IN THE SUPREME COURT OF IOWA No. 82 / 06–1377
Filed August 15, 2008
MIDWEST AMBULANCE SERVICE and COMBINED SPECIALTY INSURANCE, f/k/a/ VIRGINIA SURETY COMPANY, INC.,
Appellants,
vs.
JODI RUUD,
Appellee.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Leo Oxberger,
Senior Judge.
Employer and insurance carrier seek further review of award of
workers’ compensation benefits. DECISION OF COURT OF APPEALS
AND JUDGMENT OF DISTRICT COURT AFFIRMED.
Steven M. Nadel of Ahlers & Cooney, P.C., Des Moines, for
appellants.
Mindi M. Vervaecke of Fitzsimmons & Vervaecke Law Firm, P.L.C.,
Mason City, for appellee. 2
APPEL, Justice.
This case involves an appeal of a decision of the district court
affirming an award of workers’ compensation benefits to a former
employee. The employer claims that the workers’ compensation
commissioner erroneously determined that the claim was timely, that the
employer was not entitled to credit for medical expenses paid through
COBRA, and that the employer was required to repay medical benefits paid by the employee’s private insurer. After a divided court of appeals
sitting en banc affirmed the judgment of the district court, we granted
further review. We now affirm.
I. Factual and Procedural Background.
Jodi Ruud is a certified emergency medical technician who began
working for Midwest Ambulance Service (Midwest) in Des Moines in
1998. On May 12, 2000, Ruud dislocated her left shoulder while
spraying the inside of ambulance walls with disinfectant and wiping
them down. With the assistance of a co-worker, Ruud was able to
relocate the shoulder.
Ruud filed an accident report the day of the incident and was sent
by Midwest to Dr. David Berg for medical treatment. Berg diagnosed a left shoulder dislocation, returned Ruud to work immediately without
restriction, and referred her to physical therapy. No further treatment
was recommended by Berg. In his notes, however, Berg observed that
Ruud’s shoulder will “dislocate again!”
Ruud attended one physical therapy session. According to Ruud,
the physical therapist told her that she “may” need surgery or
“eventually” would need surgery sometime in the future.
Ruud’s shoulder injury did not cause her to miss work and did not
greatly affect her physical mobility. Her shoulder did, however, continue 3
to dislocate over the next several months when Ruud was performing
mundane tasks. When these dislocations occurred she was able to
relocate her shoulder on her own and did not seek further medical
treatment. Ruud testified that she did not seek medical treatment
because her shoulder injury did not affect her daily work, she was
uncertain as to who would be financially responsible for treatment, and
she was in denial over fear that surgery might ruin her career. On June 16, 2002, Ruud reinjured and dislocated her shoulder
while diving at an off-duty social event. The reinjured shoulder now, for
the first time, prevented her from returning to work. On June 20, Ruud
made a request in writing to Midwest for shoulder treatment.
On July 11, Ruud reported to Midwest that she experienced left
shoulder pain and strain after lifting a patient who was lying on a cot.
Midwest sent her to see Dr. Virginia Geary. Geary refused to provide
treatment, stating that Ruud’s employer was denying workers’
compensation liability because the injury was not work-related and that,
in any event, more than two years had elapsed since the initial work
injury of May 12, 2000. Geary, however, excused Ruud from work
pending further treatment. Geary further advised Ruud to see an orthopedist using her private medical insurance.
Ruud was unable to return to work after July 2002. She exercised
her COBRA benefits in order to continue her health insurance coverage
under Midwest’s group medical plan. During the period of COBRA
coverage, Ruud paid the required premiums personally and in full. On
September 25, 2002, Ruud had arthroscopic surgery to repair the tear
and reconstruct her left shoulder. Ruud was subsequently placed on
restricted duty and provided physical therapy. 4
Ruud filed a workers’ compensation claim on September 10, 2003
against Midwest and Midwest’s workers’ compensation insurer,
Combined Specialty Insurance (Combined). The deputy workers’
compensation commissioner determined that Ruud’s claim was time
barred. According to the deputy, Iowa Code section 85.23 (2003)
requires a claimant to give notice of the occurrence of an injury to the
employer within ninety days of the date of the occurrence. The deputy recognized that the time period for giving notice does not begin to run
until the claimant knows or should have known the nature, seriousness,
and probable compensable character of the injury. The deputy found,
however, that a reasonable person in Ruud’s position should have been
aware of the seriousness of her injury as of May 12, 2000. Because
Ruud did not inform her employer of the injury within the statutory
period, her claim was barred.
On intra-agency appeal, the commissioner reversed the decision.
The commissioner found that at the time of Dr. Berg’s examination, “it
was reasonable for claimant to be optimistic about the condition and to
not consider it to be serious even though she realized it had the potential
to become serious at some undetermined time in the future.” The commissioner determined that it was not until June 2002 that Ruud was
placed on notice of the severity of her injury. As a result, the
commissioner held that Ruud’s September 10, 2003 petition was brought
within two years of the date at which Ruud knew or should have known
of the seriousness of the injury.
In light of his holding that Ruud’s claim was not time barred, the
commissioner considered the remaining issues presented in the case.
With respect to the issue of whether the employer was entitled to a credit
against benefits owed for payments made by Ruud’s health insurance, 5
the commissioner determined that because Ruud herself paid the
premiums for the COBRA benefits, the employer was not entitled to a
credit. The commissioner further concluded that amounts paid by
Ruud’s private insurance were attributable to her as if she had made the
payments directly. Ruud was thus entitled to reimbursement for those
payments.
Midwest and Combined appealed the commissioner’s decision to the district court. On appeal, the district court affirmed the
commissioner on the statute of limitations issue. The district court held
that the question of whether a worker knew or should have known of the
seriousness of an injury is a question of fact to be determined in the first
instance by the commissioner. The district court held that the finding of
the agency that Ruud did not or should not have known of the
seriousness of the injury was supported by substantial evidence.
The district court also affirmed the commissioner’s determination
that the employer was not entitled to a credit for COBRA benefits paid by
Ruud’s group health insurer. The district court did not rule on the issue
of reimbursement for private insurance payments and declined the
motion of Midwest and Combined to expand its findings and conclusions with respect to that issue.
Midwest and Combined appealed and the case was transferred to
the court of appeals, which considered the case en banc. A six-member
majority affirmed the district court’s holdings on the statute of
limitations issue, the credit issue, and the private insurance issue.
Three members of the court of appeals dissented, asserting that Ruud’s
claim was time barred by the applicable statute of limitations.
We granted further review. On further review, we affirm the
decision of the court of appeals. 6
II. Standard of Review.
Iowa Code chapter 17A governs judicial review of decisions of the
workers’ compensation commissioner. Iowa Code § 86.26. Factual
findings of the commissioner are reversed only if they are not supported
by substantial evidence. Id. § 17A.19(10)(f). Application of workers’
compensation laws to facts as found by the commissioner is clearly
vested in the commissioner. Mycogen Seeds v. Sands, 686 N.W.2d 457, 465 (Iowa 2004). As a result, we may reverse the commissioner’s
application of the law to the facts only if it is “irrational, illogical, or
wholly unjustifiable.” Iowa Code § 17A.19(10)(m); Finch v. Schneider
Specialized Carriers, Inc., 700 N.W.2d 328, 330 (Iowa 2005). Finally,
interpretation of workers’ compensation statutes and related case law
has not been clearly vested within the discretion of the agency, so this
court is free to substitute its judgment de novo for the agency’s
interpretation of law. Id.
III. Discussion.
A. Statute of Limitations Issue. The threshold issue in this case
is whether Ruud’s petition was timely under Iowa Code section 85.26. In
determining whether the statute of limitations began to run, the commissioner used the correct legal standard, namely, whether Ruud
acting as a reasonable person knew or should have known that her
physical condition was serious enough “to have a permanent adverse
impact on the claimant’s employment or employability. . . .” Herrera v.
IBP, Inc., 633 N.W.2d 284, 288 (Iowa 2001) (citing Orr v. Lewis Cent. Sch.
Dist., 298 N.W.2d 256, 257 (Iowa 1980)). As a result, the provisions of
Iowa Code section 17A.19(10)(c), which vest authority in this court to
reverse an agency determination based upon an erroneous interpretation
of law not vested in the agency’s discretion, has no application. 7
Instead, this court can reverse the decision only if the
commissioner’s factual determinations are not supported by substantial
evidence as provided in Iowa Code section 17A.19(10)(f) or upon a
showing that the commissioner’s application of law to the facts of this
case meets the demanding “irrational, illogical, or wholly unjustifiable”
standard of section 17A.19(10)(m). See generally Clark v. Vicorp Rests.,
Inc., 696 N.W.2d 596, 603–04 (Iowa 2005). We turn first to the findings of the commissioner regarding
whether Ruud knew or should have known of the nature, seriousness,
and probable compensability of her claim. Based upon his review of the
record in this case, the commissioner found that Ruud did not miss work
or incur any expenses related to her shoulder injury until June or July
2002. The commissioner noted that her failure to realize that her injury
was serious was reasonable in light of Dr. Berg having immediately
released her to return to work without restrictions and without
recommending further care other than a brief amount of physical
therapy. The commissioner found that Ruud was not and could not have
been aware as a reasonable person, of the probable nature, seriousness,
and compensable character of her injury until June 2002, when her injury became sufficiently serious to force her to miss work and undergo
surgical repair of her shoulder. The question of whether a claimant
knew, or should have known, of the nature, seriousness, and probable
compensability of her injury is a question of fact to be determined by the
commissioner. Gates v. John Deere Ottumwa Works, 587 N.W.2d 471,
475 (Iowa 1998); Dillinger v. City of Sioux City, 368 N.W.2d 176, 182
(Iowa 1985).
As suggested by Midwest and Combined, there was evidence in the
record which could have been marshaled to support a contrary 8
determination. Shortly after her original injury, a physical therapist
suggested that surgery “might” or “eventually would” be required. In the
months following her original injury, Ruud experienced repeated
shoulder separations with some soreness. There was also evidence in
the record that Ruud was concerned that her injury could eventually
cause her work-related problems.
Mere recognition that there is substantial contrary evidence in the record does not mean that the commissioner’s determination may be
successfully attacked on appeal. The burden on the party who was
unsuccessful before the commissioner is not satisfied by a showing that
the decision was debatable, or even that a preponderance of evidence
supports a contrary view. The burden is on the unsuccessful party to
show that the commissioner’s determination is lacking in substantial
evidence. Meyer v. IBP, Inc., 710 N.W.2d 213, 218 (Iowa 2006).
Like the majority of the court of appeals, we simply cannot reach
that conclusion in light of the evidence when reviewed as a whole.
Dr. Berg allowed Ruud to go back to work the day of her initial injury
without restriction and prescribed only a minimal amount of physical
therapy as part of a conservative treatment plan. Until June 2002, Ruud was able to work without restrictions. Until the diving incident in 2002,
Ruud’s shoulder problem was more of a nuisance than anything else.
There was sufficient evidence in the record from which the commissioner
could conclude that Ruud was not and should not have been aware that
her condition was serious enough “to have a permanent adverse impact
on the claimant’s employment or employability . . .” until after that time.
Herrera, 633 N.W.2d at 288.
Given this evidence in the record, Midwest and Combined in effect
invite us to engage in a “scrutinizing analysis” of the commissioner’s 9
finding, an approach which we have expressly disavowed. Terwilliger v.
Snap-On Tools Corp., 529 N.W.2d 267, 272 (Iowa 1995). Such
“scrutinizing analysis” would tend to undercut the overarching goal of
the workers’ compensation system, “ ‘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.’ ” Zomer v. West River Farms, Inc., 666 N.W.2d 130, 133 (Iowa 2003) (quoting Flint v. City of Eldon, 191 Iowa
845, 847, 183 N.W. 344, 345 (1921)).
Given the binding findings of the commissioner, we next consider
the question of whether the application of law to these facts was
“irrational, illogical, or wholly unjustifiable.” Iowa Code § 17A.19(10)(m).
We cannot conclude that the commissioner’s application was any of the
above. The commissioner determined that Ruud was not aware, and
should not have been aware, of the nature, seriousness, and probable
compensability of her injury until June 2002. Given this factual finding,
we conclude that under Iowa Code section 85.26, the statute of
limitations did not begin to run until June 2002. Because her petition
was filed within two years of June 2002, the commissioner’s conclusion that it was timely was correct.
B. Credit for Payment of Medical Expenses. The district court
affirmed a holding by the commissioner that Midwest and Combined
were not entitled to a credit for the payment of medical expenses made
by Ruud’s group health insurance carrier. The issue arises because a
portion of Ruud’s medical expenses were paid during a period when
Ruud had exercised her COBRA rights. 10
Iowa Code section 85.38(2) relates to the issue of employer credits
when payments are made by a group health plan. This provision
provides, in relevant part: In the event the employee with a disability shall receive any benefits, including medical, surgical, or hospital benefits, under any group plan covering nonoccupational disability contributed to wholly or partially by the employer . . . then the amounts so paid to the employee from the group plan shall be credited to or against any compensation payments. . . . Iowa Code § 85.38(2) (emphasis added).
Midwest and Combined argue that as long as Midwest contributed
to “any group plan,” it is entitled to a credit under this statutory
provision. Midwest and Combined assert that under the literal language
of the statute, it is irrelevant that Ruud paid the premiums for the
continuation of her group health insurance coverage as long as the
employer was contributing in some fashion to the underlying group plan.
Since the employer continued to contribute to the group plan for
employees other than Ruud, Midwest and Combined argue that the
statutory requirement for crediting any group plan payments against
workers’ compensation benefits has been met.
Ruud counters that Midwest and Combined’s interpretation of
Iowa Code section 85.38(2) is contrary to legislative intent. Ruud argues
that the legislature did not intend an employer to receive credit under
Iowa Code section 85.38(2) when the employer is not contributing to the
premiums of the claimant.
We agree with Ruud. The obvious purpose of Iowa Code section
85.38(2) is to avoid duplication of payments by an employer to an
employee. It would be odd, moreover, for an employer to be entitled to a
credit against a workers’ compensation award to employee A because the 11
employer made contributions for group health insurance for employees
B, C, and D, but not A.
While the ambiguous statutory language is not a model of clarity,
the statutory purpose of workers’ compensation would not be advanced
by the illogical approach advocated by Midwest and Combined. State v.
Ross, 729 N.W.2d 806, 810 (Iowa 2007). We therefore hold that under
Iowa Code section 85.38(2), the employer must contribute in whole or in part to a group insurance plan for the benefit of the claimant in order to
be entitled to the statutory credit. Because Midwest and Combined have
not proven that they contributed to Ruud’s COBRA payments, they
cannot prevail on their claim under section 85.38(2).
C. Direct Payments to Ruud. The final issue for us to consider
is whether the commissioner erred in ordering Midwest and Combined,
pursuant to Iowa Code section 85.27, to reimburse Ruud directly for any
medical payments made by insurance plans to which Midwest did not
contribute. Section 85.27(1) provides that the employer shall furnish
reasonable medical services and supplies for injuries compensable under
workers’ compensation.
Midwest and Combined argue that under Rethamel v. Havey, 715 N.W.2d 263 (Iowa 2006), Ruud must prove that she paid the medical
expenses herself in order to receive reimbursement. In Rethamel, we
stated that a claimant must make “a specific showing that the claimant
himself paid the medical expenses.” Rethamel, 715 N.W.2d at 267
(emphasis added). While Ruud concedes that she and her husband did
not directly pay the medical bills from their own funds, they argue that
they essentially paid for the medical bills by purchasing private
insurance coverage. 12
The Rethamel case relied upon our previous decision in Krohn v.
State, 420 N.W.2d 463 (Iowa 1988). In Krohn, we held that a workers’
compensation claimant was not entitled to be paid sums for medical and
hospital expenses absent a showing that the worker personally paid the
medical suppliers. Krohn, 420 N.W.2d at 464–65. As a result, the
employer was entitled to make an arrangement for providing medical and
hospital benefits through a group nonoccupational medical and insurance plan, instead of making direct repayments. Id. at 465.
We find that Rethamel and Krohn are not dispositive of the issue in
this case. Language in Rethamel and Krohn suggests that there must be
a specific showing that claimant paid the medical expenses directly in
order to be entitled to be paid for these expenses. While it may be true
that the commissioner’s decision in Rethamel states that the claimant
did obtain medical and health insurance at her or her husband’s
expense, neither our decision in Rethamel or in Krohn specifically
addressed the issue presented in this case, namely, whether the payment
of insurance premiums not provided by the employer amounts to
personally paying for the underlying medical benefits.
The commissioner concluded that amounts paid by private insurance are attributable to the plaintiff as if she made those payments
herself. The commissioner reasoned that other health insurance plans
may have subrogation rights against an insured who receives benefits
under workers’ compensation. In order to avoid a situation where a
health insurance company sought reimbursement from the claimant for
expenses that the employer has not paid, the commissioner held that the
employer must pay to the claimant an amount equal to the medical
benefits that were covered by the insurer. 13
We believe that the commissioner has adopted the most sensible
approach to this unusual issue. Doe v. Ray, 251 N.W.2d 496, 504 (Iowa
1977) (“In construing a statute we attempt to give it a sensible, practical,
workable and logical construction.”). We note that under Iowa Code
section 85.38(2), an employer who wholly or partially provides insurance
under a group plan is entitled to a credit not simply of the premiums
paid, but of the full amount of benefits paid by the group plan for injuries covered by workers’ compensation. In light of this statutory
provision, the reverse should also be true, namely, that an employee who
pays group health insurance premiums has, in effect, paid for medical
expenses covered by the group plan. See State v. Gonzalez, 718 N.W.2d
304, 308 (Iowa 2006) (“The interpretation of a statute requires an
assessment of the statute in its entirety, not just isolated words or
phrases.”). We therefore hold that the commissioner did not err in
ordering direct payment to the claimant for past medical expenses paid
through insurance coverage obtained by the claimant independent of any
employer contribution.
IV. Conclusion.
The district court’s holding that Ruud’s claim is not time barred and that Midwest and Combined are not entitled to a credit for payments
made by Ruud’s CORBA insurance is affirmed. In addition, we hold that
the commissioner properly determined that Ruud is entitled to direct
payment of funds from Midwest and Combined to cover the cost of
medical expenses paid for by other insurance.
DECISION OF COURT OF APPEALS AND JUDGMENT OF
DISTRICT COURT AFFIRMED.
All justices concur except Baker, J., who takes no part.