Jacobson Transportation Company And Liberty Mutual Insurance Vs. Russell Harris

IN THE SUPREME COURT OF IOWA
No. 08–0065
Filed February 12, 2010
JACOBSON TRANSPORTATION COMPANY
and LIBERTY MUTUAL INSURANCE,
Appellants,
vs.
RUSSELL HARRIS,
Appellee.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Robert B.
Hanson, Judge.
Employee seeks further review of court of appeals’ decision
reversing workers’ compensation commissioner’s calculation of a weekly
compensation rate. DECISION OF COURT OF APPEALS VACATED;
DISTRICT COURT JUDGMENT AFFIRMED.
Kevin R. Rogers of Swisher & Cohrt, P.L.C., Waterloo, for
appellants.
Michael L. Mock of Bradshaw, Fowler, Proctor & Fairgrave, P.C.,
Des Moines, for appellee.
2
HECHT, Justice.
In this appeal, we must determine whether the workers’
compensation commissioner properly excluded three weeks of earnings
from the calculation of an injured employee’s compensation rate. We
conclude the commissioner did not err by excluding three weeks of low
earnings and replacing them with earnings from three earlier weeks
which more fairly represented the employee’s customary earnings.
I. Factual and Procedural Background.
Russell Harris (Harris) was hired by Jacobson Transportation
Company (Jacobson) in April 2003 as an over-the-road truck driver. He
was paid by the mile, and he was not guaranteed a minimum amount of
work each week. Accordingly, the number of miles he drove each week
varied depending on the assignments he received from Jacobson, but
also on other factors such as traffic, speed limits, road construction, and
weather. Harris’s weekly earnings during his employment were as
follows: 1
04/26/2003 $702.08 08/23/2003 $958.72
05/03/2003 $851.20 08/30/2003 $667.20
05/10/2003 $295.84 09/06/2003 $892.64
05/17/2003 $1117.12 09/13/2003 $247.36
05/24/2003 $764.80 09/20/2003 $1036.48
05/31/2003 $833.76 09/27/2003 $944.00
06/07/2003 $0.00 10/04/2003 $227.52
06/14/2003 $1710.08 10/11/2003 $1223.76
06/21/2003 $1068.64 10/18/2003 $0.00
06/28/2003 $538.24 10/25/2003 $1183.52
07/05/2003 $542.08 11/01/2003 $870.72
07/12/2003 $355.68 11/08/2003 $1012.00
07/19/2003 $698.59 11/15/2003 $1128.32
07/26/2003 $0.00 11/22/2003 $940.16
08/02/2003 $806.51 11/29/2003 $662.40
08/09/2003 $708.48 12/06/2003 $453.92
08/16/2003 $875.52
1This list of Harris’s weekly earnings includes only his earnings up to the date of
his injury, although he continued to work for Jacobson for several months after being
injured.
3
On December 9, 2003, while unloading freight in California, Harris
injured his low back. The injury was diagnosed as a lumbosacral and
thoracic spine strain, and Harris was restricted to light-duty work by a
physician. Harris received a series of spinal injections after returning to
work, but in March 2004 he was unable to continue driving because of
the injury.
From June 2004 through September 2005, Harris sought
treatment from several different doctors. Their diagnoses were generally
similar, although they disagreed about the best course of treatment and
whether Harris had reached maximum medical improvement. Each of
the doctors believed Harris was capable of light-duty work and
recommended that he not return to truck driving.
In March 2005, Harris filed a claim for workers’ compensation
benefits. After an arbitration hearing on November 8, 2005, a deputy
workers’ compensation commissioner determined that Harris was
permanently and totally disabled. The deputy commissioner calculated
Harris’s average weekly rate pursuant to Iowa Code section 85.36(6)
(2003) by using the thirteen weeks immediately prior to his injury,
although Harris had argued that his earnings in several of those weeks
were nonrepresentative and should be excluded. The deputy found
Harris’s average weekly earnings were $827.52 and his weekly
compensation rate was $483.99. 2
2The deputy commissioner apparently excluded the week ending October 18,
2003, in which Harris had zero earnings and replaced it with the week ending
September 6, 2003, in which Harris earned $892.64. The exclusion of that week from
the calculation of Harris’s wage rate has not been challenged in this case.
4
Both parties appealed, Jacobson 3 contending the deputy erred in
concluding Harris was permanently and totally disabled and Harris
contending the deputy calculated the average weekly rate incorrectly. In
the appeal decision, the workers’ compensation commissioner agreed
with the deputy commissioner’s finding that Harris is totally disabled.
However, the commissioner concluded three of the thirteen weeks
preceding Harris’s injury were not representative 4 and should have been
excluded from the calculation of Harris’s average weekly earnings.
Accordingly, the commissioner calculated Harris’s average weekly
earnings at $953.50 and his weekly compensation rate at $545.51. 5
When calculating Harris’s weekly compensation rate, the
commissioner cited Hanigan v. Hedstrom Concrete Products, Inc., 524
N.W.2d 158 (Iowa 1994), noting the “purpose of weekly compensation is
to replace the probable earnings that were lost due to the injury.” The
commissioner then engaged in a lengthy analysis of Harris’s
compensation.
3Jacobson and its insurance carrier, Liberty Mutual Insurance, were
codefendants before the agency and are copetitioners on judicial review. We refer to
them jointly as “Jacobson” in this opinion.
4As in the deputy’s arbitration award, the commissioner’s appeal decision also
did not include in the rate calculation the week of October 18 in which Harris had no
earnings. Although there is some evidence in the record tending to prove Harris missed
work in October because he was hunting, had the agency concluded Harris’s lack of
earnings were due to personal reasons, section 85.36(6) provides the weekly earnings
for such period “shall be the amount [Harris] would have earned had [he] worked when
work was available to other employees of [Jacobson] in a similar occupation.” Iowa
Code § 85.36(6). Neither the arbitration decision nor the appeal decision explains the
exclusion of the October 18 earnings. As neither party challenges the commissioner’s
exclusion of the week of October 18 from consideration in the calculation of the weekly
rate, we assume without deciding for purposes of our opinion that the exclusion was
appropriate.
5Although the commissioner’s appeal decision found Harris’s weekly
compensation rate was $549.90, an order nunc pro tunc was later entered conforming
the rate to the applicable rate table.
5
The weekly earnings range from a high of $1,223.76 to a low
of $227.52. When reviewing the distribution of earnings I
find that there are five weeks in which claimant earned
$1,012.00 or more per week. There were two weeks in which
claimant earned $247.36 per week or less. Over the 30
weekly pay periods that claimant worked for the employer
his total earnings were $24,317.34 . . . . The weekly average
of claimant’s total earnings is thus $810.58. For the thirteen
weeks immediately prior to his work injury, claimant earned
more than $810.58 in ten of those weeks. 6 It is concluded
that claimant’s average weekly wage should be calculated by
discarding the weeks ending December 6, 2003 ($453.92),
October 4, 2003 ($227.52), and September 13, 2003
($247.36). By discarding those three weeks and adding
earnings for the weeks ending August 30, 2003 ($667.20),
August 23, 2003 ($958.72), and August 16, 2003 ($875.52)
it is concluded that claimant’s gross earnings for the period
are $12,395.44. When divided by thirteen weeks the average
weekly gross earnings are $953.50.
Jacobson sought judicial review, contending the commissioner
erred both in determining Harris was permanently and totally disabled
and in calculating Harris’s weekly compensation. The district court
affirmed the commissioner’s decision. Jacobson appealed, and we
transferred the case to the court of appeals. The court of appeals
affirmed the disability decision, but reversed the commissioner’s
calculation of average weekly earnings and reinstated the deputy
commissioner’s lower calculation. We granted Harris’s petition for
further review to address the earnings issue.
II. Scope of Review.
Our review of a decision of the workers’ compensation
commissioner varies depending on the type of error allegedly committed
by the commissioner. If the error is one of fact, we must determine if the
commissioner’s findings are supported by substantial evidence. Iowa
6Although the commissioner states that ten of the thirteen weeks of earnings
exceeded $810.58, our review of the earnings history indicates that Harris earned more
than $810.58 in nine of the weeks.
6
Code § 17A.19(10)(f); Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa
2006). If the error is one of interpretation of law, we will determine
whether the commissioner’s interpretation is erroneous and substitute
our judgment for that of the commissioner. Iowa Code § 17A.19(10)(c);
Meyer, 710 N.W.2d at 219. If, however, the claimed error lies in the
commissioner’s application of the law to the facts, we will disturb the
commissioner’s decision if it is “[b]ased upon an irrational, illogical, or
wholly unjustifiable application of law to fact.” Iowa Code §
17A.19(10)(m); Meyer, 710 N.W.2d at 219. Because of the widely varying
standards of review, it is “essential for counsel to search for and pinpoint
the precise claim of error on appeal.” Meyer, 710 N.W.2d at 219.
In this case, the commissioner concluded three of the thirteen
weeks prior to Harris’s injury did not fairly reflect his customary earnings
and replaced them with weeks that he concluded did represent Harris’s
customary earnings. There is no factual dispute concerning the amount
of Harris’s wages in the weeks prior to the injury. The dispute centers
instead on the commissioner’s interpretation of the words “customary
earnings” in Iowa Code section 85.36(6) and his application of the law to
the facts. Accordingly, we must first determine whether the
commissioner has misinterpreted the law. Iowa Code § 17A.19(10)(c);
Meyer, 710 N.W.2d at 219. If the commissioner’s interpretation of the
law is correct, we will then review his application of the law to the facts
to determine if it is “irrational, illogical, or wholly unjustifiable.” Iowa
Code § 17A.19(10)(m); Meyer, 710 N.W.2d at 219.
III. Discussion.
Iowa Code section 85.36 describes the basis for calculating a
disabled employee’s compensation rate. “The basis of compensation
7
shall be the weekly earnings of the injured employee at the time of the
injury.” Iowa Code § 85.36.
In the case of an employee who is paid on a daily or hourly
basis, or by the output of the employee, the weekly earnings
shall be computed by dividing by thirteen the earnings, not
including overtime or premium pay, of the employee earned
in the employ of the employer in the last completed period of
thirteen consecutive calendar weeks immediately preceding
the injury. If the employee was absent from employment for
reasons personal to the employee during part of the thirteen
calendar weeks preceding the injury, the employee’s weekly
earnings shall be the amount the employee would have
earned had the employee worked when work was available to
other employees of the employer in a similar occupation. A
week which does not fairly reflect the employee’s customary
earnings shall be replaced by the closest previous week with
earnings that fairly represent the employee’s customary
earnings.
Id. § 85.36(6) (emphasis added). 7
Jacobson alleges the commissioner misinterpreted the last
sentence of this provision authorizing the replacement of weeks which do
not reflect the employee’s “customary earnings.” Because Harris’s weekly
earnings fluctuated based on the number of miles he drove and because
Harris was not guaranteed a uniform number of miles each week,
Jacobson posits that the only customary feature of Harris’s earnings is
their variability. Accordingly, in the case of an employee like Harris,
Jacobson argues, the statute does not authorize the commissioner to
exclude weekly earnings simply because they are significantly lower than
other weeks without an explanation for the low wages that provides a
rationale beyond the expected fluctuation in miles occurring from week
to week.
7The last two sentences, including the one at issue in this case, were added to
the statute in 2000. 2000 Iowa Acts ch. 1007, § 2.
8
Our goal, when interpreting a statute, is to give effect to the intent
of the legislature. Griffin Pipe Prods. Co. v. Guarino, 663 N.W.2d 862, 864
(Iowa 2003). To determine the intent of the legislature, we look first to
the words of the statute itself as well as the context of the language at
issue. Id. at 865. We seek to “interpret [the provision] in a manner
consistent with the statute as an integrated whole.” Id. Mindful that a
fundamental purpose of the workers’ compensation statute is to benefit
the injured workers, we interpret chapter 85 “liberally in favor of the
employee.” Id.
Consistent with the remedial nature of workers’
compensation laws, statutes for computation of wage bases
are “meant to be applied, not mechanically nor technically,
but flexibly, with a view always to achieving the ultimate
objective of reflecting fairly the claimant’s probable future
earning loss.”
Hanigan, 524 N.W.2d at 160 (quoting 2 Arthur Larson, Workmen’s
Compensation Law § 60.11, at 10-622 (1994) (now found at 5 Arthur
Larson & Lex Larson, Larson’s Workers’ Compensation Law § 93.01[1][c],
at 93–7 (2009))).
We think our decision in Griffin Pipe, interpreting section 85.36(6),
informs our analysis here. In that case, Guarino was an hourly-paid
employee at the Griffin Pipe plant. See Griffin Pipe, 663 N.W.2d at 864.
The plant was closed two weeks each summer and two weeks each winter
for maintenance and cleaning. Id. During the semi-annual plant
closures, Guarino did not work and did not earn any wages. Id. Guarino
was injured on the job, and although the two-week winter closure
occurred within the thirteen weeks immediately prior to his injury, the
commissioner concluded those two weeks did not reflect his customary
9
earnings and replaced them with earnings from earlier weeks. 8 Id. The
employer contended that because the plant closures were expected and
occurred regularly, they were “customary” and accordingly Guarino’s
resulting two weeks of zero earnings should be included in the
calculation of his weekly earnings.
In our review, we agreed with the commissioner’s decision to
replace the weeks when the plant was closed. Although the closing of the
plant was planned and routine, we explicitly rejected any distinction
between anticipated and unanticipated occurrences causing a reduction
in an employee’s wages.
Why a particular week may not reflect the employee’s
customary hours is important only insofar as it might be
relevant to whether the hours worked in that week are in fact
customary. . . .
We agree with the agency that the issue under section
85.36 “is whether the hours of work in any particular
workweek are representative of the hours typically or
customarily worked by an employee during a typical or
customary full week of work.”
Id. at 866.
Although not in effect at the time of Guarino’s injury, we also
discussed the 2000 amendment to section 85.36(6) which added to the
statute the language at issue in this case. Griffin Pipe, 663 N.W.2d at
867. We noted that while usually we presume a material change in a
statute changes the law, we concluded this amendment was intended to
clarify the statute because it was enacted after significant dispute within
the legal community about the correct application of section 85.36. Id.
Although we had previously interpreted section 85.36 to permit the
8Guarino’s injury occurred before section 85.36(6) was amended adding the
sentence explicitly requiring the replacement of weeks of earnings that do not fairly
reflect the employee’s customary earnings. However, as discussed, our interpretation of
section 85.36(6) both before and after the amendment is relevant in this case.
10
replacement of a nontypical workweek with a typical workweek in the
wage base calculation in Thilges v. Snap-On Tools Corp., 528 N.W.2d 614,
619 (Iowa 1995), the issue arose again three years later in Weishaar v.
Snap-On Tools Corp., 582 N.W.2d 177, 183 (Iowa 1998). The
amendment, explicitly adding language requiring that a nontypical week
be replaced with a typical week of earnings when calculating an
employee’s compensation base,
confirmed this court’s interpretation of section 85.36. . . .
Accordingly, to determine what weeks should be included in
the compensation rate calculation one must ask whether the
earnings attributable to a particular week are customary, not
whether a particular absence from work is anticipated.
Griffin Pipe, 663 N.W.2d at 867.
Thus, in our interpretation of section 85.36, both before and after
the addition of the language at issue in this case, we have determined
that one must look to the earnings themselves to see if they are
customary. The reason for the variance in earnings is not determinative
of whether a week’s earnings should be replaced because they are not
customary. 9
Next, then, we must address whether an employee whose earnings
fluctuate each week can ever have atypical weekly earnings justifying
replacement under section 85.36(6). Jacobson argues that because
Harris’s miles were not fixed or uniform each week, Harris’s weekly
earnings should have been calculated using the thirteen most recent
weeks of earnings, without regard to the amount of his average
9The reason for nontypical wages is relevant if the employee was absent from
work for reasons personal to the employee. As previously noted, section 85.36(6)
provides for a different method of addressing a nontypical week of earnings due to
personal reasons. In that case, the weekly wages must be replaced with the wages the
employee “would have earned had the employee worked when work was available” to
the employer’s workers performing in a similar occupation. Iowa Code § 85.36(6).
11
earnings. 10 In effect, Jacobson advocates for a bright-line rule that
would preclude the replacement of a week’s earnings under section 85.36
if the employee’s earnings customarily vary from week to week.
We do not interpret the word “customary” so rigidly as to conclude
that just because an employee’s schedule or output is neither fixed nor
guaranteed, the employee cannot have “customary” earnings.
“Customary” means “based on or established by custom”; “commonly
practiced, used or observed”; or “usual.” Merriam-Webster’s Collegiate
Dictionary 285 (10th ed. 2002). We have previously defined “customary”
as “typical.” Griffin Pipe, 663 N.W.2d at 866. Ascertainment of an
employee’s customary earnings does not turn on a determination of what
earnings are guaranteed or fixed; rather, it asks simply what earnings
are usual or typical for that employee. As discussed above, an employee
need not justify the variance with a particular explanation. The amount
of the variance alone, by the magnitude of its departure from the usual
earnings of the employee, may suffice to justify the exclusion of a week’s
earnings from the weekly rate calculation. Put another way, even an
employee whose wages fluctuate can have an unusually low or
abnormally high week of output and resulting earnings. We think it is
important that when the legislature clarified its intent in the 2000
amendment to have atypical weeks excluded from the calculation, it
added the language to section 85.36(6) which specifically addresses the
calculation of weekly earnings for employees paid daily, hourly, or by
output. An employee like Harris, who is paid by output (miles driven), is
likely to have fluctuating earnings. The fact that the legislature included
the language authorizing the exclusion of noncustomary earnings in this
10Again, Jacobson does not argue that the week ending October 18 with zero
earnings should be included in the calculation.
12
subsection indicates it expected that even employees with variable
earnings will on occasion have earnings that diverge from the customary.
We believe the commissioner’s interpretation of “customary
earnings” is compatible with the legislature’s directive that injured
employees’ weekly rate of compensation shall be based on their “average
spendable weekly earnings” at the time of the injury. Iowa Code
§ 85.34(2), (3) (emphasis added). The legislature’s adoption of the
concept of earnings-averaging as a first principle of rate calculation
evidences an intention to base workers’ compensation rates on an
earnings history of several weeks that are more likely than earnings of a
single week to fairly represent the claimant’s probable future earning
loss. The legislature’s intent to provide even greater protection to injured
workers with variable earnings from the harsh effects of basing the
weekly rate of compensation on unusually low-pay weeks is clearly
evidenced by the amendment to section 85.36(6) adopted in 2000. As
amended, the section expressly authorizes the commissioner to exclude
from the computation of average weekly earnings weeks in which injured
employees’ earnings do not fairly represent their customary earnings.
Our interpretation of “customary earnings” is further supported by
the fact that all calculations of Harris’s average weekly earnings, whether
performed by either of the parties or by the agency, have replaced the
October 18 week of zero earnings with an earlier week in which Harris
had earnings. Although no explanation has been provided for this
replacement, we think it demonstrates a common sense understanding of
what is considered customary. Even for an employee like Harris whose
earnings vary each week, a week of zero earnings is not customary. This
raises the question: If a week of zero earnings is so low that it must be
excluded as not typical, where should the line be drawn? What of a week
13
of $100 earnings? Because we think the determination of what earnings
are customary will depend on the specific facts of each case, we reject a
bright-line rule that any employee whose wages vary may not have weeks
excluded as noncustomary. Instead, we think the determination of
whether wages are customary under the circumstances is a matter
expressly committed by section 85.36(6) to the discretion of the
commissioner. Accordingly, we conclude the commissioner correctly
interpreted section 85.36(6).
We must next decide whether the commissioner’s decision to
replace the three weeks of Harris’s earnings was illogical, irrational, or
wholly unjustifiable in this case. The commissioner’s appeal decision
discloses a careful and thorough consideration of Harris’s earnings
during each of the thirteen weeks immediately prior to the injury and a
thoughtful comparison of how the earnings in those weeks compared
with those paid to Harris during earlier weeks of employment with
Jacobson. After reviewing the weekly earnings and comparing them to
the average weekly earnings for Harris’s prior career as an employee of
Jacobson, the commissioner concluded the earnings from three of the
weeks were so low as to be not customary and replaced them with the
immediately preceding three weeks of earnings. In deciding whether
Harris’s earnings during the three disputed weeks were so substantially
lower than what he usually earned as to be unrepresentative, we
conclude the commissioner aptly compared the earnings from those
weeks with Harris’s broader earnings history. When viewed in this way,
the three weeks excluded by the commissioner were so far afield from
Harris’s usual earnings as to be fairly characterized as unrepresentative
of customary earnings.
14
While we do not believe the analysis undertaken by the
commissioner in this case is the only appropriate method of arriving at a
determination of whether earnings are customary, we conclude it was
reasonable under the circumstances presented here.
Jacobson contends that even if the commissioner did not err in
excluding the three lowest weeks of earnings, it was irrational and
arbitrary to exclude only the lowest weeks and not the highest weeks.11
As we have already noted, workers’ compensation statutes are to be
interpreted and applied liberally and flexibly for the benefit of the worker.
Griffin Pipe, 663 N.W.2d at 865; Hanigan, 524 N.W.2d at 160. The
commissioner’s decision that Harris’s compensation during the three low
weeks was exceptionally low, while the high weeks were not unusually
high when compared to the earnings history was not arbitrary or
unreasonable in this case. As acknowledged by the commissioner,
nearly half of the thirteen weeks prior to the injury produced earnings of
more than $1012.00, but only two weeks had income of $247.36 or less.
The commissioner reasonably determined that most of the thirteen weeks
of earnings exceeded $810.58, Harris’s average weekly earnings for his
entire preinjury career at Jacobson. When the range of Harris’s weekly
earnings is considered, as well as the distribution of the earnings, with
most of the weekly earnings near the high end, the commissioner’s
decision to replace only the three lowest weeks because they were
significantly lower than Harris’s career average is not unreasonable.
Given our standard of review, as well as the mandate to apply workers’
compensation laws to benefit the worker, we conclude the
11It
should be noted at this juncture that the legislature has provided protection
to the employer from the risk of rate calculations based on weeks of unusually high
earnings by excluding overtime and premium pay from average weekly wage
computations. Iowa Code § 85.36(6).
15
commissioner’s determination of customary earnings in this case is not
illogical, irrational, or wholly unjustifiable.
IV. Conclusion.
We agree with the workers’ compensation commissioner’s
interpretation of section 85.36(6). His decision to replace three low
weeks of earnings with weeks in which Harris’s weekly earnings fairly
represented customary earnings was not irrational, illogical, or wholly
unjustifiable.
DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT AFFIRMED.