Opinion
No. 1-645 / 00-1720.
Filed March 13, 2002.
Appeal from the Iowa District Court for Linn County, THOMAS L. KOEHLER, Judge.
Quaker Oats Company appeals from the district court's ruling on judicial review affirming a workers' compensation award to Dennis Owens. AFFIRMED.
James M. Peters of Simmons, Perrine, Albright Ellwood, P.L.C., Cedar Rapids, for appellant.
Thomas M. Wertz of Wertz Leehey, P.C., Cedar Rapids, for appellee.
Heard by MAHAN, P.J., and MILLER and HECHT, JJ.
Quaker Oats Company appeals from the district court's ruling on judicial review affirming a workers' compensation award to the respondent Dennis Owens. Quaker Oats claims (1) that the record lacks substantial evidence to support the finding that Owens's shoulder condition was related to his 1991 work injury; (2) that Owens did not suffer a sixty-percent industrial disability and that the respondent's proximity to retirement should be a relevant factor for determining such disability; (3) that penalty benefits should not have been awarded under Iowa Code section 86.13 (1997) after Quaker Oats refused Owens's claim in spite of uncontroverted medical evidence supporting the claim; and (4) that Owens was not entitled to interest on Quaker Oats' voluntary late payment of benefits to Owens for his neck injury. We affirm.
Background Facts and Proceedings. Quaker Oats employed Dennis Owens for over twenty-five years. Owens mainly performed millwright duties, which involved lifting. He planned to retire upon reaching the age of sixty-two in July 2002. Prior to any work accident, Owens complained of neck and shoulder pain for which he received treatment. In 1987 Owens's treating physician, Dr. James LaMorgese, diagnosed him with a herniated cervical spinal disc at the C5-6 level, and Dr. LaMorgese performed a diskectomy. During this surgery Dr. LaMorgese noted that Owens's shoulder was suffering from a degenerative condition. Following surgery, Owens continued to have neck and headache problems, which began to increase. When medication failed to improve these symptoms, Dr. LaMorgese performed a second surgery called a fusion of the C5-6 cervical spine level in August 1990. While Owens significantly improved, he continued on medications to treat his neck, shoulder, and headache complaints.
On September 27, 1991, Owens suffered a lifting injury at work. He and a fellow employee were moving a 150-pound oat roll bearing. While the two men were lowering the bearing to the ground, Owens was pulled downward. He claims he injured his shoulder and neck. He reported to Dr. LaMorgese increased neck and shoulder pain. After a second MRI showed evidence of a breakdown in the fusion and pseudoarthorosis, Dr. LaMorgese performed a refusion of the C5-6 level on Owens in March 1992. Dr. LaMorgese gave an opinion that Owens had a fifteen-percent whole body impairment rating which is attributable to both the work injury and his prior condition. He was unable to separate or apportion this rating.
Although Quaker Oats officially denied the neck injury claim, they did voluntarily pay Owens for his healing period and seventy-five weeks of permanency benefits for his work related injuries. The denial was based upon a report by Dr. Laurence Krain, who examined Owens on one occasion. Dr. Krain believed Owens's symptoms were due to his prior neck condition, not a new injury.
In November 1992 Owens gradually returned to work. He continued to work in his millwright job for almost four years. He continued to report neck and shoulder pain. Quaker Oats disputed the severity of the complaints. In July 1996 Owens claimed that he suffered an increase in his shoulder pain. Dr. David Hart, an orthopedic surgeon, diagnosed Owens with a left rotator cuff tear and performed corrective shoulder surgery in September 1996. Dr. Hart gave an opinion that the injury was a result of the September 1991 accident.
Following the surgery, Owens was unable to return to his millwright job as Dr. Hart imposed formal work restrictions against lifting over fifteen pounds. Owens now is working for Quaker Oats in its battery shop watering batteries. A vocational specialist indicated that Owens's access to the labor market was diminished due to the work injury.
In January 1997 Owens filed an original notice and petition for arbitration, medical benefits, and penalty benefits relating to his work injury. The case was heard before Deputy Workers' Compensation Commissioner Larry Walshire on July 29, 1998. Quaker Oats claimed there was no connection between the accident and Owens's shoulder surgery but did not offer expert medical opinion to counter Dr. Hart's opinion. Quaker Oats challenged Dr. Hart's opinion on the basis that Dr. Hart incorrectly assumed Owens had no shoulder problems prior to May 1991 and that the symptoms worsened after the September 1991 work injury. Quaker Oats further challenged the opinion on the basis that prior MRIs in October 1991 and February 1996 did not reveal the rotator cuff tear.
On September 21, 1998, the deputy commissioner entered an arbitration decision determining that Owens suffered neck and shoulder injuries due to the 1991 accident. The deputy found that Owens suffered a sixty-percent loss of earning capacity and awarded penalty benefits under Iowa Code section 86.13 for the delay in the payment of benefits. In addition, the deputy commissioner ordered Quaker Oats to pay interest on the weekly benefits awarded. In making the disability determination, the deputy did not take into account Owens's proximity to retirement.
Quaker Oats appealed the deputy commissioner's decision to the workers' compensation commissioner. On October 29, 1999, the commissioner affirmed the arbitration decision. Quaker Oats filed a petition for judicial review challenging the commissioner's decision. On September 28, 2000, the Linn County District Court entered a ruling affirming the award of benefits to Owens. The court concluded that substantial evidence supported the decision. The court specifically found that Dr. Hart's opinion substantiated Owens's claim that his shoulder condition was related to his 1991 work injury. The court further found that the determination Owens suffered a sixty-percent industrial disability was proper and that the award of penalty benefits and interest was supported by the record. Quaker Oats appeals.
Standard of Review. Our review is governed by Iowa Code chapter 17A (1997), Iowa's Administrative Procedure Act. Herrera v. IBP, Inc., 633 N.W.2d 284, 286-87 (Iowa 2001). An appeal of a district court's ruling on judicial review of an agency decision "is limited to determining whether the district court correctly applied the law in exercising its section 17A.19(8) judicial review function." Ahrendsen ex rel. Ahrendsen v. Iowa Dep't of Human Servs., 613 N.W.2d 674, 676 (Iowa 2000). Section 17A.19 permits a reviewing court to reverse an agency decision when it is "[i]n violation of constitutional or statutory provisions," or when it is "unsupported by substantial evidence in the record made before the agency when that record is viewed as a whole." Iowa Code § 17A.19(8) (1997).
Iowa's Administrative Procedure Act was extensively amended in 1998. See Iowa Acts ch. 1202. The 1998 act provides that the amendments are to take effect on July 1, 1999 and apply to agency proceedings commenced on or after that date. See id. § 46. Since the agency proceedings at issue here were commenced in 1997, the amendments do not apply.
Our review is for correction of errors of law, not de novo. Gilbert v. USF Holland, Inc., 637 N.W.2d 194, 198 (Iowa 2001). We broadly and liberally construe the commissioner's findings to uphold, rather than defeat the commissioner's decision. Second Injury Fund v. Hodgins, 461 N.W.2d 454, 455 (Iowa 1990). "We must examine whether the commissioner's conclusions are supported by substantial evidence in the record made before the agency when the record is viewed as a whole." Second Injury Fund v. Shank, 516 N.W.2d 808, 812 (Iowa 1994). The commissioner's factual findings are binding on us if they are supported by substantial evidence. See IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001). "Thus, we `are not free to interfere with [an] agency finding where there is a conflict in the evidence or when reasonable minds might disagree about the inference to be drawn from the evidence, whether disputed or not.'" Gilbert, 637 N.W.2d at 198(quoting Stephenson v. Furnas Elec. Co., 522 N.W.2d 828, 831 (Iowa 1994)). On the other hand, we are not bound by findings that lack substantial evidence. Id.
Causation of Owens's Shoulder Injury. Quaker Oats contends the record lacks substantial evidence to support the finding that Owens's left shoulder injury and surgery in 1996 were related to his work injury in 1991. We disagree.
Quaker Oats argues that Dr. Hart's opinion should be disregarded for the following deficiencies in his testimony: First, Quaker Oats contends Dr. Hart's opinion is based on an inaccurate understanding of Owens's shoulder symptoms. Specifically, Quaker Oats argues that Dr. Hart did not have Owens's correct medical history when he gave his opinion. Quaker Oats points to Dr. LaMorgese's testimony that although Owens did not have any neck or shoulder complaints during a visit in May 1991, Owens was not pain free and was treated with medication for his shoulder up to the occurrence of the work-related injury. Secondly, Quaker Oats challenges Dr. Hart's assertion that Owens was experiencing constant shoulder pain since his 1991 injury. Quaker Oats points to Owens's medical records, which show a complete absence of any reference to the shoulder complaints between July 1992 and December 1992. Thirdly, Quaker Oats argues that Dr. Hart admitted in his report that some of Owens's shoulder symptoms could be attributed to his degenerative changes at the acromioclavicular joint. Finally, Quaker Oats contends that two MRIs in October 1991 and February 1996 did not reveal the rotator cuff tear and Owens had a significant onset of shoulder pain in 1996.
In this case, Dr. Hart provided the sole expert causation testimony. Dr. Hart opined that the rotator cuff injury he surgically repaired in 1996 was attributed to the work related injury of September 27, 1991. In his report dated January 21, 1997, Dr. Hart stated "there was at least a 51 percent chance that it was related." Dr. Hart reasoned that even though Owens had intermittent shoulder symptoms prior to his work related injury, he did not have any significant industrial injury following his 1991 injury that could have contributed to his shoulder pain. Although he could not determine the precise age, Dr. Hart opined that the tear was at least more the six months old. In addition, Dr. Hart stated that it "is possible for individuals with rotator cuff tears to continue to work although it usually is painful. . . ." He then maintained that even though Owens worked at times when he was recovering from his neck surgery, that does not "rule against a rotator cuff tear."
Our review of the record showed Owen repeatedly complained of shoulder pain to Dr. LaMorgese between 1993 and 1996.
Basically, Quaker Oats' complaints go to the weight and credibility of Dr. Hart's testimony. "Whether an injury has a direct causal connection with the employment or arose independently thereof is essentially within the domain of expert testimony." Dunlavey v. Econ. Fire Cas. Co., 526 N.W.2d 845, 853 (Iowa 1995). The weight to be given such an opinion is for the commissioner, the finder of fact, which may be affected by the completeness of the premise given the expert and other surrounding circumstances. Id. When an expert's opinion is based upon an incomplete history, the opinion is not necessarily binding upon the commissioner. Id. The commissioner "has the duty to determine the credibility of the witnesses and to weigh the evidence, together with the other disclosed facts and circumstances, and then to accept or reject the opinion." Id.
In this case, even after the alleged deficiencies were brought to Dr. Hart's attention, Dr. Hart did not change his causation views given during his deposition that the work-related injury of 1991 was casually related to the shoulder problem and the necessity for shoulder surgery in 1996. In addition to Dr. Hart's testimony, Dr. LaMorgese in a letter dated July 24, 1996 opined that Owens's problems with his left shoulder, neck, arm and head pain "are the direct result of the September 1991 work related injury." Quaker Oats offered no expert opinion to counter Dr. Hart's or Dr. LaMorgese's views. In addition, Owens testified that even though he returned to full duty as a millwright between 1992 and 1996, his shoulder was hurting and causing him pain. He stated that he continued to work because he was afraid of losing his job. Based on this evidence, the deputy commissioner concluded "that the work injury of September 27, 1991 was also a cause of the left rotator cuff tear and permanent functional impairment found by Dr. Hart," and the workers' compensation commissioner agreed. The district court concluded the evidence supported that finding. We agree. After a careful review of the record, we find the commissioner's decision is supported by substantial evidence. Accordingly, we affirm the district court on this issue.
Owens's Industrial Disability. Quaker Oats also contends that Owens's industrial disability cannot be sixty percent since he returned to full-time work in 1992 and was not subject to lifting restrictions until after the 1996 surgery. Specifically, Quaker Oats argues that because the shoulder problem was not casually related to the 1991 injury, it should not have been considered in the industrial disability rating. We disagree.
We affirmed above the commissioner's conclusion that the shoulder injury in 1996 was causally related to the 1991 work related injury. Therefore, we reject Quaker Oats' argument that the 1996 shoulder injury should not have been included in determining Owens's industrial disability.
Industrial disability measures an injured worker's lost earning capacity. Myers v. F.C.A. Servs., Inc., 592 N.W.2d 354, 355 (Iowa 1999). Factors that should be considered include "the employee's functional disability, age, education, qualifications, experience, and the ability of the employee to engage in employment for which the employee is fitted." Quaker Oats Co. v. Ciha, 552 N.W.2d 143, 157 (Iowa 1996) (footnote omitted). "Thus, the focus is not solely on what the worker can and cannot do; the focus is on the ability of the worker to be gainfully employed." Id. (quoting Second Injury Fund v. Nelson, 544 N.W.2d 258, 266 (Iowa 1995)).
In this case, the deputy commissioner found:
Dennis is 58 years of age and has a high school education. His only significant past employment is his millwright work, which he can no longer perform due to the work injury. Given his age, retraining does not appear a viable option. According to a co-worker and former union president who testified at hearing, millwrights at Quaker Oats can earn up to $90,000 annually if they work all available overtime. However, the usual earnings range from $59-60,000. At the time of the 1991 injury, claimant was earning far less, around $45,000. Although he is receiving millwright pay in his present job, he has lost earnings from overtime. But again, he admitted at hearing that he customarily did not work overtime over the last several years unless it was mandatory. The union president also testified that Dennis' current job was previously abolished and only re-created to provide a job for Dennis. This is not controverted. However it is clear that Dennis does provide a useful service to Quaker Oats in this job and Dennis appreciates the job. Defendant provided no evidence on whether such a job currently exists in the labor market in the Cedar Rapids/Iowa City metro areas. It appears rather obvious that if such work is available outside of Quaker Oats, an unskilled, light duty job would not pay the same as a millwright. Dennis's testimony is uncontroverted that other employees who had previously performed this battery filling job were also required to do other heavier tasks which he is not expected to perform.
From examination of all of the factors of industrial disability, it is found that the work injury of September 27, 1991 was a cause of a 60 percent loss of earning capacity. Such a large award given such a mild loss of actual earnings was necessitated because his current earnings in the job as a battery filler was viewed as unrepresentative of his current earning capacity.
Although the deputy commissioner did not articulate precisely how he arrived at a sixty-percent figure, our supreme court has reiterated that an agency's decision is sufficient if it is possible to work backward to deduce what must have been the agency's legal conclusions and findings. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 634 (Iowa 2000). Additionally, it is established that the commissioner "is not required to fix disability with precise accuracy." Myers, 592 N.W.2d at 357. Undoubtedly, each party can construe the record to support a lower or higher percentage of industrial disability, but if reasonable minds could differ over the outcome of an issue, the question is not whether the evidence could have supported another finding, but whether the evidence supports the finding actually made. Harpole, 621 N.W.2d at 420.
The record is clear that Owens could not have returned to his millwright job following his shoulder surgery in 1996. Dr. Hart imposed formal work restrictions against lifting over fifteen pounds. He also stated that Owens should avoid repetitive shoulder motion and limit lifting away from his body and overhead. A "Functional Capacity Evaluation" performed in 1997 found that Owens "provided a consistent effort limited by pain" during the evaluation. The evaluator stated that based on the results of the evaluation, "Owens may perform work in the light to medium category of work of the Dictionary of Occupational Titles" with specific consideration given to the extensive restrictions listed in the report. In addition, Owens was unsuccessful in performing computer work due to his shoulder problems. As a result, Quaker Oats provided him with the battery filler job. At the hearing, Quaker Oats failed to show that such a position exists outside of Quaker Oats and at Owens's current rate of pay. We therefore believe the deputy commissioner could have concluded from this evidence that Owens's industrial disability was sixty percent. We therefore affirm the district court on this issue.
In addition, we further reject the petitioner's request we overrule the holding in Second Injury Fund v. Nelson, 544 N.W.2d 258 (Iowa 1995), that the respondent's proximity to retirement cannot be considered in assessing the extent of industrial disability. We conclude Nelson is controlling in the facts presented here.
In Nelson, our supreme court stated its "conclusion does not mean that age is irrelevant to determining industrial disability. To the extent [claimant's] age affects his actual employability, it is appropriately considered." Nelson, 544 N.W.2d at 266. The court however held that the commissioner commits reversible error if the commissioner considers proximity to retirement in determining a claimant's industrial disability. Id. at 266-67.
Penalty Benefits. Quaker Oats also argues that the deputy commissioner erred in awarding penalty benefits. Iowa Code section 86.13 provides, in relevant part:
If a delay in commencement or termination of benefits occurs without reasonable or probable cause or excuse, the workers' compensation commissioner shall award benefits in addition to those benefits payable under this chapter, or chapter 85, 85A, or 85B, up to fifty percent of the amount of benefits that were unreasonably delayed or denied.
Iowa Code § 86.13. "[S]ection 86.13 `recognizes . . . an affirmative obligation on the part of the employer and insurance carrier to act reasonably in regard to benefit payments in the absence of specific direction by the commissioner.'" 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)). Under section 86.13, an unreasonable delay in payment of benefits as well as benefits that are underpaid entitles an employee to penalty benefits, unless the employer establishes reasonable and probable cause or excuse. See Meyers v. Holiday Express Corp., 557 N.W.2d 502, 505 (Iowa 1996); Robbennolt v. Snap-On Tools Corp., 555 N.W.2d 229, 237 (Iowa 1996). If the employer has a reason for the delay and conveys that reason to the employee contemporaneously with the beginning of the delay, no penalty will be imposed if the reason is of such character that a reasonable fact finder could conclude that it is a "reasonable or probable cause or excuse" under section 86.13. See Meyers, 557 N.W.2d at 504-05; Christensen, 554 N.W.2d at 260-61. "In the absence of a reasonable excuse for a delay, penalty benefits are mandatory. Only the amount is within the discretion of the commissioner." Christensen, 554 N.W.2d at 261. The commissioner is to consider factors such as the length of the delay, the number of delays, the information available to the employer regarding the employee's injury and wages, and the employer's past record of penalties. Meyers, 557 N.W.2d at 505.
Reasonable causes or excuses include (a) a delay for the employer to investigate the claim, or (b) the employer had a reasonable basis to contest the claim — the "fairly debatable" basis for delay. Meyers, 557 N.W.2d at 505; Christensen, 554 N.W.2d at 260.
In this case, the deputy commissioner awarded Owens penalty benefits for delays in compensating Owens for his shoulder injury. The commissioner reasoned:
With reference to the failure to pay healing period benefits while claimant was off work for treatment of his shoulder problems by Dr. Hart, a penalty will be assessed. Although defendant could reasonably question the causation of these problems given the length of time between the treatment and the injury, after Dr. Hart's letter report of January 21, 1997, further denial of the claim was unreasonable. If defendant felt that the doctor was not given all of the facts, it is up to the defendant to bring this to the attention of the doctor who then is free to change his opinion. However, a denial of the claim without a supportive medical opinion is the substitution of lay opinion for an expert opinion by a well-qualified physician. This agency has long held that such claims activity is unreasonable. To date, this is an 18 month unreasonable delay in payment of over 42 weeks of benefits plus interest. Absent a showing by claimant of past impositions of penalty against the employer, a penalty of $5,000 is appropriate. The maximum penalty could have exceeded $15,000.00.
(Citations omitted.) Our mandate is to broadly and liberally apply a commissioner's finding to uphold rather than defeat his decision. Al-Gharib, 604 N.W.2d at 634.
Quaker Oats argues that it is "absurd" to award a penalty on a record that shows Quaker Oats had a reasonable basis for it to dispute the left shoulder injury and its connection with the 1991 injury. We disagree. An employer's bare assertion that a claim is "fairly debatable" does not make it so. Meyers, 557 N.W.2d at 505. "A fair reading of Christensen and Robbennolt makes it clear that the employer must assert facts upon which the commissioner could reasonably find that the claim was `fairly debatable.'" Id. If, however, no reason is given for the delay or if the reason is not one that a reasonable fact finder could accept, penalty benefits are mandatory. Id.
The record is clear that Quaker Oats initially denied Owens's claim on July 14, 1995. In a letter dated August 10, 1996, Quaker Oats informed Owens:
We have reviewed the medical records pertaining to this recommended surgery. It appears that your need for this surgery is not related to the work injury that you sustained five years ago at Quaker Oats Company. Therefor [sic], we must respectfully deny your request to have this upcoming surgery paid for by workers compensation insurance coverage. Please be advised that we will be unable to make any voluntary payment of benefits to you for any time off of work or expenses associated with your current treatment for left should pain.Meyers dictates claimant is to be given an explanation at the beginning of the delay of the reason or reasons why benefits are not being paid. See id. Quaker Oats failed to convey a reason for the delay to Owens contemporaneously with the beginning of the delay that demonstrated the claim was fairly debatable.
We agree with the deputy commissioner that Quaker Oats initially could have reasonably questioned the causation of the injury. Our supreme court, however, has stated "a continued delay in payment may be unreasonable even though the original denial was not." Squealer Feeds v. Pickering, 530 N.W.2d 678, 683 (Iowa 1995). Owens provided the opinions of two medical experts that his shoulder injury was related to his 1991 work related injury. Dr. Hart opined that the work-related injury of 1991 was casually related to the shoulder problem and the necessity for shoulder surgery in 1996. Dr. LaMorgese also opined that Owens's problems with his left shoulder are the direct result of the 1991 work-related injury. Despite this medical evidence, Quaker Oats continued to deny Owens's claim. Quaker Oats offered no expert opinion to counter Dr. Hart's or Dr. LaMorgese's views. We agree with the commissioner that Quaker Oats' "denial of the claim without a supportive medical opinion is the substitution of lay opinion for an expert opinion by a well-qualified physician." Our law requires more than that. We therefore find substantial evidence existed to support the commissioner's finding that Quaker Oats acted unreasonably in further denying Owens's claim after receipt of this medical evidence. Accordingly, we affirm the district court on this issue.
After receiving the opinions from Dr. LaMorgese and Dr. Hart, Quaker Oats did not request an examination and opinion from a medical expert.
Interest Payments. Quaker Oats argues that the deputy commissioner erred in awarding Owens interest on the voluntary late payment of benefits to Owens for his neck injury. We disagree. Our supreme court has stated we adhere to the "United States rule" in allocation of interest when payments are made in workers' compensation cases:
Under that rule, when partial payments are made they are allocated first toward the interest due. Any payment which exceeds the interest due is applied toward the judgment principal. Subsequent interest is to be computed on the remaining principal. We now adopt that rule regarding late payments in workers' compensation cases.Christensen, 554 N.W.2d at 262.
On October 14, 1993, Dr. LaMorgese gave an opinion that Owens had a fifteen-percent whole body impairment rating which is attributable to both the work injury and his prior condition. He was unable to separate or apportion this rating. After receiving Dr. LaMorgese's opinion, Quaker Oats informed Owens that he was entitled to receive seventy-five weeks of permanent partial disability (PPD) benefits based on this rating. Quaker Oats paid fifty-one weeks in an accrued sum and twenty-four weeks in subsequent weekly benefits. Owens contends that he is still entitled to $494.53 in unpaid interest. We agree. When Quaker Oats delayed payment of his benefits, Owens became entitled to interest on the delayed amount. But, when Quaker Oats ultimately paid the principal and interest, the United States rule mandated that the payment first be allocated to interest, then to principal. This left a portion of the principal unpaid. We therefore affirm the decision of the district court on this issue.
AFFIRMED.