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, Appellants,
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, Appellees
[Copyrighted Material Omitted]
On review from the Iowa Court of Appeals. Appeal from the Iowa District Court for Polk County, Scott D. Rosenberg, Judge. Several professional and trade associations comprised of employers, attorneys, and insurance carriers seek further review after the district court and court of appeals affirmed the workers' compensation commissioner's ruling on a petition for declaratory order.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.
Joseph A. Happe, Stephen M. Morain, Elizabeth R. Meyer, and Sarah K. Franklin of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellants.
R. Saffin Parrish-Sams of Soldat & Parrish-Sams, PLC, West Des Moines, for appellees.
MANSFIELD, Justice. All justices concur except Hecht, J., who concurs in part and dissents in part, and Zager, J., who takes no part.
In this case we are asked to determine whether the workers' compensation commissioner correctly interpreted Iowa Code section 85.27(2) as overriding the work product immunity and therefore requiring the disclosure of surveillance video of any claimant seeking workers' compensation benefits before the claimant is deposed. For the reasons set forth herein, we conclude that section 85.27(2) is limited to health-care-related privileges such as the physician--patient privilege. Section 85.27(2), in other words, does not affect privileges and protections related to the litigation process such as the work product doctrine. Accordingly, we vacate the decision of the court of appeals, reverse the judgment of the district court, and remand this proceeding to the commissioner.
We decline to address a number of follow-on questions related to the work product doctrine in Iowa; our present holding is simply that section 85.27(2) does not affect the work product doctrine and does not give the commissioner authority to require the disclosure of anything that would otherwise be protected as work product.
I. Background Facts and Proceedings.
Under the Iowa Administrative Procedure Act (IAPA), " Any person may petition an agency for a declaratory order as to the applicability to specified circumstances of a statute, rule, or order within the primary jurisdiction of the agency." Iowa Code § 17A.9(1)( a ) (2011). The Iowa Workers' Compensation Commissioner has adopted a corresponding rule allowing any person to petition the commissioner for a declaratory order. Iowa Admin. Code r. 876-5.1. On April 20, 2012, pursuant to section 17A.9(1)( a ) and rule 876-5.1, 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.
Core Group asked the commissioner to answer ten related questions:
a) Is Iowa Code § 85.27(2) applicable to surveillance in workers' compensation claims?
b) Pursuant to Iowa Code § 85.27, are all privileges waived with respect to surveillance videos and photographs showing the injured worker?
c) Pursuant to Iowa Code § 85.27, are all privileges waived with respect to surveillance reports concerning the injured worker?
d) Pursuant to Iowa Code § 85.27, are Defendants required to produce surveillance videos, photos, and/or reports when asked for in appropriate discovery requests?
e) Pursuant to Iowa Code § 85.27, are Defendants permitted to withhold surveillance videos, photos, and/or reports until after deposing the injured worker?
f) Pursuant to Iowa Code § 85.27, when are Defendants required to produce surveillance videos, photos and/or reports?
g) Pursuant to Iowa Code § 85.27, if the information is requested in an interrogatory, is there any privilege against or valid objection to identifying the fact that surveillance was performed, the form of surveillance conducted, who performed it, when it was performed, and who has possession of it?
h) Pursuant to Iowa Code § 85.27, if the information is requested in an interrogatory, when must Defendants identify the fact surveillance was performed, the form of surveillance conducted, who performed it, when it was performed, and who has possession of it?
i) In the event that [questions " a" or " b" ] are answered " NO," if Defendants assert a privilege in response to a request for production of surveillance, are they also required to provide a privilege log under Iowa Rule of Civil Procedure 1.503(5) which identifies the fact surveillance was performed, the form of surveillance conducted, who performed it, when it was performed, and who has possession of it?
j) Pursuant to Iowa Code § 85.27, can an injured worker move to compel production of surveillance videos, photos and/or reports, and for appropriate sanctions,
under Iowa Rule of Civil Procedure 1.517?
Core Group further provided its proposed answers to these questions: Section 85.27(2) applies to surveillance materials; all privileges otherwise justifying withholding of surveillance materials when requested in discovery are waived; and employers or insurance carriers must disclose surveillance materials promptly when requested without first taking the claimant's deposition.
Desiring input from multiple organizations representing various interests in workers' compensation proceedings, the commissioner invited interested parties to intervene. See generally Iowa Code § 17A.9(4); Iowa Admin. Code r. 876-5.3. 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." See Iowa Code § 85.27(2). In response, the Institute as a threshold matter contended the commissioner should decline to rule on the petition for declaratory order because the issue would be better resolved in a contested case proceeding. The Institute urged that the declaratory order framework might leave out several necessary parties and that Core Group lacked standing to petition for a declaratory order. See Iowa Code § 17A.9(1)( b )(2) (" [A]n agency shall not issue a declaratory order that would substantially prejudice the rights of a person who would be a necessary party and who does not consent in writing to the determination of the matter by a declaratory order proceeding." ); Iowa Admin. Code r. 876-5.9(1)(2) (providing the commissioner " may refuse to issue a declaratory order" if " [t]he petition does not contain facts sufficient to demonstrate that the petitioner will be aggrieved or adversely affected" if an order is not issued). The Institute further 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." See Squealer Feeds v. Pickering, 530 N.W.2d 678, 689 (Iowa 1995) (internal quotation marks omitted), abrogated on other grounds by Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 690 N.W.2d 38, 47-48 (Iowa 2004). 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 ruling relied on a literal interpretation of the phrase " all information" in rejecting the Institute's assertion that section 85.27(2) refers only to the release of medical records and reports. Additionally, the commissioner acknowledged surveillance materials are used to test a claimant's veracity, but noted " the veracity [being tested] relates to the claimant's physical or mental condition" and is therefore included within section 85.27(2). Finally, the commissioner concluded predeposition disclosure of surveillance materials does not vitiate all impeachment value, stating, " An implausible answer as to why a claimant was shown in surveillance performing certain physical activities will still impeach a claimant's testimony."
The commissioner's ruling addressed questions (a) through (h) and (j) presented by Core Group and was based entirely on the commissioner's interpretation of Iowa Code section 85.27(2). The commissioner did not reach question (i), the only question that did not involve interpretation of section 85.27(2).
The Institute sought judicial review in the district court. See generally Iowa Code § 17A.19(10) (setting forth grounds on which a district court reviewing agency action may grant relief from that agency action). The district court affirmed the commissioner's ruling in its entirety.
The Institute appealed, and we transferred the case to the court of appeals. The court of appeals likewise affirmed the commissioner's declaratory order, with one member of the panel dissenting. The Institute sought, and we granted, further review.
II. Standard of Review.
We must resolve three questions: (1) whether section 17A.9 prohibited the commissioner from ruling on the petition for declaratory order, (2) whether the commissioner should have declined to issue a ruling for reasons set forth in the agency's rules, and (3) whether the commissioner's interpretation of section 85.27(2) is correct.
Iowa Code section 17A.9(1)( b )(2) states an agency " shall not issue a declaratory order that would substantially prejudice the rights of a person who would be a necessary party." Relying on this section, the Institute asserts the declaratory order proceedings left out necessary parties who would be substantially prejudiced, and therefore, the commissioner's decision to rule exceeded his authority. The parties agree that our review of this point is for correction of errors at law.
Section 17A.9(1)( b )(1) provides that an agency shall not issue a declaratory order when it " determines that issuance of the order under the circumstance would be contrary to a rule" adopted by the agency.
Iowa Code § 17A.9(1)( b )(1). The commissioner's rules list several circumstances when the commissioner " may refuse to issue a declaratory order." Iowa Admin. Code r. 876-5.9(1). We review the commissioner's exercise of this discretion for an abuse of discretion.
We also review the commissioner's actual interpretation of Iowa Code section 85.27(2) for errors at law. See Iowa Code § 17A.19(10)( c ). In recent years, we have repeatedly declined to give deference to the commissioner's interpretations of various provisions in chapter 85. See Staff Mgmt. v. Jimenez, 839 N.W.2d 640, 648 (Iowa 2013) (" In our prior cases, we held the legislature has not delegated any interpretive authority to the workers' compensation commissioner to interpret Iowa Code chapter 85." ); Waldinger Corp. v. Mettler, 817 N.W.2d 1, 7 (Iowa 2012) (holding that the commissioner was not clearly vested with interpretive authority for section 85.34(1)); Neal v. Annett Holdings, Inc., 814 N.W.2d 512, 519 (Iowa 2012) (concluding the legislature " did not vest the authority to interpret the phrase 'suitable work' for purposes of Iowa Code section 85.33(3) in the . . . commission[er]" ); Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 261 (Iowa 2012) (" [W]e will substitute our own interpretation of sections 85.36 and 85.61(3) if we find the commissioner's interpretation was erroneous." ); Swiss Colony, Inc. v. Deutmeyer, 789 N.W.2d 129, 133 (Iowa 2010) (" Using the refined standard in Renda [ v. Iowa Civil Rights Commission, 784 N.W.2d 8, 11 (Iowa 2010)], we are not convinced the legislature intended to vest the commissioner with the authority to interpret Iowa Code section 85.34(5)." ). Additionally, any terms of section 85.27(2) at issue here are " not uniquely within the subject matter expertise of the agency." Renda, 784 N.W.2d at 14.
A. The Commissioner's Decision to Rule on Core Group's Petition.
We first address the Institute's contention that the commissioner should not have issued a declaratory order for either of the two reasons set forth in Iowa Code section 17A.9. Iowa Code section 17A.9 establishes the procedure for agencies to issue declaratory orders. In a recent case, we held a party " fail[s] to exhaust administrative remedies by not seeking a declaratory order under section 17A.9(1)( a ) prior to petitioning for judicial review." Sierra Club Iowa Chapter v. Iowa Dep't of Transp., 832 N.W.2d 636, 643, 648 (Iowa 2013). We determined the legislature intended declaratory orders to serve as a practical alternative to judicial declaratory judgments. See id. at 646-47.
The original version of Iowa Code section 17A.9 was only two sentences long. See Sierra Club, 832 N.W.2d at 643. In 1998, the general assembly adopted an amended version of section 17A.9, based upon the 1981 amendments to the Model State Administrative Procedure Act. See id. The post-1998 version of section 17A.9 provides that an agency " shall" issue a declaratory order when petitioned to do so unless the agency determines that issuance of an order " would be contrary to a rule" or the order " would substantially prejudice the rights of a person who would be a necessary party and who does not consent in writing to the determination of the matter by a declaratory order proceeding." Iowa Code § 17A.9(1)( b )(1)-(2). The section goes on to require each agency to adopt rules " describ[ing] the classes of circumstances in which the agency will not issue a declaratory order." Id. § 17A.9(2).
Professor Arthur Bonfield, the reporter--draftsperson for the 1998 amendments, provided the following explanation regarding
the revised version of Iowa Code section 17A.9 and the situations when declaratory orders should not be issued:
This section repeals the declaratory order provision contained in current IAPA section 17A.9. Iowa law has not previously required that an agency issue a ruling, and has not contemplated indispensable parties in the declaratory order proceeding. Under this proposed provision, however, an agency is required to issue a declaratory order unless (i) such an order is contrary to a rule properly adopted by the agency in accordance with subsection (2), or (ii) such an order substantially prejudices the rights of any person who would be an indispensable party to the proceeding and who has not consented in writing to a determination of the matter by a declaratory order. In the first case, the rule adopted by the agency must delineate the circumstances in which a declaratory order will not be issued. In the second case, note that some indispensable parties might refuse to consent because, in a declaratory order proceeding, they lack many of the procedural rights to which they are entitled in a contested case proceeding.
Arthur Earl Bonfield, Amendments to Iowa Administrative Procedure Act, Report on Selected Provisions to Iowa State Bar Association and Iowa State Government 37 (1998) (hereafter Bonfield).
1. Whether a necessary party would be substantially prejudiced.
The Institute asserts numerous employers and insurers did not participate in the declaratory order proceedings but should be deemed necessary parties. See Iowa Code § 17A.9(1)( b )(2). However, the Institute has not identified any specific necessary parties that did not participate in the declaratory order proceedings and has not explained how the interests of any nonparticipants might differ from the broad range of interests represented by the Institute.
Ultimately, we conclude that even if some necessary parties did not participate in the declaratory order proceedings, the commissioner's decision to rule did not substantially prejudice them. According to its own petition for intervention, the Institute " collectively represent[s] the majority of workers' compensation Defendants in Iowa, and many of their legal advocates." In the same petition, though, the Institute stated that it did " not have authority to bind [its] members to the determination of the matters presented in this declaratory order proceeding." See Iowa Admin. Code r. 876-5.12 (indicating that a declaratory order " is binding [only] on the . . . commissioner, the petitioner, and any intervenors who consent to be bound" ).
This tightrope walk by the Institute demonstrates to us that the requirements of Iowa Code 17A.9(1)( b )(2) have been satisfied. Practically speaking, the commissioner's declaratory order--especially once reviewed by this court--can affect nonparties as a precedent. But of course that is true of any declaratory order, and any contested case proceeding as well. See Iowa Admin. Code r. 876-5.12 (" A declaratory order has the same status and binding
effect as a final order issued in a contested case proceeding." ). We think the prejudice must be more than just precedential effect, especially when a broad range of interests were represented in the declaratory order proceeding and the Institute cannot identify an interest that was not represented. The commissioner correctly concluded section 17A.9(1)( b )(2) did not preclude a ruling on Core Group's petition.
2. Agency rules.
Pursuant to the mandate in section 17A.9(2), the commissioner has adopted regulations guiding the decision whether to rule on declaratory order petitions. See Iowa Code § 17A.9(2); Iowa Admin. Code r. 876-5.9. The agency's rule provides the commissioner " shall not issue a declaratory order where prohibited by Iowa Code section 17A.9(1)." Iowa Admin. Code r. 876-5.9(1). Additionally, the regulations provide the commissioner " may refuse to issue a declaratory order on some or all questions" if one or more criteria are satisfied. Id. r. 876-5.9(1). Three of these criteria are pertinent here: subsections (2), (5), and (9). Id. r. 876-5.9(1)(2), (5), (9).
Subsection (2) allows the commissioner to refuse to rule if he or she concludes " [t]he petition does not contain facts sufficient to demonstrate that the petitioner will be aggrieved or adversely affected" if the commissioner does not issue an order. Id. r. 876-5.9(1)(2). Subsection (5) allows the commissioner to decline to rule if he or she determines " [t]he questions presented by the petition would more properly be resolved in a different type of proceeding or by another body with jurisdiction over the matter." Id. r. 876-5.9(1)(5). Subsection (9) authorizes the commissioner to refuse to rule if he or she determines a ruling " would necessarily determine the legal rights, duties, or responsibilities of other persons . . . whose position on the questions presented may fairly be presumed to be adverse to that of petitioner." Id. r. 876-5.9(1)(9).
The Institute asserts the " aggrieved or adversely affected" standard under subsection (2) is tantamount to a requirement that Core Group demonstrate standing. See id. r. 876-5.9(1)(2); see also Bonfield at 37-38 (noting that " an agency may include in its rules reasonable standing, ripeness, and other requirements for obtaining a declaratory order" ). We have often referred to similar language as a requirement that parties seeking judicial review under chapter 17A demonstrate standing. See City of Des Moines v. Pub. Emp't Relations Bd., 275 N.W.2d 753, 759 (Iowa 1979); see also Richards v. Iowa Dep't of Revenue & Fin., 454 N.W.2d 573, 575 (Iowa 1990); Iowa Power & Light Co. v. Iowa State Commerce Comm'n, 410 N.W.2d 236, 239 (Iowa 1987). We have not decided, however, what standing a party must have to initiate declaratory order proceedings.
It is noteworthy that " [s]ection 17A.9 contemplates rulings based on purely hypothetical facts, and renders them subject to review." Women Aware v. Reagen, 331 N.W.2d 88, 92 (Iowa 1983); accord City of Des Moines, 275 N.W.2d at 758; cf. Tindal v. Norman, 427 N.W.2d 871, 873 (Iowa 1988) (concluding the declaratory order procedure was inapplicable in a case presenting an actual controversy because " section 17A.9 contemplates rulings on purely hypothetical sets of facts, not on concrete challenges" ). This means that in many declaratory order proceedings, it is possible no party can demonstrate the type of concrete or imminent particularized injury we typically require for standing in contested cases.
The commissioner's rules are discretionary; they provide that the commissioner " may refuse to issue a declaratory order . . . for the following reasons." Iowa Admin. Code r. 876-5.9(1) (emphasis added). Whether or not Core Group would be aggrieved or adversely affected if its request for a declaratory order were denied, the commissioner could have concluded " the importance and nature of the questions [to be] decided" would justify dispensing with a strict standing requirement. City of Des Moines, 275 N.W.2d at 759 (concluding the mootness doctrine should not preclude judicial review of a declaratory order proceeding due to the important questions at issue). We conclude the commissioner did not abuse his discretion in deciding to rule on Core Group's petition notwithstanding rule 876-5.9(1)(2).
Next, the Institute contends the commissioner should have declined to rule because, under subsection (5), " [t]he questions presented by the petition would more properly be resolved in a different type of proceeding" --specifically, either a contested case proceeding or a rulemaking proceeding. See Iowa Admin. Code r. 876-5.9(1)(5). Relatedly, the Institute asserts the commissioner's ruling establishes an improper one-size-fits-all rule that does not allow for consideration of factual nuances in future contested cases. At the same time, the Institute also criticizes the commissioner's ruling for promulgating a sweeping rule, when declaratory orders are intended to provide only comparatively narrow advice for parties requesting them. See Arthur Earl Bonfield, The Iowa Administrative Procedure Act: Background, Construction, Applicability, Public Access to Agency Law, the Rulemaking Process, 60 Iowa L.Rev. 731, 813 (1975) (suggesting agencies " should require great specificity and precision" in petitions for declaratory orders so that agencies are not " bombarded with petitions seeking answers to . . . excessively general fact situations" ).
The legislature has granted agencies multifaceted authority. Agencies assert their authority in a quasi-judicial way when deciding contested cases; and beyond the realm of contested cases, agencies utilize the authority vested in them by the legislature when they promulgate rules and rule on petitions for declaratory orders. Compare Iowa Code § 17A.4, with id. § 17A.9, with id. § § 17A.15-.16. Agency action through the exercise of one of these manifestations of authority does not foreclose action through another. See Lenning v. Iowa Dep't of Transp., 368 N.W.2d 98, 102 (Iowa 1985) (concluding agencies can develop legal principles through contested cases and rulemaking procedures, without limiting themselves to one or the other); Young Plumbing & Heating Co. v. Iowa Natural Res. Council, 276 N.W.2d 377, 382 (Iowa 1979) (" Either means may be used so long as the statutory procedure is complied with." ). While the commissioner would have been within his discretion in declining to issue a declaratory
order here, he did not abuse that discretion in going forward. The issues that he reached were purely legal, as acknowledged by the Institute at oral argument. And the commissioner received input from diverse parties, as would have likely occurred in a rulemaking. Accordingly, the prospect that the commissioner could address the discoverability of surveillance materials in a contested case or in an agency rule does not foreclose his issuance of a declaratory order on the same subject.
Lastly, the Institute contends that the commissioner should not have ruled on Core Group's petition because it had the effect of " necessarily determin[ing] the legal rights, duties, or responsibilities of other persons . . . whose position on the questions presented may fairly be presumed to be adverse to that of petitioner." Iowa Admin. Code r. 876-5.9(9). We find no abuse of discretion under the circumstances presented here. As explained ...