Evenson v. Winnebago Industries, Inc.
Iowa Supreme Court Changes the Rules on Timing of PPD Benefits in Iowa

Evenson v. Winnebago Industries, Inc. 

Iowa Supreme Court Changes the Rules on Timing of PPD Benefits in Iowa

 

A recent Iowa Supreme Court decision will impact the timing of an employer's obligation to pay permanent partial disability (PPD) benefits and may require that those benefits be paid at the same time as temporary partial disability (TPD) benefits. Further, the decision may increase an employer's exposure for interest entitlement and penalty exposure on those PPD benefits.

 

About PPD Benefits

Employers are obligated to begin paying PPD benefits at the end of the healing period, which is statutorily defined as occurring when the first of three things happens: (1) the employee returns to work, (2) the employee reaches MMI or (3) the ability to return to substantially similar employment.  Traditionally, the Court would require an employer to begin paying PPD benefits only after the employee reaches MMI. The Court has historically done this to prevent an overlap of temporary and permanent disability benefits.

 

Evenson v. Winnebago

However, in Evenson v. Winnebago, the Iowa Supreme Court found that the claimant was entitled to PPD benefits after he first returned to work, despite the fact that he had not reached MMI and had been paid TPD benefits during much of that time.

 

In Evenson v. Winnebago, the claimant was injured on May 18, 2010. The claimant was off work starting September 3, 2010 and returned to work on September 20, 2010. Following this period, the claimant continued to work with restrictions until he was returned to full duty on January 27, 2011. He experienced a second healing period following surgery on his left elbow on April 14, 2011, did not return to work until June 14, 2011 and did not reach MMI until November 29, 2011.

 

The Commissioner and the District Court held that the claimant was entitled to PPD benefits once a physician placed him at MMI on November 29, 2011. However, the Supreme Court overruled this decision, stating that the claimant was actually entitled to PPD as soon as he had returned to work the first time on September 20, 2010. Therefore, the claimant would receive PPD benefits while he was also receiving TPD benefits due to medical restrictions.

 

Another period of concern is the second healing period the claimant experienced after his surgery. The Court cites previous cases which suggest that PPD benefits should be suspended during subsequent healing periods. However, the majority's reasoning and the dissenting opinion indicate this may be an issue that is revisited in the future. For now, we recommend that any PPD benefits that are being paid be suspended while healing period benefits are being paid.

 

The most significant impact of this decision relates to (1) interest entitlement and (2) penalty exposure.

 

Typically, the employer will not know of the extent of PPD until the claimant is rated. Before this decision, the 10% interest entitlement would accrue from the date of MMI. Now, interest may begin accruing much earlier. Employers have been counselled to voluntarily pay "estimated" PPD at the end of the temporary benefit period to avoid the 10% interest and to avoid penalty exposure. Now, it is more important than ever this "estimate" be as accurate as possible.