Duties and Responsibilities of
Employers,Insurance Carriers and Self-Insured Employers
INSURANCE. Iowa employees are covered by the Iowa workers’
compensation law under most employment relationships. 85.1, .2, .3
& .18 IA Code. Correspondingly, most employers are required by law to
purchase workers’ compensation liability insurance. 87.1 & .14A IA
Code. A procedure exists that permits employers to apply to the
Insurance Commissioner to become certified to self-insured rather than
purchase insurance. 87.11 IA Code.
Criminal and civil penalties can be
imposed on employers who violate the mandatory insurance law. Employers who
operate without insurance illegally lose the exclusive remedy protection of
the workers’ compensation law and are liable to the employee for the full
measure of damages available under tort law if an injured employee sues the
employer in court. 87.14A & .21. IA Code.
Sole proprietors, partners in a
partnership, and members of a limited liability company have a status other
than of an employee and are not covered by Iowa workers’ compensation law.
They may, however, elect to be covered by purchasing insurance that
expressly covers them. Persons who are bona fide independent contractors
are not employees. However, a contract that designates a person to be an
independent contractor does not make the person an independent contractor if
the person functions as an employee. 85.18 IA Code.
Iowa law contains a number of exemptions
that make specified employees and their employers exempt from workers’
compensation coverage. 85.1 IA Code. The exemptions are
complex and this guide does not purport to reliably describe the
exemptions. Persons eligible to receive compensation under federal law are
exempt. In general, limited exemptions exist for persons employed in
agriculture or by a relative. Limited exemptions exist when the employment
is casual and is not performed for purposes of the employer’s trade or
business or if the employee’s services are performed in or about the
employer’s dwelling. Some of the exemptions apply only if the employee’s
earnings from the employer are less than $1,500 annually. Employers may
elect to cover some classes of exempt employees by purchasing an insurance
policy the specifically includes those employees. Specific guidance on
exemptions and electing coverage can be obtained from a Workers'
Compensation Compliance Administrator.
REPRESENTATIVE IN IOWA. All workers’ compensation insurance
carriers and self-insurers are required to have a designated representative
located in Iowa. The representative must have knowledge of Iowa workers'
compensation law and authority to expedite claims. DWC shall be advised of
the name, address, and phone number of the representative and notified of
any changes within ten days. Rule 876 IAC 2.3, Reporting Compliance
Handbook (Handbook) p. 10. The
purpose of the rule is to promote having claims properly adjusted to assist
in implementation of public policy to avoid litigation and the accompanying
expense, provide benefits to injured workers at the time when the benefits
are due, and afford an efficient and speedy method of resolving disputes.
FROI (First Report of Injury). Upon notice or knowledge of a work
injury resulting in temporary disability for a period longer than three
days, resulting in permanent partial disability, or permanent total
disability, or death, a self-insured employer or and employer’s insurance
carrier must, within four days, (not counting Sundays and legal holidays)
file a properly completed First Report of Injury (FROI) using Electronic
Data Interchange (EDI). See Handbook pp. 9, 32; Rules 876 - Chapter
11. [Note: In addition, employers must report to the Iowa Labor Commissioner
within eight hours each accident or health hazard that results in one or
more fatalities or hospitalization of three or more employees. The toll free
number that is available 24 hours a day, including weekends and holidays, to
use to report is
Filing a FROI is required whenever the
Workers’ Compensation Commissioner issues a written demand to the employer
to file a FROI. A FROI must be filed whenever an employee claims to have
sustained a qualifying injury as described in the previous paragraph.
Filing a FROI is required even if liability for the injury is denied,
86.11 IA Code; Rule 876 IAC 3.1(1). Filing a FROI does not admit
liability. A FROI that is submitted will not be accepted if it is not
properly completed or is otherwise erroneously filed or has significant
errors. It will be deemed as having not been received within 5 working days
and a corrected form must be re-filed within 15 working days. See
Handbook, pp. 9, 32. Sanctions can be imposed for failure to properly and
promptly file a FROI after a FROI is demanded.
SROI (Subsequent Report of Injury). If a FROI is required to
be filed, one or more Subsequent Reports of Injury (SROI) must be filed
subsequently using EDI. Rule 876 IAC 3.1(2); Handbook, pp. 7, 11.
There are several types of SROI’s. Some
of the reasons for filing a SROI include the following:
A. When weekly compensation benefits are paid, a “notice of commencement of
payments” must be (filed) on the SROI within thirty days from the date the
payments were commenced. If the required notice of commencement of payment
is not noted on the filed SROI, the failure to do so will stop the running
of the limitation on the right of the employee to file or reopen a case from
date of last payment of weekly benefits under 85.26, see 86.13 IA Code. The
failure can also subject the reporter to sanctions under 86.12 IA Code.
B. Whenever weekly compensation payments
are terminated or interrupted.
C. A SROI Annual Report (AN) is required
to be filed for every claim that is open on June 30 of each calendar year.
Rule 876 IAC 11.7.
D. A SROI Final Report (FN) is required
to be filed when administration of a claim is closed. Rules 876 IAC
2.6 & 11.7. The information in the Final Report must also be mailed to the
E. A denial of liability is required to
be filed in a SROI in addition to the denial of liability letter to the
claimant. Rule 876 IAC 3.1, Handbook, p. 13.
F. There is a requirement to report payments of “other benefits paid” in
addition to the specific information requested on the form (this was also
requested under the old form 2A). This includes the following: 1) medical
and mileage 85.27, 2) burial 85.28, 3) interest 85.30, 4) Voc. Rehab. 85.70,
5) penalty 86.13, 6) misc.
PAPER REPORTS. In addition to the EDI filing requirements, the
following Paper Forms are required:
A. Denial of Liability Notification
Letter must be mailed to the claimant stating the reasons for the denial.
Rule 876 IAC 3.1, Handbook, p. 13.
B. Medical Reports must be filed with DWC if an injury exceeds 13 weeks of
TTD/HP, or when there is PPD. Medical transmittal forms are available at DWC
or its web site
www.iowaworkforce.org/wc/publications Rule 876 IAC 3.1, Handbook, p.
30. DWC does not retain medical reports after they are reviewed.
C. A Final Report showing the date of last payment must be mailed to the
employee at the employee’s last known address, Rules 876 IAC 2.6 and
3.1(2)(3). This notice may be necessary to establish the date of last
payment of weekly benefits for a determination of the three-year period that
a claimant has to reopen a claim under 85.26(1).
ADJUSTING AND PAYING CLAIMS. The employer and its insurance carrier
or a self-insured employer have an affirmative responsibility to act
reasonably in response to a claim for benefits. Boylan v. American
Motorists Ins. Co., 489 N.W.2d 742 (Iowa 1992). That responsibility
includes initiating payment of weekly compensation benefits within eleven
days following the first day of disability caused by the injury as required
by 85.30 IA Code. Inherent in the responsibility to act reasonably
is the duty to conduct a reasonable investigation so the decisions made
concerning the claim are based on fact. If a decision to deny benefits is
made, that decision and the reasons for it must be contemporaneously
communicated in writing to the employee. When liability for a claim is
denied, a letter of denial (Denial of Liability Notification) must be sent
to the employee stating the reasons for the denial. Rule 876 IAC 3.1(2);
Weekly compensation benefits are due and
payable weekly commencing by the eleventh day after the first day of
disability caused by the injury. 85.30 Ia Code. If weekly benefits
are not commenced within those eleven days, a penalty must be imposed as
required by the fourth paragraph of 86.13 Ia Code unless the employer
or insurance carrier demonstrate that a reasonable or probable cause or
excuse exists for the denial or delay. Christensen v. Snap-On Tools,
554 N.W.2d 254 (Iowa 1996). A
reasonable excuse may be based on fact or the law. Gilbert v. USF Holland,
637 N.W. 194 (Iowa 2001). A reasonable excuse for denying benefits exists
if the known facts or existing law make compensability of the claim fairly
debatable. A reasonable excuse for delay exists for the duration of time
needed to properly investigate the claim. The duty to investigate is a
continuing duty and compensability of the claim must be reevaluated whenever
new information becomes available. Squealer Feeds v. Pickering, 530
N.W.2d 678, 683 (Iowa 1995).
Permanent partial disability compensation
(PPD) is payable commencing upon completion of payments for TTD, HP or TPD
without interruption of the system of weekly payments.
Wages are payable in lieu of weekly
compensation if an employee who, after being incapacity from work for three
days or more, is required to be absent from work for one full day or less to
obtain care provided under section 85.27 even though the employee is not
actually disabled at that time.
Interest is owed on weekly compensation
that is not paid when due, even if the claim was fairly debatable. 85.30
IA Code. The United States Rule directs that payments are first
applied to satisfy any liability for interest and the remainder of the
payment is then applied to satisfy the employer’s responsibility for weekly
7. TERMINATING PAYMENTS.
Once weekly benefit payments have been
commenced, they must continue until termination is justified by law.
A. Termination of benefits is legally
justified when: 1) the employee has returned to work, or 2) it is medically
indicated that significant improvement from the injury is not anticipated,
or 3) the employee is medically capable of returning to the same or similar
work. However, even when “(2)” or “(3),” noted above, have occurred, if the
employee has not returned to work, weekly benefits cannot be terminated
without giving the employee 30 days advance written notice stating the
reasons and indicating the right to file a claim with DWC, 85.33(1),
85.34(2) and 86.13 IA Code; Christensen, 554 N.W.2d 254 (Iowa 1996);
Auxier v. Woodward State Hosp.-Sch., 266 N.W.2d 139 (Iowa 1978).
B. Overpayment of TTD, HP, or TPD benefits is allowed as a credit toward
satisfying the employer’s liability for PPD if the insurance carrier or
self-insurer has acted in good faith in determining and notifying the
employee of a change in benefits. 85.34(4) IA Code.
MEDICAL CARE. Iowa law requires employers to provide reasonable care
for the injuries an employee sustains arising out of in the course of
employment and also gives the employer the right to choose the providers of
the care. It is recommended that each injured employee be given express
directives regarding the authorized sources of care. The care must be
provided promptly and must be reasonably suited to treat the injury. Wilson
v. IBP, Inc., 558 N.W.2d 132 (Iowa 1996). The employer must pay for the
care it chooses and must do so with reasonable promptness. 85.27 IA Code.
Care is defined broadly and includes diagnostic tests, chiropractic,
nursing, physical rehabilitation, prosthetic devices and the cost of
transportation required for receiving the services. An employee who is
dissatisfied with the care provided by the employer can petition the DWC for
alternate care. Rule 876 IAC 4.48.
FURTHER RESPONSIBILITIES. In addition to those duties set out above,
the employer is also responsible for the following:
A. Upon request, timely provide a
statement of earnings. (85.40 IA Code).
B. Pay interest if weekly benefits are delayed. (85.3, IA Code).
C. Timely furnish copies of medical records relevant to a claim when
requested (85.27 IA Code; Rule 876 IAC 8.9);
D. Payment of lost wages for treatment after an employee returns to work
following a WC injury (85.27 IA Code).
SANCTIONS. Chapters 85 and 86 of Iowa law
authorize administrative sanctions for compliance violations.
A. Informal conference with the
Commissioner. (Rule 876 IAC 4.3).
B. Civil injunctions, revocation of insurance and self-insurance status (87.20
IA Code; 87.24, IA Code; 507B.4(9), IA Code; Rule 876 IAC 4.3).
C. An assessment of up to $1,000 payable to the Second Injury Fund of Iowa
for not properly filing a FROI or SROI [85.12 IA Code, Rule 876 IAC
D. An assessment payable to the Second
Injury Fund of Iowa for habitually failing to commence weekly compensation
benefits within eleven days. The amount of the assessment is
computed based upon the employer’s deviation from the statutory requirement
and may be for tens of thousands of dollars. (86.13A IA Code).
E. Award of up to 50% of additional benefits for delay or denial of weekly
benefits, including delays caused by the improper calculation of weekly rate
without reasonable cause or excuse (86.13, IA Code).
F. Continuation of benefits notwithstanding compensability of the claim if
the employee has not returned to work and weekly benefits are terminated
without proper notice. [86.13 & 507B.4(9) IA Code; Rule 876 IAC 4.3].
11. TORT LAIBILITY.
Common law punitive damages actions (668a.1, IA Code):
A. Bad faith claims practices, abuse of
process, interference with contract, and fraudulent misrepresentation or
failure to furnish medical care. Gibson v. ITT Hartford Ins. Co., 621
N.W.2d 388 (Iowa 2001), Boylan v. American Motorists Ins. Co., 489
N.W.2d 742 (Iowa 1992).
B. Common law claims for breach of fiduciary responsibility and slander for
violating the workers' compensation requirement to provide reasonable
medical care. Wilson v. IBP, Inc., 558 N.W.2d 132 (Iowa1996).