Summary
noting an employer's duty to act reasonably is a continuing one and requires the employer to reevaluate a claim as additional information becomes available
Summary of this case from True v. Heritage Care & Rehab.Opinion
No. 2-056 / 00-1999
Filed September 25, 2002
Appeal from the Iowa District Court for Kossuth County, JOHN P. DUFFY, Judge.
Workers' compensation claimant appeals from a district court ruling on judicial review affirming the workers' compensation commissioner regarding an award of penalty benefits. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Mark Soldat, Algona, for appellant.
Michael Roling of Peddicord, Wharton, Spencer Hook, Des Moines, for appellee.
Considered by MAHAN, P.J., and MILLER and HECHT, JJ.
Nancy Simonson appeals from a judicial review ruling on her workers' compensation proceeding, claiming error with regard to her request for penalty benefits. We affirm in part, reverse in part, and remand.
I. Background Facts and Proceedings.
On December 29, 1988, Nancy Simonson filed three arbitration petitions against her former employer Snap-On Tools Corporation and its insurance carrier Royal Insurance Company (collectively Snap-On). Before the hearing on the petitions, Snap-On voluntarily paid Simonson twenty weeks of permanent partial disability compensation based upon a four percent functional impairment rating given by Dr. Nelson. The petitions came on for hearing on April 10, 1990.
Simonson sought disability and penalty benefits from Snap-On. For a more detailed exposition of this case's long history, see Simonson v. Snap-On Tools Corp., 588 N.W.2d 430 (Iowa 1999).
On January 31, 1991, the hearing deputy filed an arbitration decision awarding Simonson thirty-five percent permanent partial disability benefits, but imposing no penalties against Snap-On for its pre-hearing conduct. Both Simonson and Snap-On sought intra-agency review of this decision.
On March 6, 1991, while the appeal from the arbitration decision was pending before the commissioner, Simonson filed a petition seeking penalties pursuant to Iowa Code section 86.13 (1991) for Snap-On's alleged delay in paying benefits after the April 10, 1990 hearing. On March 8, Snap-On communicated its decision to pay the award and abandon its cross-appeal.
Snap-On's lump-sum check in the amount of $36,371.51 was issued on March 14, and received by Simonson on March 18, 1991. Thereafter, Snap-On continued to make weekly payments to Simonson.
On October 31, 1991, the commissioner filed an appeal decision finding Simonson had sustained an industrial disability of thirty-five percent. The commissioner concluded Simonson's claim was fairly debatable during the period prior to the arbitration hearing and awarded no penalty benefits for the period up to April 10, 1990.
On judicial review, the district court affirmed the commissioner's ruling denying Simonson's claim for penalties for Snap-On's conduct prior to the April 10, 1990 hearing. In a decision filed June 29, 1993, this appellate court affirmed the district court's decision, but remanded the case to the agency for further proceedings with regard to Simonson's claim for temporary partial disability benefits.
On September 29, 1995, Simonson's March 6, 1991 petition claiming a penalty for Snap-On's delays in payments after April 10, 1990 hearing and her review-reopening petition came on for hearing. The deputy's arbitration decision denied Simonson's claim for additional disability benefits and rejected her claim for post-hearing penalty benefits. On intra-agency review, the commissioner rejected Simonson's penalty claim on preclusion and jurisdictional grounds.
Simonson again filed a petition for judicial review of the commissioner's ruling. The district court concluded the commissioner erred in deciding (1) Simonson's post-hearing penalties claim was precluded by the earlier ruling denying pre-hearing penalties and (2) she lacked jurisdiction to consider the matter. The district court again remanded this case to the commissioner for purposes of addressing the penalty claim. On appeal from the district court's remand order, our supreme court concluded the district court properly reversed the commissioner and remanded the matter to the agency for a decision on the merits of Simonson's claim for penalty benefits for Snap-On's alleged delays in making benefit payments after April 10, 1990. Simonson v. Snap-On Tools Corp., 588 N.W.2d 430, 437 (Iowa 1999).
On October 11, 1999, the commissioner filed a remand decision in which she: (1) determined Snap-On had reasonable cause for its delay in paying benefits between April 10, 1990, and March 18, 1991, because the extent of Simonson's industrial disability was not finally resolved until this court's decision of June 29, 1993, affirmed the agency's finding of thirty-five percent industrial disability; (2) found Snap-On had no excuse for making twenty-four late weekly payments and assessed a fifteen percent penalty totaling $984.49; and (3) concluded Snap-On's delay in paying $41.91 in temporary partial disability benefits subsequent to the April 24, 1994, remand decision was without excuse and imposed a fifty percent penalty of $20.96. Simonson and Snap-On both sought judicial review of the commissioner's remand decision. On December 4, 2000, the district court filed a ruling affirming the commissioner's decision. Simonson appeals.
II. Standard of Review.
Iowa's Administrative Procedure Act, Iowa Code chapter 17A (2001), governs our review of workers' compensation cases. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 627 (Iowa 2000). Therefore, we review for correction of errors of law. Koehler Elec. v. Wills, 608 N.W.2d 1, 3 (Iowa 2000). Applying the standards of Iowa Code section 17A.19(8), we determine whether our legal conclusions are the same as those reached by the district court. See Manpower Temp. Servs. v. Sioson, 529 N.W.2d 259, 262 (Iowa 1995). See generally Iowa Code § 17A.19(8) (allowing court to reverse agency if agency decision is affected by an error of law or is not supported by substantial evidence). If our conclusions are the same, we affirm; if we disagree with the conclusions of the district court, we must reverse. See Bearce v. FMC Corp., 465 N.W.2d 531, 534 (Iowa 1991).
III. Discussion.
On appeal, Simonson urges reversal on three separate grounds. First, she maintains the commissioner erroneously failed to assess penalty benefits pursuant to section 86.13 for the delay between the April 10, 1990 hearing and Snap-On's March 8, 1991 agreement to pay. Second, Simonson asserts the commissioner erred in failing to award a penalty for the time frame between Snap-On's March 8, 1991 agreement to pay thirty-five percent industrial disability and her March 18, 1991 receipt of the lump sum payment. Third, Simonson contends the commissioner erred in determining the number and extent of tardiness of late payments made by Snap-On between March 20, 1991, and November 1, 1991, imposed an inadequate penalty for such late payments, and failed to adequately explain her reasons for the penalty imposed.
A. Delay from April 10 to March 18. In resolving the penalty issue, the agency was required to apply Iowa Code section 86.13, which provides:
If a delay in commencement or termination of benefits occurs without reasonable or probable cause or excuse, the industrial commissioner shall award benefits in addition to those benefits payable under this chapter, or chapter 85, 85A, or 85B, up to fifty percent of the amount of benefits that were unreasonably delayed or denied.
Iowa Code § 86.13. In Christensen v. Snap-On Tools Corp., 554 N.W.2d 254 (Iowa 1996), our supreme court discussed the application of section 86.13 penalties and stated:
Based on the plain language of section 86.13, we hold an employee is entitled to penalty benefits if there has been a delay in payment unless the employer proves a reasonable cause or excuse. 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."Christensen, 554 N.W.2d at 260. In Meyers v. Holiday Express Corp., 557 N.W.2d 502 (Iowa 1996), the court expanded upon Christensen and provided an analytical framework for the application of section 86.13 penalties. The agency must first ask if the employer had a reason for the delay and whether such reason was conveyed to the employee contemporaneously with the delay. If so, no penalty will be imposed if the reason is a "reasonable or probable cause or excuse." Meyers, 557 N.W.2d at 504. If no reason is given for the delay or a proffered reason is unreasonable, a penalty in some amount must be assessed. Id. at 505. Reasonable excuses may include a delay to investigate the claim or a reasonable basis to contest the claim — the "fairly debatable" basis for delay. Christensen, 554 N.W.2d at 260. The employer must assert facts upon which the commissioner could reasonably find the claim was fairly debatable. Id.
It is the law of this case that Snap-On's failure to pay more than twenty weeks of benefits before the April 10 hearing was reasonable. In her remand decision of October 11, 1999, the commissioner concluded the March 18, 1991 lump sum payment was not unreasonably delayed because the extent of Simonson's industrial disability had not been finalized before the payment was made. On judicial review, the district court similarly reasoned that if the extent of Simonson's disability was fairly debatable at the time of the hearing, "it undoubtedly remains fairly debatable until a decision is filed by the deputy commissioner." We conclude the conclusions of the commissioner and the district court are based upon a misapprehension of the prevailing law.
The duty of Snap-On to act reasonably is a continuing duty. See Squealer Feeds v. Pickering, 530 N.W.2d 678, 683 (Iowa 1995) (a denial supportable at the time it is made may later lack a reasonable basis in light of subsequent information). Thus, although it has been conclusively determined that Snap-On did not unreasonably delay or deny benefits prior to the April 10, 1990 hearing, it had an ongoing duty to reevaluate Simonson's claim as additional information became available. Arbitration hearings typically produce crucial information bearing upon the nature of the claimed injury and, where relevant, the extent of industrial disability. Thus, when the hearing concluded on April 10, 1990, Snap-On was able to assess its exposure based not upon what the parties might be able to prove, but what they actually did prove. After the hearing, Snap-On could assess the weight of Simonson's testimony as it was subjected to cross-examination. Moreover, after the hearing record was closed on April 10, 1990, Snap-On was in a position to reevaluate whether any reasonable employer could conclude from the evidence that Simonson's industrial disability was limited to four percent or less. Our supreme court's decision on January 21, 1999, remanding this case to the agency for further proceedings on Simonson's post-April 10, 1990 penalty claim implicitly recognized Snap-On's continuing duty to evaluate the claim and the usefulness of information gathered during the arbitration hearing in the performance of this duty.
The employer's obligation to make benefit payments is clearly not dependent upon final agency action. Boylan v. American Motorists Ins. Co., 489 N.W.2d 742, 743 (Iowa 1992) (noting a workers' compensation carrier's duty to "act reasonably in regard to benefit payments [even] in the absence of specific direction by the commissioner"). Thus, Snap-On's obligation under section 86.13 to act reasonably in regard to benefit payments was not suspended in the interim between the arbitration hearing on April 10, 1990 and the issuance of the agency's arbitration decision on January 31, 1991. Id. at 743.
Nor was Snap-On's duty to avoid unreasonable delays in payment of benefits nullified by Simonson's intra-agency appeal or Snap-On's cross-appeal. We note that section 86.13 does not expressly suspend an employer's duty to act reasonably during the pendency of intra-agency appeals. Given the employer's section 86.13 duty to reevaluate workers' compensation claims in light of developing circumstances and the duty to avoid unreasonable delays in benefit payments even in the absence of an agency order, it is inconceivable that the legislature intended to shield employers from penalties as a matter of law for unreasonable delays during appeals. A contrary rule would prohibit the imposition of penalties even against employers who file frivolous intra-agency appeals and severely diminish the salutary purposes of section 86.13.
Thus, we conclude the commissioner committed legal error when she concluded no penalty could be imposed upon Snap-On for the period before it made the lump-sum payment in March of 1991 because the extent of Simonson's industrial disability was not finally resolved. Accordingly, we must again remand this case to the agency for determination of whether Snap-On unreasonably delayed payment of additional benefits to Simonson between April 10, 1990 and March 18, 1991.
As noted above, Snap-On conceded it owed and paid twenty weeks of permanent partial disability benefits (four percent industrial disability) before the April 10, 1990 arbitration hearing.
Although the Commissioner's remand decision concludes the lump-sum payment was made on March 19, 1991, the parties apparently agree it was received by Simonson on March 18, 1991.
B. Weekly payments from March 20 to November 1. Between March 20 and November 1, 1991, Snap-On made twenty-eight weekly payments to Simonson. The commissioner determined twenty-four of these payments were late without excuse, and therefore assessed a fifteen percent penalty of $984.49 against Snap-On. On appeal, Simonson contends all twenty-eight of the payments were late, the delays were longer than found by the commissioner, and the agency erred in explaining its reasons for, and assessing, only a fifteen percent penalty.
The commissioner's remand decision concluded the first post-lump-sum weekly payment was due on March 26, the last day of the compensation week commencing March 20, 1991. Simonson challenges the commissioner's conclusion and contends the first weekly payment was due on March 20, 1991, the first day of the compensation week after the lump-sum payment was made.
In Robbennolt v. Snap-On Tools Corp., 555 N.W.2d 229 (Iowa 1996), the court addressed the due date for permanent partial disability compensation in the context of interest calculations:
If the required weekly compensation is timely paid at the end of the compensation week, no interest will be imposed. Likewise, if full payment of the weekly compensation is not made at the end of the compensation period, interest will be imposed. As an example, if Monday is the first day of the compensation week, full payment of the weekly compensation is due the following Monday.Robbennolt, 555 N.W.2d at 235. Simonson nonetheless contends weekly payments were due on the first day of the compensation week in this case because (1) the agency set the first day of the compensation week as the due date, and (2) Snap-On abandoned its cross-appeal from the arbitration decision and implicitly consented to such a payment schedule.
The appeal decision filed on October 31, 1991 stated in relevant part: "Defendants shall pay unto claimant one hundred seventy-five (175) weeks of permanent partial disability benefits . . . commencing May 26, 1988." We conclude the commissioner did not intend with these words to set the due date of the first weekly payment. We think it more likely and therefore determine that May 26, 1988, was identified as the first day of the first permanent partial disability week.
Simonson contends even if Snap-On was not obligated by the agency decision to make payments on the first day of the compensation week, it consented to such a schedule when it paid the lump sum payment on March 18, 1991. We are not persuaded, however, that the lump sum payment was tantamount to a waiver by Snap-On of its right to make weekly benefit payments by the end of the compensation week without suffering a penalty or interest sanction.
Simonson next asserts that "it is very difficult, if not impossible, to determine overall what factors or facts the commissioner considered when setting a rather minimal 15% penalty size." In her remand decision of October 11, 1999, the commissioner made the following penalty findings:
In March 1991 defendants commenced voluntary payment of the remaining future weekly benefits. Those payments of the benefits were at the correct weekly rate. The payments were made on a weekly basis. However, many, but not all, of the payments were not made by the end of the compensation week when they were due. The delay in the payment of the benefits was not particularly significant. The delays were generally two days and the largest delay was five days. Once defendants began making voluntary payments, they were under an obligation to make the weekly payments in a timely manner. They did not do so. Some penalty is appropriate for the short delays involved. As claimant correctly points out in her remand brief, the defendant employer has previously been assessed penalties regarding payment of workers' compensation weekly benefits. Defendants offer no excuse why the payments were late. The penalty for defendants' late payment in this case should be fifteen percent for each of the payments that were late.
We acknowledge the commissioner previously found Snap-On had "established a pattern of late payments of accrued benefits;" and levied fifty percent penalties against Snap-On as a consequence of delayed payments in 1986-1987 and 1994-1995. We are not prepared, however, to hold that the commissioner was required as a matter of law to impose a penalty of the same or similar magnitude in this instance. Our standard of review prevents us from substituting our judgment for that of the agency with regard to the amount of the penalty. Although we disagree in the strongest terms with the commissioner's suggestion that Snap-On's repeated delays of two to five days should be viewed as "not particularly significant," we conclude the commissioner's discussion of applicable penalty factors was minimally sufficient to sustain the penalty imposed in this case.
Such delays might be characterized by employers and insurance carriers as insignificant. However, injured workers who depend upon timely workers' compensation benefits for food, shelter and other aspects of basic subsistence view timeliness of payments quite differently.
IV. Conclusion.
We reverse in part and remand to the workers' compensation commissioner for a determination of whether Snap-On's delay in paying permanent partial disability benefits between April 10, 1990, and March 18, 1991 was unreasonable. We affirm the agency's assessment of penalty benefits for late payments made during the period from March 20, 1991 to November 1, 1991.