Opinion
No. 6-081 / 05-0696
Filed March 29, 2006
Appeal from the Iowa District Court for Woodbury County, Dewie J. Gaul, Judge.
Marc Albers, Pyle Truck Lines, Inc. and Virginia Surety Company, Inc. appeal from the district court's order on judicial review affirming the agency's decision awarding Michael Gentry benefits. AFFIRMED.
Willis J. Hamilton of Hamilton Law Firm, P.C., Storm Lake, for appellant Marc Albers.
Steven M. Nadel of Ahlers Cooney, P.C., Des Moines, for appellants Pyle Truck Lines, Inc. and Virginia Surety Company, Inc.
Ruth M. Carter of Carter Law Firm, Sioux City, for appellee.
Heard by Sackett, C.J., and Vogel and Mahan, JJ.
Marc Albers, and Pyle Truck Lines, Inc. along with its workers' compensation carrier, Virginia Surety Company, Inc., (together referred to as "Pyle Truck"), separately appeal from the district court's order on judicial review affirming the intra-agency appeal decision by the Iowa Workers' compensation Commissioner. As we determine the commissioner's factual findings are supported by substantial evidence to which the commissioner correctly applied the law, we affirm the district court's ruling upholding the commissioner's decision.
I. Background Facts and Proceedings.
Pyle Truck was a licensed trucking company or motor carrier, which in addition to hiring its own drivers, also used drivers of independent truck owners. Albers owned several trucks and referred drivers to Pyle Truck for purposes of driving Albers's trucks, while using Pyle Truck trailers and interstate permits. In 2001, Gentry answered an ad placed by Albers for a position as a truck driver. After consulting with Albers, Gentry was referred to Pyle Truck to fill out various forms and employment documents as well as undergo a physical examination and employment background check. When his training was complete, Gentry began driving one of Albers's trucks using Pyle Truck's trailers. In August 2001, Gentry was involved in an accident in North Carolina. He sustained significant injuries to his legs requiring above-the-knee amputation of his right leg as a result of the accident.
Gentry filed a petition for workers' compensation benefits against Albers, Pyle Truck, and Pyle's insurance carrier, Virginia Surety, with the Iowa Workers' compensation Commission. In the initial arbitration decision, the deputy commissioner determined that (1) Pyle Truck was Gentry's sole employer, (2) Gentry sustained a scheduled member injury to both legs resulting in a forty-four percent permanent partial disability, and (3) the weekly rate of compensation should be set at $211.06. On intra-agency appeal, the commissioner reached a different conclusion in determining that Albers and Pyle Truck exhibited joint control and supervision over Gentry and both were Gentry's employer. The commissioner also found Gentry's severe depression and post-traumatic stress disorder were "spillover effects" caused by the scheduled-member injuries to his legs, therefore causing permanent impairment to the body as a whole, and awarded benefits based upon industrial disability. He accordingly increased Gentry's permanent partial disability rating to eighty percent for loss of earning capacity. The commissioner also adjusted Gentry's rate of compensation by discounting the wages for weeks Gentry spent as a trainee that he found were not typical or customary earnings under Iowa Code section 85.36 (2001).
Albers takes issue with the agency's use of the words "dual employment" to describe the relationship between Albers and Pyle Truck with Gentry. Regardless of the words used by the commissioner, the surrounding reasoning and conclusion describe joint employment by finding that Gentry was under simultaneous control of both employers performing services for both.
Albers and Pyle Truck petitioned the district court for judicial review of the final agency decision, challenging the commissioner's finding of joint employment, the increase in disability rating from the spillover effects of Gentry's mental health issues, and the change in compensation rate. The district court affirmed the commissioner's decision on the nature of the employment relationship as well as the extent of Gentry's injuries as both being factual determinations supported by substantial evidence. The district court also affirmed the commissioner's computation of the compensation rate by excluding Gentry's wages during his training period. Albers and Pyle Truck separately appeal.
II. Scope of Review.
We review a district court's review of agency action for correction of errors of law. Midwest Auto. III, L.L.C. v. Iowa Dep't of Transp., 646 N.W.2d 417, 422 (Iowa 2002). Our review is limited to determining whether the district court correctly applied the law in exercising its section 17A.19(8) judicial review function. Herrera v. IBP, Inc., 633 N.W.2d 284, 287 (Iowa 2001). We apply the standards of section 17A.19 to the agency action and determine whether our conclusions are consistent with those of the district court. Brown v. Quik Trip Corp., 641 N.W.2d 725, 727 (Iowa 2002). The factual findings regarding the award of benefits are within the agency's discretion, and we are bound by those findings of fact if supported by substantial evidence. Clark v. Vicorp Rests., Inc., 696 N.W.2d 596, 604 (Iowa 2005) (citing Iowa Code § 17A.19(10)(f) (2003)). Evidence is substantial when "`the quantity and quality of evidence would be deemed sufficient by a neutral, detached and reasonable person, to establish the fact at issue. . . .'" P.D.S.I. v. Peterson, 685 N.W.2d 627, 633 (Iowa 2004) (quoting Iowa Code § 17A.19(10)(f)(1) (2003)). Finally, the application of the law to the factual determinations in workers' compensation cases is "vested by a provision of law in the discretion of the agency," whereby we may only reverse if the agency's application of the law to those facts is "irrational, illogical, or wholly unjustifiable." Finch v. Schneider Specialized Carriers, Inc., 700 N.W.2d 328, 331 (Iowa 2005) (citations omitted). However, when the agency has not been vested with the final authority to interpret the law, we do not defer to the agency's interpretation of such law and review the agency's interpretation de novo. Hill v. Fleetguard, Inc., 705 N.W.2d 665, 670 (Iowa 2005).
III. Issues on Appeal.
A. Determination of Joint Employment.
Albers and Pyle Truck each argue on appeal that they are not joint employers, but that the other was the sole employer of Gentry at the time of the injury. The commissioner found, and the district court affirmed, that Albers and Pyle Truck jointly employed Gentry as they "shared supervisory control over [Gentry] and both shared in the economic benefit of his employment services."
Relying on the evidence adduced at hearing, the commissioner appears to have applied the multi-part test under Iowa law to determine Gentry's employment relationship with both Albers and Pyle Truck. See Caterpillar Tractor Co. v. Shook, 313 N.W.2d 503, 505 (Iowa 1981) (setting forth the five-part test for whether an employer-employee relationship exists). We agree with the district court and the agency that the following substantial evidence supports joint employment of Gentry: Albers placed the ad and initially recruited Gentry, promising to train him only if Gentry first qualified as a driver with Pyle Truck. Either Albers or Pyle Truck furnished all of the equipment, tractor, and trailer and paid all expenses of operating the truck. Albers believed that neither he nor Gentry had permission to haul for other carriers without prior approval and revenue-sharing by Pyle Truck. Albers set the amount of compensation Gentry was to receive for each load after receiving payment from Pyle Truck. While neither Albers nor Pyle Truck withheld payroll taxes on Gentry's income, Albers issued him a 1099 income tax form for the year 2001. Albers believed he had the authority to fire Gentry, but that Pyle Truck also had that authority.
Joint employment is recognized under Iowa law. See Swanson v. White Consol. Indus., Inc., 30 F.3d 971, 974-75 (8th Cir. 1994) (applying Iowa law and recognizing that an employee may have more than one employer under certain facts in Iowa law); Knott v. Dubuque S.C.R. Co., 84 Iowa 462, 472-73, 51 N.W. 57, 60 (1892) (recognizing joint employment and joint and several liability among multiple employers for the injuries of their employee); Beck v. Rounds, 332 N.W.2d 109, 110 (Iowa Ct.App. 1982) (affirming agency finding that the claimant was the employee of two parties together engaged in a joint venture).
Pyle Truck required Gentry to complete and sign an array of employment documents that not only referred to his employment relationship with Pyle Truck, but also included numerous company policies and regulations to which Gentry had to agree or face discipline from Pyle Truck. Pyle Truck exerted extensive control and direction over Gentry's day-to-day employment exceeding that which was required by federal or state regulations, including: a delivery schedule; route suggestions; a fine for missing a daily call-in requirement; a penalty for going over mileage limits; a penalty for late loads (that "give the company a bad name and future loads and contracts can be lost over late loads"); a one-week vacation benefit; and a detailed "points assessment schedule" that provided penalties for various infractions. Pyle Truck asserts that these policies did not apply to Gentry, although they were included in the "Driver Policies" and other documents he was required by Pyle Truck to sign before beginning work with the company. While Pyle Truck now claims the policies and initial employment documents were not intended to apply to Gentry, but simply part of a package of documents prepared by an outside consulting firm, the fact remains that Gentry was required to sign the required forms and comply with the policies as Pyle Truck admitted no contrary intent was ever conveyed to Gentry.
The documents included: a Pyle Truck driver's qualification checklist; a Pyle Truck employment application and application form waiver; a pre-employment urinalysis consent agreement; an alcohol and controlled substance employee's certified receipt; a motor vehicle driver's certification of compliance with driver license requirements; a points assessment schedule; an hours of service record for first-time drivers; a receipt of safety form; a twenty one-paragraph Pyle Truck driver's policies form; a fleet safety compliance manual certification of violations; a Department of Transportation annual review of driving record; federal W-4 and I-9 employment forms; request and consent forms for information from previous employers on alcohol and controlled substance testing; a request for check of driving record; a disclosure and release form regarding consumer reports from DAC Services in Tulsa, Oklahoma; and a medical consent form for release of information.
Pyle Truck points to a purported "independent contractor agreement" executed between Albers as an owner-operator and Pyle Truck as a carrier as evidence that Pyle Truck was not Gentry's employer but rather that Gentry was solely employed by Albers. Pyle Truck contends the intent of the parties and operation of this agreement thereby absolves it of liability for Gentry's workers' compensation benefits under Iowa Code sections 85.61(13)(c) and 87.1 because Albers meets the definition of an independent contractor/owner-operator with Gentry as his employee. Section 85.61(13)(c) reads:
The following persons shall not be deemed "workers" or "employees":
c. An owner-operator who, as an individual or partner, or shareholder of a corporate owner-operator, owns a vehicle licensed and registered as a truck, road tractor, or truck tractor by a governmental agency, is an independent contractor while performing services in the operation of the owner-operator's vehicle if all of the following conditions are substantially present:
(1) The owner-operator is responsible for the maintenance of the vehicle.
(2) The owner-operator bears the principal burden of the vehicle's operating costs, including fuel, repairs, supplies, collision insurance, and personal expenses for the operator while on the road.
(3) The owner-operator is responsible for supplying the necessary personnel to operate the vehicle, and the personnel are considered the owner-operator's employees.
(4) The owner-operator's compensation is based on factors related to the work performed, including a percentage of any schedule of rates or lawfully published tariff, and not on the basis of the hours or time expended.
(5) The owner-operator determines the details and means of performing the services, in conformance with regulatory requirements, operating procedures of the carrier, and specifications of the shipper.
(6) The owner-operator enters into a contract which specifies the relationship to be that of an independent contractor and not that of an employee.
Id.
The commissioner found, and the district court agreed, that neither Albers nor Gentry qualified under the definition of an owner-operator as an independent contractor under this section because all of the six factors were not substantially present as applied to either man. However, even if Albers was an independent contractor of Pyle Truck, that conclusion does not require a finding that Gentry was Albers's employee such that section 87.1 would automatically be triggered. See Iowa Code § 87.1 (2001) (mandating that an independent contractor is responsible for the workers' compensation insurance for the independent contractor's employees). There is still substantial evidence to support the commissioner's decision that Gentry worked for both Albers and Pyle Truck as noted above.
Gentry testified that he knew nothing of any agreement between Albers and Pyle Truck, signed no employment documents with Albers, believed all the employment documents he signed for Pyle Truck applied to him, and believed that he worked for both Albers and Pyle Truck. During his testimony at the agency hearing, Gentry also stated:
Q. Were you told that any of these [Pyle Truck employment documents] that you filled out did not apply to you? A. No.
Q. Was it your understanding that all the papers you signed and that you read did apply to you? A. As far as I knew it was.
The commissioner also found unconvincing Albers's and Pyle Truck's explanation of their respective intent in their relationship and with Gentry. He also disregarded the agreement between Albers and Pyle Truck because the evidence from the hearing showed the parties failed to follow material provisions of the purported contract without consequence where Gentry's term of employment was concerned, particularly the provisions about securing workers' compensation insurance for Albers's purported employees and presenting proof of such insurance to Pyle Truck. Cf. Finch, 700 N.W.2d at 330-31 (holding claimant was an independent contractor and applying section 85.61(13)(c) as all factors were substantially met under a substantial evidence review, where the claimant was himself the owner-operator and party to an independent contractor agreement adhered to by the parties, the control exerted by the carrier was entirely required by federal or state regulations, and there was no other purported employer).
Pyle Truck also cites Prokop v. Frank's Plastering Co., 257 Iowa 766, 775, 133 N.W.2d 878, 883 (1965) and Eagen v. K. A. Truck Lines, Inc., 254 Iowa 914, 919, 119 N.W.2d 805, 808 (1963) as support for its position. We find these cases distinguishable, as neither case deals with application of section 85.61(13)(c), and both turn heavily on factual findings in a substantial evidence review, not on statutory construction as Pyle Truck argues is the issue in this case.
The commissioner then determined that Gentry was employed by both Albers and Pyle Truck. As this application of law was based on the commissioner's factual findings that were supported by substantial evidence in the record, we conclude the commissioner's decision on this issue was not "irrational, illogical, or wholly unjustifiable." We affirm the district court's ruling upholding the commissioner's finding of joint employment.
B. Finding of Permanent Mental Disability.
Pyle Truck also contends that the commissioner erred by finding Gentry suffered a permanent mental disability as a result of his injuries and improperly relied upon the vocational expert's opinion. Pyle Truck asserts substantial evidence does not support these findings and Sandra Trudeau, the vocational expert, cited erroneous information from Dr. Anderson's report. The record clearly demonstrates that Gentry's treating psychiatrist, Dr. Paul Anderson D.O., stated that Gentry's major depression and post-traumatic stress disorder are causally related to his injuries. Dr. Anderson's report further states:
Certainly this is a permanent impairment. There is therapy that is being rendered and medications, but this condition takes years to correct and oftentimes is permanent. Mike is going to have trouble doing any activities that involve driving or riding with somebody else. This would not preclude him from any job, but he is certainly going to have a great deal more difficulty performing driving functions and riding function, no matter what they are in the future. . . . Michael's prognosis is guarded. This condition is very difficult to treat. It oftentimes requires very specialized treatment, not obtainable at a mental health center, and even with specialized treatment oftentimes tends to persist. These people tend to be on medication the rest of their lives, continue to get startle responses, and occasional bad dreams regarding their psychological trauma.
While Pyle Truck argues semantics over how one is to interpret Dr. Anderson's use of the words "any job," we conclude that substantial evidence supports the commissioner's finding that Gentry suffers from a permanent mental disability due to his injuries. Pyle Truck would like us to disregard the bulk of Dr. Anderson's conclusions and read certain statements in isolation, but our duty is to examine the entire record for substantial evidence to support the findings made by the commissioner. Acuity Ins. v. Foreman, 684 N.W.2d 212, 220 (Iowa 2004). We also note that Marie Kent, LMHC, NCC, Gentry's treating psychotherapist, diagnosed severe major depression and "ruled-out" post-traumatic stress disorder. Kent noted "both moderate persistent symptoms and moderate difficulty in family/occupational functioning." While Pyle Truck would choose to interpret the evidence differently, it does not alter our conclusion that the record contains substantial evidence supporting the commissioner's finding. See 2800 Corp. v. Fernandez, 528 N.W.2d 124, 126 (Iowa 1995) (stating "[a]n agency's decision does not lack substantial evidence because inconsistent conclusions may be drawn from the same evidence.") We affirm on this issue.
Pyle Truck next argues that Trudeau's vocational evaluation misrepresents Dr. Anderson's recommendations, resulting in a flawed conclusion as to Gentry's loss of earning capacity. Pyle Truck suggests a correlation between the commissioner's conclusions as to loss of earning capacity because of the similarity of the percentage of industrial disability. Trudeau's report states:
[Dr. Anderson] diagnosed Mr. Gentry with an Axis 1 of post-traumatic stress disorder, major depression, single episode. . . . He further stated that this condition would take years to correct and often times is permanent. He would have difficulty performing any activities that involved driving or riding with somebody else and would preclude him from jobs which involved driving functions and riding functions. His prognosis was guarded.
We cannot say that this is a mischaracterization of Dr. Anderson's statements, which the commissioner noted Dr. Anderson's conclusion in-full for himself. Furthermore, there is no evidence that the commissioner relied on Trudeau's recommendation but instead took a variety of factors into account including Gentry's physical restrictions, educational history, and past work experience. We conclude the commissioner's finding of an eighty-percent industrial disability and loss of earning capacity is supported by substantial evidence and affirm the district court's ruling upholding the commissioner's findings.
C. Increase in Weekly Rate.
Albers and Pyle Truck lastly assert that the commissioner erred when he discounted the weeks Gentry worked as a trainee in the calculation of the proper weekly benefit rate. The district court affirmed on the issue, noting that the commissioner "was entitled to exclude those unrepresentative weeks" of compensation in computing the proper rate. The commissioner found,
Under section 85.36(7), the gross weekly earnings of an employee who has worked for the employer for less than the full thirteen calendar weeks immediately preceding the injury are determined by. . . . averaging the employee's weekly earnings computed for the number of weeks that the employee has been in the employ of the employer. Weeks with atypical earnings are excluded from the calculation. (citations omitted). While [Gentry's] injury did not occur while he was a trainee, the fact that he received lower, trainee earnings during those weeks demonstrates that [Gentry's] first weeks of employment were not typical or customary. Customary earning began on June 23.
We agree with the district court that the commissioner correctly disregarded the unrepresentative trainee rate of compensation in Gentry's case. Section 85.36 dictates that weekly earnings for the basis of computation means "gross salary, wages, or earnings of an employee to which such employee would have been entitled had the employee worked the customary hours for the full pay period in which the employee was injured, as regularly required. . . ." Iowa Code § 85.36. This section has been applied to allow the agency to exclude earnings from weeks that were not customary of the employee's earnings, such as working less than forty hours. See Griffin Pipe Prods. Co. v. Guarino, 663 N.W.2d 862, 866-67 (Iowa 2003); Weishaar v. Snap-On Tools Corp., 582 N.W.2d 177, 182 (Iowa 1998). Subsection 85.36(7), used to calculate Gentry's weekly earnings in this case, directs that "the employee's weekly earnings shall be computed under subsection 6. . . ." Id. Subsection (6) states in pertinent part, "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) (2001). Reading the provisions of section 85.36 in unison, we conclude that the commissioner did not err by excluding the weeks Gentry was in training as unrepresentative of his customary wages for calculation of benefits purposes. We affirm.
We conclude substantial evidence supports the commissioner's finding of joint employment by Albers and Pyle Truck and resulting inapplication of Iowa Code sections 85.61(13)(c) or 87.1 to this case. Therefore, we affirm the district court judgment upholding the commissioner's decision.