Iowa Case Summary: Podgorniak v. Asplundh Tree Expert Co.

12-0644, 2013 WL 264366 (Iowa Ct. App. Jan. 24, 2013)

1.  Facts
   Podgorniak, the Appellant, injured his left shoulder, neck, and head while working for Asplundh, the Appellee. Podgorniak filed a workers’ compensation petition, which resulted in an order requiring alternate medical care and payment of “running healing period benefits.” Asplundh referred Podgorniak to several physicians who determined that Podgorniak had reached maximum medical improvement. Due to these medical opinions, Asplundh terminated Podgorniak’s healing period benefits. 
2.  Procedural History
   Podgorniak filed a review-reopening petition requesting penalties based on Asplundh’s termination of healing period benefits. The deputy workers’ compensation commissioner awarded “a penalty of 50 percent of all healing period benefits claimant asserts were not timely paid” because Asplundh, through its insurer, had unreasonably delayed the payment of Prodgorniak’s weekly benefits. On an intra-agency appeal, the commissioner reversed the penalty awarded holding that, “The defendants’ actions in terminating healing period benefits were fairly debatable.” The district court affirmed the commissioner’s reversal. 
3. Issue(s) 
   1. Whether the district court erred affirming the commissioner’s determination that Asplundh, and its insurer, had proven an excuse which was reasonable for its unilateral termination of healing period benefits
   2. The second issue dealt with the amount of compensation due but was not preserved for review 
4. Holding
   1. When an appeals commissioner determines that an employer’s action to terminate healing benefits is “fairly debatable”, the term is interchangeable with a finding that the employer had a “reasonable basis”, “reasonable excuse”, or “reasonable or probable cause or excuse” to delay, deny, or terminate benefits.
   2. Medical opinions, even those created before alternative medical care is completed, can be the basis for the employer’s “reasonable or probable cause or excuse” to disrupt an employee’s benefits. 
5. Rationale
   Under Iowa Code Ann. § 86.13, a penalty is to be awarded to an employee only if an employer fails provide a “reasonable or probable cause or excuse” for disrupting the employees benefits. See pg. 3 regarding § 86.13. Podgorniak argued that the appeal deputy erred by applying a non-statutory “fairly debatable” standard as a per se defense to a penalty claim. The court held that the appeal commissioner’s use of “fairly debatable” was interchangeable with the statutory requirement of a “reasonable basis”, “reasonable excuse”, or “reasonable or probable cause or excuse” to stop paying benefits. The employer is required to “assert facts upon which the commissioner could reasonably find that the claim was fairly debatable.” Here, the court found Asplundh met this requirement by submitting three medical opinions regarding the employee’s condition. Therefore, the benefits were “fairly debatable”, or in other words, the employer had a “reasonable or probable cause or excuse” for the denial of benefits. It is irrelevant that the commissioner relied on the three physician’s opinions that were completed prior to Podgorniak completing the ordered alternative medical care. An order for alternative medical care does not preclude the employer from exercising its statutory right to have Podgorniak submit to other medical examinations.   

 Under Iowa Code Ann. § 86.13 (West), the agency is to award a claimant penalty benefits if:
1) The employee shows his benefits were denied, delayed, or terminated; and
2) The employer fails to prove a reasonable or probable cause or excuse for his actions.

A “reasonable or probable cause or excuse” of the employer’s actions must:
1) Be preceded by a reasonable investigation and evaluation by the employer into whether benefits are owed;
2) Be based on the results of the reasonable investigation and evaluation of the employee; and
3) Be conveyed contemporaneously with the basis of the denial (the results of the reasonable investigation and evaluation).

In other words, for an employee to be awarded a penalty, his benefits must be disrupted by his employer , and there must be no reasonable excuse for the employer’s disruption. A reasonable excuse will only be found when the employee has been investigated and evaluated, the disruption of benefits was based on the investigation and evaluation, and the employee was told why his investigation or evaluation was the basis for disrupting his benefits.