Apportionment - New Cases Interpreting 85.34(7)

Following the passage of section 85.34(7), the constitutionality of the bill (HF 2581) of which that provision as a part was challenged in the case of Godfrey v. State of Iowa, 752 N.W.2d 413 (Iowa 2008). http://www.iowacourts.gov/Supreme_Court/Recent_Opinions/20080620/05-1691.pdf. In Godfrey, the court found that the claimant lacked standing to challenge the provisions of the bill, and therefore did not rule on the constitutionality of that provision. More recently, the constitutionality of the bill of which the apportionment language was a part was again challenged, in Quaker Oats v. Main, 2010 WL 200420, No. 08-1507 (Iowa App. Jan. 22, 2010). http://www.iowacourts.gov/court_of_appeals/Recent_Opinions/20100122/9-896.pdf. In Main, the court found that the claimant's constitutional challenge was not filed in a timely manner, and hence could not be heard by the court. The court indicated that since the challenge had not been filed before HF 2581 was codified in January of 2005, a challenge to the constitutionality of the provision was not appropriate. The court also ruled in Main that so long as the second injury occurred after the passage of the legislation on September 7, 2004, the provisions of section 85.34(7) were effective.

The merits of section 85.34(7) have only begun to be parsed out, and this article will examine two cases, Steffen v. Hawkeye Truck and Trailer, No. 5022821 (App. Sept. 9, 2009)http://decisions.iowaworkforce.org/workerscomp/2009/September/Steffen,%20Thomas-5022821a.doc and Summerlin v. Tyson Foods, Inc., Nos. 5025718, 5025719 (Reh'g Dec. March 2, 2010)http://decisions.iowaworkforce.org/workerscomp/2010/March/Summerlin,%20David-5025718O.doc . Generally speaking, Steffen addresses the impact of section 85.34(7)(b)(1), and Summerlin wades into the murky waters of 85.34(7)(b)(2). Clearly, since these decisions are the first to discuss the apportionment language of the statute in depth, there will be future reworkings of the decisions - but they provide a general examination of the commissioner's thinking concerning apportionment.

Steffen involved a claimant who had a prior work injury to his neck, which resulted in the award of a 25% industrial disability following a hearing. At the time of the initial hearing, claimant had been returned to work with no restrictions. Claimant suffered a right shoulder injury prior to the arbitration award but after the initial neck injury, and that injury was the subject of the Sept. 9, 2009 appeal decision. The agency first concluded that because both injuries had not occurred following the passage of 85.34(7), the statute did not apply (this construction of the statute has been rejected in Main). It then addressed apportionment issues - both generally speaking and in light of 85.34(7).

The agency noted that in the absence of statute, apportionment is appropriate only where the prior injury is non-work related and causes an ascertainable portion of the ultimate disability prior to the second injury. If the extent of preexisting disability cannot be ascertained, the employer is liable for the full industrial disability proximately caused by the second injury. The prior injury must independently produce some degree of disability before the second injury. Based on the application of the law without consideration of 85.34(7), the commissioner concluded that claimant had suffered a 55% industrial disability, payable in full by the employer. As a result of the full responsibility rule, no apportionment was appropriate.

The commissioner next addressed the injury to the claimant should 85.34(7) apply. He noted that section 85.34(7)(a) was a restatement of the fresh start rule as applied in conjunction with a modified full responsibility rule. That section provides, according to the commissioner, that the employer does not compensate for any preexisting disability from earlier work or non-work causes. In the Steffen case, the agency noted that claimant had the benefit of the fresh start rule when he commenced work with the employer, and because he had two injuries for the same employer, any apportionment for the successive disability would arise from 85.34(7)(b). Under the terms of the statute, the combined disability is partially satisfied to the extent of the percentage of disability previously compensated by the employer. In Mr. Steffen's case, since 25% was paid for the neck injury, the claimant was entitled to an additional 30%, since his industrial disability was found to be 55%. The agency also noted that there was nothing in the statute that allowed the claimant to be compensated for the fact that his wage rate had increased by the time of the second injury, and the credit for the first injury was paid at that increased rate, despite the fact that the actual payments were less.

Steffen sets forth a relatively straightforward method of determining industrial disability for a claimant who has multiple industrial injuries with the same employer. The first task is to determine the extent of industrial disability in light of the workers' current condition, premised on the modified full responsibility rule established in section 85.34(7)(a). The second is to allow the employer credit for the percentage of disability that had previously been paid, in accordance with 85.34(7)(b). This application of the rule should be relatively easy to apply in future cases.

The Summerlin case presents the more difficult issue of how to address 85.34(7)(b) when a worker has multiple injuries with the same employer, and has had a loss of wages as a result.  In this case, claimant had two shoulder injuries.  Consideration of these injuries was undertaken in the same arbitration decision.  As a result of the first injury, claimant was provided with a 40% industrial disability in the decision, and industrial disability following the second injury was found to be 75%.  Defendants were given credit for the percentage of disability already paid.

In the first important aspect of the case, the deputy concluded that where there was an overlap in benefits, as there was here, the claimant receives the higher rate during the period of overlap.  In the second, and more important, of the rulings in the rehearing portion of the case, the deputy found that in applying 85.34(7)(b)(2), the calculation is based on the percentage of disability previously compensated minus the percentage that the earnings were less at the time of the first injury.  In Mr. Summerlin's case, this resulted in taking a 40% industrial award from the first injury, and reducing that award by 16.14% to reach a total of 23.86%.  Thus, the credit allowed to the defendant went from 40% to 23.86%.  Subtracting 23.86% from 75% (the total award) meant that defendants had to pay an additional 51.14% over and above the 40% that was to have been paid for the first injury.  The total weeks of benefits to be paid was therefore 91.14%, or 455.7 weeks of benefits.

Although the decision is somewhat complicated, it gives meaning to  85.34(7)(b), which is applicable when a claimant earns less at the time of the present disability than would have been the case had the earlier disability not occurred.  This is a much more sound result than the initial formulation in the case, which had allowed a credit only for 16.14 weeks, which was equivalent to the percentage by which  the earnings were less than they otherwise would have been.

Whether this particular formulation withstands scrutiny at the appellate level or in the courts is obviously an open question. Nonetheless, it offers an opportunity to frame the debate in a manner that is most fair for claimants in light of the other harmful effects of 85.34(7).  Note that with the repeal of 85.36(9)(c), which had prohibited the recovery of two awards when there was an overlap, defendants cannot make the same arguments with respect to the overlap that was available previously.

From a practitioner's standpoint, the Summerlin decision counsels that is important to determine whether the first injury "caused the employee's earnings to be less at the time of the present injury. . . "    This will require a more focused effort to determine the employee's wages following the first first injury.  More to come in this area in the future, but for a first interpretation of 85.34(7)(b)(2), the agency's action minimized the harm to claimants caused by the statute.