Iowa Court of Appeals Affirms Denial of Penalty Benefits Against Employer in Workers’ Compensation Action

Posted on: January 17th, 2022

After injuring his right hand at work, claimant filed a workers’ compensation action against his employer, seeking healing period benefits after he was placed at maximum medical improvement (MMI) by an authorized doctor. He also sought penalty benefits for the employer’s failure to pay benefits after he reached MMI through the arbitration hearing. Following an arbitration hearing, the workers’ compensation commissioner found claimant was entitled to additional healing period benefits. However, the commissioner denied claimant’s request for penalty benefits. Claimant sought judicial review with the district court. The district court affirmed the commissioner’s decision and claimant appealed.

On appeal, claimant argued the commissioner improperly denied his request for penalty benefits because the employer failed to obtain an impairment rating or conduct further investigation to determine if he was entitled to additional benefits after the authorized doctor placed him at MMI. Since Iowa Code section 86.13(4)(a) authorizes an award of penalty benefits if an employer denies, delays, or terminates benefits “without reasonable or probable cause or excuse[,]” claimant contended the commissioner should have awarded penalty benefits given his employer’s failure to obtain an impairment rating.

The Iowa Court of Appeals rejected claimant’s arguments, finding the employer had “a reasonable basis to defer seeking an impairment rating and penalty benefits were not warranted.” The Court reasoned that because claimant disputed the MMI finding of the authorized physician, the employer could have concluded that claimant was also disputing entitlement to permanent partial disability benefits. Therefore, claimant’s entitlement to benefits was fairly debatable and the commissioner did not err in denying penalty benefits.

Cochran v. Quest Liner, Inc., No. 21-0288 (Iowa Ct. App. Jan. 12, 2022).

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