Court of Appeals Rejects Penalty Case Under Amended Statute

The Court of Appeals addressed the issue of penalty under the 2009 revisions to the penalty statute in Podgorniak v. Asplundh Tree Service, No. 12-0644 (Iowa App. Jan. 24, 2013).  Claimant had been awarded a running healing period, and after defendants' physicians opined that claimant had reached maximum medical improvement, healing period benefits were terminated.  The arbitration decision found that penalty benefits were appropriate, and this action was reversed by the commissioner.  The commissioner's decision found that the action of the employer was "fairly debatable."  The district court affirmed the denial of penalty.

The court first found that an issue concerning the specific amounts and dates of healing period benefits that were due had not been preserved by claimant and did not address this issue.

The court discusses the 2009 amendments to the statute, and first considered an argument that since the words "fairly debatable" were not included in the statute, this was an inappropriate test for determining whether penalty benefits were due.  Claimant argued that under the words contained in the statute itself, penalty benefits were payable.  The court concluded that the 2009 amendments "essentially codified" cases such as Meyers v. Holiday Express Corp., 557 N.W.2d 502 (Iowa 1996); Keystone Nursing Care Center v. Craddock, 705 N.W.2d 299 (Iowa 2005); and Christensen v. Snap-On Tools Corp., 554 N.W.2d 254 (Iowa 1996).  The court really does not explain why the amendments codified the "fairly debatable" standard or why, if they had codified this language, it was not actually used in the statute.  The court instead concluded that "there is no material difference between the judicially articulated general standards for denial of a penalty claim and the standard set forth in section 85.13(4)(b)(2).  The court does not address the question of why the statute was amended if, in fact, there were no changes to prior jurisprudence intended.  The court indicated that much of the language from earlier cases was "co-opted" into the statute.

On the factual aspect of the case, the commissioner had found that the opinions of three physicians finding that claimant had reached maximum medical improvement was sufficient as a reasonable or probable excuse for the denial of benefits.  Claimant argued that he was still in the process of receiving care through an alternate medical care proceeding, but the court found that this did not defeat the fact that physicians had found claimant at MMI.

On the legal issues, the case is likely to be the subject of a request for further review, as the court of appeals appears to have ruled that the 2009 statutory changes in effect made no changes to the statute. 


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