nature of the claim here hypothetically,

[00:07:56] Speaker 01:
and the ALJ decided that the worker's cop claim was correctly denied, there certainly would not be bad faith in denying the claim because there was already an enforceable adjudication that we can't relitigate at a worker versus Feldman that that denial was correct, right?

[00:08:18] Speaker 02:
Well, Your Honor, I think this case is different.

[00:08:22] Speaker 02:
Because what we're saying was the bad faith conduct is what influenced the ALJ decision in the first place.

[00:08:27] Speaker 02:
The ALJ's ruling was the byproduct of the bad faith, of the ignoring the records, of the totally tainting the second opinion.

[00:08:36] Speaker 01:
So you're not arguing that he had emotional distress or some other, even if the claim was correctly denied, he had some other damage like emotional distress,

[00:08:48] Speaker 01:
There was a delay that influenced him.

[00:08:54] Speaker 01:
Your only argument for damages for bad faith and the underlying act was the improper denial of benefits because the ALJ got it wrong because of what they're insidious cheating, right?

[00:09:09] Speaker 02:
No, Your Honor.

[00:09:10] Speaker 02:
Our damages are specific to the damage caused by the bad faith.

[00:09:14] Speaker 02:
The compensability issue has since been resolved.

[00:09:17] Speaker 02:
ALJ Kinesi's order was rendered moot when the dime made his decision on MMI, right, maximum medical improvement and causation are inextricably intertwined in our dime opinion, which as a matter of law says, the dime opinion controls ALJ Kinesi's previous ruling is now moot.

[00:09:35] Speaker 02:
The damages that we seek on our bad faith claim come from the fact that because Travelers cheated in the process, Mr. Sanchez ended up getting fired from his job

[00:09:46] Speaker 02:
He didn't get medical benefits.

[00:09:49] Speaker 01:
So all of the bad faith was in denying the claim?

[00:09:54] Speaker 02:
No, Your Honor.

[00:09:54] Speaker 02:
The bad faith was in tainting the process by which the initial ALJ made his ruling.

[00:10:01] Speaker 02:
OK.

[00:10:02] Speaker 01:
Now here's my last question, and then I will be quiet.

[00:10:05] Speaker 01:
So in district court, when you responded to the summary judgment motion on pages 14 and 15,

[00:10:13] Speaker 01:
even with a magnifying glass, where can I find any hint of such an argument?

[00:10:19] Speaker 02:
That the damages that we seek are stemming from the bad faith conduct and not the compensable?

[00:10:24] Speaker 01:
No, you certainly say just on a 64,000 foot level, yeah, they can be independent.

[00:10:35] Speaker 01:
But where in district court on those two pages, I mean, it's just two pages where you addressed it,

[00:10:41] Speaker 01:
Where can I find an argument that, well, the ALJ wouldn't have denied the benefits had they not withheld the information from Dr. Kawasaki on the first report?

[00:10:55] Speaker 01:
Or that this led the ALJ into withholding the second Kawasaki report?

[00:11:03] Speaker 01:
Or any of this stuff that you have laid out extraordinarily well to us, I just don't know

[00:11:10] Speaker 01:
where the district judge had the same benefit that we did.

[00:11:14] Speaker 02:
Well, Your Honor, I don't have the time to go through that entire brief right now, but I do think we laid it out in the extensive facts section, and then the arguments were twofold, right?

[00:11:24] Speaker 02:
The arguments were Brodeur and Savio bar this argument as a matter of law, because under binding precedent from our Colorado Supreme Court, it says these are different claims.

[00:11:34] Speaker 02:
and that the resolution of the worker's compensation claim does not impact the resolution of a bad faith claim.

[00:11:39] Speaker 02:
They're to be treated entirely separately, and that language is clear.

[00:11:44] Speaker 02:
So I did make that point, Your Honor, the best I could with the limited, you know, I have 20 pages, and perhaps in hindsight I should have asked for more.

[00:11:52] Speaker 02:
But I made the argument the best we could to say the law says that the worker's compensation claim doesn't

[00:11:58] Speaker 02:
have a bearing on the bad faith claim because they're about two separate things.

[00:12:02] Speaker 04:
In your opinion, you could have won before the ALJ and still have your bad faith claim.

[00:12:08] Speaker 02:
That's correct, Your Honor.

[00:12:09] Speaker 02:
The two are entirely separate.

[00:12:11] Speaker 02:
You can have both.

[00:12:12] Speaker 02:
You can have a finding.

[00:12:14] Speaker 02:
Even if the process wasn't tainted and the ALJ ruled against my client, if the process was tainted, then it gives rise to a separate bad faith claim.

[00:12:23] Speaker 02:
And that's what's happened here.

[00:12:25] Speaker 02:
So there are three reasons why, as we've cited in the brief, that we believe the district court's ruling must be reversed.

[00:12:32] Speaker 02:
And the first is that it doesn't even apply, issue preclusion doesn't even apply, because of the binding precedent in Brodur and Savio, which says, as a matter of law, these are separate claims.

[00:12:42] Speaker 02:
They're to be treated separately.

[00:12:43] Speaker 02:
The resolutions do not depend on one another.

[00:12:47] Speaker 02:
And the second reason is the dime, which,

[00:12:50] Speaker 02:
Judge Carlson, you talked about when you have a dime, even if it came after the ALJ decision, which is an unusual turn of events, I would say, that dime controls, and that's as a matter of statute.

[00:13:05] Speaker 02:
Because the dime's opinion went to MMI, and the MMI decision said he's not at MMI because his lower back injury was causally related to the work accident and has not been treated, the dime's opinion is given presumptive weight.

[00:13:19] Speaker 01:
If this was a lost time plan,

[00:13:21] Speaker 02:
And it is a lost-time claim, Your Honor.

[00:13:23] Speaker 01:
Did you argue that in district court?

[00:13:25] Speaker 01:
Yes, Your Honor.

[00:13:25] Speaker 01:
That it was a lost-time claim?

[00:13:26] Speaker 01:
Because the only place was in that footnote.

[00:13:29] Speaker 01:
You're right.

[00:13:30] Speaker 01:
Did you argue in that footnote that this was a lost-time claim?

[00:13:32] Speaker 02:
Well, the footnote argues that the decision belonged to the dime, and it relates back to one of the factual allegations, which has record support.

[00:13:41] Speaker 02:
There's an email that Mr. Sanchez sent the Travelers Adjuster saying, you've got to help me.

[00:13:47] Speaker 02:
Dr. McCauley won't help me.

[00:13:49] Speaker 02:
I've had to use all my personal time.

[00:13:51] Speaker 02:
He even said that week he had to take four days of his own vacation time because he couldn't go to work.

[00:13:57] Speaker 02:
So that's the reason it's not a lost time claim, right?

[00:13:59] Speaker 02:
It's circular.

[00:14:00] Speaker 02:
It all comes back to travelers misclassifying or reclassifying the injury as a mid-back injury and then saying it's not work-related, therefore the time you take off is not covered, it's vacation time.

[00:14:12] Speaker 02:
It's this perfect circle, right?

[00:14:14] Speaker 02:
Mike Sanchez can't win.

[00:14:15] Speaker 04:
So- What's the closest case

[00:14:18] Speaker 04:
to yours for under Colorado law for bad faith because here's what I'm thinking about.

[00:14:25] Speaker 04:
If I've got a lawsuit, say this wasn't in work comp court, say it was in district court and you have some, you know, a case against an insurance company over the roof of your house and you go to court and litigate it and during the pendency of the proceedings,

[00:14:46] Speaker 04:
you are able to convince the court that Travelers has acted in bad faith, hidden documents, do this, do that.

[00:14:53] Speaker 04:
The court even goes so far as to issue sanctions against Travelers and ultimately you win and get your new roof.

[00:15:02] Speaker 04:
Plus you got the sanctions because they were hiding things from you.

[00:15:06] Speaker 04:
It just seems to me that all those arguments are subsumed in the judgment of the case where the bad conduct took place.

[00:15:15] Speaker 04:
And that after you got your new roof and after you got sanctions for them acting badly, you wouldn't then be able to run to district court and file a new case.

[00:15:25] Speaker 04:
I believe we would.

[00:15:27] Speaker 04:
What's the closest one to your case that I can go read and say, gosh, this seems really close?

[00:15:34] Speaker 02:
I was hoping to save some time for rebuttal, but I'd like to.

[00:15:36] Speaker 01:
I'll give you a minute.

[00:15:38] Speaker 02:
Okay, but I'd like to answer your question.

[00:15:39] Speaker 02:
So under the factual scenario that you gave me, we would have a claim under the Colorado Unreasonable Delay Denial Act, right?

[00:15:47] Speaker 02:
Which says just because you eventually get the benefits does not mean that the bad faith has been cured.

[00:15:51] Speaker 02:
So we would have a claim under that statute and then we'd also have a... Okay, but is there a case that's been decided under that statute that

[00:15:59] Speaker 04:
I would look at it and say, wow, that's really close to the facts that are being argued here today.

[00:16:03] Speaker 02:
Your Honor, I'm simply not in a position to come up with a case right now and tell you that.

[00:16:06] Speaker 02:
That's fine.

[00:16:07] Speaker 04:
I just wondered if one was on the top of your head.

[00:16:08] Speaker 04:
There's not.

[00:16:09] Speaker 04:
I'm sorry.

[00:16:09] Speaker 04:
That's why we have four very bright young minds that work for us.

[00:16:14] Speaker 04:
Maybe they can find one.

[00:16:15] Speaker 04:
Thank you.

[00:16:16] Speaker 04:
Thanks.

[00:16:17] Speaker 01:
No pressure, though.

[00:16:18] Speaker 04:
Yeah.

[00:16:20] Speaker 04:
Actually, we have 12, 12 among the three of us.

[00:16:24] Speaker 04:
But who's counting?

[00:16:31] Speaker 03:
Excuse me.

[00:16:33] Speaker 03:
May it please the court, my name is Evan Stevenson and I represent Travelers in this case.

[00:16:39] Speaker 03:
The court should affirm Judge Domenico's summary judgment order and prevent the creation of an entirely new category of bad faith litigation in this state that has never been previously recognized.

[00:16:54] Speaker 03:
If the plaintiff's theory is adopted by this court,

[00:16:57] Speaker 03:
And for the first time in the state of Colorado, it will be possible for workers' compensation claimants who are owed no benefits to nevertheless re-litigate that question under the guise of a bad faith claim in federal court simply by filing a new lawsuit and saying, the proceeding was unfair to me.

[00:17:16] Speaker 03:
I should have won if you hadn't cheated.

[00:17:19] Speaker 03:
That kind of litigation does not exist in Colorado.

[00:17:23] Speaker 03:
As far as I know, this is the first attempt to do this.

[00:17:26] Speaker 03:
All of the examples that I'm aware of of bad faith claims brought against workers' compensation insurers that are premised on coverage, like this one, are ones where the claimant won in the workers' compensation courts.

[00:17:39] Speaker 03:
They established that there was coverage, that they were owed benefits, and that there was some kind of, and then they go on to allege that there's some kind of wrongdoing associated with that claim.

[00:17:50] Speaker 03:
But if the court, for the first time, allows someone who is not owed any benefits

[00:17:56] Speaker 03:
to then sue in federal court and raise all the same issues of coverage plus more.

[00:18:02] Speaker 03:
The courts will be very busy.

[00:18:04] Speaker 03:
I mean, everyone who loses could then just file a federal lawsuit and say, well, the reason I lost, the reason I didn't get coverage is because you enforced the rules of evidence against me.

[00:18:14] Speaker 04:
But they claim they won.

[00:18:15] Speaker 04:
He says he won because of the dime.

[00:18:19] Speaker 03:
Oh, OK.

[00:18:21] Speaker 03:
Now I understand what you're saying.

[00:18:22] Speaker 03:
Ultimately, he won.

[00:18:23] Speaker 03:
Yes, I'm happy to go straight to that issue.

[00:18:26] Speaker 03:
So there are a number of problems with that argument.

[00:18:28] Speaker 03:
The first is under this court's precedent, putting something in one line in a brief and then a string side and a footnote is not enough to develop that argument.

[00:18:40] Speaker 03:
We contend it's waived.

[00:18:42] Speaker 03:
Second, that issue of to whom it was given to determine coverage or causation in this case, that was litigated.

[00:18:53] Speaker 03:
in the underlying case.

[00:18:54] Speaker 03:
That went up to the ICAP, to the Industrial Claim Appeals Office, and that appellate panel ruled that in this instance it's given to the ALJ to determine causation and coverage.

[00:19:08] Speaker 03:
So that issue also was resolved.

[00:19:10] Speaker 01:
They say that was dicta.

[00:19:11] Speaker 01:
Why isn't that dicta?

[00:19:14] Speaker 03:
Based on the arguments we have now, I think it's very clear it's essential to that decision because later on there was a dime.

[00:19:22] Speaker 03:
mainly related to his accepted mid-back injury.

[00:19:25] Speaker 03:
But yeah, so the proceedings continued.

[00:19:28] Speaker 03:
It was very important to determine what a dime could determine later in that proceeding versus what the ALJ could determine.

[00:19:35] Speaker 03:
So I don't think it's dicta.

[00:19:36] Speaker 03:
It's absolutely essential to affirming Judge Kenichi's causation ruling, excuse me.

[00:19:43] Speaker 03:
It's essential to affirming it to determine that he's the one who should be deciding it.

[00:19:48] Speaker 03:
So I didn't even think they really explained why that's dicta.

[00:19:51] Speaker 03:
They just called it dicta.

[00:19:53] Speaker 03:
But you have to, if you're gonna affirm something, you have to explain why it's given to that person to decide that question.

[00:20:00] Speaker 03:
So it was absolutely not dicta.

[00:20:03] Speaker 03:
So not only was it waived in the district court, but the at-exact issue was also litigated in the underlying case and is procedurally barred from being relitigated here.

[00:20:14] Speaker 03:
And then on the merits, the ICAP or the Industrial Claims Appeals Panel, they got the issue right.

[00:20:20] Speaker 03:
You know, the source of law that my friend is pointing to is a statute that says that a dime report gets presumptive weight over a dime's determination of MMI and of impairment ratings in MMI impairment rating cases.

[00:20:39] Speaker 03:
And that just, there is no such presumption

[00:20:42] Speaker 03:
in a non-lost-time claim at the time MMI is determined.

[00:20:45] Speaker 01:
Well, he's arguing that it was a lost-time claim because he had more than three days of lost time, but he was forced to give it to sick leave and his annual leave.

[00:20:58] Speaker 03:
Yeah, he's leaving out half of the rule.

[00:21:02] Speaker 03:
So what the ICAP said is that the ALJ determines causation when it's a non-lost time claim at the time MMI is first determined by an authorized treating physician.

[00:21:11] Speaker 03:
So I believe, I'm going off memory here, but I believe MMI was determined by Dr. McCauley, who's the authorized treating physician here in May, I believe it was, and at that time he had not missed any work.

[00:21:23] Speaker 03:
So I just think he's incorrect on the facts on that, Judge Baccarat.

[00:21:27] Speaker 03:
And then lastly, I mean, I just, it is not given to a dime doctor to determine causation generally.

[00:21:37] Speaker 03:
What is given to a dime doctor under the statute is to determine MMI and imperibase.

[00:21:42] Speaker 03:
And what has happened with the law in Colorado is for a time there were a number of decisions like Cordova, like Egan, like La Prino Foods, they're cited by the other side's brief.

[00:21:54] Speaker 03:
that gave effect to causation findings that were embedded within those things that are given to a dime.

[00:22:02] Speaker 03:
But then the Colorado Court of Appeals in 2019 clarified the limitations on that.

[00:22:07] Speaker 03:
So what was starting to happen was people were starting to think, what is being argued here?

[00:22:11] Speaker 03:
Oh, well, dimes just determine causation for everything.

[00:22:13] Speaker 03:
They trump everyone and everything.

[00:22:15] Speaker 03:
That is the argument that's being made here.

[00:22:17] Speaker 03:
that a dime is essentially the entire workers' compensation process.

[00:22:21] Speaker 03:
That's essentially what's being argued here.

[00:22:23] Speaker 03:
And what the Colorado Court of Appeals said in 2019, addressing those cases, addressing this exact argument, was that is wrong.

[00:22:32] Speaker 03:
That dimes do not trump everything else in the workers' compensation system.

[00:22:36] Speaker 03:
They're limited to MMI and impairment ratings.

[00:22:39] Speaker 03:
And so no, it's not the case that a causation

[00:22:44] Speaker 03:
inference embedded in there, wipes out everything that comes before.

[00:22:48] Speaker 03:
I mean, that would be so impractical.

[00:22:49] Speaker 03:
Judge Balback, I see you're raising your hand.

[00:22:52] Speaker 00:
In the dime proceedings, which we have going on here, did the claimant ultimately get paid for his upper back and lower back injuries?

[00:23:04] Speaker 00:
The question comes up, did he win?

[00:23:06] Speaker 00:
He argues he won.

[00:23:08] Speaker 00:
Well, you only win if you get paid for it.

[00:23:11] Speaker 03:
Right.

[00:23:11] Speaker 03:
So I thought Judge Carson's

[00:23:14] Speaker 03:
Judge Carson was saying he won based on the dime.

[00:23:16] Speaker 03:
Is that what you're asking?

[00:23:17] Speaker 00:
Yeah, that's where, in other words, dime is argument, as I see it, is trumping everything in here.

[00:23:25] Speaker 00:
And that you can also have a bad faith in that he's wanting to punish you because you hid this.

[00:23:31] Speaker 00:
The question is, did he recover fully from all the claims of injuries to his back under the dime proceedings?

[00:23:40] Speaker 03:
Yeah, so the claims settled when the dime was being challenged.

[00:23:43] Speaker 03:
So, and I'll tell you a little more about that.

[00:23:46] Speaker 03:
Not all of this is in the record, so take it for what it's worth.

[00:23:50] Speaker 03:
So Dr. Counts died.

[00:23:51] Speaker 03:
Dr. Counts died, and there was a challenge to his dime report that was pending in the administrative courts, and the parties just settled that claim.

[00:24:00] Speaker 03:
So I would say the answer is no.

[00:24:03] Speaker 03:
I'm sorry, go ahead, Judge.

[00:24:05] Speaker 00:
Who settled with him?

[00:24:07] Speaker 00:
You say he didn't win an argument, he just settled the claim before dying.

[00:24:12] Speaker 00:
Did it include both the upper and the lower back?

[00:24:16] Speaker 03:
It was a settlement of the whole claim.

[00:24:18] Speaker 03:
I would say that when someone settles a pending claim that's disputed, I wouldn't say that they won, no.

[00:24:24] Speaker 00:
OK, then if that's separate and settlement is incurred in regards to that, what prevents a separate cause of action for bad faith?

[00:24:34] Speaker 03:
Oh, right.

[00:24:36] Speaker 03:
The thing that prevents the separate cause of action of bad faith is that my friend's entire theory

[00:24:42] Speaker 03:
Pursued below, not necessarily what he's pursuing here, but what he pursued below was the idea that travelers unreasonably deny this claim and that they owed him coverage and that the ALJ did reach the wrong conclusion.

[00:24:56] Speaker 03:
and that it was all wrong.

[00:24:58] Speaker 00:
He doesn't say unreasonable, he says you cheated.

[00:25:00] Speaker 00:
That's his word.

[00:25:03] Speaker 03:
That's bad faith.

[00:25:04] Speaker 03:
He's not using the language of the legal standard, that's true.

[00:25:08] Speaker 03:
And the thing that prevents that is that ingredient that's essential, that's the nucleus of his bad faith claim, that there is coverage, was decided against him and finally decided against him in the underlying courts

[00:25:21] Speaker 03:
and that that was appealed all the way up to the Colorado Supreme Court.

[00:25:23] Speaker 03:
It was all either affirmed or review denied, and there is no coverage.

[00:25:28] Speaker 04:
In fact, I heard him just say- It seems like he has a little more nuanced argument than that.

[00:25:32] Speaker 04:
His argument seems to be coverage, no coverage, who cares?

[00:25:39] Speaker 04:
What happened in the work comp proceeding was travelers did not disclose all the documents to my client and to our doctors

[00:25:51] Speaker 04:
thereby infecting the proceedings with bad faith.

[00:25:55] Speaker 04:
Ain't it?

[00:25:56] Speaker 04:
No, I agree.

[00:25:57] Speaker 03:
He's developing that more now here on appeal.

[00:25:59] Speaker 04:
Well, let's talk about what he's talking about today.

[00:26:02] Speaker 04:
We can talk about whether he waived it or not.

[00:26:04] Speaker 04:
You've already made that argument.

[00:26:05] Speaker 04:
Yeah.

[00:26:06] Speaker 04:
I mean, what do you say?

[00:26:10] Speaker 04:
Assume he hasn't.

[00:26:12] Speaker 04:
What do you say to that?

[00:26:13] Speaker 04:
Assume he had preserved that argument.

[00:26:14] Speaker 04:
Assume he preserved it.

[00:26:16] Speaker 04:
And maybe he did.

[00:26:17] Speaker 03:
Yeah, I think that would be another new category.

[00:26:21] Speaker 03:
of bad faith litigation that I don't think has ever existed in Colorado.

[00:26:25] Speaker 03:
The idea that I can just say that you tainted the underlying proceedings procedurally and even though, even if I really am not owed any coverage, just because the process was unfair to me.

[00:26:36] Speaker 03:
I still get to sue you for bad faith.

[00:26:39] Speaker 03:
That would be extremely unusual.

[00:26:42] Speaker 04:
Isn't that sort of what bad faith is about?

[00:26:44] Speaker 04:
I'm litigating against you and I'm paying fees.

[00:26:49] Speaker 04:
I don't know what his arrangement was.

[00:26:52] Speaker 04:
But let's assume I'm paying fees and because you're acting in bad faith and hiding documents from me and not giving my treating physicians and my experts all the documents that you have that bear on the decision.

[00:27:04] Speaker 04:
It cost me a lot of money that I wouldn't have otherwise spent if you'd have just turned those over in the first place, maybe I would have settled early or given up.

[00:27:14] Speaker 03:
What I would say is that that faith is not about bringing lawsuits about prior lawsuits where that allegedly happened.

[00:27:19] Speaker 03:
What I would say is to the extent that he thinks that they thought that the underlying proceeding at Travelers was acting unfairly,

[00:27:26] Speaker 03:
and somehow cheating or doing terrible things, the remedy is in that proceeding.

[00:27:31] Speaker 03:
Can the work comp court give a remedy for that?

[00:27:34] Speaker 03:
Oh yeah, workers compensation courts can punish bad conduct in front of them, they can issue sanctions, they can, yes of course, yes they can.

[00:27:42] Speaker 03:
And I don't believe he's ever contended otherwise.

[00:27:46] Speaker 03:
So the idea, the threat of infinite regress is real.

[00:27:51] Speaker 03:
I mean what if this is allowed and then we somehow in this case,

[00:27:55] Speaker 03:
Why can't he just file another one after that and say?

[00:27:59] Speaker 01:
Can I test that a little bit?

[00:28:00] Speaker 01:
Sure.

[00:28:01] Speaker 01:
You said several times this would be unprecedented, that this would really unleash infinite remedies in every other context, other than workers' contracts.

[00:28:15] Speaker 01:
We have bad-faith claims all of the time that are inherently predicated on a contract, an insurance contract,

[00:28:23] Speaker 01:
And yet it's, I think, pretty well established beyond any argument that there can be the bad faith delay in a claim, even if it was ultimately correctly denied, or that there was conduct involving the administration, the processing of the claim that gave rise to some damage that was not necessarily compensable through breach of contract, like emotional distress.

[00:28:51] Speaker 01:
So, but your argument is that worker's comp is different than all of these other areas and Bay of Faith is incompatible, you know, with an ultimate adjudication that the contract, the worker's insurance obligation was correctly denied.

[00:29:08] Speaker 01:
What makes worker's comp so unique in that regard?

[00:29:13] Speaker 03:
So Judge, respectfully, I would say it's the opposite.

[00:29:16] Speaker 03:
I'd say we're arguing for the regular principles of bad faith and they're arguing for some that workers comp is different and we should be able to bring a whole new separate lawsuit about this so that the examples you're giving Judge Baccarac of say an unreasonable delay of a claim all those things are brought in the one bad faith lawsuit and the unreasonable delay is usually not associated with a prior proceeding where you have remedies those are that's out of court conduct

[00:29:41] Speaker 03:
And then you bring that out of court conduct into court in one lawsuit.

[00:29:46] Speaker 03:
And by the way, if they think that the litigation is being pursued improperly, there are some narrow avenues for pursuing bad faith litigation conduct, but it's done in that case.

[00:29:56] Speaker 03:
I don't think that's an unusual principle of law at all, that if you think there's misconduct going on in your case, you raise it in that case.

[00:30:03] Speaker 03:
I don't think that's limited to bad faith.

[00:30:05] Speaker 03:
I think that gets across the board.

[00:30:07] Speaker 03:
What is unusual is to say, for bad faith alone, we're going to let you file a whole other separate lawsuit and just say that the prior proceeding was cheating and unfair.

[00:30:16] Speaker 04:
So is it your position that in the worker's comp case he could have somehow amended his complaint and asked for bad faith damages?

[00:30:25] Speaker 03:
No, no, to be clear, I'm not saying he should have tried to bring a bad faith claim in the underlying case.

[00:30:30] Speaker 03:
I'm saying that the stuff he said was cheating, he could have had a remedy for.

[00:30:34] Speaker 03:
That's what I'm saying.

[00:30:37] Speaker 04:
So you're saying that the bad faith has to occur outside the case?

[00:30:41] Speaker 04:
That if you've got bad faith going on in the work comp case, you've got to take it up there.

[00:30:46] Speaker 04:
If there's other bad faith going on, you can file a separate lawsuit.

[00:30:49] Speaker 03:
What I'm saying is if there's cheating going on or some terrible conduct going on, you remedy it in that case.

[00:30:56] Speaker 03:
And if for some reason you have a bad faith remedy for what happens in that case, like they deny coverage unreasonably,

[00:31:03] Speaker 03:
and coverages.

[00:31:04] Speaker 03:
Actually, if there's cheating, it would be established in that case.

[00:31:08] Speaker 03:
And then, I suppose, theoretically, you could then include it in your bad faith case later, if it's established.

[00:31:15] Speaker 03:
Your Honor, I see I'm 10 seconds over my time.

[00:31:17] Speaker 03:
I was pretty much done.

[00:31:20] Speaker 03:
I'll just conclude by saying thank you, Your Honors, but the Court should not create multiple new categories of bad faith litigation in this context.

[00:31:28] Speaker 01:
Thank you.

[00:31:29] Speaker 04:
No, I don't have anything else.

[00:31:30] Speaker 01:
Before you leave, I did have just kind of one

[00:31:33] Speaker 01:
follow-up question.

[00:31:35] Speaker 01:
Now, he does argue, I think it's starting on page 52 of his opening brief, that the Travelers did commit bad faith after the ALJ's decision.

[00:31:46] Speaker 01:
How could that be encompassed within the ALJ's decision if his claim is predicated on something that hadn't even taken place by then?

[00:31:56] Speaker 03:
Yeah, so all of those claims are still premised on the idea that he's owed coverage.

[00:32:02] Speaker 03:
All right, all of them.

[00:32:03] Speaker 03:
So in the underlying case, they made the argument that Travelers did all these things and therefore I didn't get paid for my lower back injury.

[00:32:10] Speaker 03:
And whether it's before or after the ALJ's decision, it's still a necessary ingredient in that claim that he's actually owed coverage.

[00:32:18] Speaker 03:
So it doesn't make it, they can't just say you did more bad things and then now we're back to square one.

[00:32:25] Speaker 03:
Are there any other questions I can answer for your honors?

[00:32:27] Speaker 01:
No, I think that's it.

[00:32:28] Speaker 01:
Thank you so much.

[00:32:30] Speaker 01:
All right, I think I promised you

[00:32:32] Speaker 02:
You did.

[00:32:33] Speaker 02:
Thank you.

[00:32:34] Speaker 02:
And I'll be brief.

[00:32:35] Speaker 02:
I'm not asking this court to expand and create a new line of bad faith cases.

[00:32:39] Speaker 02:
This matter has been squarely addressed by our Colorado Supreme Court in Brodeur and Savio, which said, bad faith tort claims are distinct and separate actions available to workers' compensation claimants in addition to remedies under the Workers' Compensation Act.

[00:32:55] Speaker 02:
the resolution of bad faith tort claims is independent from the resolution of workers' compensation claims.

[00:33:01] Speaker 02:
Your Honor, this is squarely what Radour and Savio contemplated, that there was a workers' compensation claim over here, and that if there's bad faith, it needs to be litigated separately.

[00:33:11] Speaker 02:
The administrative courts don't even have jurisdiction.

[00:33:14] Speaker 04:
Can we give him a little extra time so I can quiz him here?

[00:33:17] Speaker 04:
Anything you want, of course.

[00:33:21] Speaker 04:
It seems you're...

[00:33:25] Speaker 04:
to me there's a difference between bad faith within the litigation itself and bad faith in claims process.

[00:33:34] Speaker 04:
And it seems to me that what you're just arguing about is bad faith within the litigation.

[00:33:41] Speaker 02:
Our claim involves both.

[00:33:44] Speaker 04:
So your position is that in litigation, if somebody is engaged in dastardly conduct,

[00:33:54] Speaker 04:
that that is separately actionable through a bad faith proceeding.

[00:33:57] Speaker 02:
Yes, Your Honor, absolutely.

[00:33:59] Speaker 02:
And that's akin to, you know, it'd be like Lance Armstrong coming in before Your Honors and insisting that he remains the winner of the Tour de France, that he's still the champion.

[00:34:07] Speaker 02:
Never mind the fact that he cheated and took steroids to do it.

[00:34:10] Speaker 02:
He's just saying, I won, and that's all you look at.

[00:34:13] Speaker 02:
The law is different.

[00:34:15] Speaker 02:
The duty of good faith and fair dealing says the process does matter.

[00:34:18] Speaker 02:
And if you taint the process, the outcome is tainted.

[00:34:22] Speaker 04:
Yeah, I'm just looking at some of your stuff.

[00:34:24] Speaker 04:
Like one of the things, Judge Becker brought up page 52 of your brief here.

[00:34:28] Speaker 04:
And it says they continue to engage in bad faith.

[00:34:32] Speaker 04:
And it says one of them was, by interfering with the dime, by initially agreeing the dime would control over ALJ Kinesi's order, only to later argue the opposite.

[00:34:47] Speaker 04:
by trying to prevent him from undergoing a dime and delaying the dime for over two years.

[00:34:54] Speaker 04:
It just seems that that is ripe for abuse, that kind of argument, because it strips away, you're not saying they don't have a right to contest the dime, to suggest that the dime was medically inappropriate, to, I mean, there may be a lot of arguments why, even though they agreed a dime can go forward, maybe they object to the doctor who was going to

[00:35:18] Speaker 04:
to conduct the dime.

[00:35:23] Speaker 04:
Seems like we would be opening the door wide open in that situation in particular for people if somebody said, oh, yeah, well, obviously, we're going to have a dime later.

[00:35:33] Speaker 04:
And then they can test the procedure or they can test something about it.

[00:35:36] Speaker 04:
Then next thing you know, you have a bad faith claim.

[00:35:38] Speaker 02:
I have no problem with them contesting the procedure within the rules.

[00:35:41] Speaker 02:
The workers' compensation rules give them the right to challenge the dime.

[00:35:44] Speaker 02:
And they did that.

[00:35:45] Speaker 02:
That's not part of our bad faith claim.

[00:35:47] Speaker 02:
What is, however,

[00:35:48] Speaker 02:
is they said, yep, you get the dime.

[00:35:50] Speaker 02:
Then he requested the dime.

[00:35:52] Speaker 02:
And then for two years, they said, no, you don't get a dime.

[00:35:55] Speaker 02:
They made the same issue preclusion argument in the workers' compensation preceding that they made here.

[00:36:00] Speaker 02:
They said, ALJ Kinesi's ruling is the end of the matter.

[00:36:03] Speaker 02:
He doesn't get a dime.

[00:36:04] Speaker 02:
Two ALJs said, no way.

[00:36:07] Speaker 02:
He statutorily guaranteed a dime.

[00:36:09] Speaker 02:
And that's what they interfered with for over two years.

[00:36:11] Speaker 04:
Well, maybe that's a frivolous argument that the workers' comp

[00:36:17] Speaker 04:
proceedings can deal with in the form of sanctions, but I still don't see how it's separately actionable.

[00:36:24] Speaker 02:
Because it's inconsistent with the duty of good faith and fair dealing.

[00:36:27] Speaker 02:
They knew he had a right to a dime.

[00:36:29] Speaker 04:
Well, they don't have a contractual duty to litigate with you in good faith.

[00:36:34] Speaker 02:
No, but they have an obligation to handle the claim in good faith.

[00:36:38] Speaker 02:
And part of a worker's compensation claim, Your Honor, a key part is the dime process.

[00:36:44] Speaker 04:
It's also part of your litigation in the worker's comp.

[00:36:47] Speaker 04:
proceeding, wasn't it?

[00:36:49] Speaker 02:
It is, and I have no problem with them litigating the dime within the confines of the rules.

[00:36:53] Speaker 02:
It's when they go outside of the rules that it becomes bad faith.