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It is Halloween so I thought I would tell a tale that may put fear into the hearts of employers. Hence, the title of this article.
Rarely in the State of Iowa does the Iowa Supreme Court address alternate medical care proceedings under Iowa's Workers' Compensation Statute. However, in the past year, the Court has addressed the issue twice. Those two recent decisions create important ramifications for claimants and employers. The purpose of this article is to explain the recent decisions, the ramifications of those decisions, and to provide some practical guidance to employers and insurance carriers faced with alternate medical care petitions.
I recently served as a Committee member and spoke at the Iowa Association of Workers' Compensation Lawyers, Inc.'s 29th Annual Seminar. In preparing for that seminar and speech, I became interested in some recent developments in the alternate medical care process in Iowa. In pondering the two decisions from the Iowa Supreme Court that have come down within the past year, I started contemplating some potential uses of those decisions and the practical implications of the decisions. The more I thought about it, the more concerned I became about the potential use of the alternate medical care process as a ltiigation tool by claimants.
In its first of the two cases, Winnebago Industries, Inc. v. Haverly, 727 N.W.2d 567 (Iowa 2006), the Iowa Supreme Court was confronted with a situation in which an employer admitted liability for an injury at an alternate medical care proceeding and continued to direct care as a result of that admission of liabilty. However, subsequently at the Arbitration Hearing, the employer attempted to deny liability for the same injury.
Claimant objected to the attempts to resist liability. The Commission concluded that the employer was precluded from changing its posiiton to deny liability at the Arbitration Hearing and awarded benefits. The case proceeded through judicial review proceedings and was heard by the Iowa Court of Appeals. Ultimately, the Iowa Supreme Court took this case on further review to clarify this issue.
The Iowa Supreme Court rejected all legal theories espoused by the Claimant, concluding that the employer was not precluded by issue preclusion, res judicata, or "the law of the case." However, the Iowa Supreme Court raised an issue upon its own motion and concluded that the principles of judicial estoppel preclude an employer from admitting liability at an alternate medical care proceeding to control medical care and then seeking to chang their position to challenge liability at a later date and in a later hearing.
The Court stated that judicial estoppel applies when:
1. The employer unequivocally admits liability in Alternate Medical Care Hearing (or another contested case proceeding before the Commission);
2. The employer’s admission is relied upon or acted upon by Commission (ruling on a Petition for Alternate Medical Care); and
3. The employer subsequently changes position and attempts to deny liability in Arbitration proceeding.
The Decision in Haverly creates some important practical implications for both claimants and employers. In my judgment, the Court's decision in Haverly has given claimants an important tactical advantage. From a practical standpoint, the claimant may now force an employer's hand and place an employer into a very difficult situation and into making some very difficult decisions very early in a claim.
According to Haverly, an employer may admit liability “for all time” if it accepts or admits liability at an alternate medical care proceeding. While this is generally not significant because an employer either admits or denies liability after an investigation, claimants can now force the investigation to occur in a relatively short time frame and force an employer to work from a position of disadvantage in my judgment.
Iowa Code section 85.23 only requires that an employee give notice within a period of 90 days from the date of the injury. Given this extended period of time to report an injury, it is feasible that an injured worker will sustain an injury, seek care from their personal physician, obtain a medical opinion indicating that the injury, condition, and treatment are causally related to work activities. Upon securing this type of information, the employee could give notice of the injury and demand that care be authorized through his/her personal physician. If the employer refuses to authorize that requested care (even for good reason), the employee could file an alternate medical care petition.
Pursuant to Iowa Code section 85.27(4), an alternate medical care hearing will be held within 10 to 14 days of the filing of the Petition. Claimant is only required to serve the alternate medical care petition via mail. Accordingly, it is possible that the employee will give notice 90 days after the injury, have his/her medical evidence establishing causation prepared, and will force an employer to an alternate medical care hearing ten days later. It is also entirely possible that the worker will serve the alternate medical care petition via mail on a Friday afternoon. At best, the employer will get that petition on the following Monday and the hearing will be held five business days later. In other words, it is entirely possible under the established alternate medical care rules for an employer to have a total of 5 days to investigate and refute a claimed work injury before an alternate medical care hearing occurs.
The "squeeze" comes in because the employer is required to either admit or deny the injury and the ongoing causation at the time of the alternate medical care hearing. If the employee has a medical opinion stating that the injury is causally related to work and that additional care is required, it becomes incumbent upon the employer to investigate and generate competing evidence that makes the claim "fairly debatable." From a practical standpoint, it may be virtually impossible to conduct that investigation and generate such evidence within five business days. Therefore, it becomes possible that an employer will be faced with a decision at an alternate medical care hearing in which it is forced to admit liability because of claimant's evidence or deny liability and risk a bad faith claim for denying liability in the face of "undisputed" evidence.
In this situation, often times an employer will (at least in the past) elect to admit liability, seek to control the care, and obtain evaluations with physicians of their own choosing. This would be done under the assumption that if later medical evidence determined the injury and ongoing treatment were not related that the employer could change their position and deny liability. However, the Iowa Supreme Court's decision in Haverly suggests this assumption or litigation tactic is unacceptable. Instead, if an employer admits liability at the alternate medical care hearing, it may do so "for all time."
Interestingly, the Iowa Supreme Court noted in Haverly that “[t]here might, in some cases, be a significant change in the facts after the admission of liability that could justify a change of position by the employer.” It is unclear to date whether obtaining competing medical opinions at a later date would be sufficient to constitute a "significant change in the facts" to permit a later denial by an employer. Some attorneys interpret the Supreme Court language to mean that there will have to be discovery of fraud or other very significant developments occuring after the alternate medical care hearing to justify a reversal of the employer's position. Unforutnately, this issue is not clear at this time and employers must assume that the standard will be very high to justify a reversal of their position.
In a decision filed October 12, 2007, the Iowa Supreme Court again addressed the alternate medical care issue again. In its October 12, 2007 decision, the Court rejected a judicial estoppel argument asserted by an employee. In that case, the employee filed an alternate medical care petition. At the time of the alternate medical care hearing, the employer admitted liability but clarified that its requested evaluation was pursuant to section 85.39 and was not for purposes of treatment. The Commission dismissed the alternate medical care petition because all disputes were resolved without ruling on that petition.
The Iowa Supreme Court determined that the Commission did not rule upon the alternate care petition and, therefore, did not rely upon the admission of liability by the employer. Since there was no reliance by the Commission, the doctrine of judicial estoppel did not apply or bind the employer from subsequently changing its position to deny liability for the injury.
So, where does this leave an employer? If the employee uses the alternate medical care petition as a tactical manuever, the employer is going to be hard pressed to avoid a hearing on that petition. Ultimately, employers may be obligated to consent to medical care that ultimately may be proven not related to a work injury. In other words, from a tactical standpoint, the employer may elect to consent to and authorize treatment through Claimant's personal physician until such time as the employer is able to secure a section 85.39 evaluation and develop evidence to refute causal connection to the work activities. Of course, this may requite the expenditure of several thousand dollars by the employer during the investigation phase.
The alternatives are dim and include:
1. A mit liability at the Alternate Medical Care Hearing and potentially accept liability "for all time";
2. Deny liability without medical evidence to refute the claimant's personal physician's opinion and risk a penalty award and/or a bad faith suit;
3. Move for a continuance or dismissal of the alternate medical care petition as premature. Some deputy commissioners are inclined to grant such a motion, though this is risky and the employer will have to be prepared to either admit or deny the claim if such a motion is not granted by the particular Deputy Commissioner hearing the case;
4. Admit liability based on the only medical information available, attempt to develop contrary evidence after the fact, and move for an opportunity to amend the admission based on a theory that there was "a significant change in the facts after the admission of liability that could justify a change of position by the employer." Again, there is no guarantee that the amendment will be allowed simply because further investigation revealed a potential available defense.
Most certainly, the Iowa Supreme Court has not been presented with nor is it likely that the Court contemplated or envisioned the use of the alternate medical care proceeding as a tactical tool for the claimant's advantage. From a practical standpoint, however, the Court may have created a situation in which the employee can gain a tactical advantage over the employer through the use of an early alternate medical care petition.
From the claimant attorney's perspective, he/she may have an ethical duty to utilize this procedure to gain the tactical advantage and act in his/her client's best interest. Therefore, although this is not the intention or purpose of the alternate medical care process, it woudl ot be surprising to see this develop into a more highly used technique to force employers into early and difficult decisions in worker's compensation claims.
Employers need to contemplate this situation and be prepared on a case by case basis to make decisions to combat this potential litigation tactic. Retention of counsel at the earlies possible moment may be important to the defense of such claims. Identification of other potential factual disputes to justify a denial may be one means of combating the use of such litigation tactics. For instance, if you can challenge the claim on a notice defense, obtain witness statements indicating there is some other potential cause, etc., the employer may be able to develop a potential defense without the need to specifically refute the medical opinions. However, if the issue comes down to medical evidence on causal connection and the employee uses this litigation tactic, employers are going to be placed into very difficult positions and are going to be forced to make difficult decisions with significant potential monetary ramifications very early in claims.
Posted by William H. Grell on October 31, 2007 8:17 AM
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