Court of Appeals Concludes That Lay Testimony Cannot Be Considered to Determine Credit in Second Injury Fund Case

 Harrell v. Denver Findley & Sons, Inc. and Second Injury Fund, No. 21-0827 (Iowa App. July 20, 2022)

In this action, the deputy originally concluded that claimant was permanently and totally disabled with respect to the SIF.  The deputy found that under 85.34(2)(x), the Fund was not entitled to a credit because of a prior left knee surgery, the only evidence of which was raised at hearing by claimant, who noted that he had previously had a left total knee replacement.  No medical evidence or rating was provided concerning this injury.  On appeal, the commissioner found that the Fund was entitled to the credit, based on his own reading of the AMA Guides.  The commissioner reduced the permanent total disability award to 75% despite the fact that the parties had not raised this as an issue.

On judicial review, the district court found that the Fund was entitled to credit, but remanded the case to the agency, finding that the commissioner should not have modified the PTD finding without providing the parties notice and an opportunity to be heard.

The Court of Appeals first notes that 85.34(2)(x) provides that the "extent of loss or percentage of permanent impairment shall be determined" solely by use of the AMA Guides.  "Lay testimony or agency expertise shall not be utilized in determining loss or percentage of permanent impairment . . ." according to 85.34(2)(x).  The commissioner had provided a 37% leg credit to the Fund, based on a good result from a knee replacement under the Guides.  Claimant argues that only a physician can determine the extent of loss under the Guides and also suggests that when a non-physician deputy or commissioner applies the Guides, this is reliance on "agency expertise," which is forbidden by the Guides.

The Court finds that it does not need to determine whether only physicians can apply the Guides and focused instead on whether the impairment rating was inconsistent with the use of lay testimony to determine loss or loss of use.  The Court concluded that since the only testimony concerning the knee replacement was that of claimant, this was lay testimony and accordingly violated section 85.34(2)(x).  The court found that although lay testimony can be used to determine diagnosis or a course of care, it could not be used to determine the percentage of impairment.  Accordingly, the credit in favor of the Fund was not permissible.  

On the second question, the Court concluded that the case should be remanded for a determination of permanency, despite the fact that the parties had not raised this question on appeal.  The Court simply indicated that a remand was most appropriate under Aluminum Co. of America v. Musal, 622 N.W 2d 476, 478 (Iowa 2001).

One interesting aspect of the decision is that the determination of credit is not a determination of the extent of loss or percentage of permanent disability" and thus arguably is not covered by 85.34(2)(x).  Also left unaddressed is how error was preserved on appeal concerning the extent of impairment when the parties apparently did not raise the issue on appeal.