Iowa Supreme Court Reexamines Employer’s Authorization Defense

  • Dec 18, 2018

Legal Update by Attorney Kathryn Johnson

In a 6-1 decision, the Supreme Court in Brewer-Strong v. HNI Corporation, 913 N.W.2d 235, (Iowa, 2018), held as matter of first impression, an employer could regain control of the employee’s medical care and assert an authorization defense, even though the employer initially denied liability. The Court stated, “Holding otherwise would run contrary to the very purpose of Iowa Code chapter 85 to resolve ‘workplace-injury claims with minimal litigation’ by forcing employers to reach a conclusion about their liability for an employee’s injury without thoroughly performing their duty to investigate the claims, potentially creating more litigation and expenses in the process.”

In this case, a workers' compensation claimant, Brewer-Strong, contends the workers’ compensation commissioner wrongly denied her healing period benefits under Iowa Code section 85.34(1). Brewer-Strong filed a petition seeking workers’ compensation benefits after developing bilateral carpal tunnel injuries allegedly arising out of and in the course of her employment with the employer, HNI. HNI originally denied liability for the claimed injuries. Brewer-Strong filed a petition for alternate medical care that was dismissed on procedural grounds because HNI contested liability for the injury. A physician chosen by HNI examined Brewer-Strong, and the physician confirmed that the claimed injuries were work-related. HNI subsequently amended its answer to admit liability and authorized Brewer-Strong to undergo medical care with its chosen medical providers. However, Brewer-Strong sought medical treatment from a different, unauthorized physician who proceeded to perform two surgeries on her. HNI refused to pay Brewer-Strong healing period benefits for the time she was recovering from the unauthorized surgeries.

At the agency level, the workers’ compensation commissioner decided Brewer-Strong was not entitled to healing period benefits. Specifically, the commissioner found that HNI provided a valid authorization defense, and Brewer-Strong did not meet her burden to prove that her unauthorized care resulted in a more favorable outcome than the care she would have received from the authorized physician. On judicial review, the district court affirmed this decision on the same grounds.

The Supreme Court reviewed the commissioner’s interpretation of Iowa Code section 85.34(1), which deals with healing period benefits for work-related injuries. Brewer-Strong argued the district court erred in ruling that HNI could regain its right to control her medical care and treatment by admitting liability for her work-related injuries after it had initially denied liability. The Court noted that where the employer disputes compensability and the commissioner denies the claimant’s petition for alternate care on procedural grounds, “there can be no implicit finding that the employer has satisfied its duty to furnish reasonable medical care and has no obligation to furnish alternate care.” However, an employer is barred from asserting an authorization defense where the commissioner’s denial of the employee’s request for alternate medical care was based on substantial evidence in the record demonstrating the employer denied compensability for at least a portion of the employee’s injury for which she sought alternate medical treatment.

Thus, the workers’ compensation commissioner and the district court correctly found HNI acquired its authorization defense and the statutory rights and obligations to provide and choose appropriate medical care pursuant to Iowa Code section 85.27 once it amended its answer to accept compensability for the injury. HNI then retained its right to control medical care throughout the course of treatment for the compensable injury since it did not subsequently contest whether the injury was work-related or withdraw its authorization of care, and the commissioner did not order alternative care for Brewer-Strong.

The Court also reaffirmed the standard set out in Bell Bros. Heating & Air Conditioning v. Gwinn, 779 N.W.2d 193 204 (Iowa 2010), establishing that an employer can be ordered to pay for unauthorized care received by the employee only if the employee “prove[s] ‘by a preponderance of the evidence that such care was reasonable and beneficial’ under the totality of the circumstances,” with “beneficial” defined as “provid[ing] a more favorable medical outcome than would likely have been achieved by the care authorized by the employer.” The Court rejected Brewer-Strong’s claim that the burden of proof set an impossible standard, concluding the burden “respects the balance between the employer’s rights to control medical care and the employee’s right to seek alternative medical care under the statute. The mere fact that this creates a heightened burden for the employee does not require a modification of the test. This is all part of the balancing found within our workers’ compensation statute.” Justice Hecht dissented on this point, and would have overruled the Bell Bros. as a “flawed standard requiring proof based on sheer speculation.”

The Court further held that an employer is not required to pay healing period benefits when an employee is off due to unauthorized care, and stated that, “Iowa Code section 85.34(1) does not explicitly state that an employee cannot receive healing period benefits for unauthorized care.” The Court nonetheless concluded that “[a]n interpretation that requires an employer to provide injured employees with healing period benefits for their unauthorized care when they knowingly abandoned the protections of Iowa Code section 85.27 would be inconsistent with the overall intent of the statute.”

 

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