Sometimes an employer will fail to purchase Iowa workers’ compensation insurance. If you end up getting hurt on the job when your employer does not have workers’ compensation insurance there is a procedure for suing the employer in a civil action. I will write about the strategies for dealing with an uninsured employer in the future.
Today I am going to write about the situation in which an employer does have workers’ compensation insurance, but the employer has a very high deductible. This is similar to the situation in which you can get collision coverage as part of your auto insurance, and choose the amount of the deductible you want. You can get a very low deductible like $100 or a very high deductible like $5,000. Your auto insurance company does not have to chip in until you have paid the amount of your deductible. When an Iowa employer has a high deductible workers’ compensation insurance policy this means that the insurance company does not have to pay towards your work comp benefits until the employer has paid the amount of the deductible.
Recently we have run into a number of cases in which employers have deductibles in the area of $250,000 per injury. This means the employer has to pay for the first $250,000 of workers’ comp benefits for each injured worker before the insurance company is required to start paying. This is not a problem as long as the employer has the money to pay for the medical care and the weekly checks for the work injury.
However, we have run into a couple of cases where the employer has run into financial problems and is unable to pay the fair value of the case for settlement purposes, or is unable to pay the judgments we obtained for our clients at trial.
In these situations the insurance companies initially have taken the position that they were not obligated to pay a settlement or an award until the financially troubled employer had paid the deductible amount. This obviously put our clients in a difficult position with the employer financially unable to pay what was owed, and the insurance company arguing that they were not legally required to pay.
Fortunately, we have been able to convince the insurance carriers that they are legally obligated to pay the entire amount of the settlement or award without any contribution from the financially troubled employer.
The arguments that we have used are based on Iowa’s public policy of making sure that injured workers are compensated by basically making the employer and insurance company jointly and severally liable for all workers’ compensation damages. Bates v. Nelson, 240 Iowa 926 (1949) makes the point that the Iowa laws concerning workers’ compensation are “read into” every work comp insurance policy whether or not the statutory language is actually there.
This is important because Iowa Code Section 87.1 requires every employer to obtain insurance to cover their liability for workers’ compensation injuries. The statute does not put any dollar limit on this requirement and does not create any exceptions for deductibles, or permit any kind of exclusions. Additionally, Iowa Code Section 87.10 states that the work comp insurance company shall be bound by every agreement, adjudication, award, or judgment entered against the employer. This means that if necessary we can execute against the assets of an insurance company to satisfy a judgment we have obtained for our clients.
Another potential variation of the problem of the employer and the insurance company each saying the other should pay the injured worker his work comp benefits would involve the employer filing bankruptcy. I think that the reasoning discussed above would probably win and require the insurance company to pay the workers’ compensation benefits even if the employer filed bankruptcy. Additionally, Iowa Code Section 87.8 specifically provides that no Iowa workers’ comp insurance policy can contain a provision that relieves the insurance company from paying the benefits owed if the employer becomes insolvent or is discharged in bankruptcy.
If you are hurt on the job and the defendants are unwilling or unable to pay, you should talk to an experienced Iowa workers’ compensation attorney to find out whether the defendants can be required to provide medical care and monetary benefits.