Iowa employees are covered by the Iowa workers’ compensation law under most employment relationships. 85.1, .2, .3 & .18 IA Code. Correspondingly, most employers are required by law to purchase workers’ compensation liability insurance. 87.1 & .14A IA Code. A procedure exists that permits employers to apply to the Insurance Commissioner to become certified to self-insured rather than purchase insurance. 87.11 IA Code.
Criminal and civil penalties can be imposed on employers who violate the mandatory insurance law. Employers who operate without insurance illegally lose the exclusive remedy protection of the workers’ compensation law and are liable to the employee for the full measure of damages available under tort law if an injured employee sues the employer in court. 87.14A & .21. IA Code.
Sole proprietors, partners in a partnership, and members of a limited liability company have a status other than of an employee and are not covered by Iowa workers’ compensation law. They may, however, elect to be covered by purchasing insurance that expressly covers them. Persons who are bona fide independent contractors are not employees. However, a contract that designates a person to be an independent contractor does not make the person an independent contractor if the person functions as an employee. 85.18 IA Code.
Iowa law contains a number of exemptions that make specified employees and their employers exempt from workers’ compensation coverage. 85.1 IA Code. The exemptions are complex and this guide does not purport to reliably describe the exemptions. Persons eligible to receive compensation under federal law are exempt. In general, limited exemptions exist for persons employed in agriculture or by a relative. Limited exemptions exist when the employment is casual and is not performed for purposes of the employer’s trade or business or if the employee’s services are performed in or about the employer’s dwelling. Some of the exemptions apply only if the employee’s earnings from the employer are less than $1,500 annually. Employers may elect to cover some classes of exempt employees by purchasing an insurance policy the specifically includes those employees. Specific guidance on exemptions and electing coverage can be obtained from a Workers' Compensation Compliance Administrator.
2. REPRESENTATIVE IN IOWA.
All workers’ compensation insurance carriers and self-insurers are required to have a designated representative located in Iowa. The representative must have knowledge of Iowa workers' compensation law and authority to expedite claims. DWC shall be advised of the name, address, and phone number of the representative and notified of any changes within ten days. Rule 876 IAC 2.3, Reporting Compliance Handbook (Handbook) p. 10. The purpose of the rule is to promote having claims properly adjusted to assist in implementation of public policy to avoid litigation and the accompanying expense, provide benefits to injured workers at the time when the benefits are due, and afford an efficient and speedy method of resolving disputes.
3. FROI (First Report of Injury).
Upon notice or knowledge of a work injury resulting in temporary disability for a period longer than three days, resulting in permanent partial disability, or permanent total disability, or death, a self-insured employer or and employer’s insurance carrier must, within four days, (not counting Sundays and legal holidays) file a properly completed First Report of Injury (FROI) using Electronic Data Interchange (EDI). See Handbook pp. 9, 32; Rules 876 - Chapter 11. [Note: In addition, employers must report to the Iowa Labor Commissioner within eight hours each accident or health hazard that results in one or more fatalities or hospitalization of three or more employees. The toll free number that is available 24 hours a day, including weekends and holidays, to use to report is
Filing a FROI is required whenever the Workers’ Compensation Commissioner issues a written demand to the employer to file a FROI. A FROI must be filed whenever an employee claims to have sustained a qualifying injury as described in the previous paragraph. Filing a FROI is required even if liability for the injury is denied, 86.11 IA Code; Rule 876 IAC 3.1(1). Filing a FROI does not admit liability. A FROI that is submitted will not be accepted if it is not properly completed or is otherwise erroneously filed or has significant errors. It will be deemed as having not been received within 5 working days and a corrected form must be re-filed within 15 working days. See Handbook, pp. 9, 32. Sanctions can be imposed for failure to properly and promptly file a FROI after a FROI is demanded.
4. SROI (Subsequent Report of Injury).
If a FROI is required to be filed, one or more Subsequent Reports of Injury (SROI) must be filed subsequently using EDI. Rule 876 IAC 3.1(2); Handbook, pp. 7, 11.
There are several types of SROI’s. Some of the reasons for filing a SROI include the following:
A. When weekly compensation benefits are paid, a “notice of commencement of payments” must be (filed) on the SROI within thirty days from the date the payments were commenced. If the required notice of commencement of payment is not noted on the filed SROI, the failure to do so will stop the running of the limitation on the right of the employee to file or reopen a case from date of last payment of weekly benefits under 85.26, see 86.13 IA Code. The failure can also subject the reporter to sanctions under 86.12 IA Code.
B. Whenever weekly compensation payments are terminated or interrupted.
C. A SROI Annual Report (AN) is required to be filed for every claim that is open on June 30 of each calendar year. Rule 876 IAC 11.7.
D. A SROI Final Report (FN) is required to be filed when administration of a claim is closed. Rules 876 IAC 2.6 & 11.7. The information in the Final Report must also be mailed to the employee.
E. A denial of liability is required to be filed in a SROI in addition to the denial of liability letter to the claimant. Rule 876 IAC 3.1, Handbook, p. 13.
F. There is a requirement to report payments of “other benefits paid” in addition to the specific information requested on the form (this was also requested under the old form 2A). This includes the following: 1) medical and mileage 85.27, 2) burial 85.28, 3) interest 85.30, 4) Voc. Rehab. 85.70, 5) penalty 86.13, 6) misc.
5. PAPER REPORTS.
In addition to the EDI filing requirements, the following Paper Forms are required:
A. Denial of Liability Notification Letter must be mailed to the claimant stating the reasons for the denial. Rule 876 IAC 3.1, Handbook, p. 13.
B. Medical Reports must be filed with DWC if an injury exceeds 13 weeks of TTD/HP, or when there is PPD. Medical transmittal forms are available at DWC in Forms and Publications. Rule 876 IAC 3.1, Handbook, p. 30. DWC does not retain medical reports after they are reviewed.
C. A Final Report showing the date of last payment must be mailed to the employee at the employee’s last known address, Rules 876 IAC 2.6 and 3.1(2)(3). This notice may be necessary to establish the date of last payment of weekly benefits for a determination of the three-year period that a claimant has to reopen a claim under 85.26(1).
6. ADJUSTING AND PAYING CLAIMS.
The employer and its insurance carrier or a self-insured employer have an affirmative responsibility to act reasonably in response to a claim for benefits. Boylan v. American Motorists Ins. Co., 489 N.W.2d 742 (Iowa 1992). That responsibility includes initiating payment of weekly compensation benefits within eleven days following the first day of disability caused by the injury as required by 85.30 IA Code. Inherent in the responsibility to act reasonably is the duty to conduct a reasonable investigation so the decisions made concerning the claim are based on fact. If a decision to deny benefits is made, that decision and the reasons for it must be contemporaneously communicated in writing to the employee. When liability for a claim is denied, a letter of denial (Denial of Liability Notification) must be sent to the employee stating the reasons for the denial. Rule 876 IAC 3.1(2); Handbook, p.13.
Weekly compensation benefits are due and payable weekly commencing by the eleventh day after the first day of disability caused by the injury. 85.30 Ia Code. If weekly benefits are not commenced within those eleven days, a penalty must be imposed as required by the fourth paragraph of 86.13 Ia Code unless the employer or insurance carrier demonstrate that a reasonable or probable cause or excuse exists for the denial or delay. Christensen v. Snap-On Tools, 554 N.W.2d 254 (Iowa 1996). A reasonable excuse may be based on fact or the law. Gilbert v. USF Holland, 637 N.W. 194 (Iowa 2001). A reasonable excuse for denying benefits exists if the known facts or existing law make compensability of the claim fairly debatable. A reasonable excuse for delay exists for the duration of time needed to properly investigate the claim. The duty to investigate is a continuing duty and compensability of the claim must be reevaluated whenever new information becomes available. Squealer Feeds v. Pickering, 530 N.W.2d 678, 683 (Iowa 1995).
Permanent partial disability compensation (PPD) is payable commencing upon completion of payments for TTD, HP or TPD without interruption of the system of weekly payments.
Wages are payable in lieu of weekly compensation if an employee who, after being incapacity from work for three days or more, is required to be absent from work for one full day or less to obtain care provided under section 85.27 even though the employee is not actually disabled at that time.
Interest is owed on weekly compensation that is not paid when due, even if the claim was fairly debatable. 85.30 IA Code. The United States Rule directs that payments are first applied to satisfy any liability for interest and the remainder of the payment is then applied to satisfy the employer’s responsibility for weekly compensation benefits.
7. TERMINATING PAYMENTS.
Once weekly benefit payments have been commenced, they must continue until termination is justified by law.
A. Termination of benefits is legally justified when: 1) the employee has returned to work, or 2) it is medically indicated that significant improvement from the injury is not anticipated, or 3) the employee is medically capable of returning to the same or similar work. However, even when “(2)” or “(3),” noted above, have occurred, if the employee has not returned to work, weekly benefits cannot be terminated without giving the employee 30 days advance written notice stating the reasons and indicating the right to file a claim with DWC, 85.33(1), 85.34(2) and 86.13 IA Code; Christensen, 554 N.W.2d 254 (Iowa 1996); Auxier v. Woodward State Hosp.-Sch., 266 N.W.2d 139 (Iowa 1978).
B. Overpayment of TTD, HP, or TPD benefits is allowed as a credit toward satisfying the employer’s liability for any future weekly benefits due for an injury to that employee if the insurance carrier or self-insurer has acted in good faith in determining and notifying the employee of a change in benefits. 85.34(4) IA Code.
8. MEDICAL CARE.
Iowa law requires employers to provide reasonable care for the injuries an employee sustains arising out of in the course of employment and also gives the employer the right to choose the providers of the care. It is recommended that each injured employee be given express directives regarding the authorized sources of care. The care must be provided promptly and must be reasonably suited to treat the injury. Wilson v. IBP, Inc., 558 N.W.2d 132 (Iowa 1996). The employer must pay for the care it chooses and must do so with reasonable promptness. 85.27 IA Code. Care is defined broadly and includes diagnostic tests, chiropractic, nursing, physical rehabilitation, prosthetic devices and the cost of transportation required for receiving the services. An employee who is dissatisfied with the care provided by the employer can petition the DWC for alternate care. Rule 876 IAC 4.48.
9. FURTHER RESPONSIBILITIES.
In addition to those duties set out above, the employer is also responsible for the following:
A. Upon request, timely provide a statement of earnings. (85.40 IA Code).
B. Pay interest if weekly benefits are delayed. (85.3, IA Code).
C. Timely furnish copies of medical records relevant to a claim when requested (85.27 IA Code; Rule 876 IAC 8.9);
D. Payment of lost wages for treatment after an employee returns to work following a WC injury (85.27 IA Code).
Chapters 85 and 86 of Iowa law authorize administrative sanctions for compliance violations.
A. Informal conference with the Commissioner. (Rule 876 IAC 4.3).
B. Civil injunctions, revocation of insurance and self-insurance status (87.20 IA Code; 87.24, IA Code; 507B.4(9), IA Code; Rule 876 IAC 4.3).
C. An assessment of up to $1,000 payable to the Second Injury Fund of Iowa for not properly filing a FROI or SROI [85.12 IA Code, Rule 876 IAC 3.1(1)].
D. An assessment payable to the Second Injury Fund of Iowa for habitually failing to commence weekly compensation benefits within eleven days. The amount of the assessment is computed based upon the employer’s deviation from the statutory requirement and may be for tens of thousands of dollars. (86.13A IA Code).
E. Award of up to 50% of additional benefits for delay or denial of weekly benefits, including delays caused by the improper calculation of weekly rate without reasonable cause or excuse (86.13, IA Code).
F. Continuation of benefits notwithstanding compensability of the claim if the employee has not returned to work and weekly benefits are terminated without proper notice. [86.13 & 507B.4(9) IA Code; Rule 876 IAC 4.3].
11. TORT LIABILITY.
Common law punitive damages actions (668a.1, IA Code):
A. Bad faith claims practices, abuse of process, interference with contract, and fraudulent misrepresentation or failure to furnish medical care. Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388 (Iowa 2001), Boylan v. American Motorists Ins. Co., 489 N.W.2d 742 (Iowa 1992).
B. Common law claims for breach of fiduciary responsibility and slander for violating the workers' compensation requirement to provide reasonable medical care. Wilson v. IBP, Inc., 558 N.W.2d 132 (Iowa1996).