Brandee Rae Pettengill v. American Blue Ribbon Holdings, LLC, and Arch Insurance Company ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-1511
Filed December 23, 2015
BRANDEE RAE PETTENGILL,
Petitioner-Appellee,
vs.
AMERICAN BLUE RIBBON
HOLDINGS, LLC, and
ARCH INSURANCE COMPANY,
Respondents-Appellants.
________________________________________________________________
Appeal from the Iowa District Court for Linn County, Nancy A.
Baumgartner, Judge.
American Blue Ribbon Holdings, LLC, and Arch Insurance Company
appeal the district court’s reversal of the Iowa Workers’ Compensation
Commissioner’s decision. AFFIRMED.
Michael L. Roling and Joseph M. Barron of Peddicord, Wharton, Spencer,
Hook, Barron & Wegman, L.L.P., West Des Moines, for appellants.
T. Todd Becker of Tom Riley Law Firm, P.L.C., Cedar Rapids, for
appellee.
Considered by Tabor, P.J., and Bower and McDonald, JJ.
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BOWER, Judge.
American Blue Ribbon Holdings, LLC, and Arch Insurance Company
(American) appeal the district court’s reversal of the Iowa Workers’
Compensation Commissioner’s decision. American claims the district court erred
in reversing the commissioner’s conclusion Pettengill was not entitled to
temporary benefits after she reached maximum medical improvement on January
15, 2011. We affirm the district court’s decision and remand to the commissioner
for the calculation of penalty benefits and a determination if any healing period
benefits are owed.
I. BACKGROUND FACTS AND PROCEEDINGS
On October 23, 2010, while working as a cook at a Cedar Rapids Village
Inn (owned by American), Pettengill slipped on a freshly cleaned floor and fell,
injuring her lower back. She was twenty-four years old at the time of the fall.
Prior to her fall, Pettengill had obtained treatment for low-back pain on three
occasions. She first complained of low-back pain stemming from an injury
caused from playing volleyball in 2001. The treating doctor opined the pain was
likely musculoskeletal in origin and prescribed an anti-inflammatory. In October
2009, Pettengill saw Dr. Stephen Runde for upper respiratory type symptoms
and low-back pain. She was diagnosed with an acute lumbosacral strain.
Finally, on October 2, 2009, Pettengill was seen by physician assistant Rebecca
White, for difficulty breathing and back pain with radiation down her buttocks and
backs of her legs. Pettengill complained of an inability to sit or stand. White’s
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examination of Pettengill’s back did not reveal any issues. Pettengill was
prescribed anti-inflammatories and muscle relaxants.
The day after the fall, Pettengill went to Mercy Care North reporting she
had fallen at work and complaining she had hurt her elbow, right knee, and low
back. Runde diagnosed Pettengill with a myofascial strain. The radiology tests
were negative for any injury. Pettengill returned to Mercy on October 28 for a
recheck of her back and was seen by Dr. Sudha Anand. Anand found Pettengill
had tenderness over the L4 and L5 spinous process and the paravertebral
muscle area. Anand’s assessment was Pettengill had a low-back sprain.
Pettengill returned to Mercy for a recheck on November 2, and was again seen
by Anand. Anand found Pettengill’s injury was not improving.
On November 9, Pettengill returned to Mercy for a recheck and was seen
by Dr. Runde. Runde found Pettengill’s pain was persisting. He noted she was
now totally off work. Subsequently, Pettengill had an MRI completed and
returned to Mercy on December 1. Runde found the MRI showed Pettengill had
a disk extrusion at L5-S1, but no evidence of spinal stenosis or nerve root
impingement. Runde considered referring Pettengill to a pain management clinic
for epidural injections, or to occupational medicine for a second opinion.
Pettengill was approved for nine sessions of physical therapy by Runde.
Physical therapist Christopher Brink evaluated Pettengill and reported, “The
patient displays signs and symptoms consistent with low back pain with
radiculopathy stemming from a herniated disc of the L5 region. She will benefit
from continued outpatient physical therapy focusing on decreasing inflammation
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and pain, promoting centralization of the herniated disc, and increasing left lower
extremity function.” Pettengill attended four of the scheduled physical therapy
sessions.
Pettengill was again seen by Runde on January 14, 2011. He noted she
had attended several physical therapy sessions, without success. Runde and
Pettengill discussed an epidural injection. Runde scheduled a consult for
Pettengill with an anesthesiologist, Dr. Stephen Maze, for January 24. Maze
found Pettengill had attempted conservative care in the three months since her
injury and had not experienced improvement. He “strongly recommended a
lumbar epidural steroid injection . . . to hopefully assist in her recovery.”
Pettengill then requested epidurals, which were denied by the insurance carrier.
Pettengill saw Runde again on February 10. Pettengill reported she had
gotten somewhat better since her previous appointment. Upon examination,
Runde found Pettengill was “mildly uncomfortable” with some tenderness in the
left lower lumbosacral area. Runde recommended Pettengill see a workers’
compensation specialist, Dr. Michael Jackson, and remain off work.
The next day, Pettengill saw Jackson, though it was his last day in the
clinic and he did not dictate notes for Pettengill’s visit. Pettengill returned to
Runde on June 13, with complaints of back pain. His notes from the visit indicate
the workers’ compensation insurer had not been responsive to Pettengill in the
preceding months:
It has been four months since [the patient] has been in. She has
kind of been in “medical limbo” since that time. She had an
evaluation including an MRI and been seen by Dr. M[aze] and it
was recommended that she may be a candidate for an epidural
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steroid injection. However, the work comp insurance company, in
particular their physician reviewer, would not approve the epidural
so it has never been done. . . . She has been kind of hung out to
dry since then. The insurance company has not been answering
her calls and also they have not been paying her for the last couple
of months, even though she has remained off of work. She has
finally badgered someone in to getting approval for a one-time visit
with me to kind of reassess the situation and get her some pain
medication. It has been almost three months since she had any
pain medication from us, so I do not think there is a question of
drug seeking behavior.
Pettengill had stopped receiving healing period checks in April 2011. According
to Runde, Pettengill had not progressed since her last appointment.
Pettengill retained an attorney in June 2011 who contacted her insurance
company. She filed a petition for alternate care on September 12, with a hearing
set for September 22. The insurance company’s counsel gave its approval for an
injection one day before the hearing. Pettengill also filed a petition for workers’
compensation benefits on September 27, 2011, with a hearing set for September
17, 2012.
Pettengill received her first epidural steroid injection in October 12, 2011.
Dr. Maze reported Pettengill received a “modest benefit where her pain was
relieved and she was able to stand for a longer period of time, but was not quite
pain free.” Upon Maze’s recommendation, a second epidural was approved and
subsequently administered on January 11, 2012.
The insurance company referred Pettengill to Dr. Robert Broghammer for
an independent medical examination (IME), and he examined her on January 6.
Broghammer recommended an EMG/Conduction study and noted:
[I]f Ms. Pettengill has a chronic left leg radiculopathy, I would opine
that this likely is related to her alleged injury and would find the
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company liable for treatment until her symptoms abate. If it does
not show a left leg radiculopathy, I would not relate anymore of her
ongoing symptoms due to her alleged injury and would opine she
would be at MMI and release her to return to work full duty, with
further follow up per her primary care physician.
Dr. Sunny Kim conducted the study and found it showed a “[n]ormal study
without electrophysiological evidence of left lumbosacral radiculopathy,
plexopathy or peripheral polyneuropathy.” Broghammer issued a report on
February 15, in which he concluded “[g]iven the negative studies, the worker’s
ongoing pain is unexplained by her remote injury. I opine that any further
treatment for her idiopathic and ongoing back pain should occur outside the
auspices of the worker’s compensation system . . . .”
At the request of Pettengill’s counsel, she underwent an additional IME
performed by Dr. Richard Nieman. After the examination, Nieman concluded:
I have absolutely no idea why she was not considered for surgery.
This is a large disk extrusion. Certainly she would benefit from an
operative approach. I strongly advise that she have another MRI
scan. If confirmatory of her continued disk herniation, she should
be seen by a surgeon, consideration for micodiskectomy. I have
used Dr. Chad Abernathey, and he does an excellent job for this
type of situation.
Dr. Neiman assessed a 13 percent impairment rating and the following
restrictions:
a) Avoid lifting more than five-ten pounds repetitively;
b) Avoid standing for any length of time;
c) Avoid squatting, kneeling, or bending;
d) No driving more than one hour at a time;
e) Provide the ability to change positions from sitting to standing.
Dr. Abernathey evaluated Pettengill on April 18, 2012. He diagnosed her
as having a mild degenerative change at L5-S1 with a small annular tear. Based
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on the MRI, Dr. Abernathey did not recommend surgery. He opined her work-
related injury would have healed within six to twelve weeks of the October 23,
2010 injury, and she would have reached maximum medical improvement (MMI)
at that time. Dr. Abernathey believed the disk protrusion was not related to work,
but was actually a congenital defect.
In its opinion the commissioner highlighted the differences in the doctors’
opinions:
There is a significant difference in opinion between Dr.
Broghammer and Dr. Abernathey, who believe claimant has a
chronic congenital and personal condition that is unrelated to her
work fall, and that of Dr. Neiman. Dr. Neiman believes strongly that
claimant has a huge disk protrusion which is the result of the fall
and, thus, the fall is responsible for all claimant’s disability. No
doctor opined that claimant’s preexisting condition was aggravated
permanently by the work injury. Dr. Neiman premises his opinion
on a new injury. The disk protrusion allegedly caused by the work
injury.
....
Later, however, Dr. Runde agreed that Dr. Abernathey would
have a better understanding of claimant’s condition and would, in
fact, defer to Dr. Abernathey’s conclusions.
Dr. Runde changed his mind again on September 14, 2012,
indicating that he would stand by the permanent work restrictions
set forth on August 13, 2012.
Sunny Kim, M.D., who performed the EMG, wrote that a
person who injures the back can have pain down the lower
extremities without a specific injury to the spinal nerve root.
However, the EMG did not show that there was an acute injury at
one time which then healed; nor did the EMG show any sign of a
chronic radiculopathy, which suggests that there was never any
injury to the nerve root from claimant’s work injury.
The hearing on Pettengill’s petition for workers’ compensation benefits
was held on September 17, 2012. A deputy workers’ compensation
commissioner issued an arbitration decision on December 12, and found
Pettengill failed to meet her burden of proof to show her ongoing back problems
8
were related to the injury she sustained at work in October 2010. The deputy
found Pettengill was not entitled to additional temporary benefits for the period of
April 20, 2011 through March 18, 2012. Further, and for the same reason, the
deputy found Pettengill was not entitled to penalty benefits for failure to pay
temporary benefits for that period.
Pettengill filed a notice of appeal with the Iowa Workers’ Compensation
Commissioner on December 28. The commissioner issued an appeal decision
on July 28, 2013, affirming and adopting the deputy’s decision.
Pettengill filed a petition for judicial review on August 14. The district
court’s ruling reversed the commissioner and remanded the case to the
commissioner for a determination of healing period and penalty benefits.
American appealed.
II. STANDARD OF REVIEW
Iowa Code section 17A.19(10) (2011) governs judicial review of agency
decision making. We will apply the standards of section 17A.19(10) to determine
whether we reach the same results as the district court. “The district court may
grant relief if the agency action has prejudiced the substantial rights of the
petitioner, and the agency action meets one of the enumerated criteria contained
in section 17A.19(10)(a) through (n).” Burton v. Hilltop Care Ctr., 813 N.W.2d
250, 255–56 (Iowa 2012) (citation omitted).
Our standard of review depends on the aspect of the agency’s decision
that forms the basis of the petition for judicial review. Id. at 256. We are to defer
to the agency’s interpretation of a statute when the legislature has clearly vested
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the agency with the authority to interpret a statute, and “only reverse a decision
of statutory construction which is irrational, illogical, or wholly unjustifiable.”
Westling v. Hormel Foods Corp., 810 N.W.2d 247, 251 (Iowa 2012); see also
Iowa Code § 17A.19(10)(l). If the agency is not clearly vested with such
authority, however, we review questions of statutory interpretation for correction
of errors at law. Westling, 810 N.W.2d at 251; see also Iowa Code
§ 17A.19(10)(c).
Here, we are reviewing the commissioner’s interpretation of Iowa Code
section 86.13, which deals with penalty benefits. An examination of chapter 86
does not reveal any basis for concluding that the legislature clearly vested the
workers’ compensation commissioner with authority to interpret the section at
issue. Accordingly, we review the commissioner’s statutory interpretation for
correction of errors at law. Iowa Code § 17A.19(10)(c).
III. DISCUSSION
American claims the district court erred in reversing the commissioner’s
conclusion Pettengill was not entitled to temporary benefits after she reached
MMI on January 15, 2011. Pettengill claims she was entitled to the benefits
because American had terminated the payments in violation of Iowa Code
section 86.13(2).
The commissioner found:
Claimant seeks additional weekly benefits pursuant to Iowa
Code section 86.13(4). This particular provision requires that if a
delay in commencement or termination of benefits occurs without
reasonable or probable cause or excuse, the workers’
compensation commissioner shall award additional weekly benefits
in an amount not to exceed 50 percent of the amount of benefits
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that were unreasonably delayed or denied. Iowa Code section
85.13(4)(b).
....
Defendant has the burden to show compliance with this
statutory provision in order to avoid the mandatory assessment of a
penalty. The inquiry under the current provision of Iowa Code
section 86.13 requires more than a reasonable or probable cause
or excuse at the time the case comes to hearing. The law requires
proof of a prompt investigation and that factual basis be provided to
the injured worker at the time of the denial, delay, or termination of
benefits. Herein, defendant must show a timely investigation of
claimant’s report of a back injury, that the denial of the back claim is
based on the results of that timely investigation, and that there was
a timely communication to claimant of the reasons for the denial.
From February 2011 until approximately July 2011, claimant
received no information from defendant as to why her claim had
been denied. Dr. Broghammer indicated that claimant was not a
surgical candidate, but it was not until late fall of 2011 that
defendants engaged in any investigation of claimant’s ongoing back
claims. Defendants wrote inquiring on November 29, 2011, why
claimant was not capable of working. On December 8, 2011,
defendants wrote again requesting claimant’s deposition.
On January 12, 2012, defendants indicated that an EMG
would be ordered per Dr. Broghammer’s recommendations. Dr.
Broghammer’s opinions on February 15, 2012, essentially provide a
zero percent impairment. Defendants paid temporary benefits from
October 29, 2010, through March 19, 2011, for a total of $6,153.79.
Defendants assert benefits were terminated when claimant
refused to follow up with Dr. Runde. Claimant says that this was
totally inaccurate and that she wanted to see Dr. Runde, but that
the insurance company never authorized this care. There was no
documentation in the file indicating that claimant was ever notified
of the cessation of her benefits or the reason why these benefits
were terminated.
Claimant testified that she was given no notice her benefits
were going to end. She called and called workers’ compensation.
She even called the claims manager’s supervisor who authorized a
one-time visit with Dr. Runde.
Because it is found that claimant achieved MMI on January
15, 2011, for symptoms arising out of the October 23, 2010 work
injury there was no delay in benefits paid even though post-January
15, 2011, defendants’ communication with claimant was
disappointing and, if not within the letter of the law, definitely not
within the spirit of the law. (Iowa Code section 86.13(4)(b)).
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The district court reversed the commissioner’s decision and found notice
had not been given to Pettengill before her benefits were terminated, as required
by Iowa Code section 86.13. The court remanded the commissioner’s decision
for the determination of penalty benefits, and whether Pettengill was entitled to
healing period benefits between April 2011 and March 2012.
On appeal, our task is to evaluate the commissioner’s interpretation of
Iowa Code section 86.13. The relevant portions of section 86.13 provide:
2. If an employer or insurance carrier fails to file the notice
required by this section, the failure stops the running of the time
periods in section 85.26 as of the date of the first payment. If
commenced, the payments shall be terminated only when the
employee has returned to work, or upon thirty days’ notice stating
the reason for the termination and advising the employee of the
right to file a claim with the workers’ compensation commissioner.
....
4. a. If a denial, a delay in payment, or a termination of
benefits occurs without reasonable or probable cause or excuse
known to the employer or insurance carrier at the time of the denial,
delay in payment, or termination of benefits, 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 denied,
delayed, or terminated without reasonable or probable cause or
excuse.
b. The workers’ compensation commissioner shall award
benefits under this subsection if the commissioner finds both of the
following facts:
(1) The employee has demonstrated a denial, delay in
payment, or termination of benefits.
(2) The employer has failed to prove a reasonable or
probable cause or excuse for the denial, delay in payment, or
termination of benefits.
c.[1] In order to be considered a reasonable or probable
cause or excuse under paragraph “b”, an excuse shall satisfy all of
the following criteria:
1
The language in this subsection was added to the statute pursuant to a 2009
Amendment. See 2009 Iowa Acts ch. 179, § 110.
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(1) The excuse was preceded by a reasonable
investigation and evaluation by the employer or insurance carrier
into whether benefits were owed to the employee.
(2) The results of the reasonable investigation and
evaluation were the actual basis upon which the employer or
insurance carrier contemporaneously relied to deny, delay payment
of, or terminate benefits.
(3) The employer or insurance carrier
contemporaneously conveyed the basis for the denial, delay in
payment, or termination of benefits to the employee at the time of
the denial, delay, or termination of benefits.
Iowa Code section 86.13(4)(b) creates a two-prong test that requires the
agency to award a claimant penalty benefits if (1) “The employee has
demonstrated a denial, delay in payment, or termination of benefits”; and (2) “The
employer has failed to prove a reasonable or probable cause or excuse for the
denial, delay in payment, or termination of benefits.” Concerning the first prong,
the commissioner concluded Pettengill satisfied her burden in showing her
benefits were terminated. For the second prong, the burden shifted to American
to prove it had “a reasonable or probable cause or excuse . . . for the
termination.”
In order to be considered a reasonable or probable cause or excuse under
paragraph “b,” an excuse shall satisfy the three criteria listed in paragraph “c.”
The commissioner complained American did not communicate with Pettengill,
and also noted American did not perform the requisite investigation for months
after the termination of benefits. However, the commissioner ruled evidence
obtained nearly a year after the termination of benefits demonstrated Pettengill
had reached MMI in January 2011, and therefore there was no delay in
payments.
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We find the commissioner erred in its application of section 86.13(4)(c).
(4)(c)(1)-(3) creates a mandatory timeline for the employer to follow in showing it
had a “reasonable or probable cause or excuse” for the termination of benefits.
First, the employer’s excuse for the termination must have been preceded by an
investigation. Iowa Code § (4)(c)(1). Second, the results of the investigation
were “the actual basis . . . contemporaneously” relied on by the employer in
terminating the benefits. Third, the employer “contemporaneously conveyed the
basis for the . . . termination of benefits to the employee at the time of the . . .
termination.” American did not carry its burden in demonstrating it followed this
mandatory timeline.
American did not conduct the requisite investigation before terminating
Pettengill’s benefits, demonstrate it contemporaneously relied on the results of
an investigation, and contemporaneously convey the basis of the termination to
Pettengill. An employer cannot unilaterally decide to terminate an employee’s
benefits without adhering to Iowa Code section 86.13, to allow otherwise would
contradict the language of that section. Since American has failed to carry its
burden, we find the commissioner erred in its application of section 86.13 and
affirm the district court’s award of penalty benefits. Further, we agree with the
district court’s treatment of the healing period benefits issue:
Pettengill also appealed the agency’s denial of healing period
benefits between April 2011 and March 2012. Her healing period
benefits were terminated without notice and the agency did not
make any findings regarding whether she was entitled to continue
receiving benefits because their conclusion was that her benefits
were not delayed. The issue of Pettengill’s healing period benefits
must be remanded to the agency for review of the medical
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information available at the time her benefits were delayed or
terminated.
We affirm the district court’s decision and remand to the commissioner for
the calculation of penalty benefits and for a determination if any healing period
benefits are further owed.
AFFIRMED.