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July 27, 2009

Iowa Court Awards No Penalty for Failure to Pay While Appeal Is Pending Before the Agency

While limiting its ruling to the specific facts of this case, the Iowa Court of Appeals ruled in late July, 2009, that an employer could refuse to pay the ordered award to the injured worker while an appeal is pending.

In Millenkamp v. Millenkamp Cattle and Allied Insurance, the Court found that the employer and carrier could delay payment of benefits to the injured worker while the award was reviewed within the agency. The Iowa Code, Section 86.13, allows for an award of penalty benefits, up to 50% of benefits which have accrued but have not been paid. Generally, delay of more than 11 days without reason is considered as the basis for awards of up to 50%.

In this case, the worker asked for penalty benefits for failure to pay the award while the appeal was pending between the Deputy Workers’ Compensation Commissioner and the Commissioner. Initially, on remand, a Deputy Workers’ Compensation Commissioner, in the capacity of an Administrative Law Judge, agreed that penalty benefits were appropriate. The Commissioner initially upheld that award, but on reconsideration, reversed himself and the Deputy Commissioner, and ruled that penalty benefits were not appropriate under the facts of this case. Specifically, the Commissioner held that the deputy’s decision was a “proposed decision only,” subject to intra-agency appeal. The commissioner held that, “if defendants’ denial of benefits was fairly debatable before the decision, it was almost certainly fairly debatable after the decision.” The commissioner noted that the ruling was limited to the facts of the current case, and might be different on different facts.

The Iowa Court of Appeals upheld the decision not to award penalty benefits under Section 86.13.

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