Court of Appeals Affirms Initial Denial of Penalty Benefits, But Remands for Consideration of Post-Hearing Penalty Benefits

In True v. Heritage Care and Rehabilitation, No. 18-0818 (Iowa App. April 1, 2020), the court addressed two penalty issues brought by claimant. Claimant initially filed a medical only claim, but moved to amend the action 3 days before the statute of limitations filed to allege eligibility for temporary and permanency benefits as well as penalty. At hearing on the motion to amend, claimant listed permanent partial disability and alternate care, but not penalty benefits.  The deputy concluded the amended petition was timely and directed claimant to refile her petition.  When claimant refiled, penalty was not listed as issue, although the earlier petition had alleged penalty. 

The deputy concluded on the merits that the earlier petition was the one to be considered and this was affirmed by the COA in an earlier decision on the case.  Benefits were ultimately paid to claimant in 2015.  After benefits were paid, claimant filed another action alleging penalty benefits.  The deputy found claimant had waived the penalty claim by failing to bifurcate the issue and failing to present the question at the administrative hearing on her petition.  Claimant had not briefed or argued her claim for penalty in the earlier action, and this was a waiver of that issue.

The claimant argued that she had withdrawn the penalty issue from the case by not repleading the issue when she refiled.  The court concludes that the agency acted within its authority in finding that the issue had been waived and further finds that claimant was attempting to litigate her claims in a piecemeal fashion.  The court concluded that the claim was barred by claim preclusion.  The court found that 876 IAC 4.2, which allows for bifurcation when additional discovery is needed, create an exception to claim preclusion only when followed by the claimant.  Since claimant had failed to request bifurcation, she had waived her claim.  

The court goes on to note that while claimant waived her right to any pre-hearing penalty benefits, any new cause of action that began after the hearing, could be raised due to an employer's behavior after the first claim.  Because of this, claimant could pursue claims raised after hearing in 2012.  The case was remanded on this portion of the claim.