Commerce Committee Report – week 9, 2017

SF 435 – Workers Compensation
HF 311 – IID technical updates



HF 311 (SF 231) is a proposal by the Iowa Insurance Division (IID) that makes technical updates based on the National Association of Insurance Commissioners (NAIC) models, including conforming language with federal regulations. NAIC is the U.S. standard-setting and regulatory support organization. The IID recommendations were widely circulated to interested parties and stakeholders for review and comment.
[3/8: 49-0 (Chelgren absent)]



SF 435 (SSB 1170) makes sweeping changes to Iowa’s Workers’ Compensation law. The bill cuts benefits to Iowans who are injured on the job, and reduces the employers’ liability to provide benefits to injured workers. The changes include  provisions to:

  • Reduce benefits for workers who suffer a shoulder injury. Current law treats shoulder injuries as an injury to the body as a whole. This new change treats shoulder injuries as a member injury. A workers’ loss of earning capacity would no longer be taken into account when calculating benefits for a shoulder injury.
  • Eliminate benefits based on an employee’s loss of earning power due to an injury if the employer returns the employee to work for short period of time, but then terminates the employee, leaving the employee with no compensation for his/her lost access to other employment due to his injury.
  • Cap benefits to older workers who are permanently and totally disabled by a work injury prior to age 67. Their benefits cease at age 67; and for those aged 67 or older, they are limited to 150 weeks of benefits. Benefits that should be paid by the employer and insurance carrier for an injury that occurred at work would be picked up by taxpayers through federal programs.
  • Make a positive drug or alcohol test result grounds for an employer to deny payment of benefits for an injury without regard to whether drugs or alcohol caused the injury to occur. The burden of proof is shifted to the worker to prove the injury was not caused by drugs or alcohol.
  • Change the point at which an employee must report an injury or lose the right to claim benefits for an injury. The bill defines “date of the occurrence of the injury” to mean the date that the employee knew or should have known the injury was work-related. This language does not take into account whether the worker discovers the seriousness of the injury during the time limitation enforced by the law.
  • Eliminate the ability of injured workers to seek payment of future weekly benefits owed in a lump sum without the agreement of the employer and its insurance carrier.
  • Make proving an employee sustained a work-related injury more difficult by requiring that work activity was the “predominate” factor in causing the employee’s injury and disability.
  • Require an injured worker who is offered work (e.g. light duty) by his or her employer while recovering from an injury to decline the offer in writing if the employee believes the work is not suitable or lose the right to continue to receive benefits while recovering.
  • Change the employer’s liability for compensating an employee’s pre-existing disability that arose out of and in the course of employment from a prior injury with the employer to the extent the injury has already been compensated. Currently, employers are considered fully responsible for a workers’ injury, regardless of previous injuries. This is a substantial change from current long-standing law that considers employers fully responsible for a workers’ injury, regardless of previous injuries.

The bill also reduces interest costs for delayed benefits payments by allowing employers to avoid payment of benefits awarded by the Commissioner while the employer seeks a judicial review of the award, leaving the injured worker without benefits for two to three years. The bill eliminates the current rate of 10 percent interest on late-paid weekly benefits and reduces the interest rate on benefits to the one-year treasury rate plus 2 percent (currently less than 3 percent total).

The bill is effective upon enactment. The changes apply to injuries that occur on or after the effective date of the Act, and to commutation applications filed on or after that date.
[3/2: 9-6, party-line (Democrats voting “no”)]