Workers' Comp Update: Could comparing apples and oranges be a lemon for employers?

The Iowa Supreme Court Interprets the Successive Disabilities Statute

The Iowa Supreme Court recently provided guidance regarding the application of the successive disabilities statute (Iowa Code §85.34(7)), in Loew v. Menard, Inc., No. 22-1894, 2024 WL 501439 (Iowa Feb. 9, 2024). 

This case involved a worker who sustained two separate back injuries in 2015 and 2018, while working for Menard, Inc.  In an earlier case, the commissioner found the 2015 injury caused a 20% functional impairment and awarded 30% (150 weeks) industrial disability, inclusive of the functional impairment, for the reduction in earning capacity.  For the 2018 injury, the worker was assigned a 28% functional rating, only 8% of which was found to be attributed to the new injury.  In the 2018 case, the issue was the amount of credit offset allowed for the prior compensated injury. 

For the new injury, the parties agreed that because the employee returned to work for greater wages, pursuant to amended Iowa Code §85.34(2)(v), his compensation would be determined by his functional rating, as opposed to compensation for industrial loss.  The commissioner found the employer did not owe additional benefits for the new back injury because the total functional impairment of 28% was less than the 30% industrial disability awarded and already paid for the 2015 injury.  The worker asserted he was entitled to compensation for his new 8% impairment and argued the commissioner’s decision, which compared incommensurables – the “apples” of reduced earning capacity to the “oranges” of functional impairment – was improper. 

The Iowa Supreme Court agreed with the worker and reversed.  The Court stated: 

“Compensation based on loss of earning capacity and compensation based on functional impairment are incommensurable; offsetting one against the other is like determining ‘whether a particular line is longer than a particular rock is heavy.’”  (quoting Bendix Autorlite Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 897, 108 S.Ct 2218, 100 L.Ed.2d 896 (1988) (Scalia, J., concurring in the judgment)). 

While the Court’s decision offers a seemingly simple method for applying the apportionment statute, some questions remain. For example:

• If the worker here is terminated by the employer, entitling him to an industrial disability analysis under §85.34(2)(v), will the employer be entitled to the 2015 credit, the 2018 credit, or both?
• In a review-reopening proceeding, where additional body parts are alleged as body as a whole sequelae to a prior compensated scheduled member, how is the credit applied?

For employers, this decision confirms the apportionment credit remains available to prevent double recoveries to some extent, but the apples and oranges of its application may not always be a bowl of cherries.