THOMAS MILLENKAMP, Petitioner-Appellant, vs. MILLENKAMP CATTLE CO. and ALLIED INSURANCE, Respondents-Appellees.
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IN THE COURT OF APPEALS OF IOWA
No. 9-435 / 08-1373
Filed July 22, 2009
THOMAS MILLENKAMP,
Petitioner-Appellant,
vs.
MILLENKAMP CATTLE CO. and
ALLIED INSURANCE,
Respondents-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Eliza J. Ovrom,
Judge.
Thomas Millenkamp appeals from the district court’s ruling on judicial
review, affirming the workers’ compensation commissioner’s denial of his request
for post-hearing penalty benefits. AFFIRMED.
Dennis Currell of Currell Law Firm, Cedar Rapids, and Ronald Ricklefs,
Cedar Rapids, for appellant.
William H. Grell of Huber, Book, Cortese, Happe & Lanz, P.L.C., West
Des Moines, for appellees.
Considered by Vaitheswaran, P.J., and Potterfield and Doyle, JJ.
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POTTERFIELD, J.
Thomas Millenkamp (Thomas) appeals from the district court’s ruling on
judicial review, claiming the district court erred in affirming the workers’
compensation commissioner’s denial of his request for post-hearing penalty
benefits. He argues (1) the commissioner employed an erroneous legal standard
and (2) erred in concluding the denial of benefits was fairly debatable. We affirm.
I. Background Facts and Proceedings.
In an earlier appeal, this court affirmed the commissioner’s award of
permanent disability benefits to Thomas. Our October 1, 2008 ruling contains a
detailed factual background concerning Thomas’s injuries and workers’
compensation benefits, which we reiterate in part:
Thomas, born in 1944, is an employee of the [Millenkamp
Cattle, Inc. (Company)] and owns eighty percent of its stock. In
February of 2001 he was being treated for bladder cancer. On the
24th of that month he was working for the Company as a cattle
buyer and farm manager when, while loading cattle, a cow kicked
him in the face. He was knocked down, struck his head on cement,
and temporarily lost consciousness. Thomas was taken to a
Dubuque hospital where he exhibited some memory loss and was
treated and released.
....
[On August 22, 2001,] Dr. Sterrett determined “postconcussion syndrome from the fall in February with memory
difficulties, headaches related to the trauma, and facial pain related
to the fall.” He opined that Thomas had memory and directional
difficulties, but he was improving and was almost normal.
By September 5, 2001, Dr. Sterrett found Thomas to be at
maximum medical improvement, although Thomas still experienced
some memory loss.
On April 22, 2002, Thomas returned to Dr. Sterrett for an
impairment evaluation.
Thomas was again found to be at
maximum medical improvement and was given a zero permanent
partial impairment rating. Dr. Sterrett found Thomas had no
neurological impairment. He noted Thomas reported his memory
loss was minimal as was his insomnia. . . .
3
In May of 2002 Thomas was hunting mushrooms when he
blacked out for thirty to forty minutes. Following this incident
Thomas began to have problems that he was to claim were related
to the work injury. He consulted, as discussed below, a number of
medical doctors and other professionals who evaluated his
condition and rendered differing opinions as to his injury, disability,
and its cause. He saw Dr. Sterrett on June 18 and said his memory
problems had returned. Dr. Sterrett did not feel the problems were
related to the work injury because of the lapse of time. An MRI and
EEG both were normal.
....
On September 21, 2004, Glenn F. Haban, Ph.D.,
neuropsychologist, after giving Thomas a battery of tests, reported
that Thomas said he was ninety-five percent improved at the time
of the mushroom picking incident, but Haban believed Thomas to
be under-reporting symptoms. . . . Haban opined that Thomas
suffered a traumatic brain injury from being kicked in the head by a
cow and he continues to have cognitive impairment due to that
injury that affects his work, social, and leisure activities.
The matter came on for hearing before a deputy
commissioner, who carefully reviewed the evidence and found “the
claimant [Thomas], as a result of a February 24, 2001 work injury
has suffered a traumatic brain injury with resulting cognitive deficits,
memory loss, and other symptoms.” The deputy found Thomas
had a sixty percent industrial disability, was entitled to 300 weeks of
permanent partial disability benefits, denied his claim for disability
benefits, and found him not to be an odd-lot employee. On
rehearing the deputy made some minor changes to his decision.
The deputy’s decision was adopted by the commissioner as the
final agency decision.
....
. . . Our consideration of the evidence and these factors
causes us to find that the percentage of disability determined by the
commissioner is supported by substantial evidence and should be
affirmed.
In arriving at this conclusion we look to Dr. Kitchell’s opinion
that Thomas’s February 2001 head injury did not leave him with
any major neurologic sequelae, Dr. Sterrett’s August 22, 2001
report that Thomas was improving and was almost normal, Dr.
Rizzo’s opinion that Thomas did not have a traumatic brain injury,
and Dr. Jones’s December 23, 2003 opinion that it is not possible to
ascribe Thomas’s complaints to head trauma or post-concussive
syndrome. We also consider the deputy’s findings as incorporated
in the final agency decision that Thomas’s demeanor at the hearing
showed he was not incoherent, forgetful, or confused; that Thomas
came across as an intelligent man who had a good command of
himself; that Thomas remembered many details of his business and
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answered questions appropriately; that his demeanor at the hearing
showed a man who still retains much of his lifelong intelligence and
abilities; and that while he may have lost a portion of his business
abilities, Thomas had not become mentally incompetent from his
injury. We look at testimony from employees of the Company who
testified that Thomas went back to work in some capacity and that
Thomas was a smart man capable of making good decisions, even
after the February 2001 injury. We look also to Thomas’s
admission he still did work on his farm that he used to pay others to
do. We consider an employee’s testimony that Thomas returned to
his normal job shortly after the injury and was able to perform his
regular duties at least through December 2003, when the employee
was terminated. We agree with the district court there is substantial
evidence to support the agency’s findings as to the extent of
Thomas’s industrial disability.
Millenkamp v. Millenkamp Cattle Co., No. 08-1373 (Iowa Ct. App. Oct. 1, 2008).
The deputy’s arbitration decision was filed on February 28, 2005. The
commissioner affirmed and adopted the proposed decision on March 15, 2006.
The Company paid the industrial disability award to Thomas on March 22, 2006,
and paid accrued interest a few days later.1 Thomas sought post-arbitration
hearing penalty benefits for the delay in payment between the arbitration decision
and the commissioner’s March 2006 ruling.
The deputy commissioner ruled that at the time of the arbitration hearing,
Thomas’s claim for benefits was fairly debatable, but that the matter was no
longer debatable after its February 28, 2005 ruling of liability.
The deputy
awarded $20,000 in penalty benefits. On intra-agency appeal, the commissioner
first issued a decision in which it concluded, “Based upon the facts of this case,
the record is clear that defendants had no reasonable expectation that the
1
We note that Thomas was paid temporary partial disability benefits from February 24,
2001, through June 4, 2001. The deputy concluded he was not entitled to temporary
benefits from March 10, 2001 to April 19, 2004, as he suffered no loss of earnings. The
deputy found that defendants were entitled to a credit for the amounts paid against their
obligation to pay permanent partial disability benefits.
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workers’ compensation commissioner would reverse the causation findings made
by the presiding deputy.”
The commissioner thus found the “refusal to
commence some payment of indemnity benefits after February 28, 2005, was
unreasonable.”
On the employer’s request for rehearing, the commissioner reversed its
penalty assessment, stating in part:
The sole issue was whether an arbitration decision rendered
by a presiding deputy workers’ compensation commissioner can
alone impose a new duty upon the defendant employer and insurer
to re-evaluate the denial of weekly benefits during the pendency of
a timely appeal to the workers’ compensation commissioner where
the denial of benefits before the hearing had been held in the
arbitration decision to be fairly debatable.
After further
consideration in light of the parties’ arguments presented on
rehearing, I no longer agree that such a new duty arose in this
particular case.
The commissioner noted that the deputy’s decision was a “proposed decision
only,” which the commissioner was free to change or modify on intra-agency
appeal. The commissioner wrote, “if defendants’ denial of benefits was fairly
debatable before the decision, it was almost certainly fairly debatable after the
decision.” He disagreed with the deputy’s conclusion that the hearing imposed a
duty upon the employer to reevaluate the denial where no new information was
learned during that hearing.
The commissioner mentioned the defendants’
reliance upon doctors’ views that the work injury did not cause or aggravate the
claimant’s mental condition. The commissioner noted, however, that
this is not to say that facts and circumstances may arise in other
cases after a hearing and proposed decision that would no longer
render a denial of benefits fairly debatable and impose a duty upon
defendants to re-evaluate their past denial of benefits. A few
examples come to mind . . . . None of these situations exist herein.
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Thomas sought judicial review and the district court affirmed the denial of
penalty benefits. On appeal, Thomas contends the commissioner employed an
erroneous legal standard. He also argues the commissioner erred in finding the
claim was fairly debatable after the deputy’s ruling.
II. Scope and Standard of Review.
The Iowa Administrative Procedure Act, chapter 17A of the Iowa Code,
governs the scope of our review in workers’ compensation cases. Iowa Code
§ 86.26 (2007); Meyer v. IBP, Inc., 710 N.W.2d 213, 218 (Iowa 2006). “Under
the act, we may only interfere with the commissioner’s decision if it is erroneous
under one of the grounds enumerated in the statute, and a party’s substantial
rights have been violated.” Meyer, 710 N.W.2d at 218. The district court acts in
an appellate capacity to correct errors of law on the part of the agency.
Grundmeyer v. Weyerhauser Co., 649 N.W.2d 744, 748 (Iowa 2002).
In
reviewing the district court’s decision, we apply the standards of chapter 17A to
determine whether our conclusions are the same as those reached by the district
court. Clark v. Vicorp Rests., Inc., 696 N.W.2d 596, 603 (Iowa 2005).
“If the claim of error lies with the agency’s findings of fact, the proper
question on review is whether substantial evidence supports those findings of
fact.” Meyer, 710 N.W.2d at 219. If the claim of error “lies with the agency’s
interpretation of the law, the question on review is whether the agency’s
interpretation is erroneous, and we may substitute our interpretation for the
agency’s.” Id. Finally, if the claim of error “lies with the ultimate conclusion
reached, then the challenge is to the agency’s application of the law to the facts,
and the question on review is whether the agency abused its discretion by, for
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example, employing wholly irrational reasoning or ignoring important and relevant
evidence.”
Id.
We allocate some degree of discretion in our review of the
agency’s application of the law to the facts, but not the breadth of discretion
given to the findings of fact. Id. “With respect to the workers’ compensation
statute in particular, we keep in mind that the primary purpose of chapter 85 is to
benefit the worker and so we interpret this law liberally in favor of the employee.”
Griffin Pipe Prods. Co. v. Guarino, 663 N.W.2d 862, 865 (Iowa 2003).
III. Analysis.
Penalty benefits are created by Iowa Code section 86.13, which provides
two clear prerequisites before penalty benefits can be imposed: (1) “a delay in
commencement or termination of benefits” that occurs (2) “without reasonable or
probable cause or excuse.” Iowa Code § 86.13. When the prerequisites have
been met, the Iowa Code instructs the commissioner “shall award” penalty
benefits “up to fifty percent of the amount of benefits that were unreasonably
delayed or denied.” Id.
“To receive a penalty benefit award under section 86.13, the claimant
must first establish a delay in the payment of benefits.” Schadendorf v. Snap-On
Tools Corp., 757 N.W.2d 330, 334 (Iowa 2008). There is no doubt that Thomas
has established a delay in the payment of benefits. “The burden then shifts to
the employer to prove a reasonable cause or excuse for the delay.” Id. at 33435. The Iowa Supreme Court has explained this second statutory requirement:
A reasonable cause or excuse exists if either (1) the delay was
necessary for the insurer to investigate the claim or (2) the
employer had a reasonable basis to contest the employee’s
entitlement to benefits. A “reasonable basis” for denial of the claim
exists if the claim is “fairly debatable.”
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Keystone Nursing Care Ctr. v. Craddock, 705 N.W.2d 299, 307 (Iowa 2005).
The reasonableness of the employer’s actions “does not turn on whether
the employer was right. The issue is whether there was a reasonable basis for
the employer’s position that no benefits were owing.”
Id. at 307-08. Stated
another way, the “focus is on the existence of a debatable issue, not on which
party was correct.” Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 47374 (Iowa 2005). In Rodda v. Vermeer Mfg., 734 N.W.2d 480, 483 (Iowa 2007),
the court explained:
A reasonable basis for denying insurance benefits exists if
the claim is “fairly debatable” as to either a matter of fact or law. A
claim is “fairly debatable” when it is open to dispute on any logical
basis. Whether a claim is “fairly debatable” can generally be
determined by the court as a matter of law. If the court determines
that the defendant had no reasonable basis upon which to deny the
employee’s benefits, it must then determine if the defendant knew,
or should have known, that the basis for denying the employee’s
claim was unreasonable.
(Internal citations and quotations omitted.) In City of Madrid v. Blasnitz, 742
N.W.2d 77, 84 (Iowa 2007), the court ruled, “In view of the facts that created a
genuine dispute with respect to the cause of the claimant’s rotator cuff tear, we
conclude the claimant’s claim was fairly debatable as a matter of law.”
Here, the medical experts disagreed on the critical issue of causation:
whether the February 2001 work injury caused Thomas’s mental condition upon
which he based his claim for benefits. The commissioner found that in light of
that conflicting evidence, Thomas’s claim was fairly debatable even after the
arbitration hearing. Thomas argues that the commissioner erred in so finding.
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A. Legal Standard.
Thomas contends the commissioner erroneously
determined that an employer can await the final agency decision before paying
workers’ compensation benefits. He argues that the commissioner’s denial of
penalty benefits is contrary to “the duty and on-going obligation to act reasonably
in regard to the statutorily mandated payments,” which “is not predicated upon a
final determination of entitlement from the commissioner.”
We believe Thomas reads too much—and yet too little—into the
commissioner’s ruling. Final agency action is not required for the right of benefits
to accrue. However, whether or not there has been final agency action is a
legitimate factor in determining whether delay in making such payments is
reasonable, particularly where the evidence in the record is contradictory. The
commissioner did not conclude as a matter of law that there was no duty to pay
until final agency action. Rather, the commissioner found no “new duty arose in
this particular case.”
B. Was the Claim Fairly Debatable?
Thomas contends that the
commissioner based his decision on an erroneous general rule—if a denial of
benefits is fairly debatable before a deputy’s decision, it is fairly debatable
thereafter. Thomas’s contention is belied by the commissioner’s ruling itself.
The commissioner determined that penalty benefits were not warranted here
because the Company’s denial of benefits was based upon a claim that was fairly
debatable under the circumstances presented. The commissioner cited the
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opinions of doctors that supported the Company’s position.2 The commissioner
also noted that the matter was subject to de novo determination on intra-agency
appeal. The commissioner correctly stated, however, that post-hearing penalty
benefits might be warranted under different circumstances.
The Company states:
[T]he question being debated by the parties is whether an employer
can reasonably rely upon evidence that was rejected by a Deputy
Commissioner, but which would support a contrary finding and
decision by the Commissioner, to continue a denial of a claim
throughout a de novo intra-agency appeal.
We believe this is an appropriate statement of the issue. The evidentiary record
in the underlying case, some of which we have set forth above in the background
facts, contains competing medical opinions as to causation. The commissioner
found that the genuine dispute with respect to the cause of Thomas’s mental
condition made the claim fairly debatable. We conclude the district court did not
err in affirming the finding of reasonable cause for the delay in payment.
In light of our conclusions, we need not and do not address the
Company’s asserted alternative grounds for affirmance.
IV. Conclusion.
The commissioner did not employ an improper legal standard in its denial
of penalty benefits, nor err in finding that the question whether the 2001 injury
2
In fact, the deputy denied pre-hearing penalty benefits noting that the defendants “did
have two experts supporting their position. They also had a normal MRI and normal
EEG.” The deputy also noted that “the mushroom incident clearly appears in all written
records of the claimant’s medical providers, indicating the claimant himself traced the
increase in his symptoms to this time period.”
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caused Thomas’s industrial disability was fairly debatable. We therefore affirm
the commissioner’s denial of penalty benefits.
AFFIRMED.
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