Supreme Court Concludes Apportionment Does Not Apply to Successive Injuries with Different Employers

In Roberts Dairy v. Billick, No. 13-1009 (Iowa April 3, 2015), the Supreme Court for the first time addressed the meaning of the apportionment provisions of section 85.34(7) of the Iowa Code and concluded that in a situation where an employee has an injury with one employer, and later has an injury with a different employer, apportionment does not apply.

Claimant had a back injury in 1985 which resulted in the assessment of an 85% industrial disability in an agreement for settlement.  Claimant was able to get back to work and had another injury in 1993, resulting in injuries to his head, neck, left shoulder, ribs, back and left arm.  This was settled on an agreement for settlement under Missouri law for 18.5%.  Claimant began working for Roberts Dairy in 2001.  He suffered an ankle injury in 2004; injuries to his head, neck and left shoulder in 2004; a thoracic compression fracture in 2006; and a chest/shoulder injury which also caused emotional trauma in 2007.  All of these injuries were included in four petitions filed against Roberts and consolidated for hearing.

The commissioner rejected the employer's contention that liability should be apportioned because of the earlier payments for his injuries.  At the district court level, the claim was reversed. The district court concluded that section 85.34(7)(a) of the Code did not allow for earlier disabilities to be considered in determining the current degree of disability.

As an initial matter, the Supreme Court concluded that the commissioner was not vested with discretion to interpret the apportionment statute, and thus no deference was due the commissioner's conclusions regarding the meaning of the statute.  The court undertook a historical analysis of the precedents regarding the fresh start and full responsibility rules.  The court noted that the fresh start rule provides that when an employee begins employment with a new employer, the employee enjoys a renewed earning capacity.  Any resulting "loss of earning capacity is measured as a diminution of the new, complete earning capacity that existed at the time the employment with the new employer commenced."

The full responsibility rule was said to be a corollary to the fresh start rule, which is based on the premise of fresh start with a change of employment.  The court also noted that in Venegas v. IBP, Inc., 638 N.W.2d 699 (Iowa 2002), the court had held that the full responsibility rule applied in a situation where an employee had an earlier injury, and later had an injury with a different employee.  In this situation, the fresh start rule applied, and the second employer was fully responsible for the industrial disability of the claimant.

The court noted that in making changes to the workers' compensation law in 2004, the legislature had modified section 85.34(2)(u) of the Code to provide that earning capacity was based on the relationship between the employee's injury and "the earning capacity that the employee possessed when the injury occurred."  The court also noted that the passage of a new section 85.34(7), which created an apportionment scheme for the situation where a claimant had multiple injuries with the same employer.  The court also noted that legislature set forth specific legislative intent language which clarified that the fresh start and full responsibility rules had been modified.  The court noted that this language "emphasized in clear terms that the general assembly intended no change of existing law 'that is not expressly provided' in the enactment."

The Supreme Court stated that the district court had concluded that the commissioner's decision had erroneously exposed the employer to liability for disability incurred as a result of Billick's accidents in 1985 and 1993.  The district court had cited to section 85.34(7)(a) for this proposition (that section indicates that "an employer is not liable for compensating an employee's preexisting disability that arose out of an din the course of employment with a different employer.").  The district court concluded that this section of the law unambiguously abrogated the full responsibility rule.

The Supreme Court noted first that the legislature is deemed to be familiar with the holdings of the court regarding legislative enactments, and thus was familiar with court precedent on fresh start and full responsibility.  At the time of the 2004 enactments, the fresh start and full responsibility rules precluded apportionment in situations where there were successive injuries with different employers. The court concluded that the commissioner's reading of the law was correct.  The court indicates that 85.34(7)(a) does not expressly indicate that apportionment applies and moreover "provides no mechanism for apportioning the loss between the present and previous employers."  The court noted that this was in direct contrast to section 85.34(7)(b), which provides exactly how apportionment is to work in the case of successive injuries with the same employer.  The court gives "considerable weight" to the general assembly's statement of purpose, which included the provision of a fresh start rule with each change of employment.  With each fresh start, the employee's earning capacity is reset.  The court discussed in great detail the fact that an employee's earning capacity is not static and is continually refreshed by market forces.

The court indicated that under the modified fresh start rule, the new employer is not liable for disability arising out of past employment with a different employer, but is measured by comparing the claimant's earning capacity"when the injury occurred" with "the reduction in earning capacity caused by the disability."  Citing 85.34(2)(u).  The court stated that the "earning capacity when the injury occurred is a refreshed capacity provided by the fresh start rule."  The court also rejected the district court's conclusion that an employee was able to achieve a double recovery in such a situation.  The court noted that the employee is only recovering for the injuries sustained with the new employer, at the time the new employment began.  According to the court, this is a "full recovery" and not a double recovery.  The court also noted that under the district court's formulation, an employee could never actually gain a fresh start.  The legislature according to the court, only modified the fresh start rule, they did not eliminate that rule.

The court concluded by reinstating the decision of the commissioner and remanding for affirmance of that decision.

Roberts Dairy is a case of major importance to the workers' compensation system and confirms that the fresh start and full responsibility rules are still alive.  Under Roberts Dairy, it will only be the unusual case in which apportionment is applied when there is a successive injury with a different employer.  In most cases, the fresh start rule will allow the employee to recover disability benefits based on their earning capacity at the time the injury occurs, consistent with the statute.

Comments

Popular posts from this blog

Court of Appeals Affirms Denial of Workers' Compensation Benefits; Rules on Credit Issue

2021 Workers' Compensation Appeal Decisions

2024 Workers' Compensation Appeal Decisions