Court of Appeals Affirms Penalty Benefit Award

Foster v. East Penn Manufacturing Co., Inc., No. 20-1738 (Iowa App. Dec. 15, 2021)

Claimant suffered a work injury and was initially paid benefits for her time off work and for medical care. A second surgery was recommended, but the employer did not authorize the surgery or pay for her time off work after the second surgery.  The agency imposed penalty against the employer and this finding was affirmed by the district court.  Defendant appeals, arguing that the delay was necessary to investigate the claim, there was a reasonable basis for the delay and there was a good faith basis to dispute the entitlement to benefits.

The surgeon who had performed claimant's original surgery recommended a second surgery.  Defendants sent claimant to a second surgeon (Dr. Kirkland), who found that claimant was not at MMI and indicated that the problems she was experiencing were related to the original injury.  The treating physician, Dr. Goding, requested an MRI, which was authorized.  Based on the MRI results, Dr. Goding took claimant off work and recommended a second surgery.  Claimant filed for alternate care in February 2018 and defendants disputed liability.  Claiomant subsequently had the surgery and eventually returned to work in April of 2018.  Claimant's records were sent to Dr. Boulden, who authored a June 1 report indicating that the second surgery was not related to work.  Claimant was sent a formal letter denying payment on June 11, 2018.  Later in June, claimant was paid 5% permanency by defendants.  Claimant subsequently had an IME with Dr. Bansal, who found claimant was not at MMI, but found the treatment related to claimant's work injury. At hearing, the deputy found that claimant was not at MMI, found causation for both surgeries, awarded TTD benefits and penalty.  The commissioner affirmed.  

On appeal to the court, claimant argues that defendant failed to preserve error on issues raised over the delay in benefit payments and the credit requested (credit based on the permanency payment that was made).  The court notes that error is not preserved merely by filing an appeal and states that the issues must have been raised before the agency and district court.  

On the penalty question, the court notes that although defendants argued that the delay was due to a need to investigate, there had apparently been no invetigation from February 2018 until a letter to Dr. Boulden in May requesting an IME.  The court found this delay was not reasonable.  Ultimately, the court found that a delay of four months from the recommendations of the treating doctor to the letter to Dr. Boulden was not reasonable  The court also finds that there was no reasonable basis to contest the entitlement to benefits.  The court noted that there was no communication of the denial of benefits to claimant until June of 2018.  Although there was back and forth between counsel on the issue, the reason for the delay and denial was not contemporaneously conveyed to claimant.  Penalty benefits were therefore affirmed.

On the credit issue, claimant alleges that the issue was waived because this issue was not raised at the arbitration hearing.  The court finds the issue was raised in post-hearing briefs and this was preserved for error.  However, because defendants agreed that claimant was not at MMI, PPD was not at issue in the hearing.  The court finds that although defendants might have a credit against permanency, the benefits were not creditable against temporary benefits.  The agency decision was therefore affirmed.