Opinion
No. 4-492 / 03-1352
Filed December 8, 2004
Appeal from the Iowa District Court for Polk, Glenn E. Pille, Judge.
In this workers' compensation action an employer appeals from the district court ruling that affirmed the decision of the workers' compensation commissioner. AFFIRMED.
Stephen Spencer and Joseph Barron of Peddicord, Wharton, Spencer Hook, L.L.P., Des Moines, for appellants.
Max Schott of Max Schott Associates, P.C., Des Moines, for appellee.
Heard by Sackett, C.J., and Vogel, Zimmer, Hecht, and Eisenhauer, JJ.
Hawkeye Wood Shavings, Inc. (Hawkeye), a trucking company, and its workers' compensation insurer, Great West Casualty Company (Great West), appeal from a district court ruling that affirmed a decision of the workers' compensation commissioner. The decision awarded James Parrish, an employee of Hawkeye, permanent partial disability and penalty benefits. Upon review, we agree with the district court that the agency decision should be upheld.
I. Background Facts and Proceedings.
James Parrish, fifty-nine years old at the time of his administrative hearing, works as a dispatcher for Hawkeye. His job requires him to locate and secure loads to be hauled by the company's drivers. Parrish has held this position since 1990, and has worked as a dispatcher, for various companies, since 1975. Prior to 1975, Parrish performed manual labor. He has a high school degree, but no other formalized education or specialized training.
Although Parrish's previous dispatching jobs required physical exertion and extended periods of standing, Parrish's job at Hawkeye is sedentary. During each workday he spends approximately three to four hours on the telephone, speaking with drivers and writing down information. He also spends a significant amount of time at his desk writing up orders, and generally eats his lunch and takes his breaks at his desk. He is, however, free to stand up, move around, and leave the office area, and frequently does so. For the first ten years of his employment, Parrish worked between twelve and thirteen hours per day five days per week, and an additional seven hours on Saturday. Beginning in 2000, Hawkeye reduced Parrish's schedule to eleven to twelve hours per day five days per week, and eliminated his Saturday shift. The reduction was a purely economic decision.
In September 1999 Parrish began to experience right hip/buttock pain. He sought treatment from his personal physician, Dr. Gregory Peterson. After the pain grew more severe, and began radiating down Parrish's right leg and into his foot, Dr. Peterson ordered an MRI. The March 2000 MRI revealed both a degenerative disk condition as well as a disk herniation. Dr. Peterson referred Parrish to neurosurgeon Douglas Koontz. The consultation narrative from Parrish's initial April 2000 visit to Dr. Koontz's office recommended conservative treatment, including a selective nerve root block. Nothing in the medical records from April and May 2000 indicates a connection between Parrish's condition, and his employment at Hawkeye.
There is some dispute as to whether, at this particular visit, Parrish was seen by Dr. Koontz, or by Dr. Koontz's nurse practitioner.
Parrish underwent the nerve block, and the conservative treatment initially provided him relief. His pain eventually returned, however, and increased in severity. Dr. Koontz recommended surgery. Other than some minimal time related to doctors' visits and testing, Parrish had not yet missed work due to his condition. Parrish spoke with Hawkeye's president, Frank Sloan, and arranged to take vacation during the time of his surgery, hospitalization, and initial recuperation. Parrish initially informed Sloan his back condition was not work related.
Dr. Koontz performed surgery on September 19, 2000. During the discharge conference on September 22 Dr. Koontz informed Parrish he could not return to work in a couple of weeks, as Parrish had hoped; rather he would need to be off of work eight to twelve weeks. Dr. Koontz also informed Parrish that the years of prolonged sitting at Hawkeye had caused or contributed to his degenerative disk condition. Parrish called Sloan on or about September 25 and asked if a workers' compensation claim could be submitted. Sloan stated it could not, because Parrish had previously indicated the condition was not work related. During this conversation Parrish informed Sloan he had recently learned his condition was in fact work related.
After Sloan declined to report the claim Parrish contacted Iowa Workforce Development, who in turn contacted Hawkeye and advised it of reporting requirements. A claim for workers' compensation benefits was then filed, on or about October 6, 2000. Hawkeye's workers' compensation insurer, Great West, conducted a recorded interview with Parrish on October 11. On October 12 Great West wrote Dr. Koontz and requested Parrish's medical records. No records were received, and on October 27 Great West sent Parrish a letter denying the claim. The letter stated, in pertinent part:
[W]e have now completed our investigation of the facts surrounding your workers' compensation claim of October 6, 2000.
As you are probably aware, the employer/insurer's obligation is not to pay all claims, but only those claims were [sic] the accident, injury, and/or disease arose out of an in the course of employment. We have been unable to secure medical data to support that your employment with Hawkeye Wood Shavings, Inc. was a substantial factor in causing the injury/illness you allege.
Therefore, we will be unable to provide you benefits under the Iowa Workers' Compensation Act.
On November 13, 2000, Dr. Koontz released Parrish to return to work with the recommendation that he "get up and move around often." Dr. Koontz subsequently clarified the restriction to provide that Parrish "get up and move around at least every hour to change positions." Dr. Koontz also imposed a forty to fifty pound lifting requirement, and recommended against "frequent bending, lifting, and twisting." Parrish returned to work and, except for a brief period in April 2001, continued to work for Hawkeye up to and including the time of the arbitration hearing.
Parrish filed two claims for workers' compensation benefits, alleging a cumulative injury occurring alternatively on September 18 and 25, 2000. Parrish obtained opinions from Dr. Koontz in support of his claim. Approximately a month prior to the December 2001 arbitration hearing Parrish was examined by Dr. William Boulden, an orthopaedic surgeon retained by Hawkeye and Great Western. Dr. Boulden opined that Parrish's condition was age related, and not caused by his employment.
The second petition initially alleged an injury date of October 6, 2000, but at the arbitration hearing was amended to allege an injury date of September 25, 2000.
In the July 2002 arbitration decision, the deputy workers' compensation commissioner determined Parrish had suffered a cumulative, work-related injury on September 19, 2000, and had incurred a twenty-six percent industrial disability. The deputy awarded Parrish healing period and permanent partial disability benefits and medical expenses. The deputy also awarded Parrish $5,000 in penalty benefits, concluding Great West's reason for denying the claim on October 27 was "wholly insufficient," and that the company had no fairly debatable reason for denying the claim at that time. The award represented twenty-five percent of the total benefits delayed up to the time of Dr. Boulden's opinion. The deputy rejected the assertion by Hawkeye and Great West that Parrish had known the work-related nature of his injury as early as April 2000, and thus had not provided timely notice of his injury.
Hawkeye and Great West appealed. In the appeal decision the interim workers' compensation commissioner reduced Parrish's permanent partial disability benefits, concluding Parrish had suffered only a ten percent industrial disability. The commissioner further concluded that only $500 in penalty benefits were warranted. The commissioner reasoned the award should be limited to a percentage of Parrish's healing period benefits, as the permanency issue had been rendered fairly debatable after Parrish returned to work and performed the same job, on the same schedule, and at the same pay. The remainder of the deputy's decision was affirmed.
Hawkeye petitioned for judicial review. Parrish filed a cross-petition, challenging the agency's reduction of the permanent partial disability and penalty benefits. Rejecting the claims of both sides, the district court affirmed the agency decision. Hawkeye and Great West (hereinafter collectively referred to as Hawkeye) then filed this appeal. Hawkeye asserts the agency erred in concluding that Parrish's injury arose out of his employment with Hawkeye, that Parrish suffered a ten percent industrial disability, that Parrish provided timely notice of his injury, and that penalty benefits were warranted. Parrish did not file a cross-appeal.
Parrish argues the ten percent industrial disability award and the $500 in penalty benefits assessed by the agency were inadequate, and requests this court to remand both issues to the agency for re-determinations that "more adequately" reflect the evidence in this case. However, as the district court decided both these claims adversely to Parrish, his failure to file a cross-appeal has waived any error. See Johnson Equip. Corp. v. Industrial Indem., 489 N.W.2d 13, 17 (Iowa 1992) (holding that a party need not cross-appeal a trial court's rejection of a ground urged in the trial court in order to preserve error on a claim decided in the party's favor, but that a party must cross-appeal to preserve an issue on a claim decided adversely to the party).
II. Scope and Standards of Review.
Review of agency actions is limited to correcting errors at law. Iowa R. App. P. 6.4; IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001). In reviewing the district court's decision, we apply the standards of Iowa Code chapter 17A (2001) to determine whether our conclusions are the same as those of the district court. Grundmeyer v. Weyerhaeuser Co., 649 N.W.2d 744, 748 (Iowa 2002). If they are the same, we affirm; if not, we reverse. Id.
In reviewing the agency's factual determinations, we look to see whether those determinations are supported by substantial evidence. Iowa Code § 17A.19(10)(f). This requires that the entirety of the record — including supporting and detracting relevant evidence as well as credibility assessments — be sufficient to allow a reasonable and neutral person to reach the same conclusion as the agency. Id. Webroadly and liberally apply the agency's findings to uphold rather than to defeat its decision. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 632 (Iowa 2000).
III. Causation.
As a threshold matter, Parrish bore the burden of proving, by a preponderance of the evidence, that his back injury arose out of and in the course of his employment with Hawkeye. Iowa Code § 85.3(1). Thus, the starting point for our analysis is the agency's finding that Parrish's back condition did arise out of his employment. Hawkeye asserts the record does not contain substantial evidence to support this finding. We cannot agree.
There is no dispute Parrish's injury arose in the course of his employment with Hawkeye.
The words "arising out of" refer to the "causal relationship between the employment and the injury." 2800 Corp. v. Fernandez, 528 N.W.2d 124, 128 (Iowa 1995). Although the agency must consider all the evidence pertaining to causation, medical causation is essentially within the domain of expert testimony. See Dunlavey v. Economy Fire Cas. Co., 526 N.W.2d 845, 853 (Iowa 1995). The weight to be given to an expert opinion depends on the accuracy of the facts relied upon by the expert as well as other surrounding circumstances. Sherman v. Pella Corp., 576 N.W.2d 312, 321 (Iowa 1998). However, it is the role of the agency to determine the weight to be given to any of the evidence, and it may accept or reject a controverted expert opinion in whole or in part. Id.
Here, the agency was presented with conflicting expert medical opinions as to the cause of Parrish's degenerative disk condition. Dr. Koontz recognized that many factors contributed to Parrish's degenerative condition, including his age, but nevertheless opined that "sitting for thirteen hours a day over ten and a half years would accelerate his degenerative process," and that "long hours of sitting over many years . . . accelerated his lumbar degenerative disc disease causing his need for surgery." Although Dr. Petersen opined there was "no way to absolutely prove that an individual's length of time sitting at his job would accelerate degenerative arthritis," he did agree that prolonged sitting "certainly would aggravate" Parrish's condition, and he had "no objection to Dr. Koontz's opinion." Dr. Boulden disagreed with Dr. Koontz's conclusions, opining Parrish's degenerative disk disease was age-related, and not caused by his employment.
In concluding that Parrish's degenerative disk condition was causally related to his employment, the agency expressly placed greater weight on Dr. Koontz's testimony than it did on Dr. Boulden's. This is a decision entrusted to the agency, and not one in which we will generally interfere. See Sherman, 576 N.W.2d at 321. Although Hawkeye asserts Dr. Boulden's testimony is more consistent with the factual history in this matter, there is not such a disparity between the factual record and Dr. Koontz's opinion that the opinion would be disregarded by any reasonable person. See Stephenson v. Furnas Elec. Co., 522 N.W.2d 828, 831 (Iowa 1994) (noting courts are not bound by factual findings "as to which there is no room for difference of opinion among reasonable minds"); see also Fazio v. Brotman, 371 N.W.2d 842, 844 (Iowa Ct.App. 1985) (noting it is only when "[t]he testimony of a witness [is] so impossible and absurd and self-contradictory that it should be deemed a nullity by the court"). Nor is the agency's reference to Dr. Koontz's status as a treating physician, and Dr. Boulden's status as a retained expert, tantamount to concluding Dr. Koontz's opinion was entitled to more weight simply because he was the treating physician. See Gilleland v. Armstrong Rubber Co., 524 N.W.2d 404, 408 (Iowa 1994) ("[W]e have rejected the proposition that, as a matter of law, a treating physician's testimony will be given more weight than a physician who examines the patient in anticipation of litigation.").
The commissioner's appeal decision adequately explained the bases for the findings and conclusions contained therein. See Murillo v. Blackhawk Foundry, 571 N.W.2d 16, 20 (Iowa 1997) (requiring adequate reasons and explanations by the agency so that reviewing courts can evaluate if the agency is acting arbitrarily or has misapplied the law). Viewing all the expert opinions in light of the remaining evidence, the totality of the record provides substantial support for the agency's finding that Parrish's degenerative disk condition arose out of his employment with Hawkeye. There is also substantial evidence to support, and in fact Hawkeye does not contest, the agency's conclusion that Parrish suffered a twenty-six percent functional impairment to the body as a whole. We therefore turn to Hawkeye's assertion that the agency erred in finding Parrish had suffered a ten percent industrial disability as a result of his injury.
IV. Industrial Disability.
Industrial disability is measured by the extent to which the injury has reduced a claimant's earning capacity. Thilges v. Snap-On Tools Corp., 528 N.W.2d 614, 616 (Iowa 1995). It is the result of many factors, including the level of functional disability, the employee's age, education, experience, and the employee's "inability, because of the injury, to engage in employment for which [the employee] is fitted." Acuity Ins. v. Foreman, 684 N.W.2d 212, 219 (Iowa 2004) (citations and internal quotation marks omitted). Considering "all the . . . factors" pertinent to an industrial disability assessment, the agency concluded Parrish had incurred a ten percent industrial disability. "[M]ost pertinent" to its decision was the fact that Parrish had a sizable functional impairment but no actual reduction in earnings, and the "small chance" he would be compelled to seek work other than as a dispatcher.
In challenging the agency's award, Hawkeye focuses on the fact that Parrish has not suffered a reduction in actual earnings, and that he has continued to perform his former position despite his injury. These factors were clearly considered by the agency in limiting the industrial disability award to ten percent. They do not however, in and of themselves, conclusively demonstrate the absence of an industrial disability. See Second Injury Fund v. Hodgins, 461 N.W.2d 454, 456 (Iowa 1990); Arrow-Acme Corp. v. Bellamy, 500 N.W.2d 92, 95 (Iowa Ct.App. 1993).
Other factors support the conclusion that Parrish has incurred an industrial disability to some extent. Parrish suffered a twenty-six percent functional impairment to his body as a whole, and a functional assessment concluded, based on Dr. Koontz's restrictions, that Parrish could perform only "select medium, light and sedentary work" which would allow him to perform work in "roughly 40 percent of the job market." In addition, Parrish's own job history indicated some dispatching jobs had physical requirements Parrish could no longer perform.
The record, when viewed as a whole, contains substantial support for the agency's industrial disability award. Hawkeye nevertheless asserts that it should be relieved from the obligation to pay workers' compensation benefits, as Parrish failed to comply with the notice requirements of Iowa Code section 85.23. We therefore turn to that question.
V. Notice Defense.
Parrish was required to inform Hawkeye of his injury, and the fact the injury was work-related, within ninety days after the injury occurred. Iowa Code § 85.23; Robinson v. Department of Transp., 296 N.W.2d 809, 811 (Iowa 1980). The time for providing notice began to run once Parrish, as a reasonable man, should have recognized the "nature, seriousness, and probable compensable character of his injury. . . ." Robinson, 296 N.W.2d at 812; see also Herrera v. IBP, Inc., 633 N.W.2d 284, 288 (Iowa 2001) (clarifying a cumulative injury occurs "when the claimant, as a reasonable person, would be plainly aware (1) that he or she suffers from a condition or injury, and (2) that this condition or injury was caused by the claimant's employment"). If Parrish failed to provide timely notice, no compensation is allowed. Iowa Code § 85.23.
It is clear Hawkeye was not informed that Parrish's injury was work related until September 25, 2000. The agency determined this notice was timely, concluding Parrish was not plainly aware that his degenerative condition was work-related until after his surgery. Hawkeye asserts this determination was not supported by substantial evidence, because Parrish was aware of the casual connection as early as April 2000. Hawkeye points to deposition testimony from Parrish that indicates Dr. Koontz informed Parrish, in April 2000, that there was a "possibility" his employment was causing his current back problems.
The agency acknowledged this portion of Parrish's deposition testimony, but concluded Parrish "did not learn of the probable compensable character of his condition until on or about September 25, 2000, when he was told by Dr. Koontz." (Emphasis supplied). This conclusion is adequately supported by the record. There is no evidence, outside of this deposition statement, that Parrish was informed about even a possible causal relationship between his condition and his employment at any time prior to September 2000. Moreover, in his deposition Parrish went on to state it was not until after his September 19 surgery that Dr. Koontz informed him the degenerative condition was "probably" related to his employment, and that he "first [had the] belief" his back problems were "caused by just the years of sitting." During his hearing testimony Parrish confirmed these later statements. He also asserted that he did not recall discussing the cause of his injury with Dr. Koontz prior to September. Significantly, despite the inconsistency, the agency specifically found Parrish to be a credible witness.
The foregoing provides substantial evidence to support the agency's determination that a reasonable person in Parrish's position would not have been plainly aware of the work-related nature of the injury until September 2000. Given such a finding, timely notice was provided to Hawkeye. See Iowa Code § 85.23. Accordingly, we turn to Hawkeye's last assignment of error in this appeal, and address whether there was substantial evidence to support an award of penalty benefits.
VI. Penalty Benefits.
The agency has an obligation to award penalty benefits to an employee any time a claim for workers' compensation benefits is denied, and thus the payment of compensation is delayed, unless the denial is supported by a "reasonable or probable cause or excuse." Iowa Code § 85.13. In addressing this question, the agency must consider the insurer's affirmative obligation to act in a reasonable manner after a claim for benefits is filed. See Christensen v. Snap-On Tools Corp., 554 N.W.2d 254, 260 (Iowa 1996) (quoting Boylan v. Am. Motorists Ins. Co., 489 N.W.2d 742, 743 (Iowa 1992)).
A denial of benefits is supported by reasonable cause if the claim is "fairly debatable based on a good faith dispute over the employee's factual or legal entitlement to benefits . . . [or] where a reasonable delay in payment is necessary to allow the insurer to investigate the claim." Gilbert v. USF Holland, Inc., 637 N.W.2d 194, 199, n. 2 (Iowa 2001). However, the reason for the denial must be communicated to the employee contemporaneously with the denial. See Meyers v. Holiday Express Corp., 557 N.W.2d 502, 505 (Iowa 1996). If the reason "is not one that a reasonable fact finder could accept," then no cause or excuse exists, and penalty benefits must be awarded. Id.
Hawkeye asserts the claim was fairly debatable, relying on a number of factors. However, as both the agency and the district court pointed out, the reason for denial actually communicated to Parrish was limited to the absence of medical documentation in support of his claim. Thus, the question is whether a reasonable fact finder could conclude that this absence of medical documentation was in fact a reasonable excuse. The agency concluded it was not, and we must agree.
These include Hawkeye's notice defense, the fact Parrish informed Sloan the condition was not work-related, allegations by Sloan that even after surgery Parrish asserted both that the condition was not work related and that he was pursuing a workers' compensation claim purely for financial reasons, the fact that sitting actual relived Parrish's symptoms, disputes over how much time Parrish spent sitting each day, and the fact that Dr. Koontz had failed to provide medical records in response to Hawkeye's pre-denial request.
"An employer's bare assertion that a claim is `fairly debatable' does not make it so. . . . [T]he employer must assert facts upon which the commissioner could reasonably find that the claim was `fairly debatable.'" Meyers, 557 N.W.2d at 505. Here, those facts are fairly limited. As we have mentioned, the claim for benefits was filed on October 6, 2000, approximately two and one half weeks after Parrish's surgery. When Hawkeye denied the claim in a letter to Parrish dated October 27, the only fact relied on by Hawkeye was its inability to secure medical data in support of the claim. There is no evidence that, prior to denying the claim, Hawkeye ever requested medical documentation from Parrish himself, or conducted an inquiry or investigation beyond taking Parrish's statement and requesting Parrish's medical records from Dr. Koontz in a letter dated October 12. There is no indication that, at the time of denial, Hawkeye possessed any medical documentation, much less any medical evidence that would refute or discredit a causal connection between Parrish's work and his injury.
As noted by both the agency and the district court, this evidence falls far short of establishing that Hawkeye met its affirmative obligation to act in a reasonable manner after the claim for benefits was filed. See Christensen, 554 N.W.2d at 260. Under the circumstances, its stated excuse is not one a reasonable fact finder would accept as reasonable under the circumstances. Accordingly, the agency was required to impose penalty benefits. Hawkeye has not challenged the amount of those benefits, and a review of the record indicates that the amount is supported by substantial evidence. Thus, the penalty benefit award must be upheld.
VII. Conclusion.
All of the agency's findings were supported by substantial evidence, and its decision is not effected by an error of law. We therefore affirm the district court.
AFFIRMED.
All judges concur except Hecht, J., who concurs specially, and Sackett, C.J., and Vogel, J., who concurs in part and dissents in part.
I join the majority's opinion and write separately to specifically articulate my reasons for affirming on the penalty issue. The agency assessed the reasonableness of Great West's denial of this claim in light of certain well-established legal principles. Among these is the rule that an insurance carrier's duty to act reasonably includes the duty to fully and fairly investigate a claim. The agency applies the standard of "a professional adjustor who is reasonably competent in workers' compensation matters" when assessing the reasonableness of an insurer's investigation. After conducting a reasonable investigation, the insurer may deny a claim without penalty exposure if a reasonable basis for the denial is contemporaneously conveyed to the claimant. Meyers v. Holiday Express Corp., 557 N.W.2d 502, 504 (Iowa 1996). But an insurer's denial of a workers' compensation claim is not conclusive, for the duty to investigate continues after the denial is communicated as additional information becomes available.
Our supreme court implicitly recognized in Holiday Express that the contemporaneous communication of the reason(s) for denial of a claim is crucial both for the claimant and the insurer in our workers' compensation system. The insurer's contemporaneous communication informs the claimant of what additional information might be supplied to aid the insurer in its ongoing duty to investigate the claim. And the articulation of the reason(s) for the denial is likewise essential to the insurer who wishes to avoid a penalty by expressing the reasonable grounds for its decision. The agency's decision to impose a penalty in this case should be affirmed because Great West's denial letter of October 27, 2000 informed Parrish that his claim was denied because the insurer was "unable to secure medical data" tending to establish medical causation. I am unable to find evidence in this record that Great West relied on any medical opinion when it made its medical causation assessment and decision to deny the claim. Indeed, it appears Great West had requested but had not received medical records from Parrish's surgeon when the denial was communicated. And although Great West later solicited and obtained the opinion of Dr. Bolden on the subject of medical causation, this was not accomplished until shortly before the arbitration hearing. Under these circumstances, the agency's finding that Great West failed to make a reasonable investigation before denying the claim is supported by substantial evidence in the record. As the agency aptly noted, "[t]o hold otherwise would absolve those who might . . . deny first [and] investigate later."
Great West's brief contends the agency erred in imposing a penalty because the insurer had numerous legitimate reasons other than medical causation to deny Parrish's claim. However, these other reasons were not contemporaneously communicated with Great West's denial and therefore do not provide the insurer safe harbor under the rule announced in Holiday Express.
I agree with the majority in all respects except I would reverse the penalty benefit.
Vogel, J., joins the partial dissent.