Court of Appeals Holds That Commissioner Erred In Denying Penalty Benefits; Remands for Determination of Healing Period
In Pettengill v. American Blue Ribbon Holdings, LLC, No. 14-1511 (Iowa App. Dec. 23, 2015), the court dealt with a situation where the commissioner had concluded that penalty benefits were not owed despite the fact that the employer had not contemporaneously conveyed the reasons for the denial of benefits to claimant. The district court reversed and remanded and the Court of Appeals affirmed the decision of the district court.
Claimant suffered a back injury, the extent of which was in serious dispute. Dr. Runde provided initial treatment for the back pain, including physical therapy. He also provided permanent restrictions for claimant. An MRI demonstrated a disk extrusion at L5-S1. Dr. Broghammer indicated this was not due to the work injury, Dr. Neiman disagreed and though surgery was necessary. Dr. Abernathey did not believe surgery was necessary and thought that the injury should have resolved within six weeks.
The commissioner concluded that from February of 2011 until late fall of 2011, defendants did not engage in any investigation of claimant's ongoing back back. Defendants only paid healing period benefits through March 19, 2011 and did not notify claimant of the reasons for terminating benefits. The commissioner concluded, however, that because claimant was ultimately (in April of 2012) found to have reached MMI on January 15, 2011, there had been no delay in benefits, and thus penalty was not appropriate.
The court found that section 86.13 creates a two-part test for the determination of penalty benefits. First, the employee must demonstrate a denial, delay or termination of benefits. Second the employer must demonstrate reasonable or probable cause or excuse for the denial of benefits. The court concluded that claimant had demonstrated a delay, but that since the employer had not conduct a reasonable investigation, and had not contemporaneously conveyed the reasons for the denial, under section 86.13(c), penalty was due. The court noted that section 86.13 created a mandatory timeline for determining whether the employer had a reasonable or probably excuse for the denial of payment of benefits. The court stated: "An employer cannot unilaterally decide to terminate an employee's benefits without adhering to Iowa Code section 86.13, to allow otherwise would contradict the language of that section." The court also found that healing period benefits had been terminated without appropriate notice under section 86.13, and remanded for determination based on the medical information available at the time the benefits were delayed or terminated.
Pettengill represents one of the first appellate decisions on the scope of the penalty language in section 86.13 of the Iowa Code. Because of the importance of this issue, it would not be surprising if further review of the decision was sought by the employer.
Claimant suffered a back injury, the extent of which was in serious dispute. Dr. Runde provided initial treatment for the back pain, including physical therapy. He also provided permanent restrictions for claimant. An MRI demonstrated a disk extrusion at L5-S1. Dr. Broghammer indicated this was not due to the work injury, Dr. Neiman disagreed and though surgery was necessary. Dr. Abernathey did not believe surgery was necessary and thought that the injury should have resolved within six weeks.
The commissioner concluded that from February of 2011 until late fall of 2011, defendants did not engage in any investigation of claimant's ongoing back back. Defendants only paid healing period benefits through March 19, 2011 and did not notify claimant of the reasons for terminating benefits. The commissioner concluded, however, that because claimant was ultimately (in April of 2012) found to have reached MMI on January 15, 2011, there had been no delay in benefits, and thus penalty was not appropriate.
The court found that section 86.13 creates a two-part test for the determination of penalty benefits. First, the employee must demonstrate a denial, delay or termination of benefits. Second the employer must demonstrate reasonable or probable cause or excuse for the denial of benefits. The court concluded that claimant had demonstrated a delay, but that since the employer had not conduct a reasonable investigation, and had not contemporaneously conveyed the reasons for the denial, under section 86.13(c), penalty was due. The court noted that section 86.13 created a mandatory timeline for determining whether the employer had a reasonable or probably excuse for the denial of payment of benefits. The court stated: "An employer cannot unilaterally decide to terminate an employee's benefits without adhering to Iowa Code section 86.13, to allow otherwise would contradict the language of that section." The court also found that healing period benefits had been terminated without appropriate notice under section 86.13, and remanded for determination based on the medical information available at the time the benefits were delayed or terminated.
Pettengill represents one of the first appellate decisions on the scope of the penalty language in section 86.13 of the Iowa Code. Because of the importance of this issue, it would not be surprising if further review of the decision was sought by the employer.
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