Court Opinion

ID: 3165269
Source: CourtListenerOpinion
Date Created: 2015-12-23 18:03:40.704971+00
Date Added: 2024-06-11T11:59:09.498712
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                 No. 14-1511
                          Filed December 23, 2015

BRANDEE RAE PETTENGILL,
    Petitioner-Appellee,

vs.

AMERICAN BLUE RIBBON
HOLDINGS, LLC, and
ARCH INSURANCE COMPANY,
     Respondents-Appellants.
________________________________________________________________

      Appeal from the Iowa District Court for Linn County, Nancy A.

Baumgartner, Judge.

      American Blue Ribbon Holdings, LLC, and Arch Insurance Company

appeal the district court’s reversal of the Iowa Workers’ Compensation

Commissioner’s decision. AFFIRMED.

      Michael L. Roling and Joseph M. Barron of Peddicord, Wharton, Spencer,

Hook, Barron & Wegman, L.L.P., West Des Moines, for appellants.

      T. Todd Becker of Tom Riley Law Firm, P.L.C., Cedar Rapids, for

appellee.

      Considered by Tabor, P.J., and Bower and McDonald, JJ.
                                          2

BOWER, Judge.

      American Blue Ribbon Holdings, LLC, and Arch Insurance Company

(American)   appeal the     district   court’s reversal   of   the   Iowa   Workers’

Compensation Commissioner’s decision. American claims the district court erred

in reversing the commissioner’s conclusion Pettengill was not entitled to

temporary benefits after she reached maximum medical improvement on January

15, 2011. We affirm the district court’s decision and remand to the commissioner

for the calculation of penalty benefits and a determination if any healing period

benefits are owed.

I.    BACKGROUND FACTS AND PROCEEDINGS

      On October 23, 2010, while working as a cook at a Cedar Rapids Village

Inn (owned by American), Pettengill slipped on a freshly cleaned floor and fell,

injuring her lower back. She was twenty-four years old at the time of the fall.

Prior to her fall, Pettengill had obtained treatment for low-back pain on three

occasions.   She first complained of low-back pain stemming from an injury

caused from playing volleyball in 2001. The treating doctor opined the pain was

likely musculoskeletal in origin and prescribed an anti-inflammatory. In October

2009, Pettengill saw Dr. Stephen Runde for upper respiratory type symptoms

and low-back pain.     She was diagnosed with an acute lumbosacral strain.

Finally, on October 2, 2009, Pettengill was seen by physician assistant Rebecca

White, for difficulty breathing and back pain with radiation down her buttocks and

backs of her legs. Pettengill complained of an inability to sit or stand. White’s
                                         3

examination of Pettengill’s back did not reveal any issues.         Pettengill was

prescribed anti-inflammatories and muscle relaxants.

      The day after the fall, Pettengill went to Mercy Care North reporting she

had fallen at work and complaining she had hurt her elbow, right knee, and low

back. Runde diagnosed Pettengill with a myofascial strain. The radiology tests

were negative for any injury. Pettengill returned to Mercy on October 28 for a

recheck of her back and was seen by Dr. Sudha Anand. Anand found Pettengill

had tenderness over the L4 and L5 spinous process and the paravertebral

muscle area.     Anand’s assessment was Pettengill had a low-back sprain.

Pettengill returned to Mercy for a recheck on November 2, and was again seen

by Anand. Anand found Pettengill’s injury was not improving.

      On November 9, Pettengill returned to Mercy for a recheck and was seen

by Dr. Runde. Runde found Pettengill’s pain was persisting. He noted she was

now totally off work.    Subsequently, Pettengill had an MRI completed and

returned to Mercy on December 1. Runde found the MRI showed Pettengill had

a disk extrusion at L5-S1, but no evidence of spinal stenosis or nerve root

impingement. Runde considered referring Pettengill to a pain management clinic

for epidural injections, or to occupational medicine for a second opinion.

      Pettengill was approved for nine sessions of physical therapy by Runde.

Physical therapist Christopher Brink evaluated Pettengill and reported, “The

patient displays signs and symptoms consistent with low back pain with

radiculopathy stemming from a herniated disc of the L5 region. She will benefit

from continued outpatient physical therapy focusing on decreasing inflammation
                                        4

and pain, promoting centralization of the herniated disc, and increasing left lower

extremity function.” Pettengill attended four of the scheduled physical therapy

sessions.

      Pettengill was again seen by Runde on January 14, 2011. He noted she

had attended several physical therapy sessions, without success. Runde and

Pettengill discussed an epidural injection.     Runde scheduled a consult for

Pettengill with an anesthesiologist, Dr. Stephen Maze, for January 24. Maze

found Pettengill had attempted conservative care in the three months since her

injury and had not experienced improvement.        He “strongly recommended a

lumbar epidural steroid injection . . . to hopefully assist in her recovery.”

Pettengill then requested epidurals, which were denied by the insurance carrier.

      Pettengill saw Runde again on February 10. Pettengill reported she had

gotten somewhat better since her previous appointment.         Upon examination,

Runde found Pettengill was “mildly uncomfortable” with some tenderness in the

left lower lumbosacral area.    Runde recommended Pettengill see a workers’

compensation specialist, Dr. Michael Jackson, and remain off work.

      The next day, Pettengill saw Jackson, though it was his last day in the

clinic and he did not dictate notes for Pettengill’s visit. Pettengill returned to

Runde on June 13, with complaints of back pain. His notes from the visit indicate

the workers’ compensation insurer had not been responsive to Pettengill in the

preceding months:

      It has been four months since [the patient] has been in. She has
      kind of been in “medical limbo” since that time. She had an
      evaluation including an MRI and been seen by Dr. M[aze] and it
      was recommended that she may be a candidate for an epidural
                                        5

      steroid injection. However, the work comp insurance company, in
      particular their physician reviewer, would not approve the epidural
      so it has never been done. . . . She has been kind of hung out to
      dry since then. The insurance company has not been answering
      her calls and also they have not been paying her for the last couple
      of months, even though she has remained off of work. She has
      finally badgered someone in to getting approval for a one-time visit
      with me to kind of reassess the situation and get her some pain
      medication. It has been almost three months since she had any
      pain medication from us, so I do not think there is a question of
      drug seeking behavior.

Pettengill had stopped receiving healing period checks in April 2011. According

to Runde, Pettengill had not progressed since her last appointment.

      Pettengill retained an attorney in June 2011 who contacted her insurance

company. She filed a petition for alternate care on September 12, with a hearing

set for September 22. The insurance company’s counsel gave its approval for an

injection one day before the hearing. Pettengill also filed a petition for workers’

compensation benefits on September 27, 2011, with a hearing set for September

17, 2012.

      Pettengill received her first epidural steroid injection in October 12, 2011.

Dr. Maze reported Pettengill received a “modest benefit where her pain was

relieved and she was able to stand for a longer period of time, but was not quite

pain free.” Upon Maze’s recommendation, a second epidural was approved and

subsequently administered on January 11, 2012.

      The insurance company referred Pettengill to Dr. Robert Broghammer for

an independent medical examination (IME), and he examined her on January 6.

Broghammer recommended an EMG/Conduction study and noted:

      [I]f Ms. Pettengill has a chronic left leg radiculopathy, I would opine
      that this likely is related to her alleged injury and would find the
                                          6

       company liable for treatment until her symptoms abate. If it does
       not show a left leg radiculopathy, I would not relate anymore of her
       ongoing symptoms due to her alleged injury and would opine she
       would be at MMI and release her to return to work full duty, with
       further follow up per her primary care physician.

       Dr. Sunny Kim conducted the study and found it showed a “[n]ormal study

without   electrophysiological   evidence     of   left   lumbosacral   radiculopathy,

plexopathy or peripheral polyneuropathy.”          Broghammer issued a report on

February 15, in which he concluded “[g]iven the negative studies, the worker’s

ongoing pain is unexplained by her remote injury.            I opine that any further

treatment for her idiopathic and ongoing back pain should occur outside the

auspices of the worker’s compensation system . . . .”

       At the request of Pettengill’s counsel, she underwent an additional IME

performed by Dr. Richard Nieman. After the examination, Nieman concluded:

       I have absolutely no idea why she was not considered for surgery.
       This is a large disk extrusion. Certainly she would benefit from an
       operative approach. I strongly advise that she have another MRI
       scan. If confirmatory of her continued disk herniation, she should
       be seen by a surgeon, consideration for micodiskectomy. I have
       used Dr. Chad Abernathey, and he does an excellent job for this
       type of situation.

Dr. Neiman assessed a 13 percent impairment rating and the following

restrictions:

       a) Avoid lifting more than five-ten pounds repetitively;
       b) Avoid standing for any length of time;
       c) Avoid squatting, kneeling, or bending;
       d) No driving more than one hour at a time;
       e) Provide the ability to change positions from sitting to standing.

       Dr. Abernathey evaluated Pettengill on April 18, 2012. He diagnosed her

as having a mild degenerative change at L5-S1 with a small annular tear. Based
                                        7

on the MRI, Dr. Abernathey did not recommend surgery. He opined her work-

related injury would have healed within six to twelve weeks of the October 23,

2010 injury, and she would have reached maximum medical improvement (MMI)

at that time. Dr. Abernathey believed the disk protrusion was not related to work,

but was actually a congenital defect.

      In its opinion the commissioner highlighted the differences in the doctors’

opinions:

              There is a significant difference in opinion between Dr.
      Broghammer and Dr. Abernathey, who believe claimant has a
      chronic congenital and personal condition that is unrelated to her
      work fall, and that of Dr. Neiman. Dr. Neiman believes strongly that
      claimant has a huge disk protrusion which is the result of the fall
      and, thus, the fall is responsible for all claimant’s disability. No
      doctor opined that claimant’s preexisting condition was aggravated
      permanently by the work injury. Dr. Neiman premises his opinion
      on a new injury. The disk protrusion allegedly caused by the work
      injury.
              ....
              Later, however, Dr. Runde agreed that Dr. Abernathey would
      have a better understanding of claimant’s condition and would, in
      fact, defer to Dr. Abernathey’s conclusions.
              Dr. Runde changed his mind again on September 14, 2012,
      indicating that he would stand by the permanent work restrictions
      set forth on August 13, 2012.
              Sunny Kim, M.D., who performed the EMG, wrote that a
      person who injures the back can have pain down the lower
      extremities without a specific injury to the spinal nerve root.
      However, the EMG did not show that there was an acute injury at
      one time which then healed; nor did the EMG show any sign of a
      chronic radiculopathy, which suggests that there was never any
      injury to the nerve root from claimant’s work injury.

      The hearing on Pettengill’s petition for workers’ compensation benefits

was held on September 17, 2012.             A deputy workers’ compensation

commissioner issued an arbitration decision on December 12, and found

Pettengill failed to meet her burden of proof to show her ongoing back problems
                                         8

were related to the injury she sustained at work in October 2010. The deputy

found Pettengill was not entitled to additional temporary benefits for the period of

April 20, 2011 through March 18, 2012. Further, and for the same reason, the

deputy found Pettengill was not entitled to penalty benefits for failure to pay

temporary benefits for that period.

       Pettengill filed a notice of appeal with the Iowa Workers’ Compensation

Commissioner on December 28. The commissioner issued an appeal decision

on July 28, 2013, affirming and adopting the deputy’s decision.

       Pettengill filed a petition for judicial review on August 14. The district

court’s ruling reversed the commissioner and remanded the case to the

commissioner for a determination of healing period and penalty benefits.

American appealed.

II.    STANDARD OF REVIEW

       Iowa Code section 17A.19(10) (2011) governs judicial review of agency

decision making. We will apply the standards of section 17A.19(10) to determine

whether we reach the same results as the district court. “The district court may

grant relief if the agency action has prejudiced the substantial rights of the

petitioner, and the agency action meets one of the enumerated criteria contained

in section 17A.19(10)(a) through (n).” Burton v. Hilltop Care Ctr., 813 N.W.2d

250, 255–56 (Iowa 2012) (citation omitted).

       Our standard of review depends on the aspect of the agency’s decision

that forms the basis of the petition for judicial review. Id. at 256. We are to defer

to the agency’s interpretation of a statute when the legislature has clearly vested
                                         9

the agency with the authority to interpret a statute, and “only reverse a decision

of statutory construction which is irrational, illogical, or wholly unjustifiable.”

Westling v. Hormel Foods Corp., 810 N.W.2d 247, 251 (Iowa 2012); see also

Iowa Code § 17A.19(10)(l).       If the agency is not clearly vested with such

authority, however, we review questions of statutory interpretation for correction

of errors at law.       Westling, 810 N.W.2d at 251; see also Iowa Code

§ 17A.19(10)(c).

         Here, we are reviewing the commissioner’s interpretation of Iowa Code

section 86.13, which deals with penalty benefits. An examination of chapter 86

does not reveal any basis for concluding that the legislature clearly vested the

workers’ compensation commissioner with authority to interpret the section at

issue.    Accordingly, we review the commissioner’s statutory interpretation for

correction of errors at law. Iowa Code § 17A.19(10)(c).

III.     DISCUSSION

         American claims the district court erred in reversing the commissioner’s

conclusion Pettengill was not entitled to temporary benefits after she reached

MMI on January 15, 2011. Pettengill claims she was entitled to the benefits

because American had terminated the payments in violation of Iowa Code

section 86.13(2).

         The commissioner found:

                Claimant seeks additional weekly benefits pursuant to Iowa
         Code section 86.13(4). This particular provision requires that if a
         delay in commencement or termination of benefits occurs without
         reasonable or probable cause or excuse, the workers’
         compensation commissioner shall award additional weekly benefits
         in an amount not to exceed 50 percent of the amount of benefits
                                  10

that were unreasonably delayed or denied. Iowa Code section
85.13(4)(b).
        ....
        Defendant has the burden to show compliance with this
statutory provision in order to avoid the mandatory assessment of a
penalty. The inquiry under the current provision of Iowa Code
section 86.13 requires more than a reasonable or probable cause
or excuse at the time the case comes to hearing. The law requires
proof of a prompt investigation and that factual basis be provided to
the injured worker at the time of the denial, delay, or termination of
benefits. Herein, defendant must show a timely investigation of
claimant’s report of a back injury, that the denial of the back claim is
based on the results of that timely investigation, and that there was
a timely communication to claimant of the reasons for the denial.
From February 2011 until approximately July 2011, claimant
received no information from defendant as to why her claim had
been denied. Dr. Broghammer indicated that claimant was not a
surgical candidate, but it was not until late fall of 2011 that
defendants engaged in any investigation of claimant’s ongoing back
claims. Defendants wrote inquiring on November 29, 2011, why
claimant was not capable of working. On December 8, 2011,
defendants wrote again requesting claimant’s deposition.
        On January 12, 2012, defendants indicated that an EMG
would be ordered per Dr. Broghammer’s recommendations. Dr.
Broghammer’s opinions on February 15, 2012, essentially provide a
zero percent impairment. Defendants paid temporary benefits from
October 29, 2010, through March 19, 2011, for a total of $6,153.79.
        Defendants assert benefits were terminated when claimant
refused to follow up with Dr. Runde. Claimant says that this was
totally inaccurate and that she wanted to see Dr. Runde, but that
the insurance company never authorized this care. There was no
documentation in the file indicating that claimant was ever notified
of the cessation of her benefits or the reason why these benefits
were terminated.
        Claimant testified that she was given no notice her benefits
were going to end. She called and called workers’ compensation.
She even called the claims manager’s supervisor who authorized a
one-time visit with Dr. Runde.
        Because it is found that claimant achieved MMI on January
15, 2011, for symptoms arising out of the October 23, 2010 work
injury there was no delay in benefits paid even though post-January
15, 2011, defendants’ communication with claimant was
disappointing and, if not within the letter of the law, definitely not
within the spirit of the law. (Iowa Code section 86.13(4)(b)).
                                        11

      The district court reversed the commissioner’s decision and found notice

had not been given to Pettengill before her benefits were terminated, as required

by Iowa Code section 86.13. The court remanded the commissioner’s decision

for the determination of penalty benefits, and whether Pettengill was entitled to

healing period benefits between April 2011 and March 2012.

      On appeal, our task is to evaluate the commissioner’s interpretation of

Iowa Code section 86.13. The relevant portions of section 86.13 provide:

              2. If an employer or insurance carrier fails to file the notice
      required by this section, the failure stops the running of the time
      periods in section 85.26 as of the date of the first payment. If
      commenced, the payments shall be terminated only when the
      employee has returned to work, or upon thirty days’ notice stating
      the reason for the termination and advising the employee of the
      right to file a claim with the workers’ compensation commissioner.
              ....
              4. a. If a denial, a delay in payment, or a termination of
      benefits occurs without reasonable or probable cause or excuse
      known to the employer or insurance carrier at the time of the denial,
      delay in payment, or termination of benefits, 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 denied,
      delayed, or terminated without reasonable or probable cause or
      excuse.
              b. The workers’ compensation commissioner shall award
      benefits under this subsection if the commissioner finds both of the
      following facts:
                       (1) The employee has demonstrated a denial, delay in
      payment, or termination of benefits.
                       (2) The employer has failed to prove a reasonable or
      probable cause or excuse for the denial, delay in payment, or
      termination of benefits.
              c.[1] In order to be considered a reasonable or probable
      cause or excuse under paragraph “b”, an excuse shall satisfy all of
      the following criteria:

1
 The language in this subsection was added to the statute pursuant to a 2009
Amendment. See 2009 Iowa Acts ch. 179, § 110.
                                       12

                     (1) The excuse was preceded by a reasonable
       investigation and evaluation by the employer or insurance carrier
       into whether benefits were owed to the employee.
                     (2) The results of the reasonable investigation and
       evaluation were the actual basis upon which the employer or
       insurance carrier contemporaneously relied to deny, delay payment
       of, or terminate benefits.
                     (3)     The     employer      or insurance    carrier
       contemporaneously conveyed the basis for the denial, delay in
       payment, or termination of benefits to the employee at the time of
       the denial, delay, or termination of benefits.

       Iowa Code section 86.13(4)(b) creates a two-prong test that requires the

agency to award a claimant penalty benefits if (1) “The employee has

demonstrated a denial, delay in payment, or termination of benefits”; and (2) “The

employer has failed to prove a reasonable or probable cause or excuse for the

denial, delay in payment, or termination of benefits.” Concerning the first prong,

the commissioner concluded Pettengill satisfied her burden in showing her

benefits were terminated. For the second prong, the burden shifted to American

to prove it had “a reasonable or probable cause or excuse . . . for the

termination.”

       In order to be considered a reasonable or probable cause or excuse under

paragraph “b,” an excuse shall satisfy the three criteria listed in paragraph “c.”

The commissioner complained American did not communicate with Pettengill,

and also noted American did not perform the requisite investigation for months

after the termination of benefits.   However, the commissioner ruled evidence

obtained nearly a year after the termination of benefits demonstrated Pettengill

had reached MMI in January 2011, and therefore there was no delay in

payments.
                                         13

       We find the commissioner erred in its application of section 86.13(4)(c).

(4)(c)(1)-(3) creates a mandatory timeline for the employer to follow in showing it

had a “reasonable or probable cause or excuse” for the termination of benefits.

First, the employer’s excuse for the termination must have been preceded by an

investigation. Iowa Code § (4)(c)(1). Second, the results of the investigation

were “the actual basis . . . contemporaneously” relied on by the employer in

terminating the benefits. Third, the employer “contemporaneously conveyed the

basis for the . . . termination of benefits to the employee at the time of the . . .

termination.” American did not carry its burden in demonstrating it followed this

mandatory timeline.

       American did not conduct the requisite investigation before terminating

Pettengill’s benefits, demonstrate it contemporaneously relied on the results of

an investigation, and contemporaneously convey the basis of the termination to

Pettengill. An employer cannot unilaterally decide to terminate an employee’s

benefits without adhering to Iowa Code section 86.13, to allow otherwise would

contradict the language of that section. Since American has failed to carry its

burden, we find the commissioner erred in its application of section 86.13 and

affirm the district court’s award of penalty benefits. Further, we agree with the

district court’s treatment of the healing period benefits issue:

       Pettengill also appealed the agency’s denial of healing period
       benefits between April 2011 and March 2012. Her healing period
       benefits were terminated without notice and the agency did not
       make any findings regarding whether she was entitled to continue
       receiving benefits because their conclusion was that her benefits
       were not delayed. The issue of Pettengill’s healing period benefits
       must be remanded to the agency for review of the medical
                                       14

      information available at the time her benefits were delayed or
      terminated.

      We affirm the district court’s decision and remand to the commissioner for

the calculation of penalty benefits and for a determination if any healing period

benefits are further owed.

      AFFIRMED.