The Iowa Supreme Court issued a decision on May 3, 2019 in the case of Clark, Dusabe, Ezeirig, Green, Tarpeh, and Nyonee v. Insurance Company State of Pennsylvania.  The case involved employees who were injured by chemical exposure.  The employees brought a civil lawsuit against the work comp insurance company based on the insurance company inspecting their factory and failing to address the chemical exposure problems.

The workers’ chemical exposure lawsuit was also against the employer and a number of individuals.  The Supreme Court’s decision of May 3, 2019 only ruled on the claims against the work comp insurance company.

The work comp insurance company argued that it had immunity pursuant to Iowa Code Section 517.5 which provides:

“No inspection of any place of employment made by insurance company inspectors . . . shall be the basis for the imposition of civil liability upon the inspector or upon the insurance company. . .”

The employees argued that the Code Section was unconstitutional as a violation of equal protection, inalienable rights and due process under the Iowa constitution.

The employer in the case was TPI Iowa, LLC which is a wind blade manufacturing facility located in Newton, Iowa.  TPI employs hundreds of workers at the Newton facility.

The employees alleged that they were exposed to hazardous chemicals while manufacturing wind blades at the Newton facility.  The workers alleged that the negligent inspection by the insurance company caused them various injuries including skin ruptures, rashes, burns, swollen and wounded eyelids, extensive body itching and throat and lung congestion.  In addition to the workers that were part of the lawsuit, TPI has documented approximately 350 chemical exposure injuries between 2008 and 2017 at the Newton facility.  The Plaintiffs alleged that the employer and the work comp insurance company were well aware of the dangers of the chemicals being used, and did not take the necessary safety steps to avoid injuries to the employees.

The Iowa Supreme Court’s analysis of the case dealt with the history behind the development of workers’ compensation law and the development of the tort liability to parties who engage in voluntary undertakings.

At the start of the 1900s states began to create workers’ compensation systems.  The work comp systems were compromises between the rights of workers and employers.  Workers gave up their common law rights to seek a full range of compensatory and punitive damages and instead were limited to statute based compensation.  On the other hand, workers were no longer required to show that the employer was at fault, but only needed to show that the injury arose in the course of employment.

The second legal development involved imposing liability on a party that gratuitously or voluntarily engages in an undertaking, but acts negligently.  A common example is a bystander who voluntarily aids an injured person, but acts negligently and ends up hurting the injured person worse.

In a constitutional challenge like that brought by the workers in the Clark v. Insurance Company State of Pennsylvania case a key issue is whether the Court will review the challenged legislation under a strict scrutiny review or a rational basis review.  A challenged law can frequently pass strict scrutiny review, but there is a much higher chance the law will be found to be unconstitutional under strict scrutiny review.

By contrast, almost all legislation that is reviewed under the rational basis test is found to be constitutional.  The Iowa Supreme Court decided that the immunity law in favor of the insurance companies should be reviewed under the rational basis test.

The Supreme Court found that it was rational for the legislature to decide that the grand bargain of the workers compensations scheme is best balanced by including immunity for inspections performed by workers’ compensation insurance companies.  The Supreme Court noted that this finding did not result in an absolute elimination of a right to recover for injuries on the job, but only a regulation of the right to recover.