Den Hartog Industries v. Dungan

CourtCourt of Appeals of Iowa
DecidedJanuary 9, 2025
Docket23-1402
StatusPublished

This text of Den Hartog Industries v. Dungan (Den Hartog Industries v. Dungan) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Den Hartog Industries v. Dungan, (iowactapp 2025).

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 23-1402 Filed January 9, 2025

DEN HARTOG INDUSTRIES and WEST BEND MUTUAL INSURANCE COMPANY, Petitioners-Appellants,

vs.

TYLER DUNGAN, Respondent-Appellee. ________________________________________________________________

Appeal from the Iowa District Court for Polk County, Jeanie Vaudt, Judge.

An employer appeals from a judicial-review proceeding following an

adverse decision by the workers’ compensation commissioner. AFFIRMED.

Lee P. Hook, Morgan R. Todd Borron, and Jordan R. Reed (until

withdrawal) of Peddicord Wharton, LLP, West Des Moines, for appellants.

Michael Roling and Christopher Spencer of Peddicord Wharton, LLP, West

Des Moines, for appellant West Bend Mutual Insurance Company.

Janece Valentine, Fort Dodge, for appellee.

Heard by Buller, P.J., Langholz, J. and Doyle, S.J.*

*Senior judge assigned by order pursuant to Iowa Code section 602.9206

(2025). 2

BULLER, Judge.

Den Hartog Industries and its insurer appeal from a judicial-review

proceeding arising out of a contested workers’ compensation case involving former

employee Tyler Dungan. Den Hartog alleges a legal error in the district court and

workers’ compensation commissioner’s interpretations of a 2017 amendment to

Iowa Code section 85.34(2)(v) (2019), which could potentially affect the amount of

benefits owed Dungan. Finding the district court correctly affirmed the

commissioner’s interpretation of ambiguous statutory language, we affirm.

I. Background Facts and Proceedings

Most of the material facts in this case are not disputed. Dungan injured his

back in July 2019 while working for Den Hartog. He promptly reported the injury

to Den Hartog and saw medical providers for treatment. He missed some work

while receiving medical care but continued to work for Den Hartog for the next

eleven months with some restrictions.

Dungan voluntarily left his job at Den Hartog the next June to take a different

job and move closer to his family. He worked a few different positions before he

started at his current employer as a welder, earning more than he had while

working for Den Hartog.

Dungan petitioned for workers’ compensation benefits in March 2021.

Following arbitration, a deputy workers’ compensation commissioner determined

Dungan sustained an eight percent functional impairment and awarded him

industrial disability benefits based on a fifteen percent reduction in his earning

capacity as well as costs and continued medical care. Den Hartog appealed to the

commissioner, who affirmed the deputy’s award in its entirety. 3

By way of background, before 2017, permanent partial disability to an

unscheduled body part was compensated exclusively by an industrial disability

calculation, which focuses on the loss of earning capacity.1 As part of the 2017

legislative changes, the General Assembly amended Iowa Code

section 85.34(2)(v), which in pertinent part reads:

In all cases of permanent partial disability other than those hereinabove described[,] . . . the compensation shall be paid during the number of weeks in relation to five hundred weeks as the reduction in the employee’s earning capacity caused by the disability bears in relation to the earning capacity that the employee possessed when the injury occurred. . . . If an employee who is eligible for compensation under this paragraph returns to work or is offered work for which the employee receives or would receive the same or greater salary, wages, or earnings than the employee received at the time of the injury, the employee shall be compensated based only upon the employee’s functional impairment resulting from the injury, and not in relation to the employee’s earning capacity. Notwithstanding section 85.26, subsection 2, if an employee who is eligible for compensation under this paragraph returns to work with the same employer and is compensated based only upon the employee’s functional impairment resulting from the injury as provided in this paragraph and is terminated from employment by that employer, the award or agreement for settlement for benefits under this chapter shall be reviewed upon commencement of reopening proceedings by the employee for a determination of any reduction in the employee’s earning capacity caused by the employee’s permanent partial disability.

The workers’ compensation commissioner interpreted the bifurcation process to

only apply when a worker returns to work for the employer and is later terminated

by the same employer. Under that reasoning, the commissioner determined the

1 Earning capacity is focused “on the ability of the worker to be gainfully employed.”

Keystone Nursing Care Ctr. v. Craddock, 705 N.W.2d 299, 306 (Iowa 2005) (citation omitted). In this opinion, when we refer to industrial disability, we mean the reduction in earning capacity. See Loew v. Menard, Inc., 2 N.W.3d 880, 884 (Iowa 2024) (“Determining an injured employee’s compensation based on the employee’s reduction in earning capacity is known as the industrial method.”). 4

functional impairment provision did not apply to Dungan because he voluntarily

separated from Den Hartog. As a result, the commissioner determined the

bifurcated process established by section 85.34(2)(v) linking benefits to functional

impairment did not apply to Dungan, and the commissioner instead calculated his

industrial disability.

Den Hartog petitioned for judicial review in the district court, urging that

section 85.34(2)(v)’s bifurcated process applied regardless of whether the

employee was terminated or voluntarily separated from the employer. The court

affirmed the commissioner, criticizing Den Hartog’s position as asking the court to

ignore part of the statutory text and finding that the statute read as a whole only

imposed the bifurcated process when the employee returned to work and was then

terminated by the employer. Den Hartog appealed, and the supreme court

transferred this matter to our court for resolution.

II. Standards of Review

We review the interpretation of the workers’ compensation statute for

correction of errors at law, without deference to the agency’s legal interpretation.

Chavez v. MS Tech. LLC, 972 N.W.2d 662, 666 (Iowa 2022). If the commissioner’s

factual determinations are supported by substantial evidence, we are bound by

them. Neal v. Annett Holdings, Inc., 814 N.W.2d 512, 526 (Iowa 2012).

III. Discussion

There are essentially two parts to this appeal—statutory interpretation and

application of the statute to the facts to determine Dungan’s industrial disability

rating. We address each separately. 5

A. Statutory Interpretation

On the legal question, we must determine for the first time how Iowa Code

section 85.34(2)(v) applies in the circumstance of a voluntary quit. “Our first step

in statutory interpretation is to determine whether the language is ambiguous.”

State v. Richardson, 890 N.W.2d 609, 616 (Iowa 2017).

The supreme court recently looked at compensation under this section,

explaining:

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