By Troy Howell

On March 30, 2017, Iowa Governor Terry Branstad signed House File 518, which contains many changes to the Iowa Workers’ Compensation Act. The effective date for this new legislation is July 1, 2017. Here is a link to House File 518 which shows all the changes: https://www.legis.iowa.gov/docs/publications/LGR/87/HF518.pdf?utm_medium=email&utm_source=govdelivery.

What are the major changes?

While there are many changes to Iowa’s workers’ compensation law, in my opinion, the four most important changes are:

1. Any shoulder injuries occurring on or after July 1, 2017 will now be considered scheduled member injuries rather than whole person injuries subject to an industrial disability (loss of earning capacity) analysis as they had been in the past. Going forward, with shoulder injuries occurring on or after July 1, 2017, the number of weeks of permanent partial disability (PPD) benefits payable for 100% loss of use (100% functional impairment) of a shoulder will be 400 weeks.  Of course, complete (100%) loss of use of a shoulder is rare and the percentage loss of use will typically be much less.  Loss of earning capacity will no longer matter for a shoulder injury-PPD benefits for a shoulder injury will be based solely on functional impairment going forward.  This change eliminates the scenario where a shoulder injury could have a low permanent impairment rating based on the AMA Guides yet generate a large industrial disability award because of the employee’s loss of earning capacity as a result of the shoulder injury.  Along with this change, an employee with such a shoulder injury resulting in permanent partial disability who cannot return to gainful employment because of the injury will now have the opportunity for vocational training and education paid for by the employer (capped at $15,000);
2. With whole person injuries (including injuries to the back, neck, head and hips) occurring on or after July 1, 2017, if the employee returns to work from the injury at the same or greater hourly wage or earnings than he/she had at the time of the injury or is offered work post-injury at the same or greater hourly wage or earnings than he/she had at the time of the injury, then the injury is to be compensated based solely on functional disability (essentially as a scheduled member injury) rather than industrially taking into account loss of earning capacity. This eliminates industrial disability awards based solely on the severity of the injury, whether a surgery took place or permanent restrictions.  Even a severe injury that required surgery and that resulted in permanent restrictions would not be subject to a loss of earning capacity analysis provided the employee returns to work from the injury at the same or greater hourly wage or earnings.  The employee would still have the right to later file a review-reopening petition in the event he/she is later terminated or his/her hourly wage or earnings were later reduced provided the review-reopening petition is timely filed.  For employers, this change places even more importance on returning employees to either their same job or a job that pays even more money;
3. With whole person injuries occurring on or after July 1, 2017, the number of years an employee is reasonably anticipated to work going forward will now be included in the industrial disability analysis. This change should make large industrial disability awards less likely for injured employees that had plans to retire shortly anyway regardless of the injury; and
4. With injuries occurring on or after July 1, 2017, an employer’s obligation to reimburse an employee for a Section 85.39 independent medical examination (IME) is now contingent upon the alleged injury being found compensable. This change will eliminate the reimbursement for an employee’s IME when the alleged injury at issue is not compensable.

What actions should employers take to prepare for these changes?

For employers, they should verify that their management personnel overseeing worker’s compensation are aware of these changes to the Iowa Workers’ Compensation Act.  They should also verify that their worker’s compensation insurers and claims administrators are aware of these changes as many insurers and claims administrators operate in multiple jurisdictions and may not be aware of the changes here in Iowa.

Is there anything else employers should know?

These changes may generate litigation regarding their constitutionality, interpretation, applicability, and implementation.  The attorneys at Lane & Waterman will be able to advise you regarding case law generated by these changes.

Troy practices in Lane & Waterman’s Labor & Employment practice group focusing primarily on workers’ compensation issues.