July 31, 2015 – Henry Romero v. Laidlaw Transit Services, Inc. d/b/a Saferide Services, Inc. and Insurance Company of the State of Pennsylvania, No. 33,032

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: _JULY 31, 2015

NO. 33,062
HENRY ROMERO,
Worker-A ppellant,
V.
LAIDLAW TRANSIT SERVICES, INC.
d/b/a SAFERIDE SERVICES, INC. and

INSURANCE COMPANY OF THE STATE
OF PENNSYLVANIA,

Employer/Insurer-A ppellees.

APPEAL FROM THE WORKERS’ COMPENSATION ADMINISTRATION
David L. Skinner, Workers’ Compensation J udge

Gerald A. Hanrahan
Albuquerque, NM

for Appellant

Timothy S. Hale
Paulette J. Dixon

Albuquerque, NM

for Appellees

OPINION
ZAMORA, Judge.
{1} 	In this workers’ compensation case, Henry Romero (Worker) appeals from an
order awarding him permanent partial disability (PPD) benefits, partial attorney fees,
and imposing bad faith sanctions against Laidlaw Transit Services, Inc. d/b/a Saferide
Services, Inc. (Employer), and the Insurance Company of the State of Pennsylvania
(Insurer). 	Worker 	maintains 	that 	the 	bad 	faith 	sanctions 	imposed 	against
Employer/Insurer were inadequate and that he should not have been required to pay
half of his attorney fees. We affirm.
BACKGROUND
{2} 	Worker was employed as a patient transporter and driver for Employer. Worker
was injured in two separate accidents, which both occurred within the scope of his
employment. On April 13, 2006, a compensation order was entered finding that
Worker had sustained compensable injuries as a result of the accidents. Worker was
awarded temporary total disability (TTD) benefits. An interim order was entered
March 9, 2012, reflecting a stipulation by the parties to reduce Worker’s TTD benefits
to PPD benefits at 80 percent.
{3} 	In August 2012, the parties reached a settlement agreement. Worker agreed to
accept a lump sum payment in lieu of additional workers’ compensation benefits, and

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Insurer agreed to continue paying Worker PPD benefits until the order approving
settlement was filed. The agreement was presented to and approved by the Workers’
Compensation Judge (WCJ) on August 10, 2012, and the order approving settlement
was filed on August 30, 2012. However, Insurer had discontinued payment of PPD
benefits on August 10, 2012, the day the WCJ approved the settlement rather than
August 30, 2012, the day the order was filed.
{4} 	Worker sent letters requesting payment of PPD benefits for the period from
August 10, 2012, to August 30, 2012, and received no response from Insurer. Worker
requested that the WCJ enter an order directing payment of the PPD benefits along
with post-judgment interest, a benefit penalty, and attorney fees. On March 7, 2013,
the WCJ entered an order directing payment of the PPD benefits. The WCJ found that,
contrary to the order approving settlement and despite Worker’s requests for payment,
Insurer failed or refused to issue the missed PPD payments. The WCJ ordered Insurer
to issue payment of the PPD benefits and post-judgment interest, which together
totaled $864.76. The WCJ set a hearing to address Worker’s request for a benefit
penalty and attorney fees.
{5} 	The hearing was held on March 20, 2013. The WCJ found that Insurer: failed
to timely issue payment of the lump sum settlement funds pursuant to the order
approving settlement; failed to pay PPD benefits in compliance with the order

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approving settlement; took no action in response to Worker’s requests for payment;
failed to respond to Worker’s application to the WCJ requesting the order directing
payment; failed to timely comply with the WCJ’s order requiring payment of the PPD
benefits; and offered no excuse or justification for its failure to comply with the
WCJ’s orders.
{6} 	The WCJ found that Insurer had willfully disregarded Worker’s rights and
violated the WCJ’s orders and that Insurer knew that there was no reasonable basis for
its conduct. The WCJ determined that Insurer’s conduct constituted bad faith and/or
unfair claim processing. The WCJ ordered Insurer to pay Worker $864.76 in PPD
benefits, plus a benefit penalty of $216.19, for a total award of $1,080.95. The WCJ
also awarded $2,500 in attorney fees to be shared equally between Insurer and
Worker. Worker was responsible for $1,250 in attorney fees, resulting in a $169.05
net loss to Worker. Worker appealed.
DISCUSSION
{7} 	On appeal, Worker argues that the Workers’ Compensation Act (the Act),
NMSA 1978, §§ 52-1-1 to -70 (1929, as amended through 2015), provides an
inadequate remedy for unfair claim-processing practices and bad faith claims. Worker
also challenges the WCJ’s decision concerning attorney fees.

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Standard of Review
{8} 	We review the WCJ’s factual findings under a whole record standard of review.
Moya v. City of Albuquerque, 2008-NMSC-004, ¶ 6, 143 N.M. 258, 175 P.3d 926. We
give deference to the WCJ as fact finder where findings are supported by substantial
evidence. See DeWitt v. Rent-A-Ctr., Inc., 2009-NMSC-032, ¶ 12, 146 N.M. 453, 212
P.3d 341. The WCJ’s application of the law to the facts is reviewed de novo. Ruiz v.
Los Lunas Pub. Sch., 2013-NMCA-085, ¶ 5, 308 P.3d 983. We also apply a de novo
standard of review to the extent that our analysis involves the interpretation of
workers’ 	compensation 	statutes. 	See 	Ramirez 	v. 	IBP 	Prepared 	Foods,
2001-NMCA-036, ¶ 10, 130 N.M. 559, 28 P.3d 1100 (stating that interpretation of a
workers’ compensation statute is a question of law to be reviewed de novo),
superseded by statute on other grounds as stated in Baca v. Los Lunas Cmty.
Programs, 2011-NMCA-008, 149 N.M. 198, 246 P.3d 1070. The WCJ’s award of
attorney fees is reviewed for abuse of discretion. Cordova v. Taos Ski Valley, Inc.,
1996-NMCA-009, ¶ 15, 121 N.M. 258, 910 P.2d 334.
Unfair Claim-Processing Practices and Bad Faith
{9} 	Section 52-1-28.1(B) provides that when an employer/insurer engages in unfair
claim processing or bad faith, the worker shall be awarded “any benefits due and
owing” and “a benefit penalty not to exceed twenty-five percent of the benefit amount

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ordered to be paid.” In this case, the WCJ awarded a benefit penalty of $216.19, an
amount equal to twenty-five percent of the benefit amount ordered to be paid. This is
the maximum benefit penalty allowable under the statute.
{10} 	Worker argues that the benefit penalty allowed by Section 52-1-28.1 is
insufficient to deter bad faith and unfair claim processing by employers/insurers and
that workers are deterred from pursuing bad faith and unfair claim-processing claims
because the cost of successfully pursuing such claims exceeds the available benefit
penalty. Worker also argues against Section 52-1-28.1 as an exclusive remedy for
workers’ bad faith claims.
{11} 	Section 52-1-28.1 was enacted in response to Russell v. Protective Insurance
Co., 1988-NMSC-025, ¶¶ 8-9, 107 N.M. 9, 751 P.2d 693, abrogated by Cruz v.
Liberty Mutual Insurance Co., 1995-NMSC-006, 119 N.M. 301, 889 P.2d 1223. See
Meyers v. W. Auto, 2002-NMCA-089, ¶ 16, 132 N.M. 675, 54 P.3d 79. In Russell, the
New Mexico Supreme Court held that, because the Act did not address bad faith
claims in a workers’ compensation context, such claims could be brought in the
district court. 1988-NMSC-025, ¶¶ 8-9. Subsequently, the Legislature enacted Section
52-1-28.1 that provided workers with a remedy for bad faith and unfair claim-
processing practices.

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{12} 	In Cruz, the New Mexico Supreme Court addressed the question of whether the
statute provides an adequate and exclusive remedy for workers’ bad faith claims.
1995-NMSC-006, ¶¶ 2, 4. In Cruz, an injured worker filed a complaint in district court
alleging “fraud, bad faith, breach of contract, breach of the insurance code, civil
conspiracy, invasion of privacy, negligent misrepresentation, and racketeering” after
the employer/insurer refused to pay for the worker’s treatment as set forth in the
parties’ settlement agreement. Id. The district court dismissed the worker’s complaint,
finding it lacked jurisdiction due to the Act’s exclusivity provision. Id. ¶ 6. The
worker appealed, arguing that Section 52-1-28.1 was not an exclusive or adequate
remedy for bad faith and unfair claim-processing claims. Cruz, 1995-NMSC-006,
¶¶ 7, 13.
{13} 	Our Supreme Court discussed the effect of Section 52-1-28.1 on workers’ bad
faith claims. Cruz, 1995-NMSC-006, ¶¶ 7-14. As to the statute’s exclusivity, the Court
explained that prior to the enactment of Section 52-1-28.1, workers were not afforded
a remedy for bad faith and unfair claim processing under the Act. Cruz, 1995-NMSC-
006, ¶ 9. The Court determined that the Legislature, by enacting Section 52-1-28.1
and providing a remedy for bad faith under the Act, brought all workers’ bad faith
claims under the Act’s exclusivity provision and abrogated workers’ rights to file bad
faith actions in district court. Cruz, 1995-NMSC-006, ¶¶ 9, 11.

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{14} 	As to the adequacy of the remedy, the Court stated that “[t]he purpose of the
bad[]faith action in the Act is to secure benefits for the employee and penalize the
employer or insurer.” Id. ¶ 14. The Court noted that under Section 52-1-28.1, the
worker receives all benefits due and owing as well as the extra benefit penalty of up
to twenty-five percent of the claim. Cruz, 1995-NMSC-006, ¶ 14. The Court
recognized that the benefit penalty would not be large in cases involving small claims.
Id. Nonetheless, the Court concluded that the penalty amount was adequate and
provided “sufficient deterrence to prevent an insurer from denying benefits in bad
faith and enforces the public policy against the bad[]faith handling of workers’
compensation claims.” Id.
{15} 	Worker urges this Court to re-examine and overturn the holding of Cruz
concerning the adequacy and exclusivity of the remedies provided in Section 52-1-
28.1. We decline to do so. Our Supreme Court’s decision in Cruz is binding, and we
do not have the authority to overrule it. See Alexander v. Delgado, 1973-NMSC-030,
¶ 9, 84 N.M. 717, 507 P.2d 778 (stating that “the Court of Appeals is to be governed
by the precedents of [the Supreme C]ourt”); Meyers, 2002-NMCA-089, ¶ 21 (“Worker
challenges the holding of Cruz with respect to exclusivity and the adequacy of
remedies available under Section 52-1-28.1. However, this Court does not have
authority to overrule Cruz.”).

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Worker’s Other Arguments Related to the Act’s Exclusivity
{16} 	Worker argues that NMSA 1978, Section 59A-16-30 (1990), which provides
a private right of action for bad faith under the Insurance Code and which specifically
excludes actions by workers subject to the Act’s exclusivity, violates the Equal
Protection Clause of the New Mexico Constitution. Worker also argues that the
district court should be granted concurrent jurisdiction with WCJs to assess penalty
benefits for workers’ bad faith claims. With regard to both of these arguments, Worker
does not cite any supporting authority or develop factual bases on which we can
evaluate his claims. As such, we will not review these arguments on appeal. See
Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d
1076 (stating that this Court will not review unclear or undeveloped arguments or
guess at what parties’ arguments might be); ITT Educ. Servs., Inc. v. Taxation &
Revenue Dep’t, 1998-NMCA-078, ¶ 10, 125 N.M. 244, 959 P.2d 969 (explaining that
appellate courts will not consider propositions that are unsupported by citation to
authority).
Attorney Fees
{17} 	The WCJ determined and allocated Worker’s attorney fees pursuant to NMSA
1978, § 52-1-54(I), (J) (2003, amended 2013), which provided in pertinent part:
I. 	. . . The workers’ compensation judge may . . . award[] a
reasonable attorney fee if [he] finds that a claimant, an insurer or an

1This regulation was amended in 2014, and the current version does not contain
the provisions Worker relies on.
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employer acted in bad faith with regard to handling the injured worker’s
claim and the injured worker or employer has suffered economic loss as
a result. However, in no case shall this additional amount exceed two
thousand five hundred dollars ($2,500). . . .
J. 	. . . [T]he payment of a claimant’s attorney fees determined
under this section shall be shared equally by the worker and the
employer.
{18} 	Worker argues that the WCJ abused his discretion in assessing fifty percent of
the awarded attorney fees to him. Worker relies on 11.4.4.13(B), (D)(1) NMAC
(6/13/2003, amended 12/31/2012 and 10/1/2014), which provide that a WCJ may
assess reasonable attorney fees to a party upon a finding of bad faith or unfair claim
processing.1 Worker contends that, under the circumstances of this case, it was
reasonable to assess 100 percent of Worker’s attorney fees to Insurer pursuant to the
regulations. Worker’s reading of the regulation puts it in direct contravention to
Section 52-1-54(J). Worker’s argument fails for two reasons.
{19} 	First, “[a]n administrative agency has no power to create a rule or regulation
that is not in harmony with its statutory authority.” Wilcox v. N.M. Bd. of Acupuncture
& Oriental Med., 2012-NMCA-106, ¶ 7, 288 P.3d 902 (internal quotation marks and
citation omitted). “If there is a conflict or inconsistency between statutes and
regulations promulgated by an agency, the language of the statutes shall prevail. An

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agency by regulation cannot overrule a specific statute.” Jones v. Emp’t Servs. Div.
of Human Servs. Dep’t, 1980-NMSC-120, ¶ 3, 95 N.M. 97, 619 P.2d 542.
{20} 	Second, we will not adopt a construction of an administrative code provision
that is inconsistent with a related statute if consistent construction is possible. In
interpreting sections of the administrative code, we employ the same rules as used in
statutory construction. AMREP Sw. Inc. v. Sandoval Cnty. Assessor, 2012-NMCA-
082, ¶ 9, 284 P.3d 1118. The primary goal “is to give effect to the intent of the
[L]egislature.” Archer v. Roadrunner Trucking, Inc., 1997-NMSC-003, ¶ 7, 122 N.M.
703, 930 P.2d 1155. Administrative regulations should be construed in harmony with
related statutory provisions if possible. See Fowler v. Vista Care, 2014-NMSC-019,
¶ 7, 329 P.3d 630 (“[The appellate courts] will not read the plain language of the
statute in a way that is absurd, unreasonable, or contrary to the spirit of the statute, and
will not read any provision of the statute in a way that would render another provision
of the statute null or superfluous[.]” (internal quotation marks and citations omitted));
DeWitt, 2009-NMSC-032, ¶ 14 (stating that related provisions should be read together
“to produce a harmonious whole”); AMREP, 2012-NMCA-082, ¶ 14 (reading
pertinent statutory and administrative code provisions “together so as to give effect
to their meaning”); Howell v. Marto Elec., 2006-NMCA-154, ¶ 16, 140 N.M. 737, 148
P.3d 823 (“[I]t is the function of [the] courts to interpret [statutes and regulations] in

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a manner consistent with the legislative intent.”). We conclude that 11.4.4.13(B), (D)
NMAC (6/13/2003) cannot be read in a manner consistent with Section 52-1-54.
Accordingly, we reject Worker’s argument that the WCJ abused his discretion by
failing to assess attorney fees entirely to Insurer under the regulation.
{21} 	We note that Section 52-1-54(I) and (J) were amended effective June 14, 2013.
The current version of the statute provides that a “party found to have acted in bad
faith shall pay [100] percent of the additional fees awarded for representation of the
prevailing party in a bad faith action.” Section 52-1-54(I) (emphasis added). However,
because Worker’s claim with regard to the benefit penalty and attorney fees was
pending at the time the statute was amended, Article IV, Section 34 of the New
Mexico Constitution precludes the application of the current version of the statute to
this case. See N.M. Const. art. IV, § 34 (“No act of the [L]egislature shall affect the
right or remedy of either party, or change the rules of evidence or procedure, in any
pending case.”).
CONCLUSION
{22} 	For the foregoing reasons, we affirm the WCJ’s order.
{23} 	IT IS SO ORDERED.
M. MONICA ZAMORA, Judge

WE CONCUR:

JONATHANB. SUTIN, Judge

CYNTHIA A. FRY, Judge

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