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-ofDiscretion” 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.