Court Opinion

ID: 4249839
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:21:29.292824+00
Date Added: 2024-06-11T14:44:09.068747
License: Public Domain

IN THE SUPREME COURT OF IOWA
                             No. 08–0065

                        Filed February 12, 2010

JACOBSON TRANSPORTATION COMPANY
and LIBERTY MUTUAL INSURANCE,

      Appellants,

vs.

RUSSELL HARRIS,

      Appellee.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Polk County, Robert B.

Hanson, Judge.

      Employee seeks further review of court of appeals’ decision

reversing workers’ compensation commissioner’s calculation of a weekly

compensation rate.    DECISION OF COURT OF APPEALS VACATED;

DISTRICT COURT JUDGMENT AFFIRMED.

      Kevin R. Rogers of Swisher & Cohrt, P.L.C., Waterloo, for

appellants.

      Michael L. Mock of Bradshaw, Fowler, Proctor & Fairgrave, P.C.,

Des Moines, for appellee.
                                            2
HECHT, Justice.
       In    this   appeal,    we    must       determine    whether      the   workers’

compensation commissioner properly excluded three weeks of earnings

from the calculation of an injured employee’s compensation rate.                       We

conclude the commissioner did not err by excluding three weeks of low

earnings and replacing them with earnings from three earlier weeks

which more fairly represented the employee’s customary earnings.

       I. Factual and Procedural Background.

       Russell Harris (Harris) was hired by Jacobson Transportation

Company (Jacobson) in April 2003 as an over-the-road truck driver. He

was paid by the mile, and he was not guaranteed a minimum amount of

work each week. Accordingly, the number of miles he drove each week

varied depending on the assignments he received from Jacobson, but

also on other factors such as traffic, speed limits, road construction, and

weather.       Harris’s weekly earnings during his employment were as

follows: 1
       04/26/2003              $702.08            08/23/2003            $958.72
       05/03/2003              $851.20            08/30/2003            $667.20
       05/10/2003              $295.84            09/06/2003            $892.64
       05/17/2003             $1117.12            09/13/2003            $247.36
       05/24/2003              $764.80            09/20/2003           $1036.48
       05/31/2003              $833.76            09/27/2003            $944.00
       06/07/2003                $0.00            10/04/2003            $227.52
       06/14/2003             $1710.08            10/11/2003           $1223.76
       06/21/2003             $1068.64            10/18/2003              $0.00
       06/28/2003              $538.24            10/25/2003           $1183.52
       07/05/2003              $542.08            11/01/2003            $870.72
       07/12/2003              $355.68            11/08/2003           $1012.00
       07/19/2003              $698.59            11/15/2003           $1128.32
       07/26/2003                $0.00            11/22/2003            $940.16
       08/02/2003              $806.51            11/29/2003            $662.40
       08/09/2003              $708.48            12/06/2003            $453.92
       08/16/2003              $875.52

       1This  list of Harris’s weekly earnings includes only his earnings up to the date of
his injury, although he continued to work for Jacobson for several months after being
injured.
                                          3

      On December 9, 2003, while unloading freight in California, Harris

injured his low back. The injury was diagnosed as a lumbosacral and

thoracic spine strain, and Harris was restricted to light-duty work by a

physician. Harris received a series of spinal injections after returning to

work, but in March 2004 he was unable to continue driving because of

the injury.

      From      June   2004     through       September   2005,   Harris    sought

treatment from several different doctors. Their diagnoses were generally

similar, although they disagreed about the best course of treatment and

whether Harris had reached maximum medical improvement. Each of

the doctors believed Harris was capable of light-duty work and

recommended that he not return to truck driving.

      In March 2005, Harris filed a claim for workers’ compensation

benefits.     After an arbitration hearing on November 8, 2005, a deputy

workers’ compensation commissioner determined that Harris was

permanently and totally disabled. The deputy commissioner calculated

Harris’s average weekly rate pursuant to Iowa Code section 85.36(6)

(2003) by using the thirteen weeks immediately prior to his injury,

although Harris had argued that his earnings in several of those weeks

were nonrepresentative and should be excluded.                 The deputy found

Harris’s     average   weekly   earnings      were   $827.52    and   his   weekly

compensation rate was $483.99. 2

      2The    deputy commissioner apparently excluded the week ending October 18,
2003, in which Harris had zero earnings and replaced it with the week ending
September 6, 2003, in which Harris earned $892.64. The exclusion of that week from
the calculation of Harris’s wage rate has not been challenged in this case.
                                            4

       Both parties appealed, Jacobson 3 contending the deputy erred in

concluding Harris was permanently and totally disabled and Harris

contending the deputy calculated the average weekly rate incorrectly. In

the appeal decision, the workers’ compensation commissioner agreed

with the deputy commissioner’s finding that Harris is totally disabled.

However, the commissioner concluded three of the thirteen weeks

preceding Harris’s injury were not representative 4 and should have been

excluded from the calculation of Harris’s average weekly earnings.

Accordingly, the commissioner calculated Harris’s average weekly

earnings at $953.50 and his weekly compensation rate at $545.51. 5

       When     calculating     Harris’s        weekly   compensation     rate,    the

commissioner cited Hanigan v. Hedstrom Concrete Products, Inc., 524
N.W.2d 158 (Iowa 1994), noting the “purpose of weekly compensation is

to replace the probable earnings that were lost due to the injury.” The

commissioner       then    engaged     in       a   lengthy   analysis   of   Harris’s

compensation.

       3Jacobson    and its insurance carrier, Liberty Mutual Insurance, were
codefendants before the agency and are copetitioners on judicial review. We refer to
them jointly as “Jacobson” in this opinion.

       4As  in the deputy’s arbitration award, the commissioner’s appeal decision also
did not include in the rate calculation the week of October 18 in which Harris had no
earnings. Although there is some evidence in the record tending to prove Harris missed
work in October because he was hunting, had the agency concluded Harris’s lack of
earnings were due to personal reasons, section 85.36(6) provides the weekly earnings
for such period “shall be the amount [Harris] would have earned had [he] worked when
work was available to other employees of [Jacobson] in a similar occupation.” Iowa
Code § 85.36(6). Neither the arbitration decision nor the appeal decision explains the
exclusion of the October 18 earnings. As neither party challenges the commissioner’s
exclusion of the week of October 18 from consideration in the calculation of the weekly
rate, we assume without deciding for purposes of our opinion that the exclusion was
appropriate.

       5Although     the commissioner’s appeal decision found Harris’s weekly
compensation rate was $549.90, an order nunc pro tunc was later entered conforming
the rate to the applicable rate table.
                                          5
       The weekly earnings range from a high of $1,223.76 to a low
       of $227.52. When reviewing the distribution of earnings I
       find that there are five weeks in which claimant earned
       $1,012.00 or more per week. There were two weeks in which
       claimant earned $247.36 per week or less. Over the 30
       weekly pay periods that claimant worked for the employer
       his total earnings were $24,317.34 . . . . The weekly average
       of claimant’s total earnings is thus $810.58. For the thirteen
       weeks immediately prior to his work injury, claimant earned
       more than $810.58 in ten of those weeks. 6 It is concluded
       that claimant’s average weekly wage should be calculated by
       discarding the weeks ending December 6, 2003 ($453.92),
       October 4, 2003 ($227.52), and September 13, 2003
       ($247.36). By discarding those three weeks and adding
       earnings for the weeks ending August 30, 2003 ($667.20),
       August 23, 2003 ($958.72), and August 16, 2003 ($875.52)
       it is concluded that claimant’s gross earnings for the period
       are $12,395.44. When divided by thirteen weeks the average
       weekly gross earnings are $953.50.
       Jacobson sought judicial review, contending the commissioner

erred both in determining Harris was permanently and totally disabled

and in calculating Harris’s weekly compensation.                The district court

affirmed the commissioner’s decision.              Jacobson appealed, and we

transferred the case to the court of appeals.              The court of appeals

affirmed the disability decision, but reversed the commissioner’s

calculation of average weekly earnings and reinstated the deputy

commissioner’s lower calculation.             We granted Harris’s petition for

further review to address the earnings issue.

       II. Scope of Review.

       Our    review    of   a   decision     of   the   workers’    compensation

commissioner varies depending on the type of error allegedly committed

by the commissioner. If the error is one of fact, we must determine if the

commissioner’s findings are supported by substantial evidence.                  Iowa

       6Although the commissioner states that ten of the thirteen weeks of earnings
exceeded $810.58, our review of the earnings history indicates that Harris earned more
than $810.58 in nine of the weeks.
                                        6

Code § 17A.19(10)(f); Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa

2006).   If the error is one of interpretation of law, we will determine

whether the commissioner’s interpretation is erroneous and substitute

our judgment for that of the commissioner. Iowa Code § 17A.19(10)(c);

Meyer, 710 N.W.2d at 219.       If, however, the claimed error lies in the

commissioner’s application of the law to the facts, we will disturb the

commissioner’s decision if it is “[b]ased upon an irrational, illogical, or

wholly   unjustifiable   application    of    law    to    fact.”     Iowa   Code §

17A.19(10)(m); Meyer, 710 N.W.2d at 219. Because of the widely varying

standards of review, it is “essential for counsel to search for and pinpoint

the precise claim of error on appeal.” Meyer, 710 N.W.2d at 219.

      In this case, the commissioner concluded three of the thirteen

weeks prior to Harris’s injury did not fairly reflect his customary earnings

and replaced them with weeks that he concluded did represent Harris’s

customary earnings. There is no factual dispute concerning the amount

of Harris’s wages in the weeks prior to the injury. The dispute centers

instead on the commissioner’s interpretation of the words “customary

earnings” in Iowa Code section 85.36(6) and his application of the law to

the   facts.    Accordingly,   we      must    first      determine    whether    the

commissioner has misinterpreted the law.               Iowa Code § 17A.19(10)(c);

Meyer, 710 N.W.2d at 219. If the commissioner’s interpretation of the

law is correct, we will then review his application of the law to the facts

to determine if it is “irrational, illogical, or wholly unjustifiable.”          Iowa

Code § 17A.19(10)(m); Meyer, 710 N.W.2d at 219.

      III. Discussion.

      Iowa Code section 85.36 describes the basis for calculating a

disabled employee’s compensation rate.              “The basis of compensation
                                          7

shall be the weekly earnings of the injured employee at the time of the

injury.” Iowa Code § 85.36.
       In the case of an employee who is paid on a daily or hourly
       basis, or by the output of the employee, the weekly earnings
       shall be computed by dividing by thirteen the earnings, not
       including overtime or premium pay, of the employee earned
       in the employ of the employer in the last completed period of
       thirteen consecutive calendar weeks immediately preceding
       the injury. If the employee was absent from employment for
       reasons personal to the employee during part of the thirteen
       calendar weeks preceding the injury, the employee’s weekly
       earnings shall be the amount the employee would have
       earned had the employee worked when work was available to
       other employees of the employer in a similar occupation. 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) (emphasis added). 7

       Jacobson      alleges   the   commissioner       misinterpreted      the   last

sentence of this provision authorizing the replacement of weeks which do

not reflect the employee’s “customary earnings.” Because Harris’s weekly

earnings fluctuated based on the number of miles he drove and because

Harris was not guaranteed a uniform number of miles each week,

Jacobson posits that the only customary feature of Harris’s earnings is

their variability.    Accordingly, in the case of an employee like Harris,

Jacobson argues, the statute does not authorize the commissioner to

exclude weekly earnings simply because they are significantly lower than

other weeks without an explanation for the low wages that provides a

rationale beyond the expected fluctuation in miles occurring from week

to week.

        7The last two sentences, including the one at issue in this case, were added to

the statute in 2000. 2000 Iowa Acts ch. 1007, § 2.
                                        8

         Our goal, when interpreting a statute, is to give effect to the intent

of the legislature. Griffin Pipe Prods. Co. v. Guarino, 663 N.W.2d 862, 864

(Iowa 2003). To determine the intent of the legislature, we look first to

the words of the statute itself as well as the context of the language at

issue.    Id. at 865.   We seek to “interpret [the provision] in a manner

consistent with the statute as an integrated whole.” Id. Mindful that a

fundamental purpose of the workers’ compensation statute is to benefit

the injured workers, we interpret chapter 85 “liberally in favor of the

employee.” Id.
         Consistent with the remedial nature of workers’
         compensation laws, statutes for computation of wage bases
         are “meant to be applied, not mechanically nor technically,
         but flexibly, with a view always to achieving the ultimate
         objective of reflecting fairly the claimant’s probable future
         earning loss.”

Hanigan, 524 N.W.2d at 160 (quoting 2 Arthur Larson, Workmen’s

Compensation Law § 60.11, at 10-622 (1994) (now found at 5 Arthur
Larson & Lex Larson, Larson’s Workers’ Compensation Law § 93.01[1][c],

at 93–7 (2009))).

         We think our decision in Griffin Pipe, interpreting section 85.36(6),

informs our analysis here.       In that case, Guarino was an hourly-paid

employee at the Griffin Pipe plant. See Griffin Pipe, 663 N.W.2d at 864.

The plant was closed two weeks each summer and two weeks each winter

for maintenance and cleaning.          Id.   During the semi-annual plant

closures, Guarino did not work and did not earn any wages. Id. Guarino

was injured on the job, and although the two-week winter closure

occurred within the thirteen weeks immediately prior to his injury, the

commissioner concluded those two weeks did not reflect his customary
                                          9

earnings and replaced them with earnings from earlier weeks. 8 Id. The

employer contended that because the plant closures were expected and

occurred regularly, they were “customary” and accordingly Guarino’s

resulting two weeks of zero earnings should be included in the

calculation of his weekly earnings.

       In our review, we agreed with the commissioner’s decision to

replace the weeks when the plant was closed. Although the closing of the

plant was planned and routine, we explicitly rejected any distinction

between anticipated and unanticipated occurrences causing a reduction

in an employee’s wages.
       Why a particular week may not reflect the employee’s
       customary hours is important only insofar as it might be
       relevant to whether the hours worked in that week are in fact
       customary. . . .

             We agree with the agency that the issue under section
       85.36 “is whether the hours of work in any particular
       workweek are representative of the hours typically or
       customarily worked by an employee during a typical or
       customary full week of work.”
Id. at 866.

       Although not in effect at the time of Guarino’s injury, we also

discussed the 2000 amendment to section 85.36(6) which added to the

statute the language at issue in this case. Griffin Pipe, 663 N.W.2d at

867. We noted that while usually we presume a material change in a

statute changes the law, we concluded this amendment was intended to

clarify the statute because it was enacted after significant dispute within

the legal community about the correct application of section 85.36. Id.

Although we had previously interpreted section 85.36 to permit the

       8Guarino’s  injury occurred before section 85.36(6) was amended adding the
sentence explicitly requiring the replacement of weeks of earnings that do not fairly
reflect the employee’s customary earnings. However, as discussed, our interpretation of
section 85.36(6) both before and after the amendment is relevant in this case.
                                        10

replacement of a nontypical workweek with a typical workweek in the

wage base calculation in Thilges v. Snap-On Tools Corp., 528 N.W.2d 614,

619 (Iowa 1995), the issue arose again three years later in Weishaar v.

Snap-On Tools Corp., 582 N.W.2d 177, 183 (Iowa 1998).                          The

amendment, explicitly adding language requiring that a nontypical week

be replaced with a typical week of earnings when calculating an

employee’s compensation base,
      confirmed this court’s interpretation of section 85.36. . . .
      Accordingly, to determine what weeks should be included in
      the compensation rate calculation one must ask whether the
      earnings attributable to a particular week are customary, not
      whether a particular absence from work is anticipated.
Griffin Pipe, 663 N.W.2d at 867.

      Thus, in our interpretation of section 85.36, both before and after

the addition of the language at issue in this case, we have determined

that one must look to the earnings themselves to see if they are

customary. The reason for the variance in earnings is not determinative

of whether a week’s earnings should be replaced because they are not

customary. 9

      Next, then, we must address whether an employee whose earnings

fluctuate each week can ever have atypical weekly earnings justifying

replacement under section 85.36(6).           Jacobson argues that because

Harris’s miles were not fixed or uniform each week, Harris’s weekly

earnings should have been calculated using the thirteen most recent

weeks of earnings, without regard to the amount of his average

      9The   reason for nontypical wages is relevant if the employee was absent from
work for reasons personal to the employee. As previously noted, section 85.36(6)
provides for a different method of addressing a nontypical week of earnings due to
personal reasons. In that case, the weekly wages must be replaced with the wages the
employee “would have earned had the employee worked when work was available” to
the employer’s workers performing in a similar occupation. Iowa Code § 85.36(6).
                                       11

earnings. 10    In effect, Jacobson advocates for a bright-line rule that

would preclude the replacement of a week’s earnings under section 85.36

if the employee’s earnings customarily vary from week to week.

      We do not interpret the word “customary” so rigidly as to conclude

that just because an employee’s schedule or output is neither fixed nor

guaranteed,     the   employee     cannot     have    “customary”     earnings.

“Customary” means “based on or established by custom”; “commonly

practiced, used or observed”; or “usual.”       Merriam-Webster’s Collegiate

Dictionary 285 (10th ed. 2002). We have previously defined “customary”

as “typical.”    Griffin Pipe, 663 N.W.2d at 866.        Ascertainment of an

employee’s customary earnings does not turn on a determination of what

earnings are guaranteed or fixed; rather, it asks simply what earnings

are usual or typical for that employee. As discussed above, an employee

need not justify the variance with a particular explanation. The amount

of the variance alone, by the magnitude of its departure from the usual

earnings of the employee, may suffice to justify the exclusion of a week’s

earnings from the weekly rate calculation.         Put another way, even an

employee whose wages fluctuate can have an unusually low or

abnormally high week of output and resulting earnings. We think it is

important that when the legislature clarified its intent in the 2000

amendment to have atypical weeks excluded from the calculation, it

added the language to section 85.36(6) which specifically addresses the

calculation of weekly earnings for employees paid daily, hourly, or by

output. An employee like Harris, who is paid by output (miles driven), is

likely to have fluctuating earnings. The fact that the legislature included

the language authorizing the exclusion of noncustomary earnings in this

       10Again, Jacobson does not argue that the week ending October 18 with zero

earnings should be included in the calculation.
                                    12

subsection indicates it expected that even employees with variable

earnings will on occasion have earnings that diverge from the customary.

      We believe the commissioner’s interpretation of “customary

earnings” is compatible with the legislature’s directive that injured

employees’ weekly rate of compensation shall be based on their “average

spendable weekly earnings” at the time of the injury.           Iowa Code

§ 85.34(2), (3) (emphasis added).        The legislature’s adoption of the

concept of earnings-averaging as a first principle of rate calculation

evidences an intention to base workers’ compensation rates on an

earnings history of several weeks that are more likely than earnings of a

single week to fairly represent the claimant’s probable future earning

loss. The legislature’s intent to provide even greater protection to injured

workers with variable earnings from the harsh effects of basing the

weekly rate of compensation on unusually low-pay weeks is clearly

evidenced by the amendment to section 85.36(6) adopted in 2000. As

amended, the section expressly authorizes the commissioner to exclude

from the computation of average weekly earnings weeks in which injured

employees’ earnings do not fairly represent their customary earnings.

      Our interpretation of “customary earnings” is further supported by

the fact that all calculations of Harris’s average weekly earnings, whether

performed by either of the parties or by the agency, have replaced the

October 18 week of zero earnings with an earlier week in which Harris

had earnings.    Although no explanation has been provided for this

replacement, we think it demonstrates a common sense understanding of

what is considered customary. Even for an employee like Harris whose

earnings vary each week, a week of zero earnings is not customary. This

raises the question: If a week of zero earnings is so low that it must be

excluded as not typical, where should the line be drawn? What of a week
                                     13

of $100 earnings? Because we think the determination of what earnings

are customary will depend on the specific facts of each case, we reject a

bright-line rule that any employee whose wages vary may not have weeks

excluded as noncustomary.       Instead, we think the determination of

whether wages are customary under the circumstances is a matter

expressly committed by section 85.36(6) to the discretion of the

commissioner.    Accordingly, we conclude the commissioner correctly

interpreted section 85.36(6).

      We must next decide whether the commissioner’s decision to

replace the three weeks of Harris’s earnings was illogical, irrational, or

wholly unjustifiable in this case.   The commissioner’s appeal decision

discloses a careful and thorough consideration of Harris’s earnings

during each of the thirteen weeks immediately prior to the injury and a

thoughtful comparison of how the earnings in those weeks compared

with those paid to Harris during earlier weeks of employment with

Jacobson. After reviewing the weekly earnings and comparing them to

the average weekly earnings for Harris’s prior career as an employee of

Jacobson, the commissioner concluded the earnings from three of the

weeks were so low as to be not customary and replaced them with the

immediately preceding three weeks of earnings.      In deciding whether

Harris’s earnings during the three disputed weeks were so substantially

lower than what he usually earned as to be unrepresentative, we

conclude the commissioner aptly compared the earnings from those

weeks with Harris’s broader earnings history. When viewed in this way,

the three weeks excluded by the commissioner were so far afield from

Harris’s usual earnings as to be fairly characterized as unrepresentative

of customary earnings.
                                           14

       While we do not believe the analysis undertaken by the

commissioner in this case is the only appropriate method of arriving at a

determination of whether earnings are customary, we conclude it was

reasonable under the circumstances presented here.

       Jacobson contends that even if the commissioner did not err in

excluding the three lowest weeks of earnings, it was irrational and

arbitrary to exclude only the lowest weeks and not the highest weeks.11

As we have already noted, workers’ compensation statutes are to be

interpreted and applied liberally and flexibly for the benefit of the worker.

Griffin Pipe, 663 N.W.2d at 865; Hanigan, 524 N.W.2d at 160.                      The

commissioner’s decision that Harris’s compensation during the three low

weeks was exceptionally low, while the high weeks were not unusually

high when compared to the earnings history was not arbitrary or

unreasonable in this case.           As acknowledged by the commissioner,

nearly half of the thirteen weeks prior to the injury produced earnings of

more than $1012.00, but only two weeks had income of $247.36 or less.

The commissioner reasonably determined that most of the thirteen weeks

of earnings exceeded $810.58, Harris’s average weekly earnings for his

entire preinjury career at Jacobson. When the range of Harris’s weekly

earnings is considered, as well as the distribution of the earnings, with

most of the weekly earnings near the high end, the commissioner’s

decision to replace only the three lowest weeks because they were

significantly lower than Harris’s career average is not unreasonable.

Given our standard of review, as well as the mandate to apply workers’

compensation       laws    to    benefit    the    worker,     we    conclude      the

       11It
          should be noted at this juncture that the legislature has provided protection
to the employer from the risk of rate calculations based on weeks of unusually high
earnings by excluding overtime and premium pay from average weekly wage
computations. Iowa Code § 85.36(6).
                                       15

commissioner’s determination of customary earnings in this case is not

illogical, irrational, or wholly unjustifiable.

      IV. Conclusion.

      We    agree    with   the   workers’    compensation   commissioner’s

interpretation of section 85.36(6).       His decision to replace three low

weeks of earnings with weeks in which Harris’s weekly earnings fairly

represented customary earnings was not irrational, illogical, or wholly

unjustifiable.

      DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT AFFIRMED.