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January 10, 2012

Iowa Employer Subject to Penalty for Not Paying Injured Worker With Zero Impairment

On April 21, 2010, the Iowa Court of Appeals issued an opinion that will almost certainly be appealed, and will cause considerable discussion among insurance carriers and employers. In Williams v. KW Products and Hartford Insurance, the Iowa Court of Appeals considered the claim of an injured worker with bilateral forearm tendonitis, who was given zero impairment by his treating orthopædic surgeon. At the same time, the treating doctor recommended “moderate” restrictions in the use of the arms and rare internal rotation of the forearms, and suggested that he find another job.

A second orthopædic examination, performed as an Independent Medical Examination, found permanent impairment and permanent restrictions. The case went to hearing, and the Deputy Workers’ Compensation Commissioner found that Mr. Williams had sustained a 15% impairment to the body as a whole, based on the opinion of the IME opinion. The arbitration decision noted that it seemed inconsistent to have permanent restrictions but no permanent impairment, despite defendants’ argument that such restrictions were simply “prophylactic,” to avoid future reinjury. The Deputy Commissioner found a 15% loss to the body as a whole, and the Commissioner affirmed.

Claimant also requested penalty benefits under §86.13 of the Iowa Code, based on the defendants’ failure to pay any permanent partial disability benefits. Defendants argued that the treating orthopædic surgeon assigned no permanent impairment, so there was no duty to pay for the medical impairment. The Deputy Workers’ Compensation Commissioner awarded no penalty benefits on the weight of the treating doctor’s finding of zero impairment. The Commissioner affirmed the arbitration decision, as did the Iowa District Court.

However, relying on  Larson’s Workers’ Compensation Law § 135.03 at 135-02, the Iowa Court of Appeals reversed the denial of penalty benefits. The Court of Appeals noted that the defendants had an ongoing duty to investigate the claimant’s entitlement to permanent partial disability benefits, and that the treating doctor’s recommendation of permanent restrictions triggered a duty to investigate and to pay the claimant for his loss of use of this arms.

This case will almost certainly be appealed to the Iowa Supreme Court. If upheld, Williams v. KW Products will cause insurance carriers and employers to look more closely at the findings of the treating doctors before simply refusing to pay any permanent disability benefits.

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