Schadendorf v. Snap-On Tools Corp.

• Decision Date: 03 October 2008
• Docket Number: No. 06-1387.,06-1387.
• Citation: 757 N.W.2d 330
• Parties: Sandra K. SCHADENDORF f/k/a Sandra K. Weishaar, Appellant, v. SNAP-ON TOOLS CORPORATION, Appellee.
• Court: Iowa Supreme Court

757 N.W.2d 330

Sandra K. SCHADENDORF f/k/a Sandra K. Weishaar, Appellant, v. SNAP-ON TOOLS CORPORATION, Appellee.

No. 06-1387.

Supreme Court of Iowa.

October 3, 2008.

Rehearing Denied November 14, 2008.

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

Michael S. Roling of Peddicord, Wharton, Spencer, Hook, Barron & Wegman, L.L.P., Des Moines, for appellee.

WIGGINS, Justice.

In this appeal, a claimant and her employer challenge the workers' compensation commissioner's award of penalty benefits under Iowa Code section 86.13 (1999). The district court affirmed the award of penalty benefits; however, it remanded the case to the agency to determine whether further penalty benefits were due. Because we find the workers' compensation commissioner was correct in awarding penalty benefits to the claimant and the claimant is not entitled to further benefits, we reverse the judgment of the district court remanding the case for further proceedings before the workers' compensation commissioner and direct the district court to affirm the decision of the commissioner.

I. Factual Background.

This case arises out of a July 26, 1999, decision of the workers' compensation commissioner awarding Sandra K. Schadendorf f/k/a Sandra K. Weishaar workers' compensation benefits from her employer, Snap-On Tools Corporation. The July 26 award for back benefits totaled $72,166.32. Snap-On was also required to pay interest on the benefits. On August 9 Schadendorf's attorney wrote a letter to Snap-On advising Snap-On of his calculations as to the amount owed on the judgment including interest and costs as of August 25. The interest on the award was calculated to be $43,796.26, making the total amount due to Schadendorf $115,962.58. In the same letter, the attorney asked Snap-On to advise him if it did not agree with his calculations. Finally, the attorney said,

please be advised that if we cannot agree by 8/18/99 on whether these amounts will be paid and whether all parties agree not to seek judicial review, I will have to file a judicial review, as well as a motion for judgment, just to protect my client's rights.

On August 16 Snap-On made the decision not to appeal the award and to pay the amount as calculated in the August 9 letter. Snap-On communicated this decision telephonically to Schadendorf's attorney. On August 18 Schadendorf's attorney confirmed by letter that Snap-on was going to pay the award. In the same letter the attorney advised Snap-On that if payment was not received by August 24, he would file a judicial review action to protect his client's rights.

Because Schadendorf did not receive payment, she filed a petition for judicial review and a motion for judgment in the district court. On September 7 the court entered a judgment against Snap-On for the total amount of the award plus interest.

On September 8 Snap-On mailed a check in the amount of $115,962.58 to Schadendorf's attorney. Snap-On's attorney acknowledged in his transmittal letter that because the check was late he was requesting an additional check to cover the remaining balance. Schadendorf's attorney received the check for $115,962.58 on September 9. On September 14 Schadendorf's attorney wrote another letter to Snap-On indicating that they still owed $2442.76. The attorney also indicated that the per diem interest rate was $.70.

On September 24 Snap-On made a payment of $2442.76, which was acknowledged by Schadendorf's attorney. In addition to acknowledging receipt of the check, Schadendorf's attorney informed Snap-On that there was another $10.04 due. On September 29 Snap-On mailed a check in the amount of $10.07 to Schadendorf's attorney. On September 30, 1999, Schadendorf dismissed her petition for judicial review and satisfied the judgment she had transcribed to the district court. We will set out additional facts as they relate to the issues.

II. Prior Proceedings.

Schadendorf filed a review-reopening petition claiming penalty benefits under Iowa Code section 86.13 for Snap-On's delay in payment of benefits as originally awarded on July 26, 1999. On May 15, 2001, a deputy workers' compensation commissioner filed her decision. The deputy determined Schadendorf was entitled to a penalty benefit of $36,083.16. The deputy found the delay in paying the award was unreasonable. She determined that the penalty benefit should be the maximum allowed by law, fifty percent of the amount of benefits that were unreasonably delayed. She limited the fifty percent penalty benefits award to the principal amount of the July 26, 1999, award because in Davidson v. Bruce, 594 N.W.2d 833, 840 (Iowa Ct.App.1999), the court of appeals held penalty benefits were not available for delayed payments of interest. This decision was appealed within the agency.

On January 30, 2002, the commissioner issued a final decision. The commissioner determined as a matter of law there can be no penalty benefits awarded while a petition for judicial review is pending because there can be no delay in payment during the pendency of the judicial review decision. Alternatively, the commissioner found if the benefits were payable, the delay was not unreasonable because of the pending judicial review petition. Schadendorf filed a petition for judicial review.

On October 28, 2002, the district court reversed that part of the commissioner's decision holding the filing of a petition for judicial review excuses a party from paying benefits because the Code provides for a stay during the appeal process. This decision was appealed to the supreme court. We assigned the case to our court of appeals. The court of appeals found the payments due to Schadendorf were due long before the July 26, 1999, decision. It held that a penalty benefit could be assessed if there was unreasonable delay in making payments under Iowa Code section 86.13. The court of appeals determined the delay was reasonable until the July 26 decision was filed because the amount due prior to that date was fairly debatable. The court of appeals remanded the decision back to the commissioner to determine whether the delay after July 26 was unreasonable under the evidence.

On August 25, 2005, the commissioner issued a remand decision. The commissioner held that there was no unreasonable delay until August 25, 1999, the date used in Schadendorf's August 9 letter to calculate the amount of benefits and interest due under the decision. The commissioner held the delay was unreasonable after August 25. Accordingly, the commissioner found an unreasonable delay for fourteen, twenty-nine, and thirty-five days respectively. The commissioner awarded a $10,000 penalty benefit for the delay. In determining the amount of penalty benefits to award Schadendorf, the commissioner only considered the benefits awarded and not the interest due on the benefits. Schadendorf filed a petition for judicial review. Snap-On filed a cross-petition for judicial review.

On July 28, 2006, the district court entered its judicial review decision. The district court found no evidence to support the finding that the delay in paying benefits was reasonable prior to August 25, 1999. It remanded the case to the commissioner for determination of the reasonableness of the delay from July 27 until August 25. The district court affirmed the $10,000 penalty benefit for the delay after August 25. Schadendorf argued in the district court that interest on the penalty benefit should begin to run from the May 2001 decision of the deputy, the date the deputy first awarded a penalty benefit, rather than from the remand decision. The district court determined interest ran from August 25, 2005, the date of the remand decision. Finally, the district court held penalty benefits are not available on delayed payments of interest even if the interest payments were unreasonably delayed. Both Schadendorf and Snap-On have appealed this decision.

III. Issues.

To decide this appeal, we need to address the following issues raised by the parties: (1) whether the district court was correct to remand the case to the commissioner to determine whether penalty benefits were due prior to August 25, 1999; (2) whether substantial evidence supports the award of penalty benefits after August 25, 1999; (3) whether Schadendorf is entitled to penalty benefits on the interest due on her benefits if the payment of this interest has been unreasonably delayed; and (4) whether interest on the penalty benefit award runs from the date of the deputy's decision or from the date of the commissioner's remand decision.

IV. Commissioner's Award of Penalty Benefits.

Section 17A.19(10) of the Code governs the standard upon which we review a decision of the commissioner. It is well settled that "`[t]he interpretation of workers' compensation statutes and related case law has not been clearly vested by a provision of law in the discretion of the agency.'" Lakeside Casino v. Blue, 743 N.W.2d 169, 173 (Iowa 2007) (citation omitted). Therefore, when we interpret a workers' compensation statute we will not give the commissioner's interpretation of the law deference and are free to substitute our own judgment. Id.; see also Iowa Code § 17A.19(10)(c) (1999 Supp.).

When reviewing the agency's factual determinations, we determine whether the factual determinations are based on "substantial evidence in the record before the court when that record is viewed as a whole." Iowa Code § 17A.19(10)(f) (1999 Supp.). The Code defines "substantial evidence" as

[T]he 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.

Id. § 17A.19(10)(f)(1). The factual determinations made by the workers' compensation commissioner are "`clearly vested by a provision of law in the discretion of the...