Supreme Court Affirms Billick, Holds That Injuries at Concurrent Employment May Not Be Entry Into Competitive Labor Market Requiring Application of Fresh Start Rule
In Roberts Dairy v. Billick, 861 N.W.2d 814 (Iowa 2015), the Supreme Court held that when a claimant has a first compensable injury with one employer, and later has a second compensable claim with a different employer, the fresh start rule applies with the change of employment and the second claim is not apportioned against the first injury. In that case, the court concluded that "because Billick gained a fresh start when he began his employment with Roberts in 2001, Roberts is not entitled to apportion its liability for permanent partial disability benefits in this case." Id. at 825.
In Warren Properties v. Stewart, No. 13-0474 (Iowa May 29, 2015), the court was presented with similar arguments concerning apportionment, with the exception that claimant suffered her first injury while working at Wal-Mart concurrently with her employment at Warren Properties. Claimant subsequently left her job at Wal-Mart following her back injury, but continued to work at Warren Properties where she suffered back and shoulder injuries approximately two years thereafter. Claimant settled her case with Wal-Mart on an agreement for settlement basis for a 40% industrial disability. Following hearing on the claim against Warren Properties, claimant was awarded a 50% industrial disability. The agency rejected the employer's claim that apportionment should apply to reduce the benefits awarded to the difference between the 40% and 50% awards. The agency also rejected the claim that claimant failed to prove a new back injury arising out of the claim against Warren Properties.
The district court reversed in part and affirmed in part. The court held that apportionment should have been applied, but rejected Warren Properties' argument that they should have been credited with the previous 40% award. The court also concluded that the commissioner's impairment finding could not be sustained without an additional finding that the prior impairment to the back had healed before the 2009 injury.
The Supreme Court discussed the history of the treatment of successive disabilities, both statutorily and judicially. The court noted the adoption of the fresh start and full responsibility rules via judicial decisions. The court then noted the changes made to the statute in 2004. The court discussed the rule under section 85.34(2)(u), which describes industrial disability as the reduction in the employee's earning capacity caused by the disability as it "relates to the earning capacity that the employee possessed when the injury occurred." The court noted the changes to section 85.34(7), which generally applied apportionment when a claimant had successive injuries with the same employer. The court stated that in Billick, apportionment did not apply "when the earning capacity of the employee had been reevaluated by the competitive labor market." The court found that when such a reevaluation had taken place, a fresh start applied and apportionment did not occur.
The court found that in Warren Properties, claimant had not had an injury with a previous employer, but with a concurrent employer. The employer argued that no reentry into the competitive labor market had taken place and thus apportionment applied. The claimant argued that her loss of the job with Wal-Mart without an accompanying loss at Warren Properties gave her a fresh start because she had been working two jobs previously and was now working only one job. The court concluded that concurrent employers were also different employers. The court went on to note, citing the legislative history of the statute, that the fresh start rule only applied where the employee had entered the competitive labor market with a change of employment. The court concluded that "although a specific method of apportionment was not established, the legislature did not intent to exclude from apportionment successive disability with different employers when no market reevaluation has occurred." The court further found that claimant had not competed in the labor market, and thus apportionment applied.
The court then noted that the rule of section 85.34(2)(u) must apply, as well as the rule under section 85.34(7)(a), which holds that the employer is not responsible for compensating an employee's preexisting disability that arose out of and in the course of employment with a different employer. In applying this rule, the court indicated that:
The earning capacity possessed at the time of the successive injury does not include any earning capacity lost as a consequence of a prior work-related injury or due to causes unrelated to employment, and the reduction in earning capacity caused by the successive injury therefore cannot include any earning capacity that was lost and not regained before the successive injury at issue in a particular case.
In a footnote, the court strongly suggests in the context of Ms. Stewart's case, apportionment should be applied first, by taking the difference between the 40 and 50% industrial losses suffered by the claimant. The court then states the following:
In a mathematical formulation, the reduction in earning capacity divided by earning capacity possessed is equal to the number of weeks compensated divided by 500 weeks. Applying this formula to our hypothetical scenario [which is identical to the actual scenario presented by Ms. Stewart's case], the reduction in earning capacity caused by successive injury was ten percent (fifty percent minus forty percent) and the earning capacity possessed when the injury occurred was sixty percent (100 percent minus forty percent). To determine the compensable change in earning capacity, we divide the reduction in earning capacity by the earning capacity possessed when the successive injury occurred, sixty percent. In this example, the calculation equals 16.67%, and 16.67% of 500 weeks equals 83.3 weeks.
The court then rejects the employer's contention that evidence of a loss of functional capacity arising from the 2006 injury precludes a finding that claimant suffered an industrial loss as a consequence of the 2009 injury and remands to the commissioner for further fact finding on this issue.
Because Stewart followed the decision in Billick, it reinforces the decision in Billick that, so long as an employee competes in the workforce following an initial injury, he or she receives a fresh start and apportionment does not apply. In the limited situation where there is no such competition, such as the concurrent employment situation in Stewart, apportionment does apply. That apportionment, according to the court in footnote 6, is not applied directly, but takes into account the difference between the two industrial findings divided by the earning capacity possessed when the successive injury occurred. Thus, the effect of Stewart is relatively limited, to only those situations where an employee has not reentered the competitive job market, a scenario which is quite rare with respect to successive injuries. The general rule outlined by Billick and Stewart is that apportionment does not apply to successive injuries with different employers because of the application of the fresh start rule once an employee reenters the labor market.
Stewart was handled by Martin Ozga of Neifert, Byrne & Ozga.
In Warren Properties v. Stewart, No. 13-0474 (Iowa May 29, 2015), the court was presented with similar arguments concerning apportionment, with the exception that claimant suffered her first injury while working at Wal-Mart concurrently with her employment at Warren Properties. Claimant subsequently left her job at Wal-Mart following her back injury, but continued to work at Warren Properties where she suffered back and shoulder injuries approximately two years thereafter. Claimant settled her case with Wal-Mart on an agreement for settlement basis for a 40% industrial disability. Following hearing on the claim against Warren Properties, claimant was awarded a 50% industrial disability. The agency rejected the employer's claim that apportionment should apply to reduce the benefits awarded to the difference between the 40% and 50% awards. The agency also rejected the claim that claimant failed to prove a new back injury arising out of the claim against Warren Properties.
The district court reversed in part and affirmed in part. The court held that apportionment should have been applied, but rejected Warren Properties' argument that they should have been credited with the previous 40% award. The court also concluded that the commissioner's impairment finding could not be sustained without an additional finding that the prior impairment to the back had healed before the 2009 injury.
The Supreme Court discussed the history of the treatment of successive disabilities, both statutorily and judicially. The court noted the adoption of the fresh start and full responsibility rules via judicial decisions. The court then noted the changes made to the statute in 2004. The court discussed the rule under section 85.34(2)(u), which describes industrial disability as the reduction in the employee's earning capacity caused by the disability as it "relates to the earning capacity that the employee possessed when the injury occurred." The court noted the changes to section 85.34(7), which generally applied apportionment when a claimant had successive injuries with the same employer. The court stated that in Billick, apportionment did not apply "when the earning capacity of the employee had been reevaluated by the competitive labor market." The court found that when such a reevaluation had taken place, a fresh start applied and apportionment did not occur.
The court found that in Warren Properties, claimant had not had an injury with a previous employer, but with a concurrent employer. The employer argued that no reentry into the competitive labor market had taken place and thus apportionment applied. The claimant argued that her loss of the job with Wal-Mart without an accompanying loss at Warren Properties gave her a fresh start because she had been working two jobs previously and was now working only one job. The court concluded that concurrent employers were also different employers. The court went on to note, citing the legislative history of the statute, that the fresh start rule only applied where the employee had entered the competitive labor market with a change of employment. The court concluded that "although a specific method of apportionment was not established, the legislature did not intent to exclude from apportionment successive disability with different employers when no market reevaluation has occurred." The court further found that claimant had not competed in the labor market, and thus apportionment applied.
The court then noted that the rule of section 85.34(2)(u) must apply, as well as the rule under section 85.34(7)(a), which holds that the employer is not responsible for compensating an employee's preexisting disability that arose out of and in the course of employment with a different employer. In applying this rule, the court indicated that:
The earning capacity possessed at the time of the successive injury does not include any earning capacity lost as a consequence of a prior work-related injury or due to causes unrelated to employment, and the reduction in earning capacity caused by the successive injury therefore cannot include any earning capacity that was lost and not regained before the successive injury at issue in a particular case.
In a footnote, the court strongly suggests in the context of Ms. Stewart's case, apportionment should be applied first, by taking the difference between the 40 and 50% industrial losses suffered by the claimant. The court then states the following:
In a mathematical formulation, the reduction in earning capacity divided by earning capacity possessed is equal to the number of weeks compensated divided by 500 weeks. Applying this formula to our hypothetical scenario [which is identical to the actual scenario presented by Ms. Stewart's case], the reduction in earning capacity caused by successive injury was ten percent (fifty percent minus forty percent) and the earning capacity possessed when the injury occurred was sixty percent (100 percent minus forty percent). To determine the compensable change in earning capacity, we divide the reduction in earning capacity by the earning capacity possessed when the successive injury occurred, sixty percent. In this example, the calculation equals 16.67%, and 16.67% of 500 weeks equals 83.3 weeks.
The court then rejects the employer's contention that evidence of a loss of functional capacity arising from the 2006 injury precludes a finding that claimant suffered an industrial loss as a consequence of the 2009 injury and remands to the commissioner for further fact finding on this issue.
Because Stewart followed the decision in Billick, it reinforces the decision in Billick that, so long as an employee competes in the workforce following an initial injury, he or she receives a fresh start and apportionment does not apply. In the limited situation where there is no such competition, such as the concurrent employment situation in Stewart, apportionment does apply. That apportionment, according to the court in footnote 6, is not applied directly, but takes into account the difference between the two industrial findings divided by the earning capacity possessed when the successive injury occurred. Thus, the effect of Stewart is relatively limited, to only those situations where an employee has not reentered the competitive job market, a scenario which is quite rare with respect to successive injuries. The general rule outlined by Billick and Stewart is that apportionment does not apply to successive injuries with different employers because of the application of the fresh start rule once an employee reenters the labor market.
Stewart was handled by Martin Ozga of Neifert, Byrne & Ozga.
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