Recent Changes to Iowa Workers’ Compensation Law – March 12, 2019

by Gary G. Mattson

During its 2017 Session, the Iowa Legislature dramatically changed portions of Iowa Workers’ Compensation law contained in Iowa Code Chapters 85 and 86. Not less than 27 changes were made. None of the changes benefit injured workers. The Legislature submitted no legislative history to explain the basis or need for the changes. The move to change the law was partisan. Not a single Democrat in either the House or Senate supported or voted in favor of the changes it made. According to the Legislative Service Bureau, it was not anticipated that the changes would lower workers’ compensation insurance premiums.

For historical context, Iowa’s workers’ compensation law was enacted in 1913. See Baker v. Bridgestone/Firestone, 872 N.W.2d 672, 676 (Iowa 2015). The system has been described as one: “…to supply security to injured workers…”. Id. at 678. The Iowa Supreme Court has said on numerous occasions: “We liberally construe workers’ compensation statutes in Claimant’s favor to effectuate the statute’s humanitarian and beneficent purpose.” Id.

This analysis will focus on four of the changes to Iowa’s workers’ compensation that I believe are most impactful to injured Iowa workers.

Shoulder Injuries

Under the prior law, shoulder injuries were considered “unscheduled”, body as a whole injuries. See Prewitt v. Firestone Tire & Rubber Co., 564 N.W.2d 852 (Iowa 1997). The significance being that when a worker suffered a permanent disability to the shoulder, the disability was compensated “industrially”, meaning that the compensation was paid on a percentage of 500 weeks in relation to the injured worker’s loss of earning capacity. See Iowa Code Section 85.34(2)(u).

Injuries to the shoulder area or shoulder joint are not uncommon and have been a frequent source of litigation in the workers’ compensation system.

The new Iowa Code Chapter 85.34(2)(n) provides that a shoulder will be paid on the basis of 400 weeks, payable to the extent the loss or percentage of permanent impairment as determined by the use of the AMA guides to the evaluation of permanent impairment. (See Iowa Code Chapter 85.34(2)). In short, shoulder injuries have now become scheduled member injuries that are compensated based on the functional loss rather than the loss of earning capacity. The practical effect of this change can be catastrophic for workers with serious shoulder injuries. The net effect can be between an 80% to 90% reduction in the value of these claims for permanent injury.

However, the term shoulder was left undefined in the Iowa Code. The sole Agency decision to date found that if the injury is conceded to be to the shoulder, the upper extremity value under the AMA guides would be applied to the 400 weeks schedule. In other words, 5% of the upper extremity translates to 5% of 400 weeks, 20 weeks of benefits.

The litigation necessary to sort out what, if any, shoulder injuries can be deemed unscheduled will likely take years to move through the system.

Evidence Concerning Scheduled Member Injury Cases

A new provision, Iowa Code Section 85.34(2)(w) complicates matters further. Under the prior law, scheduled member injuries, (fingers, toes, arms, legs, et cetera), although subject to a schedule, provided that a determination of functional disability was not limited to functional impairment ratings. See Miller v. Lauridsen Foods, Inc., 525 N.W.2d 417, 421 (Iowa 1994).

In other words, witness testimony and other evidence was considered in evaluating an injured worker’s true functional disability.

The new Section 85.34(2)(w) provides in part:

In all cases of permanent partial disability described in paragraphs “a” through “t”, or paragraph “u” when determining functional disability…, the extent of loss or percentage of permanent impairment shall be determined solely by utilizing the guides to the evaluation of permanent impairment, published by the American Medical Association… . Lay testimony or agency expertise shall not be utilized in determining loss or percentage of permanent impairment… (emphasis added).

This suggests that the only evidence that can be presented is the impairment rating of a physician. It is hard to imagine a workers’ compensation hearing going forward with no testimony from the injured worker concerning disability, but that is what this Code provision seems to say. The new Section is in conflict with Iowa Code Chapter 17A.14, which sets forth rules concerning evidence in administrative proceedings, including workers’ compensation, and provides: “A finding shall be based upon the kind of evidence on which reasonably prudent persons are accustomed to rely for the conduct of their serious affairs, and may be based upon such evidence even if it would be inadmissible in a jury trial.” At this point it is unknown how the Agency will handle objections to injured workers testifying as to their own disability.

The Return-to-Work Provision

The change made in Iowa Code Chapter 85.34(2)(u) is what I call the return-to-work provision. It relates to body as a whole injuries. Under the prior law, if a worker sustained a body as a whole injury and returned to the same or similar employment, their claim was compensated on an industrial basis, calculating the injured worker’s loss of earning capacity as a result of the injury. The new Iowa Code Chapter 85.34(2)(u) changes this: “If an employee…returns to work or is offered work for which the employer receives or would receive the same or greater salary, wages, or earnings, than the employee received at the time of the injury, the employee shall be compensated based only upon the employee’s functional impairment resulting from the injury and not in relation to the employee’s earning capacity.” The Code Section goes on to state that if an injured worker is terminated from employment the award or agreement for settlement for benefits shall be reviewed in re-opening proceedings by the employee for a determination of any reduction in the employee’s earning capacity.

The first provision can, in certain cases, dramatically reduce benefits for injured workers by again making what have been historically body as a whole, loss of earning capacity claims and turning them into functional loss claims. In the second provision, dealing with termination, the Legislature, perhaps unwittingly, created a potential cause of action that has no statute of limitations. This potential administrative nightmare leaves open the potential to resolve these claims in ways that will still benefit the injured worker.

Commutations

Under the prior law, awards of future permanency benefits could be reduced to present value and paid to the injured worker in a lump sum rate than being paid out on a weekly basis. The change to Iowa Code Chapter 85.45 still allows for commutations but only upon the written consent of all parties. In other words, if the workers’ compensation insurance company does not agree, there is no way to receive a lump sum of future benefits. Other than the changes to how shoulder injuries are compensated, I believe that this change is the most significant change that benefits workers’ compensation insurance carriers. Those entities no longer have the threat of facing a petition for commutation for large amounts of future benefits. This change gives the workers’ compensation insurance carriers considerable leverage in negotiating with injured workers. This is particularly true for the most significantly injured and those who have a high weekly workers’ compensation rates.

Time does not allow for a complete discussion of all the changes made to Iowa’s workers’ compensation law. Some of the changes made are more dramatic than others. None benefit injured workers.

In spite of the changes, LaMarca Law Group, P.C., remains committed to representing the rights of injured workers. It will take years before many of these changes can be litigated and the full extent of the new law interpreted. Only a substantial change in the Iowa Legislature will turn this tide anytime soon.

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