Nid, Inc., and Great West Casualty Company, petitioners-appellees/cross-appellants v. Troy Monahan, respondent-appellant/cross-appellee. ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-0292
Filed March 25, 2015
NID, INC., and GREAT WEST
CASUALTY COMPANY,
Petitioners-Appellees/Cross-Appellants,
vs.
TROY MONAHAN,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Robert J. Blink,
Judge.
Appeal and cross-appeal from ruling on judicial review. AFFIRMED IN
PART, REVERSED IN PART, AND REMANDED.
Max Schott and Jean Mauss of Schott Mauss & Associates, P.L.L.C., Des
Moines, for appellant.
Stephen W. Spencer and Christopher S. Spencer of Peddicord, Wharton,
Spencer, Hook, Barron & Wegman, L.L.P., West Des Moines, for appellee.
Heard by Vogel, P.J., and Doyle and McDonald, JJ.
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MCDONALD, J.
Claimant Troy Monahan appeals and the employer NID, Inc., and its
insurer Great West Casualty Company (collectively, hereinafter “NID”) cross-
appeal from the district court’s ruling that affirmed in part and reversed in part the
agency’s decision in this alternate medical care proceeding arising under the
workers’ compensation law. See Iowa Code § 85.27(4) (2009). Monahan
concedes the agency committed legal error in concluding the employer was
barred from denying causation but asks this court to apply the doctrine of judicial
estoppel to affirm the agency’s action. NID claims the agency erred in imposing
sanctions, and the court erred in remanding this alternate medical care
proceeding to the agency for a hearing on causation.
I.
This workers’ compensation proceeding is unnecessarily Dickensian in
duration and procedural complexity. On March 15, 2007, Monahan fell at work,
landing on his left side. He treated at a local hospital and was prescribed
medication. On September 28 of that year, NID assigned Monahan to a project.
Monahan did not think he was physically able to do the project, and he left
without ever returning to work. Over the next two years Monahan treated on
multiple occasions for pain on his left side.
Almost two years after the injury, on February 26, 2009, Monahan filed his
petition in arbitration, alleging a March 15, 2007 work-related injury to his upper
left extremity, including shoulder, elbow, and hand. The matter came on for
hearing in March 2010. The joint hearing report shows the parties stipulated that
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Monahan sustained an injury on March 15, 2007, that arose out of and in the
course of his employment with NID. The parties disputed whether the injury
caused disability, Monahan’s entitlement to healing period benefits, and
Monahan’s entitlement to permanent partial disability benefits. The joint report
also showed the parties disputed whether Monahan’s medical expenses were
causally connected to the injury. On April 5 and May 19, 2010—after the
arbitration hearing but prior to the filing of the arbitration decision—Monahan, on
his own volition, treated with Dr. Neff, an orthopedic surgeon, who recommended
arthroscopy of Monahan’s left shoulder with impingement decompression.
On June 1, 2010—after the arbitration hearing but prior to the filing of the
arbitration decision—Monahan filed a petition for alternate medical care pursuant
to Iowa Code section 85.27(4), seeking the recommended arthroscopy. NID filed
its answer, disputing liability for Monahan’s “current left shoulder complaints for
which he seeks care.” The agency dismissed the petition for alternate care,
explaining the “summary provisions of Iowa Code section 85.27 as more
particularly described in rule 876 IAC 4.48 are not designed to adjudicate
disputed compensability of claim.”
On October 27, 2010, the agency filed its arbitration decision. The deputy
found “claimant sustained a stipulated injury to the neck, left upper extremity/left
shoulder” and “at the time of the evidentiary hearing claimant was working full-
time with IMT with lots of overtime without restrictions or accommodations.” The
deputy found that Monahan “still gets sharp pains in his hand and from his elbow
to his shoulder and has reduced grip strength in the left hand. No doctor took
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claimant off work from the time he left employment at NID until he began work at
another employer, L&M, except for October 25, 2007 to November 8, 2007.” The
deputy found Monahan’s work injury was causally related only to the left hand
carpal tunnel syndrome and awarded benefits for the period Monahan was off
work following carpal tunnel surgery. The deputy concluded Monahan failed to
prove the March 15, 2007 work injury “caused a permanent disability.” The
deputy ordered that Monahan was entitled to alternate medical care, specifically
that “defendants shall provide claimant a second opinion by an orthopedic doctor
of their choosing for his shoulder.” The parties appealed and cross-appealed the
arbitration decision. In April 2012, the agency issued its appeal decision,
affirming and adopting “those portions of the proposed arbitration decision . . .
that relate to issues properly raised . . . without additional comment.”
On April 15, 2013, now more than six years after his injury, Monahan filed
a second application for alternate medical care, requesting that the agency order
NID to authorize a return consultation with Dr. Neff to determine if the May 2010
recommendation was still appropriate. NID answered and denied “causation of
claimant’s current complaints.” The agency dismissed the alternate medical care
application, explaining “before any benefits can be ordered, including medical
benefits, compensability of the claim must be established, either by admission of
liability or by adjudication.”
Monahan sought rehearing of his second application for alternate medical
care. He asserted causation and liability were established in the arbitration and
appeal decisions “as a matter of law and [are] preclusive on this issue.” He
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noted NID had failed to comply with the appeal decision’s order to provide a
second opinion by an orthopedic doctor. For relief, he requested that he be
allowed to return to Dr. Neff and that sanctions be imposed against NID. The
agency granted Monahan’s request for rehearing. It held the defendants were
“barred by the doctrine of res judicata from contending they are not liable for
claimant’s continued shoulder problems.” The rehearing decision also stated:
“Since the April 2, 2012 appeal decision, defendants have not provided claimant
with a second opinion regarding care for his shoulder injury. Defendants are
therefore ordered, once again, to provide the alternate medical care prescribed in
the October 27, 2010 arbitration decision in this case.” The decision continued:
“Defendants’ continued denial of the order to provide alternate medical care was
not warranted by existing law.” The agency then imposed attorney’s fees and
costs as a sanction against NID.
NID sought judicial review of the rehearing decision pursuant to the Iowa
Administrative Procedure Act (“IAPA”), Iowa Code Chapter 17A. NID argued the
agency erred (1) in ruling on the merits of the alternate medical care request
when causation was at issue, (2) in determining causation in the alternate
medical care proceeding, (3) in using the alternate medical care proceeding to
enforce the appeal decision, and (4) in awarding attorney fees. The district court
determined the agency’s application of the res judicata doctrine was error
because Monahan’s “shoulder injury was stipulated to, [so] it was never actually
litigated.” The district court concluded the application for alternate medical care
“should have been dismissed” because causation was still at issue. The district
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court explained that if Monahan wanted to enforce the appeal decision and
obtain a second opinion, Monahan “should have sought judicial enforcement of
the order” pursuant to Iowa Code section 86.42. Although the court recognized
that dismissal of the application for alternate medical care was required when
causation and liability were disputed, the court, in an attempt to bring closure to
this Jarndyce-like case, remanded the case to the agency to hold a hearing on
causation.
Both parties filed post-ruling motions. Monahan’s motion acknowledged
res judicata did not apply, but, for the first time in this proceeding, asked the court
to apply the doctrine of judicial estoppel. The court summarily denied all post-
ruling motions. This appeal and cross-appeal followed.
II.
The standard of review in this case is governed by the IAPA. Under the
IAPA, we may grant relief only if we determine the “substantial rights of the
person seeking judicial relief have been prejudiced” due to certain types of
enumerated errors. Iowa Code § 17A.19(10). As relevant here, we review final
agency action for correction of errors at law. See Kohlhaas v. Hog Slat, Inc., 777
N.W.2d 387, 390 (Iowa 2009). We review the agency’s findings to determine if
they are supported by substantial evidence. See id. at 391. “‘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
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§ 17A.19(10)(f)(1). We review the agency’s application of the law to the facts for
an abuse of discretion. See Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa
2006). “An abuse of discretion occurs when the commissioner’s exercise of
discretion is ‘clearly erroneous or rests on untenable grounds.’” Kohlhaas, 777
N.W.2d at 391 (citation omitted).
III.
A.
The district court concluded the agency erred in holding that res judicata
barred NID from contesting causation and liability. Monahan concedes the
agency erred in applying the doctrine of res judicata. He argues that the agency
decision should nonetheless be affirmed by application of the doctrine of judicial
estoppel.
Our supreme court has explored the application of the doctrine of judicial
estoppel in workers’ compensation proceedings. See Tyson Foods v. Hedlund,
740 N.W.2d 192, 195-99 (Iowa 2007); Winnebago Indus. v. Haverly, 727 N.W.2d
567, 573-75 (Iowa 2006). “[J]udicial estoppel is a ‘commonsense doctrine’ that
‘prohibits a party who has successfully and unequivocally asserted a position in
one proceeding from asserting an inconsistent position in a subsequent
proceeding.’” Tyson Foods, 740 N.W.2d at 195 (quoting Vennerberg Farms, Inc.
v. IGF Ins. Co., 405 N.W.2d 810, 814 (Iowa 1987)). It is “designed to protect the
integrity of the judicial process.” Id. The doctrine applies to administrative
proceedings as well as judicial proceedings. See Winnebago Indus., 727 N.W.2d
at 573-74. If there is a significant change in the facts after an initial position, then
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a change in position does not violate the doctrine of judicial estoppel.
Winnebago Indus., 727 N.W.2d at 575. Because the doctrine primarily is
intended to protect the integrity of the legal process, an appellate court may raise
judicial estoppel on its own motion. See State v. Duncan, 710 N.W.2d 34, 43-44
(Iowa 2006).
We conclude there is no basis to apply the doctrine of judicial estoppel
here. Monahan contends NID previously stipulated to causation and liability. In
his main and reply briefs, Monahan never identifies where in the record the
alleged stipulation can be found. At oral argument, Monahan’s counsel was
unable to identify where in the record the alleged stipulation can be found. On
our review of the record, we conclude NID stipulated only that Monahan suffered
a work-related injury. At no point in these proceedings did NID stipulate as to
causation and liability. As set forth above, NID actually contested causation and
liability at every point in these proceedings. An employer may properly admit to
an injury arising out of and in the course of employment while still contesting
liability for all of the consequences and any disability claimed to result from such
injury. See McGowan v. Brandt Constr. Co., No. 09-1033, 2010 WL 2079704, at
*4 (Iowa Ct. App. May 26, 2010). Because NID has not asserted inconsistent
positions, there is no reason for this court to apply the doctrine of judicial
estoppel, and we decline Monahan’s request to do so.
We thus affirm the district court insofar as it held the agency committed
legal error in holding res judicata barred NID from denying causation and liability.
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We also affirm the district court insofar as it declined to judicially estop NID from
denying causation and liability.
B.
We next address issues related to the remedies the agency ordered. In
his second application for alternate medical care at issue in this appeal,
Monahan essentially sought enforcement of the appeal decision following
arbitration. Alternate medical care proceedings are summary proceedings. See
Iowa Admin. Code r. 876-4.1, 876-4.48(7); see also Iowa Code § 85.27(4);
McGowan, 2010 WL 2079704, at *4 (describing alternate medical care
proceedings as summary proceedings). The agency does not have the authority
in an alternate medical care proceeding under section 85.27(4) to enforce a prior
order. We agree with the district court that section 86.42 is the appropriate
method for seeking judicial enforcement of the agency’s orders and that the
agency erred by ordering compliance with the agency’s prior order in the context
of an alternate care proceeding. See Iowa Code § 86.42 (stating a party may
present the district court with an order or decision of the commissioner in order to
have it enforced if timely petition for judicial review has not been filed).
The agency also awarded Monahan fees and costs as a sanction against
NID. Monahan contends that sanctions are appropriate here regardless of
whether the agency erred in its application of res judicata. We disagree. The
agency’s primary basis for imposing sanctions was NID’s failure to comply with
the appeal decision and obtain a second medical opinion regarding Monahan’s
shoulder. As indicated above, that issue was not properly before the agency in
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this alternate medical care proceeding. Further, NID had a legitimate basis to
contest causation and liability. Thus, sanctions were not appropriate in this
context.
C.
Finally, we address what further proceedings are necessary given our
conclusion the agency erred in applying res judicata, erred in issuing an
enforcement order in an alternate medical care proceeding, and erred in
imposing sanctions. The district court ordered the case remanded for a hearing
on causation and liability. NID argues this was erroneous and that the
appropriate remedy is remand to the agency for dismissal of the alternate
medical care petition. Monahan agrees that dismissal is the appropriate remedy.
We reach the same conclusion. Alternate medical care is available only where
the employer does not contest the compensability of the injury—the issue of
compensability is totally removed from the alternate medical care process. See
R.R. Donnelly & Sons v. Barnett, 670 N.W.2d 190, 196-97 (Iowa 2003). Because
NID denied causation and liability, the application for alternate care should have
been dismissed. See Iowa Admin. Code r. 876-4.48(7) (“Application [for
alternate care] cannot be filed under this rule if the liability of the employer is at
issue. If an application is filed where the liability of the employer is an issue, the
application will be dismissed without prejudice.”).
IV.
For the foregoing reasons, we affirm in part and reverse in part the district
court’s ruling on NID’s petition for judicial review. This matter shall be remanded
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to the agency for dismissal of Monahan’s petition for alternate medical care.
NID’s motion to strike certain portions of the appendix not part of the record and
certain portions of Monahan’s reply brief referring to material outside the record
is denied. However, the court has not considered those parts of the appendix not
in the record, those arguments in Monahan’s main brief and reply brief relying on
material outside the record, and the new arguments raised for the first time in
Monahan’s reply brief. See Sun Valley Iowa Lake Ass’n v. Anderson, 551
N.W.2d 621, 642 (Iowa 1996); Jones v. Madison Cnty., 492 N.W.2d 690, 693-94
(Iowa 1992); Kliege v. Iowa Emp’t Security Comm’n, 206 N.W.2d 123, 126 (Iowa
1973).
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.