State News : Iowa

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Iowa Insurance Institute, Iowa Defense Counsel Association, Iowa Self-Insurers’ Association, Property Casualty Insurers Association Of America, National Association Of Mutual Insurance Companies, And Iowa Association Of Business And Industry, v. Core Group Of The Iowa Association For Justice; Christopher J. Godfrey, Workers’ Compensation Commissioner, Division Of Workers’ Compensation; And The Iowa Department Of Workforce Development, Supreme Court of Iowa, No. 13-1627

On April 20, 2012, the Workers’ Compensation Core Group of the Iowa Association for Justice (Core Group) filed a petition for declaratory order with the commissioner. The petition sought a determination whether Iowa Code section 85.27(2) mandates that employers or insurance carriers defending workers’ compensation claims must immediately provide copies of surveillance videos, photographs, and reports concerning the claimant’s physical or mental condition upon receiving a properly phrased discovery request. Four professional and trade associations, including the Iowa Insurance Institute, intervened.

On June 26, the commissioner held a hearing on the petition for declaratory order. At the hearing, Core Group asserted section 85.27(2) applies to surveillance materials because surveillance footage, photographs, and reports are “information . . . concerning the employee’s physical or mental condition relative to the claim.” Iowa Code § 85.27(2). The Institute, on the other hand, asserted that if the commissioner ruled on the petition, he should conclude section 85.27(2) does not mandate that employers disclose surveillance materials before deposing a claimant.

On October 23, the commissioner ruled on the petition for declaratory order. The commissioner concluded section 85.27(2) applies to surveillance materials and waives the work product privilege except to the extent that requested materials contain “mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.” He further concluded employers or insurers must produce surveillance materials upon request from a claimant and may not withhold the materials until after deposing the claimant.

The Institute sought judicial review in the district court. The district court affirmed the commissioner’s ruling in its entirety. The Institute appealed. The court of appeals likewise affirmed the commissioner’s declaratory order. The Institute sought, and the Supreme Court of Iowa granted, further review.

The Supreme Court concludes the commissioner erroneously interpreted Iowa Code section 85.27(2) as requiring the production of postclaim surveillance to the employee before the employee’s deposition.

In its decision, the Supreme Court first concludes that surveillance constitutes work product under the Iowa Rules of Civil Procedure because surveillance materials are documents or tangible things, prepared in anticipation of litigation, by or for another party or that party’s representative. Iowa R. Civ. P. 1.503(3). The Court therefore agrees with the prevailing view that surveillance materials are protected work product that is only “discoverable upon a showing of substantial need and undue hardship.” The Court also notes that the consensus seems to be that surveillance loses the status of protected work product once a determination is made that the surveillance will be used at trial.

In interpreting section 85.27(2), the Court’s analysis centers on the phrase “all information . . . concerning the employee’s physical or mental condition relative to the claim.” Iowa Code § 85.27(2). In the view of Core Group, it applies to any information that may bear upon the employee’s physical or mental condition, including otherwise protected work product. According to the Institute, it applies only to information that addresses the employee’s physical or mental condition directly, as a health care provider record would, rather than inferentially.

The court used the tools of statutory construction to interpret the ambiguous phrase. The court first focuses on the wording of section 85.27(2) itself. It notes that Core Group justifiably attaches significance to the words “all information.” Iowa Code § 85.27(2). However, courts have long recognized that statutes should not be interpreted in a manner that leads to absurd results. Applying this principle in the case at hand reveals a problem with Core Group’s reading of the statute. If “all information” means all information and not merely, in context, all health care provider information, Core Group’s interpretation would eliminate all privileges and protections—e.g., work product, attorney work product, attorney– client, priest–penitent—to the extent the item refers to the employee’s physical condition. The Court believes that is an absurd result that could not have been intended by the legislature.

The Court also notes that most jurisdictions to have considered this issue allow the responding employer to withhold production of surveillance until after the employee’s deposition—while requiring the surveillance to be produced before the hearing. The Court concludes that allowing an employer or an employer’s attorney to withhold surveillance until after the employee’s deposition does not undermine the policies behind workers’ compensation including the high value placed on getting benefits in the hands of injured workers.

The Court concludes that reasonable arguments can be made for and against the commissioner’s interpretation of Iowa Code section 85.27(2). In the end, however, the Court is persuaded that the section is directed at health care provider records and not at any information that might have any bearing on an employee’s physical or mental condition, including work product surveillance. The Court specifically notes that Section 85.27(2) does not refer to attorneys, does not mention discovery barriers other than “privileges” (which the work product immunity is not), and falls within a code provision that is otherwise limited to health care services. Most importantly, the commissioner’s interpretation has no limiting principle. If all means all, then even an attorney–client privileged email from a claimant to her attorney discussing her impairment would have to be produced—an outcome that even the commissioner is unwilling to countenance. Hence, the Court finds the declaratory order erroneously determined that Iowa Code section 85.27(2) applies to surveillance.

Call Mark Bosscher or Lee Hook with any questions @ 515-243-2100.  We’d be happy to help, whether it be a quick or a complex issue!