Supreme Court Decision in Gregory v. Second Injury Fund

In Gregory v. Second Injury Fund, 775 N.W.2d 395 (Iowa 2010), the court addressed a number of issues that arise repeatedly in Fund cases which had not been addressed previously by the appellate courts. In Gregory, claimant suffered a first injury to both arms (bilateral carpal tunnel). At the same time she had bilateral injuries to her shoulders resulting in subacromial decompressions and distal clavicle excisions in both shoulders. She later fractured her right foot, and filed an action against the Fund. The workers' compensation commissioner concluded that an action against the Fund was not appropriate because Ms. Gregory's injuries extended beyond her extremities and into the body. The commissioner found that since this was a body as a whole injury, Fund benefits were not appropriate.

The court noted that the Fund was conceived to encourage the employment of disabled persons by making the current employer responsible only for the disability the current employer causes. The court concluded that Gregory's entitlement was dependent on proof of the following: 1) she sustained a permanent disability to a hand, arm, foot, leg or eye; 2) she subsequently sustained a permanent disability to another such member; and 3) the permenant disability resulting from the first and second injuries exceeded the compensable value of the previously lost member.

Using the familiar rationale that workers' compensation statutes are to be liberally construed in favor of or the employee, the court concluded that the focus of the inquiry must be on "whether Gregory sustained a partial permanent loss of at least two enumerated members in successive injuries." The court found that claimant clearly did suffer these injuries. Noting that the earlier decision in Second Injury Fund of Iowa v. George, 737 N.W.2d 141 (Iowa 2007) had concluded that a simultaneous second injury did not disqualify a party from Fund benefits, the court concluded that "it would be senselessly inconsistent to conclude a first qualifying injury cannot likewise occur simultaneously with an injury to another such member." With respect to the argument that Fund benefits were precluded because the injury also affected the whole body, the court stated that the plain language of the statute was not supportive of the Fund's contention. Ultimately, the court stated that its holding was consistent with the court's understanding "that the General Assembly did not intent to disadvantage claimants with histories of more complex combinations of enumerated and unenumerated member injuries."

In applying this rule, the court was at pains to point out that the commissioner shall consider only the extent to which earning capacity was diminished by the combined effect of the 2000 and 2002 losses to her enumerated extremities. This would seem to be inconsistent with earlier decisions indicating that the full responsibility rule was applicable to the Fund, and potentially to the general rule in workers' compensation actions that an employee is to be taken as he is found in making the determination of lost earning capacity. This was apparently not an issue that was presented to the court, but the language of the decision seems to put this in play.

The three dissenting justices (four justices ruled in favor of Ms. Gregory) found that the observation that the Fund was meant to encourage the employment of disabled persons was incorrect "and has likely contributed to an overly broad interpretation of our Second Injury Fund statute over the years." The dissenters indicated that the Fund developed because not all employees were perfectly functioning when they entered the workplace or had an injury. Because it would not be fair to impose liability on employers for both injuries, the Fund was created. The dissenters believed that the majority was rewriting the statute, and suggested in a footnote that the decision could conceivably eliminate the Fund in Iowa because it placed Iowa at a competitive disadvantage from a business perspective. Whether this has any place in the explication of the meaning of a statute is open to question, and in seeming contradiction to the desire of the dissenters not to rewrite the statute.

Gregory expands the benefits to be paid under the Fund, but not to extent envisioned by the dissenters. Indeed, by limiting the recovery to the combined effect of the losses to a person's enumerated extremities, the court may have inadvertently limited Fund benefits, and allowed segregation of certain injuries that would not be segregated under the full responsibility rule. This issue is likely to come before the court in the future, as the court's understanding of the Fund evolves.