Court of Appeals Issues Decision on Partial Commutation

In Pilgrim's Pride v. Eakins, No. 12-0901 (Iowa App Jan. 24, 2013), the court of appeals addressed the issue of partial commutation, an issue that does not come before the appellate courts frequently.  Two issues were presented - whether claimant was entitled to the partial commutation (i.e. whether the commutation was in claimant's best interests) and whether the amount of the commutation should be based on the amounts due at the time of filing (including the discount amount) or at some later date.

On the issue of commutation, the court concluded that the issue was largely one of substantial interest.  The court noted that the "best interests" test of Dameron v. Newmann Bros., 339 N.W.2d 160, 164 (Iowa 1983) was the governing standard.  Under this test, the agency is to consider the workers' age, education, mental and physical condition, life expectancy, family circumstances and living arrangements, and the reasonableness of the investment plan in determining whether the commutation is in the best interests of the claimant.  The court found, in the face of arguments that claimant had a lack of fiscal sophistication and that he planned on spending a good portion of his commutation on family members, that the decision to commute by the agency was supported by substantial evidence.  The court noted that while there was evidence to suggest that the commutation was not in Mr. Eakins' best interests, there was sufficient evidence to support the conclusion that the commutation was in his best interests, as found by the agency.

The more interesting issue involved the computation of the commutation. Defendants argued that until there was a final judgment by the courts, the commutation amount could not be fixed.  Claimant argued that basing the commutation amount on the situation at the time the claim was finally completed would allow defendants to continue to appeal and thus change the computation amounts, particularly the discount rate.  The court followed a middle path on this issue.  They found that the amounts paid by the defendants should be credited in determining the amount of the commutation.  The court, rather than using the date that the case was final, indicated that interest amounts were fixed as of the date of the final agency action, in this case the appeal decision of the agency.  The court found that the "final determination of the rights and obligations of the parties" occurred at the time of final agency action.  Under the decision, "the proper date to use to determine the applicable interest rate for the commutation calculation is the date of the commissioner's decision."  Weekly payments made while the action is pending on judicial review should be credit to the defendants.  This would appear to be a common sense application of the statute, consistent with the statutes that govern the issue, i.e. sections 85.48, 535.3 and 668.13.

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