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Recent Agency Decision and Hearing Update

• Sep 24, 2020

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Legal Update by Attorney Alison Stewart and Law Clerk Jordan Gehlhaar

The Court of Appeals Rules on Commutation of Workers’ Compensation Benefits

In VanGetson v. Aero Concrete, LTD & Westco Ins. Co., Claimants filed arbitration petitions with the workers’ compensation commissioner in early March of 2017. At the time of filing their petitions, the commutation of future payments of compensation to a lump sum payment was allowed when “the period during which compensation is payable can be definitely determined” and the Commissioner was satisfied that commutation was for the best interest of the recipient of benefits. See Iowa Code § 85.45(1) (2016).

Amendments to Iowa’s workers’ compensation laws were passed later that March, with an effective date of July 1, 2017. One of the amendments required commutation be allowed “only upon application of a party to the commissioner and upon written consent of all parties to the proposed commutation” and that amendment was to take effect for all dates of injury, including those that predated the legislative change. Iowa Code § 85.45 (2017).

In late June of 2017, Claimants filed petitions for partial commutation. A deputy commissioner dismissed the petitions, concluding the record was inadequate to determine the period during which compensation was payable could be definitely determined, and an award or settlement was a condition precedent to a request for commutation. Subsequently, the Commissioner and District Court both ruled that the petitions for commutation were premature, since the claimants did not file commutation petitions after the effective date of the amendments to section 85.45.

On appeal, claimants argued the agency’s interpretation of section 85.45 was erroneous. The Court of Appeals found that both versions of the statute require “the period during which compensation is payable can be definitely determined.” The Iowa Supreme Court had interpreted this language to mean that applications for commutation cannot be heard “without a hearing on the merits or an agreement between the parties as to the duration of the disability and the amount of the award.” Diamond v. Parsons Co., 129 N.W.2d 608, 615 (1964).

Based on this precedent, the dismissal and ruling was affirmed. An arbitration award or settlement is a jurisdictional prerequisite necessary for the decision maker to consider a commutation petition. The claimants in this case are a few of many who faced this jurisdictional issue following the 2017 amendments. The Court determined the proper procedure to obtain standing is to proceed under the new statute and, if aggrieved, challenge its retroactive application to workers who were injured before the new statute’s effective date.

COVID-19 Impact on In Person Hearings

The Agency (Iowa Division of Workers' Compensation) recently extended the suspension of in person hearings through November 20, 2020, due to the impact of COVID-19. We will monitor the situation for further updates. Additional information can be found here. 

 

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Peddicord Wharton Legal 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. ©2020 Peddicord Wharton. All Rights Reserved.