The Iowa Supreme Court recently reversed the state Commission and lower court decisions to uphold the plain meaning of Sec. 85.34(2)(v) regarding the limitation of compensation to functional loss. (Den Hartog Industries and West Bend Mutual Insurance Company vs. Tyler Dungan, No. 23–1402, October 3, 2025). The employee sustained an undisputed back injury while lifting at work in 2019. He was diagnosed with a herniated disc and annular tear and underwent injections and physical therapy. He was returned to work with a forty-pound weight restriction. Prior to his injury he was earning $15.16 per hour. When he returned, he was earning $15.50. One year after returning to work post-injury the employee resigned to relocate closer to family. He then obtained a job as a welder earning $17.48 per hour while continuing to receive treatment and injections in 2020. Prior to hearing he changed employers again and earned $20.15 per hour. He had requested and received a release of all work restrictions from his treater.
His treating doctor provided an AMA Guides impairment rating of 5% whole body. Claimant obtained a higher IME rating of 8% whole body based on ongoing radiculopathy. The employer also obtained their own IME rating, which was the same 5% as the treater. Following hearing, the deputy agreed with the 8% impairment rating of Claimant’s IME, but also concluded that the case should be evaluated as loss of earning capacity, and not functional impairment, and awarded 15% industrial disability.
The employer filed a review with the Commissioner, who affirmed the deputy’s decision. On further appeal, the district court also affirmed. The appellate court, in a split decision, reaffirmed.
The Supreme Court initially discussed the applicable standard of review, citing recent decisions declining to give deference to the Commissioner’s interpretation of various provisions of the Worker’s Compensation Act, although the Commissioner’s factual findings are to be accepted when supported by substantial evidence. In its analysis the Court first noted that this back injury is an “unscheduled injury” to be compensated under Sec. 85.34(2)(v). The Court then analyzed the specific provisions of Sec. 85.34(2)(v), noting that (3) of that section provides: If an employee who is eligible for compensation under this paragraph returns to work or is offered work for which the employee receives or would receive the same or greater salary, wages, or earnings than the employee received at the time of the injury, the employee shall be compensated based only upon the employee’s functional impairment resulting from the injury, and not in relation to the employee’s earning capacity.
The Court disagreed with the Commissioner’s interpretation that (4) of this section creates a “bifurcated litigation process” which supports an industrial loss approach to permanency. Sec. 85.34(2)(v)(4) provides: “Notwithstanding section 85.26, subsection 2, if an employee who is eligible for compensation under this paragraph returns to work with the same employer and is compensated based only upon the employee’s functional impairment resulting from the injury as provided in this paragraph and is terminated from employment by that employer, the award or agreement for settlement for benefits under this chapter shall be reviewed upon commencement of reopening proceedings by the employee for a determination of any reduction in the employee’s earning capacity caused by the employee’s permanent partial disability.” The Court saw no ambiguity in the statute, and held that a plain reading, applied to this case, results in subsection 3 controlling (returned to employer at same or greater salary), and subsection 4 inapplicable (employee was never terminated, but voluntarily resigned).
Key Point: If an employee with an unscheduled injury (back injuries most often) returns to work with the same earnings, permanency should be based only on impairment ratings.