H.D. Supply Mgmt. v. Smith

1

H.D. SUPPLY MANAGEMENT, INC. and NEW HAMPSHIRE INSURANCE COMPANY, Petitioners-Appellees, v. KENNETH E. SMITH, Respondent-Appellant.

No. 23-1656

Court of Appeals of Iowa

September 18, 2024

Appeal from the Iowa District Court for Polk County, Scott J Beattie, Judge.

An injured employee appeals an interlocutory district court order staying enforcement of a workers' compensation award pending judicial review under Iowa Code section 17A.19(5) (2023) and refusing to enter judgment on the award under section 86.42. APPEAL DISMISSED.

Nate Willems of Rush &Nicholson, P.L.C., Cedar Rapids, for appellant.

Kathryn L. Hartnett of Prentiss Grant, LLC, Omaha, Nebraska for appellees.

Considered by Schumacher, P.J., and Ahlers and Langholz, JJ.

LANGHOLZ, JUDGE

In this interlocutory appeal, the parties ask us to decide whether the district court correctly granted a stay of a workers' compensation award pending completion of a judicial-review proceeding that is now complete. And they want to know if the court properly refused to enter judgment on that award, which has now been reversed and remanded to the workers' compensation commissioner. But because the judicial-review proceeding has ended and the workers' compensation award has been reversed and remanded, this interlocutory appeal is moot. Any ruling would not affect either party. And this appeal does not satisfy the publicimportance exception to mootness because deciding it would provide little additional guidance on the law governing stays and enforcement of workers' compensation awards during judicial-review proceedings. So we abide by our duty to refrain from answering moot questions and dismiss this appeal.

I.

In March 2023, the workers' compensation commissioner awarded Kenneth Smith benefits for an injury while working at H.D. Supply Management, Inc. The commissioner found that Smith suffered an unscheduled work-related injury to his shoulder and arm under Iowa Code section 85.34(2)(v) (2023) and that he was permanently and totally disabled. And so, the commissioner awarded Smith benefits of $487.87 to be paid weekly, beginning from the date of the injury. It also awarded penalty benefits of $19,000 because H.D. Supply and its insurer, New Hampshire Insurance Company, unreasonably denied Smith's claim for benefits.^[1] And it ordered H.D. Supply to reimburse Smith for his medical expenses and mileage, the cost of the independent medical evaluation, and the costs of the arbitration proceeding and hearing transcript.

H.D. Supply petitioned for judicial review of the commissioner's award. Its two-page petition contained little explanation of its grounds for review aside from conclusory claims that the award was not supported by substantial evidence; was based on an irrational, illogical or wholly unjustifiable interpretation and application of law; and was otherwise unreasonable, arbitrary, capricious, or an abuse of discretion. See Iowa Code § 17A.19(10)(f), (l), (m), (n).

Thirty-three days later, Smith applied for entry of judgment on the award under Iowa Code section 86.42.^[2] He argued that he was entitled to judgment because H.D. Supply did not post a bond within thirty days of filing its petition for judicial review to stay the award under Iowa Code section 86.26(2). See Iowa Code § 86.42 (authorizing judgment on presentment of "file-stamped copy of an order or decision of the commissioner . . . which has not had execution or enforcement stayed as provided in section 17A.19, subsection 5, or section 86.26, subsection 2"); id. § 86.26(2) (staying "execution or enforcement of a decision or order of the workers' compensation commissioner if the party seeking judicial review posts a bond securing any compensation awarded pursuant to the decision or order with the district court within thirty days of filing the petition"). Smith calculated the amount of weekly total disability benefits and interest that H.D. Supply still owed under the award as of the date of his application for entry of judgment. He also added in the penalty benefits and medical and litigation expenses he was awarded. He thus requested entry of judgment against H.D. Supply "in the total amount of $77,942.08 with interest continuing to accrue on unpaid permanent total disability benefits at 2.15%."

About three hours later, H.D. Supply moved to stay enforcement of the award under Iowa Code sections 86.26(2) or 17A.19(5). H.D. Supply conceded that it was three days late in posting bond under section 86.26(2), but asked for permission to do so "[i]n the interest of: judicial economy, having this case be heard by this Court on the merits, justice, and equity." Alternatively, H.D. Supply argued that a stay was appropriate under section 17A.19(5) because it was likely to prevail on the merits, it would suffer irreparable injury if Smith could not repay the award if the award is reversed after being paid, Smith would not be substantially harmed by delayed payment, and there is significant public interest in deciding the proper statutory interpretation.

The district court eventually heard argument on the dueling requests. But it did not receive any testimony or other evidence. Nor did it have the administrative record before the workers' compensation commissioner-that record was not filed by the commissioner until several months after the court ruled. See generally id. § 17A.19(6) (requiring the agency to "transmit to the reviewing court the original or a certified copy of the entire record of any contested case which may be the subject of the petition" for judicial review).

In September 2023, the court granted H.D Supply's motion to stay the award during the judicial-review proceeding under section 17A.19(5) and denied Smith's application to enter judgment on the award. The court reasoned:

In this case, there is a likelihood that the Petitioner will prevail on the appeal. Furthermore, the Petitioner would suffer irreparable harm if the judgment were to be entered at this juncture because they would likely be unable to recuperate the award payment if they prevailed on appeal. The Respondent will also not be prejudiced in a stay because he would not have received judgment if the bond was posted and the Petitioners appear solvent and capable of paying an award at the appeal's conclusion. As such, the Court concludes that a stay under Iowa Code section 17A.19(5) is supported.

Smith then sought interlocutory review of the district court order. The supreme court granted his application and transferred the case to our court. In his appeal, Smith makes two main arguments that the district court abused its discretion in granting the stay. First, he argues that the court made its findings- especially on irreparable harm-without having any evidence on which to base them and thus improperly "listened to a mere allegation from an employer and adopted it." Second, he argues the court did not follow the governing precedent on considering stays pending judicial review of workers' compensation awards: Grinnell College v. Osborn, 751 N.W.2d 396 (Iowa 2008).

In most interlocutory appeals, proceedings in the district court would have stopped while this appellate process plays out. See Iowa R. App. P. 6.104(2) ("An order granting an appeal under this rule will stay further proceedings in the court below ...."). But here, the supreme court ordered that the district court could continue its "proceedings related to the petition for judicial review" so long as it did "not rule on any issues directly related to its" order granting the stay and denying entry of judgment. And so, the district court proceedings on the merits of H.D. Supply's judicial-review petition continued on.

In April 2024, the district court ruled on the merits of H.D. Supply's petition. The court first held that Smith's arm injury and shoulder injury were both work-related-rejecting H.D. Supply's argument that the arm was "not injured due to the work injury, but as an incidental result of [Smith's] shoulder surgery." But the court still reversed and remanded the award back to the workers' compensation commissioner because the commissioner had awarded compensation for an unscheduled injury rather than as separate scheduled injuries. The court reasoned that Smith's injuries "are parallel to those in" a supreme court case decided a few weeks before its ruling, which held that arm and shoulder injuries should be compensated separately as scheduled injuries rather than as an unscheduled injury. See Bridgestone Americas, Inc. v. Anderson, 4 N.W.3d 676, 683 (Iowa 2024). So the court concluded that "[t]he commissioner should consider Smith's injuries consistent with the Iowa Supreme Court's Bridgestone decision."

Neither party appealed that district court order. And according to Smith's statement to us, which H.D. Supply does not dispute, as of August 2024, his case was still pending before the commissioner after the parties submitted additional briefing about "Smith's entitlement to permanent benefits consistent with Bridgestone."

We asked the parties for supplemental briefing to address the effect on this interlocutory appeal of the district court's ruling reversing and remanding the award. Both parties urged that it has no effect and this appeal is not moot. Smith also contends that even if it is moot, we should decide it under the public- importance exception to mootness because whether injured workers should be paid "benefits which are not contested or disputed" during judicial-review proceedings "is a matter of public importance" and "likely to recur unless this Court requires a workers' compensation carrier to pay the injured workers the benefits which they have not contested on appeal."

II.

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