Zomer v. West River Farms, Inc.

• Decision Date: 16 July 2003
• Docket Number: No. 01-0326.,01-0326.
• Citation: 666 N.W.2d 130
• Parties: Mark ZOMER, Appellant, v. WEST RIVER FARMS, INC. and IMT Insurance Company, Appellees.
• Court: Iowa Supreme Court

666 N.W.2d 130

Mark ZOMER, Appellant, v. WEST RIVER FARMS, INC. and IMT Insurance Company, Appellees.

No. 01-0326.

Supreme Court of Iowa.

July 16, 2003.

Alice S. Horneber of Horneber Law Firm, Sioux City, for appellant.

Timothy A. Clausen of Klass, Stoik, Mugan, Villone, Phillips, Orzechowski, Clausen & Lapierre, L.L.P., Sioux City, for appellees.

TERNUS, Justice.

In this workers' compensation case involving an injured agricultural employee, the compensability of the claimant's work-related injury depends on whether the employer's insurance policy specifically covers the claimant, as required for application of the workers' compensation act to farm employees. See Iowa Code § 85.1(3)(b)(3), (6) (1997). Although the employer's workers' compensation policy does not by its terms cover the claimant, the deputy workers' compensation commissioner reformed the policy to provide such coverage. On intra-agency appeal, the chief deputy commissioner held that the agency had no jurisdiction to reform a workers' compensation policy and this decision was affirmed on judicial review.

We think the agency did have jurisdiction to reform the policy because, under the unique circumstances of this case, a determination of insurance coverage was an essential prerequisite to a determination of the compensability of the claimant's injury. Therefore, we reverse and remand for further proceedings.

I. Background Facts and Proceedings.

The appellant, Mark Zomer, was employed by appellee West River Farms, Inc. as a farm laborer. West River Farms is a family farm corporation owned by Gertrude Blom, Zomer's mother-in-law. While employed by West River Farms, Zomer sustained a work-related injury on November 8, 1995. He subsequently filed a claim with the Iowa workers' compensation commissioner, seeking statutory benefits under the Iowa workers' compensation act, Iowa Code chapter 85.

West River Farms' insurance carrier, appellee IMT Insurance Company, contested liability, claiming Zomer was an exempt agricultural employee under the act. IMT relied on Iowa Code section 85.1(3)(b)(3), which provides that chapter 85 does not apply to "persons engaged in agriculture," including spouses of the children of officers of a family farm corporation. Iowa Code § 85.1(3)(b)(3). Zomer claimed this exemption did not apply to him, citing Iowa Code section 85.1(6), which permits a family farm corporation to assume liability under chapter 85 "by the purchase of valid workers' compensation insurance specifically including the employee or classification of employees." Id. § 85.1(6). IMT asserted West River Farms had not exercised this option because the policy issued by IMT to the farm corporation did not include an endorsement extending coverage to family members. In response, Zomer claimed the endorsement had been omitted from the policy through the mutual mistake of Blom and IMT's agent. He asked the commissioner (1) to reform the policy to provide coverage for family members, (2) to hold that the reformed policy removed Zomer from the section 85.1(3) exemption under the act, and (3) to award benefits under the act for his work-related injury.

The matter proceeded to hearing and a deputy workers' compensation commissioner granted Zomer the requested relief. On IMT's appeal, the chief deputy workers' compensation commissioner issued a final agency decision holding that the agency had no "equitable jurisdiction" and therefore was required to determine the compensability of Zomer's injury on the basis of the policy as actually issued by IMT. Based on the policy as written, the chief deputy concluded West River Farms had not insured family members, and consequently, Zomer was an exempt agricultural employee to whom the benefits of chapter 85 did not apply.

This decision was affirmed on judicial review by the district court and on appeal by the court of appeals. We granted Zomer's application for further review.

II. Issue on Appeal and Scope of Review.

The sole question on appeal is whether the workers' compensation commissioner has jurisdiction to reform a workers' compensation policy where the existence of insurance coverage is determinative of a claimant's qualification for benefits under chapter 85. We review the agency's decision on this legal question for correction of errors of law. See Iowa Code § 17A.19(8)(e) (stating court may reverse agency ruling affected by an error of law).

III. Discussion.

In determining whether the commissioner has the power to reform a workers' compensation insurance policy under the circumstances presented by this case, we start with the general proposition that as an administrative agency, the commissioner "has no inherent power and has only such authority as is conferred by statute or is necessarily inferred from the power expressly granted."¹ Schmidt v. Iowa State Bd. of Dental Exam'rs, 423 N.W.2d 19, 21 (Iowa 1988); accord Sioux City Cmty. Sch. Dist. v. Iowa State Bd. of Pub. Instruction, 402 N.W.2d 739, 741 (Iowa 1987). What then is the power "expressly granted" to the commissioner? Our legislature has given the commissioner authority to resolve claims for workers' compensation benefits:

The industrial commissioner may order any number or combination of alleged workers' compensation insurance carriers and alleged employers, which are parties to a contested case ..., to pay all or part of the benefits due to an employee ... if ... the commissioner determines after an evidentiary hearing, that one or more of the carriers or employers is liable to the employee ... for benefits under this chapter ....

Iowa Code § 85.21. The scope of this authority is comprehensive: "In an original proceeding, all matters relevant to a dispute are subject to inquiry." Id. § 86.14 (emphasis added). The determinative question, then, is whether the reformation issue presented by this case is a matter relevant to the employer's liability for benefits under the act.

In answering this question, we keep in mind that the workers' compensation law "must be construed according to the language the legislature has chosen." Ehteshamfar v. UTA Engineered Sys. Div., 555 N.W.2d 450, 453 (Iowa 1996). Moreover, we interpret the act broadly and liberally in favor of the worker. Danker v. Wilimek, 577 N.W.2d 634, 636 (Iowa 1998). Finally, we strive to be true to the legislature's purpose in providing this statutory remedy. See Travelers Ins. Co. v. Sneddon, 249 Iowa 393, 403, 86 N.W.2d 870, 877 (1957). That purpose has been stated as follows:

The fundamental reason for the enactment of this legislation is to avoid litigation, lessen the expense incident thereto, minimize appeals, and afford an efficient and speedy tribunal to determine and award compensation under the terms of this act.

"It was the purpose of the legislature to create a tribunal to do rough justice—speedy, summary, informal, untechnical. With this scheme of the legislature we must not interfere; for, if we trench in the slightest degree upon the prerogatives of the commission, one encroachment will breed another, until finally simplicity will give way to complexity, and informality to technicality."

Flint v. City of Eldon, 191 Iowa 845, 847, 183 N.W. 344, 345 (1921) (citation omitted).

Interpreting the statutory powers conferred by the legislature on the workers' compensation commissioner in light of these principles, we conclude the commissioner has the power to decide any issue necessary to a determination of whether a claimant is entitled to workers' compensation benefits. Here, in order to determine whether the employee is entitled to such benefits, it is necessary for the commissioner to decide whether Zomer is covered by the farm corporation's workers' compensation insurance policy. Resolution of this coverage issue depends on whether the policy should be reformed, based on the parties' mutual mistake, to include the claimant as an insured. Thus, only by deciding the reformation issue can the commissioner determine whether the claimant is entitled to workers' compensation benefits.

The insurance carrier contends, however, that only courts may grant the equitable remedy of reformation. As a result, according to the insurer, an employee in Zomer's position must first commence an action in district court to reform the policy and then, if successful, proceed to recover workers' compensation benefits in a contested case proceeding before the commissioner.

Such an interpretation of the commissioner's authority is, we think, contrary to the express language of the applicable statute as well as its underlying purpose. The legislature has given the commissioner the power to resolve "all matters relevant" to a compensation claim, not just the legal issues relevant to a claim. Iowa Code § 86.14 (emphasis added). In addition, the bifurcated litigation process suggested by the insurer is a far cry from the efficient and speedy remedy envisioned by the general assembly when it adopted the workers' compensation act. As this court recently observed, the "beneficent purposes" of the workers' compensation law "should not be defeated by `reading something into it which is not there.'" Area Educ. Agency 7 v. Bauch, 646 N.W.2d 398, 400 (Iowa 2002) (citation omitted). We refuse to read into the statute a limitation on the commissioner's authority to decide claims for compensation, particularly when to do so would defeat one of the primary purposes of the statute—the provision of a prompt and adequate remedy.

Our conclusion that the workers' compensation commissioner has authority to reform the policy under the circumstances of this case finds support in our Sneddon decision. In that case, we held the commissioner had jurisdiction to decide whether the workers' compensation policy at issue was in effect at the time of the employee's injury. See Sneddon, 249 Iowa at 404, 86 N.W.2d at 877. In our opinion, we cited several cases from other jurisdictions "which support[ed] our holding,"...