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Legal Issues

Loss of Earning Capacity Versus Functional Impairment for Compensating Unscheduled (Body as a Whole) Work Injuries under the 2017 Amendments - July 9, 2019

A workers’ compensation arbitration decision was recently filed in what appears to be the first time the Iowa Division of Workers’ Compensation has dealt with how to compensate unscheduled work injuries under the 2017 Amendments, specifically when the claimant no longer works for the same employer. 


In Wood v. Vermeer Manufacturing Company, the claimant injured his back at work on August 28, 2017.  After the work injury, he was terminated by Vermeer Manufacturing Company for reasons unrelated to his work injury.  Despite permanent restrictions, the claimant was able to secure a new job with a different employer.  However, he was earning less in this new job than at the time of the work injury.


In 2017, the Iowa Legislature passed changes to Iowa Code section 85.34(2)(u) amending the section on how to compensate permanent disability for unscheduled injuries:

If an employee who is eligible for compensation under this paragraph [for an unscheduled injury] 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 the 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 earning capacity.

The parties in the Wood case agreed the injury was an industrial disability.  Interpreting the amended section, the Deputy concluded that because the claimant returned to work making less than at the time of the work injury, a traditional loss of earning capacity analysis should be used. 

Although the Deputy gave more weight to the functional impairment rating from the treating physician (5% permanent impairment to the body as a whole), permanency was not limited to the functional impairment rating.  Instead, 35% industrial disability was awarded under a traditional loss of earning capacity analysis (taking into consideration the claimant’s age, education, skills, experience, motivation to work, permanent restrictions, etc.).  The 35% loss of earning capacity award was 150 weeks more compensation than if permanency was limited to the functional impairment rating of 5% to the body as a whole.    

Going Forward

How this interpretation holds going forward relies on an interesting grammatical rule involving statutory construction principles - the rule of the last antecedent.  Statutory construction principles instruct that qualifying words and phrases only refer to the immediately preceding antecedent in a series; this is the rule of the last antecedent.  In the Wood case and in similar cases, it could be argued that the phrase, “for which the employee receives or would receive the same or greater salary, wages, or earnings” only qualifies “is offered work” and does not qualify “returns to work.”  It is possible this argument will be advanced on appeal or in other cases, but it is still unknown how the agency and courts will respond.


For now, employers/insurance carriers may want to consider arguing that as long as the claimant returned to any work at all, regardless of whether he/she earned the same or greater earnings, this triggers the application of the functional impairment rating assessment.  It is not clear whether this particular argument was advanced in the Wood case.   

Please see Lucas Draisey’s blog post, How A Comma Could Cost You, for additional examples and reference to a case won by Davis Brown Attorneys Jodie McDougal and Elizabeth Meyer involving “the rule of the last antecedent.”

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