However, in order for claims to be resolved amicably, the parties need to understand the various types of settlements available and the ramifications of each type of settlement so there can be informed and mutually beneficial negotiations. This article is intended to introduce the reader to the various types of settlements that can be used to resolve a worker’s compensation claim in the State of Iowa. A subsequent article will follow to explain the pros and cons of various settlements for both the employee and the employer.

In Iowa there are four general types of settlement agreements that can be used to resolve a worker’s compensation claim amicably without the time, expense, and necessity of trial. Those settlement types include:

1. The Compromise Settlement. This settlement results in a “closed file” settlement and closes all past and future claims that the injured worker may have, including medical rights. This settlement is the most commonly used settlement. All that is required to obtain approval of this settlement is a bona fide dispute on some issue. Nearly every claim has some identifiable dispute. Otherwise, the parties would not have likely proceeded to litigation on the claim. Yet, the Compromise Settlement has pros and cons, which will be discussed in a subsequent article. In general, this settlement is used to resolve disputed claims and to finalize all disputes and issues between the employee and the employer.

2. The Full Commutation. This settlement also results in a “closed file” settlement. This settlement is only available if the parties agree that there was a compensable work injury, and the parties agree to the total benefits to which the employee is entitled. There are specific requirements that must be met to obtain a full commutation, which will be the subject of a subsequent article. The full commutation is most useful when the employee continues to work for the employer and there is concern about subsequent injuries to the same body parts.

3. The Agreement for Settlement. This settlement requires the parties to agree to the total benefits to which the employee is entitled to receive. However, this settlement results in an “open file.” The employer must admit liability, concede liability to lifetime medical treatment for any treatment related to the initial work injury. Employees favor these types of settlements because the ensure coverage for future medical treatment, if ultimately needed.

4. The Partial Commutation. This settlement is rather rare in Iowa. It results in an open file settlement. Employers have little or no incentive to agree to this type of settlement. Employees can pursue a partial commutation once they prove entitlement to the underlying claim. However, the partial commutation is not utilized often in the State of Iowa.

In addition to the above settlements, the State of Iowa also recognizes a “Combination Settlement.” A Combination Settlement is a combination of a Compromise Settlement and an Agreement for Settlement. Again, a more in depth review of this type of settlement will follow in a subsequent article. However, this type of settlement is most likely to be used when the parties can agree on all issues pertaining to one alleged injury, while there remains an irreconcilable dispute on another part of the claim. For instance, the employer may concede liability for a knee injury, while disputing any claims for a low back injury. Under the Combination Settlement, the employer can concede liability for the knee injury, including future medical treatment, while the employee could relinquish and provide a “close file” on the low back injury to get the claim resolved amicably.

The State of Iowa also permits the parties to enter into Contingent Settlements. This type of settlement permits the parties to agree to the terms of a Compromise Settlement (based on a valid dispute) and make the final consummation of the agreement contingent upon some future event. Often, this contingency is approval of a Medicare Set Aside amount by the federal government. This settlement generally arises only when there are considerations of Medicare interests and can often become complicated settlements. In some situations, however, this manner of settlement permits the parties to reach an amicable settlement agreement while there remain some “unknowns” that need to be worked out before the settlement is completely finalized.

Each of these settlements will be reviewed and discussed in subsequent articles. However, if there are any questions about the types or ramifications of the various types of settlements identified above, an employee and/or employer should consult competent legal counsel.

Indeed, probably all employers should be concerned about and monitor their mod factor. The mod factor is the calculation performed to determine the employer’s loss ratio. The mod factor determines whether the employer is “penalized” or “rewarded” in their worker’s compensation premiums based on their loss experience, wage basis, etc. There are some clearly relevant factors involved in the calculation of the mod factor and some measures that employers can take to reduce their mod factor and control their worker’s compensation premiums.

However, in order to manage its mod factor, every employer should understand the factors used to calculate the mod factor and techniques that the employer can use to reduce the mod factor. I have located a few good articles that can help employers understand, monitor, and manage their mod factor. I recommend that employers visit this article by Watson Insurance Agency, Inc.   This article by Sam Martin also provides some good insight. It should be helpful to employers desiring additional information about means to reduce their mod factor.

If an injured worker has a qualifying disability, he/she may be entitled to reasonable accommodations upon return to work. No blanket statement can be given as to when a reasonable accommodation must be extended by an employer. Nor can a blanket statement be offered to determine whether a particular modification of the work duties or work environment will be considered a “reasonable accommodation.” Instead, the facts and circumstances of each situation must be considered.

In some instances, an injured work comp claimant may be able to return to the pre-injury job with a modification that lowers stock to below shoulder level or provides some type of lifting assistance. In other instances, an employee may need more than the 12 weeks of FMLA leave, despite having a pending offer of employment to fully recover and return to work. A reasonable accommodation may requite transfer to a different job for which the employee is qualified. Of course, this case get complicated if there is a union contract or seniority rules in place that may affect another employee that also has certain legal rights.

The size and financial ability of an employer is important in making this decision. The expense, hassles, and effects on production of a particular accommodations must be considered. Therefore, whenever an injured worker requests some type of modification of his/her job after a work injury, the employer should be congnizant of the potential application of the ADA and/or Iowa Civil Rights Act. Pre-emptive action may be indicated and consultation with corporate counsel early in the process is wise.

Pursuant to the Family and Medical Leave Act, employees may be entitled to unpaid leave without adverse employment consequences under certain conditions. If an employee qualifies for FMLA leave, an employer may be obligated to provide the employee additional time off despite clearance by an authorized medical provider for the employee to return to work.

From a practical standpoint, both the employee and the employer should understand their respective rights and obligations under the FMLA. An employee is entitled to take up to 12 weeks of unpaid leave as a result of a serious personal health condition. The employer can and should require medical documentation or excuse for taking this leave. However, as noted above, if the employee is able to obtain a medical excuse to remain off work from his or her personal physician or another medical provider, the employer must determine whether the requested leave qualifies for FMLA protections.

If the leave is protected by the FMLA, the employer must provide the necessary leave up to 12 weeks. However, providing FMLA leave does not require payment of wages or worker’s compensation benefits during the leave period. Pursuant to Iowa Code 85.33(2), the employer is entitled to extend an offer of light duty work to the employee. The offer must be reasonable, consistent with the medical restrictions of the authorized medical provider, and must not be unduly inconvenient or degrading. Employees should not be expect to “sort bolts” or other meanial tasks, unless this is a legitimate work task that is required to promote the employer’s business objectives.

However, if the employer has light duty work that is reasonable and consistent with the medical restrictions offered by the authorized medical provider, the employee is obligated to accept that work or forfeit weekly benefits. See Iowa Code section 85.33(2). Therefore, it is important for both employers and employees to be educated and understand their respective rights. While an employer may have light duty avaialble, refusal of that light duty assignment is not grounds for termination or other disciplinary action if the employee is entitled to FMLA leave.

Some employers favor and some disfavor the light duty work assignments. Of course, some employers simply cannot practically return an employee to work unless the employee meets certain medical and physical criteria. However, in the vast number of circumstances, the employer can and probably should accommodate the temporary medical restrictions and disability and get the employee back to work in some capacity.

Most experts and even the State of Ohio recognize that there are significant benefits to both the employer and the employee in returning an employee to work in a timely and prompt fashion. If they implement their light duty program appropriately, the employer benefits in several ways. Among the benefits that the employer can experience are:

1. A happy and loyal workforce. If the employer plays its cards right, it can make it known that it values its employees and wants to keep them working even after an injury. If prompted properly, an employer can encourage a feeling of cooperation among employees to promote those in good health to assist those that may be ailing. In the end, employees operating under this type of system may feel useful, wanted, and may return these actions through greater job satisfaction, increased production, and loyalty to the employer.

2. Some production is better than no production. If the employer can think ahead and plan for potential injuries, the employer may be able to generate sufficient types of work that could be performed by an injured worker that the employer may receive a benefit while also making the injured worker feel useful. Instead of asking the worker to sort bolts for no apparent reason, the employer could explain to an injured worker that it needs to get promotional materials or holiday mailings completed and ask an injured worker to stuff envelopes and mail important documents as part of light duty. A myriad of possibilities exist and each employer will have different needs. However, if an employer can use the injured worker to complete some little performed or perhaps delinquent duties, the light duty work may ultimately be beneficial to the employer and get some much needed work accomplished.

3. The employer can reduce its workers’ compensation premiums. Statistics show that lost time claims result in significantly higher medical, indemnity, and other related worker’s compensation costs. Reducing lost time may help reduce an employer’s work comp costs and, ultimately, its own bottom line.

4. An employer may eliminate any exposure for healing period or temporary total disability benefits. In Iowa, an employer is permitted to extend an offer of light duty to an injured employee. So long as the offered work is consistent with the medical restrictions at the time and is a “reasonable” offer of work (not demeaning, not requring travel too far from home, etc.), the employee is obligated to accept the work. If the employee declines the light duty assignment, Iowa law precludes a recovery of any temporary disability benefits by the employee. Therefore, if a reasonable light duty offer is made and refused, the employer eliminates all liability for temporary disability benefits.

5. Prompt return to work may also limit the ultimate permanent disability award on a claim in Iowa as well. Length of the healing period is one factor considered by the Commissioner in determining an industrial disability. Getting an employee promptly back to work proves potential productivity, limits the healing period, and also protrays the employer in the best possible light should the claim later become litigated and require a hearing.

6. Happy employees sue employers much less frequently. Keeping an employee working and happy is very likely to preclude litigation and is much more likely to promote a harmonious and reasonable resolution of the worker’s compensation claim once the healing process has completed.

For all of these reasons, an employer should plan ahead and develop a strategy and perhaps identify relevant job tasks that can be performed by an injured worker. Planning ahead makes the process smooth and the transition back to work easier for the employee. Planning ahead allows the employer to announce the policy, express the importance of reporting to work, the desire to maintain good employees, and also allows an employer to identify work that will potentially benefit the employer, even if in some intangible ways.

So, what does an injured worker get out of the deal? Injured workers receive several benefits from a light duty assignment. First and foremost, the employee will experience a financial benefit in reporting to work as opposed to sitting on temporary disability.

Temporary total disability benefits are paid if the employer cannot accommodate the medical restrictions. Temporary total disability benefits are intended to represent 80% of the employee’s pre-injury spendable earnings. In other words, the employee will experience a reduction in income if he/she is required to stay home because of medical restrictions. On the other hand, if the employer offers the injured worker a light duty assignment, the employeee will receive 100% of his/her normal earings and will not experience the financial distress and losses that can occur with workers required to stay off work.

Even if the employer is able to provide limited work opportunities under a light duty work assignment, the employee will receive financial benefit. If the employer offers light duty work, it will presumably pay wages consistent with those prior to the date of injury for work actually performed. In this respect, the employee will receive “normal” wages at least for a portion of the hours worked and more than the 80% level should the medical restricitons preclude a return to work.

Depending on the employer, the employee may also need to return to work to maintain seniority rights, avoid lay-off, or other action under a uniion contract. Accordingly, the employee may be highly motivated and need to return to work, even if in a light duty capacity.

In addition to the monetary benefits to the employee, there are psychological and phsyical benefits to returning to work even in a light duty assignment. From a physical standpoint, being active helps the employee avoid de-conditioning. The longer a person sits at home without working, the more atrophy may occur to necessary muscles and skills required at the workplace. Continuing to work in some capacity may help keep the employee conditioned for the time when a full-duty return is a possibility.

From a psychological standpoint, most humans are creatures of habit and requrie some interaction with other humans to maintain their mental health. Light duty work assignments allow an injured worker to maintain some semblence of a normal schedule and routine in their life and may help distract the injured worker from the detriments of the injury. Instead of sitting at home with little or no personal interaction and pondering the severity of their injury, light duty assignments allow workers to continue to get up, get ready, and go to work. This allows the worker to feel useful and to earn an “honest living.” Many workers will be happier, recover more quickly, and feel more positive toward their injury and their employer if they are maintained on a light duty work assignment until they are capable of returning to unrestricted work.

Therefore, all employers should recognize that ther are significant benefits both to the employee and to the employer in planning ahead and preparing reasonable options for light duty work assignments should an employee become injured. All employers should contemplate potential and useful work assignments that could be performed and should use their light duty work program as a means to promote the employer, show compassion, all while promoting increased productivity, loyalty, and happiness among their employees.

The purpose of the 90 day notice provision is to permit the employer to make a prompt investigation of the claimed injury while the events are fresh and the evidence remains available to investigate the claim. Moreover, an early notice of the injury permits the employer to make an early direction of medical care and presumably early medical intervention will result in better care and quicker healing. In general, the interests of both the employee and the employer support early notice, early investigation, prompt medical care, and hopefully improved medical outcomes.

That being said, the notice defense can be a difficult issue with numerous legal issues to be resolved. For instance, when is an employee required to give notice of a cumulative injury. Often times, the employee will experience some type of repetitive trauma type injuries and may seek treatment with a family physician for a period of time without knowing that the injury is related to work or not believing that it will be a significant injury that should or need be pursued through worker’s compensation. The trouble comes when the treatment continues for months or years before the injury is reported to the employer. Then questions arise about whether the notice was timely and whether the claim is barred.

For this reason, it is in all parties’ interests to encourage prompt reporting of injuries. Employees should report any physical ailments they may even suspect are work related to ensure that their 90 day notice is covered and the claim is preserved. Employers should include personnel policies that require prompt reporting of work injuries. Moreover, employers should repeat this directive to employees, encourage prompt reporting of injuries, and not foster, encourage, or even permit a work environment that discourages or threatens any type of adverse work reaction to the filing of a work comp claim. In fact, as noted above, early reporting and intervention is likely in both the employee and employer’s best interests and should be encouraged to prevent misunderstandings and potential forfeitures of an employee’s rights.

However, most injured employees only want to be paid what they are entitled and to be taken care of until they are able to return to work. Accordingly, most litigation in the worker’s compensation arena is driven by poor employment practices or by poor case handling by an insurance carrier.

To be certain, employers and insurance carriers possess very effective means to ensure that they get sued by an injured worker. Among the 10 best ways to get sued are:

1. Fail to report a work comp injury to the insurance carrier in a timely manner
2. Deny the injured worker necessary medical care (or at least don’t offer it promptly)
3. Refuse to pay for medical treatment obtained after a work injury (even if you have authorized the care)
4. Don’t worry about, take a personal interest, or even inquire of the employer to see how he/she is doing after a work injury.
5. Provide the injured employee demeaning work and continually harass the employee upon return to work
6. Don’t timely report the hours worked on light duty to the insurance carrier, causing the injured worker to have a shortfall in earnings.
7. Refuse to allow the worker to return to work until he/she obtains a full duty release (workers earn less sitting at home than returning to a light duty assignment and often feel the money crunch if not put back to work). This one might just get you a double award and a suit under the Americans with Disabilities Act as well!
8. Upon returning to work, start writing the injured worker up for every insignificant policy violation you can think of, regardless of whether you have done so in the past and regardless of whether you are writing up other employees for similar conduct (employees love to be singled out and discriminated against).
9. Fire or threaten to fire the injured employee immediately upon being advised of the work comp claim (this one gets you the triple or potentially the quadruple whammy because you get thh honor of being sued for worker’s compensation benefits, wrongful termination, violations of the ADA, and potentially violations of the Family and Medical Leave Act).
10. Fire the injured worker as soon as you receive a work comp petition (these employers also desire the double whammy of a wrongful termination suit).

If employers implement each of the above ten practices, lawyers on both sides of the table should reap the benefits! (And I am sure that employees and employers alike enjoy paying their attorneys!) Realistically, through proper training, implementation of policy, and simple human compassion, many worker’s compensation suits can be avoided, employees can receive what they are entitled to receive, and exposures can be reduced both for the employer and the insurance carrier.

If a Petition is filed, a hearing will be scheduled within 10-14 days of the date the petition was filed. The hearing can be held live or via telephone conference call.

If a Deputy Commissioner determines that the medical care offered is not reasonably suited to treat the injuries, is untimely, or unduly inconvenient (generally an injured worker cannot be expected to travel more than 50 miles one-way to obtain care), care can be shifted by order of the Commission. Care can also be shifted if the employer fails to follow and authorize the recommendations of the physician it authorized or if there is an irreconcilable breakdown in the doctor-patient relationship. However, the injured worker must prove the basis for the requested transfer of care.

While the current debate is presented as between allowing the employer or the employee to select the medical care, the current employer-choice method is not without checks and balances.  If an employee becomes dissatisfied with the care being offered and has a good basis for that satisfaction, he/she already has a method to obtain an Order that switches care to someone the injured worker prefers.

Some states permit the employer to select the treating medical provider while some states permit the employee to select his/her own medical providers. Employees complain that their employer should not be allowed to select their treating medical providers. Indeed, there are some good arguments that can and have been advanced by employee representatives as to why the employer should not be permitted to select the treating physician. Among these arguments are the fact that medical care is inherently a private issue and that the employee should be able to treat privately and at his/her own discretion. Another argument that is often advanced and that has some logical appeal is that the employee is more likely to trust, respect, and follow the medical recommendations and treatment of a physician that he/she selects.

Similarly, there are good arguments why the employer should be permitted to select the physician. Among those arguments are that work injury claims are mandatory legal obligations placed on an employer. Unlike private health insurance claims where the employer may elect to decline to provide coverage for employees, employers are forced to provide worker’s compensation coverage and treatment for injured workers. Among the negotiated benefits and exchanges at the inception of the worker’s compensation system was this right to select medical care. In exchange for guaranteed coverage and medical care, employees were willing to give up their private right to select the medical provider. Employers will also tell you that they believe the employer-selected physician system is better because employees often obtain treatment from better qualified physicians and in a more timely manner.

Employers have connections and refer numerous workers to physicians. Over time, they develop rapport with the physicians’ offices. This may enable employers to secure more prompt medical care with the physician. Over time, the employer can identify specialties among physicians and can watch long-term outcomes of various physicians to identify the best physicians. In the end, it is most beneficial to both the worker and the employer to have the best possible medical outcome because the worker is “healed” and the employer’s liability decreases.

Other arguments that support an employer-chosen medical system are financial arguments. In those states where the employer is permitted to select the physician, workers tend to return to work sooner and treat for less time. It is arguable whether this is a good thing. However, from a financial viability standpoint, it is beneficial to keep premiums down and encourage employers to locate in a state. In addition, there is inherent benefit in having a rapport between the employer and the physicians treating injured workers. Over time, the physician learns and becomes comfortable with the work duties performed at particular employment sites. The physicians may become familiar with reasonable light duty work options and may develop a sense of cooperation (or alternatively a lack of cooperation) from the employer. If the physician knows the particular job duties and light duty work options, the physician may be able to tailor medical restrictions that will permit an injured worker to return sooner to the employment scene. While this obviously reduces the employer’s liability, this also permits the employee to earn more money.

In fact, the employee will earn more by working that by staying at home. Accordingly, both employees and employers have reasonable, logical, and compelling arguments as to how and why a certain phsycian selection process can and should be implemented. Although there is constantly debate about the issue, Iowa falls into the group that permits the employer to select the medical provider. Iowa Code section 85.27 provides that “the employer is obligated to furnish reasonable services and supplies to treat an injured employee.” However, that statute also provide the employer “the right to choose the care.” This statutory section is sometimes misunderstood or misapplied by employers and insurance carriers. While this statutory section permits the employer to “choose the care,” this statute does not permit an employer to pick and choose which treatment recommendations it will authorize. In other words, the employer is permitted to select the physician or other medical provider to whom the injured worker must go for treatment.

However, the employer may not dictate what care, the order of the care, or the extent of the care recommended or offered by the treating physician. The employer’s right to “choose the care” is limited to the selection of the medical provider that will render that care. Often times, an employer or an insurance carrier will select a reasonable and skilled physician to render care. However, after evaluating the injured worker, that physician may recommend a MRI or other expensive diagnostic testing. The inclination by the employer is to delay or deny that diagnostic testing if there are other alternatives or if there is a chance that this is a strain that may resolve with or without the expensive testing.

The law in Iowa is clear that the employer and/or carrier may not interfere with or dictate which testing or treatment is provided. Once the employer selects and designates the treating physician, its “right to choose” is accomplished and the carrier generally must accept and approve all recommended care from that physician. Employers contnue to cherish and urge retention of the employer-selected physician system. While I concur that the employer’s right to select the physician is important and makes sense for many of the reasons outlined in this article, I often wonder if some of the desire and drive to change that system isn’t simply because employers and carriers overstep their bounds and attempt to manipulate their use of the “right to choose” rather than simply directing employees to well-respected physicians and encouraging vigorous and prompt medical care.

If employers select competent physicians that have sufficient capacity to provide reasonably prompt medical care and Claimants cooperate in that treatment and attempt to get better, rather than trying to extend their time off work, the whole system can and should work better.  Nevertheless, the debate rages on as the Iowa legislature debates whether the employer or the employee should be allowed to select the medical providers in a worker’s compensation case.

The most recent opinion in this case deals with the right of an employer to appeal an adverse decision of the Iowa Workers’ Compensation Commissioner.  Unfortunately, I have serious concerns with the precedent and trend being established in prior cases and the most recent Thorson decision.  They have practical implications that may well eliminate any practical right to an appeal by an employer.

This opinion deals with the time period after the Workers’ Compensation Commissioner issues his final decision.  Iowa law provides that either the injured worker or the employer have the right to seek a review of the Commissioner’s decision by taking an appeal to the Iowa District Court.

However, Iowa law also says that an injured worker has the right to ask the Iowa District Court to enter a judgment based upon the Commissioner’s decision, even though it is subject to review and potential reversal.  In and of itself, the judgment does not seem objectionable to me.  However, once the judgment is obtained, the claimant can begin to execute on that judgment, even before the Court decides the underlying merits of the case.  In other words, the employee can start selling the employer’s property to satisfy the judgment.

To make the situation even more difficult on an employer, there is a statute in Iowa that precludes the employer from seeking reimbursement of any overpayment.  Therefore, the employer cannot simply voluntarily pay the award/judgment and seek reimbursement later if it wins the appeal.  Instead, the employer must make a calculated decision about whether to pay the decision, seek futher appeal to the Iowa Supreme Court, or simply wait for the worker to execute on the judgment.

If the judgment is paid, what is the point of pursuing the appeal further?  If the employer cannot recover the benefits paid, why would it want to continue an appeal?  While it may be nice to prove that the employer was “right,” there would be no practical benefit to pursuing the appeal.  In fact, from a business perspective, it would be unreasonable and silly to spend money to pursue an appeal that would have no practical financial impact or benefit to the employer. 

Therefore, I ponder, does an employer really have any practical right to appeal a worker’s compensation commissioner decision in the State of Iowa?  Is the statutory scheme fair and just?  The Iowa Supreme Court has concluded it is.