Second Injury Fund of Iowa v. Nelson

• Decision Date: 20 December 1995
• Docket Number: No. 94-967,94-967
• Citation: 544 N.W.2d 258
• Parties: SECOND INJURY FUND OF IOWA, Appellee, v. Perry NELSON, Appellant, and Basic Materials Corp. and Wausau Insurance Cos., Appellees.
• Court: Iowa Supreme Court

Page 258

544 N.W.2d 258

SECOND INJURY FUND OF IOWA, Appellee, v. Perry NELSON, Appellant, and Basic Materials Corp. and Wausau Insurance Cos., Appellees.

No. 94-967.

Supreme Court of Iowa.

Dec. 20, 1995.

As Amended on Denial of Rehearing

Feb. 14, 1996.

Robert W. Pratt and Max Schott, Des Moines, for appellant.

Philip H. Dorff, Jr. and Anne L. Clark of Hopkins & Huebner, P.C., Des Moines, for appellees Basic Materials Corp. and Wausau Insurance Cos.

Thomas J. Miller, Attorney General, and Shirley A. Steffee, Assistant Attorney General, for appellee Second Injury Fund.

Considered by HARRIS, P.J., and CARTER, NEUMAN, SNELL, and TERNUS, JJ.

TERNUS, Justice.

Appellant, Perry Nelson, injured his right shoulder while working for appellee, Basic Materials Corp. In ruling on his claim for workers' compensation benefits, the industrial commissioner awarded permanent partial disability benefits for this injury against Basic Materials and its insurer, appellee, Wausau Insurance Companies. The commissioner allowed an additional recovery from the appellee, Second Injury Fund of Iowa, for industrial disability caused by a prior knee injury. On judicial review, the district court affirmed the award of permanent partial disability benefits and reversed the judgment against the Second Injury Fund.

We conclude the industrial commissioner's determination of permanent partial disability benefits was affected by two errors of law: (1) the commissioner did not include in his calculation of industrial disability the disability arising from Nelson's prior work-related knee injury; and (2) the commissioner considered Nelson's age as a factor that decreased, rather than increased, Nelson's industrial disability because Nelson would suffer less total future wage loss than a younger worker. Therefore, we reverse the judgment against Basic Materials and Wausau and remand for further proceedings consistent with this opinion. We affirm the district court's ruling that the Second Injury Fund has no liability for Nelson's industrial disability because Fund liability was not triggered by the injury to Nelson's shoulder, a nonscheduled member.

I. Background Facts and Proceedings.

A. Facts. Perry Nelson was born in 1931 and graduated from high school in 1949 with honors and a college scholarship. However, Nelson chose not to attend college and instead accepted a position with Concrete Materials. (The assets of Concrete Materials changed ownership over the years until they were purchased by Basic Materials sometime prior to 1988.) Concrete Materials operated a rock quarry; Nelson ran various pieces of equipment.

In 1963 Nelson suffered a serious injury at work. At this time, he worked as a mechanic, welding and repairing construction equipment. While working on a piece of equipment containing two large augers, his left leg became entangled in one of the augers. Nelson had several surgeries over two years engendering an extended rehabilitative process. He received workers' compensation benefits for this injury, including an award for a thirty percent impairment to his left lower extremity. He returned to work a year after his leg injury and performed sedentary tasks for four or five years before resuming his duties as a mechanic.

Nelson continued to suffer from the residual effects of this injury up to the date of his second injury. Due to his ongoing left knee problems, Nelson saw an orthopaedic surgeon, Dr. McCoy in 1983. Dr. McCoy recorded that Nelson suffered from severe knee pain and could barely stand by the end of the day. He diagnosed developing degenerative arthritis.

In 1988 Nelson sustained the injury which precipitated this action. While working on a conveyor he fell from a ladder, hitting his left shoulder on the ground. Dr. McCoy eventually diagnosed a rotator cuff tear and advised Nelson to have surgery to repair the tear. The doctor also diagnosed severe degenerative arthritis in Nelson's left shoulder and both knees, as well as partial deafness. McCoy believed Nelson was a candidate for total knee substitution on both sides, but recommended that Nelson wait as long as he could: McCoy thought Nelson "could not continue working at his present job after a total knee substitution as one would not expect the total knee joint to last long with that level of heavy physical activity."

In November 1988 Nelson had surgery on his left shoulder. Afterward, he had a permanent restriction of twenty pounds lifting with the left shoulder and a thirteen percent functional impairment rating to the left upper extremity. In May 1989 McCoy indicated that Nelson had achieved maximum recuperation from his shoulder injury. However, McCoy believed the severe arthritis in Nelson's knees prevented Nelson from returning to heavy labor. Therefore, McCoy recommended that Nelson go ahead with the knee replacements and retire from his job.

Nelson decided not to return to work and was terminated by Basic Materials in August 1990. He had left knee replacement surgery in December 1990, and at the time of the workers' compensation hearing, was planning to have the right knee surgery early in 1991.

B. Record in workers' compensation proceeding. Nelson filed a petition for workers' compensation benefits in July 1989, seeking benefits for his 1988 shoulder injury. He did not claim that either of his knees were materially aggravated by the 1988 fall, nor did he make a claim for cumulative injury to his knees.

The medical evidence at trial showed that Nelson's shoulder impairment was caused by the 1988 injury. This injury also aggravated Nelson's preexisting, yet dormant, degenerative arthritis in his left shoulder. McCoy reported that the 1963 injury played a significant role in the progressive arthritic deterioration of Nelson's left knee; McCoy related the arthritis in Nelson's right knee to the wear and tear of general use. McCoy believed that Nelson could have returned to some sort of employment for Basic Materials if the shoulder injury had been Nelson's only problem. However, because of Nelson's arthritic knees, McCoy thought Nelson could not work.

Both Nelson and Basic Materials obtained evaluations from vocational rehabilitation specialists. The conclusions of these experts, as summarized in the commissioner's decision, were nearly identical:

Both vocational rehabilitation specialists ... found that claimant's knees were the primary culprit in preventing him from returning to the competitive labor force. Secondary to the knee problems both vocational rehabilitation specialists found that claimant's shoulder injury in combination with his knees and his deafness also made him an unlikely candidate for the competitive labor market. However, if the enquiry was only limited to claimant's shoulder injury, both vocational rehabilitation specialists indicated that claimant would be able to do sedentary or light work. The vocational rehabilitation specialists for claimant went on to indicate that because claimant's transferable skills were limited to the quarry industry, that claimant's transferable skills were not desirable by employers who were in search [of] employees in the competitive market.

Nelson did not look for work after his shoulder surgery. Basic Materials attempted to accommodate Nelson's shoulder injury by allowing him to drive a truck. However, McCoy felt that this job was not suitable because Nelson's knees would prevent him from operating the clutch required to shift gears.

At the hearing on his petition for benefits, Nelson argued that his shoulder injury in combination with his prior knee injury and his hearing loss made him totally and permanently disabled. He relied in part on the odd-lot doctrine. Basic Materials urged that it was not liable for any preexisting condition that was not aggravated by the 1988 fall. The Second Injury Fund further contended that its liability was not triggered because Nelson's second injury was to the body as a whole and not to a scheduled member.

C. Rulings of the agency and the district court. The deputy industrial commissioner issued a decision ruling that Basic Materials was liable only for the industrial disability resulting from the shoulder injury. The deputy concluded that the odd-lot doctrine did not apply because Nelson's inability to obtain employment was due to his knee injury, not his shoulder injury, and because Nelson had not looked for a job. The deputy then considered the extent of industrial disability caused by Nelson's shoulder injury. She considered several factors affecting Nelson's earning capacity, including his age: "Claimant is near the end of the normal work life. Compared to a younger worker with the same injury, claimant has lost less future earning capacity as a result of his age." The deputy concluded Nelson had an eighteen percent industrial disability from his shoulder injury.

Finally, the deputy decided the Second Injury Fund had no liability because Nelson's shoulder injury was considered an injury to the body as a whole. The deputy ruled that only an injury to "a hand, an arm, a foot, a leg or an eye" would trigger Fund liability. See Iowa Code § 85.64 (1989). Nelson was awarded healing period benefits and permanent partial disability benefits in the amount of eighteen percent against Basic Materials.

On appeal to the industrial commissioner, the commissioner adopted the deputy's findings and conclusions concerning Basic Materials' liability. However, with respect to the Second Injury Fund's liability, the commissioner concluded that "an injury which affects a scheduled member is all that is necessary." The commissioner found that Nelson's shoulder injury affected his arm and therefore, the Second Injury Fund was liable for Nelson's cumulative industrial disability. Finding Nelson's cumulative industrial disability to be thirty-five percent, the Fund's liability was established as nineteen weeks of compensation.

Nelson and the Second Injury Fund filed ...