Recent Agency Decision: Zachary Martinez v. Pavlich, Inc. & National Interstate Insurance

  • Sep 15, 2020

Legal Update by Attorney Alison Stewart and Law Clerk Jordan Gehlhaar

On July 30, 2020, Workers’ Compensation Commissioner Joseph Cortese II issued an appeal decision in Martinez v. Palvich, Inc. & National Interstate Insurance.

Joseph Martinez was injured on April 16, 2018 while hauling freight when his semi-truck was turned over and collided with another vehicle. He alleged that he sustained injuries to his bilateral lower extremities, right wrist, head and back. He returned to work with Pavlich approximately three months after the injury. Claimant performed light-duty work for one month before returning to his full-duty position. In September of 2018, he voluntarily left Defendant Pavlich to enroll in an apprenticeship program in the construction industry.

The deputy commissioner determined at the arbitration level that Claimant did not sustain a permanent injury to the head or back. The IME provider, Dr. Stoken’s, ratings were found most persuasive as they utilized the preferred AMA guides, Fifth Edition. Dr. Stoken’s rating was chosen as opposed to the rating assigned by Defendants authorized treater, who used the AMA Guides to Permanent Impairment, Sixth Edition, which is not applicable in Iowa. As such, Claimant was entitled to receive 100 weeks of permanency benefits for combined scheduled member disability pursuant to Iowa Code § 85.34(2)(s) (2016).

It was to be determined on appeal whether the deputy commissioner correctly calculated Claimant’s entitlement to permanent partial disability benefits under section 85.34(2). Commissioner Cortese determined that since the accident occurred in 2018, reliance on the 2016 version of the Iowa Code was in error. The language from former section 85.34(2)(s) was not modified, but it was renumbered to section 85.34(2)(t). It provides:

The loss of both arms, or both hands, or both feet, or both legs, or both eyes, or any two thereof, caused by a single accident, shall equal five hundred weeks and be compensated as such.
Iowa Code § 85.34(2)(t) (2019).

The main issue in dispute was whether claimant’s permanent injuries to three (3) scheduled members removed him from the provisions of section 85.34(2)(t) and placed him instead under the provisions of section 85.34(2)(v) “catch all” provision, calling for compensation based on reduction in earning capacity.

Claimant asserted the determination would not affect the outcome as he had returned to work with the same or greater salary which entitled him to compensation based upon his functional capacity only, and not his industrial disability. See Iowa Code § 85.34(2)(v) (2019). The Defendants argued that since Claimant voluntarily resigned to work for a different employer, his benefits should be calculated by his reduction in earning capacity under the industrial disability method. Defendants appear to have made this argument because they believed that Claimant’s industrial disability was less than his functional disability rating at the time. This issue of termination whether voluntary or involuntary had not been considered by the agency since the 2017 amendments.

The commissioner called the statutory change to these code sections “ambiguous.” He further determined that when read together, it appears the legislature only intended to address a scenario in which a claimant returned to work for the defendant-employer or was offered work by the defendant-employer for the same or greater earnings, but was later terminated. The commissioner recognized that the plain language of the statutes support claimant’s interpretation, but reasoned that such interpretation would result in “unreasonable outcomes.” He reasoned that in effect, it would be almost impossible for defendants to know when to volunteer benefits using the industrial disability method. Additionally, a claimant entitled to benefits under section 85.34(2)(v) may be better off not seeking employment after being terminated by a defendant-employer, which could not have been the legislature’s intention according to Commissioner Cortese.

It was determined that despite the fact that he was earning greater wages at the time of the Arbitration hearing than at the time of the injury, Claimant’s voluntary separation from Pavlich removed him from functional impairment analysis and triggered his entitlement to benefits using the industrial disability analysis.

Ultimately, even though his loss of earnings and ability to engage in suitable employment were minimal, the commissioner found Martinez sustained a 20% industrial disability based on permanent injuries to three different body parts. His entitlement to receive 100 weeks of permanent partial disability benefits was affirmed.

This opinion is a novel interpretation of the “catch all” provision § 85.34(2)(v) (2019) which calls for compensation based on a Claimant’s industrial disability, or reduction in earning capacity. This applies where a claimant has suffered an injury to more than two scheduled members, or has sustained a body as a whole injury. If a claimant returns to work or is offered work with the same or greater earnings, their compensation will be based on functional impairment. If later terminated, there may be reopening proceedings for determination of a reduction in earning capacity. However, if the claimant voluntarily resigns with the defendant-employer, the interpretation would not “reset.”

Peddicord Wharton will continue to monitor the case law on this interpretation.



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