INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Injured employee claims total disability
Lorri Hagen was injured in the course of her employment with Serta/National Bedding Company, LLC, on February 21, 2017, when a cart weighing upwards of 350 pounds rolled over her right foot. At Serta’s request, Hagen underwent an independent medical examination (IME) on July 22, 2019, with Dr. Gorsche, who opined that Hagen had reached maximum medical improvement for the work injury. On August 5, Hagen filed an arbitration petition seeking workers compensation benefits from Serta and its insurer, Safety National Casualty Company. On November 5, Hagen requested agreement from Serta to provide an IME under a section of the Iowa workers compensation statute, which Serta agreed to on November 7.
The workers compensation commissioner filed an order on December 31 that set Hagen’s arbitration hearing for September 25, 2020, where one of the disputed issues would be whether Hagen was permanently and totally disabled. The order also established deadlines for discovery and the exchange and filing of witness and exhibit lists and proposed exhibits. These deadlines largely followed the time limits under an Iowa administrative code rule that governs “prehearing procedure, completion of discovery and case management in contested cases.”
Under a section of the statute, Hagen was required to “certify to all other parties the expert’s name, subject matter of expertise, qualifications, and a summary of the expert’s opinions” if she intended to introduce evidence from an expert. The rule also gave Hagen 120 days to certify before the hearing and Serta 90 days before the hearing and required that Hagen certify any rebuttal experts 60 days before the hearing.
The scheduling order set a 30-day deadline for the parties to serve a witness and exhibit list in accordance with a rule ordering all parties to “serve a witness and exhibit list and exchange all intended exhibits that were not previously required to be served.” Finally, the order mandated that the parties file proposed exhibits “[a]t least 14 days prior to hearing” and any written objections or motions to exclude evidence at least seven days before the hearing.
The IME that Hagen requested was conducted on June 23. On August 19, Hagen provided Serta updated discovery responses and listed Tom Karrow as a vocational expert. Serta provided Hagen its vocational report on August 27. On the same day, which was less than 30 days prior to the arbitration hearing, Hagen’s counsel informed Serta “that he ha[d] inquired into the status of the two reports [from Dr. Kuhnlein and Karrow] and that they can be expected soon.” Both Karrow and Dr. Kuhnlein completed their reports on September 10. Hagen provided Serta Dr. Kuhnlein’s report on September 10 and Karrow’s report on September 11.
Hagen filed her proposed hearing exhibits on September 11, listing Dr. Kuhnlein’s IME report as “exhibit 10” and Karrow’s vocational report as “exhibit 11.” Neither Dr. Kuhnlein nor Karrow were certified as experts, and their reports were not provided to Serta at least 30 days before the hearing.
Serta filed a written objection to these two exhibits a week before the arbitration hearing, arguing: “The production of Dr. Kuhnlein’s report after the 30-day deadline is prejudicial to Defendants as they were not aware of Dr. Kuhnlein’s opinions regarding the extent of impairment and permanent work restrictions until 15 days prior to the Arbitration Hearing. In addition, Mr. Karrow’s report concluding that the claimant is permanently and totally disabled was produced to Defendants 14 days prior to the Arbitration Hearing. Given the late production of the reports, Defendants are unable to respond or rebut Dr. Kuhnlein or Mr. Karrow.”
Serta renewed this objection at the arbitration hearing on September 25, to which Hagen proposed leaving the record open for Serta to obtain rebuttal reports. Serta objected, arguing this would not alleviate the prejudice because it would cause further delay. The deputy commissioner agreed with Serta and excluded the reports, concluding that this was “an unfairly prejudicial instance.”
Hagen moved to reconsider the exclusion of these exhibits after the hearing, which the deputy denied.
The deputy concluded that Hagen suffered an industrial disability of 60% and reached maximum medical improvement on July 23, 2019, but she failed to prove that she was permanently and totally disabled. The deputy also ordered Serta to pay Hagen penalty benefits because of its late payment of benefits to Hagen on five occasions. Hagen appealed.
On appeal, the commissioner issued a decision that concluded the deputy did not abuse his discretion in excluding the exhibits. The commissioner noted that “keeping the record open and offering the objecting party the opportunity to seek responsive reports is often the preferred remedy employed by deputy commissioners in similar circumstances.”
He explained, however: “The IME report and vocational assessment report were not authored by treating physicians and were exchanged for the first time roughly two weeks before hearing in violation of Iowa Administrative Code rule 4.19(3). Furthermore, Mr. Karrow was not designated as an expert until roughly one month before hearing, which was also in violation of the rule, and Mr. Karrow’s report concluded claimant was permanently and totally disabled, which was an opinion not shared by any other experts in this case. Thus, I find defendants proved unfair surprise and prejudice by the untimely exchange of these reports. As a result, with this additional analysis, I affirm the deputy commissioner’s exclusion of Exhibits 10 and 11.”
The commissioner also increased the amount of penalty benefits that Serta must pay Hagen for its late payments and ordered Serta to reimburse Hagen for the cost of the IME that Dr. Kuhnlein performed. He affirmed the deputy commissioner’s ruling on all other aspects.
Hagen petitioned for judicial review in the district court, challenging the exclusion of the reports and other issues. The district court reversed the commissioner’s decision to exclude the reports. It concluded that the deputy and commissioner merely assumed that the late disclosure and production of the reports was inherently prejudicial to Serta instead of making the necessary finding that admitting these reports would be unfairly prejudicial to Serta.
The district court reversed the agency’s decision and remanded the case with directions to admit the reports and other exhibits and “leave the record open for a whatever length of time [the commissioner] deems sufficient to permit [Serta] an opportunity to file responsive reports, and then revisit and rule on the issues.” Serta appealed, and the case was transferred to the court of appeals. The court of appeals affirmed the district court’s ruling. The court of appeals granted Serta’s application for further review.
The Iowa Supreme Court said it would consider whether the commissioner abused his discretion by excluding the reports from Dr. Kuhnlein and Karrow after Hagen failed to meet the deadlines in accordance with the Iowa Administrative Code.
The commissioner excluded the reports under a rule in the code that authorizes the commissioner to exclude untimely evidence “if the objecting party shows that receipt of the evidence would be unfairly prejudicial.”
The commissioner examined Serta’s claim that it was prejudiced by the untimely reports and decided that “there was some element of surprise, as the reports were not timely exchanged, nor was Mr. Karrow timely designated as an expert under the administrative rules.”
Consequently the commissioner decided that Serta “proved unfair surprise and prejudice by the untimely exchange of these reports” and affirmed the deputy’s exclusion.
The supreme court stated that it could not say that the commissioner’s decision to exclude the reports was clearly against reason and evidence.
The supreme court vacated the court of appeals decision and reversed the district court decision that remanded the matter to the commissioner with instructions to admit the challenged evidence, reopen the record, and revisit the issues. The supreme court remanded the case to the district court to enter a judgment that affirmed the commissioner’s decision.
Hagen v. Serta/National Bedding Company, LLC—Iowa Supreme Court—No. 22-0684—January 5, 2024.
