Opinion
No. 04-1206
Filed September 14, 2005
Appeal from the Iowa District Court for Polk County, Arthur E. Gamble, Judge.
Employer appeals the district court's affirming on judicial review an Iowa Workers' Compensation Commission decision awarding permanent total disability benefits to an employee. AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
Thomas J. Miller, Attorney General, and Joanne Moeller, Special Assistant Attorney General, for appellant.
Paul J. McAndrew Jr. of Paul J. McAndrew Law Firm, Coralville, for appellee.
Considered by Huitink, P.J., and Vogel and Zimmer, JJ.
The University of Iowa Hospitals and Clinics and the State of Iowa, (together referred to as UIHC) appeal the district court's ruling, affirming a decision by the Iowa Workers' Compensation Commission awarding permanent total disability benefits to Jack Waters. We affirm in part, reverse in part and remand.
Backgrounds Facts and Proceedings.
Jack Waters worked for nearly thirty years as a custodian for UIHC. Waters has a history of work-related back injuries dating back to 1968, which required several surgeries over the years. He has also sustained other, non-work-related back injuries during this time. Waters was working as a custodian for UIHC until June 21, 1997, when he alleges the cumulative effect of his back injuries rendered him unable to continue working. Waters handed his keys to his supervisor at the end of his shift on June 21 and told him something to the effect, "That's it. I'm done." Waters sought medical care for this latest injury, which shortly thereafter required surgery.
Waters filed a petition for Workers' compensation benefits in February 1999. UIHC defended the claim arguing that Waters's injury was not work-related and that he further failed to give notice to his employer within the statutory ninety-day period after the injury. The Workers' compensation deputy commissioner filed an arbitration decision on February 20, 2001, awarding Waters permanent total disability benefits. The intra-agency appeal decision filed on November 16, 2001, affirmed the award. UIHC sought judicial review of the agency decision, in which UIHC raised four grounds for reversal. The district court reversed on a single issue, finding the commissioner abused his discretion in awarding benefits on a theory of recovery not plead by Waters, e.g., cumulative injury. On appeal, this court affirmed the district court. Our Supreme Court reversed the district court on further review, holding that a claim for Waters's cumulative injury should have been inferred by UIHC due to Waters's long history of work-related back injuries. Univ. of Iowa Hosp. Clinics v. Waters, 674 N.W.2d 92, 98-99 (Iowa 2004). On remand, the district court considered the additional grounds argued by UIHC on judicial review and affirmed the agency decision. UIHC now appeals asserting: (1) Waters's injury was not work-related; (2) Waters did not comply with the statutory ninety-day notice period; and (3) the agency erred in reducing UIHC's credit under Iowa Code section 85.38(2) for taxes allegedly paid by Waters on the long-term disability payments already received. We affirm on the first two issues as each is supported by substantial evidence but reverse the reduction of UIHC's credit and remand to the agency for further proceedings.
I. Scope of Review.
Review of agency actions is limited to correcting errors at law. IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001). The agency's decision will be upheld if supported by substantial evidence and is otherwise free of legal or other error. See Iowa Code § 17A.19(10) (2001). Substantial evidence exists if the entirety of the record, including supporting and detracting relevant evidence, as well as credibility assessments, is sufficient to allow a reasonable and neutral person to reach the same conclusion as the agency. Id. § 17A.19(10)(f). "We apply agency findings broadly and liberally to uphold, rather than to defeat, an agency's decision." Organic Techs. Corp. v. State ex rel. Iowa Dep't of Natural Res., 609 N.W.2d 809, 815 (Iowa 2000).
II. Work-Related Injury.
UIHC contends that the agency's finding that Waters's June 1997 injury was a work-related injury is not supported by substantial evidence. A claimant has the burden of proving, by a preponderance of the evidence, that his or her injury arose out of and in the course of employment. Iowa Code § 85.3(1) (2001). See also 2800 Corp. v. Fernandez, 528 N.W.2d 124, 128 (Iowa 1995). The words "arising out of" refer to the "causal relationship between the employment and the injury." Id. The words "in the course of" refer to the time, place, and circumstances of the injury. McClure v. Union County, 188 N.W.2d 283, 287 (Iowa 1971).
Whether Waters's injury was a work-related injury was disputed before the agency and primarily a credibility contest between the parties. There was evidence supporting each side as to whether Waters's back injury was a pre-existing condition at the time he was first employed by UIHC in 1968. The record also reflects an extensive history of work-related back injuries and some non-work related injuries, during his nearly thirty-year employment with UIHC. UIHC's primary argument on causation calls into question Waters's credibility. In particular, Waters saw his treating physician on July 11, 1997, and stated that he had injured his back while camping, not at work. There are also some partially legible notes in Waters's medical record from a June 27 visit to his chiropractor Dr. Margaret Hansen, stating "went camping ___ last ___ — lifted and twisted!!" UIHC also refers to absence reports filled out by Waters's wife and signed by Waters for June 16, 1997, indicating an "illness" as the reason for absence and not "accident on duty." On the other side of the evidence equation, Waters admitted lying about the cause of his injury but claimed he did so because of his dissatisfaction with treatment received from UIHC's Workers' compensation doctors. There was also expert testimony presented by Waters's physicians that his back injury was cumulative and work-related due to the high physical demands of his job. Assessing the weight of the evidence is within the exclusive domain of the agency fact finder, Burns v. Board of Nursing, 495 N.W.2d 698, 699 (Iowa 1993), and courts are not allowed to reassess the weight of the evidence upon judicial review. Christensen v. Snap-On Tools Corp., 602 N.W.2d 199, 201 (Iowa Ct.App. 1999). While there was clearly conflicting evidence before the agency as to causation, the agency's finding of a cumulative work-related injury is supported on the record by substantial evidence. We therefore affirm the agency's findings and district court's ruling with respect to this issue.
III. Statutory Ninety-Day Notice of Work-Related Injury.
UIHC likewise contests the agency's finding that adequate notice was given pursuant to Iowa Code section 85.23 (2001). An employee who sustains a work-related injury is required to give notice to his employer within ninety days of its occurrence or "no compensation shall be allowed." Id. The agency decision as to notice focused on Waters's history of back injuries and his UIHC supervisors' long-standing knowledge of this history and the constraints of his occupational abilities. The agency determined that this knowledge coupled with Waters's statements and handing in his keys on June 21, 1997, was adequate notice to give UIHC actual knowledge of a work-related injury. The agency also noted a verbal notification to UIHC by Waters's wife about a week after his last work day that Waters would not be returning to work due to his back. As with the causation issue, this matter was contested before the agency and was highly dependent on credibility determinations. The district court correctly affirmed this issue on judicial review as supported by substantial evidence. The agency's findings that Waters gave notice as prescribed by Iowa Code section 85.23 is supported on the record by substantial evidence, and we affirm the district court and agency as to this issue.
IV. Reduction of UIHC's Section 85.38(2) Credit.
UIHC next alleges the agency erroneously interpreted and applied Iowa Code section 85.38(2) when it reduced UIHC's long-term disability benefit credit, and the district court erred by affirming the agency on judicial review. In reviewing a district court decision on the validity of an agency action, we decide only whether the district court has correctly applied the law. Litterer v. Judge, 644 N.W.2d 357, 360 (Iowa 2002). The district court itself acts in an appellate capacity to correct errors of law on the part of the agency. Hager v. Iowa Dep't of Transp., 687 N.W.2d 106, 108 (Iowa Ct.App. 2004).
The agency concluded that UIHC bore the burden of proving the amount of the credit because it would benefit from the credit and was the primary custodian of records showing payment and taxes withheld. Under Iowa Rule of Appellate Procedure 6.14(6)( e), the burden of proof on an issue is upon the party who would suffer loss if the issue were not established. Id. (2001). Therefore UIHC would suffer a loss were the 85.38(2) credit not proven. However, the record establishes that UIHC met its burden by producing documentation as to the disability benefits paid. On the other hand, Waters would suffer a loss if there were no reduction in the disability benefits for taxes withheld or paid, as his Workers' compensation benefits would be reduced accordingly. Before the agency, there was no evidence that taxes had been withheld or paid. The agency then concluded that because the group disability benefit policy was not in evidence, "it is determined that the entire amount of the payment is subject to the credit." However, the agency proceeded to reduce UIHC's credit to the net amount after withholding for taxes, citing previous agency opinions as authority. The agency reduced the credit for taxes "likely paid," not according to any evidence of actual withholding or of taxes actually paid by Waters, but rather, based on a tax estimate using a Workers' compensation benefits table. The district court then framed its review of the credit, by stating, "The issue is the amount of taxes Mr. Waters paid on the long-term disability benefits he received from the state." (emphasis added). No evidence of tax paid was in the record. Iowa Code section 85.38 reads:
There was no evidence in the record as to whether taxes were paid on the long-term disability benefits. A letter dated November 19, 1997, from Michelle Penenger at Principal Financial Group to Waters states, "Based on our knowledge of tax laws, 100% of the benefits you receive under the disability plan will be considered taxable income. If you wish to have federal and/or state taxes withheld from your benefits, please let me know." UIHC contends Waters did not request taxes be withheld from these payments, and no taxes were withheld.
2. Credit for benefits paid under group plans. In the event the employee with a disability shall receive any benefits, including medical, surgical, or hospital benefits, under any group plan covering nonoccupational disabilities contributed to wholly or partially by the employer, which benefits should not have been paid or payable if any rights of recovery existed under this chapter, chapter 85A, or chapter 85B, then the amounts so paid to the employee from the group plan shall be credited to or against any compensation payments, including medical, surgical, or hospital, made or to be made under this chapter, chapter 85A, or chapter 85B. The amounts so credited shall be deducted from the payments made under these chapters. Any nonoccupational plan shall be reimbursed in the amount deducted. This section shall not apply to payments made under any group plan which would have been payable even though there was an injury under this chapter or an occupational disease under chapter 85A or an occupational hearing loss under chapter 85B. Any employer receiving such credit shall keep the employee safe and harmless from any and all claims or liabilities that may be made against them by reason of having received the payments only to the extent of the credit.
Iowa Code § 85.38(2) (2001) (emphasis added).
This code section does not address or authorize deduction of the credit for an amount of taxes paid by the claimant or withheld by the employer. Rather, the plain language of section 85.38(2) requires credit to the employer of the "amounts so paid to the employee from the group plan." When the text of a statute is plain and its meaning clear, we apply the language of the statute as written and will not search for meaning beyond express terms of the statute or resort to rules of statutory construction. City of Muscatine v. Northbrook P'ship Co., 619 N.W.2d 362, 368 (Iowa 2000). The legislature has not delegated any special powers to the agency regarding its interpretation of case law or statutes, so the agency's interpretation has not "clearly been vested by a provision of law in the discretion of the agency." Iowa Code § 17A.19(11)(b) (2001); P.D.S.I. v. Peterson, 685 N.W.2d 627, 633 (Iowa 2004) (citations omitted). We therefore need not give the agency any deference regarding its interpretation, and we are free to substitute our judgment de novo for the agency's interpretation. Id.
We find that the agency erroneously interpreted and applied section 85.38(2) to reduce UIHC's credit for taxes "likely paid," and the district court likewise erred in affirming on judicial review the agency's action. While UIHC does not dispute the notion that the credit may be reduced by the amount of taxes paid, it does dispute the findings made here, as there was absolutely no evidence offered by Waters as to what tax, if any, he actually paid on the benefits he had previously received. This was Waters's burden to establish and that burden was not met. Without evidence of tax paid, the statute is clear that the amount paid to the employee shall be the amount that is credited. UIHC provided evidence of the amount of long-term disability benefits paid to Waters under its group plan, and Waters stipulated to that figure. Any taxes paid were outside of the record, and we therefore reverse the district court and agency on this issue and remand for correction of errors of law consistent with this opinion.