Acuity Ins. v. Foreman

• Decision Date: 21 July 2004
• Docket Number: No. 02-1350.,02-1350.
• Citation: 684 N.W.2d 212
• Parties: ACUITY INSURANCE, f/k/a Heritage Mutual Insurance Company, and Foreman Electric & Hardware, Appellants, v. Darrell FOREMAN, Appellee.
• Court: Iowa Supreme Court

684 N.W.2d 212

ACUITY INSURANCE, f/k/a Heritage Mutual Insurance Company, and Foreman Electric & Hardware, Appellants, v. Darrell FOREMAN, Appellee.

No. 02-1350.

Supreme Court of Iowa.

July 21, 2004.

Joseph A. Quinn of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., Des Moines, for appellants.

Steven C. Jayne, Des Moines, for appellee.

TERNUS, Justice.

The Iowa workers' compensation commissioner awarded the appellee, Darrell Foreman, permanent and total disability benefits in this review-reopening proceeding. The district court affirmed the award on judicial review, but the court of appeals, in a split decision, reversed. The court of appeals held that while there was substantial evidence to support a finding that Foreman's industrial disability had increased since the original award of benefits, there was not substantial evidence supporting the degree of disability determined by the commissioner. Consequently, the court of appeals remanded the case for a new assessment of industrial disability.

We granted Foreman's request for further review. Concluding there is substantial evidence in the record to support the agency's decision, we affirm.

I. Background Facts and Proceedings.

Darrell Foreman is the owner and president of appellant, Foreman Electric & Hardware, an electrical and plumbing contracting business. He has been employed by this business since 1969. A high school graduate, Foreman worked almost exclusively as a laborer prior to his on-the-job injury. At the time of the hearing on this matter, he was sixty years old.

In October 1987 Foreman fell from a ladder while working, injuring his back, fracturing his left hip, and injuring his left knee. After two hip surgeries, he was released to light duty in January 1989. At that time he still had significant, intermittent symptoms involving the injured areas, as well as some discomfort in his right hip. A 1989 functional assessment showed a twenty-seven percent functional impairment to the body as a whole. Foreman's medical team determined Foreman would never be able to do more than light work and he would be permanently restricted to lifting no more than 20-30 pounds maximum, and 10-15 pounds frequently. The claimant's treating physician said the symptoms on Foreman's left side and back were permanent and would worsen over time, eventually requiring a left hip replacement and perhaps left knee surgery.

Foreman sought workers' compensation benefits from his employer and its insurer, appellant, Acuity Insurance Company. (We will refer to the employer and its insurance carrier jointly as the employer in the remainder of this opinion.) The only disputed issue was the rate of compensation, as the parties stipulated that Foreman had sustained a sixty-percent industrial disability. The parties specified in the stipulation submitted to the commissioner the following factual bases for their agreement with respect to industrial disability: (1) "the claimant's medical condition will remain substantially stable"; (2) the claimant's business was presently economically unstable; (3) the "future business condition could improve or deteriorate or result in the closing of the business"; and (4) due to "the continued economic instability of claimant's business, claimant may in the future need or want to seek new employment[,] the prospects for which are uncertain." The commissioner accepted this stipulation and then determined benefits were payable at a rate of $108.67 per week.

In July 1997 this review-reopening proceeding was commenced. Foreman alleged there had been a change in his condition resulting in an increase in his industrial disability. A deputy workers' compensation commissioner issued a decision in May 2001, finding current problems with Foreman's right knee and hip were not contemplated at the time of the original decision and, more specifically, that surgical replacements on the right side were not anticipated. He concluded Foreman was permanently and totally disabled and ordered the employer to continue paying benefits as long as Foremen remained so disabled. This ruling was adopted as the final agency decision.

On judicial review, the district court affirmed, finding substantial evidence in the record to support the agency's decision. The employer's appeal was transferred to the court of appeals, where the district court judgment was reversed. Although the court found substantial evidence to support the commissioner's finding of a change in condition not contemplated at the time of the original decision, it concluded there was not substantial evidence to support the agency finding that Foreman was permanently and totally disabled.

Foreman sought further review, claiming error in the court of appeals' ruling on the degree-of-disability issue. The employer resisted further review, but asked, in the event the claimant's application was granted, that we also address the change-in-condition issue. Therefore, we will consider both matters. Additional facts pertinent to our consideration of this appeal will be reviewed in our discussion of these issues.

II. Scope of Review.

Our review is governed by Iowa's Administrative Procedure Act, Iowa Code chapter 17A (2001). See Wal-Mart Stores, Inc. v. Caselman, 657 N.W.2d 493, 498 (Iowa 2003). Accordingly, we may grant relief from the commissioner's decision if a party's substantial rights have been prejudiced and the decision is "not supported by substantial evidence in the record before the court when that record is viewed as a whole." Iowa Code § 17A.19(10)(f); see IBP, Inc. v. Harpole, 621 N.W.2d 410, 417 (Iowa 2001). In assessing the record, we consider the record evidence "that detracts from any challenged finding as well as evidence that supports it." Wal-Mart Stores, 657 N.W.2d at 499 (citing Iowa Code § 17A.19(10)(f)(3)). Moreover, "where reasonable minds may differ on the inferences to be drawn from the proven facts and circumstances, the findings of the commissioner in such matters are conclusive." Bousfield v. Sisters of Mercy, 249 Iowa 64, 68, 86 N.W.2d 109, 112 (1957); accord Wal-Mart Stores, 657 N.W.2d at 499.

III. General Principles Regarding Review-Reopening Proceedings.

Under Iowa Code section 86.14(2), the workers' compensation commissioner has authority to "reopen an award or settlement of workers' compensation benefits to inquire `whether or not the condition of the employee warrants an end to, diminishment of, or increase of compensation so awarded or agreed upon.'" Gallardo v. Firestone Tire & Rubber Co., 482 N.W.2d 393, 395 (Iowa 1992) (quoting Iowa Code § 86.14(2)). When the employee files a review-reopening proceeding to increase benefits, the employee must establish by a preponderance of the evidence that "he or she has suffered an impairment or lessening of earning capacity proximately caused by the original injury." Simonson v. Snap-On Tools Corp., 588 N.W.2d 430, 434 (Iowa 1999).

Logic dictates that the circumstances giving rise to a decrease in earning capacity must not have been within the contemplation of the decision maker at the time of the original award. That is so because if these circumstances were known or anticipated at the time of the initial award, they would logically be reflected in the original determination of industrial disability. Thus, in a case such as this where the employee claims his earning capacity has decreased as the result of changes in his physical condition occurring after the initial award of benefits, the commissioner must determine (1) whether there has been a change in the worker's condition as a result of the original injury, and (2) whether this change was contemplated by the parties at the time of any settlement or stipulation with respect to industrial disability or whether it was beyond what the commissioner contemplated at the time of the original assessment of industrial disability. If such an unanticipated change has occurred, the commissioner must then determine the extent to which this deterioration has adversely affected the employee's earning capacity. We now discuss these matters in the context of the case before us.

IV. Was There Substantial Evidence to Support the Commissioner's Finding That Foreman's Physical Condition Had Deteriorated More Than What the Parties Anticipated When They Stipulated to a Sixty-Percent Industrial Disability in 1991?

In the appealed decision, the commissioner made a factual finding that since the original award of benefits in 1991 there had been a shortening of Foreman's left leg and degenerative changes in his left hip and knee. In addition, the commissioner found that "the combination of favoring the left leg as well as its decreased length [had] resulted in an increased force being applied to the right leg over a period of time." This situation had caused degenerative changes in Foreman's right hip and knee. In deciding there had been a change in condition that was not contemplated at the time of the initial award, the commissioner's discussion focused on the deterioration in the claimant's right hip and knee. With respect to these particular problems, the commissioner interpreted a report from Foreman's treating physician as indicating that right hip and knee replacements would be required.

In challenging the agency's decision, the employer concedes Foreman's condition has changed since the original award, but claims any change was contemplated at the time of the original hearing. In this regard, the employer relies on 1989 medical reports stating that the claimant's condition would worsen over time. The employer's position on this issue must be rejected as the record unequivocally shows that the parties anticipated no substantial change in Foreman's physical state when they stipulated to a sixty-percent industrial disability in 1991. In the written stipulation submitted to the commissioner, the parties stated that "[t]his agreement [as to industrial disability]...