Grinnell College And The Cincinnati Insurance Companies Vs. Ron Osborn ( 2008 )

IN THE SUPREME COURT OF IOWA
No. 152 / 06–1012
Filed June 27, 2008
GRINNELL COLLEGE and the CINCINNATI INSURANCE COMPANIES,
Appellants,
vs.
RON OSBORN,
Appellee.
Appeal from the Iowa District Court for Polk County, Scott D.
Rosenberg, Judge.
Employer appeals entry of judgment on workers’ compensation
award and denial of interlocutory motion for stay. AFFIRMED.
David L. Jenkins of Bradshaw, Fowler, Proctor & Fairgrave, P.C.,
Des Moines, for appellants.
Paul J. McAndrew, Jr. of Paul McAndrew Law Firm, Coralville, for
appellee.
2
CADY, Justice.
In this appeal, we review a decision by the district court to enter
judgment on an award of benefits by the worker’s compensation
commissioner during the pendency of a petition for judicial review and to
deny a motion to stay execution or enforcement of the award. On our
review, we affirm the decision of the district court.
I. Background Facts and Proceedings.
Following a hearing before a deputy industrial commissioner, the
worker’s compensation commissioner on review determined Ron Osborn
sustained injuries arising out of and in the course of his employment
with Grinnell College. The commissioner entered a decision awarding
Osborn weekly benefits based on a permanent total disability. Grinnell
College and its insurer filed a petition for judicial review.1 During the
pendency of judicial review, Osborn requested the district court to enter
judgment on the worker’s compensation decision. Grinnell College
resisted Osborn’s request and contemporaneously filed a motion with the
district court to stay enforcement of the commissioner’s decision. The
district court entered judgment on the award and denied the motion to
stay. The judgment was in the amount of $141,589.50, representing
accrued benefits, medical expenses, and interest. Grinnell College
appealed from the judgment entry and the denial of the stay.
During the pendency of this appeal, the district court proceeded to
determine the merits of the petition for judicial review. It ultimately
affirmed the decision of the workers’ compensation commissioner, and
Grinnell College separately appealed from that decision. The district
1GrinnellCollege was insured by Cincinnati Insurance Company, who is also a
party to this appeal. All references to Grinnell College will implicitly refer to its insurer
as well.
3
court then stayed execution or enforcement of the judgment during the
pendency of the appeal after Grinnell College filed a supersedeas bond.
In this appeal, Grinnell College claims the district court erred in
converting the workers’ compensation decision into a judgment during
the pendency of judicial review and in failing to stay enforcement of the
commissioner’s decision. Osborn claims the final judgment
subsequently entered on judicial review and the stay entered after the
appeal of the judicial-review decision render the issues presented in this
appeal moot. Thus, before we consider the merits of the issues raised by
Grinnell College, we must decide if they are no longer justiciable.
II. Standard of Review.
We review the district court’s decision to enter judgment on the
workers’ compensation award for errors at law. Iowa R. App. P. 6.4.
Iowa Code section 17A.19(5) “plainly makes the issuance of [a] stay
discretionary.” Teleconnect Co. v. Iowa State Commerce Comm’n, 366
N.W.2d 511, 513 (Iowa 1985). For that reason, review of the district
court’s decision whether to stay agency action under section 17A.19(5) is
for abuse of discretion. Id.; see also Glowacki v. State Bd. of Med.
Exam’rs, 501 N.W.2d 539, 541 (Iowa 1993).
III. Justiciability.
The two intertwined issues raised by Grinnell College in this appeal
are whether the district court erred in entering judgment after a petition
for judicial review had been filed and whether the district court abused
its discretion by refusing to grant a stay of execution or enforcement of
the commissioner’s award of benefits during the pendency of the judicial
review. Ultimately, these two issues require us to consider the
interaction of Iowa Code sections 17A.19(5) and 86.42. Before we
4
address these two sections, however, we must consider the preliminary
question of whether the issues presented are justiciable.
“One familiar principle of judicial restraint is that courts do not
decide cases when the underlying controversy is moot.” Rhiner v. State,
703 N.W.2d 174, 176 (Iowa 2005); see also, e.g., Lalla v. Gilroy, 369
N.W.2d 431, 434 (Iowa 1985) (“A live dispute must ordinarily exist before
a court will engage in an interpretation of the law.”). “ ‘[O]ur test of
mootness is whether an opinion would be of force or effect in the
underlying controversy.’ ” Iowa Mut. Ins. Co. v. McCarthy, 572 N.W.2d
537, 540 (Iowa 1997) (quoting Wengert v. Branstad, 474 N.W.2d 576, 578
(Iowa 1991)). “In other words, will our decision in this case ‘have any
practical legal effect upon an existing controversy?’ ” Id. (quoting 5
Am. Jur. 2d Appellate Review § 642, at 321 (1995)).
In this case, the district court ultimately affirmed the workers’
compensation commissioner on judicial review and entered a stay of
enforcement of the decision during the pendency of the appeal. See Iowa
R. App. P. 6.7. Thus, the prior actions of the district court, which are the
subject of this appeal, no longer have any direct consequences on the
parties. Accordingly, the issues raised by Grinnell College are moot.
Nevertheless, we will consider moot issues on appeal under certain
circumstances. State v. Hernandez-Lopez, 639 N.W.2d 226, 235 (Iowa
2002). In determining whether or not we should review a moot action,
we consider four factors:
(1) the private or public nature of the issue; (2) the
desirability of an authoritative adjudication to guide public
officials in their future conduct; (3) the likelihood of the
recurrence of the issue; and (4) the likelihood the issue will
recur yet evade appellate review.
Id. at 234.
 5
While this appeal is a purely private action, the issues presented
currently lack authoritative adjudication. Additionally, the broader
question of how the statutory procedure to transform an award of
benefits following a decision of the workers’ compensation commissioner
into a judgment interacts with the statutory procedure to request a stay
during the pendency of an action for judicial review of a decision of the
workers’ compensation commissioner is substantial and will likely
reoccur. Considering the respective timelines of the appellate and
judicial review processes, employers will likely continue to appeal adverse
judicial review decisions and post the required supersedeas bond before
our appellate courts can decide the separate appeal of a denial of a
section 17A.19(5) stay or the grant of a section 86.42 request to enter
judgment. Enforcement will be stayed under our rules of appellate
procedure, mooting any appeal of a district court’s decision under either
section 17A.19(5) or section 86.42 and ensuring the question will
continue to evade review. Consequently, the issues presented by this
appeal fall neatly under the exception to our mootness doctrine, and we
consider them now.2
IV. Stay of Judgment During Judicial Review.
Grinnell College asserts the district court erred in entering
judgment and in denying its motion to stay the decision of the workers’
2We also recognize that Grinnell College appeals not only from the judgment
entered on the award by the commissioner, but also from the denial of the stay. Osborn
makes no claim that Grinnell College may not appeal from the judgment, but a question
is raised whether the separate decision to deny the stay was an interlocutory decision
and not appealable as a matter of right. Nevertheless, we may grant permission for an
interlocutory appeal under rule of appellate procedure 6.2(1). Having determined we
should consider the appeal under the exception to the mootness doctrine, we also
conclude we should now consider the stay issue in the interest of sound and effective
administration of justice. Buechel v. Five Star Quality Care, Inc., 745 N.W.2d 732, 735–
36 (Iowa 2008).
6
compensation commissioner during judicial review. It claims the actions
by the district court not only defeated its statutory right to judicial
review, but also violated its due process rights under the state and
federal constitutions. The basis of the claims by Grinnell College is
derived from its argument that it is unfair to be required to pay an award
of benefits by the workers’ compensation commissioner before the
district court has had an opportunity to review the award on judicial
review.
We acknowledge that the execution of a judgment entered in a
workers’ compensation proceeding under section 86.42 during the
pendency of judicial review can present many subsequent problems for
the parties if the district court ultimately reverses the decision of the
commissioner. The specific problem identified by Grinnell College in this
case is an employer may not be able to recover the payment made on the
judgment in the event the employer is successful in reversing or
modifying the decision on judicial review. Grinnell College asserts this
problem could ultimately undermine the very objective and purpose of
judicial review in workers’ compensation proceedings.
We begin our analysis of the issue by considering a fundamental
proposition of workers’ compensation law. The Workers’ Compensation
Act was enacted nearly a century ago to benefit workers and compensate
them for industrial disabilities. Pribyl v. Standard Elec. Co., 246 Iowa
333, 343, 67 N.W.2d 438, 444 (1954). The process sought to establish
an administrative tribunal that would provide for the prompt and
efficient determination and award of compensation to injured workers.
Nash v. Citizens Coal Co., 224 Iowa 1088, 1092, 277 N.W. 728, 730
(1938). Yet, in doing so, our legislature recognized an award of benefits
to a worker by such a tribunal was not a personal judgment that would
7
allow a worker to collect the award when not voluntarily paid by the
employer. Consequently, a summary method was established under the
statute to convert an award by the workers’ compensation commissioner
into a district court judgment or decree. See Elk River Coal & Lumber Co.
v. Funk, 222 Iowa 1222, 1235, 271 N.W. 204, 211 (1937). This summary
method was part of the original act and is now found in Iowa Code
section 86.42. See 1913 Iowa Acts ch. 147, § 34.
Section 86.42 requires the district court to enter judgment on any
order or decision of the workers’ compensation commissioner as long as,
among other conditions not relevant to this case, no timely petition for
judicial review has been filed or no stay has been entered pursuant to
section 17A.19(5) when a petition for judicial review has been timely
filed. Once entered, the judgment “has the same effect and in all
proceedings in relation thereto is the same as though rendered in a suit
duly heard and determined by the court.” Iowa Code § 86.42 (2005).
We have interpreted section 86.42 to provide “a summary method
. . . for converting the decision of the commissioner into the form of a
judgment or decree by transcribing the proceedings to the district court.”
Elk River Coal & Lumber Co., 222 Iowa at 1235, 271 N.W. at 211. The
transcription facilitates “collection by legal process of the amount already
legally ascertained to be due.” Rathamel v. Harvey, 679 N.W.2d 626, 629
(Iowa 2004). Consequently, the court’s role in the process is ministerial
and is limited to entering a judgment in conformance with the award. Id.
at 628. This statutory scheme reveals that the district court did not err
in converting the decision into a judgment in this case. No stay had been
entered at the time the request was made, and the relevant conditions to
enter the judgment had been satisfied.
8
While our workers’ compensation statute allows the district court
to convert an award of benefits into a judgment, it also provides for
judicial review of decisions by the worker’s compensation commissioner.
Iowa Code § 86.26. This process is implemented by a separate legislative
scheme available for all administrative agency action. Id. (referencing
Iowa Code ch. 17A). Under the Iowa Administrative Procedure Act, a
process exists for a petitioner to obtain a stay of execution or
enforcement of the agency action during the pendency of judicial review.
Id. § 17A.19(5). As applied to judicial review of decisions by the workers’
compensation commissioner, only the district court is authorized to
grant or deny stays once a petition for judicial review has been filed. See
id. § 86.26. The parties are not permitted to seek a stay from the
workers’ compensation commissioner once a petition for judicial review
has been filed. Id.
Under section 17A.19(5), four factors are required to be considered
before entering a stay. This approach means a petition for judicial review
does not automatically stay the action of the workers’ compensation
commissioner. See id. § 17A.19(5) (“The filing of the petition for review
does not itself stay execution or enforcement of any agency action.”).
Likewise, an award of benefits by the commissioner can be converted into
a judgment under section 86.42 even when a petition for judicial review
has been filed as long as the district court has not entered a stay. Thus,
the collection of workers’ compensation benefits and the pursuit of
judicial review coexist under the statute, and judicial review does not
itself stay the right to collect an award unless the district court
affirmatively concludes otherwise. Yet, the present compatibility between
these statutes has not always existed.
9
When the Iowa Administrative Procedure Act was enacted in 1974,
the legislature also amended section 86.42. 1974 Iowa Acts ch. 1090,
§ 53. The amendments provided that a judgment converted from an
award by the workers’ compensation commissioner had the force of a
district court judgment only “in the absence of a petition for judicial
review of the decision of the industrial commissioner.” Id. Thus, section
17A.19(5) rejected the concept that judicial review automatically stayed
enforcement of a judgment, while section 86.42 endorsed the concept
that judicial review stayed enforcement. Three years later, the legislature
addressed this apparent conflict. Section 86.42 was amended to allow
the commissioner’s decision to be converted into a decree or judgment
“in the absence of a petition for judicial review or if judicial review has
been commenced, in the absence of a stay of execution or enforcement.”
1977 Iowa Acts ch. 51, § 20. This change clarified two principles. First,
the legislature did not want the filing of a petition for judicial review to
automatically stay enforcement of a judgment in a workers’
compensation proceeding. Second, a stay in a workers’ compensation
proceeding could only be entered under the same guidelines governing a
stay of other agency action. Consequently, this history undermines the
claim made by Grinnell College that stays during judicial review of
workers’ compensation actions must be entered under different
standards than stays entered in other agency action, and that stays of
worker’s compensation awards should be entered as a matter of course
to maintain the status quo during judicial review. Thus, we turn to
section 17A.19(5) to consider the four factors governing the grant of a
stay and how they apply to workers’ compensation proceedings.
The four factors enumerated in section 17A.19(5) are largely
derived from factors developed under federal law for the issuance of a
10
stay of agency action. See Teleconnect Co., 366 N.W.2d at 513–14
(explaining derivation of our four-factor analysis from the federal
analysis). Although we have applied these factors in the past, we have
had little occasion to elaborate on their meaning, especially in judicial
review of agency action involving workers’ compensation decisions. Their
meaning, however, is important considering the crucial role they play in
deciding whether a stay is entered.
The first factor considers the “extent” the applicant for the stay “is
likely to prevail when the court finally disposes of the matter.” Iowa Code
§ 17A.19(5)(c)(1). This factor does not describe the degree of likelihood of
prevailing, but only requires the court to consider and balance the extent
or range of the likelihood of success. See generally John W. Gotanda,
Emerging Standards for Issuing Appellate Stays, 45 Baylor L. Rev. 809
(1993). Thus, the degree of likelihood of success required to be shown to
obtain a stay will necessarily vary with the assessment of the other three
factors. Mohammed v. Reno, 309 F.3d 95, 101 (3d Cir. 2002). A stay can
be granted “where the likelihood of success is not high but the balance of
hardships favors the applicant.” Id. In other words, more of one factor
excuses less of another factor. Id.
The second factor considers the extent the employer “will suffer
irreparable injury” if a stay is not entered. Iowa Code § 17A.19(5)(c)(2).
As applied to workers’ compensation proceedings, this factor must
recognize that an employer has no means to obtain a stay by posting a
bond during the pendency of judicial review, as the employer does in an
appeal from a final decision by the district court on judicial review.3 See
3Iowa Code section 626.58 also provides for a temporary stay of execution on
any judgment for any party who can “procure one or more sufficient freehold sureties to
enter a bond.” This presumably includes a judgment entered pursuant to section
86.42. However, such a stay waives the right to appeal. Iowa Code § 626.60.
11
Iowa R. App. P. 6.7 (providing for stay of civil proceedings on appeal by
posting of a supersedeas bond). Thus, the request for a stay by an
employer can be a critical component in a judicial review proceeding
when the employee converts an award into a judgment. Additionally,
payment on a judgment by an employer during the pendency of judicial
review can give rise to problems if the district court ultimately decides to
reduce or reverse the reward. In this case, Grinnell College primarily
points to the legal and practical impediments to recovering overpayments
if successful on judicial review and asserts these impediments reveal that
stays should ordinarily be granted. See Iowa Code § 85.34(5) (limiting
recovery of overpayment of workers’ compensation benefits). Osborn
asserts such impediments do not rise to the level of “irreparable injury.”
We have recognized loss of revenue, even if substantial, “does not
amount to irreparable damage” to support a stay of agency action
pending judicial review. Teleconnect Co., 366 N.W.2d at 514. Yet, this
rule is a general statement of the law and recognizes that extreme
circumstances of financial loss, even if recoverable, could amount to
irreparable injury. See Wisconsin Gas Co. v. Fed. Energy Regulatory
Comm’n, 758 F.2d 669, 674 (D.C. Cir. 1985). Moreover, this general rule
is largely premised on the principle that adequate compensation or
corrective relief ultimately would be available if judicial review were
successful, even though revenue may be lost in the short term in the
absence of a stay. See Virginia Petroleum Jobbers Ass’n v. Fed. Power
Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958). If the absence of a stay
would deprive an employer of the ability to obtain relief if successful at
the conclusion of judicial review, then irreparable injury could be shown.
The loss-of-revenue rule was never meant to render judicial review
meaningless. Instead, the irreparable-injury factor was meant to impose
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a strong showing on the applicant. Importantly, it requires the district
court to first determine if the injury is “irreparable” and then determine
the “extent” of the “irreparable injury.” In determining if the payment of
a workers’ compensation judgment during the pendency of judicial
review would constitute irreparable injury, the court should consider
such circumstances as the extent of the relief sought on judicial review,
the amount of the judgment, and the amount of the judgment that will
not be recovered if paid. Of course, the employer must also establish the
irreparable injury is certain and actual, not theoretical. Wisconsin Gas
Co., 758 F.2d at 674. Mere allegations of “irreparable injury” have “no
value since the court must decide whether the harm will in fact occur.”
Id.
The third factor requires the court to balance the extent that a stay
would substantially harm the employee or another party to the
proceeding. In the workers’ compensation context, this factor mainly
relates to the legislative purpose of workers’ compensation to provide
injured workers prompt benefits once the commissioner has found
benefits are due. Rivere v. Offshore Painting Contractors, 872 F.2d 1187,
1190 (5th Cir. 1989) (discussing Congressional history of the Longshore
and Harbor Workers’ Compensation Act). Our legislature did not intend
for the judicial-review process alone to justify delay in the payment of
benefits awarded by the commissioner, see Iowa Code § 17A.19(5), but
wanted the district court to consider how additional delay in payment of
benefits as a result of judicial review would impact the worker. Thus, the
court must consider circumstances such as the amount of time needed
to complete judicial review and the financial needs of the injured worker
during the pendency of judicial review.
13
The final factor considers the public’s interest. This factor helps
distinguish stays involving agency action from stays or injunctions
involving purely private parties. Rochester-Genesee Reg’l Transp. Auth. v.
Bridgid Hynes-Cherin, 506 F. Supp. 2d 207, 212–13 (W.D.N.Y. 2007). It
means the interest of private litigants in agency action may need to
ultimately yield to the greater public interest. See Teleconnect Co., 366
N.W.2d at 513.
In applying these factors to this case, Grinnell College first argues
the district court failed to properly consider its likelihood of prevailing on
the merits. Grinnell College asserts the trial court erred when it heard
and decided the motion for stay prior to the time the parties had an
opportunity to define and brief the issues as a part of the judicial review
proceedings.
This argument overlooks that the applicant for a stay during
judicial review has the burden to establish the prerequisites for a stay
and must submit evidence to the district court concerning all relevant
statutory factors at a hearing. The argument also fails to consider the
broad objective of workers’ compensation to provide prompt benefits to
injured workers. Additionally, our legislature has decided that judicial
review should not automatically delay the payment of benefits.
Consequently, the stay process does not contemplate the court must
delay consideration of a request for a stay until the merits of the petition
for judicial review have been briefed and submitted to the district court
for final decision. Instead, the district court must schedule a hearing on
an application for a stay and promptly decide the request based on the
evidence submitted by the parties relating to the four statutory elements,
including the likelihood of prevailing on the merits on judicial review.
14
Grinnell College next argues that the district court failed to
consider its evidence of “irreparable harm.” It asserts that the difficulties
of obtaining future reimbursement from Osborn, if Grinnell College were
successful in reversing the award on judicial review, was supported by
evidence that Osborn was no longer employed by Grinnell College at the
time of judicial review. It claims this evidence means it will have no
opportunity to seek reimbursement by means of a credit against any
future benefits to Osborn under section 85.34(5).
We find it unnecessary to decide whether section 85.34(5) was
intended to prevent an employer who has paid an award of weekly
benefits converted into a judgment from seeking reimbursement from the
employee if successful on judicial review.4 Even if Grinnell College would
be unable to recover accrued benefits paid to Osborn as a result of the
judgment, it has failed in this case to present any evidence that would
have allowed the district court to balance this circumstance with the
other three factors. Instead, Grinnell College sought to obtain a stay
based almost entirely on the inherent unfairness of satisfying a judgment
prior to a final decision on judicial review. Regardless of the potential
merit of this argument, it is not one our legislature has accepted. See
Rivere, 872 F.2d at 1191 (discussing the statutory requirements under
4Iowa Code section 85.34(5) governs recovery of weekly benefits paid to an
employee in excess of those required to be paid under the law. The workers’
compensation commissioner in this case awarded Osborn forty-eight weeks of
permanent partial disability from September 15, 1995, to August 15, 2000, and
permanent total disability benefits of $322.49 each week beginning August 16, 2000.
The amount of the judgment entered by the district court included $110,644.37 for
past-due accrued disability benefits (less benefits previously paid), medical expenses of
$45,561.37, and accrued interest.
We also find it unnecessary to decide if Iowa Code section 625A.15 applies to
this case. Iowa Code section 625A.15 allows an appellate or district court to order
“restoration of any part of the money or property that was taken from the appellant by
means of a judgment or order” which has been reversed on appeal.
15
the Longshore and Harbor Workers’ Compensation Act to obtain a stay of
compensation awards pending an appeal despite persistent calls for
Congress to change the strict requirements).
We conclude the district court did not abuse its discretion in
denying the stay. The record supports the decision of the district court.
V. Due Process and Equal Protection.
Grinnell College also argues its statutory and constitutional rights
to due process and equal protection will be violated if it is forced to
satisfy the workers’ compensation commissioner’s award before the
judicial review and appeals processes have been completed. The record
demonstrates none of these issues were preserved for our review.
“It is a fundamental doctrine of appellate review that issues must
ordinarily be both raised and decided by the district court before we will
decide them on appeal.” Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa
2002). “When a district court fails to rule on an issue properly raised by
a party, the party who raised the issue must file a motion requesting a
ruling in order to preserve error for appeal.” Id. These issues were not
raised in Grinnell College’s resistance to the judgment entry or its motion
to stay. Further, the district court did not decide them in its ruling on
the motion to stay, nor did it address them in the judgment entry.
Finally, and fatally to our consideration of these issues, Grinnell College
did not file a rule 1.904(2) motion to enlarge the findings or conclusions.
As a consequence, the due process and equal protection claims are not
preserved for our review.
VI. Conclusion.
We affirm the decision of the district court.
AFFIRMED.
All justices concur except Baker, J., who takes no part.