Iowa Gov. Terry Branstad has signed a workers’ compensation bill that reduces benefits for injured workers, notably benefits for shoulder injuries, and decreases coverage for injuries tied to a pre-existing condition.
A proposal to end permanent total disability benefits at age 67 was ultimately removed from measure, but Iowa Republicans added an amendment creating a vocational rehabilitation program for some workers with shoulder injuries. Under this provision, an employer would pay up to $15,000 toward a retraining program for qualified workers, according to a report by the Iowa Legislative Services Agency (LSA).
Beginning in the 2018 budget year, payouts from the state Workers’ Compensation Fund are expected to decrease by about $1.8 million annually under the bill, the LSA reported. The LSA said it’s unknown what the fiscal impact of the retraining program will be, but it is expected to increase some costs to the state fund.
In a statement released by his office, Branstad said the Iowa workers’ comp system over the past decade had “mutated into a system benefiting trial lawyers at the expense of Iowa businesses and Iowa workers.”
He said the bill acts “to ensure employees are compensated fairly for being injured on the job, while ensuring that abuses are curtailed. This legislation prevents attorneys from taking fees from injured workers when the employer was voluntarily giving benefits, ends the burden on the employer to demonstrate that intoxicated workers incurred injuries as a result of the intoxication, and ends an individual’s ability to receive workers’ compensation while receiving unemployment insurance.”
The National Council on Compensation Insurance has found the Iowa system overall is fair for employers, according to the Associated Press. The NCCI last year proposed overall decrease in voluntary and assigned risk rates of 4.7 percent that became effective in Iowa on Jan. 1. Rates increased by about 2.2 percent in 2016.
Republicans, echoing arguments in states such as Illinois, argued that that workers’ compensation rates for Iowa businesses are so much higher than rates in neighboring states that it makes it difficult to compete. Democrats overwhelmingly spoke out against the bill, saying it is a bad deal for injured workers.
The bill goes into effect on July 1.
I&F thanks the Insurance Journal for the summary of the changes in Iowa.
I&F Partner Kevin Deuschle wrote this article and is the Chair of the firm’s Information Technology Practice Management group, including the firm’s Committee on Digital Ethics. He has managed the firm’s blog since its inception in 2009.
Partner Terry Donohue handles Iowa claims for the firm and works out of the Chicago and Des Moines offices of Inman and Fitzgibbons. Please feel free contact Terry with any Iowa workers’ compensation questions.