Supreme Court Holds That IME Costs for an "Examination" are Included in Code Section 85.39

Mid American Construction LLC v. Sandlin, No. 22-0471 (Iowa Feb. 9, 2024)

In this action, the sole question presented to the Court was whether the cost of an "examination" conducted as a part of an independent medical examination was reimbursable to claimant or whether the amount to be paid was limited to the the component cost of the impairment rating under section 85.39 of the Code.  The commissioner had included the costs of the examination and the district court agreed.  On appeal to the Court of Appeals, the court limited the amount to the cost involved in providing the impairment rating and awarded only $500 of the $2200 amount charged by the IME physician.

On further review, the Supreme Court reverses the decision of the Court of Appeals and holds that the cost of the examination was payable by the employer.  The Court begins by noting that section 85.39(1) and (2) both require an employee to submit to examinations as a part of the workers' compensation claims.  Specifically, section 2 provides that an employer is only liable for the costs of the "examination" if a claim is found to be compensable.  An employer is required to reimburse the employee for the "reasonable fee for a subsequent examination by a physician of the employee's own choice."  85.39(2).  Given the fact that 85.39 focuses on the examination, the Court, reading the statute as a whole, finds that the employer must reimburse the entire cost of the the independent medical examination.  The Court also notes that workers' compensation statutes are to be liberally constructed in favor of the employee.

The Court also construes the phrase "perform an impairment rating," which the employer posited as a limiting factor on the costs to be reimbursed.  The Court finds that in order to adequately "perform" an impairment rating, the rating is to be conducted in accordance with the AMA Guides.  The Guides require the physician to perform various tasks in order to determine the rating, including the performance of  "a physical examination to assess the employee's status and peform accurate measurements."  AMA Guides 21.  Thus, in order to perform an impairment rating, an examination must occur and the costs of that examination are included in the costs of the IME.

The Court concludes that the costs of Dr. Taylor's exam was reasonable, as the doctor indicated that the charges were reasonable based on the time spent reviewing records, performing the exam and issuing the report.  Because the doctor did not indicate, however, that this amount was within the "typical fee(s) charged by a medical provider to perform an impairment rating in the local area where the examination is conducted", another requirement of 85.39, the case was remanded to the commissioner for a determination of the reasonableness of the charge in light of the fees charged in the local area.  NOTE that in P.M. Lattner Mfg. v. Rife, No. 22-1421 (Iowa Feb. 9, 2024), the Court holds that where the IME doctor indicates that an IME fee is reasonable and customary "in the geographic area" this is sufficient to support a finding that the commissioner's decision is supported by substantial evidence.