Court of Appeals Affirms Declaratory Order Requiring Divulgence of Surveillance Materials
The Court of Appeals, in a case that is likely to be heard by the Supreme Court, has held that the Commissioner's Declaratory Order indicating that section 85.27 required the release of surveillance materials once surveillance had been conducted was appropriate. Iowa Insurance Institute et al. v. Core Group of the Iowa Association for Justice, No. 13-1627 (Oct. 29, 2014). The court, in a 2-1 decision, found that section 85.27 of the Code, in its requirement that the release of all information was required in a workers' compensation case, encompassed the disclosure of surveillance materials.
The declaratory order proceeding had been brought by the Core Group of the Iowa Association for Justice (Core Group) before the commissioner to obtain an order elucidating the commissioner's position on this issue. The Iowa Insurance Institute and other employer and defense counsel groups intervened in the proceedings at the commissioner level. An initial question in the case was whether the commissioner had the power, under section 17A.9 of the Iowa Administrative Procedure Act, to rule on the declaratory order petition. The court found that there were sufficient facts to demonstrate that petitioners would be aggrieved by the commissioner's failure to issue an order, and found that a stringent standing requirement was inconsistent with the precept that declaratory orders may be based on hypothetical facts. The court also found that the questions presented were appropriate in a declaratory order proceeding. Finally, the court noted that the ruling did not prejudice other parties who were not parties to the proceeding because those parties were not bound by the ruling (although as a practical matter, the commissioner's determination provides a clear clue as to how a surveillance question would be ruled on in proceedings outside the declaratory order proceeding. Accordingly, the court agreed that the commissioner had the power to hear the action, a finding joined by all judges on the panel.
On the merits of the case, the majority of the court held that, because of the expansive wording of section 85.27, the requirement that surveillance materials be released was consistent with the statute. The court noted that section 85.27 required the release of information concerning the employee's physical or mental condition, which the commissioner had applied to surveillance materials. The court rejected the contention that the release of information applied only to materials held by third parties, noting that the statutory language requiring the "release of all information" was more encompassing than defendants alleged. The court rejected the contention of appellants that the "release of information" applied only to the release of medical records. According to the court, the use of the word release "means disclosure to the other parties in the workers' compensation proceeding." The court noted, citing Morrison v. Century Eng'g., 434 N.W.2d 874, 877 (Iowa 1989) that the term release was part of a broad discovery rule designed to "foster and encourage a ready access to the information necessary to speedily process workers' compensation claims."
The court also noted that the commissioner, in ordering the release of surveillance materials prior to deposition, was acting contrary to previous decisions from the agency. The court noted that section 17A.19(10)(h), which involves judicial review of agency action, authorizes judicial review when a ruling is inconsistent with the agency's prior practice. The court notes that this provision had been narrowly construed. Furthermore, the commissioner had explained his reasoning in rejecting the earlier rule.
Finally, the court rejected appellants' contention that disclosure destroyed the work product privilege. The court noted that the work product privilege applied only to those items that disclose the mental impression, conclusions, opinions or legal theories of the attorney representing the party in litigation. The court found that the mental impressions of counsel were not revealed by discovery of surveillance materials. The court also noted that the burden of asserting the work product privilege under section 85.27(2) was placed on the party asserting it. The court found that there was no conflict with the statute on this point. The decision of the commissioner was affirmed.
In his partial dissent, Judge McDonald argues that when read in context, section 85.27(2) limits all information to "medical records and similar or related documents that typically, although not necessarily would be held by third parties." The dissent focuses on the legislative history of this provision, which referenced "the release of information concerning a person's past physical or mental condition. The dissent would conclude that 85.27(2) did not apply to surveillance materials and reports.
The dissent goes on to indicate that privileges are not waived under the statute. In making this argument the dissent essentially ignores the language of the statute stating that the parties to a workers' compensation claim "further waive any privilege for the release of information." The dissent cites to general work product principles and cases without focusing on the terms of the statute. The dissent criticizes the commissioner for conflating attorney-client privilege and the work product doctrine. The dissent argues that the work product doctrine is not a privilege and thus is not waived under the statute. The dissent would reverse the decision of the commissioner.
Because of the importance of the issues presented in this case, it is likely that further review will be sought by the Supreme Court, and also likely that review will be granted. For the time being, however, the position of the commissioner, that surveillance materials are discoverable prior to deposition and that the party asserting the right to withhold the information bears the burden of demonstrating why the material should not be disclosed, has been upheld by the Court of Appeals.
The declaratory order proceeding had been brought by the Core Group of the Iowa Association for Justice (Core Group) before the commissioner to obtain an order elucidating the commissioner's position on this issue. The Iowa Insurance Institute and other employer and defense counsel groups intervened in the proceedings at the commissioner level. An initial question in the case was whether the commissioner had the power, under section 17A.9 of the Iowa Administrative Procedure Act, to rule on the declaratory order petition. The court found that there were sufficient facts to demonstrate that petitioners would be aggrieved by the commissioner's failure to issue an order, and found that a stringent standing requirement was inconsistent with the precept that declaratory orders may be based on hypothetical facts. The court also found that the questions presented were appropriate in a declaratory order proceeding. Finally, the court noted that the ruling did not prejudice other parties who were not parties to the proceeding because those parties were not bound by the ruling (although as a practical matter, the commissioner's determination provides a clear clue as to how a surveillance question would be ruled on in proceedings outside the declaratory order proceeding. Accordingly, the court agreed that the commissioner had the power to hear the action, a finding joined by all judges on the panel.
On the merits of the case, the majority of the court held that, because of the expansive wording of section 85.27, the requirement that surveillance materials be released was consistent with the statute. The court noted that section 85.27 required the release of information concerning the employee's physical or mental condition, which the commissioner had applied to surveillance materials. The court rejected the contention that the release of information applied only to materials held by third parties, noting that the statutory language requiring the "release of all information" was more encompassing than defendants alleged. The court rejected the contention of appellants that the "release of information" applied only to the release of medical records. According to the court, the use of the word release "means disclosure to the other parties in the workers' compensation proceeding." The court noted, citing Morrison v. Century Eng'g., 434 N.W.2d 874, 877 (Iowa 1989) that the term release was part of a broad discovery rule designed to "foster and encourage a ready access to the information necessary to speedily process workers' compensation claims."
The court also noted that the commissioner, in ordering the release of surveillance materials prior to deposition, was acting contrary to previous decisions from the agency. The court noted that section 17A.19(10)(h), which involves judicial review of agency action, authorizes judicial review when a ruling is inconsistent with the agency's prior practice. The court notes that this provision had been narrowly construed. Furthermore, the commissioner had explained his reasoning in rejecting the earlier rule.
Finally, the court rejected appellants' contention that disclosure destroyed the work product privilege. The court noted that the work product privilege applied only to those items that disclose the mental impression, conclusions, opinions or legal theories of the attorney representing the party in litigation. The court found that the mental impressions of counsel were not revealed by discovery of surveillance materials. The court also noted that the burden of asserting the work product privilege under section 85.27(2) was placed on the party asserting it. The court found that there was no conflict with the statute on this point. The decision of the commissioner was affirmed.
In his partial dissent, Judge McDonald argues that when read in context, section 85.27(2) limits all information to "medical records and similar or related documents that typically, although not necessarily would be held by third parties." The dissent focuses on the legislative history of this provision, which referenced "the release of information concerning a person's past physical or mental condition. The dissent would conclude that 85.27(2) did not apply to surveillance materials and reports.
The dissent goes on to indicate that privileges are not waived under the statute. In making this argument the dissent essentially ignores the language of the statute stating that the parties to a workers' compensation claim "further waive any privilege for the release of information." The dissent cites to general work product principles and cases without focusing on the terms of the statute. The dissent criticizes the commissioner for conflating attorney-client privilege and the work product doctrine. The dissent argues that the work product doctrine is not a privilege and thus is not waived under the statute. The dissent would reverse the decision of the commissioner.
Because of the importance of the issues presented in this case, it is likely that further review will be sought by the Supreme Court, and also likely that review will be granted. For the time being, however, the position of the commissioner, that surveillance materials are discoverable prior to deposition and that the party asserting the right to withhold the information bears the burden of demonstrating why the material should not be disclosed, has been upheld by the Court of Appeals.
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