Keystone Nursing Care Center v. Craddock

• Decision Date: 08 November 2005
• Docket Number: No. 04-0526.,04-0526.
• Citation: 705 N.W.2d 299
• Parties: KEYSTONE NURSING CARE CENTER and Iowa Long Term Care Risk Management Association, Appellants, v. Billi CRADDOCK, Appellee.
• Court: Iowa Supreme Court

705 N.W.2d 299

KEYSTONE NURSING CARE CENTER and Iowa Long Term Care Risk Management Association, Appellants, v. Billi CRADDOCK, Appellee.

No. 04-0526.

Supreme Court of Iowa.

September 30, 2005.

Rehearing Denied November 8, 2005.

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D. Brian Scieszinski of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, for appellants.

Thomas M. Wertz and Matthew D. Drake, Cedar Rapids, for appellee.

TERNUS, Justice.

In this appeal, an employer and its workers' compensation insurance carrier seek reversal of a district court judgment affirming an award of permanent partial disability benefits and penalty benefits to a former employee. We affirm the district court's decision upholding the award of disability benefits, but we reverse on the issue of penalty benefits.

I. Background Facts and Proceedings.

On March 26, 1998, appellee, Billi Craddock, was employed as a certified nursing assistant (CNA) at a nursing home operated by the appellant, Keystone Nursing Care Center. Craddock testified she injured her back on that date when helping a resident into a wheelchair. A co-employee working with Craddock at the time recalled the lifting incident, but did not remember Craddock complaining of an injury or pain. Five days later Craddock completed a formal report of injury for her employer.

Upon being notified of the injury, Keystone referred Craddock to Rita Taylor, a physician assistant, for medical care. After conservative treatment was unsuccessful, Craddock saw Dr. Chad Abernathey, who eventually performed surgery on her lower back. On June 15, 1998, Dr. Abernathey released Craddock to return to work. The written release form states, "No restriction." Craddock testified, however, that Dr. Abernathey told her orally that she should not help residents with showers or whirlpools. She also said Keystone accommodated her request that she not be assigned such duties. On October 9, 1998, Dr. Abernathey gave Craddock a seven percent whole body impairment rating.

Keystone paid all of Craddock's medical expenses.¹ In addition, Keystone paid healing period benefits until Craddock returned to work on June 15, 1998, but made no voluntary permanent partial disability payments. The employer did not notify Craddock of the reason for its refusal to pay additional benefits until Craddock's counsel inquired on November 5, 1999. In its response ten days later, the employer explained that it believed Craddock had not sustained an industrial disability because she was released to full duty without restrictions.

Craddock left her employment with Keystone in September 1998, and began working for another nursing home located closer to her residence. She did not have to give baths in her new job because her new employer had an employee who bathed all residents. Nonetheless, in March 1999, Craddock sustained another on-the-job injury to her lower back. Dr. Abernathey again performed surgery, and upon releasing Craddock to return to work, imposed a thirty-pound lifting restriction.

After the second injury, Craddock obtained an independent medical examination from Dr. Ray Miller. Dr. Miller reported his opinion that Craddock had a ten percent permanent impairment for the whole person following the second surgery. He also suggested that the claimant would have benefited from a 30-pound lifting restriction after her first surgery.

At the time of the hearing, Craddock was employed as a cashier at a convenience store at an hourly wage of $9.15. (She earned $7.40 per hour when working for Keystone.) The claimant was able to do most of the required work except her back condition and restrictions prevented her from taking out the garbage.

Craddock filed a petition seeking workers' compensation benefits and penalty benefits on February 14, 2001. After a hearing, a deputy workers' compensation commissioner issued a decision holding the claimant had sustained a compensable injury that had resulted in a fifteen percent industrial disability. The deputy also ruled that Craddock was entitled to penalty benefits because the employer had not advised her of the reason for its decision not to pay permanent partial disability benefits at the time it stopped paying healing period benefits. The deputy rejected Craddock's argument that she was entitled to penalty benefits because there was no reasonable basis for Keystone's position that she had sustained no industrial disability.

On the employer's appeal, the commissioner affirmed the deputy's decision and adopted it as the final agency action with one exception. The commissioner held the denial of benefits was itself unreasonable because Craddock was restricted from bathing duties upon her return to work. Therefore, the commissioner stated, "it was not reasonable [for Keystone] to conclude that the injury had not caused any permanent disability."

Keystone sought judicial review in the district court. That court held there was substantial evidence to support the agency's decision that Craddock sustained an injury arising out of and in the course of her employment with Keystone, and that she suffered a fifteen percent industrial disability as a result of the injury. Relying on this court's decision in Meyers v. Holiday Express Corp., 557 N.W.2d 502 (Iowa 1996), the district court also concluded the agency properly awarded penalty benefits based on Keystone's failure to advise Craddock, contemporaneously with its denial, of the reason it denied permanent disability benefits. The district court held, however, that there was not substantial evidence to support the commissioner's alternate basis for penalty benefits: the absence of a reasonable basis to deny benefits. The court stated, "Given the fact Dr. Abernathey wrote `no restriction' on his release form when he released [Craddock] to return to work, the issue of industrial disability was fairly debatable."

The case now comes to us on the employer's appeal. The employer challenges the commissioner's decision in four respects: (1) that Craddock sustained a compensable injury; (2) that Craddock sustained any industrial disability; (3) that Craddock was entitled to penalty benefits; and (4) the extent of penalty benefits. Because we hold the claimant is not entitled to penalty benefits, we will not address the parties' dispute over the amount of those benefits. We turn our attention instead to the other three issues.

II. Scope of Review.

Our review is controlled by Iowa's Administrative Procedure Act, Iowa Code chapter 17A. Griffin Pipe Prods. Co. v. Guarino, 663 N.W.2d 862, 864 (Iowa 2003). Under the provisions of that statute, we may grant relief from the commissioner's decision if a party's substantial rights have been prejudiced by agency action that falls within one of several enumerated grounds. Iowa Code § 17A.19(10) (2003). The grounds implicated in the present appeal include the following agency action:

c. Based upon an erroneous interpretation of a provision of law whose interpretation has not clearly been vested by a provision of law in the discretion of the agency.

....

f. Based upon a determination of fact clearly vested by a provision of law in the discretion of the agency that is not supported by substantial evidence in the record before the court when that record is viewed as a whole....

Id. § 17A.19(10)(c), (f).²

Because "factual findings regarding [an] award of benefits are within the agency's discretion, ... we are bound by the agency's findings of fact if supported by substantial evidence." Clark v. Vicorp Restaurants, Inc., 696 N.W.2d 596, 604 (Iowa 2005). On the other hand, the workers' compensation commissioner has no particular power with respect to the interpretation of the workers' compensation statute. See Mycogen Seeds v. Sands, 686 N.W.2d 457, 464 (Iowa 2004). Therefore, we need not give the agency's interpretation of the statute any deference and are free to substitute our judgment for that of the commissioner. Id. Moreover, "[r]eversal is appropriate when the agency has applied an erroneous interpretation of the law." Griffin Pipe Prods. Co., 663 N.W.2d at 864.

III. Existence of Compensable Injury.

The employer challenges the commissioner's finding that Craddock sustained an injury arising out of and in the course of her employment. Keystone focuses on the following discussion by the deputy:

The greater weight of evidence supports the conclusion that the claimant has established an injury arising out of and in the course of employment. The claimant had no record of back problems before the incident lifting the resident. She testified she felt immediate pain. Although her coworker does not corroborate the claimant's testimony that claimant complained immediately, such does not necessitate a finding that the claimant is not credible. The treating physicians have never questioned the claimant's history of this injury.

Keystone first claims "the finding that Craddock `had no record of back problems before the incident' is in error" because "Craddock's medical records indicate that Craddock previously had undergone back x-rays in 1992." The evidence to which Keystone refers is an April 8, 1998 radiology report prepared in connection with x-rays taken after Craddock's March 1998 injury. This report states, "Comparison made to study of 11/27/92." The employer introduced no records from 1992, so the reason the prior x-rays were taken was not shown.

We do not think the mere taking of x-rays six years earlier mandates a finding that the claimant had prior back problems. Craddock testified that while she "probably" had general aches and pains in her back prior to her 1998 injury, she had not had any previous "back problems" or "symptoms," nor had she been treated for her back. The deputy, who assessed the witness's credibility, could have believed that Craddock's failure to recall the 1992 x-rays merely confirmed that whatever prompted the taking of those x-rays was so inconsequential or...