Howard John Kohlhaas Vs. Hog Slat, Inc., And Royal & Sunalliance Insurance Companies ( 2009 )

IN THE SUPREME COURT OF IOWA
No. 08–0589
Filed June 12, 2009
HOWARD JOHN KOHLHAAS,
Appellant,
vs.
HOG SLAT, INC., and ROYAL &
SUNALLIANCE INSURANCE COMPANIES,
Appellees.
Appeal from the Iowa District Court for Polk County,
Michael D. Huppert, Judge.
Appellant challenges district court’s denial of his review-reopening
petition and request for reimbursement for a medical evaluation.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Mark S. Soldat of Soldat & Parrish-Sams, P.L.C., West Des Moines,
for appellant.
Meredith J. Kuehler of Engles, Ketcham, Olson & Keith, P.C.,
Omaha, for appellees.
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STREIT, Justice.
While working for Hog Slat, Inc., Howard Kohlhaas’ right foot was
crushed by a large concrete block. Kohlhaas and Hog Slat entered into a
settlement agreement, establishing a 50% permanent partial disability to
Kohlhaas’ right leg. Both before the settlement and after the settlement,
Kohlhaas complained of knee, hip, and back pain in addition to his foot
problems. A few years later, Kohlhaas filed a review-reopening petition,
requesting an increase in compensation as well as reimbursement for a
medical evaluation pursuant to Iowa Code section 85.39 (2003). The
commissioner denied both requests. Kohlhaas appealed, and the
decision was affirmed. He then filed a petition for judicial review, and
the district court affirmed the commissioner’s decision. Because the
claimant need not prove that the current extent of disability was not
contemplated by the commissioner (in the arbitration award) or the
parties (in their agreement for settlement), we reverse. However, we
affirm the commissioner’s denial of Kohlhaas’ request for reimbursement
of his expenses for a section 85.39 medical evaluation because the
employer did not obtain a new evaluation of Kohlhaas’ permanent
disability in the review-reopening proceeding.
I. Facts and Prior Proceedings.
On October 21, 1999, a 400-pound concrete block fell on Howard
Kohlhaas’ right foot while working at Hog Slat. His foot was fractured in
several places, and the skin was crushed and torn apart. On July 15,
2002, Kohlhaas and Hog Slat, along with its insurance companies Royal
and SunAlliance Insurance Cos., filed an agreement for settlement
pursuant to Iowa Code chapter 86 (2002), which was approved by the
Iowa workers’ compensation commissioner. The settlement established
that the injury proximately caused a 50% permanent partial disability to
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Kohlhaas’ right leg. The settlement documents also contained the
opinion of Dr. Crane that Kohlhaas’ knee, hip, and back pain was not
related to the work injury.
Kohlhaas continued to suffer from foot, knee, hip, and back pain in
varying degrees. On July 14, 2005, Kohlhaas filed a review-reopening
petition, requesting an increase in compensation, seeking compensation
for a 95% industrial disability, as well as reimbursement for an
independent medical evaluation by Dr. Kuhnlein. Kohlhaas presented
evidence from his chiropractor, Dr. Mueller, who asserted Kohlhaas’
knee, hip, and back problems were a direct result of his injury. Dr.
Kuhnlein, who performed a medical evaluation, opined Kohlhaas had a
34% impairment of his right leg, and his knee and hip pain was related
to the change in his gait after the injury. The review-reopening decision
issued by the deputy commissioner on August 31, 2006 determined that
an increase in compensation was not warranted because “the claimant
has not proved by a preponderance of the evidence that there has been a
change in the condition of the claimant that was not anticipated at the
time of the original settlement.” The deputy commissioner also denied
Kohlhaas reimbursement for Dr. Kuhnlein’s medical evaluation.
Kohlhaas appealed, and the decision was affirmed by the commissioner.
Kohlhaas then filed a petition for judicial review. The district court
affirmed the commissioner’s decision, stating “[i]t is clear that most of
the complaints that the petitioner claims supports an increase in his
disability were reported and known at the time of the settlement.”
Further, the district court determined
[t]he connection between the 1999 injury and the petitioner’s
complaints of back, hip, and knee pain (while supported by
Drs. Mueller and Kuhnlein) were discounted by Dr. Crane at
the time of the original settlement. The agency was well
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within its rights to side with Dr. Crane’s evaluation of this
issue.
Kohlhaas appealed.
II. Scope of Review.
Our scope of review is for the correction of errors at law. E.N.T.
Assocs. v. Collentine, 525 N.W.2d 827, 829 (Iowa 1994). “We review the
district court decision by applying the standards of the [Iowa]
Administrative Procedure Act to the agency action to determine if our
conclusions are the same reached by the district court.”
Locate.Plus.Com, Inc. v. Iowa Dep’t of Transp., 650 N.W.2d 609, 612 (Iowa
2002). Under Iowa Code section 17A.19(10) (2007), “a reviewing court
may reverse the decision of the workers’ compensation commissioner if it
is unsupported by substantial evidence in the record or characterized by
an abuse of discretion.” Univ. of Iowa Hosps. & Clinics v. Waters, 674
N.W.2d 92, 95 (Iowa 2004).
“Substantial evidence” means the quantity and quality of
evidence that would be deemed sufficient by a neutral,
detached, and reasonable person, to establish the fact at
issue when the consequences resulting from the
establishment of that fact are understood to be serious and
of great importance.
Iowa Code § 17A.19(10)(f)(1). An abuse of discretion occurs when the
commissioner’s exercise of discretion is “clearly erroneous or rests on
untenable grounds.” Waters, 674 N.W.2d at 96.
III. Merits.
A. Review-reopening Decision. Under Iowa Code section
86.14(2), the workers’ compensation commissioner is authorized to
“reopen an award for payments or agreement for settlement . . . [to
inquire] into whether or not the condition of the employee warrants an
end to, diminishment of, or increase of compensation so awarded or
agreed upon.” When an employee seeks an increase in compensation,
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the employee bears the burden of establishing by a preponderance of the
evidence that his or her current condition was “proximately caused by
the original injury.” Simonson v. Snap-On Tools Corp., 588 N.W.2d 430,
434 (Iowa 1999) (quoting Collentine, 525 N.W.2d at 829). The
commissioner must then evaluate “the condition of the employee, which
is found to exist subsequent to the date of the award being reviewed.”
Stice v. Consol. Ind. Coal Co., 228 Iowa 1031, 1038, 291 N.W. 452, 456
(1940). The commissioner is not supposed to “re-determine the condition
of the employee which was adjudicated by the former award.” Id.In our case, the commissioner and the district court relied on the
holding in Acuity Insurance v. Foreman, 684 N.W.2d 212 (Iowa 2004),
which states that the commissioner must determine
(1) whether there has been a change in the worker’s
condition as a result of the original injury, and (2) whether
this change was contemplated by the parties at the time of
any settlement . . . or whether it was beyond what the
commissioner contemplated at the time of the original
assessment of industrial disability.
Acuity, 684 N.W.2d at 217. The test set forth in Acuity thus requires the
employee to demonstrate his condition has changed and that change was
not taken into account in the original settlement. 1
Kohlhaas asserts the district court erred by declaring as a matter
of law that review-reopening relief cannot be granted unless the employee
has demonstrated a change in his condition not anticipated at the time of
the original settlement. He contends the rule from Acuity that the
change in condition “must not have been within the contemplation of the
decision maker at the time of the original award” is obiter dictum and,
1The language in Acuity is akin to the language in divorce modification cases.
See In re Marriage of Pals, 714 N.W.2d 644, 646 (Iowa 2006) (“Dissolution decrees may
be modified upon a substantial change in circumstances . . . ‘not within the knowledge
or contemplation of the court when the decree was entered.’ ” (quoting In re Marriage of
Rolek, 555 N.W.2d 675, 679 (Iowa 1996))).
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therefore, not binding precedent. Id. We agree. The language in Acuity
is ambiguous and seems to condone an agency’s consideration of, or
speculation about, future changes in condition or earning capacity at the
time of the initial award. What we attempted to say in Acuity is that a
condition that has already been determined by an award or settlement
should not be the subject of a review-reopening petition.
In determining a scheduled or unscheduled award, the
commissioner finds the facts as they stand at the time of the hearing and
should not speculate about the future course of the claimant’s condition.
The functional impairment and disability resulting from a scheduled loss
is what it is at the time of the award and is not based on any anticipated
deterioration of function that might or might not occur in the future. See
Iowa Code § 85.34(2); Second Injury Fund v. Bergeson, 526 N.W.2d 543,
548 (Iowa 1995) (“a scheduled injury is evaluated by determining the loss
of physiological capacity of the body part”). Likewise, in an unscheduled
whole-body case, the claimant’s loss of earning capacity is determined by
the commissioner as of the time of the hearing based on the factors
bearing on industrial disability then prevailing—not based on what the
claimant’s physical condition and economic realities might be at some
future time. See Iowa Code § 85.34(3); Quaker Oats Co. v. Ciha, 552
N.W.2d 143, 157 (Iowa 1996) (“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.”); Second Injury Fund v. Nelson, 544 N.W.2d
258, 266 (Iowa 1995) (stating “the concept of industrial disability rests
on a comparison of what the injured worker could earn before the injury
as compared to what the same person could earn after the injury”). The
workers’ compensation statutory scheme contemplates that future
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developments (post-award and post-settlement developments), including
the worsening of a physical condition or a reduction in earning capacity,
should be addressed in review-reopening proceedings. See Iowa Code §
86.14(2). The review-reopening claimant need not prove, as an element
of his claim, that the current extent of disability was not contemplated by
the commissioner (in the arbitration award) or the parties (in their
agreement for settlement).
A compensable review-reopening claim filed by an employee
requires proof by a preponderance of the evidence that the claimant’s
current condition is “proximately caused by the original injury.” See
Simonson, 588 N.W.2d at 434 (original emphasis omitted) (quoting
Collentine, 525 N.W.2d at 829). While worsening of the claimant’s
physical condition is one way to satisfy the review-reopening
requirement, it is not the only way for a claimant to demonstrate his or
her current condition warrants an increase of compensation under
section 86.14(2). See Blacksmith v. All-Am., Inc., 290 N.W.2d 348, 354
(Iowa 1980) (holding a compensable diminution of earning capacity in an
industrial disability claim may occur without a deterioration of the
claimant’s physical capacity).
Therefore, we have held that awards may be adjusted by the
commissioner pursuant to section 86.14(2) [then section 86.34] when a
temporary disability later develops into a permanent disability, see Rose
v. John Deere Ottumwa Works, 247 Iowa 900, 906, 76 N.W.2d 756, 759
(1956), or when critical facts existed but were unknown and could not
have been discovered by the exercise of reasonable diligence at the time
of the prior settlement or award, see Gosek v. Garmer & Stiles Co., 158
N.W.2d 731, 735 (Iowa 1968). We have also previously approved a
review-reopening where an injury to a scheduled member later caused an
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industrial disability. See Mortimer v. Fruehauf Corp., 502 N.W.2d 12, 13,
17 (Iowa 1993) (“[A] psychological condition caused or aggravated by a
scheduled injury is to be compensated as an unscheduled injury.”).
Although we do not require the claimant to demonstrate his
current condition was not contemplated at the time of the original
settlement, we emphasize the principles of res judicata still apply—that
the agency, in a review-reopening petition, should not reevaluate an
employee’s level of physical impairment or earning capacity if all of the
facts and circumstances were known or knowable at the time of the
original action. As this court has explained,
a contrary view would tend to defeat the intention of the
legislature[:] . . . “The fundamental reason for the enactment
of this legislation is to avoid litigation, lessen the expense
incident thereto, minimize appeals, and afford an efficient
and speedy tribunal to determine and award compensation
under the terms of this act.”
Stice, 228 Iowa at 1038, 291 N.W. at 456 (quoting Flint v. City of Eldon,
191 Iowa 845, 847, 183 N.W. 344, 345 (1921)). Therefore, “once there
has been an agreement or adjudication the commissioner, absent appeal
and remand of the case, has no authority on a later review to change the
compensation granted on the same or substantially same facts as those
previously considered.” Gosek, 158 N.W.2d at 732. For example, a
“mere difference of opinion of experts or competent observers as to the
percentage of disability arising from the original injury would not be
sufficient to justify a different determination by another commissioner on
a petition for review-reopening.” Bousfield v. Sisters of Mercy, 249 Iowa
64, 69, 86 N.W.2d 109, 113 (1957). Likewise, section 86.14(2) does not
provide an opportunity to relitigate causation issues that were
determined in the initial award or settlement agreement.
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Although it could be argued there is substantial evidence in the
record that Kohlhaas’ current condition does not warrant an increase in
compensation, it is fair to conclude the commissioner’s determination
may have been influenced by the language in Acuity we have just
disavowed. In that we have clarified the requirements for a review-
reopening petition, we reverse and remand the case to the commissioner
to determine on the record already made whether Kohlhaas has met the
burden of proof required for a review-reopening petition under the
standard we have set forth today.
B. Reimbursement for Medical Evaluation Pursuant to Iowa
Code Section 85.39. Kohlhaas contends that the commissioner
incorrectly failed to reimburse him for the fees associated with Dr.
Kuhnlein’s medical evaluation. Under Iowa Code section 85.39,
If an evaluation of permanent disability has been made
by a physician retained by the employer and the employee
believes this evaluation to be too low, the employee shall . . .
be reimbursed by the employer the reasonable fee for a
subsequent examination by a physician of the employee’s
own choice. . . .
Kohlhaas argues that Dr. Crane’s evaluation performed as part of the
2002 settlement qualifies as “an evaluation of permanent disability . . .
made by a physician retained by the employer.” Iowa Code § 85.39.
The commissioner determined Kohlhaas could not be reimbursed
for Dr. Kuhnlein’s fees because “there was no prior rating by a doctor
who was retained by defendants that claimant claimed was too low.”
Affirming the commissioner’s decision, the district court determined
“[t]he time for challenging the prior evaluations was in the context of the
original proceedings that culminated in the agreement for settlement.”
We agree.
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In interpreting the Workers’ Compensation Act, we look to the
language of the statute in order to determine the intent of the legislature.
United Fire & Cas. Co. v. St. Paul Fire & Marine Ins. Co., 677 N.W.2d 755,
759 (Iowa 2004). “ ‘We look to the object to be accomplished, the
mischief to be remedied, or the purpose to be served, and place on the
statute a reasonable or liberal construction which will best effect, rather
than defeat, the legislature’s purpose.’ ” Id. (quoting Beier Glass Co. v.
Brundige, 329 N.W.2d 280, 283 (Iowa 1983)). The language of section
85.39 does not indicate that the “evaluation of permanent disability . . .
made by a physician retained by the employer” from a previous
proceeding can be the basis for permitting reimbursement for a
“subsequent examination” in a subsequent proceeding. Iowa Code §
85.39.
A medical evaluation pursuant to section 85.39 is a means by
which an injured employee can rebut the employer’s evaluation of
disability. It is not a way for the employee to initiate proceedings. If we
were to allow reimbursement for a section 85.39 medical evaluation
without a new evaluation from an employer, then an employee could
continually file review-reopening petitions at the expense of the employer.
This could hardly be the purpose of the statute. See McSpadden v. Big
Ben Coal Co., 288 N.W.2d 181, 194 (Iowa 1980) (“[T]here is no reason to
conclude that . . . the legislature intended to permit employer furnished
medical examinations merely to aid the claimant’s discovery.”).
Even though we have not applied Iowa Code section 85.39 to
review-reopening petitions, the industrial commissioner has. In Sheriff v.
Intercity Express, 34 Iowa Indus. Comm’r Repts. 302 (Oct. 1978), the
employee sought reimbursement for a section 85.39 medical evaluation
during his second review-reopening proceeding. The employee asserted
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that the prior evaluation, which the new medical evaluation challenged,
was the physician’s report during the first review-reopening proceeding.
Sheriff, 34 Iowa Indus. Comm’r Rpts. at 303. In denying the claim for
reimbursement, the commissioner stated
Claimant’s subsequent attempt to obtain an examination
pursuant to § 85.39 is either an attempt to get evidence of
an evaluation of disability greater than that awarded by the
deputy in the first review-reopening proceeding or an
attempt to get evidence of a change in condition at the
employer’s expense. It is neither contemplated nor proper
that § 85.39 be used for these purposes.
Id. Although we do not defer to the commissioner’s interpretation of the
workers’ compensation statute, Larson Mfg. Co. v. Thorson, 763 N.W.2d
842, 850 (Iowa 2009), we find the commissioner’s reasoning persuasive
here.
We agree with the commissioner and the district court that Iowa
Code section 85.39 does not expose the employer to liability for
reimbursement of the cost of a medical evaluation unless the employer
has obtained a rating in the same proceeding with which the claimant
disagrees. In 2002, Kohlhaas entered into a settlement agreement
establishing his disability. Three years later, he seeks reimbursement for
a medical evaluation not to rebut a new impairment rating obtained by
the employer in the review-reopening proceeding, but rather to cast
doubt on an impairment rating obtained by the employer before the
agreement for settlement was reached. If Kohlhaas wanted to challenge
Dr. Crane’s evaluation at his employer’s expense, he should have done so
in the original proceeding establishing his disability in 2002, 2 not during
the review-reopening proceeding three years later. The review-reopening
proceeding in this case is a new and distinct proceeding apart from the
2From
the record, it does not appear Kohlhaas challenged the employer’s rating
through a medical evaluation pursuant to section 85.39 prior to the 2002 settlement
agreement.
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original arbitration action, as the claimant had a burden to prove
something different than he proved at the arbitration hearing. See Iowa
Code § 86.14(2). As the employer did not obtain a new evaluation of
Kohlhaas’ disability in connection with the review-reopening proceeding,
Kohlhaas is not entitled to reimbursement for expenses associated with
Dr. Kuhnlein’s medical evaluation under section 85.39.
IV. Conclusion.
As a compensable review-reopening claim requires proof that, after
the award or settlement, the claimant’s current condition warrants an
adjustment in compensation, we reverse and remand the case to
determine on the record already made whether Kohlhaas’ disability has
increased since the settlement agreement. We affirm the commissioner’s
denial of reimbursement for Kohlhaas’ medical evaluation because the
employer did not obtain a new rating in the review-reopening proceeding.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.