Swiss Colony, Inc., And Sentry Insurance Vs. Kent J. Deutmeyer

IN THE SUPREME COURT OF IOWA
No. 09–0810

Filed August 6, 2010

SWISS COLONY, INC., and
SENTRY INSURANCE,

Appellees,

vs.

KENT J. DEUTMEYER,

Appellant.

Appeal from the Iowa District Court for Polk County, Joel D.

Novak, Judge.

Employee and employer appeal from a decision of the workers’

compensation commissioner alleging errors in the calculation of benefits,

award of overpayments credits, and determination of industrial

disability. AFFIRMED IN PART, REVERSED IN PART, AND CASE

REMANDED.

Mark J. Sullivan of Reynolds & Kenline, L.L.P., Dubuque, for

appellant.

Steven T. Durick and Joseph M. Barron of Peddicord, Wharton,

Spencer, Hook, Barron & Wegman, LLP, Des Moines, for appellees.
 2

APPEL, Justice.

Employee appeals and employer cross-appeals from the district

court’s decision affirming in part and reversing in part the final decision

of the workers’ compensation commissioner. The parties challenge the

commissioner’s findings that claimant “earned less” than the usual

weekly earnings of a full-time adult laborer in his field and suffered a

sixty percent permanent industrial disability as not supported by

substantial evidence. The employer further asserts entitlement to a

credit for overpayment of weekly benefits on future permanency benefits

for this injury. For the reasons expressed below, we affirm in part and

reverse in part the district court judgment and remand the case for

further proceedings.

I. Factual and Procedural Background.

Kent Deutmeyer was severely injured while working at the Swiss

Colony warehouse and distribution facility on July 29, 2005. The injury

occurred when Deutmeyer’s left leg struck a pole or beam while he was

operating a forklift. The damage to the foot and lower leg was so

extensive that the extremity was amputated below the knee. After three

months, Deutmeyer was fitted with a prosthesis, which has since been

replaced. Deutmeyer continues to suffer from hip and low back pain and

has difficulty with his gait. He also suffers from “phantom leg

syndrome,” which causes him to feel as if his lost toes are being crushed.

At the time of his injury, Deutmeyer was a twenty-two-year-old

laborer with a high school education. He worked at Swiss Colony an

average of thirty hours a week at $9.25 an hour, though he had indicated

in his application an availability for thirty-seven hours a week. His job

responsibilities included operating a forklift, lifting heavy loads up to one

hundred pounds, and standing on his feet for most of the day.
 3

Deutmeyer considered himself to be a full-time employee of Swiss

Colony.

During the time he worked at Swiss Colony, Deutmeyer also

worked at Webber Metals. Deutmeyer worked an average of forty to

forty-five hours a week at Webber Metals at $13.65 an hour with

benefits. His principal responsibility was to operate a CNC machine,

which required constant standing in order to feed parts into the

machine, deburring finished parts, and stacking parts on pallets.

Deutmeyer returned to work at both Webber Metals and Swiss

Colony following his injury, albeit with different responsibilities.

Eventually he quit each position, in part due to his injuries and in part

due to his desire to work the day shift. Deutmeyer thereafter worked a

series of jobs, generally for lower wages than before his injury. At the

time of the hearing, claimant was working full time at IWI at $7.50 an

hour and at Taco Bell at $6.20 an hour about ten to twenty hours a

week.

Deutmeyer filed a claim for workers’ compensation on August 30,

2006. He submitted medical reports from two physicians, Dr. Sergio

Mendoza, his primary physician, and Dr. Thomas Hughes, an

occupational medicine physician. Dr. Mendoza concluded that

Deutmeyer suffered a thirty percent functional disability as a result of

his injury. Although Dr. Mendoza did not prescribe any work

restrictions, he did outline long-term recommendations for Deutmeyer’s

safety. Dr. Hughes also concluded that Deutmeyer suffered a thirty

percent functional disability. Dr. Hughes, however, determined that

Deutmeyer was now ill-suited for numerous types of manual

employment.
 4

After a hearing, the workers’ compensation deputy issued the

arbitration decision. The deputy concluded that Deutmeyer suffered a

sixty percent loss of his earning capacity as a result of the work injury.

Next, the deputy concluded that Deutmeyer’s weekly benefits should be

calculated according to Iowa Code section 85.36(9) (2005) because he

was a part-time employee at Swiss Colony. Classifying Deutmeyer as a

part-time employee allowed the deputy to consider the claimant’s “total

employment,” including his salary at Webber Metals, in calculating the

amount of his weekly benefits. Finally, the deputy determined that

based on the parties’ stipulation, Deutmeyer had been overpaid for

healing period and permanent disability benefits. While the deputy

granted the employer a credit for the healing period overpayments, he

denied Swiss Colony a credit for the excess permanent disability

payments for this injury. The deputy determined that a credit can only

be taken against any future entitlement to permanency benefits for a

subsequent injury should claimant return to employment at Swiss

Colony. The deputy’s decision was affirmed in whole by the workers’

compensation commissioner.

Swiss Colony sought judicial review in the district court. While the

district court affirmed the commissioner’s finding that Deutmeyer

suffered a sixty percent industrial disability, it determined that

substantial evidence did not support the commissioner’s finding that

Deutmeyer was a part-time employee at Swiss Colony. The district court

noted that under the commissioner’s own admission, there was no

evidence in the record that the claimant earned less than the usual

earnings of a full-time adult laborer in his field. According to the district

court, instead of relying on evidence presented at the hearing, the

commissioner based his conclusion that Deutmeyer was a part-time
 5

employee on the commissioner’s personal knowledge of the average work

week. As a result, the district court remanded the case to the

commissioner either for additional evidence or to select a rate calculation

supported by the record. Finally, the district court determined that

Swiss Colony was entitled to a credit for overpayment of permanency

benefits for this injury. The district court found Iowa Code section

85.34(5) inapplicable and concluded that the employer was entitled to a

credit based on notions of equity and the public policy underlying Iowa’s

workers’ compensation scheme. Both parties appealed to this court.

II. Standard of Review.

We review decisions of the workers’ compensation commissioner

according to the Iowa Administrative Procedure Act, Iowa Code chapter

17A. The issues in this case concern the agency’s interpretation of a

statute and its factual determinations. We have previously found that

the legislature did not delegate the interpretation of chapter 85 to the

commissioner. Mycogen Seeds v. Sands, 686 N.W.2d 457, 464 (Iowa

2004). As a result, in the past we have “not give[n] the agency any

deference regarding its interpretation and [were] free to substitute our

judgment de novo for the agency’s interpretation.” Id.; see Iowa Code

§ 17A.19(10)(c).

We recently refined the analysis required to determine whether the

legislature clearly vested an agency with the authority to interpret a

particular statute or phrase in a statute. Renda v. Iowa Civil Rights

Comm’n, 784 N.W.2d 8, 11 (Iowa 2010) (noting that the proper inquiry is

whether the agency has been vested with authority to interpret a phrase

or individual statute rather than the entire legislative scheme). First, we

must determine whether the legislature has explicitly granted the agency

authority to interpret the disputed statute or phrase. Id. at 11. Here, as
 6

in most cases, there is no such express grant of authority in Iowa Code

section 85.34(5). In the absence of such an explicit grant of authority,

we must determine whether the legislature, nevertheless, “clearly” vested

the agency with the power to interpret the statute by implication. Iowa

Code § 17A.19(10)(c).

Using the refined standard in Renda, we are not convinced the

legislature intended to vest the commissioner with the authority to

interpret Iowa Code section 85.34(5). In order for this court to find that a

statute or phrase has been “clearly” vested with an agency by

implication, such an intention must be unambiguously manifest. The

test is akin to finding an implied contractual term. Cf. Wells Dairy, Inc.

v. Am. Indus. Refrigeration, Inc., 762 N.W.2d 463, 470 (Iowa 2009) (noting

in order to find an implied contractual term there must be “unmistakable

intent”). Such an intention is not apparent in the language or structure

of section 85.34(5). As a result, the commissioner’s interpretation is not

entitled to deference, and we are free to substitute our interpretation de

novo. Iowa Code § 17A.19(10)(c).

This court reviews an agency’s factual findings for substantial

evidence. Id. § 17A.19(10)(f). The code defines substantial evidence as:

the quantity and quality of evidence that would be deemed
sufficient by a neutral, detached, and reasonable person, to
establish the fact at issue when the consequences resulting
from the establishment of that fact are understood to be
serious and of great importance.

Id. § 17A.19(10)(f)(1). Evidence is not insubstantial merely because the

court could draw a different conclusion from the record. Arndt v. City of

Le Claire, 728 N.W.2d 389, 393 (Iowa 2007). The ultimate question is

whether the record when viewed as a whole supports the finding actually

made. Fischer v. City of Sioux City, 695 N.W.2d 31, 34 (Iowa 2005).
 7

III. Discussion.

On appeal to this court, the parties allege four errors. Deutmeyer

claims that the district court erred in (1) concluding that there was no

substantial evidence to support the commissioner’s finding that he was a

part-time employee and (2) allowing Swiss Colony credit for overpayment

of weekly benefits. Swiss Colony conversely asserts that the district

court erred in (1) remanding the case to the agency on the part-time

benefits issue and (2) concluding that substantial evidence supported the

commissioner’s finding that Deutmeyer suffered a sixty percent

permanent industrial disability.

A. Calculation of Benefits. “The compensation to be received by

an injured employee is based on ‘weekly earnings’ at the time of injury.”

Hartman v. Clarke County Homemakers, 520 N.W.2d 323, 327 (Iowa Ct.

App. 1994). Weekly earnings are defined in Iowa Code section 85.36 as:

gross salary, wages, or earnings of an employee to which
such employee would have been entitled had the employee
worked the customary hours for the full pay period in which
the employee was injured, as regularly required by the
employee’s employer for the work or employment for which
the employee was employed.

Iowa Code § 85.36. In order to accommodate a variety of employment

scenarios, section 85.36 goes on to provide several methods to calculate

an employee’s weekly earnings.

In calculating Deutmeyer’s benefits, the workers’ compensation

commissioner relied upon the methodology set forth in section 85.36(9).

That section provides:
If an employee earns either no wages or less than the usual
weekly earnings of the regular full-time adult laborer in the
line of industry in which the employee is injured in that
locality, the weekly earnings shall be one-fiftieth of the total
earnings which the employee has earned from all
employment during the twelve calendar months immediately
preceding the injury.
 8

Id. § 85.36(9). Before utilizing this methodology, however, the

commissioner must make a preliminary factual finding that the employee

either (1) earns no wages or (2) earns “ ‘less than the usual weekly

earnings of the regular full-time adult laborer in the line of industry in

which the employee is injured in that locality.’ ” King v. City of Mt.

Pleasant, 474 N.W.2d 564, 566 (Iowa 1991) (quoting Iowa Code

§ 85.36(10) (1987) (now § 85.36(9))). The commissioner found that

Deutmeyer earned less than the usual earnings of a regular full-time

laborer in his line of industry. The commissioner then utilized section

85.36(9) to calculate Duetmeyer’s rate of weekly benefits based on his

earnings at both Swiss Colony and Webber Metals.

On appeal, Swiss Colony claims the commissioner’s finding that

Deutmeyer earned less than the usual earnings of a regular full-time

laborer in his line of industry is not supported by substantial evidence.

We agree. In making his preliminary factual finding, the commissioner

candidly acknowledged that “[n]either party offered evidence as to

whether or not Kent’s earnings or hours at Swiss Colony were lower or

higher than a regular full-time laborer in the line of industry in which

Kent was injured and in that locality.” Notwithstanding the lack of

evidence, the commissioner decided that Deutmeyer was a part-time

employee. This conclusion was based on the commissioner’s belief that

“the vast majority of all industries in this state view 40 hours a week as

full-time.” Such a conclusion is not consistent with the language of the

statute and our prior precedent.

In King, members of the Mt. Pleasant city council sought workers’

compensation benefits after a gunman opened fire at a city council

meeting, killing the mayor and severely injuring two council members.

King, 474 N.W.2d at 565. Each of the claimants held full-time
 9

employment in addition to their membership on the council. Id. The

council members filed claims for workers’ compensation under Iowa Code

section 85.36(10), asserting that their benefits should be calculated

based on their respective total incomes because they were part-time city

employees. Id. This court disagreed. Id. at 566. This court noted that

the relevant inquiry is not whether the claimants had outside

employment, either full- or part-time. Id. The relevant inquiry is

whether the claimants’ weekly earnings were inconsistent with the

earnings of full-time Mt. Pleasant officials. Id. at 566–67. Having found

that the claimant’s earnings were not inconsistent, this court found

section 85.36(9) inapplicable. Id.

Applying King to the instant case, the workers’ compensation

commissioner erred in finding that Deutmeyer was a part-time employee

of Swiss Colony. Whether an employee works a forty-hour week is not

the sole criterion for determining whether that employee “earns less”

than similar laborers in his field. Id. The language in section 85.36(9)

distinguishes full- and part-time employees on the basis of weekly

earnings, not the number of hours worked per week.

We recognize, of course, that our workers’ compensation statute is

to be liberally construed to implement its remedial purposes. Kohlhaas

v. Hog Slat, Inc., 777 N.W.2d 387, 394 (Iowa 2009). Nonetheless, the

principle of liberal construction does not vest this court with an editor’s

pen with the power to add or detract from the legislature’s handiwork.

Had the legislature intended to establish the forty-hour week as standard

for full-time employment it could have done so. See Hornby v. State, 559

N.W.2d 23, 25 (Iowa 1997) (“We are guided by what the legislature

actually said, rather than that which it might or should have said.”).

Instead, in section 85.36(9), the legislature necessarily recognized that
 10

the forty-hour week is not the standard for every industry within the

state by making “earnings” the operative factor. As a result, section

85.36(9) is applicable only where a claimant earns less than the usual

weekly earnings of a full-time adult laborer in his or her “line of

industry.” Based upon the commissioner’s correct observation that there

is “no evidence” of the “usual weekly earnings” of laborers in Deutmeyer’s

field in the record, we make the inescapable conclusion that his finding

is not supported by substantial evidence.

Because we find that Deutmeyer’s weekly benefits were

erroneously calculated under section 85.36(9), we must determine the

proper remedy. As noted previously, the district court remanded the

case to the commissioner either for “additional evidence necessary to

make a factual finding as to the usual weekly earnings of a regular full

time adult laborer in [Deutmeyer’s] line of industry and locality, or select

a different rate calculation method supported by the facts.” Deutmeyer

argues that remand is necessary as there is confusion regarding what

type of evidence is necessary to support application of 85.36(9) and

because failure to apply section 85.36(9) would greatly reduce his weekly

benefits.

We disagree. When a record is inadequate, remand for additional

evidence is generally not appropriate and the issue will be decided

adversely to the party bearing the burden of proof. Murillo v. Blackhawk

Foundry, 571 N.W.2d 16, 19 (Iowa 1997). For equitable reasons,

however, remand for additional evidence will be allowed where there are

“good reasons” for the failure. Id. For example, this court has ordered

remand of an agency action where it announced a new rule, even though

the new rule may have been predictable from prior precedent. Id.
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No “good reasons” exist to warrant remand for additional evidence

here. This court’s decision in King, 474 N.W.2d at 565, was announced

almost twenty years prior to the evidentiary hearing in this case. King

established the requirement for a preliminary factual finding of lower

earnings prior to the application of section 85.36(9). We do not regard

our opinion in this case as establishing new law, but simply applying

existing law. As a result, remand for additional evidence on the earnings

issue is not available under Murillo. Because Deutmeyer is not entitled

to benefits under section 85.36(9) on the record before the agency under

established precedent, the matter must be remanded to the

commissioner for a recalculation of benefits under the proper standard.

B. Credit for Overpayments. Prior to the arbitration decision in

this case, Swiss Colony paid Deutmeyer weekly compensation benefits at

a rate of $441.88. This amount was in excess of the weekly benefits

awarded by the commissioner. While both parties agree that Swiss

Colony is entitled to a credit for these overpayments, they disagree as to

what type of credit is permitted under chapter 85.

Deutmeyer argues that section 85.34(5) is the exclusive remedy for

the overpayment of permanency benefits by employers. That section

provides:
If an employee is paid any weekly benefits in excess of that
required by this chapter . . . , the excess paid by the
employer shall be credited against the liability of the
employer for any future weekly benefits due pursuant to
subsection 2, for a subsequent injury to the same employee.

Iowa Code § 85.34(5). Under section 85.34(5), Deutmeyer asserts that

when an overpayment of weekly benefits occurs, employers are only

entitled to a credit against a future injury and not against future weekly

benefits for the same injury. In support, Deutmeyer points to the phrase
 12

“any weekly benefits.” Swiss Colony conversely asserts that the claimant

is interpreting section 85.34(5) too expansively, finding the operative

words of the statute to be “in excess of that required by this chapter.”

According to the employer, section 85.34(5) only applies where the

employer has overpaid the total permanent disability award and not the

rate of each separate weekly payment. Section 85.34(5) simply has no

relevance where, as is the case here, the claimant has not yet received

his total permanency award. In such cases, equity and public policy

support allowing employers a credit for overpayments on future benefits

for the same injury.

We agree with Deutmeyer. In interpreting statutes, our goal is to

derive legislative intent. State v. Wagner, 596 N.W.2d 83, 87 (Iowa 1999).

We determine legislative intent from the words chosen by the
legislature, not what it should or might have said. Absent a
statutory definition or an established meaning in the law,
words in the statute are given their ordinary and common
meaning by considering the context within which they are
used.
Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004)

(citations omitted).
Additionally, legislative intent is derived not only from the
language used but also from “the statute’s ‘subject matter,
the object sought to be accomplished, the purpose to be
served, underlying policies, remedies provided, and the
consequences of the various interpretations.’ ”
State v. Dohlman, 725 N.W.2d 428, 431 (Iowa 2006) (quoting Cox v. State,

686 N.W.2d 209, 213 (Iowa 2004)).

The plain language of section 85.34(5) directs that the

overpayment of any weekly benefits be credited to payments for

subsequent injuries. “Any” is commonly understood to have broad

application. See Merriam-Webster’s Collegiate Dictionary 53 (10th ed.

2002) (defining “any” as “every” or “used to indicate one selected without
 13

restriction”); see also State v. Owens, 635 N.W.2d 478, 486 (Iowa 2001)

(reading “any state or federal statute” broadly); Fisher Controls Int’l, Inc.

v. Marrone, 524 N.W.2d 148, 149 (Iowa 1994) (holding phrase “any legal

action” broader than “an action”); Iowa Realty Co. v. Jochims, 503

N.W.2d 385, 386 (Iowa 1993) (interpreting “antennas of any kind” not to

create an ambiguity and to include satellite dishes). By using a word

with an expansive import, we conclude that section 85.34(5) must be

interpreted to apply to all overpayments of benefits, including an

overpayment of weekly benefits and not simply an overpayment of the

entire benefit award. As a result, Swiss Colony is only entitled to a credit

for the overpayments against future benefits for a subsequent injury and

not against future benefits for this injury.

As with our approach to the part-time employment issue in this

case, we must base our interpretations on what the legislature did, not

on what it might have done or should have done. We recognize that

under the limitation for recovery of overpayments contained in the

statute, employers who turn out to be overly generous on the front end of

workers’ compensation proceedings may find themselves without an

effective remedy at the back end of the proceedings. We further

recognize that the limitation may discourage employers from voluntarily

paying generous benefits pending the outcome of workers’ compensation

proceedings. While policy arguments may be made for a contrary result,

such argument must be made to the legislature, not the court. See, e.g.,

Baker v. Shields, 767 N.W.2d 404, 408–09 (Iowa 2009).

C. Industrial Disability. On appeal, Swiss Colony asserts that

the commissioner’s award of sixty percent industrial disability is not

supported by substantial evidence. The employer points to the testimony

of Drs. Hughes and Mendoza, both of which stated that Deutmeyer
 14

suffered a thirty percent whole body impairment as the result of his

injury. Swiss Colony further notes that Deutmeyer returned to work at

both Webber Metals and Swiss Colony following his injury. He

subsequently left that employment for reasons not exclusive to his

injury. While Deutmeyer currently earns less than he did prior to his

injury, Swiss Colony asserts that following his injury, the claimant was

able to hold two jobs.

Industrial disability is intended to measure an injured worker’s

lost earning capacity. St. Luke’s Hosp. v. Gray, 604 N.W.2d 646, 653

(Iowa 2000). This inquiry is a multi-factored test, including

“consideration of not only the claimant’s functional disability, but also

[his] age, education, qualifications, experience, and ability to engage in

similar employment.” Id. The relevant question thus is more than the

worker’s physical ability. Id. Instead, the focus is on the injured

worker’s ability to be gainfully employed. Id. Considering Deutmeyer’s

lack of post-high school education or vocational training and the

undisputed physical impairment caused by his amputation, we conclude

the commissioner’s determination that Deutmeyer suffered a sixty

percent permanent disability is supported by substantial evidence.

IV. Conclusion.

Substantial evidence does not support the commissioner’s finding

that Deutmeyer “earned less” than the usual earnings of a full-time adult

laborer in his field. As a result, this case is remanded for a recalculation

of weekly benefits supported by the record. Substantial evidence does

support the commissioner’s finding that claimant suffered a sixty percent

permanent industrial disability. Furthermore, the employer is entitled to

a credit for overpayments only on benefits for a subsequent injury and
 15

not against future benefits related to this injury. Costs on appeal are

taxed to the parties equally.

AFFIRMED IN PART, REVERSED IN PART, AND CASE

REMANDED.