Excel Corp. v. Smithart

• Decision Date: 18 December 2002
• Docket Number: No. 01-0702.,01-0702.
• Parties: EXCEL CORPORATION, Appellee, v. Joseph E. SMITHART, Appellant.
• Court: Iowa Supreme Court

654 N.W.2d 891

EXCEL CORPORATION, Appellee, v. Joseph E. SMITHART, Appellant.

No. 01-0702.

Supreme Court of Iowa.

December 18, 2002.

Dennis W. Emanuel of Webber, Gaumer & Emanuel, P.C., Ottumwa, and Anne L. Clark of Hopkins & Huebner, P.C., Des Moines, for appellant.

Dorothy L. Kelley, Des Moines, for appellee.

CADY, Justice.

In this workers' compensation appeal, we are asked to revisit our rule governing apportionment of disability resulting from multiple work injuries, and our rule governing employer accommodations in determining industrial disability. The workers' compensation commissioner awarded benefits to the worker based on a finding of two separate injuries to the same area of the body, refused to apportion the resulting disability, and refused to consider accommodations made by the employer following the injuries. Our review follows review by the district court and the court of appeals. We vacate the decision of the court of appeals, reverse the decision of the district court, and remand the case to the workers' compensation commissioner for further proceedings consistent with this opinion.

I. Background Facts and Proceedings.

Joseph Smithart began working for Excel Corporation in Ottumwa, Iowa, in 1989. He worked as a laborer, and held a number of different jobs for the company over the years. Smithart performed unskilled manual labor for a variety of other employers prior to his employment with Excel. He was born in 1951 and left school after the ninth grade. Standard intelligence tests showed Smithart functions within the borderline range of mental retardation.

Smithart sustained a number of injuries while working at Excel. Most of the injuries were to his lower back, but he was able to return to work after each episode.

One of the back injuries occurred on November 30, 1995, while Smithart was lifting boxes of meat. He returned to work shortly after the injury, with a fifty pound lifting restriction imposed by his doctor.

Smithart also hurt his back on May 6, 1997, again while lifting boxes. Following this incident, his doctor imposed a twenty-five pound lifting restriction. Medical treatment for his back injuries over the period of his employment has essentially been limited to the administration of pain medication, such as aspirin. He has never had surgery on his back.

Smithart filed nine workers' compensation claims for benefits based on the injuries to his back. One claim was filed on October 13, 1997, based on his November 30, 1995, injury. He also filed a claim on May 4, 1999, based on the May 6, 1997, incident.

A consolidated hearing on the claims revealed Smithart continued to work at Excel despite his back injuries. Excel always provided him with jobs within his lifting restrictions, and Smithart rarely missed any work, even after the injuries. Medical tests indicated the presence of degenerative disc disease in his back, with a possible herniated disc. One medical doctor gave Smithart a permanent impairment rating of five percent, while another doctor gave him a permanent rating of eight percent.

The workers' compensation commissioner found Smithart sustained an industrial disability of twenty percent as a result of the November 1995 injury. The commissioner also found Smithart sustained a separate injury in May 1997, supported by the enhanced lifting restriction, resulting in an industrial disability of forty percent. The separate injuries were found to be a part of an ongoing cumulative injury. The commissioner dismissed the remaining seven claims. The commissioner found Smithart failed to prove an injury was sustained in six of the claims, and failed to establish a permanent disability in the remaining claim.

The commissioner refused to consider the efforts by Excel to accommodate Smithart's lifting restrictions in determining the industrial disability. Additionally, the commissioner refused to apportion the two disabilities. Consequently, Smithart was awarded one hundred weeks of permanent partial disability benefits for the 1995 injury. In addition, he was awarded 200 weeks of permanent partial disability benefits for the 1997 injury. The benefits were made retroactive to the date of injury, and Excel was directed to pay all accrued amounts in a lump sum with interest.

Excel filed a petition for judicial review. In its review of the case, the district court reversed the decision of the commissioner. The district court found there was no substantial evidence in the record to support an industrial disability of twenty percent for the 1995 injury, and no substantial evidence to support two separate cumulative injuries. The district court further found no substantial evidence to support a total industrial disability of forty percent. Because of these findings, the district court determined it was unnecessary to address the issue whether the disability awards should have been apportioned.

Smithart filed an appeal from the district court decision, and we transferred the case to the court of appeals. The court of appeals reversed the decision of the district court and affirmed the decision of the commissioner. We granted further review.

On further review, Excel claims substantial evidence was lacking to support an award of twenty percent disability for the first cumulative injury and forty percent disability for the second cumulative injury. In support of this claim, Excel points out that Smithart continued to work at Excel at a regular job despite his back problems, and the reduction in his lifting restriction from fifty pounds to twenty-five pounds in 1997 was not based on his permanent inability to lift the greater weight but was a precautionary measure to avoid aggravating his back condition in the future. Excel further argues there was no substantial evidence to support two distinct and discrete disabilities, only evidence of a single degenerative process that was aggravated by the 1997 incident.

Excel also claims that, in the event the two separate awards stand, Iowa Code section 85.36(9)(c) (1997) requires they be apportioned because the two benefit periods overlap. The court of appeals acknowledged an overlap in the benefits, but held that the apportionment under section 85.36(9)(c) only applies when the first injury is not work-related. Excel asserts that the failure to apportion the disabilities resulted in double recovery, and provides a disincentive for employers to reemploy a disabled employee following an injury. Finally, Excel asserts that the failure to consider employer accommodations in determining the amount of an industrial disability punishes employers for their efforts to keep disabled employees employed, and provides a disincentive for an employer to accommodate disabled workers, which ultimately harms the worker.

II. Standard of Review.

An appeal from a district court decision on judicial review of an agency decision "`is limited to determining whether the district court correctly applied the law in exercising its [review]'" under Iowa Code section 17A.19(8) (1997). Herrera v. IBP, Inc., 633 N.W.2d 284, 287 (Iowa 2001) (citation omitted). We are "`bound by the commissioner's factual findings if they are supported by substantial evidence in the record.'" IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001) (citation omitted).

III. Background of Governing Legal Theories.

Before addressing specific issues raised on appeal, we will review the underlying legal theories driving the central dispute presented on appeal. The parties do not dispute that Smithart sustained a work-related injury resulting in disability, and that compensation is due. The disagreement concerns the amount of disability and whether the disability resulted from a single injury or two separate and discrete cumulative injuries. The dispute over the number and nature of the injuries arises because the amount of compensation can vary dramatically depending on whether a disability results from a single injury or from two separate injuries. The reason for the difference in the amount of compensation relates to the impact of the "cumulative injury rule" and the "full-responsibility rule." We first examine these two rules and then consider their impact on the issues presented on appeal.

We first recognized the "cumulative injury rule" in McKeever Custom Cabinets v. Smith, 379 N.W.2d 368, 373-74 (Iowa 1985). In McKeever, a worker developed a gradual injury to his wrist from a series of work activities beginning when he commenced employment. There was no single disabling injury, but the condition eventually caused the worker to quit his employment three years later. He then filed a report of injury and instituted a workers' compensation claim a few months later. The employer argued that the claim was not filed within the two-year statutory period of limitations because the work activity that first gave rise to the injury began when he started his employment. We rejected the argument and adopted a rule that the injury in such a case does not occur until the disability is apparent, such as that time when it prevents the employee from working. McKeever, 379 N.W.2d at 374; see also Ellingson v. Fleetguard, Inc., 599 N.W.2d 440, 444 (1999). In doing so, we recognized that workers' compensation liability was not confined to disabilities arising from accidents, but includes disabilities which gradually develop "over a period of time." McKeever, 379 N.W.2d at 373. This principle is known as the "cumulative injury rule." As subsequently developed by other cases, it simply means that when a worker develops a disability over time from work activities, the compensable injury itself occurs when the claimant becomes aware "he or she suffers from a condition or injury" and such "condition or injury was caused by the claimant's employment." Herrera, 633 N.W.2d at 288. It is also known as the "gradual injury rule." McKeever, 379 N.W.2d at 373.

We have also adopted what we call the ...