Leavens v. Second Injury Fund of Iowa - COA Affirms Denial of SIF Benefits

In Leavens v. Second Injury Fund of Iowa, No. 11-1636 (Iowa App. June 27, 2012), the Court of Appeals affirmed the decision of the commissioner that claimant had not established a compensable SIF claim.  Presented to the court were issues involving the preclusive effect of an earlier settlement agreement, a question concerning rehearing, and the overall question of whether claimant had established a second injury.

On the second injury, which was a bilateral upper extremity injury, claimant and the employer entered into what the court described as a compromise settlement under section 85.35(3).  This settlement was based on a 12/20/06 cumulative injury.  Claimant later filed a claim against the Fund, alleging a first injury from 2000, and the second injury from 12/20/06.  Benefits were awarded against the Fund at the hearing level.  Subsequent to this time, claimant filed a rehearing petition, seeking additional industrial disability.  Apparently much to the claimant's surprise, the hearing deputy reversed the earlier award, and found that Fund benefits could not be awarded when the second injury was concluded with a compromise settlement.  The deputy noted that agency policy on this point had changed.  The commissioner affirmed and concluded that no benefits against the Fund were appropriate.  The district court affirmed.

Before the COA, claimant alleged that the settlement agreement was entitled to limited preclusive effect against the Fund.  Part of the difficulty in Leavens is that the initial reference in the opinion is to a settlement under 85.34(3) - a compromise or contested case settlement, and the second reference in the body of the decision, is to a settlement under 85.34(2) - an agreement for settlement.  The second reference also notes that benefits were commuted under section 85.45.  The agency cited Grahovic v. SIF, No. 5021995 (App. Oct. 9, 2009), for the principle that the settlement agreement was not to be given preclusive effect.  It appears from the decision that the actual settlement was based on an agreement for settlement, which makes more sense in terms of an argument over the preclusive effect of the settlement.

The court discusses preclusion principles under Tyson Foods v. Hedlund, 740 N.W.2d 192 (Iowa 2007) and Winnebago Industries v. Haverly, 727 N.W.2d 567 (Iowa 2006) and concludes that the issue of the compensability of the December 2006 claim was never actually raised and litigated, since the matter was settled.  Therefore, the settlement agreement could not be used offensively against the Fund to preclude arguments that the December 2006 claim was not compensable.  Ultimately, the court concludes that because the Fund did not have the opportunity to litigate the issue, there was no preclusive effect to the earlier settlement.  

On the issue of whether claimant had established disability from the second injury, the agency had given weight to the opinions of Drs. Quenzer and Formanek over the opinions of the IME doctor, Dr. Jones.  The court, citing section 17A.16 of the Code and Bridgestone-Firestone v. Accordino, 561 N.W.2d 60 (Iowa 1997), indicated that as long as the analytical process of the commissioner could be followed, there was no error in the decision (note that the recent Supreme Court decision in Burton v. Hilltop Care Center from May of 2012 casts some doubt on the continued vitality of Accordino).  Claimant challenged the agency's reliance on "summary, leading, and wish-list" reports, but the court concluded that these reports were sufficient to require affirmance of the fact finding of the agency under substantial evidence principles. 


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