Howard John Kohlhaas Vs. Hog Slat, Inc., And Royal & Sunalliance Insurance Companies

IN THE SUPREME COURT OF IOWA

No. 08–0589

Filed June 12, 2009

HOWARD JOHN KOHLHAAS,

Appellant,

vs.

HOG SLAT, INC., and ROYAL &

SUNALLIANCE INSURANCE COMPANIES,

Appellees.

Appeal from the Iowa District Court for Polk County,

Michael D. Huppert, Judge.

Appellant challenges district court’s denial of his review-reopening

petition and request for reimbursement for a medical evaluation.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Mark S. Soldat of Soldat & Parrish-Sams, P.L.C., West Des Moines,

for appellant.

Meredith J. Kuehler of Engles, Ketcham, Olson & Keith, P.C.,

Omaha, for appellees.

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STREIT, Justice.

While working for Hog Slat, Inc., Howard Kohlhaas’ right foot was

crushed by a large concrete block. Kohlhaas and Hog Slat entered into a

settlement agreement, establishing a 50% permanent partial disability to

Kohlhaas’ right leg. Both before the settlement and after the settlement,

Kohlhaas complained of knee, hip, and back pain in addition to his foot

problems. A few years later, Kohlhaas filed a review-reopening petition,

requesting an increase in compensation as well as reimbursement for a

medical evaluation pursuant to Iowa Code section 85.39 (2003). The

commissioner denied both requests. Kohlhaas appealed, and the

decision was affirmed. He then filed a petition for judicial review, and

the district court affirmed the commissioner’s decision. Because the

claimant need not prove that the current extent of disability was not

contemplated by the commissioner (in the arbitration award) or the

parties (in their agreement for settlement), we reverse. However, we

affirm the commissioner’s denial of Kohlhaas’ request for reimbursement

of his expenses for a section 85.39 medical evaluation because the

employer did not obtain a new evaluation of Kohlhaas’ permanent

disability in the review-reopening proceeding.

I. Facts and Prior Proceedings.

On October 21, 1999, a 400-pound concrete block fell on Howard

Kohlhaas’ right foot while working at Hog Slat. His foot was fractured in

several places, and the skin was crushed and torn apart. On July 15,

2002, Kohlhaas and Hog Slat, along with its insurance companies Royal

and SunAlliance Insurance Cos., filed an agreement for settlement

pursuant to Iowa Code chapter 86 (2002), which was approved by the

Iowa workers’ compensation commissioner. The settlement established

that the injury proximately caused a 50% permanent partial disability to

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Kohlhaas’ right leg. The settlement documents also contained the

opinion of Dr. Crane that Kohlhaas’ knee, hip, and back pain was not

related to the work injury.

Kohlhaas continued to suffer from foot, knee, hip, and back pain in

varying degrees. On July 14, 2005, Kohlhaas filed a review-reopening

petition, requesting an increase in compensation, seeking compensation

for a 95% industrial disability, as well as reimbursement for an

independent medical evaluation by Dr. Kuhnlein. Kohlhaas presented

evidence from his chiropractor, Dr. Mueller, who asserted Kohlhaas’

knee, hip, and back problems were a direct result of his injury. Dr.

Kuhnlein, who performed a medical evaluation, opined Kohlhaas had a

34% impairment of his right leg, and his knee and hip pain was related

to the change in his gait after the injury. The review-reopening decision

issued by the deputy commissioner on August 31, 2006 determined that

an increase in compensation was not warranted because “the claimant

has not 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 settlement.” The deputy commissioner also denied

Kohlhaas reimbursement for Dr. Kuhnlein’s medical evaluation.

Kohlhaas appealed, and the decision was affirmed by the commissioner.

Kohlhaas then filed a petition for judicial review. The district court

affirmed the commissioner’s decision, stating “[i]t is clear that most of

the complaints that the petitioner claims supports an increase in his

disability were reported and known at the time of the settlement.”

Further, the district court determined

[t]he connection between the 1999 injury and the petitioner’s

complaints of back, hip, and knee pain (while supported by

Drs. Mueller and Kuhnlein) were discounted by Dr. Crane at

the time of the original settlement. The agency was well

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within its rights to side with Dr. Crane’s evaluation of this

issue.

Kohlhaas appealed.

II. Scope of Review.

Our scope of review is for the correction of errors at law. E.N.T.

Assocs. v. Collentine, 525 N.W.2d 827, 829 (Iowa 1994). “We review the

district court decision by applying the standards of the [Iowa]

Administrative Procedure Act to the agency action to determine if our

conclusions are the same reached by the district court.”

Locate.Plus.Com, Inc. v. Iowa Dep’t of Transp., 650 N.W.2d 609, 612 (Iowa

2002). Under Iowa Code section 17A.19(10) (2007), “a reviewing court

may reverse the decision of the workers’ compensation commissioner if it

is unsupported by substantial evidence in the record or characterized by

an abuse of discretion.” Univ. of Iowa Hosps. & Clinics v. Waters, 674

N.W.2d 92, 95 (Iowa 2004).

“Substantial evidence” means the quantity and quality of

evidence that would be deemed sufficient by a neutral,

detached, and reasonable person, to establish the fact at

issue when the consequences resulting from the

establishment of that fact are understood to be serious and

of great importance.

Iowa Code § 17A.19(10)(f)(1). An abuse of discretion occurs when the

commissioner’s exercise of discretion is “clearly erroneous or rests on

untenable grounds.” Waters, 674 N.W.2d at 96.

III. Merits.

A. Review-reopening Decision. Under Iowa Code section

86.14(2), the workers’ compensation commissioner is authorized to

“reopen an award for payments or agreement for settlement . . . [to

inquire] into whether or not the condition of the employee warrants an

end to, diminishment of, or increase of compensation so awarded or

agreed upon.” When an employee seeks an increase in compensation,

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the employee bears the burden of establishing by a preponderance of the

evidence that his or her current condition was “proximately caused by

the original injury.” Simonson v. Snap-On Tools Corp., 588 N.W.2d 430,

434 (Iowa 1999) (quoting Collentine, 525 N.W.2d at 829). The

commissioner must then evaluate “the condition of the employee, which

is found to exist subsequent to the date of the award being reviewed.”

Stice v. Consol. Ind. Coal Co., 228 Iowa 1031, 1038, 291 N.W. 452, 456

(1940). The commissioner is not supposed to “re-determine the condition

of the employee which was adjudicated by the former award.” Id.

In our case, the commissioner and the district court relied on the

holding in Acuity Insurance v. Foreman, 684 N.W.2d 212 (Iowa 2004),

which states that the commissioner must determine

(1) whether there has been a change in the worker’s

condition as a result of the original injury, and (2) whether

this change was contemplated by the parties at the time of

any settlement . . . or whether it was beyond what the

commissioner contemplated at the time of the original

assessment of industrial disability.

Acuity, 684 N.W.2d at 217. The test set forth in Acuity thus requires the

employee to demonstrate his condition has changed and that change was

not taken into account in the original settlement. 1

Kohlhaas asserts the district court erred by declaring as a matter

of law that review-reopening relief cannot be granted unless the employee

has demonstrated a change in his condition not anticipated at the time of

the original settlement. He contends the rule from Acuity that the

change in condition “must not have been within the contemplation of the

decision maker at the time of the original award” is obiter dictum and,

1The language in Acuity is akin to the language in divorce modification cases.

See In re Marriage of Pals, 714 N.W.2d 644, 646 (Iowa 2006) (“Dissolution decrees may

be modified upon a substantial change in circumstances . . . ‘not within the knowledge

or contemplation of the court when the decree was entered.’ ” (quoting In re Marriage of

Rolek, 555 N.W.2d 675, 679 (Iowa 1996))).

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therefore, not binding precedent. Id. We agree. The language in Acuity

is ambiguous and seems to condone an agency’s consideration of, or

speculation about, future changes in condition or earning capacity at the

time of the initial award. What we attempted to say in Acuity is that a

condition that has already been determined by an award or settlement

should not be the subject of a review-reopening petition.

In determining a scheduled or unscheduled award, the

commissioner finds the facts as they stand at the time of the hearing and

should not speculate about the future course of the claimant’s condition.

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. See

Iowa Code § 85.34(2); Second Injury Fund v. Bergeson, 526 N.W.2d 543,

548 (Iowa 1995) (“a scheduled injury is evaluated by determining the loss

of physiological capacity of the body part”). Likewise, in an unscheduled

whole-body case, the claimant’s loss of earning capacity is determined by

the commissioner as of the time of the hearing based on the factors

bearing on industrial disability then prevailing—not based on what the

claimant’s physical condition and economic realities might be at some

future time. See Iowa Code § 85.34(3); Quaker Oats Co. v. Ciha, 552

N.W.2d 143, 157 (Iowa 1996) (“Factors that should be considered include

the employee’s functional disability, age, education, qualifications,

experience, and the ability of the employee to engage in employment for

which the employee is fitted.”); Second Injury Fund v. Nelson, 544 N.W.2d

258, 266 (Iowa 1995) (stating “the concept of industrial disability rests

on a comparison of what the injured worker could earn before the injury

as compared to what the same person could earn after the injury”). The

workers’ compensation statutory scheme contemplates that future

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developments (post-award and post-settlement developments), including

the worsening of a physical condition or a reduction in earning capacity,

should be addressed in review-reopening proceedings. See Iowa Code §

86.14(2). The review-reopening claimant need not prove, as an element

of his claim, that the current extent of disability was not contemplated by

the commissioner (in the arbitration award) or the parties (in their

agreement for settlement).

A compensable review-reopening claim filed by an employee

requires proof by a preponderance of the evidence that the claimant’s

current condition is “proximately caused by the original injury.” See

Simonson, 588 N.W.2d at 434 (original emphasis omitted) (quoting

Collentine, 525 N.W.2d at 829). While worsening of the claimant’s

physical condition is one way to satisfy the review-reopening

requirement, it is not the only way for a claimant to demonstrate his or

her current condition warrants an increase of compensation under

section 86.14(2). See Blacksmith v. All-Am., Inc., 290 N.W.2d 348, 354

(Iowa 1980) (holding a compensable diminution of earning capacity in an

industrial disability claim may occur without a deterioration of the

claimant’s physical capacity).

Therefore, we have held that awards may be adjusted by the

commissioner pursuant to section 86.14(2) [then section 86.34] when a

temporary disability later develops into a permanent disability, see Rose

v. John Deere Ottumwa Works, 247 Iowa 900, 906, 76 N.W.2d 756, 759

(1956), or when critical facts existed but were unknown and could not

have been discovered by the exercise of reasonable diligence at the time

of the prior settlement or award, see Gosek v. Garmer & Stiles Co., 158

N.W.2d 731, 735 (Iowa 1968). We have also previously approved a

review-reopening where an injury to a scheduled member later caused an

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industrial disability. See Mortimer v. Fruehauf Corp., 502 N.W.2d 12, 13,

17 (Iowa 1993) (“[A] psychological condition caused or aggravated by a

scheduled injury is to be compensated as an unscheduled injury.”).

Although we do not require the claimant to demonstrate his

current condition was not contemplated at the time of the original

settlement, we emphasize the principles of res judicata still apply—that

the agency, in a review-reopening petition, should not reevaluate an

employee’s level of physical impairment or earning capacity if all of the

facts and circumstances were known or knowable at the time of the

original action. As this court has explained,

a contrary view would tend to defeat the intention of the

legislature[:] . . . “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.”

Stice, 228 Iowa at 1038, 291 N.W. at 456 (quoting Flint v. City of Eldon,

191 Iowa 845, 847, 183 N.W. 344, 345 (1921)). Therefore, “once there

has been an agreement or adjudication the commissioner, absent appeal

and remand of the case, has no authority on a later review to change the

compensation granted on the same or substantially same facts as those

previously considered.” Gosek, 158 N.W.2d at 732. For example, a

“mere difference of opinion of experts or competent observers as to the

percentage of disability arising from the original injury would not be

sufficient to justify a different determination by another commissioner on

a petition for review-reopening.” Bousfield v. Sisters of Mercy, 249 Iowa

64, 69, 86 N.W.2d 109, 113 (1957). Likewise, section 86.14(2) does not

provide an opportunity to relitigate causation issues that were

determined in the initial award or settlement agreement.

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Although it could be argued there is substantial evidence in the

record that Kohlhaas’ current condition does not warrant an increase in

compensation, it is fair to conclude the commissioner’s determination

may have been influenced by the language in Acuity we have just

disavowed. In that we have clarified the requirements for a review-

reopening petition, we reverse and remand the case to the commissioner

to determine on the record already made whether Kohlhaas has met the

burden of proof required for a review-reopening petition under the

standard we have set forth today.

B. Reimbursement for Medical Evaluation Pursuant to Iowa

Code Section 85.39. Kohlhaas contends that the commissioner

incorrectly failed to reimburse him for the fees associated with Dr.

Kuhnlein’s medical evaluation. Under Iowa Code section 85.39,

If an evaluation of permanent disability has been made

by a physician retained by the employer and the employee

believes this evaluation to be too low, the employee shall . . .

be reimbursed by the employer the reasonable fee for a

subsequent examination by a physician of the employee’s

own choice. . . .

Kohlhaas argues that Dr. Crane’s evaluation performed as part of the

2002 settlement qualifies as “an evaluation of permanent disability . . .

made by a physician retained by the employer.” Iowa Code § 85.39.

The commissioner determined Kohlhaas could not be reimbursed

for Dr. Kuhnlein’s fees because “there was no prior rating by a doctor

who was retained by defendants that claimant claimed was too low.”

Affirming the commissioner’s decision, the district court determined

“[t]he time for challenging the prior evaluations was in the context of the

original proceedings that culminated in the agreement for settlement.”

We agree.

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In interpreting the Workers’ Compensation Act, we look to the

language of the statute in order to determine the intent of the legislature.

United Fire & Cas. Co. v. St. Paul Fire & Marine Ins. Co., 677 N.W.2d 755,

759 (Iowa 2004). “ ‘We look to the object to be accomplished, the

mischief to be remedied, or the purpose to be served, and place on the

statute a reasonable or liberal construction which will best effect, rather

than defeat, the legislature’s purpose.’ ” Id. (quoting Beier Glass Co. v.

Brundige, 329 N.W.2d 280, 283 (Iowa 1983)). The language of section

85.39 does not indicate that the “evaluation of permanent disability . . .

made by a physician retained by the employer” from a previous

proceeding can be the basis for permitting reimbursement for a

“subsequent examination” in a subsequent proceeding. Iowa Code §

85.39.

A medical evaluation pursuant to section 85.39 is a means by

which an injured employee can rebut the employer’s evaluation of

disability. It is not a way for the employee to initiate proceedings. If we

were to allow reimbursement for a section 85.39 medical evaluation

without a new evaluation from an employer, then an employee could

continually file review-reopening petitions at the expense of the employer.

This could hardly be the purpose of the statute. See McSpadden v. Big

Ben Coal Co., 288 N.W.2d 181, 194 (Iowa 1980) (“[T]here is no reason to

conclude that . . . the legislature intended to permit employer furnished

medical examinations merely to aid the claimant’s discovery.”).

Even though we have not applied Iowa Code section 85.39 to

review-reopening petitions, the industrial commissioner has. In Sheriff v.

Intercity Express, 34 Iowa Indus. Comm’r Repts. 302 (Oct. 1978), the

employee sought reimbursement for a section 85.39 medical evaluation

during his second review-reopening proceeding. The employee asserted

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that the prior evaluation, which the new medical evaluation challenged,

was the physician’s report during the first review-reopening proceeding.

Sheriff, 34 Iowa Indus. Comm’r Rpts. at 303. In denying the claim for

reimbursement, the commissioner stated

Claimant’s subsequent attempt to obtain an examination

pursuant to § 85.39 is either an attempt to get evidence of

an evaluation of disability greater than that awarded by the

deputy in the first review-reopening proceeding or an

attempt to get evidence of a change in condition at the

employer’s expense. It is neither contemplated nor proper

that § 85.39 be used for these purposes.

Id. Although we do not defer to the commissioner’s interpretation of the

workers’ compensation statute, Larson Mfg. Co. v. Thorson, 763 N.W.2d

842, 850 (Iowa 2009), we find the commissioner’s reasoning persuasive

here.

We agree with the commissioner and the district court that Iowa

Code section 85.39 does not expose the employer to liability for

reimbursement of the cost of a medical evaluation unless the employer

has obtained a rating in the same proceeding with which the claimant

disagrees. In 2002, Kohlhaas entered into a settlement agreement

establishing his disability. Three years later, he seeks reimbursement for

a medical evaluation not to rebut a new impairment rating obtained by

the employer in the review-reopening proceeding, but rather to cast

doubt on an impairment rating obtained by the employer before the

agreement for settlement was reached. If Kohlhaas wanted to challenge

Dr. Crane’s evaluation at his employer’s expense, he should have done so

in the original proceeding establishing his disability in 2002, 2 not during

the review-reopening proceeding three years later. The review-reopening

proceeding in this case is a new and distinct proceeding apart from the

2From

the record, it does not appear Kohlhaas challenged the employer’s rating

through a medical evaluation pursuant to section 85.39 prior to the 2002 settlement

agreement.

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original arbitration action, as the claimant had a burden to prove

something different than he proved at the arbitration hearing. See Iowa

Code § 86.14(2). As the employer did not obtain a new evaluation of

Kohlhaas’ disability in connection with the review-reopening proceeding,

Kohlhaas is not entitled to reimbursement for expenses associated with

Dr. Kuhnlein’s medical evaluation under section 85.39.

IV. Conclusion.

As a compensable review-reopening claim requires proof that, after

the award or settlement, the claimant’s current condition warrants an

adjustment in compensation, we reverse and remand the case to

determine on the record already made whether Kohlhaas’ disability has

increased since the settlement agreement. We affirm the commissioner’s

denial of reimbursement for Kohlhaas’ medical evaluation because the

employer did not obtain a new rating in the review-reopening proceeding.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.