IN THE COURT OF APPEALS OF IOWA
No. 4-492 / 03-1352
Filed December 8, 2004
HAWKEYE WOOD SHAVINGS, INC., and GREAT WEST CASUALTY
Appeal from the Iowa District Court for Polk, Glenn E. Pille, Judge.
In this workers’ compensation action an employer appeals from the district
court ruling that affirmed the decision of the workers’ compensation
Stephen Spencer and Joseph Barron of Peddicord, Wharton, Spencer &
Hook, L.L.P., Des Moines, for appellants.
Max Schott of Max Schott & Associates, P.C., Des Moines, for appellee.
Heard by Sackett, C.J., and Vogel, Zimmer, Hecht, and Eisenhauer, JJ.
Hawkeye Wood Shavings, Inc. (Hawkeye), a trucking company, and its
workers’ compensation insurer, Great West Casualty Company (Great West),
appeal from a district court ruling that affirmed a decision of the workers’
compensation commissioner. The decision awarded James Parrish, an
employee of Hawkeye, permanent partial disability and penalty benefits. Upon
review, we agree with the district court that the agency decision should be
I. Background Facts and Proceedings.
James Parrish, fifty-nine years old at the time of his administrative
hearing, works as a dispatcher for Hawkeye. His job requires him to locate and
secure loads to be hauled by the company’s drivers. Parrish has held this
position since 1990, and has worked as a dispatcher, for various companies,
since 1975. Prior to 1975, Parrish performed manual labor. He has a high
school degree, but no other formalized education or specialized training.
Although Parrish’s previous dispatching jobs required physical exertion
and extended periods of standing, Parrish’s job at Hawkeye is sedentary. During
each workday he spends approximately three to four hours on the telephone,
speaking with drivers and writing down information. He also spends a significant
amount of time at his desk writing up orders, and generally eats his lunch and
takes his breaks at his desk. He is, however, free to stand up, move around, and
leave the office area, and frequently does so. For the first ten years of his
employment, Parrish worked between twelve and thirteen hours per day five
days per week, and an additional seven hours on Saturday. Beginning in 2000,
Hawkeye reduced Parrish’s schedule to eleven to twelve hours per day five days
per week, and eliminated his Saturday shift. The reduction was a purely
In September 1999 Parrish began to experience right hip/buttock pain. He
sought treatment from his personal physician, Dr. Gregory Peterson. After the
pain grew more severe, and began radiating down Parrish’s right leg and into his
foot, Dr. Peterson ordered an MRI. The March 2000 MRI revealed both a
degenerative disk condition as well as a disk herniation. Dr. Peterson referred
Parrish to neurosurgeon Douglas Koontz. The consultation narrative from
Parrish’s initial April 2000 visit to Dr. Koontz’s office recommended conservative
treatment, including a selective nerve root block.1 Nothing in the medical records
from April and May 2000 indicates a connection between Parrish’s condition, and
his employment at Hawkeye.
Parrish underwent the nerve block, and the conservative treatment initially
provided him relief. His pain eventually returned, however, and increased in
severity. Dr. Koontz recommended surgery. Other than some minimal time
related to doctors’ visits and testing, Parrish had not yet missed work due to his
condition. Parrish spoke with Hawkeye’s president, Frank Sloan, and arranged
to take vacation during the time of his surgery, hospitalization, and initial
recuperation. Parrish initially informed Sloan his back condition was not work
There is some dispute as to whether, at this particular visit, Parrish was seen by Dr.
Koontz, or by Dr. Koontz’s nurse practitioner.
Dr. Koontz performed surgery on September 19, 2000. During the
discharge conference on September 22 Dr. Koontz informed Parrish he could not
return to work in a couple of weeks, as Parrish had hoped; rather he would need
to be off of work eight to twelve weeks. Dr. Koontz also informed Parrish that the
years of prolonged sitting at Hawkeye had caused or contributed to his
degenerative disk condition. Parrish called Sloan on or about September 25 and
asked if a workers’ compensation claim could be submitted. Sloan stated it could
not, because Parrish had previously indicated the condition was not work related.
During this conversation Parrish informed Sloan he had recently learned his
condition was in fact work related.
After Sloan declined to report the claim Parrish contacted Iowa Workforce
Development, who in turn contacted Hawkeye and advised it of reporting
requirements. A claim for workers’ compensation benefits was then filed, on or
about October 6, 2000. Hawkeye’s workers’ compensation insurer, Great West,
conducted a recorded interview with Parrish on October 11. On October 12
Great West wrote Dr. Koontz and requested Parrish’s medical records. No
records were received, and on October 27 Great West sent Parrish a letter
denying the claim. The letter stated, in pertinent part:
[W]e have now completed our investigation of the facts surrounding
your workers’ compensation claim of October 6, 2000.
As you are probably aware, the employer/insurer’s obligation
is not to pay all claims, but only those claims were [sic] the
accident, injury, and/or disease arose out of an in the course of
employment. We have been unable to secure medical data to
support that your employment with Hawkeye Wood Shavings, Inc.
was a substantial factor in causing the injury/illness you allege.
Therefore, we will be unable to provide you benefits under
the Iowa Workers’ Compensation Act.
On November 13, 2000, Dr. Koontz released Parrish to return to work with
the recommendation that he “get up and move around often.” Dr. Koontz
subsequently clarified the restriction to provide that Parrish “get up and move
around at least every hour to change positions.” Dr. Koontz also imposed a forty
to fifty pound lifting requirement, and recommended against “frequent bending,
lifting, and twisting.” Parrish returned to work and, except for a brief period in
April 2001, continued to work for Hawkeye up to and including the time of the
Parrish filed two claims for workers’ compensation benefits, alleging a
cumulative injury occurring alternatively on September 18 and 25, 2000. 2 Parrish
obtained opinions from Dr. Koontz in support of his claim. Approximately a
month prior to the December 2001 arbitration hearing Parrish was examined by
Dr. William Boulden, an orthopaedic surgeon retained by Hawkeye and Great
Western. Dr. Boulden opined that Parrish’s condition was age related, and not
caused by his employment.
In the July 2002 arbitration decision, the deputy workers’ compensation
commissioner determined Parrish had suffered a cumulative, work-related injury
on September 19, 2000, and had incurred a twenty-six percent industrial
disability. The deputy awarded Parrish healing period and permanent partial
disability benefits and medical expenses. The deputy also awarded Parrish
$5,000 in penalty benefits, concluding Great West’s reason for denying the claim
on October 27 was “wholly insufficient,” and that the company had no fairly
The second petition initially alleged an injury date of October 6, 2000, but at the
arbitration hearing was amended to allege an injury date of September 25, 2000.
debatable reason for denying the claim at that time. The award represented
twenty-five percent of the total benefits delayed up to the time of Dr. Boulden’s
opinion. The deputy rejected the assertion by Hawkeye and Great West that
Parrish had known the work-related nature of his injury as early as April 2000,
and thus had not provided timely notice of his injury.
Hawkeye and Great West appealed. In the appeal decision the interim
workers’ compensation commissioner reduced Parrish’s permanent partial
disability benefits, concluding Parrish had suffered only a ten percent industrial
disability. The commissioner further concluded that only $500 in penalty benefits
were warranted. The commissioner reasoned the award should be limited to a
percentage of Parrish’s healing period benefits, as the permanency issue had
been rendered fairly debatable after Parrish returned to work and performed the
same job, on the same schedule, and at the same pay. The remainder of the
deputy’s decision was affirmed.
Hawkeye petitioned for judicial review. Parrish filed a cross-petition,
challenging the agency’s reduction of the permanent partial disability and penalty
benefits. Rejecting the claims of both sides, the district court affirmed the agency
decision. Hawkeye and Great West (hereinafter collectively referred to as
Hawkeye) then filed this appeal. Hawkeye asserts the agency erred in
concluding that Parrish’s injury arose out of his employment with Hawkeye, that
Parrish suffered a ten percent industrial disability, that Parrish provided timely
notice of his injury, and that penalty benefits were warranted. Parrish did not file
II. Scope and Standards of Review.
Review of agency actions is limited to correcting errors at law. Iowa R.
App. P. 6.4; IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001). In reviewing
the district court’s decision, we apply the standards of Iowa Code chapter 17A
(2001) to determine whether our conclusions are the same as those of the district
court. Grundmeyer v. Weyerhaeuser Co., 649 N.W.2d 744, 748 (Iowa 2002). If
they are the same, we affirm; if not, we reverse. Id.
In reviewing the agency’s factual determinations, we look to see whether
those determinations are supported by substantial evidence. Iowa Code §
17A.19(10)(f). This requires that the entirety of the record—including supporting
and detracting relevant evidence as well as credibility assessments—be
sufficient to allow a reasonable and neutral person to reach the same conclusion
as the agency. Id. We broadly and liberally apply the agency’s findings to
uphold rather than to defeat its decision. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621,
632 (Iowa 2000).
Parrish argues the ten percent industrial disability award and the $500 in penalty
benefits assessed by the agency were inadequate, and requests this court to remand
both issues to the agency for re-determinations that “more adequately” reflect the
evidence in this case. However, as the district court decided both these claims
adversely to Parrish, his failure to file a cross-appeal has waived any error. See
Johnson Equip. Corp. v. Industrial Indem., 489 N.W.2d 13, 17 (Iowa 1992) (holding that
a party need not cross-appeal a trial court's rejection of a ground urged in the trial court
in order to preserve error on a claim decided in the party's favor, but that a party must
cross-appeal to preserve an issue on a claim decided adversely to the party).
As a threshold matter, Parrish bore the burden of proving, by a
preponderance of the evidence, that his back injury arose out of and in the
course of his employment with Hawkeye. Iowa Code § 85.3(1). Thus, the
starting point for our analysis is the agency’s finding that Parrish’s back condition
did arise out of his employment.4 Hawkeye asserts the record does not contain
substantial evidence to support this finding. We cannot agree.
The words "arising out of" refer to the “causal relationship between the
employment and the injury.” 2800 Corp. v. Fernandez, 528 N.W.2d 124, 128
(Iowa 1995). Although the agency must consider all the evidence pertaining to
causation, medical causation is essentially within the domain of expert testimony.
See Dunlavey v. Economy Fire & Cas. Co., 526 N.W.2d 845, 853 (Iowa 1995).
The weight to be given to an expert opinion depends on the accuracy of the facts
relied upon by the expert as well as other surrounding circumstances. Sherman
v. Pella Corp., 576 N.W.2d 312, 321 (Iowa 1998). However, it is the role of the
agency to determine the weight to be given to any of the evidence, and it may
accept or reject a controverted expert opinion in whole or in part. Id.
Here, the agency was presented with conflicting expert medical opinions
as to the cause of Parrish’s degenerative disk condition. Dr. Koontz recognized
that many factors contributed to Parrish’s degenerative condition, including his
age, but nevertheless opined that “sitting for thirteen hours a day over ten and a
half years would accelerate his degenerative process,” and that “long hours of
sitting over many years . . . accelerated his lumbar degenerative disc disease
There is no dispute Parrish’s injury arose in the course of his employment with
causing his need for surgery.” Although Dr. Petersen opined there was “no way
to absolutely prove that an individual’s length of time sitting at his job would
accelerate degenerative arthritis,” he did agree that prolonged sitting “certainly
would aggravate” Parrish’s condition, and he had “no objection to Dr. Koontz’s
opinion.” Dr. Boulden disagreed with Dr. Koontz’s conclusions, opining Parrish’s
degenerative disk disease was age-related, and not caused by his employment.
In concluding that Parrish’s degenerative disk condition was causally
related to his employment, the agency expressly placed greater weight on Dr.
Koontz’s testimony than it did on Dr. Boulden’s. This is a decision entrusted to
the agency, and not one in which we will generally interfere. See Sherman, 576
N.W.2d at 321. Although Hawkeye asserts Dr. Boulden’s testimony is more
consistent with the factual history in this matter, there is not such a disparity
between the factual record and Dr. Koontz’s opinion that the opinion would be
disregarded by any reasonable person. See Stephenson v. Furnas Elec. Co.,
522 N.W.2d 828, 831 (Iowa 1994) (noting courts are not bound by factual
findings "as to which there is no room for difference of opinion among reasonable
minds"); see also Fazio v. Brotman, 371 N.W.2d 842, 844 (Iowa Ct. App. 1985)
(noting it is only when “[t]he testimony of a witness [is] so impossible and absurd
and self-contradictory that it should be deemed a nullity by the court”). Nor is the
agency’s reference to Dr. Koontz’s status as a treating physician, and Dr.
Boulden’s status as a retained expert, tantamount to concluding Dr. Koontz’s
opinion was entitled to more weight simply because he was the treating
physician. See Gilleland v. Armstrong Rubber Co., 524 N.W.2d 404, 408 (Iowa
1994) (“[W]e have rejected the proposition that, as a matter of law, a treating
physician's testimony will be given more weight than a physician who examines
the patient in anticipation of litigation.”).
The commissioner’s appeal decision adequately explained the bases for
the findings and conclusions contained therein. See Murillo v. Blackhawk
Foundry, 571 N.W.2d 16, 20 (Iowa 1997) (requiring adequate reasons and
explanations by the agency so that reviewing courts can evaluate if the agency is
acting arbitrarily or has misapplied the law). Viewing all the expert opinions in
light of the remaining evidence, the totality of the record provides substantial
support for the agency’s finding that Parrish’s degenerative disk condition arose
out of his employment with Hawkeye. There is also substantial evidence to
support, and in fact Hawkeye does not contest, the agency’s conclusion that
Parrish suffered a twenty-six percent functional impairment to the body as a
whole. We therefore turn to Hawkeye’s assertion that the agency erred in finding
Parrish had suffered a ten percent industrial disability as a result of his injury.
IV. Industrial Disability.
Industrial disability is measured by the extent to which the injury has
reduced a claimant’s earning capacity. Thilges v. Snap-On Tools Corp., 528
N.W.2d 614, 616 (Iowa 1995). It is the result of many factors, including the level
of functional disability, the employee’s age, education, experience, and the
employee’s “inability, because of the injury, to engage in employment for which
[the employee] is fitted." Acuity Ins. v. Foreman, 684 N.W.2d 212, 219 (Iowa
2004) (citations and internal quotation marks omitted). Considering “all the . . .
factors” pertinent to an industrial disability assessment, the agency concluded
Parrish had incurred a ten percent industrial disability. “[M]ost pertinent” to its
decision was the fact that Parrish had a sizable functional impairment but no
actual reduction in earnings, and the “small chance” he would be compelled to
seek work other than as a dispatcher.
In challenging the agency’s award, Hawkeye focuses on the fact that
Parrish has not suffered a reduction in actual earnings, and that he has
continued to perform his former position despite his injury. These factors were
clearly considered by the agency in limiting the industrial disability award to ten
percent. They do not however, in and of themselves, conclusively demonstrate
the absence of an industrial disability. See Second Injury Fund v. Hodgins, 461
N.W.2d 454, 456 (Iowa 1990); Arrow-Acme Corp. v. Bellamy, 500 N.W.2d 92,
95 (Iowa Ct. App. 1993).
Other factors support the conclusion that Parrish has incurred an industrial
disability to some extent. Parrish suffered a twenty-six percent functional
impairment to his body as a whole, and a functional assessment concluded,
based on Dr. Koontz’s restrictions, that Parrish could perform only “select
medium, light and sedentary work” which would allow him to perform work in
“roughly 40 percent of the job market.” In addition, Parrish’s own job history
indicated some dispatching jobs had physical requirements Parrish could no
The record, when viewed as a whole, contains substantial support for the
agency’s industrial disability award. Hawkeye nevertheless asserts that it should
be relieved from the obligation to pay workers’ compensation benefits, as Parrish
failed to comply with the notice requirements of Iowa Code section 85.23. We
therefore turn to that question.
V. Notice Defense.
Parrish was required to inform Hawkeye of his injury, and the fact the
injury was work-related, within ninety days after the injury occurred. Iowa Code §
85.23; Robinson v. Department of Transp., 296 N.W.2d 809, 811 (Iowa 1980).
The time for providing notice began to run once Parrish, as a reasonable man,
should have recognized the “nature, seriousness, and probable compensable
character of his injury . . . .” Robinson, 296 N.W.2d at 812; see also Herrera v.
IBP, Inc., 633 N.W.2d 284, 288 (Iowa 2001) (clarifying a cumulative injury occurs
“when the claimant, as a reasonable person, would be plainly aware (1) that he
or she suffers from a condition or injury, and (2) that this condition or injury was
caused by the claimant’s employment”). If Parrish failed to provide timely notice,
no compensation is allowed. Iowa Code § 85.23.
It is clear Hawkeye was not informed that Parrish’s injury was work related
until September 25, 2000. The agency determined this notice was timely,
concluding Parrish was not plainly aware that his degenerative condition was
work-related until after his surgery. Hawkeye asserts this determination was not
supported by substantial evidence, because Parrish was aware of the casual
connection as early as April 2000. Hawkeye points to deposition testimony from
Parrish that indicates Dr. Koontz informed Parrish, in April 2000, that there was a
“possibility” his employment was causing his current back problems.
The agency acknowledged this portion of Parrish’s deposition testimony,
but concluded Parrish “did not learn of the probable compensable character of
his condition until on or about September 25, 2000, when he was told by Dr.
Koontz.” (Emphasis supplied). This conclusion is adequately supported by the
record. There is no evidence, outside of this deposition statement, that Parrish
was informed about even a possible causal relationship between his condition
and his employment at any time prior to September 2000. Moreover, in his
deposition Parrish went on to state it was not until after his September 19 surgery
that Dr. Koontz informed him the degenerative condition was “probably” related
to his employment, and that he “first [had the] belief” his back problems were
“caused by just the years of sitting.” During his hearing testimony Parrish
confirmed these later statements. He also asserted that he did not recall
discussing the cause of his injury with Dr. Koontz prior to September.
Significantly, despite the inconsistency, the agency specifically found Parrish to
be a credible witness.
The foregoing provides substantial evidence to support the agency’s
determination that a reasonable person in Parrish’s position would not have been
plainly aware of the work-related nature of the injury until September 2000.
Given such a finding, timely notice was provided to Hawkeye. See Iowa Code §
85.23. Accordingly, we turn to Hawkeye’s last assignment of error in this
appeal, and address whether there was substantial evidence to support an award
of penalty benefits.
VI. Penalty Benefits.
The agency has an obligation to award penalty benefits to an employee
any time a claim for workers’ compensation benefits is denied, and thus the
payment of compensation is delayed, unless the denial is supported by a
“reasonable or probable cause or excuse.” Iowa Code § 85.13. In addressing
this question, the agency must consider the insurer’s affirmative obligation to act
in a reasonable manner after a claim for benefits is filed. See Christensen v.
Snap-On Tools Corp., 554 N.W.2d 254, 260 (Iowa 1996) (quoting Boylan v. Am.
Motorists Ins. Co., 489 N.W.2d 742, 743 (Iowa 1992)).
A denial of benefits is supported by reasonable cause if the claim is “fairly
debatable based on a good faith dispute over the employee's factual or legal
entitlement to benefits . . . [or] where a reasonable delay in payment is necessary
to allow the insurer to investigate the claim.” Gilbert v. USF Holland, Inc., 637
N.W.2d 194, 199, n.2 (Iowa 2001). However, the reason for the denial must be
communicated to the employee contemporaneously with the denial. See Meyers
v. Holiday Express Corp., 557 N.W.2d 502, 505 (Iowa 1996). If the reason “is not
one that a reasonable fact finder could accept,” then no cause or excuse exists,
and penalty benefits must be awarded. Id.
Hawkeye asserts the claim was fairly debatable, relying on a number of
factors.5 However, as both the agency and the district court pointed out, the
reason for denial actually communicated to Parrish was limited to the absence of
medical documentation in support of his claim. Thus, the question is whether a
reasonable fact finder could conclude that this absence of medical
documentation was in fact a reasonable excuse. The agency concluded it was
not, and we must agree.
“An employer's bare assertion that a claim is ‘fairly debatable’ does not
make it so. . . . [T]he employer must assert facts upon which the commissioner
could reasonably find that the claim was ‘fairly debatable.’” Meyers, 557 N.W.2d
at 505. Here, those facts are fairly limited. As we have mentioned, the claim for
benefits was filed on October 6, 2000, approximately two and one half weeks
after Parrish’s surgery. When Hawkeye denied the claim in a letter to Parrish
dated October 27, the only fact relied on by Hawkeye was its inability to secure
medical data in support of the claim. There is no evidence that, prior to denying
the claim, Hawkeye ever requested medical documentation from Parrish himself,
or conducted an inquiry or investigation beyond taking Parrish’s statement and
requesting Parrish’s medical records from Dr. Koontz in a letter dated October
12. There is no indication that, at the time of denial, Hawkeye possessed any
medical documentation, much less any medical evidence that would refute or
discredit a causal connection between Parrish’s work and his injury.
These include Hawkeye’s notice defense, the fact Parrish informed Sloan the
condition was not work-related, allegations by Sloan that even after surgery Parrish
asserted both that the condition was not work related and that he was pursuing a
workers’ compensation claim purely for financial reasons, the fact that sitting actual
relived Parrish’s symptoms, disputes over how much time Parrish spent sitting each day,
and the fact that Dr. Koontz had failed to provide medical records in response to
Hawkeye’s pre-denial request.
As noted by both the agency and the district court, this evidence falls far
short of establishing that Hawkeye met its affirmative obligation to act in a
reasonable manner after the claim for benefits was filed. See Christensen, 554
N.W.2d at 260. Under the circumstances, its stated excuse is not one a
reasonable fact finder would accept as reasonable under the circumstances.
Accordingly, the agency was required to impose penalty benefits. Hawkeye has
not challenged the amount of those benefits, and a review of the record indicates
that the amount is supported by substantial evidence. Thus, the penalty benefit
award must be upheld.
All of the agency’s findings were supported by substantial evidence, and
its decision is not effected by an error of law. We therefore affirm the district
All judges concur except Hecht, J., who concurs specially, and Sackett,
C.J., and Vogel, J., who concurs in part and dissents in part.
HECHT, J., (concurs specially)
I join the majority’s opinion and write separately to specifically articulate
my reasons for affirming on the penalty issue. The agency assessed the
reasonableness of Great West’s denial of this claim in light of certain well-
established legal principles. Among these is the rule that an insurance carrier’s
duty to act reasonably includes the duty to fully and fairly investigate a claim.
The agency applies the standard of “a professional adjustor who is reasonably
competent in workers’ compensation matters” when assessing the
reasonableness of an insurer’s investigation. After conducting a reasonable
investigation, the insurer may deny a claim without penalty exposure if a
reasonable basis for the denial is contemporaneously conveyed to the claimant.
Meyers v. Holiday Express Corp., 557 N.W.2d 502, 504 (Iowa 1996). But an
insurer’s denial of a workers’ compensation claim is not conclusive, for the duty
to investigate continues after the denial is communicated as additional
information becomes available.
Our supreme court implicitly recognized in Holiday Express that the
contemporaneous communication of the reason(s) for denial of a claim is crucial
both for the claimant and the insurer in our workers’ compensation system. The
insurer’s contemporaneous communication informs the claimant of what
additional information might be supplied to aid the insurer in its ongoing duty to
investigate the claim. And the articulation of the reason(s) for the denial is
likewise essential to the insurer who wishes to avoid a penalty by expressing the
reasonable grounds for its decision. The agency’s decision to impose a penalty in
this case should be affirmed because Great West’s denial letter of October 27,
2000 informed Parrish that his claim was denied because the insurer was
“unable to secure medical data” tending to establish medical causation. I am
unable to find evidence in this record that Great West relied on any medical
opinion when it made its medical causation assessment and decision to deny the
claim. Indeed, it appears Great West had requested but had not received
medical records from Parrish’s surgeon when the denial was communicated.
And although Great West later solicited and obtained the opinion of Dr. Bolden
on the subject of medical causation, this was not accomplished until shortly
before the arbitration hearing. Under these circumstances, the agency’s finding
that Great West failed to make a reasonable investigation before denying the
claim is supported by substantial evidence in the record. As the agency aptly
noted, “[t]o hold otherwise would absolve those who might . . . deny first [and]
Great West’s brief contends the agency erred in imposing a penalty
because the insurer had numerous legitimate reasons other than medical
causation to deny Parrish’s claim. However, these other reasons were not
contemporaneously communicated with Great West’s denial and therefore do not
provide the insurer safe harbor under the rule announced in Holiday Express.
SACKETT, C.J., (concurs in part; dissents in part)
I agree with the majority in all respects except I would reverse the penalty
Vogel, J., joins the partial dissent.