Practice Pointers Under Iowa Law For Timely Payment of Benefits and Avoidance of Allegations of Entitlement of Penalties.
Under Iowa Workers’ Compensation Law an employee may be entitled to penalty benefits if there has been a delay in payment without reasonable cause or excuse by the payor. I.C.A. §86.13. However, a reasonable cause or excuse for delay exists if (1) the delay was necessary for the insurer to investigate the claim or (2) the employer had a reasonable basis to contest the employee’s entitlement to benefits. Christensen v. Snap-On Tools Corp., 554 N.W. 2d 254 (Iowa 1996). Typically, both a reasonable basis for a delay and contemporaneous communication to the employee regarding the delay is necessary to avoid penalty.
Typically, partial payment of uncontested benefits is not sufficient to avoid penalty as the Commission has determined that underpayment of benefits can result in penalty assessment. Robbennolt v. Snap-On Tools Corp. 555 N.W. 2d 229 (Iowa 1996).
Payments are considered “made” when either the check addressed to a Claimant is placed in the mail or the check is delivered personally to the Claimant. Keep in mind that the Iowa Workers’ Compensation Commissioner has determined that an employer or insurer’s past record of penalties is relevant in the assessment of penalties in a current matter.
In essence, assessment of penalties for late or underpayment is a very real possibility in actions before the Iowa Workers’ Compensation Commissioner. In light of the same, we recommend that employers and/or insurers promptly investigate claims and/or make payment as soon as practical for accepted uncontested matters. Along those lines however, please note that interest owed is not subject to penalties.
Should you have any questions regarding payment of benefits under Iowa Workers’ Compensation Law and/or whether a “reasonable basis” exists to provide for delayed indemnity benefits, please contact Iowa workers’ compensation attorneys Tim Clarke, Caroline Westerhold, or Paul Barta at (402) 475-1075 .