State News : Iowa

Legislative Update by Attorney Alison Stewart

In a recent decision by Iowa Workers’ Compensation Deputy Erin Pals, Reiter v. Incorporated City of Remsen,the agency determined it is appropriate to apply the upper extremity functional rating to shoulder injuries now that shoulders have been identified as a scheduled member injury under the post July 1, 2017 workers’ compensation legislation. Deputy Pals reasoned that the table consulted by the rating physician could be found in Chapter 16 of the5^th Edition AMA Guidelines, which is entitled “The Upper Extremities,” and historically the agency has not utilized whole person impairment ratings for a single scheduled member injury. The full decision can be found here:http://decisions.iowaworkforce.org/2018/October/Reiter,%20Craig-5059413d.pdf.

In light of this decision, it is prudent to take the upper extremity rating and multiply it by the 400 week value of the shoulder in order to determine permanency entitlement for employees who sustain work-related shoulder injuries post July 1, 2017. 

Legislative Update by Attorney Kathryn Johnson

In a 6-1 decision, the Supreme Court in Brewer-Strong v. HNI Corporation,913 N.W.2d 235, (Iowa, 2018), held as matter of first impression, an employer could regain control of the employee’s medical care and assert an authorization defense, even though the employer initially denied liability. The Court stated, “Holding otherwise would run contrary to the very purpose of Iowa Code chapter 85 to resolve ‘workplace-injury claims with minimal litigation’ by forcing employers to reach a conclusion about their liability for an employee’s injury without thoroughly performing their duty to investigate the claims, potentially creating more litigation and expenses in the process.”

In this case, a workers' compensation claimant, Brewer-Strong, contends the workers’ compensation commissioner wrongly denied her healing period benefits under Iowa Code section 85.34(1). Brewer-Strong filed a petition seeking workers’ compensation benefits after developing bilateral carpal tunnel injuries allegedly arising out of and in the course of her employment with the employer, HNI. HNI originally denied liability for the claimed injuries. Brewer-Strong filed a petition for alternate medical care that was dismissed on procedural grounds because HNI contested liability for the injury. A physician chosen by HNI examined Brewer-Strong, and the physician confirmed that the claimed injuries were work-related. HNI subsequently amended its answer to admit liability and authorized Brewer-Strong to undergo medical care with its chosen medical providers. However, Brewer-Strong sought medical treatment from a different, unauthorized physician who proceeded to perform two surgeries on her. HNI refused to pay Brewer-Strong healing period benefits for the time she was recovering from the unauthorized surgeries.

At the agency level, the workers’ compensation commissioner decided Brewer-Strong was not entitled to healing period benefits. Specifically, the commissioner found that HNI provided a valid authorization defense, and Brewer-Strong did not meet her burden to prove that her unauthorized care resulted in a more favorable outcome than the care she would have received from the authorized physician. On judicial review, the district court affirmed this decision on the same grounds.

The Supreme Court reviewed the commissioner’s interpretation of Iowa Code section 85.34(1), which deals with healing period benefits for work-related injuries. Brewer-Strong argued the district court erred in ruling that HNI could regain its right to control her medical care and treatment by admitting liability for her work-related injuries after it had initially denied liability. The Court noted that where the employer disputes compensability and the commissioner denies the claimant’s petition for alternate care on procedural grounds, “there can be no implicit finding that the employer has satisfied its duty to furnish reasonable medical care and has no obligation to furnish alternate care.” However, an employer is barred from asserting an authorization defense where the commissioner’s denial of the employee’s request for alternate medical care was based on substantial evidence in the record demonstrating the employer denied compensability for at least a portion of the employee’s injury for which she sought alternate medical treatment.

Thus, the workers’ compensation commissioner and the district court correctly found HNI acquired its authorization defense and the statutory rights and obligations to provide and choose appropriate medical care pursuant to Iowa Code section 85.27 once it amended its answer to accept compensability for the injury. HNI then retained its right to control medical care throughout the course of treatment for the compensable injury since it did not subsequently contest whether the injury was work-related or withdraw its authorization of care, and the commissioner did not order alternative care for Brewer-Strong.

The Court also reaffirmed the standard set out in Bell Bros. Heating & Air Conditioning v. Gwinn, 779 N.W.2d 193 204 (Iowa 2010), establishing that an employer can be ordered to pay for unauthorized care received by the employee only if the employee “prove[s] ‘by a preponderance of the evidence that such care was reasonable and beneficial’ under the totality of the circumstances,” with “beneficial” defined as “provid[ing] a more favorable medical outcome than would likely have been achieved by the care authorized by the employer.” The Court rejected Brewer-Strong’s claim that the burden of proof set an impossible standard, concluding the burden “respects the balance between the employer’s rights to control medical care and the employee’s right to seek alternative medical care under the statute. The mere fact that this creates a heightened burden for the employee does not require a modification of the test. This is all part of the balancing found within our workers’ compensation statute.” Justice Hecht dissented on this point, and would have overruled the Bell Bros. as a “flawed standard requiring proof based on sheer speculation.”

The Court further held that an employer is not required to pay healing period benefits when an employee is off due to unauthorized care, and stated that, “Iowa Code section 85.34(1) does not explicitly state that an employee cannot receive healing period benefits for unauthorized care.” The Court nonetheless concluded that “[a]n interpretation that requires an employer to provide injured employees with healing period benefits for their unauthorized care when they knowingly abandoned the protections of Iowa Code section 85.27 would be inconsistent with the overall intent of the statute.”

Legislative Update by Alison Stewart

On November 16, 2018, the Iowa Supreme Court issued a ruling addressing the compensability of idiopathic falls. Previously the Court said, “The workers’ compensation statute is not a general health insurance policy that extends to all injuries that happen to occur while on the job.” In Bluml v. Dee Jay’s Inc., d/b/a Long John Silvers and Commerce & Indus. Ins. Co., the Court held that there is no blanket rule rendering certain categories of workplace idiopathic falls non-compensable, so long as the employee proves that a condition of the employment increased the risk of injury.

The specifics of Bluml involve an employee who experienced a seizure while working, which caused him to fall straight backward onto the ceramic floor and strike the back of his head. He had been experiencing seizures for many years, but had been non-compliant with anti-seizure medication and there was a record of alcohol abuse. The Iowa Workers’ Compensation Commissioner deputy who heard the case denied benefits reasoning that idiopathic falls to level surfaces are not compensable under Iowa law.  On appeal to the Iowa Workers’ Compensation Commissioner, the Commissioner affirmed, but noted it was undisputed the employee’s injuries were worsened because he fell on a ceramic tile floor.

Ultimately the Supreme Court held that these types of cases should be factually analyzed on a case-by-case basis. With this decision on the books, there is no hard and fast rule in Iowa whether idiopathic falls onto level floors are compensable. An employee may recover when they prove a condition of their employment increased the risk of injury. To read the full decision,click here.

Legislative Update by Attorney Alison Stewart

The Division of Workers’ Compensation is announcing a delay in the roll-out of WCES, the new electronic filing, case management, hearing scheduling and EDI system for workers’ compensation.

The Division had planned to Go-Live on December 3, 2018. It has been determined it is not possible to thoroughly test the system before December 3, 2018. The Division was advised to delay the Go-Live date until they can be confident WCES has been thoroughly tested.

A new Go-Live date for WCES has not been determined. Work will not stop on this project and the Division will publish a revised Go-Live date once they have agreement among the vendors and the Division.

The delay in the go-live date applies to both filing in contested claims as well as EDI. EDI filers will continue to file using EDI Release 2.0 until WCES goes live and then will switch to EDI Release 3.1. Claimants, employers and insurance carriers will continue to file paper documents in contested claims until WCES goes live. The process for scheduling hearings will also remain as it is currently until WCES goes live. 

Legislative Update by Attorney Alison Stewart       

WCES - Workers' Compensation Electronic System         

A new electronic filing system is tentatively scheduled to be implemented beginning in December of 2018. The new system will be known as Workers’ Compensation Electronic System, or WCES (pronounced “wick-ess”). Training will be provided by the Iowa Division of Workers’ Compensation for attorneys and other stakeholders who will be required to use the system. It is the intention of the Division that the system will provide for electronic filing of all pleadings and documents with the Division. The new system will also provide for more efficient scheduling of hearings, comprehensive case management, and greatly improved EDI transactions. The proposed administrative rules relating to the implementation of this system were recently sent out for comment and we are now waiting for them to be adopted. These rules will instruct parties how to appropriately navigate the new system.

CourtCall 

The Division of Workers’ Compensation is now providing a system to conduct hearings by phone or video through a system called CourtCall. This system allows attorneys and parties to avoid travel time and the cost of commuting to a hearing location. The system is currently available at the Des Moines hearing venue for any hearing the parties and the hearing deputy agree to. It may also be available for road venues with advanced arrangements. There are some expenses associated with use of this program. The cost is $45 for the first 45 minutes and $12.50 for each 15 minute increment thereafter. This could be an excellent tool for remote employer witnesses, for example.

More information on these systems can be found at:  https://www.iowaworkcomp.gov/news-and-updates

By order of the Commissioner, beginning July 1, 2018, the Iowa Division of Workers’ Compensation will impose a monetary late settlement sanction on parties in cases where settlements are reported to the Division less than 24 hours before the scheduled start time of the hearing. Settlements must be reported to both the Division and the Deputy Commissioner assigned to hear the case 24 hours or more before the hearing is scheduled to start to avoid imposition of the sanction. This sanction is modeled on the late settlement sanction which is imposed by the Iowa District Courts. The Division has recently experienced an increase in late settlements which places further strains on diminishing resources. This action is necessary to allow the Division to better serve the people of the State of Iowa. The late settlement sanction order is effective for all cases with hearing dates of July 1, 2018, or later.

Claims that have been assessed a late settlement sanction will not have the settlement approved until the sanction has been paid. The late settlement sanctions shall be paid to the Division of Workers’ Compensation and all funds received will be paid over to the Iowa General Fund.

The late settlement sanction will apply in cases filed using the Form 100. It will also apply in full and partial commutation cases filed before July 1, 2017. It is not applicable to alternate medical care, vocational benefits or compliance proceedings.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

NOTICE TO THE PUBLIC

The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. This disclosure is required by rule of the Supreme Court of Iowa.

Peddicord Wharton Legislative Updates are intended to provide information on current developments in legislation impacting our clients. Readers should not rely solely upon this information as legal advice. Peddicord Wharton attorneys would be pleased to answer any questions you may have about this update. ©2018 Peddicord Wharton. All Rights Reserved.

Legislative Update by Attorney Kathryn Johnson

When an employee has been injured and is entitled to temporary or permanent workers’ compensation benefits, a calculation of the employee’s average weekly wage and rate is required. In order to calculate the rate of compensation, the “gross earnings” of the employee must be determined and then converted to a weekly benefit rate. Correctly calculating the weekly rate at the onset of a claim can save insurers time, money, and headaches later on down the road.

There are various methods to determine an employee’s gross weekly earnings, otherwise known as the “average weekly wage” or “AWW”. The method of determining AWW will depend upon how the employee is compensated. Generally speaking, the majority of employees will be compensated on an hourly basis. For employees who are paid on a daily or hourly basis, or by the output of the employee (i.e. truck drivers), the method of calculating the AWW is determined by Iowa Code section 85.36(6). For these employees, the basic procedure for correctly calculating the weekly rate is to start by looking at the employee’s earnings immediately prior to the injury date, and find the first 13 weeks of “representative” earnings. This process can be reduced to the following formula:

The total weekly earnings during 13 representative weeks prior to the work injury ÷ 13 = AWW

The average of those 13 representative weeks is then applied to the rate table put out by the Iowa Division of Workers’ Compensation. The rate tables are set up to take the AWW, and reveal the correct weekly rate based on whether the injured employee is married or single, and how many exemptions the employee is entitled to claim. Generally, the weekly rate of compensation is 80% of the employee’s average spendable earnings at the time of the injury.

While this process may seem fairly straight-forward, the miscalculation of the AWW can be the cause of significant rate disputes that may result in interest on underpayment of benefits, unnecessary litigation expenses, and penalty awards. To avoid getting trapped into unnecessary expenses associated with a miscalculation of rate, utilize the following tips and tricks.

TIPS 

• To correctly calculate the AWW you will need to know the following information about the injured employee:
  • Marital Status. An injured employee’s weekly rate will vary depending on whether the employee is married or single.
  • Number of Dependents. An injured employee is entitled to one exemption for themselves, one exemption for their spouse, and one exemption for each of their dependents. Generally, a child can be claimed as an exemption for weekly rate purposes if the employee could claim the child as an exemption on their tax return.
  • Length of time between pay periods.
    • Weekly pay period – gross weekly earnings equal the weekly gross amount.
    • Biweekly pay period – gross weekly earnings equal the biweekly gross amount divided by 2.
    • Semimonthly pay period – gross weekly earnings equal the semimonthly gross amount multiplied by 24 and divided by 52.
    • Monthly pay period – gross weekly earnings equal the monthly gross amount multiplied by 12 and divided by 52.
    • Yearly pay period (salaried employees) – gross weekly earnings equal the yearly gross amount divided by 52.
  • Method of Compensation. From the onset you will need to establish the amount and frequency of compensation (hourly rate, salary or other method of payment), as well as increases in compensation. 
  • In some cases, the classification of the employee. The classification of the employee may be necessary when calculating the rate of certain types of employees such as volunteer fire fighters, emergency medical providers and reserve peace officers. Special rate rules also apply to elected or appointed officials, proprietors, limited liability company members, partners, officers of a corporation, apprentices, trainees, and employees whose earnings have not been fixed or cannot be ascertained. 
• Representative Weeks. When calculating the AWW, do not use the week of injury, but instead start with the week immediately preceding. The primary objective when calculating an AWW is to reflect earnings that fairly represent the employee’s customary earnings loss due to injury. Frequently, an employee’s wages will vary from week to week.
• Types of Compensation Included in the Weekly Rate Calculation. Certain types of payments to the employee must be included in the employee’s gross earnings.
  • Regular Bonuses. Bonuses received on a regular basis are to be included in the employee’s gross earnings. For example, bonuses that are received by an employee on an annual basis or are a fixed amount per year, will likely be classified as a regular bonus, and should be included.
  • Shift Differential. Shift differential refers to extra pay received by employees for working a less-than desirable shift (i.e., late nights, weekends). Shift differentials are to be included in the employee’s gross earnings. Therefore, if an employee is compensated at different rates depending on the shift, the earnings will be determined at the shift differential rates.
• Types of Compensation Not Included in the Weekly Rate Calculation. Certain types of payments to the employee are not used in calculating the weekly rate.
  • Overtime pay. Overtime pay is not included in figuring the gross earnings of an employee. This means that the amount paid in excess of the rate the employee receives for straight time is not included. For example, the rate of an employee who is paid $10 per hour and works a 50 hour work week (with 10 of those hours being overtime at time and one-half) will be $500.
  • Irregular Bonuses. A bonus may be irregular if it is conditioned upon the happening of a certain event, varies in amount, or is not fixed in terms of entitlement or amount. Irregular bonuses are not included in the employee’s gross earnings. This determination is fact-based and will require additional investigation.
  • Other types of pay which are excluded include: fringe benefits, retroactive pay, reimbursement of expenses, expense allowances, and an employer’s contribution for welfare benefits.
• Non-Representative Weeks. When determining an AWW, count back until you have 13representative weeks of earnings. It is not uncommon for a non-salaried employee to find that there are weeks within the 13 consecutive weeks prior to the injury that contain absences due to illness, vacation or other causes.
  
  If the employee is gone for reasons personal to the employee (such as vacation, holiday, or sick leave) during part of the 13 calendar weeks preceding the injury, than the gross earnings are determined as the amount that the employee would have earned had the employee worked when work was available. For instance, if an employee customarily works 40 hours per week, but in one week has 32 hours worked and 8 hours of vacation time, the earnings are based on the 40 hour work week had work been available for the employee during that time. This week would not be thrown out, but rather included within the 13 week average.
  
  It is important to remember that it is the earnings that must be customary, not the weeks. If the week in question does not reflect customary wages earned by the employee, the week is thrown out and replaced with the next preceding fairly representative week. Always bear in mind that the determination of whether a week is included to arrive at rate is whether the weeks considered “fairly reflect the employee’s customary earnings.”
  
  
• Other Types of Employees. If the employee worked full-time at the time of the injury, earning the same amount each pay period, the method of computation depends on the length of time between pay periods. (See above.) Certain types of employees are subject to other rules of rate calculation.
  • Part-time Employees. If the employee either earns no wages, or less than the usual weekly earnings of a regular full-time adult laborer in the employee’s line of work, the earnings are determined by the total of ALL earnings of ALL employment the employee has engaged in during the 12 months preceding the injury divided by 50. (Generally an employee who works less than 30 hours per week is considered part-time.)
  • Employees who do not have 13 Weeks of Representative Earnings. In some instances an employee will be injured before he or she has accrued 13 weeks of wages prior to the injury. In addition to a careful analysis of causation, you must look to the earnings of “similarly situated employees” for the 13 weeks preceding the injury to determine the AWW.
    • To do so, request wage records of employees in the injured employee’s same position, averaging the hours worked by the similarly situated employees at the injured employee’s straight time rate.
    • If the earnings of other employees cannot be determined, the employee’s weekly earnings shall be the average computed for the number of weeks the employee has been in the employ of the employer.
• Convert the AWW to a Weekly Benefit Rate. Once you determine the employee’s gross weekly earnings, round to the nearest dollar, and apply the AWW to the rate table put out by the Iowa Division of Workers’ Compensation[1]. 

TRICKS 

• If the employee is paid on an hourly basis (regardless of interval at which payments are made; weekly, biweekly, monthly or semimonthly) you will need to know the hours worked each week, both regular and overtime, rate(s) of pay, whether regular bonuses were paid, and whether the employee had time off for vacation, sick, holiday, or other personal leave during any week. You may need to speak with the employer’s payroll department and the employee’s immediate supervisor to better understand the employee’s work and compensation.
• For hourly employees, since a 13 week average is needed, the pay periods need to be broken down weekly to help you decide which weeks are representative. Those which do not fairly reflect the employee's customary earnings need to be excluded.
• Be sure the employer provides information regarding any pay increases and their effective dates. The employee’s personnel file is a good place to start to ascertain this information, but you may need to request actual time cards as well.
• Marital status and entitlement to exemptions are determined at the time of the injury, not when the claim is presented. Therefore, if an injured employee is single on the date of injury and subsequently gets married or has a child, they are still considered single with one exemption for rate purposes. If you take an injured employee’s statement, be sure to ascertain this information.
• The test for dependent status is whether or not the dependent could be properly included on the employee’s tax return. To help determine the employee’s dependents, request a copy of the employee’s tax return for the year in which the employee was injured. However, keep in mind that the employee’s tax return, while good evidence of dependent status, is not necessarily determinative of the issue.
• Remember that, although, AWW seems like a moving target, "§85.36 is to be applied flexibly, rather than mechanically or technically, with the ultimate objective being to fairly reflect the employee's earning loss."Daniels v. T&L Cleaning Services, File 1283486 (2003).
• The Iowa Division of Workers’ Compensation puts out tables on their website which can be used to determine compensation rate, however the easiest thing to do is to determine AWW and then usePeddicord Wharton’s free rate calculator which calculates the rate for you!

These tips and tricks are by no means an exhaustive list of everything there is to know about calculating weekly benefit rates in Iowa. However, they serve to provide the basic framework for rate calculation so that you can avoid getting trapped into unnecessary expenses associated with improper rate calculation. If you require assistance in calculating an injured employee’s AWW and rate, feel free to contact one of our firm’s attorneys and we will be happy to help you. 

[1] Peddicord Wharton provides a free calculator to help quickly convert AWW to rate. Rate calculators can be found here .

The Iowa Workers’ Compensation law underwent significant changes last legislative session (2017), going into effect for work-related injuries occurring after July 1, 2017. For a comprehensive summary, lookhere (for those changes to the Iowa Code) and here (for those changes to the Iowa Administrative Code). This update addresses one change in the effect of return to work on the industrial disability analysis. In that regard, the discussion below illustrates two main take-a-ways:

        -- Functional impairment ratings will become more important in return-to-work situations.

        -- Job descriptions and work restrictions will be scrutinized more in cases where an employer offers a claimant a return to work but the claimant denies the offer, arguing he/she is unable to perform job functions/duties under restrictions.

By way of background, in Iowa, an injury to a “whole person” – an injury that is not considered a scheduled-member injury per Iowa Code §85.34(a)–(t) (2017) – results in an “industrial disability.” Iowa Code §85.34(u) (2017). Thus, with an industrial disability claim, the determination of the injured worker’s permanent disability is the effect the whole-person injury has on employability, as determined by a number of factors – which are: functional disability (i.e., impairment rating), age, education, qualification, experience, and ability to engage in employment that claimant is fitted. Larson Mfg. Co., Inc., v. Thorson, 763 N.W.2d 842, 857 (Iowa 2009);see also Bearce v. FMC Corp., 465 N.W.2d 531, 535 (Iowa 1991).

Under the new law, if a claimant returns to work making the same or greater earnings, the claimant is not entitled to the industrial disability analysis; rather, the permanent partial disability award, if any, is determined by the functional impairment rating for the whole-person injury assigned by the doctor(s), as determined by the 5^th Edition AMA Guides. Iowa Code §85.34(u) (2017).

Iowa Code §85.34(u) provides in pertinent part:

        If an employee who is eligible for compensation under this paragraph returns to work or is offered work for which the employee 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. Notwithstanding section 85.26, subsection 2, if an employee who is eligible for compensation under this paragraph returns to work with the same employer and is compensated based only upon the employee’s functional impairment resulting from the injury as provided in this paragraph and is terminated from employment by that employer, the award or agreement for settlement for benefits under this chapter shall be reviewed upon commencement of reopening proceedings by the employee for a determination of any reduction in the employee's earning capacity caused by the employee's permanent partial disability.

While it is yet to be determined how the Iowa Workers’ Compensation Commission and the courts will interpret this new law, we can use two recent Court of Appeals decisions (applying the old law) as case studies and compare how they would have been affected by the new law.

Norton v. Hy-Vee, Inc.

In Norton v. Hy-Vee, Inc., Vicky Norton, the Claimant, injured her neck and back on April 2, 2009, and suffered from mental health issues of anxiety and depression as a result of the injuries. The Deputy found that Norton sustained a 70% industrial disability. In assigning the industrial disability rating, the Deputy analyzed Norton’s motivation to work, her “unique skills that allow her to be an exceptional [employee],” and the fact that her work restriction – maximum of 6-hour work days – resulted in her working 25% less than before the injury. Norton argued she sustained a permanent total disability; Hy-Vee argued Norton sustained a 25% industrial disability. The Commissioner, in approving the Deputy’s conclusion of 70%, noted that Norton received very high marks from her supervisors, and she was working what was considered full-time in the local market (30 hours per week). Norton argued that the Commissioner erred in adjusting the industrial disability rating downward based on the fact that she returned to work. On this point, the Court of Appeals noted:

        Based on the above law, we agree with Norton that an injured worker's performance of accommodated work, in and of itself, many [sic] not be used to reduce a worker's industrial disability rating. But the injured worker's performance of accommodated work can be considered in assessing the industrial disability rating if the work being performed is “transferrable to the competitive job market,” and “discloses that the worker has a discerned earning capacity.”Id. at *6 (citations omitted).

The case was being decided under the old law. That said, the new law explicitly instructs theadjustment of the industrial disability award if the claimant returned to work and earned the same or greater wage. Under the new law, evidence of Norton’s wage would have been admitted and discussed, and if it was the same or greater, then the functional impairment rating of Norton’s whole-person injury would have been admitted and discussed. Likely, the outcome would be the same under either the new or old law, as it is unlikely that Norton was earning the same or greater (considering the 25% decrease in work time). In any case, there is an additional evidentiary piece – the post-return-to-work wages – that must be analyzed, prior to undertaking the traditional industrial disability analysis.  

Allen v. Tyson Fresh Meats, Inc.

In Allen v. Tyson Fresh Meats, Inc., the Claimant, Allen, was assigned a 12% body-as-a-whole impairment rating (which was the combination of injuries to two body parts – knee and spine).  While Allen argued that his advanced age and history of working only manual labor supported a finding of industrial disability of greater than 12%, the Court disagreed, noting that “Allen had no loss of job or earnings due to his injury. In fact, he continued to work in the same job, for the same company, without having missed any days due to injury . . . .” p. 6. The Court noted: “While such a finding does not preclude Allen from an award of industrial disability, it cannot be overlooked in determining how much his injuries affect his employability.” Under the new law, this “employability” analysis is unnecessary, which is common place in pre-July 1, 2017, whole-person injury analysis. If this was a post-July 1, 2017, claim, Allen’s industrial disability would be 12%, the functional impairment rating. In short, the new law offers a level of certainty to this type of a claim: it effectively makes a whole-person injury to a claimant that returns to work earning the same or greater wages a scheduled-member, whole-person injury, leaving the permanent partial disability percentage to be determined by the functional impairment rating(s) assigned.

Even in return-to-work situations as discussed above, the traditional industrial disability analysis still applies in the event that the claimant receives an industrial disability award based on the new return-to-work provision but is later terminated – in such case, the earning-capacity analysis is appropriate upon a review-reopening proceeding.

 On March 30, 2017, new legislation signed into law by Governor Branstad made significant changes to the Iowa Workers’ Compensation laws. On December 20, 2017, new administrative rules were adopted. These changes will be applied to injuries occurring after July 1, 2017.  This update addresses the most significant changes.

    Industrial Disability Determinations: Perhaps the most significant legislative change pertains to an employee with unscheduled injuries to the trunk or head (now excluding shoulders) who is able to return to work for the employer, or is offered to return to work by the employer, in a position making the same or greater earnings compared to the time of the injury after a permanent restriction determination has been made. The employee is now only entitled to compensation based on the functional impairment rating assigned by a doctor(s). IOWA CODE § 85.34(2)(u) (2017). An industrial disability (loss of earning capacity) analysis will not be conducted if such a return to work occurs. The new administrative rules contain no specific guidance on how to implement the offer for return to work in the context of this particular code section, however, we are recommending that employers should make any such offers of return to work in writing.

Also of note, when an industrial disability analysis is appropriate, the number of years the employee is reasonably anticipated to work into the future will now be taken into account. IOWA CODE § 85.34(2)(u) (2017).

    Shoulder Injuries: Shoulder injuries are now considered scheduled member injuries, meaning an industrial disability analysis no longer applies. IOWA CODE § 85.34(2)(n) (2017). Employees sustaining a permanent work-related shoulder injury will now be entitled to a percentage of 400 weeks.

    Vocational Training: If an employee sustains a shoulder injury and cannot return to gainful employment as a result of that injury, they may be eligible for financial support from the employer for vocational retraining in an amount not to exceed $15,000. IOWA CODE § 85.70(2). The new administrative rules provide guidance on how this will be implemented. IOWA ADMIN. CODE. r. 876-4.5(5) (2018). First, the employee will be required to complete a form requesting an evaluation and determination by Iowa Workforce Development. Then, Workforce Development assesses whether the employee would benefit from a vocational training and education program offered through an area community college. Once this determination has been made, the employee, employer, or insurance carrier may contest the results of the Workforce Development determination by applying for a hearing before the Division of Workers’ Compensation. The Commissioner’s office will notice a hearing. A telephonic hearing can be requested. Decisions must be issued within 30 working days and can be appealed.

    Functional Disability Determinations: Prior to the changes, hearing arbitrators were allowed discretion in determining the amount of permanency entitlement for a particular scheduled member injury based on lay testimony or agency expertise. The legislative changes made it so that only The 5th Edition AMA Guidelines can be used to determine the extent of permanent impairment for body parts that are scheduled members (not a part of the trunk or head of the body), which now include the shoulders. IOWA CODE § 85.34(2) (2017). The previous version of the applicable administrative rule indicated that The Guides were to be used only “as a guide,” and that language has now been removed. IOWA ADMIN. CODE r. 876-2.4 (2018). This change should make scheduled member award ranges easier to predict.

    Commencement Date: Permanent partial disability benefits now begin when a worker reaches maximum medical improvement (MMI). IOWA CODE § 85.34(2). The previous rule stated that permanency benefits should begin at MMI, return to substantially similar employment, or indication that significant improvement was not likely – whichever occurred first. Under the amendment, permanency benefits are not owed until MMI is reached, even if an employee returns to work prior to reaching MMI.

    Interest: The interest rate accruing on past due benefits has been changed from 10% to the one-year treasury constant maturity plus 2%. This is governed by Iowa Code section 535.3(1) and can be foundhere. Peddicord Wharton’s website calculator (found under Resources) has been updated  to reflect this change.

    Commutation of Awards: Previously, injured workers who received an award of permanency benefits accruing into the future were permitted to commute their award to a present value lump sum payment by making an application to the Division of Iowa Workers’ Compensation. Historically, these requests were freely granted. After the legislative changes, such requests can only be granted if all parties agree. IOWA CODE § 85.45 (2018). The relevant administrative rule has been amended to reflect this change. IOWA ADMIN. CODE r. 876-6.2 (2018). Note, this change applies to all applications for commutation filed after July 1, 2017 (not just injuries occurring after July 1, 2017).

    Offers and Refusals of Suitable Work: Employers and employees are now required to communicate in writing relating to offers and refusals of light duty work. IOWA CODE § 85.33(2) (2018). The new administrative rules provide additional details about this new requirement. IOWA ADMIN. CODE r. 876-8.11 (2018). All offers pertaining to return to temporary work must be in writing and must inform the employee of the details of the offer, including lodging, meals, and transportation. With each offer, if the employee refuses the offer of work, the employee must communicate the refusal in writing, including the reason(s) for the refusal. During the period of refusal, the employee will not be compensated with temporary benefits unless the work refused is not suitable. A failure to communicate the reason for the refusal to the employer in writing precludes the employee from later asserting the work was not suitable until such time as that reason is communicated.

    Permanent Total Disability Benefits: There are a few changes impacting entitlement to permanent total disability benefits. (1) An employee can no longer receive permanent total and permanent partial disability benefits concurrently. IOWA CODE §§ 85.34(2)(x), 85.34(3)(a) (2017); (2) An employee can no longer receive permanent total disability benefits if they are receiving 50% or more of the statewide average weekly wages in gross earnings from another employer or source. IOWA CODE § 85.34(3)(c) (2017); and (3) An employee cannot receive permanent total disability benefits if the employee is also receiving unemployment benefits.  IOWA CODE § 85.34(3)(d) (2017).

    Intoxication Defense: A positive post-injury drug screen (without an appropriate prescription) creates a presumption that the employee was intoxicated at the time of the injury and that this intoxication was a substantial factor in causing the injury, barring benefit entitlement. IOWA CODE § 85.16(2) (2017).

    Credit for Overpayment of Weekly Benefits: An employer who overpays temporary benefits (in good faith) is entitled to a credit against any future weekly benefits due for that injury. IOWA CODE § 85.34(4)-(5) (2017). The credit applies to a current injury, not just a subsequent injury as in the past.

    Independent Medical Examinations: An employee forfeits entitlement to weekly benefits for refusing to attend an IME arranged by the employer/insurance carrier. In the past, benefits were only suspended during the time of refusal. The new law explicitly states that an employer is only obligated to pay these exams for compensable injuries. The reasonableness standard for fees charged by these examining physicians is based on the fee charged by a medical provider for performing an impairment rating.   IOWA CODE § 85.39 (2017).

With only six months since the legislative changes have become effective, we are still unable to predict how the Commissioner will address some issues, but the recently adopted administrative rules do offer some additional indication and guidance.

Major legislative changes occurred in Iowa effective for all injuries that occur on or after July 1, 2017. Under prior law injured workers were awarded permanency benefits based on loss of earning capacity for non-extremity type injuries including the neck, shoulders, back and hips (“body as a whole” injuries). Under the new law shoulders are no longer injuries to the body as a whole, but are rather considered scheduled member-type injuries. Workers with shoulder injuries are now entitled to receive permanency benefits only to the extent of his/her functional impairment, and are not entitled to receive benefits for loss of earning capacity.

 Further, after July 1, 2017, if the injured worker sustains an injury to his/her body as a whole and returns to work or is offered work for which he/she receives or would receive the same or greater salary, wages, or earnings, than the injured worker received at the time of the injury, the injured worker is compensated based only upon his/her functional impairment resulting from the injury.

Legislative changes also stiffened the employer’s intoxication defense adding a presumption that an employee was intoxicated at the time of his or her injury if the employee had a positive test result reflecting the presence of alcohol, narcotic, depressant, stimulant, hallucinogenic or hypnotic drug not prescribed by a medical practitioner or not used in accordance with prescribed use. The new law made changes with respect to independent medical evaluations, pre-existing conditions, vocational rehabilitation, and commencement date for the payment of permanency benefits.

Legislative changes will most certainly result in a very significant decrease in the value of claims.

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