DOYLE, J.
MCI Worldcom Network Services, Inc. doing business as MCI Telecommunications Corporation (MCI)
On December 26, 1999, Melinda McKenzie slipped and fell on a wet floor while working at MCI. She sought medical treatment the next day, complaining of lower back and left leg pain. Her condition did not improve with conservative treatment, and surgery was not recommended. Although only light-duty restrictions were imposed, McKenzie was not able to return to work in any capacity. More than one physician advised her that losing some weight would help combat her persistent pain.
McKenzie filed a petition with the Iowa Workers' Compensation Commissioner in January 2001, alleging she had suffered an injury to her lower back, left leg, and buttock. About a month before the arbitration hearing, McKenzie was referred to pain management specialist Dr. Bruce Keppen. He started her on a low-dose of methadone, a narcotic pain medication. Keppen informed her, "Definitely weight loss is the only thing that is going to give . . . long term relief."
Following an arbitration hearing, the deputy workers' compensation commissioner determined McKenzie had suffered a twenty-five percent industrial disability, entitling her to 125 weeks of permanent partial disability benefits at a rate of $196.57 per week. The deputy found McKenzie's
McKenzie continued to suffer from lower back and left leg pain. She underwent gastric bypass surgery in July 2006, and eventually lost more than two hundred pounds. MCI refused to authorize the surgery and declined to pay for it. Although her pain improved, she had to take a higher dose of narcotic pain medication due to a malabsorption condition caused by the surgery.
The deputy commissioner issued a review-reopening decision in May 2008, finding McKenzie
The deputy concluded McKenzie had suffered a 100 percent permanent total industrial disability, entitling her to permanent benefits commencing on September 11, 2002, a date agreed upon by the parties. Finally, the deputy ordered MCI to pay for McKenzie's gastric bypass surgery, as well as her anticipated follow-up surgery to reshape her skin and muscles.
MCI appealed, and the deputy's decision was affirmed and adopted by the commissioner with some additional analysis. The commissioner concluded
Finally, the commissioner found MCI's
MCI filed a petition for judicial review. Following a hearing, the district court issued a ruling affirming the agency's determination that McKenzie had established her current condition warranted an increase in compensation and the agency's award of permanent total disability benefits. The court nevertheless disagreed with the agency's order requiring MCI to pay for McKenzie's gastric bypass procedure and related follow-up surgery because those procedures were not authorized by MCI. The court also determined the agency erred in failing to address the commencement-date issue, finding it was "raised, albeit in poor form, and therefore should have been addressed by the agency." The court accordingly remanded the case to the agency for determination of that issue.
MCI appeals. It claims that after the agency entered its decision, the Iowa Supreme Court issued an opinion clarifying a claimant's burden of proof in a review-reopening proceeding, which the district court failed to apply. See Kohlhaas v. Hog Slat, Inc., 777 N.W.2d 387, 391-92 (Iowa 2009). MCI asserts that when the correct standard is applied, substantial evidence does not support the agency's finding that McKenzie established a change in condition justifying an increase in compensation. MCI also takes issue with the extent of disability found by the agency.
McKenzie cross-appeals, claiming the district court erred in reversing the agency's order requiring MCI to pay for her gastric bypass surgeries and in remanding the case to the agency to determine whether the parties stipulated to the correct date for commencement of benefits.
Our scope of review is for the correction of errors at law. Kohlhaas, 777 N.W.2d at 390. We review the district court decision by applying the standards of the Iowa Administrative Procedure Act, Iowa Code chapter 17A (2007), to the agency action to determine if our conclusions are the same as those reached by the district court. Id. Under section 17A.19(10), a reviewing court may reverse the agency's decision if it is unsupported by substantial evidence in the record as a whole, based upon an irrational, illogical, or wholly unjustifiable application of law to fact, or otherwise characterized by an abuse of discretion. Id. at 391.
Iowa Code section 86.14(2) provides that in a review-reopening proceeding, "inquiry shall be into whether or not the condition of the employee warrants an end to, diminishment of, or increase of compensation so awarded or agreed upon." In Acuity Insurance v. Foreman, 684 N.W.2d 212, 217 (Iowa 2004), our supreme court stated the commissioner must make the following two determinations in review-reopening proceedings:
The Acuity test was re-examined in Kohlhaas, 777 N.W.2d at 391-92, which was decided after the agency's review-reopening decision but before the district court's judicial review ruling. In Kohlhaas, the court determined the second element of the test
777 N.W.2d at 391-92. The court reasoned 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." Id. at 392. Similarly,
Id. Future developments, including the worsening of a physical condition or a reduction in earning capacity, should be addressed in a review-reopening proceeding. Id. The Kohlhaas court accordingly concluded a review-reopening claimant need no longer prove, as an element of the claim, that the current extent of disability was not contemplated by the commissioner in the arbitration award. Id.
Although the agency did not cite Acuity in its review-reopening decision, it is apparent it utilized the Acuity test. The deputy's decision concluded McKenzie "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 decision." (Emphasis added.) The commissioner's appeal decision adopted that finding and reiterated:
(Emphasis added.)
In its judicial review ruling, the district court quoted the test from Acuity and then mentioned in a footnote the court's decision in Kohlhaas disavowing the second element of that test. The court stated, "However, this authority was not available at the time Ms. McKenzie filed her Petition for Review-Reopening." It then proceeded to analyze the substantial-evidence question raised by MCI under the Acuity test, ultimately concluding, "The change in condition or circumstances resulted from Ms. McKenzie's dramatic weight loss which was not, and could not have been, considered by the original presiding deputy."
MCI argues the district court erred in failing to conclude the agency analyzed McKenzie's review-reopening claim under an incorrect standard. We agree. See Beeck v. S.R. Smith Co., 359 N.W.2d 428, 484 (Iowa 1984) ("As a general rule, judicial decisions, including overruling decisions, operate both retroactively and prospectively."); accord Farm Bureau Serv. Co. v. Kohls, 203 N.W.2d 209, 211 (Iowa 1972). McKenzie does not dispute an incorrect analysis was used by the agency. Instead, she urges remand is not necessary "just to have the Industrial Commissioner rewrite his decision to restate or avoid words such as `anticipated' and `contemplated.'" We conclude otherwise.
In Kohlhass, the court stated,
777 N.W.2d at 393. The court accordingly remanded the case to the commissioner to determine on the record already made whether the claimant met the new burden of proof required in a review-reopening proceeding. Id.; see also Xenia Rural Water Dist. v. Vegors, 786 N.W.2d 250, 257 (Iowa 2010) (reversing agency determination regarding proper allocation of burden of proof and remanding to allow agency to apply proper burden to evidence).
We believe we should do the same here, first because the agency's determination may have been influenced by the disavowed language in Acuity,
Because we are remanding the case to the commissioner to determine on the record already made whether McKenzie met her burden of proof under Kohlhaas, we need not and do not address MCI's other claim that the commissioner erred in finding McKenzie was entitled to a permanent total disability award. That finding is necessarily dependent on the agency's re-evaluation of the evidence under the correct rule stated in Kohlhaas. See, e.g., Xenia Rural Water Dist., 786 N.W.2d at 260 n.1 (noting issue regarding whether commissioner erred in finding claimant was entitled to a permanent total disability award did not need to be addressed due to remand on issue of entitlement to compensation). We do, however, find it necessary to address the two issues raised in McKenzie's cross-appeal.
The deputy ordered MCI to pay for McKenzie's gastric bypass surgery and her anticipated follow-up surgery, finding the gastric bypass surgery was recommended by Dr. Keppen, McKenzie's authorized treating doctor for the management of her back and leg pain. The commissioner adopted that finding on appeal and additionally found "the weight loss surgery constituted reasonable and necessary treatment of the work injury."
MCI challenged those findings on judicial review, arguing it did not authorize McKenzie's gastric bypass surgery; therefore, it was not required to reimburse her for the surgery under Iowa Code section 85.27. In response, McKenzie argued "the `current rule' is that if the medical care improved the employee's condition, the care need not be authorized for the employee to receive medical expenses." The district court agreed with MCI, relying on an unpublished decision from this court rejecting the argument that section 85.27 should be read "in hindsight such that liability would attach if the unauthorized care proved to be successful and beneficial." See City of Ames v. Tillman, No. 08-1677 (Iowa Ct. App. July 22, 2009).
After the district court entered its judicial review ruling, our supreme court decided Bell Brothers Heating & Air Conditioning v. Gwinn, 779 N.W.2d 193, 202 (Iowa 2010), and addressed the very question raised here: whether an employer in a contested-case proceeding can be liable for medical benefits under section 85.27 based on unauthorized medical care to treat a work injury.
Id. at 206.
Although the agency determined McKenzie's gastric bypass surgery "constituted reasonable and necessary treatment of the work injury," it did not address whether the surgery was beneficial to her work-related injury. Cf. id. at 208 (examining whether substantial evidence supported commissioner's finding that unauthorized medical care was necessary and beneficial). Because the facts bearing on that question are not undisputed, we think remand for application of the analysis set forth above on the record already made is required. See McSpadden, 288 N.W.2d at 186. We accordingly reverse the district court's ruling to the contrary.
At the hearing on McKenzie's review-reopening petition, MCI's attorney stipulated the commencement date for benefits, if any were awarded, would be September 11, 2002, the last day of the original arbitration award. The deputy accordingly adopted that date in its decision. On intra-agency appeal, MCI filed an appeal brief listing five issues, the last of which was "[w]hether the Deputy erred in adopting the commencement date as stipulated to by the parties." It did not, however, provide any argument on that issue in the body of its brief.
The commissioner refused to address the issue on appeal, stating, "Although raised as an issue, it was not discussed in the appeal brief. It is concluded that the agency shall not, under such circumstances, overrule a stipulation of the parties." The district court determined the case should be remanded to the commissioner for resolution of the issue because it "was raised, albeit in poor form, and therefore should have been addressed by the agency." We agree.
Iowa Administrative Code rule 876-4.28(4) requires an appellant's brief on intra-agency appeal to include a statement of the issues on appeal, in addition to an "argument corresponding to the separately stated issues and contentions of appellant with respect to the issues presented and reasons for them." See also Aluminum Co. of Am. v. Musal, 622 N.W.2d 476, 478 (Iowa 2001) ("When review is sought by a party filing a notice of appeal, the rules provide for the issues to be identified in the briefs filed by the parties."). Rule 876-4.28(7) then states:
Like the district court, we conclude under rule 876-4.28(7) the commissioner should have addressed the issue expressly raised by MCI even though it was not supported by an argument, as it was presented for the agency's review. See, e.g., Aluminum, 622 N.W.2d at 478 (concluding commissioner was authorized to decide case even though parties did not file briefs or identify issues for review). But see Iowa R. App. P. 6.903(2)(g)(3) ("Failure to cite authority in support of an issue may be deemed waiver of that issue."). We accordingly direct the agency to reconsider the commencement date for McKenzie's benefits should it determine on remand she is in fact entitled to benefits.
We reverse and remand the case to the district court for further remand to the workers' compensation commissioner to determine on the record already made (1) whether McKenzie's disability has increased since the original award using the standard set forth in Kohlhaas, (2) if she is entitled to benefits, the correct commencement date for benefits, and (3) whether the unauthorized medical expenses should be paid by MCI under the analysis adopted by our supreme court in Bell Brothers. The judgment of the district court is accordingly affirmed in part, reversed in part, and remanded. Costs on appeal are taxed to the parties equally.
