P.M. LATTNER MANUFACTURING CO. and ACCIDENT FUND GENERAL INSURANCE CO. v. MICHAEL RIFE
No. 22–1421
IN THE SUPREME COURT OF IOWA
February 9, 2024
Submitted December 13, 2023
Appeal from the Iowa District Court for Polk County, Michael D. Huppert, Judge.
A workers’ compensation claimant challenges a district court ruling reversing a commission award of permanent partial disability benefits and reimbursement of expenses for independent medical examination. DECISION OF COURT OF APPEALS AFFIRMED IN PART AND REVERSED IN PART; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED WITH INSTRUCTIONS.
McDonald, J., delivered the opinion of the court, in which all justices join.
Anthony J. Olson of Rush & Nicholson, P.L.C., Cedar Rapids, for appellant.
Laura J. Ostrander, General Counsel, Accident Fund Holdings, Inc. d/b/a AF Group, Lansing, Michigan, for appellee.
McDONALD, Justice.
Michael Rife worked as a welder for P.M. Lattner Manufacturing Company. In 2009, Rife sustained an injury to his shoulder arising out of and in the course of his employment with P.M. Lattner and sought workers’ compensation benefits. Rife and P.M. Lattner entered into a commutation settlement agreement for that injury. In 2018, Rife sustained another injury to his shoulder arising out of and in the course of his employment and sought workers’ compensation benefits. The commissioner found the injury caused a new permanent
I.
In 2009, Rife sustained an injury to his right shoulder in the course of his employment with P.M. Lattner. Three doctors assessed the injury and issued impairment ratings. One doctor issued an impairment rating of 14% to the right shoulder, or 8% to the body as a whole. Another doctor issued an impairment rating of 12% to the right shoulder, or 7% to the body as a whole. A third doctor issued an impairment rating of 15% to the right shoulder, or 9% to the body as a whole. The commissioner never made a finding regarding the impairment rating because the parties entered into a commutation settlement agreement in September 2010. The commutation settlement stipulated that Rife sustained a permanent partial disability of 29.6% to the body as a whole.
At the time of the 2009 injury, permanent partial disability arising out of an injury to the shoulder was a nonscheduled disability. See
In 2017, the general assembly changed the method of calculating permanent partial disability benefits for an injury to the shoulder. 2017 Iowa Acts ch. 23, § 7 (codified at
Rife sustained a second work-related injury to his right shoulder in August 2018 and filed this claim for workers’ compensation benefits against P.M. Lattner and its insurer, Accident Fund General Insurance Co. (collectively, “P.M. Lattner“). After treating with several physicians, Rife sought an independent medical examination with Dr. Sunny Kim. Dr. Kim had
The matter proceeded to an arbitration proceeding. The deputy commissioner found Rife suffered a 19% functional impairment to his right shoulder and would be entitled to 19% of 400 weeks’ compensation. P.M. Lattner argued that it was entitled to an apportionment of liability pursuant to
The deputy commissioner rejected P.M. Lattner‘s apportionment argument under
At the arbitration hearing, Rife sought reimbursement for the costs of Dr. Kim‘s independent medical examination (IME). The deputy commissioner concluded that Rife was entitled to seek an IME and ordered P.M. Lattner to reimburse Rife in the amount of $2,250 for the same. The deputy commissioner found the fee was reasonable based on Dr. Kim‘s opinion that the cost was “reasonable and customary in his geographic area.”
P.M. Lattner filed an intra-agency appeal of the arbitration decision. The commissioner affirmed the deputy‘s conclusions and findings regarding the compensation to be paid for Rife‘s permanent partial disability. On the question of apportionment, the commissioner concluded that P.M. Lattner‘s theory and method of apportionment were not supported by the statutory text or the general body of workers’ compensation law governing permanent partial disabilities. The commissioner reasoned that to conclude otherwise would be to compare apples and oranges. The commissioner‘s reasoning was persuasive, and we quote it at length:
Not only is there no mechanism in the statute for apportioning past compensation for industrial disability against compensation for a scheduled member, . . . but the statute, as amended, does not support such an apportionment. . . .
Because claimant‘s prior shoulder injury occurred before the legislature‘s 2017 overhaul of chapter 85, it was not compensated as a scheduled member. Instead, claimant‘s pre-existing disability was compensated under former
Iowa Code section 85.34(2)(u) (now subsection (2)(v)), which is the section for unscheduled losses that provides compensation based on a reduction in earning capacity.
In determining a claimant‘s reduction of earning capacity, functional impairment is an element to be considered, but consideration must also be given to the injured employee‘s age, education, qualifications, experience, motivation, loss of earnings, severity and situs of the injury, work restrictions, inability to engage in employment for which the employee is fitted and the employer‘s offer of work or failure to so offer. Before the 2017 amendments, this agency stated in countless decisions over several decades that “[t]here are no weighting guidelines that indicate how each of the industrial disability factors is to be considered.” See, e.g., Logan v. ABF Freight System, Inc., File No. 5047979 (App. April 25, 2018). In this case, the parties agreed upon a settlement for claimant‘s prior right shoulder injury. While part of the settlement was certainly for claimant‘s functional impairment, the agreed-upon compensation exceeded what would have been payable for claimant‘s functional impairment alone. In other words, the parties considered other industrial disability factors when arriving at their settlement.
Claimant‘s current right shoulder injury, however, is a scheduled member under the newly added
Iowa Code section 85.34(2)(n) . Claimant‘s compensation under this section is limited only to the extent of loss or permanent impairment of the shoulder itself. . . .Thus, if defendants in this case were entitled to a credit for the entirety of their settlement, which was for industrial disability, against claimant‘s current scheduled member injury, they would receive an unfair excess credit for considerations and factors that are not applicable to claimant‘s current injury. Put differently, their credit would be for apples against an award for oranges.
I agree with the deputy commissioner that defendants could arguably be entitled to a credit based solely upon the functional impairment attributable to claimant‘s preexisting shoulder injury—a credit for oranges against an award for oranges.
(Citations omitted.) Like the deputy commissioner, the commissioner also concluded that if P.M. Lattner were entitled to a credit based on the prior functional impairment, it failed to carry its burden of proving the amount of the credit. P.M. Lattner “did not identify which impairment ratings the parties adopted . . . nor did they offer any evidence (expert opinions or otherwise) to shed light on which of the impairment ratings was more persuasive than the others.”
On the question of reimbursement for the costs of Dr. Kim‘s IME, the commissioner stated that P.M. Lattner contested only that the costs of Dr. Kim‘s IME included expenses for an examination of an unrelated right ankle injury. The commissioner rejected that argument. The commissioner affirmed the deputy commissioner‘s decision that P.M. Lattner was required to reimburse Rife $2,250 for the IME.
P.M. Lattner appealed the decision to the district court. The district court concluded that the commissioner‘s ruling on the apportionment issue was erroneous. In the district court‘s view, the commissioner failed to address and interpret the relevant statutes and the commutation settlement. The district court concluded that this legal failure was a failure “to consider all the evidence.” Although the district court concluded the agency failed to “consider all the evidence,” the district court remanded the case back to the agency to consider the law. Specifically, the district court remanded the case to the agency to “reevaluate
Rife appealed the decision of the district court, and we transferred the appeal to the court of appeals. On the apportionment issue, Rife argued that apportionment under
On the question of the IME, the court of appeals held that the district court erred in concluding that Rife was not entitled to reimbursement for the IME. The court of appeals concluded, however, that Rife could only be reimbursed for the cost of the impairment rating rather than the cost for the entire examination. The court of appeals remanded the matter to the commissioner “to determine what portion of Dr. Kim‘s examination related to the impairment rating of Rife‘s right shoulder.”
II.
We granted Rife‘s application for further review.
A.
We first address the commissioner‘s ruling regarding the apportionment of liability pursuant to
This case is resolved by Loew v. Menard, Inc., ___ N.W.3d ___ (Iowa 2024). In that case, we addressed the question of how the commissioner should apportion liability when compensation for the employee‘s first injury resulting in permanent partial disability was based on a loss of earning capacity and compensation for the second injury resulting in permanent partial disability was to be compensated based on a loss of functional impairment. See id. at ___. Like the commissioner and the court of appeals in this case, we concluded that offsetting an award based on functional impairment against a prior award based on loss of earning capacity was an improper comparison of apples to oranges. See id. at ___. Rather than comparing these incommensurables, the employer is entitled to an offset or credit for the functional impairment caused by the first injury. See id. at ___. Stated differently,
Although the commissioner in this case articulated the correct framework for apportioning the employer‘s liability for the second injury,1 the commissioner declined to apportion liability on the ground that P.M. Lattner failed to provide evidence on the extent of the prior impairment. “When there has been a failure of a required record, we frequently must decide whether it is appropriate to remand a case in order to supply the missing record. The answer most often is no; in view of limited judicial resources, we can ordinarily accord but one trial for each controversy.” Murillo v. Blackhawk Foundry, 571 N.W.2d 16, 19 (Iowa 1997). In administrative appeals, however, “[i]f it is shown to the satisfaction of the court that the additional evidence is material and that there were good reasons for failure to present it in the contested case proceeding before the agency, the court may order that the additional evidence be taken before the agency upon conditions determined by the court.”
“We think the record here calls for a remand for additional evidence.” Murillo, 571 N.W.2d at 19. The application of
circumstances presented
B.
We next address the question of whether Rife was entitled to reimbursement for the expense of Dr. Kim‘s IME. The deputy commissioner found Rife was entitled to reimbursement and found the fee of $2,250 was reasonable based on Dr. Kim‘s opinion that the cost was “reasonable and customary in his geographic area.” The commissioner affirmed this finding. The district court concluded that Rife was not entitled to any reimbursement. The court of appeals concluded that the district court erred and Rife was entitled to reimbursement. The court of appeals concluded, however, that Rife was entitled to reimbursement only for the costs of the impairment rating and not for the entire examination.
We agree with the court of appeals that the district court erred in concluding Rife was not entitled to reimbursement for the cost of the IME. However, we conclude the court of appeals erred in holding that Rife was entitled to reimbursement only for the cost of the impairment rating and not the cost of the examination. “[T]he employee is entitled to the reasonable cost of the examination accompanying the physician‘s determination of the impairment rating, not merely the component cost of the impairment rating itself.” Mid Am. Constr. LLC v. Sandlin, ___ N.W.3d ___ (Iowa 2024). The Code “provides for reimbursement of the reasonable cost of the examination to determine the impairment rating, and the examination encompasses the records review, the physical examination and testing, and a written report.” Id. at ___; see also
We conclude the commissioner‘s reimbursement decision should be affirmed. The reasonableness of the fee for an IME “is to be based on the typical fee charged in the locale where the examination is performed.” Id. at ___. “Whether the fee is reasonable is a question of fact, and the commissioner‘s finding of reasonableness is to be affirmed if supported by substantial evidence.” Id. at ___. Here, the commissioner found the $2,250 fee was reasonable based on Dr. Kim‘s opinion that his fee was the reasonable and customary fee in the geographic area. The commissioner‘s finding is thus supported by substantial evidence.
III.
For these reasons, we affirm in part and reverse in part the decision of the court of appeals. We reverse the judgment of the district court. We remand this matter to the district court with instructions to remand this matter to the workers’ compensation commissioner for further proceedings.
DECISION OF COURT OF APPEALS AFFIRMED IN PART AND REVERSED IN PART; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED WITH INSTRUCTIONS.