Iowa Legislature Addresses Workers’ Comp Payments in Special Session

In a one-day special session, the Iowa Legislature has passed a controversial economic stimulus package and reforms supported by the Property Casualty Insurers Association of America (PCI) that will reportedly help reduce workers’ compensation costs. Gov. Vilsack has signed the economic development plan in Senate File 2311 and the workers’ comp revisions in House File 2581.

The special session stemmed from an Iowa Supreme Court ruling in June that stated Vilsack exceeded his line item veto authority last year when he vetoed portions of legislation dealing with economic development, the tax code, and the workers’ comp system. The court’s ruling had the effect of vetoing the entire law. Since June lawmakers have been working to resolve their differences on these issues.

“This legislation is welcomed in that it reverses the 2002 Iowa Supreme Court ruling in Venegas v. IBP that eliminated apportionment in workers’ compensation claims and allowed employees to collect twice for the same injury,” Nancy Schroeder, PCI’s assistant vice president, workers’ compensation, commented. “The reversal of Venegas is a key component in reducing workers’ compensation costs in Iowa. The intent of the legislation is to prevent all double recoveries and all double reductions in workers’ compensation benefits for permanent partial disability. However PCI continues to have concerns regarding provisions that increase penalties and fines for noncompliance. These provisions have the potential to result in very large penalties for simple errors in reporting on claim activity, regardless of a company’s good faith effort to comply. PCI has worked with Iowa Workers Compensation Commissioner Mike Trier and looks forward to continuing the dialogue with him to resolve these concerns.”

In addition to reversing the Venegas decision and implementing stiff penalties, HF2581 codifies the use of loss of earning capacity to determine unscheduled permanent partial disability, clarifies the employer’s responsibility for the cost of medical care that the employer directs when it is determined that the claim will not be compensated, and increases the weekly allowance during rehabilitation.