Larry Holland Vs. Shaeffer Pen Corp. And Liberty Mutual Insurance Company

IN THE SUPREME COURT OF IOWA
No. 56 / 04-1645
Filed September 1, 2006
LARRY HOLLAND,
Appellant,
vs.
SHAEFFER PEN CORP. and LIBERTY MUTUAL INSURANCE COMPANY,
Appellees.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Des Moines County,
William L. Dowell, Judge.
Appeal by claimant in workers’ compensation case. DECISION OF
COURT OF APPEALS VACATED; JUDGMENT OF DISTRICT COURT
AFFIRMED; CASE REMANDED.
Nicholas G. Pothitakis, Burlington, for appellant.
Jean Dickson Feeney of Betty, Neuman & McMahon, L.L.P.,
Davenport, for appellees.
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PER CURIAM.
Larry Holland filed a workers’ compensation claim seeking benefits
from his employer, Shaeffer Pen Corp., and its workers’ compensation
insurance carrier, Liberty Mutual Insurance Company. A deputy
commissioner denied benefits, and the commissioner affirmed. On judicial
review, the district court affirmed as well. See Iowa Code § 17A.19 (2003).
On the claimant’s appeal, the court of appeals reversed and remanded to
the workers’ compensation commissioner. The employer sought further
review, which we granted. We vacate the decision of the court of appeals
and affirm the ruling of the district court.
Three issues are raised on further review, all of which are controlled
by clear precedent of this court.
I. The Court of Appeals Reversal Based on Findings of a Deputy
Commissioner.
The deputy workers’ compensation commissioner stated in her
arbitration decision that the claimant was not credible. She supported that
conclusion in part on her finding that, because the claimant was so
immature, he was “likely to reconstruct events in a manner that better
serves his perceived self-interests than more objective reviews of events
would suggest.”
The court of appeals held that this conclusion was unsupported by
medical evidence and therefore had “allowed [the deputy’s] diagnosis of
Holland to bias the rest of her opinion.” The employer argues that this was
error because on the intra-agency appeal the commissioner expressly
declined to give any weight to the comment in question. The commissioner
reached the same conclusion, i.e., that the claimant was not credible, but
did so on the basis of other evidence. The other evidence included
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inconsistent testimony by the claimant himself, testimony by other
witnesses, and a lack of support in medical documents.
We have held that, on judicial review, a court is to base its decision
on the commissioner’s findings because “the deputy industrial
commissioner’s proposed findings are not in consideration on judicial
review.” Myers v. FCA Servs., Inc., 592 N.W.2d 354, 358 (Iowa 1999); see
Iowa Code § 17A.19(1) (aggrieved party may seek review of “final agency
action”). A deputy’s decision, of course, is not final agency action. We
conclude it was error for the court of appeals to reverse the judicial-review
decision of the district court on the basis of the proposed findings of the
deputy commissioner. As already noted, there was adequate evidence in the
record to support the commissioner’s conclusion that the claimant lacked
credibility.
II. Application of the “Arbitrary, Capricious, and Abuse-of-
Discretion” Standard of Review Under Iowa Code Section
17A.19(10)(n).
On the issue of the claimant’s credibility, the court of appeals
observed:
Essentially, once the deputy commissioner decided Holland
lacked emotional maturity, his case was over. We therefore
conclude that the deputy’s characterization of Holland,
credibility determinations, and treatment of the evidence were
unreasonable, arbitrary, capricious, and an abuse of discretion
under section 17A.19(10)(n).
Holland’s employer argues that the application of an “arbitrary, capricious,
or abuse-of-discretion” standard is contrary to recent precedent by this
court and thus constitutes legal error.
First, as we have already discussed, it is the decision of the
commissioner—not the deputy—that is reviewed by the court. The
commissioner specifically disavowed any finding on credibility based on the
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comment in question. Second, judicial review of fact-findings is not to be
based on abuse-of-discretion or arbitrary-and-capricious standards.
Rather, the commissioner is required “to base his factual determination on
substantial evidence and properly apply the pertinent legal principles to
those facts.” Finch v. Schneider Specialized Carriers, Inc., 700 N.W.2d 328,
332 (Iowa 2005).
While it is true that the commissioner has discretion to reject
evidence it deems not to be credible, her credibility determination
necessarily is based on facts, and as noted, factual determinations are
subject to review under a substantial-evidence standard. Id. at 331-33; see
also Keystone Nursing Care Ctr. v. Craddock, 705 N.W.2d 299, 304 (Iowa
2005).
In Dunlavey v. Economy Fire & Casualty Co., 526 N.W.2d 845 (Iowa
1995), we held:
When an expert’s opinion is based upon an incomplete
history, the opinion is not necessarily binding upon the
commissioner. The commissioner as trier of fact has the duty
to determine the credibility of the witnesses and to weigh the
evidence, together with the other disclosed facts and
circumstances, and then to accept or reject the opinion.
Our review of such a determination by the commissioner is
limited to whether the commissioner’s finding is supported by
substantial evidence in the record made before the agency when
that record is viewed as a whole.
Id. at 853-54 (citations omitted) (emphasis added).
Contrary to the holding of the court of appeals, we conclude the
district court did not err in failing to assess the commissioner’s credibility
determinations on an abuse-of-discretion standard.
III. Sufficiency of the Evidence.
The court of appeals held that the decision of the workers’
compensation commissioner was not supported by substantial evidence
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because it was based largely on a lack of the claimant’s credibility. Because
the court of appeals concluded that the commissioner erred in making that
determination, it held that the commissioner’s decision must fail for lack of
substantial evidence. Based on our conclusion that the commissioner did
not err in making a credibility determination, we disagree with this
assessment.
We vacate the decision of the court of appeals, affirm the decision of
the district court, and remand for entry of an order affirming the
commissioner’s ruling.
DECISION OF COURT OF APPEALS VACATED; JUDGMENT OF
DISTRICT COURT AFFIRMED; CASE REMANDED.
This is not a published opinion.