Iowa Supreme Court’s Holding in Evenson v. Winnebago and the New Start Date for Permanent Benefits

On June 3, 2016 , the Iowa Supreme Court issued a substantive opinion in Evenson v. Winnebago. The Court’s decision included a number of findings, including that an employer’s matching contribution to an employee’s 401k should not be considered earnings in calculating the employee’s workers’ compensation rate. Additionally, the Court overruled preexisting case law in determining a new commencement date for permanent partial disability benefits that possibly allows a claimant to receive temporary partial disability and permanent partial disability for the same injury over the same time period.

During the course of his employment, Evenson suffered an injury to his left elbow, a scheduled member. The deputy commissioner awarded healing period benefits from September 7, 2010 through September 19, 2010 and April 14, 2011 through June 14, 2011. The deputy commissioner then awarded multiples periods of temporary partial disability (TPD), where Evenson was not working fulltime, throughout 2010 and 2011. The deputy commissioner also concluded that Evenson suffered a 20% permanent loss of use of his left arm, based on the experts’ impairment ratings, as well as the testimony of Evenson and his family, resulting in an award of permanent partial disability benefits (PPD).

401K Plan and AWW

As for the issue of whether an employer’s matching contributions to an employee’s 401k plan should be included in a weekly rate calculation when determining workers’ compensation benefits, the Supreme Court determined that they are not to be included as they are not “spendable weekly earnings” under Iowa Code 85.61(9), but rather are fringe benefits.

Extent of Disability

As for the extent of Evenson’s disability, the deputy commissioner found Evenson had suffered a 20% permanent impairment, whereas both experts found  functional impairments of 3% and 4% to Evenson’s left arm. Ruling on the ability to find a 20% permanent impairment where the experts only found 3% and 4%, the Supreme Court held that it was appropriate to rely on lay witness testimony regarding functional impairment, and that there was substantial evidence to support a finding of a 20% impairment rating.

New Start Date for Permanent Benefits

With regard to the issue of permanent benefits, the deputy commissioner found that Evenson’s received healing period benefits from September 7, 2010 to September 19, 2010 and April 14, 2011 to June 14, 2011, and that his PPD benefits began on November 30, 2011, as he achieved MMI on November 29, 2011. However, Evenson argued that the commissioner should have awarded PPD benefits on September 20, 2010, as that was the date he returned to work after his first healing period ended, and that PPD benefits should have been suspended from April 14, 2011 to June 14, 2011, while he received healing period benefits.

Iowa Code 85.34(1) provides that healing period benefits are paid while an employee is not capable of working and last until 1) the employee has returned to work or 2) it is medically indicated that significant improvement from the injury is not anticipated or 3) until the employee is medically capable of returning to employment substantially similar to the employment in which the employee was engaged at the time of injury, whichever occurs first. Additionally, Iowa Code 85.34(2) provides that compensation for permanent partial disability benefits shall begin at the termination of the healing period.

Based on the same, the Iowa Supreme Court in Evenson held that in situations where there are multiple healing periods, as was the case in Evenson, PPD benefits are to begin when the first healing period ends. That would mean Evenson was entitled to PPD benefits as of September 20, 2010 as that is when his first healing period terminated, as it was the date he returned to work.

The Supreme Court went on to hold that their determination that Evenson became entitled to PPD on September 20, 2010 was not precluded by the fact that he was entitled to temporary partial disability (TPD) benefits for subsequent weeks when he was medically restricted from working his full hours. Which means that the Supreme Court held that a claimant can possibly be entitled to both TPD benefits and PPD benefits at the same time.

This overturned the Iowa Court of Appeals prior decision in Presthus v. Barco, Inc., 531 N.W. 2d 476 (1995), that a claimant could not receive TPD benefits and PPD benefits at the same time. However, the Supreme Court correctly noted that payment of TPD and PPD benefits at the same time, does not pose a risk of duplication and there would be no overpayment of benefits under the circumstances in the Evenson matter, Evenson would receive precisely the same total amount of benefits as he would have. However, it does affect the potential interest owed, as that is based on the date of when PPD should have been started.

It should be noted that this was a 5-2 decision, and there was a strong dissent finding that modifying the law as to when PPD benefit commence, it would be unfair for the court to subject the employer to a penalty for its lack clairvoyance regarding the courts’ modification of the law.

In summary, the Iowa Supreme Court held that Permanent Partial Disability benefits begin at the termination of a claimant’s healing period, whether or not a claimant has subsequent healing periods. As a result, it should be noted, that in certain circumstances, this opens potential issues where a claimant may be owed permanent benefits and temporary partial disability benefits at the same time.

If you wish to discuss the implications of Evenson, please don’t hesitate to contact Iowa Workers’ Compensation attorneys, Paul Barta at pbarta@baylorenen.com or Thomas Shires at tshries@baylorevnen.com or call (402) 475-1075 to speak to any of our Iowa attorneys.