Supreme Court Issues Decision Addressing Beneficial Care Rule

In a 6-1 decision, the Iowa Supreme Court affirmed their earlier ruling in Bell Bros. v. Gwinn, 779 N.W.2d 193 (Iowa 2010) and held that in order to take advantage of the beneficial care rule, claimant must prove that care that was unauthorized is reasonable and beneficial and provides a more favorable medical outcome than the care authorized by the employer.  Brewer-Strong v. HNI Corp., No. 16-1364 (Iowa June 8, 2018).  The court also concluded that a an employer who initially denies liability of a claim, can later find that the claim is work-related and regain control of the claim, including authorization of medical care.  Finally, the court held that if care is provided to claimant outside of the workers' compensation process, healing period benefits may be lost if claimant does not prove that the care obtained provided a more favorable outcome than that offered by the employer.

Claimant suffered carpal tunnel problems, which were thought to be work-related by her initial treater.  Claimant filed for alternate medical and defendants denied the claim. Subsequently, defendants had claimant seen by Dr. Adams at the University of Iowa.  Dr. Adams found that claimant had carpal tunnel syndrome that was aggravated by her work, but declined to recommend surgical treatment. Claimant was examined by another physician, Dr. Kreiter, who recommended surgery.  Defendants set up another appointment with Dr. Adams, which claimant did not attend.

At her deposition, claimant testified that she intended to seek treatment with Dr. Thomas VonGillern.  In that deposition, she claimed that Dr. Adams was "high educated idiot" and indicated she did not wish to see him again.  During the deposition, claimant also indicated she had seen Dr. Atwell, who also did not recommend surgery.  Defendants subsequently indicated that Dr. Adams was the authorized treater and they would not authorize or pay for treatment with Dr. VonGillern. Claimant had surgery with Dr. VonGillern on her own and in his deposition, the doctor indicated that he was not sure if the results of a surgery by Dr. Adams would have been substantially different than those he achieved.

The agency found that claimant had not demonstrated that the care provided to her was not more beneficial than what would have been provided by Dr. Adams.  Payment for that care was therefore denied.  Payment for healing period benefits was also denied under Bell Brothers.  The agency also found that the employer could regain control of care after having first denied a claim and found that HNI had done so in this case.

The Supreme Court found that an employer does not forfeit its right to control medical care by initially denying a claim.  The court noted that the employer had an ongoing duty to investigate a claim and if that investigation indicated that the claim was compensable and the employer accepted its responsibility, it could regain control of medical care.  The court distinguished R.R. Donnelly and Sons v. Barnett, 670 N.W.2d 190 (Iowa 2003), which had examined the scope of the authorization defense.  Although Barnett  had indicated that the employer could lose the authorization defense if compensability was denied, it could regain that defense if the employer later accepted liability ("we have never held that an employer forever forfeits its rights and obligations under Iowa Code section 85.27 by initially denying liability for an injury, and it does not make sense that we would."). The court clarified that the employer only loses its authorization defense with regard to the medical care the employee requested in an application for alternate medical care.

The second issue before the court concerned the extent of Bell Bros's beneficial care rule.  Claimant alleged that requiring claimant to prove that care that was provided was more beneficial than the hypothetical care that might have been provided by the employer was "nearly impossible."  The IAJ Core Group had proposed a test that the care chosen by the employee be "reasonable and beneficial in some way under the totality of the circumstances."  The court rejected the IAJ approach, not necessarily because it was inconsistent with the act, but because of stare decisis.  The court found that the highest possible showing was needed before a prior precedent was overturned.  The court also found that stare decisis was particularly applicable where the legislature had acquiesced in the interpretation made earlier by the court.  Since eight years had passed without a legislative response altering the sections of the Code, the legislature was found to have "embraced" the court's interpretation of that section.  Furthermore, claimant had failed to demonstrate factually that the care that was provided was reasonable, beneficial and provided a more favorable outcome than that authorized by defendants.

Finally, the court concluded that the provision of healing period benefits should be linked to the question of whether beneficial care had been demonstrated.  Claimant had argued that nothing in section 85.34(1) of the Code supports the interpretation that an employer is only responsible for healing period when the care is authorized.  Although the court admits this is the case, they conclude that claimant's interpretation is "inharmonious" with chapter 85 as a whole.  The court concludes "An interpretation that requires an employer to provide injured employees with healing period benefits for their unauthorized care when they knowingly abandoned the protections of Iowa Code section 85.27 would be inconsistent with the overall intent of the statute."

Justice Hecht dissents, finding that Bell Bros. established an impractical legal standard, inviting the commissioner to engage in sheer speculation.  Justice Hecht noted that the agency's beneficial care rule, which had been established before Bell Bros., did not require claimant to demonstrate that the care they received was "more beneficial" than care that was provided by the employer, only that the care was "reasonable and beneficial."  The dissent concluded that requiring claimant to prove a more favorable outcome was an "unrealistic and impractical burden of proof." In this case, the commissioner was required to engage in "pure speculation" because claimant was required to prove that her surgery was more beneficial than surgeries that were not provided by defendants.

For claimants' attorneys there are a few upshots to the decision in Brewer-Strong.  First, if the defendants agree to provide care, not attending an appointment with the authorized treater is not going to be a winning strategy.  Second, in any case where the type of treatment recommended by an authorized treater and unauathorized treater, is the same or similar, you're unlikely to prevail.  On the flip side, there is still a beneficial care rule which can be helpful in the right cases, but that will typically be where the defendants are provided no care or very limited care.

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