Supreme Court Decision in Second Injury Fund of Iowa v. Kratzer

The decision in Second Injury Fund of Iowa v. Kratzer, 778 N.W.2d 42 (Iowa 2010) followed close on the heals of the decision in Gregory v. Fund, which addressed similar issues. In Kratzer, claimant suffered an injury to both legs and lower back in 1994, which ultimately resulted in a decision by the commissioner, affirmed on appeal, of a 20% industrial disability. In 2002, claimant had another injury to her left leg, which was settled with the employer just before hearing. The arbitration decision found a first and second injury, and awarded 40% industrial disability. On appeal before the commissioner, the finding of first and second injuries was maintained, but the award was increased to permanent total disability under the odd-lot doctrine.

On judicial review, the district court concluded that although claimant's first injury to the right leg was a qualifying injury, the injury to the left leg in 2002 was not because the same member was injured in the 1994 accident (a bilateral injury). The Court of Appeals affirmed this decision. On review before the Supreme Court, Kratzer contended the 2002 injury was a qualifying second injury, and the Fund argued that the 1997 injury was not a qualifying first injury.

Based on the decision in Gregory (see discussion in this blog on March 21), the court concluded that the injury to the right leg in 1997 was a first injury. With respect to the 2002 injury, the court was faced with the question of whether a bilateral first injury precluded a qualifying second injury because this injury was not to "another member." The court noted the liberal construction of the workers' compensation statute and found "no support in the language of section 85.64 for the proposition that that General Assembly intended to qualify as second injuries only disabling injuries to enumerated members that were not previously functionally impaired." All that the phrase "another member" required was that a "subsequent disabling injury be to an enumerated member other than the member relied upon by the claimant to establish the first qualifying injury." The court concluded that to rule otherwise would require the court to ignore the principle that chapter 85 was to be interpreted in favor of injured employees.

Justice Ternus, based on the decision in Gregory, and the principle of stare decisis, concurred in the majority opinion. Justices Cady and Streit, based on their dissents in Gregory, also dissented in Kratzer. Justice Baker, who had dissented in the Court of Appeals decision, took no part in the decision of the Supreme Court.

Kratzer expands the reach of Second Injury Fund claims in keeping with the words of the statute. It should pave the way for consideration of cases in which claimants have a bilateral first injury as well as a bilateral second injury (e.g. a first bilateral carpal tunnel claim followed by a second such claim), and indeed in Solland v. Second Injury Fund, No. 08-1893 (Iowa Ct. App. March 10, 2010), 2010 WL 786165, the Court of Appeals did just this, finding that Kratzer required that a bilateral loss followed by a bilateral loss did not preclude benefits.  The court remanded the case to the agency for further proceedings.

With Kratzer and George, the potential range of Fund cases has grown larger, but troubling language in Gregory concerning but not directly addressing the full responsibility rule could reduce the favorable effect of these decisions for claimants, depending on the future interpretation by the courts.