Supreme Court Issues Decision Altering Standard of Review Principles
The case of Burton v. Hilltop Care Center, 813 NW2d 250 (Iowa 2012), arose out of a unique set of facts, but has led to a decision in which the court has modified its standard of review principles and simultaneously urged the commissioner's office to rethink its manner of deciding cases.
The primary issue involved in Burton was a rate question for a claimant who was allegedly supposed to receive a $1,000 per year raise, but was paid (for 15 months) a wage that was $1,000 more on a monthly basis than she had previously been receiving. The commissioner and court of appeals concluded that the rate should be decided on the basis of the $1,000 additional per month that had been paid, and defendants challenged this conclusion, in addition to challenging a penalty finding and the award of a 30% industrial disability from abdominal injuries sustained by the claimant.
In setting forth its standard of review for the case, the court cites the familiar principles of substantial evidence from Meyer v. IBP and notes that when an agency has been clearly vested with the authority to make factual determinations, "it follows that application of the law to those facts is likewise 'vested by a provision of law in the discretion of the agency.'" Citing Mycogen Seeds v. Sands, 686 N.W.2d 457, 465 (Iowa 2004). Interpretations of law that are not clearly vested with the agency are subject to being overturned if those interpretations are erroneous. The level of deference accorded the commissioner is determined on a case by case basis. The court notes that the agency does not need to be expressly vested with authority in order for some deference to apply, only that the agency be clearly vested with such authority. When a term is not defined in a statute, but the agency must necessarily define the term as a part of its duties, the court is more likely to conclude that interpretation was clearly vested with the agency.
On the issue of rate, the court noted that section 85.61(3) defines gross earnings as "payments to the employee for employment . . . ." The court also noted that irregular bonuses were excluded. The interpretation of this section of the statute was the key feature for the court in reaching its decision.
In reaching its decision, the commissioner had issued what the court concluded were "combined findings of fact and conclusions of law." The court described the findings as "tapestry of interwoven findings of fact, application of law to fact and interpretations of law." The court noted that these interconnected findings "pose a uniquely difficult problem on judicial review." The court indicated that when the commissioner lumped together facts, law, and the application of law to facts, section 17A.16(1) of the IAPA had not been satisfied. "Combining all three elements of agency decision making in such a condensed, tangled manner makes for inefficient and ineffective judicial review of agency action."
The court found that the commissioner had not been clearly vested with the authority to determine how sections 85.36 (the rate statute) or 85.61(3) (the definitional statute) apply to a particular dispute. To the court, the issue devolved into a determination of whether the $1,000 payment per month to the claimant was a "payment to the employee for employment" or whether this was simply a payment that was made as a mistake. Citing AEA 7 v. Bauch, 646 N.W.2d 398 (Iowa 2002), which involved teacher pay, the court noted that in that case, the rate was to be calculated based on the amount she earned each month, rather than the amount she made each month. Applying this logic to Ms. Burton's situation, the court concluded that the commissioner had not made a factual finding over whether the payments were for employment. The court indicated that although the commissioner had summarized the arguments of the parties on this issue, he had not made a finding of fact on this issue. The court indicated that without such a factual finding, the court was left with nothing to review. This part of the case was therefore remanded to the commissioner with instructions to make a factual determination as to whether the $1,000 a month raise was an accounting error. If it was, then this should not have been included in the rate, but it it was money earned for employment, then the determination was correct.
The court also addressed a bonus issue. Claimant had received a $270.01 bonus, which the commissioner divided by 52 to provide a bonus of $5.20 per week. The district court remanded in light of Noel v. Rolscreen, 475 N.W.2d 666 (Iowa App. 1991). The commissioner had not discussed Noel, but had indicated that the testimony demonstrated that this was a part of a regular bonus. The court found that the district court had relied too much on Noel to determine whether the bonus was "regular." The court noted that the list of factors contained in Noel was not exhaustive or exclusive. The court concluded that the commissioner's inclusion of the bonus was not irrational, illogical or wholly unjustified and reversed the action of the district court.
On the penalty issue, the court remanded this issue along with the issue of rate to determine whether penalty was appropriate in light of the commissioner's factual findings.
In a special concurrence, Justice Hecht wrote that the court's opinion "amounts to a disavowal of the less demanding standard of judicial review applied in Bridgestone-Firestone v. Accordino, 561 N.W.2d 60, 62 (Iowa 1997). Justice Hecht believed that although the court did not specifically disavow Accordino, the practical effect of the decision was to do so. He notes that under the Accordino standard, the court could easily have worked backward from the result reached to determine the agency's legal conclusions and findings of fact. He also noted that under this standard, it was clear that the commissioner had found that the payments made to Burton were for employment. Ultimately, Justice Hecht concluded that it was better to expressly disavow the Accordino standard to ensure that the more demanding standard was applied.
It is to be expected that the effect of Burton will be to require the agency to be more specific in its findings of fact and conclusions of law. The current decisions generally set forth the factual contentions of the parties without making specific findings of fact about those contentions. Often conclusions of law are stated within the portion of the decision labeled "findings of fact." Although it is usually easy enough to determine the findings of fact and conclusions of law made by the agency, there are decisions where it is difficult to reach a conclusion as to the agency's findings. If Burton results in more specific decisions, it will have served an important purpose.
The primary issue involved in Burton was a rate question for a claimant who was allegedly supposed to receive a $1,000 per year raise, but was paid (for 15 months) a wage that was $1,000 more on a monthly basis than she had previously been receiving. The commissioner and court of appeals concluded that the rate should be decided on the basis of the $1,000 additional per month that had been paid, and defendants challenged this conclusion, in addition to challenging a penalty finding and the award of a 30% industrial disability from abdominal injuries sustained by the claimant.
In setting forth its standard of review for the case, the court cites the familiar principles of substantial evidence from Meyer v. IBP and notes that when an agency has been clearly vested with the authority to make factual determinations, "it follows that application of the law to those facts is likewise 'vested by a provision of law in the discretion of the agency.'" Citing Mycogen Seeds v. Sands, 686 N.W.2d 457, 465 (Iowa 2004). Interpretations of law that are not clearly vested with the agency are subject to being overturned if those interpretations are erroneous. The level of deference accorded the commissioner is determined on a case by case basis. The court notes that the agency does not need to be expressly vested with authority in order for some deference to apply, only that the agency be clearly vested with such authority. When a term is not defined in a statute, but the agency must necessarily define the term as a part of its duties, the court is more likely to conclude that interpretation was clearly vested with the agency.
On the issue of rate, the court noted that section 85.61(3) defines gross earnings as "payments to the employee for employment . . . ." The court also noted that irregular bonuses were excluded. The interpretation of this section of the statute was the key feature for the court in reaching its decision.
In reaching its decision, the commissioner had issued what the court concluded were "combined findings of fact and conclusions of law." The court described the findings as "tapestry of interwoven findings of fact, application of law to fact and interpretations of law." The court noted that these interconnected findings "pose a uniquely difficult problem on judicial review." The court indicated that when the commissioner lumped together facts, law, and the application of law to facts, section 17A.16(1) of the IAPA had not been satisfied. "Combining all three elements of agency decision making in such a condensed, tangled manner makes for inefficient and ineffective judicial review of agency action."
The court found that the commissioner had not been clearly vested with the authority to determine how sections 85.36 (the rate statute) or 85.61(3) (the definitional statute) apply to a particular dispute. To the court, the issue devolved into a determination of whether the $1,000 payment per month to the claimant was a "payment to the employee for employment" or whether this was simply a payment that was made as a mistake. Citing AEA 7 v. Bauch, 646 N.W.2d 398 (Iowa 2002), which involved teacher pay, the court noted that in that case, the rate was to be calculated based on the amount she earned each month, rather than the amount she made each month. Applying this logic to Ms. Burton's situation, the court concluded that the commissioner had not made a factual finding over whether the payments were for employment. The court indicated that although the commissioner had summarized the arguments of the parties on this issue, he had not made a finding of fact on this issue. The court indicated that without such a factual finding, the court was left with nothing to review. This part of the case was therefore remanded to the commissioner with instructions to make a factual determination as to whether the $1,000 a month raise was an accounting error. If it was, then this should not have been included in the rate, but it it was money earned for employment, then the determination was correct.
The court also addressed a bonus issue. Claimant had received a $270.01 bonus, which the commissioner divided by 52 to provide a bonus of $5.20 per week. The district court remanded in light of Noel v. Rolscreen, 475 N.W.2d 666 (Iowa App. 1991). The commissioner had not discussed Noel, but had indicated that the testimony demonstrated that this was a part of a regular bonus. The court found that the district court had relied too much on Noel to determine whether the bonus was "regular." The court noted that the list of factors contained in Noel was not exhaustive or exclusive. The court concluded that the commissioner's inclusion of the bonus was not irrational, illogical or wholly unjustified and reversed the action of the district court.
On the penalty issue, the court remanded this issue along with the issue of rate to determine whether penalty was appropriate in light of the commissioner's factual findings.
In a special concurrence, Justice Hecht wrote that the court's opinion "amounts to a disavowal of the less demanding standard of judicial review applied in Bridgestone-Firestone v. Accordino, 561 N.W.2d 60, 62 (Iowa 1997). Justice Hecht believed that although the court did not specifically disavow Accordino, the practical effect of the decision was to do so. He notes that under the Accordino standard, the court could easily have worked backward from the result reached to determine the agency's legal conclusions and findings of fact. He also noted that under this standard, it was clear that the commissioner had found that the payments made to Burton were for employment. Ultimately, Justice Hecht concluded that it was better to expressly disavow the Accordino standard to ensure that the more demanding standard was applied.
It is to be expected that the effect of Burton will be to require the agency to be more specific in its findings of fact and conclusions of law. The current decisions generally set forth the factual contentions of the parties without making specific findings of fact about those contentions. Often conclusions of law are stated within the portion of the decision labeled "findings of fact." Although it is usually easy enough to determine the findings of fact and conclusions of law made by the agency, there are decisions where it is difficult to reach a conclusion as to the agency's findings. If Burton results in more specific decisions, it will have served an important purpose.
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