THE COURT OF APPEALS OF IOWA FINDS A CLAIMANT UNABLE TO REOPEN A SETTLEMENT WHEN THE CLAIMANT’S CHANGE IN CONDITION ARISES ENTIRELY FROM NON-ECONOMIC REASONS

by | May 21, 2013

Recently, the Court of Appeals of Iowa in Hernandez v. Osceola Foods, 2013 WL 1751006, determined that a Claimant’s  change in economic condition was not sufficiently related to the Claimant’s prior work injury to allow the Claimant an increase in industrial disability indemnity in excess to that agreed to in a prior open medical settlement. In Hernandez, Claimant injured her back on May 7, 2004. Subsequent to her injury, the parties entered into an “open file” settlement. This settlement stipulated to an industrial disability of 15 percent and left related medical benefits open.

The Claimant continued to work for the employer for almost two years subsequent to the settlement when she was terminated for dishonesty. The Claimant subsequently filed a Petition for Review Reopening, an option available within three years subsequent to an open file settlement, alleging a substantial change in earnings. The Claimant’s intent was to obtain an indemnity award based on a higher industrial disability than that which she agreed upon approximately two years earlier via the open file settlement. The reviewing Deputy Commissioner determined that although the Claimant did have a change in actual earnings, the change was due to her dishonest conduct (which resulted in Claimant’s employment being terminated) rather than the work injury. Accordingly, the Deputy Commissioner determined that the Claimant’s Petition for Review Reopening should not result in increased benefits.

Under I.C.A. § 86.14 (2), a workers’ compensation deputy commissioner may authorize an increased indemnity Award based on a claimant’s a change in physical condition or a change in economic conditions despite the existence of a valid prior “open medical” settlement detailing the indemnity entitlement. The Court of Appeals of Iowa reasoned that the Claimant’s job loss with the employer had nothing to do with her physical impairment, but with documented dishonesty. Accordingly, the Court reasoned that any injury-related loss of access to the labor market was no different than the loss of access the Claimant was experiencing when the agreement for settlement was approved. It was the Court’s position that there were no subsequently changed facts about the Claimant’s employability attributable to her injury; the difference in earnings arose out of economic conditions. The Court of Appeals of Iowa affirmed that the Claimant was not entitled to set aside the terms of her settlement and be awarded a higher industrial disability award.

This case illustrates the potential issues that arise in Iowa when settling matters on an “open file” basis. While there are specific circumstances where a settlement leaving medical benefits open can be advantageous to employers, in this case, the employer voluntarily paid 15 percent and allowed Claimant the right to subsequently petition the Commission for further benefits.  Fortunately, the Claimant failed to meet her burden of proof related to the same.

Should you have any questions regarding the best form of settlement in given situations for employers in Iowa, please feel free to contact Paul Barta at pbarta@baylorevnen.com or or any other of our Iowa Workers’ Compensation Attorneys (http://www.baylorevnen.com/practice/workers_compensation.html) at (402) 475-1075.