The Iowa workers’ compensation commissioner ordered an employer and its workers’ compensation insurance carrier to pay a $39,000 penalty for failing to pay an injured worker approximately $80,000 in healing period benefits. The commissioner found the employer and insurance carrier terminated benefits without a reasonable cause and awarded a 50 percent penalty in accordance with Iowa Code Section 86.13(4)(a), which provides:
If a denial, a delay in payment, or a termination of benefits occurs without reasonable or probable cause or excuse known to the employer or insurance carrier at the time of the denial, delay in payment, or termination of benefits, the workers’ compensation commissioner shall award benefits . . . up to fifty percent of the amount of benefits that were denied, delayed, or terminated without reasonable or probable cause or excuse.
The district court affirmed the commissioner’s penalty award and the employer and insurance carrier appealed.
In challenging the penalty award, the employer and insurance carrier argued that they reasonably relied on their medical expert opinion to deny liability and terminate benefits. The Court of Appeals rejected their argument, finding the employer and insurance carrier got their expert opinion months after they had stopped paying benefits and could not use that opinion to justify their termination of benefits. Additionally, the employer and insurance carrier offered no evidence that they properly communicated their denial of benefits to the injured employee. Therefore, the Court of Appeals concluded there was substantial evidence to support a finding that the employer and insurance carrier terminated benefits without a reasonable cause.
Regional Care Hospital Partners, Inc. v. Marrs, No. 19-2138 (Iowa Ct. App. 2021).