Dameron v. Neumann Bros., Inc.

• Decision Date: 19 October 1983
• Docket Number: No. 68786,68786
• Citation: 339 N.W.2d 160
• Parties: Howell DAMERON, Appellee, v. NEUMANN BROTHERS, INC., Employer, and Bituminous Insurance Co., Insurance Carrier, Appellants.
• Court: Iowa Supreme Court

Page 160

339 N.W.2d 160

Howell DAMERON, Appellee, v. NEUMANN BROTHERS, INC., Employer, and Bituminous Insurance Co., Insurance Carrier, Appellants.

No. 68786.

Supreme Court of Iowa.

Oct. 19, 1983.

William D. Scherle of Hansen, McClintock & Riley, Des Moines, for appellant.

Fred D. Huebner of Hopkins & Huebner, Des Moines, for appellee.

Considered by REYNOLDSON, C.J., and McCORMICK, McGIVERIN, CARTER and WOLLE, JJ.

WOLLE, Justice.

The narrow question on this appeal is whether Howell Dameron should be allowed to receive in one commuted lump sum payment the lifetime worker's compensation benefits awarded to him in a decision of the Iowa industrial commissioner. The larger question is how restrictive should be the guidelines applied by the industrial commissioner in determining whether commutation is in the best interests of a worker's compensation claimant. Dameron applied for commutation pursuant to Iowa Code section 85.45 (1981), and despite vigorous protest by the employer and insurance carrier, a deputy industrial commissioner, the commissioner, and the district court on judicial review all upheld his request. We affirm, finding that the industrial commissioner measured the request for commutation by appropriate standards and substantial evidence in the record as a whole supports the decision approving commutation.

Dameron sustained a job-related injury on October 24, 1978. In an arbitration decision filed on March 10, 1981 the industrial commissioner found that Dameron was totally and permanently disabled and awarded him lifetime periodic payments of $222.50 per week. Upon receiving the award, Dameron immediately requested that instead of receiving periodic payments he be paid the lump sum commuted value of the award which by reason of the statutory discount rate would be the sum of $131,058.93. Because the employer and insurance carrier objected that commutation would not be in Dameron's best interests, an evidentiary hearing was held before a deputy industrial commissioner who approved commutation. Upon further review, the industrial commissioner and subsequently the district court both affirmed the decision.

In this appeal, the employer and insurance carrier make essentially three arguments: (1) that the industrial commissioner failed to apply his own procedural rules which constituted prerequisites to commutation which Dameron failed to satisfy; (2) that the industrial commissioner applied incorrect guidelines in determining whether commutation was in Dameron's best interests; and (3) that the facts of this case do not support commutation of Dameron's compensation award.

I. The Commissioner's Rules.

At the threshold is the contention that Dameron's petition for commutation was insufficient because it failed to satisfy certain requirements of the industrial commissioner's administrative rules. The cited rules were part of the chapter entitled "Settlements and Commutations," and the section entitled "Commutation" purported to list informational prerequisites which "must be met before a commutation will be considered or granted." Iowa Admin.Code §§ 500-6.1 to 6.2(6). Addressing this issue, the deputy industrial commissioner held that those rules were not applicable to contested cases but rather were designed only for cases in which the parties jointly submit written documentation to the commissioner for approval.

We adopt the deputy's interpretation of the rules for two reasons. First, it is a logical and sensible interpretation. The entire chapter, of which the cited rules are a part, concerns information which the deputy reviewing an uncontested written application would need to have, but which in a contested case would more effectively be presented through detailed oral testimony. A second reason for adopting the deputy's interpretation is that we give administrative tribunals a reasonable range of informed discretion in the interpretation and application of their own administrative rules. See Davenport Community School District v. Iowa Civil Rights Commission, 277 N.W.2d 907, 909-10 (Iowa 1979). A court may turn to the administrative construction of an administrative regulation if the meaning of the words used is in doubt; the administrative interpretation "becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 413-14, 65 S.Ct. 1215, 1217, 89 L.Ed.2d 1700, 1702 (1945). We therefore reject the contention of the employer and insurance carrier that the industrial commissioner should have refused to consider or grant Dameron's application for commutation because it did not satisfy requirements of the commissioner's cited rules.

II. Principles for Deciding Commutation Cases.

The primary contention of the employer and insurance carrier is that the industrial commissioner applied incorrect guidelines in allowing commutation of Dameron's award. They ask that we reconsider the principal Iowa case which addresses the propriety of commutation, Diamond v. Parsons Co., 256 Iowa 915, 129 N.W.2d 608 (1964). The thrust of their argument is that the Diamond principles which were followed by the industrial commissioner are less restrictive than those applied in other states and should be replaced by more stringent prerequisites for commutation which would make allowance of commutation the exception and periodic payments the rule in Iowa.

A. Reasons for reconsidering Diamond. It is appropriate that we reconsider Diamond for several reasons. First, the underlying statutory authority for allowing commutation, Iowa Code section 85.45-.46, was amended in 1970 to provide that the industrial commissioner rather than a court of equity should decide whether to allow commutation. See 63 G.A. ch. 1051, §§ 14-15 (1970). Iowa Code section 85.45, under which Dameron's request for commutation was approved, provides in pertinent part as follows:

Future payments of compensation may be commuted to a present worth lump sum payment on the following conditions:

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2. When it shall be shown to the satisfaction of the industrial commissioner that such commutation will be for the best interest of the person or persons entitled to the compensation or that periodic payments as compared with a lump sum payment will entail undue expense, hardship or inconvenience upon the employer liable therefor.

Iowa Code § 85.45 (1981) (emphasis added). When Diamond was decided in 1964 the same statute provided that the "court or judge," not the industrial commissioner, must be satisfied that the commutation is in the best interest of the claimant.

A second reason for revisiting Diamond is that the legislature has since 1964 adopted the Iowa Administrative Procedure Act which delineates the standards for courts to apply when reviewing administrative decisions, including decisions of the industrial commissioner. See 67 G.A. ch. 51 § 21 (1977); Iowa Code §§ 17A.19, 86.26 (1981). No longer is a contested commutation case decided de novo by the reviewing court sitting as a court of equity as in Diamond. See Iowa Code § 85.46 (1963). Where, as here, the industrial commissioner in a contested case proceeding has determined that commutation was in the best interests of the claimant, the trial court and this court are now bound by that determination unless it is "unsupported by substantial evidence in the record made before the agency when the record is viewed as a whole." Iowa Code § 17A.19(8)(f). Finally, it is important that the Diamond principles be reconsidered because the industrial commissioner has cited Diamond and applied its rationale not only in this case but in many other commutation decisions. See, e.g., Watters v. Clinton Engines Corporation (Iowa Industrial Commissioner, March 31, 1983); Thompson v. Thompson Pipeline & Utilities Co., (Iowa Industrial Commissioner, February 29, 1980).

B. What Diamond Decided. Turning to the Diamond case, we find that our court there first restated the pertinent statutory prerequisites for commutation and then discussed the considerations involved in determining what is in the best interests of the injured worker. One of the statutory prerequisites Diamond addressed is not here in issue, that being the question whether the period during which compensation is payable is definitely determinable. Iowa Code § 85.45(1) (1983); see Diamond, 256 Iowa at 924, 129 N.W.2d at 614. What Diamond said about best interests of the claimant, however, is at the heart of the instant case and based on very similar facts. There, as here, the worker was in his mid-sixties, in debt, and without skill or experience in managing investments. The claimant in Diamond, like the claimant Dameron here, wanted first to pay his bills, then use the income from the investment of the remaining lump sum balance as an earnings substitute. This court approved commutation, saying:

The statute says nothing about denying commutation because of expense, hardship or inconvenience to the employer. We have here only the question of the best interests of the claimant.

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[I]n determining the "best interest of the person or persons entitled to the compensation" as required by the statute, claimant's condition and life expectancy may properly be considered along with other matters. Here, under weekly payments, if claimant lives out his expectancy, he will outlive his compensation period and be left with nothing. If he dies prematurely his total weekly payments may be less than the present commuted value.

Based upon claimant's estimates and desires, the benefits and convenience from improved living quarters, the availability of family help, the testimony of real estate agents, and all surrounding circumstances, the trial court approved commutation. Whether the court was right in...