by | Sep 29, 2022

There has been much talk regarding an Iowa district court’s reversal of the Workers’ Compensation Commissioner’s finding in Martinez v. Pavlich.  The Commissioner determined that an injured claimant must be compensated based on earning capacity when the claimant voluntarily resigns and begins working for a new employer.  While a district court reversed that decision on appeal, the reversal is not binding on subsequent cases within the Worker’s Compensation Division.

In Martinez v. Pavlich, the employee originally returned to work for the same employer at the same or greater wages than the employee had before the compensable injury. However, after returning to work, the employee was offered a job with a different employer for more money. The employee stopped working for the original employer to take advantage of this new opportunity. One of the key issues in Martinez v. Pavlich was whether the limitation provision under Section 85.34(2)(v) could still apply to the facts of the case after the employee quit to take advantage of a higher-paying job.

Section 85.34(2)(v) provides that an employee with a “body-as-a-whole injury” should receive compensation for permanent partial disability based on industrial disability, not functional impairment alone.  However, it also contains a limitation provision that stated that:

If an employee who is eligible for compensation under this paragraph returns to work or is offered work for which the employee receives or would receive the same or greater salary, wages, or earnings than the employee received at the time of injury, the employee shall be compensated based only upon the employee’s functional impairment resulting from the injury and not in relation to the employee’s [industrial disability].

Iowa Code § 85.34(2)(v). Essentially, this limitation provision means that, if the employee returns to work making the same or greater wages than the employee made at the time of the injury, then the employee can only recover for functional impairment alone and not industrial disability.

In Martinez v. Pavlich, the Commissioner interpreted that this limitation provision was only to apply in instances wherein an employee returns to work with the same employer and receives the same or greater wages. The Commissioner thought that the employee in Martinez v. Pavlich could recover for industrial disability because, while the employee had briefly returned to work for the same employer, the employee had left that job by the time of hearing.

That ruling was appealed to the Polk County District Court where that decision was reversed.  The District Court interpreted the limitation provision to apply when an employee returns to work with any employer and receives the same or greater wages.

Despite the reversal, Deputy Commissioners have continued to follow the Commissioner’s interpretation of the limitation provision.  This is because a district court’s decision is not binding upon subsequent cases with the Division of Worker’s Compensation.  See, Dague v. Unisys Corp., Iowa Work. Comp. Comm., No. 1645503.02 (Mar. 28, 2022).  It appears that Deputy Commissioners will continue to follow the Commissioner’s interpretation until a definitive interpretation is provided by the Iowa Court of Appeals or the Iowa Supreme Court.

For more details regarding the Commissioner’s interpretation of Section 85.34(2)(v) in Martinez v. Pavlich, see our previous blog post here.

This post was drafted by Adam Barrett, a law clerk at Baylor Evnen.  If you have questions regarding permanent disability payments, please call Paul Barta or Micah Hawker-Boehnke at 402-475-1075.