Opinion ID: 1945998
Heading Depth: 1
Heading Rank: 4

Heading: Commissioner's Award of Penalty Benefits.

Text: Section 17A.19(10) of the Code governs the standard upon which we review a decision of the commissioner. It is well settled that `[t]he interpretation of workers' compensation statutes and related case law has not been clearly vested by a provision of law in the discretion of the agency.' Lakeside Casino v. Blue, 743 N.W.2d 169, 173 (Iowa 2007) (citation omitted). Therefore, when we interpret a workers' compensation statute we will not give the commissioner's interpretation of the law deference and are free to substitute our own judgment. Id. ; see also Iowa Code § 17A.19(10)( c ) (1999 Supp.). When reviewing the agency's factual determinations, we determine whether the factual determinations are based on substantial evidence in the record before the court when that record is viewed as a whole. Iowa Code § 17A.19(10)( f ) (1999 Supp.). The Code defines substantial evidence as [T]he quantity and quality of evidence that would be deemed sufficient by a neutral, detached, and reasonable person, to establish the fact at issue when the consequences resulting from the establishment of that fact are understood to be serious and of great importance. Id. § 17A.19(10)(f)(1). The factual determinations made by the workers' compensation commissioner are `clearly vested by a provision of law in the discretion of the agency,' together with the application of the law to those facts. Mycogen Seeds v. Sands, 686 N.W.2d 457, 465 (Iowa 2004) (citation omitted). When applying the substantial evidence standard to the agency's fact-finding, we must give the agency the appropriate discretion. Id. We review an agency's decision to determine whether its application of the law to the facts was `irrational, illogical, or wholly unjustifiable.' Id. (citation omitted). This standard of review affords appropriate deference to the agency. Id. The commissioner may award penalty benefits on benefits that were unreasonably delayed or denied. Iowa Code § 86.13. The Code provides in relevant part that [i]f a delay in commencement or termination of benefits occurs without reasonable or probable cause or excuse, the workers' compensation 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. Id. To receive a penalty benefit award under section 86.13, the claimant must first establish a delay in the payment of benefits. Keystone Nursing Care Ctr. v. Craddock, 705 N.W.2d 299, 307 (Iowa 2005). The burden then shifts to the employer to prove a reasonable cause or excuse for the delay. Christensen v. Snap-On Tools Corp., 554 N.W.2d 254, 260 (Iowa 1996). We will divide our analysis of the commissioner's award of the penalty benefits issue into two sections. In the first section, we will discuss the commissioner's decision not to award penalty benefits for the period between July 26, 1999, the date of the decision awarding benefits, and August 25, 1999. In the second section, we will discuss whether substantial evidence supports the award for penalty benefits for the period between August 26, 1999, to the date the benefits were paid, September 29, 1999. A. Whether the Commissioner Erred by Not Awarding Penalty Benefits for the Time Period From July 26, 1999, to August 25, 1999. The commissioner found Snap-On did not introduce evidence providing a reasonable cause or excuse for delaying payment to August 25, 1999. However, the commissioner reviewed the entire record, including the evidence introduced by Schadendorf, and determined the delay until August 25 was reasonable. The district court reversed this decision because Snap-On had not provided any evidence that the reasonable cause or excuse found by the commissioner was in fact the reason for its delayed payment. We review the record as a whole to determine if substantial evidence exists to support the commissioner's findings of fact. Iowa Code § 17A.19(10)( f ). Accordingly, we consider all the evidence introduced, not just the evidence introduced by Snap-On, to determine if Snap-On met its burden and established that it had reasonable cause or excuse to delay the payment of benefits until August 25, 1999. The commissioner handed down the decision awarding compensatory benefits on July 26, 1999, and mailed it to each party's attorney on that date. As testified to by the Snap-On representative, Snap-On had to make a decision whether to appeal the award or pay it. If Snap-On decided to pay the award, it would have to request the funds from its home office. No one disagrees that it would have taken some period of time for Snap-On to pay the award if it decided not to appeal. Therefore, the question is whether it was reasonable for Snap-on to delay paying the award before August 25. On our review of the record, we find substantial evidence supports the commissioner's finding that the delay was reasonable. Schadendorf's August 9 letter calculated the amount owed under the July 26 decision, including interest and costs as of August 25. The letter gave Snap-On until August 18 to make a decision as to whether to pay the amount owed, or else Schadendorf would seek judicial review of the commissioner's decision. On August 16 Snap-On informed Schadendorf's attorney that it would pay the award. On August 18 Schadendorf's attorney informed Snap-On that if payment was not received by August 24, he would file a judicial review action to protect his client's rights. The correspondence between the parties constitutes substantial evidence that Schadendorf considered August 25 a reasonable time in which to receive payment of her benefits. Thus, the record contains substantial evidence supporting the commissioner's finding in its August 25, 2005, remand decision that [i]n view of the communication from claimant's counsel on August 9, 1999, that requested payment as of August 25, 1999, the delay up to August 25, 1999, was reasonable. While employer likely should have acted sooner and issued payment on its own initiative before receiving the August 9, 1999, request from claimant's counsel, its failure to do so does not warrant a penalty in view of the totality of the circumstances. It is necessary to select a day in the future for payment due to the need to calculate interest and process payments. That inevitably causes some reasonable delay, though not unlimited justification. The parties were communicating and cooperating regarding determining the correct amount owed and delay due to that type of interaction was not unreasonable. Accordingly, we reverse the decision of the district court remanding the case back to the commissioner to determine penalty benefits for the period from July 26, 1999, to August 25, 1999, and affirm the decision of the commissioner not to award such benefits during that period. B. Whether Substantial Evidence Supports the Award of Penalty Benefits From August 26, 1999, to September 29, 1999. In making its findings that the delay in the payment of benefits was unreasonably delayed after August 26, 1999, the commissioner found: It was not reasonable for employer to ignore the impact of interest accruing from August 25, 1999, until it issued payment on September 8, 1999. Those adjusting workers' compensation claims are held to know the requirements and to be capable of performing routine mathematical calculations, including computing interest. While absolute perfection is not required, substantial compliance is expected. Claimant established that employer did not pay the compensation award until September 8, 1999, September 23, 1999, and September 29, 1999. The period of reasonable delay ended August 25, 1999. Claimant's payments were unreasonably delayed in the amount of 14 days, 29 days, and 35 days. The commissioner then awarded Schadendorf a $10,000 penalty benefit for the delay. Snap-On argues substantial evidence does not support a finding of unreasonable delay. We disagree with Snap-On. We agree with the commissioner that there is no evidence in the record supporting Snap-On's claim its delay was reasonable after August 25. Therefore, Snap-On failed to carry its burden to show that the delay after August 25 was reasonable. Accordingly, we affirm the decisions of the district court and the commissioner on this issue. Snap-On further argues if we find substantial evidence supports a finding of unreasonable delay, there is not substantial evidence to support the amount assessed. On the other hand, Schadendorf argues in her brief that the penalty benefit is too small. As of August 26, Snap-On unreasonably delayed the payment of $72,166.32 in benefits. Even though Snap-On made substantial payments on September 8 and 24, Snap-On did not pay Schadendorf all of her benefits until September 29 because the payments made by Snap-on were applied first to interest and then to unpaid benefits. Christensen, 554 N.W.2d at 259. The maximum penalty benefit allowed is fifty percent of the amount of benefits that were unreasonably delayed. Iowa Code § 86.13. Thus, the maximum penalty benefit allowed by law was $36,083.16. The factors the commissioner should consider when awarding penalty benefits are the length of the delay, the number of the delays, the information available to the employer regarding the employee's injuries and wages, and the prior penalties imposed against the employer under section 86.13. Robbennolt v. Snap-On Tools Corp., 555 N.W.2d 229, 238 (Iowa 1996). The record establishes that on July 26, 1999, the commissioner determined the amount of benefits Schadendorf was due for her work-related injury. The August 9 letter from Schadendorf's attorney calculated the amount due with interest as of August 25. On August 16, Snap-On agreed with the calculations and informed Schadendorf that it would be paying Schadendorf the amount as calculated. Without any explanation as to the delay, Snap-On did not make its payment until September 8. When it made its payment, it failed to include all of the amounts due. It took two more letters from Schadendorf's attorney to get Snap-On to pay Schadendorf all of her benefits. The record also disclosed this was not the first time Snap-On failed to pay benefits. As the commissioner noted in his decision, Snap-On has been the subject of several cases where a penalty benefit was imposed for its unreasonable delay in paying benefits. Just because the interpretation of the evidence is open to a fair difference of opinion does not mean the commissioner's decision is not supported by substantial evidence. ABC Disposal Sys., Inc. v. Dep't of Natural Res., 681 N.W.2d 596, 603 (Iowa 2004). An appellate court should not consider evidence insubstantial merely because the court may draw different conclusions from the record. Fischer v. City of Sioux City, 695 N.W.2d 31, 33-34 (Iowa 2005). Balancing the short delay in payment of benefits with Snap-On's repeated conduct of unreasonably delaying benefits in this and other cases, substantial evidence supports the amount of the penalty benefit awarded by the commissioner. Accordingly, we affirm the decisions of the district court and the commissioner on the amount of the penalty benefit awarded after August 25, 1999.