Iowa Supreme Court Holds That a Second Injury for SIF Purposes Can Encompass an Injury That Includes Both a Scheduled and Unscheduled Component, But That the Fund Receives Credit For the "Full Amount of the Employer's Liability for the Second Qualifying Injury"

Second Injury Fund of Iowa v. Strable, No. 24-0056 (Iowa Dec. 13, 2024)

In this Second Injury Fund case, the Court addresses the issue of whether a second injury for Fund purposes can be brought when that injury also encompasses non-scheduled injuries.  This particular issue had previously been decided by the Court in Delaney v. SIF, 6 NW3d 714, 717 (Iowa 2024) and the Court affirms its finding in Delaney that such an injury can be the subject of a Fund claim.  Strable goes beyond Delaney in also considering the credits accorded the Fund in such a situation, finding that those credits include not only the scheduled value of all such claims, but the industrial value of those claims.

In this case, claimant had a first injury in the form of injuries to the arm (carpal tunnel). She subsequently suffered an ankle injury, which included unscheduled sequela injuries (back and mental health injuries).  She settled the ankle injury by way of a commutation and settled the unscheduled sequela injuries by way of a compromise settlement. The commissioner found that the claim was appropriate against the Fund, found claimant had a 70% industrial disability as a result of the ankle injury and the carpal tunnel and provided the Fund with credits for the value of the ankle injury (92.4 weeks) and the carpal tunnel (20 weeks).

The Court concludes the claimant had a first injury and rejects the Fund's argument that the second qualifying injury must be limited to a scheduled injury, citing Delaney. The Court indicates that under 85.64, the phrase "which has resulted in the loss of or loss of use of another such member or organ" means a loss regardless of whether the second loss includes other injuries. The Fund argued that under SIF v. Nelson and Mortimer v. Fruehauf, there was no claim if the second injury included an unscheduled component.The Court rejects these arguments, finding that Mortimer did not involve the Fund and that Nelson simply requires that the qualifying injury involve the loss of use of an enumerated member, which Strable's case clearly did.

In calculating the credits to be allowed the Fund externded beyond the Commissioner's finding that the credit was only for the value of the two scheduled members, the Court finds that the "Fund is liable for the incremental increase in Strable's disability associated the the combined effect of both enumerated injuries as compared to the disability associated only with the second qualifying injury, for which the employer is liable." The Court finds that when the second injury extends beyond the enumerated member, "the Fund should get a credit for the full amount of the employer's liability for the second qualifying injury."  The Court finds the commissioner erred in subtracting only the amount of disability associated with the scheduled lower leg injury without also including the employer's liability for the accompanying sequela injury.

Under the Court's approach, the commissioner is to determine the industrial disability from both qualifying injuries (including sequela injuries from the second injury). The commissioner then subtracts the functional value of the first injury and then the "discrete industrial disability associated with the lower left leg and sequela "without considering the effect of [the first injury]."  The case is remanded to the commissioner for a redetermination of the Fund's liability.

Note that the Court's determination for the first time reduces the Fund's obligations by the industrial value of the second injury and would seem to significantly reduce claimant's recovery in any situation in which the second injury involves sequela injuries that are determined industrially.

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