Nid, Inc., and Great West Casualty Company, petitioners-appellees/cross-appellants v. Troy Monahan, respondent-appellant/cross-appellee.

IN THE COURT OF APPEALS OF IOWA

No. 14-0292
Filed March 25, 2015

NID, INC., and GREAT WEST
CASUALTY COMPANY,
Petitioners-Appellees/Cross-Appellants,

vs.

TROY MONAHAN,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Robert J. Blink,

Judge.

Appeal and cross-appeal from ruling on judicial review. AFFIRMED IN

PART, REVERSED IN PART, AND REMANDED.

Max Schott and Jean Mauss of Schott Mauss & Associates, P.L.L.C., Des

Moines, for appellant.

Stephen W. Spencer and Christopher S. Spencer of Peddicord, Wharton,

Spencer, Hook, Barron & Wegman, L.L.P., West Des Moines, for appellee.

Heard by Vogel, P.J., and Doyle and McDonald, JJ.
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MCDONALD, J.

Claimant Troy Monahan appeals and the employer NID, Inc., and its

insurer Great West Casualty Company (collectively, hereinafter “NID”) cross-

appeal from the district court’s ruling that affirmed in part and reversed in part the

agency’s decision in this alternate medical care proceeding arising under the

workers’ compensation law. See Iowa Code § 85.27(4) (2009). Monahan

concedes the agency committed legal error in concluding the employer was

barred from denying causation but asks this court to apply the doctrine of judicial

estoppel to affirm the agency’s action. NID claims the agency erred in imposing

sanctions, and the court erred in remanding this alternate medical care

proceeding to the agency for a hearing on causation.

I.

This workers’ compensation proceeding is unnecessarily Dickensian in

duration and procedural complexity. On March 15, 2007, Monahan fell at work,

landing on his left side. He treated at a local hospital and was prescribed

medication. On September 28 of that year, NID assigned Monahan to a project.

Monahan did not think he was physically able to do the project, and he left

without ever returning to work. Over the next two years Monahan treated on

multiple occasions for pain on his left side.

Almost two years after the injury, on February 26, 2009, Monahan filed his

petition in arbitration, alleging a March 15, 2007 work-related injury to his upper

left extremity, including shoulder, elbow, and hand. The matter came on for

hearing in March 2010. The joint hearing report shows the parties stipulated that
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Monahan sustained an injury on March 15, 2007, that arose out of and in the

course of his employment with NID. The parties disputed whether the injury

caused disability, Monahan’s entitlement to healing period benefits, and

Monahan’s entitlement to permanent partial disability benefits. The joint report

also showed the parties disputed whether Monahan’s medical expenses were

causally connected to the injury. On April 5 and May 19, 2010—after the

arbitration hearing but prior to the filing of the arbitration decision—Monahan, on

his own volition, treated with Dr. Neff, an orthopedic surgeon, who recommended

arthroscopy of Monahan’s left shoulder with impingement decompression.

On June 1, 2010—after the arbitration hearing but prior to the filing of the

arbitration decision—Monahan filed a petition for alternate medical care pursuant

to Iowa Code section 85.27(4), seeking the recommended arthroscopy. NID filed

its answer, disputing liability for Monahan’s “current left shoulder complaints for

which he seeks care.” The agency dismissed the petition for alternate care,

explaining the “summary provisions of Iowa Code section 85.27 as more

particularly described in rule 876 IAC 4.48 are not designed to adjudicate

disputed compensability of claim.”

On October 27, 2010, the agency filed its arbitration decision. The deputy

found “claimant sustained a stipulated injury to the neck, left upper extremity/left

shoulder” and “at the time of the evidentiary hearing claimant was working full-

time with IMT with lots of overtime without restrictions or accommodations.” The

deputy found that Monahan “still gets sharp pains in his hand and from his elbow

to his shoulder and has reduced grip strength in the left hand. No doctor took
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claimant off work from the time he left employment at NID until he began work at

another employer, L&M, except for October 25, 2007 to November 8, 2007.” The

deputy found Monahan’s work injury was causally related only to the left hand

carpal tunnel syndrome and awarded benefits for the period Monahan was off

work following carpal tunnel surgery. The deputy concluded Monahan failed to

prove the March 15, 2007 work injury “caused a permanent disability.” The

deputy ordered that Monahan was entitled to alternate medical care, specifically

that “defendants shall provide claimant a second opinion by an orthopedic doctor

of their choosing for his shoulder.” The parties appealed and cross-appealed the

arbitration decision. In April 2012, the agency issued its appeal decision,

affirming and adopting “those portions of the proposed arbitration decision . . .

that relate to issues properly raised . . . without additional comment.”

On April 15, 2013, now more than six years after his injury, Monahan filed

a second application for alternate medical care, requesting that the agency order

NID to authorize a return consultation with Dr. Neff to determine if the May 2010

recommendation was still appropriate. NID answered and denied “causation of

claimant’s current complaints.” The agency dismissed the alternate medical care

application, explaining “before any benefits can be ordered, including medical

benefits, compensability of the claim must be established, either by admission of

liability or by adjudication.”

Monahan sought rehearing of his second application for alternate medical

care. He asserted causation and liability were established in the arbitration and

appeal decisions “as a matter of law and [are] preclusive on this issue.” He
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noted NID had failed to comply with the appeal decision’s order to provide a

second opinion by an orthopedic doctor. For relief, he requested that he be

allowed to return to Dr. Neff and that sanctions be imposed against NID. The

agency granted Monahan’s request for rehearing. It held the defendants were

“barred by the doctrine of res judicata from contending they are not liable for

claimant’s continued shoulder problems.” The rehearing decision also stated:

“Since the April 2, 2012 appeal decision, defendants have not provided claimant

with a second opinion regarding care for his shoulder injury. Defendants are

therefore ordered, once again, to provide the alternate medical care prescribed in

the October 27, 2010 arbitration decision in this case.” The decision continued:

“Defendants’ continued denial of the order to provide alternate medical care was

not warranted by existing law.” The agency then imposed attorney’s fees and

costs as a sanction against NID.

NID sought judicial review of the rehearing decision pursuant to the Iowa

Administrative Procedure Act (“IAPA”), Iowa Code Chapter 17A. NID argued the

agency erred (1) in ruling on the merits of the alternate medical care request

when causation was at issue, (2) in determining causation in the alternate

medical care proceeding, (3) in using the alternate medical care proceeding to

enforce the appeal decision, and (4) in awarding attorney fees. The district court

determined the agency’s application of the res judicata doctrine was error

because Monahan’s “shoulder injury was stipulated to, [so] it was never actually

litigated.” The district court concluded the application for alternate medical care

“should have been dismissed” because causation was still at issue. The district
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court explained that if Monahan wanted to enforce the appeal decision and

obtain a second opinion, Monahan “should have sought judicial enforcement of

the order” pursuant to Iowa Code section 86.42. Although the court recognized

that dismissal of the application for alternate medical care was required when

causation and liability were disputed, the court, in an attempt to bring closure to

this Jarndyce-like case, remanded the case to the agency to hold a hearing on

causation.

Both parties filed post-ruling motions. Monahan’s motion acknowledged

res judicata did not apply, but, for the first time in this proceeding, asked the court

to apply the doctrine of judicial estoppel. The court summarily denied all post-

ruling motions. This appeal and cross-appeal followed.

II.

The standard of review in this case is governed by the IAPA. Under the

IAPA, we may grant relief only if we determine the “substantial rights of the

person seeking judicial relief have been prejudiced” due to certain types of

enumerated errors. Iowa Code § 17A.19(10). As relevant here, we review final

agency action for correction of errors at law. See Kohlhaas v. Hog Slat, Inc., 777

N.W.2d 387, 390 (Iowa 2009). We review the agency’s findings to determine if

they are supported by substantial evidence. See id. at 391. “‘Substantial

evidence’ means 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.” Iowa Code
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§ 17A.19(10)(f)(1). We review the agency’s application of the law to the facts for

an abuse of discretion. See Meyer v. IBP, Inc., 710 N.W.2d 213, 219 (Iowa

2006). “An abuse of discretion occurs when the commissioner’s exercise of

discretion is ‘clearly erroneous or rests on untenable grounds.’” Kohlhaas, 777

N.W.2d at 391 (citation omitted).

III.

A.

The district court concluded the agency erred in holding that res judicata

barred NID from contesting causation and liability. Monahan concedes the

agency erred in applying the doctrine of res judicata. He argues that the agency

decision should nonetheless be affirmed by application of the doctrine of judicial

estoppel.

Our supreme court has explored the application of the doctrine of judicial

estoppel in workers’ compensation proceedings. See Tyson Foods v. Hedlund,

740 N.W.2d 192, 195-99 (Iowa 2007); Winnebago Indus. v. Haverly, 727 N.W.2d

567, 573-75 (Iowa 2006). “[J]udicial estoppel is a ‘commonsense doctrine’ that

‘prohibits a party who has successfully and unequivocally asserted a position in

one proceeding from asserting an inconsistent position in a subsequent

proceeding.’” Tyson Foods, 740 N.W.2d at 195 (quoting Vennerberg Farms, Inc.

v. IGF Ins. Co., 405 N.W.2d 810, 814 (Iowa 1987)). It is “designed to protect the

integrity of the judicial process.” Id. The doctrine applies to administrative

proceedings as well as judicial proceedings. See Winnebago Indus., 727 N.W.2d

at 573-74. If there is a significant change in the facts after an initial position, then
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a change in position does not violate the doctrine of judicial estoppel.

Winnebago Indus., 727 N.W.2d at 575. Because the doctrine primarily is

intended to protect the integrity of the legal process, an appellate court may raise

judicial estoppel on its own motion. See State v. Duncan, 710 N.W.2d 34, 43-44

(Iowa 2006).

We conclude there is no basis to apply the doctrine of judicial estoppel

here. Monahan contends NID previously stipulated to causation and liability. In

his main and reply briefs, Monahan never identifies where in the record the

alleged stipulation can be found. At oral argument, Monahan’s counsel was

unable to identify where in the record the alleged stipulation can be found. On

our review of the record, we conclude NID stipulated only that Monahan suffered

a work-related injury. At no point in these proceedings did NID stipulate as to

causation and liability. As set forth above, NID actually contested causation and

liability at every point in these proceedings. An employer may properly admit to

an injury arising out of and in the course of employment while still contesting

liability for all of the consequences and any disability claimed to result from such

injury. See McGowan v. Brandt Constr. Co., No. 09-1033, 2010 WL 2079704, at

*4 (Iowa Ct. App. May 26, 2010). Because NID has not asserted inconsistent

positions, there is no reason for this court to apply the doctrine of judicial

estoppel, and we decline Monahan’s request to do so.

We thus affirm the district court insofar as it held the agency committed

legal error in holding res judicata barred NID from denying causation and liability.
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We also affirm the district court insofar as it declined to judicially estop NID from

denying causation and liability.

B.

We next address issues related to the remedies the agency ordered. In

his second application for alternate medical care at issue in this appeal,

Monahan essentially sought enforcement of the appeal decision following

arbitration. Alternate medical care proceedings are summary proceedings. See

Iowa Admin. Code r. 876-4.1, 876-4.48(7); see also Iowa Code § 85.27(4);

McGowan, 2010 WL 2079704, at *4 (describing alternate medical care

proceedings as summary proceedings). The agency does not have the authority

in an alternate medical care proceeding under section 85.27(4) to enforce a prior

order. We agree with the district court that section 86.42 is the appropriate

method for seeking judicial enforcement of the agency’s orders and that the

agency erred by ordering compliance with the agency’s prior order in the context

of an alternate care proceeding. See Iowa Code § 86.42 (stating a party may

present the district court with an order or decision of the commissioner in order to

have it enforced if timely petition for judicial review has not been filed).

The agency also awarded Monahan fees and costs as a sanction against

NID. Monahan contends that sanctions are appropriate here regardless of

whether the agency erred in its application of res judicata. We disagree. The

agency’s primary basis for imposing sanctions was NID’s failure to comply with

the appeal decision and obtain a second medical opinion regarding Monahan’s

shoulder. As indicated above, that issue was not properly before the agency in
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this alternate medical care proceeding. Further, NID had a legitimate basis to

contest causation and liability. Thus, sanctions were not appropriate in this

context.

C.

Finally, we address what further proceedings are necessary given our

conclusion the agency erred in applying res judicata, erred in issuing an

enforcement order in an alternate medical care proceeding, and erred in

imposing sanctions. The district court ordered the case remanded for a hearing

on causation and liability. NID argues this was erroneous and that the

appropriate remedy is remand to the agency for dismissal of the alternate

medical care petition. Monahan agrees that dismissal is the appropriate remedy.

We reach the same conclusion. Alternate medical care is available only where

the employer does not contest the compensability of the injury—the issue of

compensability is totally removed from the alternate medical care process. See

R.R. Donnelly & Sons v. Barnett, 670 N.W.2d 190, 196-97 (Iowa 2003). Because

NID denied causation and liability, the application for alternate care should have

been dismissed. See Iowa Admin. Code r. 876-4.48(7) (“Application [for

alternate care] cannot be filed under this rule if the liability of the employer is at

issue. If an application is filed where the liability of the employer is an issue, the

application will be dismissed without prejudice.”).

IV.

For the foregoing reasons, we affirm in part and reverse in part the district

court’s ruling on NID’s petition for judicial review. This matter shall be remanded
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to the agency for dismissal of Monahan’s petition for alternate medical care.

NID’s motion to strike certain portions of the appendix not part of the record and

certain portions of Monahan’s reply brief referring to material outside the record

is denied. However, the court has not considered those parts of the appendix not

in the record, those arguments in Monahan’s main brief and reply brief relying on

material outside the record, and the new arguments raised for the first time in

Monahan’s reply brief. See Sun Valley Iowa Lake Ass’n v. Anderson, 551

N.W.2d 621, 642 (Iowa 1996); Jones v. Madison Cnty., 492 N.W.2d 690, 693-94

(Iowa 1992); Kliege v. Iowa Emp’t Security Comm’n, 206 N.W.2d 123, 126 (Iowa

1973).

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.