Kohlhaas v. Hog Slat, Inc.

• Decision Date: 24 November 2009
• Docket Number: No. 08-0589.,08-0589.
• Citation: 777 N.W.2d 387
• Parties: Howard John KOHLHAAS, Appellant, v. HOG SLAT, INC. and ROYAL & SUNALLIANCE INSURANCE COMPANIES, Appellees.
• Court: Iowa Supreme Court

777 N.W.2d 387

Howard John KOHLHAAS, Appellant, v. HOG SLAT, INC. and ROYAL & SUNALLIANCE INSURANCE COMPANIES, Appellees.

No. 08-0589.

Supreme Court of Iowa.

November 24. 2009.

COPYRIGHT MATERIAL OMITTED

Mark S. Soldat of Soldat & Parrish-Sams, P.L.C., West Des Moines, for appellant.

Meredith J. Kuehler of Engles, Ketcham, Olson & Keith, P.C., Omaha, for appellees.

STREIT, Justice.

While working for Hog Slat, Inc., Howard Kohlhaas' right foot was crushed by a large concrete block. Kohlhaas and Hog Slat entered into a settlement agreement, establishing a 50% permanent partial disability to Kohlhaas' right leg. Both before the settlement and after the settlement, Kohlhaas complained of knee, hip, and back pain in addition to his foot problems. A few years later, Kohlhaas filed a review-reopening petition, requesting an increase in compensation as well as reimbursement for a medical evaluation pursuant to Iowa Code section 85.39 (2003). The commissioner denied both requests. Kohlhaas appealed, and the decision was affirmed. He then filed a petition for judicial review, and the "district court affirmed the commissioner's decision. Because the claimant need not prove that the current extent of disability was not contemplated by the commissioner (in the arbitration award) or the parties (in their agreement for settlement), we reverse. However, we affirm the commissioner's denial of Kohlhaas' request for reimbursement of his expenses for a section 85.39 medical evaluation because the employer did not obtain a new evaluation of Kohlhaas' permanent disability in the review-reopening proceeding.

I. Facts and Prior Proceedings.

On October 21, 1999, a 400-pound concrete block fell on Howard Kohlhaas' right foot while working at Hog Slat. His foot was fractured in several places, and the skin was crushed and torn apart. On July 15, 2002, Kohlhaas and Hog Slat, along with its insurance companies Royal and SunAlliance Insurance Cos., filed an agreement for settlement pursuant to Iowa Code chapter 86 (2002), which was approved by the Iowa workers' compensation commissioner. The settlement established that the injury proximately caused a 50% permanent partial-disability to Kohlhaas' right leg. The settlement documents also contained the opinion of Dr. Crane that Kohlhaas' knee, hip, and back pain was not related to the work injury.

Kohlhaas continued to suffer from foot, knee, hip, and back pain in varying degrees. On July 14, 2005, Kohlhaas filed a review-reopening petition, requesting an increase in compensation, seeking compensation for a 95% industrial disability, as well as reimbursement for an independent medical evaluation by Dr. Kuhnlein. Kohlhaas presented evidence from his chiropractor, Dr. Mueller, who asserted Kohlhaas' knee, hip, and back problems were a direct result of his injury. Dr. Kuhnlein, who performed a medical evaluation, opined Kohlhaas had a 34% impairment of his right leg, and his knee and hip pain was related to the change in his gait after the injury. The review-reopening decision issued by the deputy commissioner on August 31, 2006 determined that an increase in compensation was hot warranted because "the claimant has not proved by a preponderance of the evidence that there has been a change in the condition of the claimant that was not anticipated at the time of the original settlement." The deputy commissioner also denied Kohlhaas reimbursement for Dr. Kuhnlein's medical evaluation. Kohlhaas appealed, and the decision was affirmed by the commissioner.

Kohlhaas then filed a petition for judicial review. The district court affirmed the commissioner's decision, stating "it is clear that most of the complaints that the petitioner claims supports an increase in his disability were reported and known at the time of the settlement." Further, the district court determined

the connection between the 1999 injury and the petitioner's complaints of back, hip, and knee pain (while supported by Drs. Mueller and Kuhnlein) were discounted by Dr. Crane at the time of the original settlement. The agency was well within its rights to side with Dr. Crane's evaluation of this issue.

Kohlhaas appealed.

II. Scope of Review.

Our scope of review is for the correction of errors at law. B.N.T. Assocs. v. Collentine, 525 N.W.2d 827, 829 (Iowa 1994). "We review the district court decision by applying the standards of the Iowa Administrative Procedure Act to the agency action to determine if our conclusions are the same reached by the district court." Locate.Plm.Com, Inc. v. Iowa Dep't of Transp., 650 N.W.2d 609, 612 (lows, 2002). Under Iowa Code section 17A.19(10) (2007), "a reviewing court may reverse the decision of the workers' compensation commissioner if it is unsupported by substantial evidence in the record or characterized by an abuse of discretion." Univ. of Iowa Hosps. & Clinics v. Waters, 674 N.W.2d 92, 95 (Iowa 2004).

"Substantial evidence" means the quantity and quality of evidence that would be deemed sufficient by a neutral, detached, and reasonable person, to establish the fact at issue when the consequences resulting from the establishment of that fact are understood to be serious and of great importance.

Iowa Code § 17A.19(10)(f)(1). An abuse of discretion occurs when the commissioner's exercise of discretion is "clearly erroneous or rests on untenable grounds." Waters, 674 N.W.2d at 96.

III. Merits.

A. Review-reopening Decision. "Under Iowa Code section 86.14(2), the workers' compensation commissioner is authorized to "reopen an award for payments or agreement for settlement ... to inquire into whether or not the condition of the employee warrants an end to, diminishment of, or increase of compensation so awarded or agreed upon." When an employee seeks an increase in compensation, the employee bears the burden of establishing by a preponderance of the evidence that his or her current condition was "proximately caused by the original injury." Simonson v. Snap-On Tools Corp., 588 N.W.2d 430, 434 (Iowa 1999) (quoting Collentine, 525 N.W.2d at 829). The commissioner must then evaluate "the condition of the employee which is found to exist subsequent to the date of the award being reviewed." Stice v. Consol. Ind. Coal Co., 228 Iowa 1031, 1038, 291. N.W. 452, 456 (1940). The commissioner is, not supposed to "re-determine the condition of the employee which was adjudicated by the former award." Id.

In our case, the commissioner and the district court relied on the holding in Acuity Insurance v. Foreman, 684 N.W.2d 212 (Iowa 2004), which states that 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 whether it was beyond what the commissioner contemplated at the time of the original assessment of industrial disability.

Acuity, 684 N.W.2d at 217. The test set forth in Acuity thus requires the employee to demonstrate his condition has changed and that change was not taken into account in the original settlement.¹

Kohlhaas asserts the district court erred by declaring as a matter of law that review-reopening relief cannot be granted unless the employee has demonstrated a change in his condition not anticipated at the time of the original settlement. He contends the rule from Acuity that the change in condition "must not have been within the contemplation of the decision maker at the time of the original Award" is obiter dictum and, therefore, not binding precedent. Id. We agree. The language in Acuity is ambiguous and seems to condone an agency's consideration of, or speculation "about, future changes in condition or earning) capacity at the time of the initial award. What we attempted to say in Acuity. is that a condition that has already been determined by an award or settlement should not be the subject of a review-reopening petition.

In determining a scheduled or unscheduled award, the commissioner finds the facts as they stand at the time of the hearing and should not speculate about the future course of the claimant's condition. The functional impairment and disability resulting from a scheduled loss is what it is at the time of the award and is not based on any anticipated deterioration of function that might or might not occur in the future. See Iowa "Code § 85.34(2); Second Injury Fund v. Bergeson, 526 N.W.2d 543, 548 (Iowa 1995) ("a scheduled injury is evaluated by determining the loss of physiological capacity of the body part"). Likewise, in an unscheduled whole-body case, the claimant's loss of earning capacity is determined by the commissioner as of the time of the hearing based on the factors bearing on industrial disability then prevailing—not based on what the claimant's physical condition and economic realities might be at some future time. See Iowa Code § 85.34(3); Quaker Oats Co. v. Ciha, 552 N.W.2d 143, 157 (Iowa 1996) ("Factors that should be considered include the employee's functional disability, age, education, qualifications, experience, and the ability of the employee to engage in employment for which the employee is fitted."); Second Injury Fund v. Nelson, 544 N.W.2d 258, 266 (Iowa 1995) (stating "the concept of industrial disability rests on a comparison of what the injured worker could earn before the injury as compared to what the same person could earn after the injury"). The workers' compensation statutory scheme contemplates that future developments (post-award and post-settlement developments), including the worsening of a physical condition or a reduction in earning capacity, should be addressed in review-reopening proceedings. See Iowa Code § 86.14(2). The review-reopening claimant need not prove, as an element of his claim, that the current extent of disability was not contemplated by the commissioner (in the arbitration award) or the parties (in their agreement for settlement).

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