New Workers’ Compensation Legislation and Administrative Rules

  • Feb 07, 2018

Legal Update by Attorney Alison Stewart

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 found here. 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.



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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.





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