The “Magic” of Iowa Second Injury Fund Claims

This post is about how a worker in Iowa with a scheduled injury claim can receive extra compensation through a special type of litigation called a Second Injury Fund claim.

In many situations under Iowa workers’ compensation law an injury to an unscheduled body part such as a shoulder, neck or back receives higher compensation than an injury to a scheduled body part such as a hand, knee, or foot. (See here for a longer discussion about the differences between scheduled injuries and unscheduled injuries and how they are compensated).

The different treatment of scheduled and unscheduled injuries under Iowa law may not always seem completely logical or fair. One worker may receive a serious hand injury that prevents him from doing his job, and another worker can receive a serious neck injury that prevents him from doing his job. However, because of the difference in the location of the injuries, the worker with the neck injury will receive higher compensation than the worker with the hand injury.

Many cases over the years have challenged the validity of this different compensation between scheduled injuries and unscheduled injuries. All the challenges have been unsuccessful. The Iowa Supreme Court has approved the reasonableness of the legislature’s decision to try to make the resolution of scheduled injury claims easier by making the determination of the extent of compensation more like a simple math equation. See Gilleland v. Armstrong Rubber Co., 524 N.W.2d 404, 407 (Iowa 1994).

However, if a worker’s situation fits within the requirements of a Second Injury Fund claim he can receive industrial disability type damages for a scheduled injury claim.

The Iowa statutory law concerning workers’ compensation injuries is set out in Iowa Code Sections 85.63, 85.64, 85.65, 85.65A, 85.66, 85.67, 85.68, and 85.69.

The money to pay for Second Injury Fund claims comes from two sources. First, in every workers’ compensation case involving a death the insurance company or self-insured employer involved in the case has to pay a special assessment into the Second Injury Fund. The current assessment is $12,000 for death cases where there are dependents, and $45,000 for death cases in which there are not any dependents.

Second, if there is not enough money from the death assessments to pay the Second Injury Fund claims a special assessment is made against all of the insurance companies selling workers’ compensation insurance in Iowa, and the self-insured employers.

The Iowa State Treasurer is the custodian of the money that is used to pay the Second Injury Fund claims. The Iowa Attorney General’s office defends all of the Second Injury Fund claims.

There are two primary requirements to qualify for a Second Injury Fund claim. First, the worker must have suffered an injury in the past involving a hand, arm, foot, leg, or eye. This first injury can be the result of a work injury, or from some other source. This first injury can either be caused by trauma or through some other process. Second, the worker must incur another injury arising out of work to a different hand, arm, foot, leg, or eye.

In Second Injury Fund litigation a claim is brought against both the employer and the Second Injury Fund. The employer is only responsible for the regular scheduled injury value of the work injury.

The Second Injury Fund is liable for the unscheduled or industrial disability value of the combination of the first and second injuries, less a credit for the scheduled value of the two injuries.

Here is an example of how a Second Injury Fund claim could arise and play out. A worker may have suffered a right arm injury years ago while playing high school football that resulted in a 30% impairment of the right arm. The worker then hurts his left arm on the job that results in a 40% impairment to the left arm. For purposes of this example we will assume that the combined industrial disability value of those two injuries is 50% industrial disability.

Therefore, since the worker has a 50% industrial disability that would usually entitle him to 250 weeks of PPD benefits. (Maximum industrial disability is generally worth 500 weeks x 50% industrial disability = 250 weeks of PPD).

However, these 250 weeks of PPD must be reduced by the scheduled injury value of the two arm injuries. The right arm football injury is worth 75 weeks. (Arm is worth 250 weeks x 30% impairment = 75 weeks of PPD benefits). The left arm work injury is worth 100 weeks. (Arm is worth 250 weeks x 40% = 100 weeks of PPD benefits).

Therefore, the 250 weeks for 50% industrial disability is reduced by the 175 weeks from the combined value of the scheduled injuries for a net recovery from the Second Injury Fund of 75 weeks of PPD (250 – 175 = 75 weeks of PPD).

The worker also gets the 100 weeks of PPD from the employer for the work injury to the left arm. There is no recovery for the old football injury.

In other words, by bringing a Second Injury Fund claim the hypothetical worker who only would have been entitled to 100 weeks of benefits for his scheduled injury claim also gets an additional 75 weeks of benefits from the Second Injury Fund.

This fairly basic explanation of a Second Injury Fund claim can be confusing. Additionally, over the years there has been extensive litigation concerning Second Injury Fund claims. This litigation has produced very detailed law about the requirements for Second Injury Fund claims, the special defenses available to the Fund, the special limitations about the timing of the Fund’s duty to pay, and special limitations on the interest applicable to claims against the Fund.

The main point for a worker to keep in mind is that if they suffer a scheduled injury they should talk to a lawyer to figure out whether they might also have a Second Injury Fund claim.