Neifert, Byrne & Ozga, P.C.

Welcome to the blog for Neifert, Byrne & Ozga, P.C., devoted to developments in the field of workers' compensation in the State of Iowa. We hope the blog provides helpful information to users, including updates of Iowa Supreme Court and Court of Appeals cases of interest to claimants and workers' compensation practitioners.

Neifert, Byrne & Ozga represents only injured workers in workers' compensation claims in Iowa. This blog is meant to provide accurate and updated information on state of workers' compensation claims in our state. Should you have further questions, please contact us at Neifert, Byrne & Ozga, P.C, 1441 29th Street, Suite 111, West Des Moines, IA 50266. Tel. 888-926-2117 (toll free). Visit us on the web at or

Monday, June 15, 2015

Supreme Court Holds That Disclose of Surveillance is not Required Prior to Claimant's Deposition

This case began when the Core Group of the Iowa Association for Justice requested the commissioner to enter a declaratory order holding that employers must, under section 85.27(2) of the Iowa Code, provide surveillance materials as a part of normal discovery, and must provide these materials prior to claimant's deposition.  The commissioner found in favor of the Core Group and the Iowa Insurance Institute and others appealed to the district court.  The district court and Court of Appeals affirmed.  In Iowa Insurance Institute et al. v. Core Group etc. and Godfrey, No. 13-1627 (Iowa June 12, 2015), the Supreme Court, in a 5-1 decision , reversed the decision of the commissioner.  The court concludes that the disclosure provisions of section 85.27(2) are "limited to health-care related privileges such as the physician-patient privilege."

The court first addressed the procedural mechanism for the grant of a declaratory order under section 17A.9 of the Iowa Code and 876 IAC 5.1.  Core Group had asked the commissioner for a declaratory order and this was opposed by various employers' representatives and insurance interests.  The Supreme Court noted the broad powers the agencies had to issue declaratory orders, and the specific situations in which declaratory orders were not to be provided.  The court noted that Professor Bonfield had noted that declaratory orders were to be issued unless the order would be in conflict with an agency rule or substantially prejudiced the rights of parties who were indispensable parties to the proceedings.  The court concluded that the agency did not abuse its discretion in issuing the declaratory order and all parties necessary had been a part of the proceedings.  Accordingly,
the court found the commissioner was within his rights in issuing the declaratory ruling.

On the merits, the court noted that section 85.27(2) provides that "all information  . . . concerning the employee's physical or mental condition relative to the claim . . . "  is to be produced.  The court indicated that Core Group's position was that there was a waiver of any privilege as to such materials and that appellant's position was that only health care records were subject to disclosure rules.  The court noted that work product rules under IRCP 1.503(3) protected the disclosure of the mental impressions of the party's attorney.  The court stated that there were two tiers of work product - the lower tier allowed for discovery upon a showing of substantial need and undue hardship and the upper tier insulated the mental impressions of the attorney.

The court concluded that surveillance materials were protected lower tier materials.  The court further noted that surveillance lost the status of protected work product "once a determination is made that the surveillance will be used at trial."  The court next analyzed 85.27(2), asking whether the disclosure requirements were ambiguous.  The court noted that other sections of the statute related to health care services, and not broader disclosure requirements.  The court stated that the provisions of 85.27(2) were consistent with other provisions in section 85.27 that related to health care services, and not "all information . . . relative to the claim."  The court posed this as an ambiguity in the statute.  The court then found that "all" does not always mean "all" and is not always all-inclusive.

The court then concludes that if the Core Group's position were to be enforced and "all information" meant "all information," then Core Group's interpretation would eliminate all privileges and protections.  The court found this to be an "absurd result."  Ultimately, the court concluded that section 85.27(2) was not directed at anything other than health care services, and did not apply to surveillance materials.

The dissent by Justice Hecht agreed that the case was properly before the court.  He concludes that "all information" really does mean "all information," and notes that decisions before the court had given that term a very broad reading.  Furthermore, no workers' compensation cases had limited the use of the word "all" in the manner of the majority.  Justice Hecht reads the statute to mean what it says, and finds that the "all information" includes surveillance materials.  He notes that the declaratory order did not abolish all privileges, and did not compromise work product, but only required the divulgence of surveillance materials.  He concludes that the commissioner correctly required parties in a worker's compensation proceeding to release surveillance materials upon request and would affirm the district and appeals court decisions.

Wednesday, June 10, 2015

Court of Appeals Concludes that Rejection of Review Reopening Claim Against the Second Injury Fund was Proper

In Grahovic v. Second Injury Fund of Iowa, No. 14-1295 (Iowa App.  June 10, 2015), the court was presented with a situation where claimant sought review of an earlier denial of a claim against the Fund.  Claimant had suffered multiple scheduled injuries, but liability of the SIF had been denied previously.  The court found that a review reopening was improper in the circumstances of the case.

Claimant had a left leg injury in 1997, and a right leg injury in 2001.  He settled a claim against the Fund in 2003 on a closed file basis.  Claimant later had an injury to his left knee in 2005.  He brought a claim against the Fund with the left knee injury of 2005 being the second injury and the right leg injury of 2001 being the first injury.  He settled with the employer and went to hearing against the Fund.  The agency found that claimant failed to prove his left leg injury and even if he did, had failed to prove that this caused permanent disability.  These findings were ultimately affirmed by the district court.

In 2011, claimant filed a review reopening petition against the employer and the Fund, arguing the same two injuries that had been part of the earlier proceedings before the agency (2001 first injury and 2005 second injury).  Claimant also alleged that  his left knee injury had become worse.  The commissioner ruled against claimant, finding that claimant had not demonstrated that his injury had become worse, that his economic condition had become worse, or that his restrictions had changed.  The commissioner concluded that even if the left knee condition was worse than at the time of the hearing against the Fund, it had not been shown that the worsening was due to the 2005 work injury.

The court finds that the earlier Fund petition had been denied because he had failed to prove that he had sustained a permanent disability to his left leg (the 2005 injury).  Claimant argues in this proceeding that he was not attempting to relitigate this issue, but was instead urging that because his left leg injury did not improve to the extent anticipated, time had now passed to determine the seriousness of the injury.

The court concludes that 86.14 could not be invoked because there had been no prior award for payments against the Fund.  The court, citing Kohlhaas, noted that the language in that case demonstrated that for there to be a review reopening "there must have been a prior award of compensation that might be increased."  Citing Gosek, the court noted that on a review reopening petition, the claimant has the burden of demonstrating an entitlement to benefits "in addition to that accorded by a prior agreement or adjudication."  Even if claimant had a review reopening claim, the court noted that the agency had found that his worsening of his left knee condition was not proximately caused by the 2005 injury with the employer.  The denial of benefits was affirmed.

Note that Second Injury Fund liability is often derivative of that against the employer.  For example, the statute of limitations for Fund cases is based on payments of benefits by the employer.  This opinion can be seen as decoupling those situations for review reopening purposes.  Grahovic is somewhat unusual in that there was a payment of benefits by the employer for the second injury, but a later finding by the agency that there had been no permanency.  The court clearly felt that in order for there to be a review-reopening against the Fund, that there had to be some earlier award against or payment by the Fund.

Court of Appeals Affirms Permanent Total Disability Award on Substantial Evidence Grounds

In H.J. Heating and Cooling v. Dahlen, No. 14-1100 (Iowa App. June 10, 2015), the Court of Appeals affirmed the decision of the commissioner finding that claimant was permanently and totally disabled.  The fighting issue in the case was whether the unrebutted testimony of an electrician hired by defendants which indicated it was impossible for claimant to be shocked in the manner he indicated was to be credited.  The commissioner discredited that testimony and found permanent total disability.

Claimant was working for a heating and cooling company and was walking outside through tall wet grass and plants when he touched metal and testified he was shocked.  This caused him to fall and break a window well cover and aggravated an underlying back condition.  The agency concluded that claimant was permanently and totally disabled.

At hearing, the employer presented the testimony of a master electrician that it was not possible for claimant to have been shocked by the air conditioning unit, and thus the fall was not related to this incident and claimant did not have an injury arising out of his employment.  Claimant presented testimony that claimant's behavior after the injury was consistent with being shocked, but did not present expert testimony concerning the possible of being shocked in such a situation.  In rejecting the employer's contention, the commissioner noted the electrician's testimony was "highly suspect" because the inspection occurred three years after the fact, a new furnace had been installed since the date of injury, an addition had been put on the house causing changes to the breaker box and the electrician had not talked with any of the workers to see what alterations they had made.

The Court of Appeals deferred to the commissioner as the finder of fact, and noted that the commissioner had provided cogent reasons to reject the employer's expert opinion.  The court also concluded that the finding that claimant was permanently and totally disabled was supported by substantial evidence.  The treating doctor was not optimistic about claimant's ability to return to work and this was supported by the opinion of a vocational expert.  The court affirmed without further opinion, as the findings of the commissioner were supported by substantial evidence.

Monday, June 8, 2015

Supreme Court Holds That 85.39 Examination Not Taxable as Costs Under 876 IAC 4.33(6)

The Supreme Court, in DART v. Young, No. 14-0231 (Iowa June 5, 2015) , held that an independent medical evaluation under section 85.39 could not be completely paid under the "costs" section of the commissioner's administrative rules at 876 IAC 4.33(6).  The court affirmed the decision of the Court of Appeals, although discussing the issue in more detail.  The case was decided on a 4-3 vote, with Justices Hecht, Appel and Zager in dissent.

The facts in DART were relatively straightforward.  Defendants accepted claimant's back injury, but did not obtain a rating of impairment under section 85.39.  Claimant obtained an evaluation of her own, and sought to tax the expense of this evaluation as costs under 876 IAC 4.33(6).  The commissioner and the district court ordered that the evaluation to be paid in full under 4.33(6), and the district court affirmed.  The Court of Appeals reversed, finding that ordering payment for the exam as costs would defeat the statutory requirements under 85.39.  DART v. Young, No. 14-0231 (Iowa App. Oct. 1, 2014).  The Supreme Court accepted the case for further review.

The court acknowledged that it was to give substantial deference to the agency when it interpreted its own regulations, and reversed the agency only when its application of the regulations was "irrational, illogical or wholly unjustifiable."  The court noted the statutory process for payment of an IME under section 85.39, and noted that "the statute does not preclude an employee from seeking evaluations outside the statutory process at the employee's own expense."  The court also noted that the workers' compensation statute, section 86.40, stated that costs incurred in the hearing were to be "taxed in the discretion of the commissioner" and that the regulations at 4.33(6) included the "reasonable costs of obtaining no more than two doctors' or practitioners' reports."

The court notes that section 86.40 only granted discretion to tax all costs in the hearing (emphasis in original) and did not grant the commissioner the authority to "restructure the statutory process governing evaluations of permanent disabilities and the employer's statutory obligation to reimburse the employee for an independent evaluation."  The court, indicating that it needed to harmonize the statutes, noted that if 4.33(6) and 86.40 allowed for the costs of the examination to be paid, there would be a conflict with section 85.39.  If, however, 86.40 "is confined to costs attributable to the hearing and excludes expenses incurred for medical treatment and evaluations, the conflict is eliminated."  The court also concludes that the costs of a report under 4.33(6) did not include "the expenses of the underlying medical treatment and examination. . . ."

The court ultimately rejects the contention that hearing costs include the expenses of an independent examination because the examination is necessary to obtain a report on the results of the examination for a hearing.  The court goes on to state, however, that the examination and report would be a reimbursable expense under 85.39 "just as an unreimbursed written report of an examination and evaluation, like deposition testimony and witness fees, could be taxed as hearing costs by the commissioner."  The court concludes that section 85.39 is the sole method for reimbursement of an examination by a physician of the employee's choosing and that the expense of the exam is not included in the report.

Two separate dissents, one by Justice Hecht and the other by Justice Appel, were written.  Justice Hecht found that section 85.39 was not the sole basis for the commissioner's authority to shift costs to the employer.  Justice Hecht noted that costs were in the discretion of the commissioner, and that 4.33(6), did not require the taxation of costs, only gave the commissioner the discretion to do so.  Therefore, the commissioner's interpretation of 4.33(6) was not in conflict with 85.39.  Justice Hecht would find that "claimants must not be deterred by economic realities from obtaining and presenting evidence supporting their claims at a hearing."  He also notes that if the costs of the examination are not included, and the report is not provided in conjunction with an examination, it will most likely be given less weight at hearing.  Ultimately, since the commissioner's interpretation was not irrational, illogical or wholly unjustifiable, the interpretation should have been accorded deference by the court.

Justice Appel noted that section 86.40 provided that all costs incurred in the hearing were potentially compensable.  Secondly, only reports presented at the hearing were compensable.  Finally, the recovery of costs was a discretionary matter with the commissioner.  Justice Appel finds that section 85.39 and 86.40 are not in conflict.  Section 85.39 provide that a party is entitled to an early, mandatory payment of certain costs.  In contrast, section 86.40 only allows costs, presented as a part of the hearing, in the discretion of the commissioner.  All that 86.40 encompasses is the payment of costs at the hearing.  The majority, according to Justice Appel, creates a "nonexistent conflict."  ("Iowa Code section 85.39 does not cast a grim and menacing policy shadow over Iowa Code section 86.40").

It is important to note that DART v. Young does not hold that no costs of an examination can be paid under 876 IAC 4.33(6).  Indeed, all of the justices appear to agree that the commissioner has the discretion to tax costs with the exception of the costs attributable to the examination.  In practice, this would seem to allow for claimant's attorneys to ask the examining physician to set forth the amount of time (and the amount of costs) of the report that were attributable to the examination itself and to carve out those costs when asking for payment of the report.  Since the time spent in the examination is minimal compared to the time spent preparing the report, the practical effects of the decision may not be as substantial as it appears at first glance.

Tuesday, June 2, 2015

Supreme Court Affirms Billick, Holds That Injuries at Concurrent Employment May Not Be Entry Into Competitive Labor Market Requiring Application of Fresh Start Rule

In Roberts Dairy v. Billick, 861 N.W.2d 814 (Iowa 2015), the Supreme Court held that when a claimant has a first compensable injury with one employer, and later has a second compensable claim with a different employer, the fresh start rule applies with the change of employment and the second claim is not apportioned against the first injury.  In that case, the court concluded that "because Billick gained a fresh start when he began his employment with Roberts in 2001, Roberts is not entitled to apportion its liability for permanent partial disability benefits in this case."  Id.  at 825.

In Warren Properties v. Stewart, No. 13-0474 (Iowa May 29, 2015), the court was presented with similar arguments concerning apportionment, with the exception that claimant suffered her first injury while working at Wal-Mart concurrently with her employment at Warren Properties.  Claimant subsequently left her job at Wal-Mart following her back injury, but continued to work at Warren Properties where she suffered back and shoulder injuries approximately two years thereafter.  Claimant settled her case with Wal-Mart on an agreement for settlement basis for a 40% industrial disability.  Following hearing on the claim against Warren Properties, claimant was awarded a 50% industrial disability.  The agency rejected the employer's claim that apportionment should apply to reduce the benefits awarded to the difference between the 40% and 50% awards.  The agency also rejected the claim that claimant failed to prove a new back injury arising out of the claim against Warren Properties.

The district court reversed in part and affirmed in part.  The court held that apportionment should have been applied, but rejected Warren Properties' argument that they should have been credited with the previous 40% award.  The court also concluded that the commissioner's impairment finding could not be sustained without an additional finding that the prior impairment to the back had healed before the 2009 injury.

The Supreme Court discussed the history of the treatment of successive disabilities, both statutorily and judicially.  The court noted the adoption of the fresh start and full responsibility rules via judicial decisions.  The court then noted the changes made to the statute in 2004.  The court discussed the rule under section 85.34(2)(u), which describes industrial disability as the reduction in the employee's earning capacity caused by the disability as it "relates to the earning capacity that the employee possessed when the injury occurred."  The court noted the changes to section 85.34(7), which generally applied apportionment when a claimant had successive injuries with the same employer.  The court stated that in Billick, apportionment did not apply "when the earning capacity of the employee had been reevaluated by the competitive labor market."  The court found that when such a reevaluation had taken place, a fresh start applied and apportionment did not occur.

The court found that in Warren Properties, claimant had not had an injury with a previous employer, but with a concurrent employer.  The employer argued that no reentry into the competitive labor market had taken place and thus apportionment applied.  The claimant argued that her loss of the job with Wal-Mart without an accompanying loss at Warren Properties gave her a fresh start because she had been working two jobs previously and was now working only one job.   The court concluded that concurrent employers were also different employers.  The court went on to note, citing the legislative history of the statute, that the fresh start rule only applied where the employee had entered the competitive labor market with a change of employment.  The court concluded that "although a specific method of apportionment was not established, the legislature did not intent to exclude from apportionment successive disability with different employers when no market reevaluation has occurred."  The court further found that claimant had not competed in the labor market, and thus apportionment applied.

The court then noted that the rule of section 85.34(2)(u) must apply, as well as the rule under section 85.34(7)(a), which holds that the employer is not responsible for compensating an employee's preexisting disability that arose out of and in the course of employment with a different employer.  In applying this rule, the court indicated that:

                The earning capacity possessed at the time of the successive injury does not include any                        earning capacity lost as a consequence of a prior work-related injury or due to causes                            unrelated to employment, and the reduction in earning capacity caused by the successive                      injury therefore cannot include any earning capacity that was lost and not regained before                    the successive injury at issue in a particular case.

In a footnote, the court strongly suggests in the context of Ms. Stewart's case, apportionment should be applied first, by taking the difference between the 40 and 50% industrial losses suffered by the claimant.  The court then states the following:

                In a mathematical formulation, the reduction in earning capacity divided by earning                             capacity possessed is equal to the number of weeks compensated divided by 500 weeks.                       Applying this formula to our hypothetical scenario [which is identical to the actual scenario                 presented by Ms. Stewart's case], the reduction in earning capacity caused by successive                     injury was ten percent (fifty percent minus forty percent) and the earning capacity                                 possessed when the injury occurred was sixty percent (100 percent minus forty percent).                     To determine the compensable change in earning capacity, we divide the reduction in                           earning capacity by the earning capacity possessed when the successive injury occurred,                     sixty percent.  In this example, the calculation equals 16.67%, and 16.67% of 500 weeks                     equals 83.3 weeks.

The court then rejects the employer's contention that evidence of a loss of functional capacity arising from the 2006 injury precludes a finding that claimant suffered an industrial loss as a consequence of the 2009 injury and remands to the commissioner for further fact finding on this issue.

Because Stewart followed the decision in Billick, it reinforces the decision in Billick that, so long as an employee competes in the workforce following an initial injury, he or she receives a fresh start and apportionment does not apply.  In the limited situation where there is no such competition, such as the concurrent employment situation in Stewart, apportionment does apply.  That apportionment, according to the court in footnote 6, is not applied directly, but takes into account the difference between the two industrial findings divided by the earning capacity possessed when the successive injury occurred.  Thus, the effect of  Stewart is relatively limited, to only those situations where an employee has not reentered the competitive job market, a scenario which is quite rare with respect to successive injuries.  The general rule outlined by Billick and Stewart is that apportionment does not apply to successive injuries with different employers because of the application of the fresh start rule once an employee reenters the labor market.

Stewart was handled by Martin Ozga of Neifert, Byrne & Ozga.