VOGEL, P.J.
The City of Davenport appeals from the district court's ruling on judicial review, affirming the award of workers' compensation benefits to former employee, Dick Newcomb. Newcomb cross-appeals the denial of penalty benefits under Iowa Code section 86.13 (2007). We affirm the agency's
Dick Newcomb began working for the City of Davenport in October 2002, at the age of fifty-three, as a plant operator at the sewage treatment plant. The injury at issue in this case occurred on Sunday, December 11, 2005, when Newcomb slipped and fell on ice while performing work-related duties. Newcomb's left hip, as well as both arms, hit the ground. He reported the fall to the lead operator and filed a written report. Newcomb did not think it was necessary go to the hospital as he felt a little bruised and shook up, but wanted to wait and see what happened. Newcomb worked the remaining three or four hours of his shift and also worked the second shift on Monday. By Tuesday, Newcomb was experiencing some complications — increased soreness and trouble getting up and sitting down. Newcomb took four hours off work on Tuesday and went home early. On Wednesday, Newcomb left for a scheduled trip to Florida. During his trip, Newcomb continued to have problems. He later described the pain as being "real sharp pain. It came out of the low back into the buttock, and it went under the back side of the thigh of the leg. And it [came] out the calf, right above the ankle." Newcomb self-medicated, using Flexeril and Vicodin — from an existing prescription he had been given to address other joint and muscle pain.
While Newcomb was in Florida, he called the City's nurse and said he needed to see a City doctor when he returned. Newcomb requested to see Rick Garrels, M.D., with whom he had established a good rapport in previous treatment.
By August 2006, there was still no resolution to the pain and Newcomb was taking eight to ten Vicodin a day to manage his pain. On August 6, 2006, Dr. Garrels placed work restrictions on Newcomb, and Newcomb was then assigned light duty at the fire department. On August 14, 2006,
With the news that any further treatment would not be covered, Newcomb began seeing his family doctor, James King, D.O., in September 2006. Newcomb complained of chronic back pain with left leg radiculopathy. Dr. King referred Newcomb to an orthopedic surgeon, Michael Dolphin, D.O., in October 2006. After examining Newcomb, Dr. Dolphin noted, "Based upon [Newcomb's] history as well as the x-ray and MRI today, it would appear that his degenerative disc disease is not the issue with his present complaint." Dr. Dolphin performed surgery on Newcomb's left leg on December 11, 2006.
Newcomb returned to work for the City in late March 2007 and worked approximately four weeks. A couple weeks into work, Newcomb experienced pain in his left leg, as well as pain in his right buttock that came through the hip and into the right groin area, which then shot down the right knee.
Newcomb was removed from work again and Dr. Dolphin performed another surgery in June 2007. After the second surgery, Newcomb reported positive results on the right side, with much less pain, but the left side remained unchanged. After the second surgery, Newcomb also developed an infection in the wound on the left side, which required yet another surgery. In August 2007, Newcomb suffered a heart attack and underwent surgery to place six stents in his heart vessels.
Despite the corrective surgeries and physical therapy, Newcomb's pain persisted. The only thing that seemed to alleviate Newcomb's pain was taking pain medications, including OxyContin, Vicodin, and Cymbalta. On September 20, 2007, Dr. Dolphin concluded it would be "difficult for me to recommend that [Newcomb] return to work given his degree of discomfort, pain, and immobility." Dr. Dolphin imposed restrictions including: lifting no greater than twenty pounds, no repetitive bending, twisting, pushing, and pulling, and advising Newcomb be able to change position every hour from sitting to standing. The City terminated Newcomb's employment on September 21, 2007.
On November 1, 2007, Newcomb filed a workers' compensation petition alleging an injury to his lower back on December 11, 2005. The City answered on November 8, denying liability. On February 7, 2008, Newcomb amended his original petition to plead the odd-lot doctrine for his disability,
On January 13, 2009, Newcomb's petition came on for arbitration hearing before Deputy Workers' Compensation Commissioner Vicki Seeck. On April 20, 2009, before a ruling was issued, Newcomb's case was reassigned to Deputy Commissioner Walshire. On May 7, 2009, Walshire, after reviewing the record created at the arbitration hearing, determined he needed to make a credibility assessment of Newcomb and his wife, before ruling on the merits, as there was a "significant conflict" between the Newcombs' testimony and Dr. Garrels's reported history of Newcomb's back pain. As such, he ordered a follow-up or credibility hearing, limited to receiving the Newcombs' testimony. On August 17, 2009, the City filed an application for interlocutory appeal, seeking among other things, the testimony of Dr. Garrels be allowed at the credibility hearing. Newcomb resisted and the commissioner denied the City's interlocutory appeal.
On September 10, 2009, Walshire issued an arbitration decision and ordered the City to pay Newcomb permanent total disability benefits, medical expenses listed in the hearing report, and the costs of bringing the action. The City appealed. On October 18, 2010, the commissioner affirmed the arbitration decision. The City then filed a petition for judicial review and Newcomb cross-appealed. On May 31, 2011, the district court affirmed the agency decision, with one exception.
Judicial review in workers' compensation actions is governed by Iowa Code chapter 17A. Broadlawns Med. Ctr. v. Sanders, 792 N.W.2d 302, 306 (Iowa 2010). "A district court acts in an appellate capacity when it exercises its judicial review power." Neal v. Annett Holdings Inc., 814 N.W.2d 512, 518 (Iowa 2012). In our review of the district court's decision, we apply the same standards of chapter 17A to determine whether the conclusions we
In this appeal there are multiple claims, each requiring a different standard of review. First, the City asserts the agency erred in barring Dr. Garrels from testifying at the credibility hearing. Given the fact the agency is vested with the power to make factual findings, we find the agency is also vested with the power to determine what information is necessary for it to make those findings. We are therefore bound by the agency's decision unless it is "unreasonable, arbitrary, capricious, or an abuse of discretion." Iowa Code § 17A.19(10)(n).
The City also asserts the agency improperly denied its motion to compel Newcomb's attendance at an IME conducted by Dr. Abernathey under both Iowa Rule of Civil Procedure 1.515 and Iowa Code section 85.39. We find at the heart of these claims is the assertion (1) the agency wrongly concluded the City failed to meet the requirements for an IME under rule 1.515, and (2) the agency wrongly interpreted section 85.39 as only applying to claims where liability for a workers' compensation injury has been accepted. With respect to the claim under rule 1.515, the agency's ultimate conclusions are challenged, and therefore, the claim challenges the agency's application of law to the facts. Meyer, 710 N.W.2d at 219. Our scope of review then is whether "the agency abused its discretion by, for example, employing wholly irrational reasoning or ignoring important and relevant evidence." Id. We give some deference to the agency, but less than we give to the agency's findings of fact. Larson Mfg. Co., v. Thorson, 763 N.W.2d 842, 850 (Iowa 2009).
With respect to the claim under section 85.39, when it is alleged an agency erred in interpreting a statute, we look to see if the legislature has clearly vested the authority to interpret the law with the agency. Xenia Rural Water Dist. v. Vegors, 786 N.W.2d 250, 252-53 (Iowa 2010). If the agency has been vested with the authority to interpret, we will only reverse if the decision is "irrational, illogical, or wholly unjustifiable." Id. at 252. When the agency has not been vested with the authority, we "accord no deference to the interpretation of the commissioner" and are free to substitute our own judgment for the agency's interpretation if we conclude the agency made an error of law. Neal, 814 N.W.2d at 519. In this case we find the agency was not vested with the authority to interpret section 85.39, therefore, our review is for correction of errors at law.
The final issue we will address in this case is whether the agency correctly determined Newcomb was not entitled to penalty benefits under section 86.13. Again, this challenge is to the ultimate conclusion made by the agency and is therefore a challenge to the agency's application of law to the facts. As such, we reverse only if the commissioner's application was "irrational, illogical, or wholly unjustifiable." Thorson, 763 N.W.2d at 850. We give some deference to the agency, but less than we give to the agency's findings of fact. Id.
The City first contends the district court erred in affirming the commissioner's decision to bar a defense witness, Dr. Garrels, from testifying at the credibility hearing requested by Deputy Commissioner Walshire.
The first arbitration hearing was held on January 13, 2009, before Deputy Commissioner Seeck. At this hearing, Dr. Garrels testified Newcomb had chronic lower back pain that pre-dated the December 11, 2005 fall. Newcomb and his wife, Geraldine, both testified Newcomb had no previous lower back pain other than that from a 2004 work injury. Newcomb further testified that the lower back pain terminated after his gallbladder was removed in October 2004. As noted above, before a decision on the first arbitration hearing was issued, Walshire was assigned the case. Walshire set the case for a credibility hearing, because following his review of the records, he determined:
The City cites Iowa Code section 17A.15(2), which provides in relevant part:
(Emphasis added.) While the City urges that Dr. Garrels should have also been allowed to testify at the credibility hearing, we disagree. Deputy Commissioner Walshire found a discrepancy between "the history provided by Dr. Garrels" and the "testimony of claimant and his spouse."
It is the commissioner's "duty as the trier of fact to determine the credibility of witnesses." Arndt v. City of Le Claire, 728 N.W.2d 389, 395 (Iowa 2007). Under section 17A.15(2), the commissioner need only rehear the portions of the hearing involving demeanor if demeanor is a "substantial factor." See Iowa Code § 17A.15 (stating when rehearing is necessary). Upon his review of the record, Walshire determined it would be necessary for him to make a credibility assessment of Newcomb and his wife. Walshire did not articulate such a credibility determination was necessary regarding Dr. Garrels. In his August 5, 2009 ruling, Walshire determined an assessment of the Newcombs' credibility was critical because the "defendants have raised their credibility as an issue in this case." Walshire did not find additional testimony by Dr. Garrels was
Because factual determinations are "clearly vested by a provision of law in the discretion of the agency," we find it was within Walshire's discretion to determine whose demeanor required reassessment at a credibility hearing. Thorson, 763 N.W.2d at 850. At the time the credibility hearing was ordered, Walshire had exhibits including medical records from Dr. Garrels and a transcript of Dr. Garrels's testimony on which to base his decision. He determined that rehearing testimony from Dr. Garrels was unnecessary, as no one challenged his credibility, which was well within his discretion. See Cedar Rapids Cmty. Sch. Dist. v. Pease, 807 N.W.2d 839, 850 (Iowa 2011) (noting that "the commissioner, as fact finder, is responsible for determining the weight to be given to expert testimony"). The district court noted that in the arbitration decision Walshire stated:
Based on our review of the record, we agree with the district court that Walshire acted within his discretion in determining what testimony he needed to resolve a dispute in the testimony already received, and in concluding Dr. Garrels's testimony was not required in the credibility hearing, as his credibility was not in question. We therefore affirm as to this issue.
The City next asserts the district court erred in affirming the commissioner's denial of its motion requesting that Newcomb be examined by Dr. Abernathey, under both Iowa Rule of Civil Procedure 1.515 and Iowa Code section 85.39.
Because the City challenges the agency's ultimate conclusion with respect to whether good cause was shown for an IME under Iowa Rule of Civil Procedure 1.515, the City's claim challenges the agency's application of law to facts, and therefore, must be reviewed under an abuse of discretion standard. See Meyer, 710 N.W.2d at 219. Our review of the City's challenge to the agency's failure to grant an IME under Iowa Code section 85.39, on the other hand, is for correction of errors at law as the City contends the agency wrongly interpreted this statute. See Neal, 814 N.W.2d at 518.
We begin by noting that Iowa Rule of Civil Procedure 1.515 is applicable to workers' compensation proceedings. See Iowa Admin.Code r. 876-4.18.
Iowa Rule of Civil Procedure 1.515 states:
(Emphasis added.) "An independent medical examination is not available as a matter of right, but is permitted only within the discretion of the trial court." Ragan v. Petersen, 569 N.W.2d 390, 393 (Iowa Ct. App.1997).
McQuillen v. City of Sioux City, 306 N.W.2d 789, 790-91 (Iowa 1981). "These two requirements are not merely formalities and are not satisfied by mere conclusory allegations or by mere relevance to the case." Ragan, 569 N.W.2d at 393. On July 30, 2008, Walshire denied the City's July 23 motion to compel, stating:
The district court found that based upon the record, the agency did not improperly exercise its discretion in denying the first motion for an independent medical examination by Dr. Abernathey. We agree.
Where an Iowa rule of civil procedure is patterned after a federal rule, interpretations of the federal rule are persuasive. Sherwood v. Nissen, 179 N.W.2d 336, 339 (Iowa 1970). Iowa Rule of Civil Procedure 1.515 is patterned after Federal Rule of Civil Procedure 35. Compare Iowa R. Civ. P. 1.515 with Fed.R.Civ.P. 35. In Schlagenhauf v. Holder, the United States Supreme Court was charged with interpreting Federal Rule of Civil Procedure 35. 379 U.S. 104, 112-13, 85 S.Ct. 234, 239-40, 13 L.Ed.2d 152, 160 (1964). The petitioner, a bus driver in an action where passengers were seeking compensation for injuries suffered, contended Rule 35 should not apply to defendants; the Court, however, recognized that "[d]iscovery is not a one-way proposition. Issues cannot be resolved by a doctrine favoring one class of litigants over another." Id. at 113, 85 S.Ct. at 240, 13 L.Ed.2d at 161 (internal citation omitted). Schlagenhauf further challenged a request that he submit to mental and physical examinations by specialists in internal medicine, ophthalmology, neurology, and psychiatry. Id. at 107, 85 S.Ct. at 237, 13 L.Ed.2d at 157.
Id. at 118, 85 S.Ct. at 242-43, 13 L.Ed.2d at 164. It has further been noted that courts have not been willing "to order batteries of examinations by different specialists unless each was supported by good cause." Peters v. Nelson, 153 F.R.D. 635, 638 (N.D.Iowa 1994).
The City alleged in its July 23 motion to compel that it "ha[d] a right to have a similarly-qualified neurosurgeon respond to ... and offer independent opinions from those of Dr. Dolphin." The City had no right to compel examination by a neurosurgeon just because Newcomb had been examined by a neurosurgeon. See McQuillen, 306 N.W.2d at 790 (stating an order for a medical examination under what is now rule 1.515 is discretionary); see, e.g., Schlagenhauf, 379 U.S. at 120-21, 85 S.Ct. at 244, 13 L.Ed.2d at 165 (holding that a request for four separate independent medical exams performed by specialists was not warranted where nothing in the pleadings or affidavit supported broad examinations by specialists). Instead, the City needed to make the requisite showing under rule 1.515, which includes establishing "good cause" to seek the additional examination, and requiring the requesting party to specify the time, place, manner, conditions, and scope of such examination. We agree with Walshire's conclusion that the City failed to set forth the "manner, conditions, and scope of the examination" and therefore did not fully comply with the requirements under the rule in its July 23 motion.
On August 7, the City filed a second motion to compel an IME with Dr. Abernathey. In this second motion, the City set forth the manner, conditions, and scope of examination, as well as its allegations of good cause. With respect to good cause, the City stated,
This second motion was denied by virtue of Iowa Administrative Code rule 876-4.24 when it was not granted within twenty days after filing. Thus the agency abused its discretion by failing to exercise its discretion to decide whether good cause had been shown by the City in this second motion. See IBP, Inc. v. Al-Gharib, 604 N.W.2d 621, 631 (Iowa 2000). When there is error based on an agency's failure to exercise discretion, the remedy is to reverse and remand to the agency for consideration. See id. at 631-32 (affirming the district court's decision to reverse and remand where a blanket exclusion of opinion testimony amounted to an agency's failure to exercise discretion); see also GreatAmerica Leasing Corp. v. Cool Comfort Air Conditioning & Refrigeration, Inc., 691 N.W.2d 730, 733 (Iowa 2005) (reversing and remanding where district court abused its discretion because it "fail[ed] to exercise any discretion"). While we would typically remand to the agency for consideration, our disposition of this issue under Iowa Code section 85.39, as provided below, makes it unnecessary to remand the issue pursuant to Iowa Rule of Civil Procedure 1.515.
The City further contends the district court erred in holding the City was not entitled to an IME under Iowa Code section 85.39. This code section provides, in pertinent part:
Iowa Code § 85.39. Newcomb contends, and the agency found, the City was not entitled to an IME under section 85.39 because the City denied liability.
Our supreme court has held that reimbursement for a medical examination under Iowa Code section 85.39 cannot be ordered until liability for an injury has been established. McSpadden v. Big Ben Coal Co., 288 N.W.2d 181, 194 (Iowa 1980). In addition, the court has held an employer's "right to control treatment ... is lost if the employer disputes liability." Winnebago Indus., Inc. v. Haverly, 727 N.W.2d 567, 575 (Iowa 2006). Although an admission of liability affects the employer's right to control treatment and an employee's ability to receive compensation for an employee-requested IME, we do not find a denial of liability wholly precludes an IME under Iowa Code section 85.39. In fact, if the purpose of the IME is to assist in determining causation, an admission of liability should not be a prerequisite to such an examination. See Daugherty v. Scandia
As the City indicated, Dr. Garrels was Newcomb's treating doctor and an IME was never performed by Dr. Garrels or any other medical professional. Contrary to the ruling of the district court and the commissioner, we find the City's request was reasonable under the circumstances. In addition, the City further clarified the difficult position employers are put in if the only manner in which they can rebut an employee's claims is through a doctor's review of medical records. The City explained that as the deputy commissioner is able to make credibility findings as to expert opinions, limiting the employer to a doctor's written report based only on a records review, and not an actual examination, puts the employer at a disadvantage. That argument finds support in the language of the deputy commissioner who found, "the views of [Doctors] Dolphin, Milas, King and Hughes, more convincing than those of Dr. Garrels for several reasons," including that Dr. Garrels was "not a specialist in orthopedics or neurosurgery." The result of the deputy commissioner denying an IME by the specialist, Dr. Abernathey, was therefore used against the City in concluding the City's medical evidence was inferior to the expert medical testimony presented by Newcomb. That defeats the notion of "substantial justice." See Ragan, 569 N.W.2d at 394 ("The concept of `substantial justice' favors a trial which allows both parties an opportunity to fully and fairly develop their claims and defenses without prejudice to the other party."). This put Newcomb at an unfair advantage as the City could not fully and fairly develop and defend this claim.
The district court erred in concluding Iowa Code section 85.39 was only applicable where liability for an injury has been accepted. We reverse its decision and remand to the agency with directions to permit Dr. Abernathey
The only issue raised by Newcomb on cross-appeal is that the district court erred in affirming the denial of penalty benefits under Iowa Code section 86.13. Penalty benefits are authorized in workers' compensation cases under section 86.13, which reads, in pertinent part:
See also City of Madrid v. Blasnitz, 742 N.W.2d 77, 81 (Iowa 2007) (citing Iowa Code section 86.13). This code section "provides a statutory remedy for unreasonably delayed or withheld workers' compensation benefits." Christensen v. Snap-On Tools Corp., 554 N.W.2d 254, 260 (Iowa 1996). The claimant must first establish there was a delay in the commencement or termination of benefits. Blasnitz, 742 N.W.2d at 81. The burden then shifts to the insurer — or in this case the City — to prove a reasonable cause or excuse for the delay or denial. Id.
Christensen, 554 N.W.2d at 260.
Newcomb contends the City did not have a reasonable basis to deny disability benefits. In Christensen, our supreme court determined the "fairly debatable" standard that applies to the tort of bad-faith denial of insurance claims should be utilized in determining whether penalty benefits are owed under Iowa Code section 86.13. Blasnitz, 742 N.W.2d at 81-82. In analyzing the reasonable-basis element, our supreme court recognized,
Id. at 82 (citing Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473-74 (Iowa 2005)) (internal quotation marks omitted).
The deputy commissioner held that even if the City's decision to withhold benefits was "imprudent" because it was based on the opinion of Dr. Garrels, which was discredited by more highly trained specialists, such action can still be "fairly debatable" as a matter of law. Both the commissioner and district court affirmed.
We agree with the agency that as a matter of law, the City proved a reasonable basis existed to deny Newcomb's entitlement to benefits. The City's doctor, Dr. Garrels, concluded on August 14, 2006, Newcomb had returned to baseline and had achieved maximum medical improvement. Based on this assessment, Newcomb's claim was "fairly debatable," and a reasonable basis existed for the City's denial of the claim. Moreover, our remand directing Newcomb be seen by Dr. Abernathey for an IME does not change the outcome of this issue, because our inquiry focuses on the time of the initial denial, as well as whether, at some later date, the City "became aware there was no reasonable basis to continue denying [Newcomb's] claim." McIlravy v. N. River Ins. Co., 653 N.W.2d 323, 331 (Iowa 2002). Because the City's initial denial was based on Dr. Garrels's August 14, 2006 opinion that Newcomb had returned to baseline, and at no later date did the City become aware there was not a reasonable basis to continue denying Newcomb's claim, we conclude that Dr. Abernathey's opinion — whatever it may be in the future — will not in any way affect our evaluation of the penalty benefits request. We therefore affirm as to the denial of penalty benefits.
In addition to the issues already decided, the City raised issues relating to causation, medical expenses, and permanent and total disability. As each of these remaining issues could be affected by our decision to remand to the agency for the IME and further proceedings, we decline to rule on these issues at this time.
(Emphasis added.)
