Opinion
No. 3-543 / 02-1923.
Filed January 14, 2004.
Appeal from the Iowa District Court for Kossuth County, David A. Lester, Judge.
Employee appeals, and employer cross-appeals, from a ruling on employee's claim for penalty benefits. AFFIRMED.
Mark S. Soldat, Algona, for appellant.
Michael S. Roling of Peddicord, Wharton, Spencer Hook, P.C., Des Moines, for appellee.
Heard by Huitink, P.J., and Zimmer and Miller, JJ.
Sandra Schadendorf (f/k/a Sandra Weishaar) appeals and her employer Snap-On Tools Corporation (Snap-On) cross-appeals from a district court ruling on her claim for penalty benefits. The district court found the industrial commissioner erred in determining that no penalty benefits could be imposed against Snap-On for delaying payment of Schadendorf's compensation benefits, and remanded the matter to the agency for a determination of whether Snap-On's delay in paying benefits was reasonable. We affirm.
Background Facts and Proceedings. On July 26, 1999, following a remand from our supreme court, see Weishaar v. Snap-On Tools Corp., 582 N.W.2d 177 (Iowa 1998), the chief deputy workers' compensation commissioner entered a final agency decision determining that Schadendorf was entitled to accrued workers' compensation benefits from Snap-On. On August 9, 1999, Schadendorf requested Snap-On pay the award and interest, totaling $115,962.58, by August 25. On August 16 Snap-On indicated it would not seek judicial review and would pay the award.
On August 24, 1999, Schadendorf, who had not yet received payment, filed a "protective" judicial review action and a motion for judgment pursuant to Iowa Code section 86.42 (1999). On September 7, 1999, the district court granted Schadendorf a judgment against Snap-On for $118,355.82 and Schadendorf notified Snap-On that she was preparing an execution for levy on Snap-On's property. On September 8 Snap-On issued a check in the amount of the original award. Schadendorf received the check for $115,962.58 on September 9, along with a letter informing her Snap-On was processing a check for the remaining balance.
Schadendorf contends she filed the petition only to preserve her right of review in the event Snap-On sought judicial review of the agency's decision.
On September 14 Schadendorf demanded an additional $2442.79, representing the difference between the September 9 check and the amount of the district court judgment, court costs and interest. The demanded amount was paid on September 24. Schadendorf then demanded additional interest, which was paid, in the amount of $10.07, on September 30. Schadendorf dismissed her judicial review action, and filed a satisfaction of judgment, on October 4.
On November 10, 1999, Schadendorf filed a claim for penalty benefits with the industrial commissioner, based on Snap-On's allegedly unreasonable delay in paying the benefits awarded on July 26. The claim was eventually heard on December 8, 2000. The day prior to the hearing, Schadendorf's counsel filed his affidavit in support of the claim for penalty benefits. The affidavit was admitted into evidence over Snap-On's objections.
In a decision filed May 15, 2001, a deputy workers' compensation commissioner determined that the thirty days following the July 26, 1999 agency decision, the period for filing a judicial review petition, should be considered a "grace period" for which penalty benefits could not be imposed. She concluded, however, that the fifteen-day delay between the expiration of this grace period and the date Schadendorf received her first check was unreasonable. Accordingly, she awarded Schadendorf penalty benefits in the amount of $36,083.16, which represented fifty percent of the principle amount due. Snap-On filed an intra-agency appeal, and Schadendorf cross-appealed.
The deputy declined to award penalty benefits on delayed interest payments. This determination, confirmed by the district court, is also at issue on appeal. However, this court has determined penalty benefits are not awarded on delayed interest payments. See Davidson v. Bruce, 594 N.W.2d 833, 840 (Iowa Ct. App. 1999); Weishaar v. Snap-On Tools Corp., 506 N.W.2d 786, 791 (Iowa Ct. App. 1993).
In his January 30, 2002 appeal decision, the chief deputy workers' compensation commissioner concluded Schadendorf was not entitled to penalty benefits, as there had been no delay in the payments from Snap-On. The chief deputy reasoned there could be no delay in payment until there was a final judgment in the contested proceeding, which did not occur until Schadendorf dismissed her judicial review action on October 4, 1999. The chief deputy further found that, even if payment had been delayed, Snap-On had a reasonable excuse as (1) it could not know of the final disposition of the July 26 award until the district court proceedings were resolved, and (2) its claim that the Iowa Rules of Civil Procedure allowed for the filing of a cross petition for judicial review involved an unresolved legal issue that rendered penalty benefits inappropriate. While the chief deputy found the affidavit from Schadendorf's counsel was properly included in the record, he did not rely on the affidavit in making his findings.
Schadendorf sought judicial review. The district court concluded the agency did not err in admitting, but not relying upon, the affidavit from Schadendorf's counsel. However, the court determined the agency did err in concluding an employer's duty to act reasonably was suspended during the time for filing a petition for judicial review, and that therefore no penalty benefits could be imposed during the pendency of a judicial review action. It also determined the agency committed legal error by concluding the pending judicial review action created a reasonable excuse for delay. The court therefore remanded the matter to the agency for a determination of whether Snap-On had a reasonable excuse for the delay of the payment of benefits after July 26, 1999.
Schadendorf appeals and Snap-On cross appeals from the district court ruling. The issues before us are whether there was in fact a delay in benefit payments by Snap-On, if any delay occurred whether that delay was reasonable, and the admission and use of the affidavit of Schadendorf's counsel.
Scope and Standard of Review. Our review is for the correction of errors at law. Aluminum Co. of America v. Musal, 622 N.W.2d 476, 478 (Iowa 2001). The party contesting any issue bears the burden of demonstrating the invalidity of the agency's action and resulting prejudice. Iowa Code § 17A.19(8)(a) (2001). The agency decision will be upheld if it is unaffected by legal or other error, and is supported by substantial evidence in the record when the record is viewed as a whole. Id. § 17A.19(10).
Commencement of Payments. An agency is required to award a claimant penalty benefits if there has been a delay in the commencement of compensation payments "without reasonable or probable cause or excuse." Iowa Code § 86.13 (1999). Thus, the threshold inquiry must be when the claimant was entitled to the payment of compensation benefits. We conclude this question is answered by Iowa Code section 85.30, which provides compensation payments are due "on the eleventh day after the injury, and each week thereafter during the period for which compensation is payable, and if not paid when due, there shall be added to the weekly compensation payments, interest. . . ." See also Robbennolt v. Snap-On Tools Corp., 555 N.W.2d 229, 235 (Iowa 1996) (interpreting section 85.30 to provide that payments are due, following the eleven-day grace period, at the end of the compensation week, and that any payment not so made will require the imposition of interest).
In this case, Schadendorf was awarded 225 weeks of permanent partial disability payments from January 18, 1991, the day after her cumulative injury manifested. Applying the mandates of section 85.30, there can be no doubt Schadendorf's weekly compensation payments were all due and payable well before the agency entered its July 26, 1999 ruling, or Snap-On rendered payment. Accordingly, there was a delay in the payment of Schadendorf's benefits. If this delay was unreasonable, Schadendorf was entitled to an award of penalty benefits on the principal amount of benefits due and owing. See Iowa Code § 86.13.
Reasonable Delay. A reasonable cause or excuse exists for the delay in payment if the delay was necessary for investigation of the claim, or if the employer had a reasonable basis to contest the employee's entitlement to benefits. Davidson v. Bruce, 594 N.W.2d 833, 838 (Iowa Ct. App. 1999). The employer must communicate to the employee the reason for the delay, and must do so contemporaneously with the beginning of the delay. Id. Schadendorf does not claim the delay in payment up to the July 26, 1999 agency decision was unreasonable, and it in fact appears the debatable nature of the claim would provide a reasonable cause or excuse for delay in payment up to and including July 26, 1999. The question therefore becomes whether the delay in payment after July 26, 1999 was supported by a reasonable excuse.
In ruling on Schadendorf's initial petition for workers' compensation benefits, the industrial commissioner determined that nine of her claims were res judicata, and awarded only limited benefits on her tenth claim. See Weishaar v. Snap-On Tools Corp., 582 N.W.2d 177, 179 (Iowa 1998). Upon judicial review the district court ruled res judicata did not apply to the first nine claims, and remanded to the agency for a hearing on the merits. Id. It also remanded the tenth claim for a determination of a proper compensation rate. Id. Snap-On appealed, and Schadendorf cross-appealed, from the district court's ruling. Id. The Iowa Supreme Court's ruling in that appeal led to the July 26, 1999 agency decision.
Schadendorf urges this court to assess the reasonableness of Snap-On's actions, arguing the record contains uncontroverted facts that require a finding of unreasonable delay. We decline to do so for two reasons. First, we do not agree with Schadendorf's characterization of the record. Second, and perhaps more importantly, it appears to this court that, given the limited scope of the agency's reasonableness finding, it did not consider and pass on, as a factual matter, the reasonableness of Snap-On's delay. The weighing of evidence and assessment of credibility is a matter within the agency's purview, not the court's. Dunlavey v. Economy Fire and Cas. Co., 526 N.W.2d 845, 853 (Iowa 1995). We therefore determine, as did the district court, that the better course is to remand this issue to the agency. We do, however, note some principles to be considered by the agency upon remand.
The agency did not assess the reasonableness of Snap-On's actions in light of the correct legal principles. Rather, it appears to have reached the erroneous legal conclusion that the mere existence of a pending judicial review action necessarily creates a reasonable cause or excuse for delay. Moreover, while the existence of a right to file a cross-petition for judicial review is an unresolved legal issue, it does not appear to have any relevance to the current matter. As noted above, even if such a right exists, a fact we very much doubt, see Iowa Code section 17A.19; Iowa R. Civ. P. 1.1601, it would not create a per se reasonable excuse for delay. Rather, the reasonableness of any delay during this period of time would be dependent on the facts of the individual case. Here, Snap-On did not file, nor is there evidence they sought to file, a cross-petition following the July 26, 1999 decision. Rather, the record indicates that at all relevant times Snap-On took the position it did not and would not contest the benefit award, and forwarded only administrative reasons for the delay in paying Schadendorf's benefits.
The mere fact an employer has a right to seek judicial review of an agency decision does not stay the employer's obligation to pay benefits or act in a reasonable manner. See Iowa Code § 17A.19(5)(a) (2001). The right to seek review, and the decision whether to seek a stay from the agency, id., are simply factors to be considered in determining whether the delay was reasonable. Moreover, in assessing whether Snap-On had a reasonable excuse for the delay in payment, the focus should be on the actual posture of this case.
In making its assessment, the agency is free to rely on the entirety of the record before it, including the affidavit from Schadendorf's counsel. Despite Snap-On's claim, we perceive no error in the admission of the affidavit, a matter clearly within the agency's discretion. See Schoenfeld v. FDL Foods, Inc., 560 N.W.2d 595, 598 (Iowa 1997). Unlike a district court, the agency is not bound by technical rules of evidence, and can consider evidence that might not be admissible in a jury trial. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 630 (Iowa 2000). Generally, to be considered inadmissible the evidence must work to a party's prejudice. Schoenfeld, 560 N.W.2d at 598.
However, the agency should note that, if it once again declines to rely on the affidavit, its ruling should be sufficiently specific so that the court will be able to discern the reasons for its rejection, and thereby determine if the agency acted arbitrarily or committed legal error. See IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 631 (Iowa 2000).
Schadendorf argues error was not preserved on this issue because Snap-On did not file a petition for judicial review. However, the issue of admission was raised to and ruled on by the agency, as well as the district court. We will therefore address it on appeal. See Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002).
Here, Snap-On was aware sixty days prior to hearing that Schadendorf's counsel would be filing a "foundational affidavit." While Snap-On complains the assertions in the affidavit make it more than a "foundational affidavit," we see no evidence that this term has been so narrowly defined, in the context of agency actions, as to render the contents of the affidavit in question unfair surprise that worked to Snap-On's prejudice. See id. In fact, the complained of portions of the affidavit appear quite similar to assertions in the affidavit from Snap-On's counsel, signed only two days prior to the agency hearing, regarding whether reasons for delay were conveyed to Schadendorf. We cannot conclude the agency abused its discretion in admitting the affidavit.
Conclusion. The district court properly concluded that there was a delay in payment in Schadendorf's benefits, and that this matter should be remanded to the agency to determine whether the delay occurring between the July 26, 1999 agency decision and the final September payment was reasonable. Accordingly, we affirm the district court's ruling on judicial review.