Opinion
No. 5-872 / 05-0493
Filed January 19, 2006
Appeal from the Iowa District Court for Polk County, Robert Hutchison, Judge.
Mark Haverly appeals a district court ruling which reversed the worker's compensation commissioner's award of benefits and remanded the matter to the agency for a finding on the issue of liability. AFFIRMED.
Christopher D. Spaulding of Berg, Rouse, Spaulding Schmidt, P.L.C., Des Moines, for appellant.
Joseph M. Barron and Lee P. Hook of Peddicord, Wharton, Spencer Hook, L.L.P., for appellees.
Heard by Zimmer, P.J., and Miller and Vaitheswaran, JJ.
Claimant Mark Haverly appeals a district court ruling which reversed the workers' compensation commissioner's award of benefits and remanded the matter to the agency for a finding on the issue of liability. Haverly claims the court erred in concluding that his employer, Winnebago Industries, Inc., and Winnebago's insurance carrier, Sentry Insurance, (collectively Winnebago) were not precluded from raising the issue of liability in the benefits proceeding when they had earlier admitted to liability in an alternate medical care proceeding. We affirm the district court.
I. Background Facts and Proceedings.
Haverly began his employment with Winnebago in 1983. In 1992 he suffered a work-related back injury. Haverly and Winnebago entered into a settlement of the claim in 1997.
Winnebago provided Haverly care for his back condition, including a left diskectomy performed by Dr. Lynn Nelson in November 2001. Haverly remained symptomatic, however. Dissatisfied with the care provided by Winnebago, Haverly eventually sought care from Dr. David Beck. Dr. Beck recommended additional surgery, which was not authorized by Winnebago.
In March 2002 Haverly filed a petition for workers' compensation benefits, alleging a work-related back injury had occurred on November 7, 2000. In its answer Winnebago asserted any injury sustained on November 7 related back to Haverly's 1992 injury, and at most caused a temporary aggravation of his preexisting back condition.
Haverly also filed a petition alleging he suffered a work-related back injury on March 2, 2000. The two claims were consolidated for hearing, and the agency determined Haverly had not suffered a new injury on March 2. That claim is not at issue on appeal.
On May 17, 2002, Haverly filed an application for alternate medical care, which alleged a November 7, 2000, injury date and requested surgery by Dr. Beck. Haverly supported his request with an opinion from Dr. Beck that Haverly's work duties had aggravated his pre-existing back condition and "that the recommended surgery is necessitated by the work related aggravation." Winnebago did not dispute liability, but asserted the surgery was not reasonably necessary. The matter proceeded to hearing on May 30, and the deputy workers' compensation commissioner ordered the alternate medical care. Neither party sought judicial review of the decision.
On June 25, 2002, Dr. Nelson issued a letter indicating Haverly's low-back condition was related to his original work injury in 1992. Winnebago accordingly amended its answer to the November 7 claim for benefits to affirmatively state Haverly's current condition related back to the 1992 injury.
Haverly's claim for benefits proceeded to hearing in July 2003. The deputy workers' compensation commissioner issued an arbitration decision awarding Haverly healing period, permanent partial disability and penalty benefits, and ordering Winnebago to pay disputed medical expenses. In relevant part, the deputy found the issue of liability for the November 7 injury had been previously litigated in the alternate medical care proceeding, and this prior decision was res judicata on the issue of liability.
On intra-agency appeal the workers' compensation commissioner affirmed the award of healing period benefits, awarded Haverly additional permanent partial disability benefits, and ordered Winnebago to pay medical expenses, but reversed the deputy's award of penalty benefits. The commissioner determined Winnebago's admission of liability in the alternate care proceeding was res judicata, and precluded Winnebago from litigating "the issue of liability, specifically the issue of whether an injury occurred on November 7, 2000, that arose out of and in the course of" Haverly's employment with Winnebago. The commissioner further found that, even if issue preclusion did not prevent Winnebago from litigating the issue, the record "amply demonstrates" that Haverly suffered a new injury on November 7.
Winnebago filed a petition for judicial review challenging the agency's res judicata determination, as well as the existence of a new injury. Haverly filed a "counterclaim/cross-appeal," challenging the agency's application of the full responsibility rule and denial of penalty benefits. In a March 2005 ruling the district court reversed the agency decision, concluding Winnebago was not precluded from litigating the issue of liability in the benefits proceeding. The court also determined that litigation of the issue was not barred under the doctrines of law of the case or judicial estoppel. The court remanded the matter to the agency for a finding on the issue of liability. It did not address the remaining issues before it, concluding it would be premature when the issue of liability was as yet undecided.
It does not appear that the issues of law of the case and judicial estoppel were affirmatively raised by either party.
Haverly appeals. He argues Winnebago was precluded from relitigation of the liability issue in light of its admission in the alternate medical care proceeding. He contends this conclusion is supported by the doctrines of (1) res judicata, specifically issue preclusion, (2) law of the case, and (3) judicial estoppel.
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 (2003) 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.
A party challenging agency action bears the burden of demonstrating the action's invalidity and resulting prejudice. Iowa Code § 17A.19(8)(a). This can be shown in a number of ways, including proof the action was legally erroneous; unsupported by substantial evidence in the record when that record is viewed as a whole; or otherwise unreasonable, arbitrary, capricious, or an abuse of discretion. See id. § 17A.19(10).
III. Issue Preclusion.
Haverly asserts the agency was correct in concluding Winnebago's admission of liability in the alternate medical care proceeding precluded Winnebago from relitigating the issue of liability in the proceeding for workers' compensation benefits. Application of this doctrine requires that
(1) the issue determined in the prior action is identical to the present issue; (2) the issue was raised and litigated in the prior action; (3) the issue was material and relevant to the disposition in the prior action; and (4) the determination made of the issue in the prior action was necessary and essential to that resulting judgment.
American Family Mut. Ins. Co. v. Allied Mut. Ins. Co., 562 N.W.2d 159, 163-64 (Iowa 1997). In ruling the agency erred, the district court concluded the second element of issue preclusion was not present, in that the issue of liability was not in fact raised and litigated in the alternate medical proceeding. We concur in the court's assessment.
Issue preclusion applies only if the relevant issue has "actually be[en] litigated in the prior litigation." Hoth v. Iowa Mut. Ins. Co., 577 N.W.2d 390, 391-92 (Iowa 1998). In assessing this requirement our supreme court has turned to the Restatement (Second) Judgments section 27 (1982) and its comments (Restatement) for guidance. Id.; see also Ideal Mut. Ins. Co. v. Winker, 319 N.W.2d 289, 291-93, 296 (Iowa 1982). Those comments define an issue "actually litigated" as one that is "properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined. . . ." Restatement § 27 cmt. d. They also define "[i]ssues not actually litigated":
A judgment is not conclusive in a subsequent action as to issues which might have been but were not litigated and determined in the prior action. There are many reasons why a party may choose not to raise an issue, or to contest an assertion, in a particular action. The interests of conserving judicial resources, of maintaining consistency, and of avoiding oppression or harassment of the adverse party are less compelling when the issue on which preclusion is sought has not actually been litigated before. And if preclusive effect were given to issues not litigated, the result might serve to discourage compromise, to decrease the likelihood that the issues in an action would be narrowed by stipulation, and thus to intensify litigation.
It is true that it is sometimes difficult to determine whether an issue was actually litigated; even if it was not litigated, the party's reasons for not litigating in the prior action may be such that preclusion would be appropriate. But the policy considerations outlined above weigh strongly in favor of nonpreclusion, and it is in the interest of predictability and simplicity for such a result to obtain uniformly.
. . . .
An issue is not actually litigated if . . . it is raised by a material allegation of a party's pleading but is admitted (explicitly or by virtue of a failure to deny) in a responsive pleading; nor is it actually litigated if it is raised in an allegation by one party and is admitted by the other before evidence on the issue is adduced at trial; nor is it actually litigated if it is the subject of a stipulation between the parties.
Restatement § 27 cmt. e.
Thus, under section 27 an issue is not actually litigated merely because it was admitted or conceded in the prior proceeding. Rather, a judicial determination of a disputed issue is generally required. Although no Iowa case has expressly adopted the Restatement's definition of "actually litigated," it has been implicitly approved by our supreme court. See Hoth, 577 N.W.2d at 391-92 (concluding a judgment by confession, like a consent judgment or a default judgment, did not constitute actual litigation of an issue resolved by that judgment); Ideal Mut. Ins. Co., 319 N.W.2d at 291-93, 296 (concluding a guilty plea for which a factual basis was properly ascertained satisfied the "raised and litigated" requirement of issue preclusion and was "consistent with the rationale underlying the actual litigation requirement of the Restatement . . . to preclude relitigation only after the parties have obtained a judicial determination of an issue following the exploration of that issue through the litigative process"). Employing these definitions leads to the conclusion that liability for the November 7 injury was not "actually litigated" in the alternate medical care proceeding.
Alternate medical care proceedings are an expedited process created to ensure quick resolution of "disputes over the medical care for compensable injuries . . . in advance of a contested case hearing on a claim for workers' compensation benefits." R.R. Donnelly Sons v. Barnett, 670 N.W.2d 190, 195 (Iowa 2003); see also Iowa Code § 85.27(4) (requiring agency decision within ten or fourteen working days of receipt of application). Applications for alternate medical care can be filed only if the employer does not dispute liability; if liability is disputed the application must be dismissed without prejudice. Iowa Admin. Code r. 876-4.48(7); see also R.R. Donnelly Sons, 670 N.W.2d at 197 n. 2 (noting alternate care proceedings are available when an employer does not dispute liability and furnishes medical care, but disputes the reasonableness of a particular course of treatment).
[T]he issue of compensability is totally removed from the alternate medical care process. Instead, the commissioner's role . . . at this stage is limited to determining the reasonableness and necessity of medical care sought by an employee as an alternative to the care furnished by the employer. Thus, if a compensability issue arises in the course of an alternate care dispute, the commissioner cannot order that the alternate care sought by the employee be furnished by the employer prior to a determination of the compensability of the injury in a contested case proceeding. . . .
R.R. Donnelly Sons, 670 N.W.2d at 196-97.
If the issue of liability cannot be submitted for determination in an alternate medical care proceeding, then the issue has not been actually litigated for the purpose of issue preclusion. See also McGee v. Iowa Dep't of Public Safety, 443 N.W.2d 693, 696 (Iowa 1989) (determining party was not precluded from raising an issue in a judicial review of an agency action when the district court had never actually been required to decide the issue in the prior proceeding, and thus determination of the issue was not "essential to the [prior] judgment").
Haverly appears to advocate for a less stringent application of the doctrine in workers' compensation proceedings. He contends that to deny preclusive effect to an admission in an alternate medical care proceeding is to allow an employer to admit liability for the purpose of controlling the care, then deny liability for purposes of compensability. He contends alternate medical care proceedings were created to prevent such manipulation by employers.
Haverly's contention is not without appeal. Arguably, some benefits can inure to an employer who controls an employee's medical care. Looking to the specific facts of this case, however, we are not convinced the reasons underlying alternate medical care proceedings are sufficient to support a departure from the general rules of issue preclusion. In particular, we note Winnebago has not denied its responsibility to provide medical care for Haverly's back condition; rather, it contended the obligation to pay for such care arose out of the 1992 injury and 1997 stipulation, and not any new injury. We accordingly conclude the district court did not err in ruling issue preclusion cannot serve as a bar to litigation of the issue of liability.
IV. Law of the Case and Judicial Estoppel.
Haverly contends that, even if issue preclusion does not apply in this matter, the doctrines of law of the case and judicial estoppel serve as a bar to relitigation of liability. We question whether it is appropriate to reverse a district court ruling and uphold an agency decision on grounds that were not urged by either party. We need not decide the question, however, as we conclude neither doctrine can be applied to bar litigation of the issue.
Law of the case is the doctrine that "represents the practice of courts to refuse to reconsider what has once been decided." State v. Grosvenor, 402 N.W.2d 402, 405 (Iowa 1987); see also State ex rel. Goettsch v. Diacide Distributors, Inc., 596 N.W.2d 532, 537 (Iowa 1999). Thus, "legal principles announced and the views expressed by a . . . court in an opinion, right or wrong, are binding throughout further progress of the case upon the litigants, the trial court and this court in later appeals." Grosvenor, 402 N.W.2d at 405. The benefits proceeding and the alternate medical care proceeding are each an original contested case proceeding subject to judicial review upon final decision. See Iowa Code §§ 85.26, 85.27(4). Although the benefits proceeding and alternate medical care proceeding may have been litigated by the same parties before the same agency, they are not the "same case" for the purpose of the application of the law of case doctrine.
The doctrine of judicial estoppel "prohibits a party who successfully and unequivocally asserts a position in one proceeding from asserting an inconsistent position in a subsequent proceeding," provided there is proof of an intentional attempt to mislead the court with the inconsistency. Graber v. Iowa Dist. Court, 410 N.W.2d 224, 227-28 (Iowa 1987). Whether or not the positions taken by Winnebago were inconsistent or successfully and unequivocally asserted, the record before the agency contains no convincing evidence of an intent to mislead, and contrary to Haverly's assertion, the agency decision does not contain a finding that such an attempt occurred.
V. Conclusion.
The district court correctly concluded that Winnebago was not precluded from litigating the issue of liability in the benefits proceeding, and thus did not err in reversing the agency opinion. We affirm the court's ruling. AFFIRMED.
The district court also remanded the matter to the agency for "a finding on the issue of liability," an issue that was characterized by the parties and the court as whether a new injury had occurred on November 7, 2000. We note the agency decision, while determining Winnebago was precluded from relitigating this issue, also expressly found Haverly had suffered a new injury on November 7. The agency cogently explained the basis of its finding, including reasons why it determined the opinion of Dr. Beck was entitled to significantly more weight than the opinion of Dr. Nelson. When read in the context of the entire decision, it appears the agency did in fact make a finding on the issue of liability. However, neither party challenges the remand portion of the district court's ruling, or raises the question of whether the record supports the finding of a new injury as an issue on appeal. We accordingly do not address the correctness of the remand portion of the district court's ruling.