BEFORE THE IOWA WORKERS’ COMPENSATION COMMISSIONER
DALE JACKSON, :
: File No. 5007638
ATLANTIC CARRIERS, INC. AND :
GREG NEWELL TRUCKING, INC., :
: A R B I T R A T I O N
: D E C I S I O N
GREAT WEST CASUALTY, :
Insurance Carrier, : HEAD NOTE NOS.: 1400.2; 1504; 1801;
Defendants. : 2001; 2002
STATEMENT OF THE CASE
This is a proceeding in arbitration that claimant, Dale Jackson, has brought against the non-insured employer, Greg Newell Trucking, Inc, and against the employer, Atlantic Carriers and its insurance carrier, Great West Casualty, to recover benefits under the Iowa Workers' Compensation Act as a result of an injury sustained on October 31, 2002.
This matter came on for hearing before the undersigned deputy workers' compensation commissioner at Des Moines, Iowa on May 5, 2004. The record consists of the testimony of claimant and of Greg Newell, Marlon Breon and Joseph Bateman, as well as of claimant’s exhibits 1 through 16, defendant’s Greg Newell Trucking's exhibits I through III, and Atlantic Carriers exhibits A through P. Briefs as submitted were reviewed.
The stipulations of the parties contained within the hearing report filed at the time of hearing are accepted and incorporated into this decision by reference to that report. Pursuant to those stipulations, claimant was single, and entitled to one exemption on the date of injury. Gross weekly earnings were $749.45, resulting in a weekly rate of compensation of $440.70. Initially, defendants Atlantic Carriers and Great West disputed that this was claimant's appropriate weekly rate. These defendants agreed that this rate was correct in their post hearing brief, however.
The issues to be resolved are:
Whether, on the date of injury, an employer-employee relationship existed as between claimant and either of the defendant-employers or both, including the question of whether claimant was an independent contractor;
The extent of claimant's entitlement to temporary disability benefits, if any;
Whether claimant is entitled to payment of certain medical benefits as costs incurred for reasonable and necessary treatment of his asserted work injury; and
Whether claimant is entitled to additional benefits as a penalty pursuant to section 86.13.
FINDINGS OF FACT AND ANALYSIS
The undersigned deputy workers' compensation commissioner, having heard the testimony and considered the evidence, finds:
The 49 year-old claimant was a long-term Firestone Tire employee. Initially, he began driving track for Greg Newell Trucking while on strike from Firestone. Claimant then asked that Greg Newell Trucking compensate claimant in a matter that did not interfere with claimant's continuing to receive strike pay from Firestone's union. Greg Newell Trucking, therefore, paid claimant directly and did not deduct taxes or other mandated contributions from claimant's remuneration. Greg Newell Trucking sent claimant a 1099 form at each tax year's end and not a W-2.
Both Greg Newell and Greg Newell Trucking’s accountant testified that they considered claimant an independent contractor and not an employee of Greg Newell Trucking. Claimant testified that he believed he was a contract labor employee of Greg Newell Trucking.
Greg Newell Trucking owns several tractors and trailers. It leases that equipment to long haul freight carriers and also supplies the carrier with a potential driver for the rig. The driver must "qualify" with the carrier, however. Qualification entails the driver showing compliance with sundry federal Department of Transportation regulations as well as meeting standards that the carrier otherwise imposes on its drivers.
In the year 2001, claimant had been driving a Greg Newell Trucking rig under contract with C & C Transport. Claimant had a dispute with C & C Transport dock personnel and advised Greg Newell that claimant would no longer drive for C & C Transport. Claimant also advised Greg Newell that claimant would be willing to drive Greg Newell trucking's equipment if Greg Newell could arrange for claimant to haul a different type of load with a carrier other than C & C Transport.
Greg Newell then agreed to enter into a contract to haul with Atlantic Carriers. (Exhibit G) Under the contract to haul, Greg Newell was characterized as an independent contractor leasing equipment to Atlantic Carriers. Only Greg Newell could drive the equipment for Atlantic Carriers unless Atlantic Carriers approved another driver for the rig. Greg Newell agreed to comply with all applicable laws and regulations while driving the equipment for Atlantic Carriers. Greg Newell could only use the leased equipment for transporting Atlantic Carriers’ loads. Greg Newell was to maintain the equipment in compliance with federal DOT regulations and was responsible for all repairs and replacements to the equipment. Greg Newell was required to be insured against liability for personal injury or property damage. Atlantic Carriers agreed to pay Greg Newell 90 percent of total revenues received for freight loads transported.
Greg Newell and claimant agreed that should Atlantic Carriers accept claimant as a driver, Greg Newell would pay claimant 30 percent of Greg Newell’s 90 percent remuneration for each load transported. Greg Newell directed claimant to fill out an application to qualify as a driver for Atlantic Carriers.
On October 6, 2001, claimant filled out an application for qualification as a driver for Atlantic Carriers. (Exhibit F) On the application claimant listed his last employer as Greg Newell Trucking/C & C Distribution.
On October 16, 2001, claimant completed a document entitled “Iowa Certificate of Rejection of Worker’s [sic] Compensation Insurance.” That document provides as follows:
The Worker’s [sic] Compensation Law of the State of Iowa allows for an individual employer, a partner, or self-employed person who is actually engaged in the employer's, partnership’s, or self-employed person's business on a substantially full-time basis to elect to bring himself or herself within the provisions of Section 85.1A of the Iowa Code.
I hereby elect NOT to be covered under the Worker’s [sic] Compensation Act of the State of Iowa.
(Ex. F, p. 5)
The Iowa division of workers' compensation does not produce and does not recognize this so-called certificate.
Claimant apparently began driving a Greg Newell rig under lease to Atlantic Carriers in October 2001. Both Greg Newell and Joseph Bateman, vice president of the Atlantic Carriers, testified that claimant maintained substantial control of when and whether he hauled loads that Atlantic Carriers had available for him to haul. That testimony is rejected as contrary to the terms of the contract to haul between Greg Newell and Atlantic Carriers.
In mid October 2002, the Greg Newell tractor under lease to Atlantic Carriers broke-down. Atlantic Carriers agreed to "rent" to a tractor to Greg Newell to use with his still operational trailer. Claimant was driving this Atlantic Carrier tractor with a Greg Newell trailer on October 31, 2002. Claimant had a single vehicle motor vehicle crash on that day when he fell asleep at the wheel in route to Omaha, Nebraska.
Emergency service personnel transported claimant to a local hospital. After reviewing a number of diagnostic radiographic studies that they had prescribed for claimant, treating physicians determine that claimant had sustained broken ribs in the crash. From his hospital release through February 18, 2003, claimant treated these fractures at the East Des Moines Clinic. Exhibit 8 contains claimant's medical expenses that causally relate to his motor vehicle accident.
In early December 2002, claimant again approached Greg Newell about driving a Greg Newell Trucking rig. Claimant filled out an application for employment or lease to C & C Distribution on December 17, 2002. Unfortunately, on December 20, 2002, after undergoing a drug test, as the Federal Motor Carrier Safety Regulations require, claimant tested positive for methamphetamine use. Additionally, in February 2003, claimant was founded the to be a habitual violator of traffic laws. As a result, he lost his commercial driver's license.
Nothing in the medical evidence suggests that claimant could not have returned to work as an over-the-road trucker in December 2002 had claimant not self disqualified from driving as a result of his methamphetamine use.
This record does not support a finding that claimant was an independent contractor. The tractor-trailer was the primary equipment claimant required to perform the tasks for which he was remunerated. Greg Newell owned that piece of equipment and compensated claimant for driving it. Greg Newell was responsible for maintaining the equipment. He paid for repairs and fuel. Claimant paid only his personal expenses while on the road. Likewise, claimant did not operate the tractor-trailer under his own direction. He took loads as Atlantic Carriers dispatched them to him. In other words, claimant performed the work assigned to him under delivery schedules set for him. These are characteristics of an employee performing duties that ultimately profit his employer and not characteristics of an independent business operator performing duties wholly for his own profit.
It is further expressly found that Greg Newell Trucking and Atlantic Carriers jointly employed claimant. Both these entities exercised control over claimant's work activities. Both had secured claimant’s labors in order to increase their own profits. In other words, both intended that claimant work for remuneration in their business enterprises and at their direction in order to further the ends of those enterprises for their economic benefit. Hence, despite any maneuvering to disguise that intent, both clearly intended that claimant function as an employee and not as an independent contractor.
(In their brief, defendants Atlantic Carriers and Great West Casualty have argued that the case of Eagen v. K & A Truck Lines, Inc., 119 N.W.2d 805 (Iowa 1963) conclusively establishes that an individual operating the equipment of a leased owner operator is an employee of that owner operator and not of the leasing motor carrier. Eagan cannot be read so broadly. The Eagan Court expressly stated that its holding was limited to a finding that substantial evidence supported the commissioner’s finding such in Eagan. Indeed, the Eagan Court expressly stated that its decision should not be read to infer that a finding that the equipment operator was an employee of the motor carrier would be an error of law.)
All parties to this matter, including claimant, attempted to create confusion as to claimant's actual employment status when each perceived an advantage from doing so. Indeed, all party succeeded in creating sufficient confusion that a reasonable basis for denying claimant's claim existed for both employers. Under that circumstance, payment of additional benefits as a penalty is not warranted.
CONCLUSIONS OF LAW
First considered are the issues surrounding claimant's employment status as regards both asserted employers.
The party who would suffer loss if an issue were not established ordinarily has the burden of proving that issue by a preponderance of the evidence. Iowa R. App. P. 6.14(6)(e)
Iowa Code section 85.61(11) provides in part:
"Worker" or "employee" means a person who has entered into the employment of, or works under contract of service, express or implied, or apprenticeship, for an employer; . . . .
Factors to be considered in determining whether an employer-employee relationship exists are: (1) the right of selection, or to employ at will; (2) responsibility for payment of wages by the employer; (3) the right to discharge or terminate the relationship; (4) the right to control the work; and (5) identity of the employer as the authority in charge of the work or for whose benefit it is performed. The overriding issue is the intention of the parties. Where both parties by agreement state they intend to form an independent contractor relationship, their stated intent is ignored if the agreement exists to avoid the workers' compensation laws, however. Likewise, the test of control is not the actual exercise of the power of control over the details and methods to be followed in the performance of the work, but the right to exercise such control. Also, the general belief or custom of the community that employees perform a particular kind of work can be considered in determining whether an employer-employee relationship exists. Caterpillar Tractor Co. v. Shook, 313 N.W.2d 503 (Iowa 1981); McClure v. Union County, 188 N.W.2d 283 (Iowa 1971); Nelson v. Cities Serv. Oil Co., 259 Iowa 1209, 146 N.W.2d 261 (1966); Lembke v. Fritz, 223 Iowa 261, 272 N.W. 300 (1937); Funk v. Bekins Van Lines Co., I Iowa Industrial Commissioner Report 82 (App. 1980).
Claimant must prove, by a preponderance of the evidence, that claimant was an employee within the meaning of the law. Where claimant establishes a prima facie case, defendants then have the burden of going forward with the evidence that rebuts claimant's case. The employer must establish, by a preponderance of the evidence, any pleaded affirmative defense that claimant is an independent contractor. Nelson v. Cities Serv. Oil Co., 259 Iowa 1209, 146 N.W.2d 261 (1967).
An independent contractor is defined as one who carries on an independent business, and contracts to do a piece of work for another by a method the contractor chooses. The commonly recognized tests used to demonstrate that one has the status of an independent contractor are: (1) the existence of a contract under which the individual performs a certain piece or kind of work at a fixed rate; (2) the independent nature of the individual's business or its recognition as a distinct calling; (3) the individual's ability to employee assistants and supervise their activities; (4) the individual’s obligation to furnish the necessary tools, supplies, and materials; (5) the individual's right to control the progress of the work, except as to final results; (6) whether the individual is engaged to complete the particular job or is considered and at will employee; whether the individual is paid by time or by job; and, (8) whether the work is part of the regular business of the employer. See Mallinger v. Webster City Oil Co., 2 11 Iowa 847, 851; 234 N.W. 254 (1931)
It is concluded that claimant has established that as of his October 31, 2002 injury, claimant was a joint employee of Greg Newell Trucking and Atlantic Carriers.
It is further concluded that defendant Greg Newell Trucking has not established the affirmative defense that claimant was an independent contractor and not an employee of Greg Newell Trucking.
As claimant had a dual employment relationship with both employers, both employers and Great West Casualty are jointly and severally liable for payment of weekly indemnity and medical benefits due claimant.
The extent of claimant's entitlement to temporary total disability benefits is determined.
When an injured worker has been unable to work during a period of recuperation from an injury that did not produce permanent disability, the worker is entitled to temporary total disability benefits during the time the worker could not work. Those benefits are payable until the employee has returned to work, or is medically capable of returning to work substantially similar to the work performed at the time of injury. Section 85.33 (1)
It is concluded that claimant has established entitlement to payment of temporary total disability benefits from October 31, 2002 through December 16, 2002.
Whether claimant is entitled to payment of medical costs related to his injury is determined.
The employer shall furnish reasonable surgical, medical, dental, osteopathic, chiropractic, podiatric, physical rehabilitation, nursing, ambulance and hospital services and supplies for all conditions compensable under the workers' compensation law. The employer shall also allow reasonable and necessary transportation expenses incurred for those services. The employer has the right to choose the provider of care, except where the employer has denied liability for the injury. Section 85.27. Holbert v. Townsend Engineering Co., Thirty-second Biennial Report of the Industrial Commissioner 78 (Review-reopen 1975).
Evidence in administrative proceedings is governed by section 17A.14. The agency’s experience, technical competence, and specialized knowledge may be utilized in the evaluation of evidence. The rules of evidence followed in the courts are not controlling. Findings are to be based upon the kind of evidence on which reasonably prudent persons customarily rely in the conduct of serious affairs. Health care is a serious affair.
Prudent persons customarily rely upon their physician’s recommendation for medical care without expressly asking the physician if that care is reasonable. Proof of reasonableness and necessity of the treatment can be based on the injured person’s testimony. Sister M. Benedict v. St. Mary’s Corp., 255 Iowa 847, 124 N.W.2d 548 (1963)
It is said that “actions speak louder than words.” When a licensed physician prescribes and actually provides a course of treatment, doing so manifests the physician’s opinion that the treatment being provided is reasonable. A physician practices medicine under standards of professional competence and ethics. Knowingly providing unreasonable care would likely violate those standards. Actually providing care is a nonverbal manifestation that the physician considers the care actually provided to be reasonable. A verbal expression of that professional opinion is not legally mandated in a workers' compensation proceeding to support a finding that the care provided was reasonable. The success, or lack thereof, of the care provided is evidence that can be considered when deciding the issue of reasonableness of the care. A treating physician’s conduct in actually providing care is a manifestation of the physician’s opinion that the care provided is reasonable and creates an inference that can support a finding of reasonableness. Jones v. United Gypsum, File 1254118 (App., May 16, 2002); Kleinman v. BMS Contract Services, Ltd., No. 1019099 (App. September 8, 1995); McClellon v. Iowa Southern Utilities, File No. 894090 (App. January 31, 1992). This inference also applies to the reasonableness of the fees actually charged for that treatment.
It is concluded that claimant has established entitlement to payment of his medical expenses set forth in exhibit 8 as costs incurred for medical treatment that was reasonable and necessary to diagnose and treat the physical injuries he incurred in his work-related October 31, 2002 motor vehicle crash.
Finally, whether claimant is entitled to payment of additional weekly indemnity benefits as a penalty pursuant to section 86.13 is determined.
In Christensen v. Snap-on Tools Corp., 554 N.W.2d 254 (Iowa 1996), and Robbennolt v. Snap-on Tools Corp., 555 N.W.2d 229 (Iowa 1996), the supreme court said:
Based on the plain language of section 86.13, we hold an employee is entitled to penalty benefits if there has been a delay in payment unless the employer proves a reasonable cause or excuse. A reasonable cause or excuse exists if either (1) the delay was necessary for the insurer to investigate the claim or (2) the employer had a reasonable basis to contest the employee’s entitlement to benefits. A “reasonable basis” for denial of the claim exists if the claim is “fairly debatable.”
Christensen, 554 N.W.2d at 260.
The supreme court has stated:
(1) If the employer has a reason for the delay and conveys that reason to the employee contemporaneously with the beginning of the delay, no penalty will be imposed if the reason is of such character that a reasonable fact finder could conclude that it is a "reasonable or probable cause or excuse" under Iowa Code section 86.13. In that case, we will defer to the decision of the commissioner. See Christensen, 554 N.W.2d at 260 (substantial evidence found to support commissioner’s finding of legitimate reason for delay pending receipt of medical report); Robbennolt, 555 N.W.2d at 236.
(2) If no reason is given for the delay or if the “reason” is not one that a reasonable fact finder could accept, we will hold that no such cause or excuse exists and remand to the commissioner for the sole purpose of assessing penalties under section 86.13. See Christensen, 554 N.W.2d at 261.
(3) Reasonable causes or excuses include (a) a delay for the employer to investigate the claim, Christensen, 554 N.W.2d at 260; Kiesecker v. Webster City Custom Meats, Inc., 528 N.W.2d at 109, 111 (Iowa 1995); or (b) the employer had a reasonable basis to contest the claimthe “fairly debatable” basis for delay. See Christensen, 554 N.W.2d at 260 (holding two-month delay to obtain employer’s own medical report reasonable under the circumstances).
(4) For the purpose of applying section 86.13, the benefits that are underpaid as well as late-paid benefits are subject to penalties, unless the employer establishes reasonable and probable cause or excuse. Robbennolt, 555 N.W.2d at 237 (underpayment resulting from application of wrong wage base; in absence of excuse, commissioner required to apply penalty).
If we were to construe [section 86.13] to permit the avoidance of penalty if any amount of compensation benefits are paid, the purpose of the penalty statute would be frustrated. For these reasons, we conclude section 86.13 is applicable when payment of compensation is not timely . . . or when the full amount of compensation is not paid.
(5) For purposes of determining whether there has been a delay, payments are “made” when (a) the check addressed to a claimant is mailed (Robbennolt, 555 N.W.2d at 236; Kiesecker, 528 N.W.2d at 112), or (b) the check is delivered personally to the claimant by the employer or its workers’ compensation insurer. Robbennolt, 555 N.W.2d at 235. In the present case, the insurer sent the checks to the employer, not to the claimant. The employer then delivered the checks to the claimant. In this case, payment is not “made” for penalty purposes until the claimant actually receives the check. See Id. at 235.
(6) In determining the amount of penalty, the commissioner is to consider factors such as the length of the delay, the number of delays, the information available to the employer regarding the employee’s injury and wages, and the employer’s past record of penalties. Robbennolt, 555 N.W.2d at 238.
(7) An employer’s bare assertion that a claim is “fairly debatable” does not make it so. A fair reading of Christensen and Robbennolt, makes it clear that the employer must assert facts upon which the commissioner could reasonably find that the claim was “fairly debatable.” See Christensen, 554 N.W.2d at 260.
Meyers v. Holiday Express Corp., 557 N.W.2d 502 (Iowa 1996).
Weekly compensation payments are due at the end of the compensation week. Robbennolt, 555 N.W.2d 229, 235.
Penalty is not imposed for delayed interest payments. Davidson v. Bruce, 593 N.W.2d 833, 840 (Iowa App. 1999).
When an employee’s claim for benefits is fairly debatable based on a good faith dispute over the employee’s factual or legal entitlement to benefits, an award of penalty benefits is not appropriate under the statute. Whether the issue was fairly debatable turns on whether there was a factual dispute that, if resolved in favor of the employer, would have supported the employer's denial of compensability Gilbert v. USF Holland, Inc., 637 N.W.2d 194 (Iowa 2001).
It is concluded that claimant has not established that claimant is entitled to payment of additional benefits as a penalty because defendants unreasonably denied benefits to which claimant's entitlement was not fairly debatable.
THEREFORE, IT IS ORDERED:
That defendant Greg Newell Trucking and defendants Atlantic Carriers, Inc. and Great West Casualty, jointly and severally, pay claimant temporary total disability benefits from October 31, 2002 through December 16, 2002 at the weekly compensation rate of four hundred forty and 70/100 dollars ($440.70).
That defendant Greg Newell Trucking and defendants Atlantic Carriers, Inc. and Great West Casualty, jointly and severally, pay accrued amounts in a lump sum and pay interest as section 85.30 provides.
That defendant Greg Newell Trucking and defendants Atlantic Carriers, Inc. and Great West Casualty, jointly and severally, pay medical costs that this claimant incurred in the total amount of fourteen thousand four hundred twenty-six and 71/100 dollars ($14,426.71), in the amounts and to the individual providers as follows: City of Wabasso Ambulance, three hundred ninety-eight and 75/100 dollars ($398.75); West Central Radiology, four hundred ninety-four and 36/100 dollars ($494.36); Redwood Area Hospital, seven thousand one hundred sixty-six and 49/100 dollars ($7,166.49); and North Medical Transport, three thousand four hundred four and 70/100 dollars ($3,404.70); Affiliated Community Medical Center, one thousand one hundred sixty-two and 83/100 dollars ($1,162.83); East Des Moines Clinic, four hundred sixty and 00/100 dollars ($460.00); and Walgreens, thirty‑four and 58/100 dollars ($34.58). That defendant Greg Newell Trucking and defendants Atlantic Carriers, Inc. and Great West Casualty pay costs of this proceeding as the applicable rule and statutes provide. That defendant Greg Newell Trucking and defendants Atlantic Carriers, Inc. and Great West Casualty file subsequent reports of injury as this division requires.
Signed and filed this _____22nd______ day of June, 2004.
HELENJEAN M. WALLESER
Mr. Robert E. McKinney
Attorney at Law
P.O. Box 609
Waukee, IA 50263-0609
Mr. Stephen W. Spencer
Attorney at Law
P.O. Box 9130
Des Moines, IA 50306-9130
Mr. Roger J. Hudson
Attorney at Law
604 Locust St., Ste. 1116
Des Moines, IA 50309-3712