Senate File 2314 - Introduced
SENATE FILE
BY DOTZLER
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act requiring imposition of a penalty for certain delays in
2 commencement or terminations of workers' compensation
3 benefits, and providing an applicability date.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 5566SS 82
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PAG LIN
1 1 Section 1. Section 86.13, unnumbered paragraph 4, Code
1 2 2007, is stricken.
1 3 Sec. 2. NEW SECTION. 86.13B DELAY IN COMMENCEMENT OR
1 4 TERMINATION OF BENEFITS == PENALTY == LEGISLATIVE INTENT.
1 5 1. For the purposes of this section:
1 6 a. "Affirmative obligation" means the duty described in
1 7 subsection 2 to pay benefits in full on or before the due
1 8 date. "Affirmative obligation" includes the duty to
1 9 investigate and evaluate whether or not benefits are due.
1 10 b. "Benefits" means any benefits, compensation, interest
1 11 on compensation, or interest on other benefits due under
1 12 section 85.27, 85.28, 85.29, 85.30, 85.31, 85.32, 85.33,
1 13 85.34, 535.2, or 535.3.
1 14 c. "Commissioner" means the workers' compensation
1 15 commissioner.
1 16 d. "Compensation" means transportation expenses and other
1 17 benefits, except services, supplies, care, or treatment
1 18 provided under section 85.27, subsection 1, 4, or 5.
1 19 e. "Due date" means the date that payment is due for any
1 20 of the following, as follows:
1 21 (1) For the principal amount of compensation due, the due
1 22 date is the day after the last day of each seven=day period in
1 23 which compensation becomes payable.
1 24 (2) For interest added to compensation, the due date is
1 25 the seventh day after the due date of the principal amount of
1 26 compensation.
1 27 (3) For the principal amount of benefits due, the due date
1 28 is thirty days after the benefits, including but not limited
1 29 to services, supplies, treatment, or care provided under
1 30 section 85.27, were or should have been furnished to an
1 31 employee and ten days after transportation expenses were paid
1 32 by an employee.
1 33 (4) For interest added to benefits, the due date is the
1 34 date provided by law or contract.
1 35 f. "Failure to perform" means the failure to perform an
2 1 affirmative obligation.
2 2 g. "Legal excuse" means an excuse given by an employer for
2 3 a failure to perform an affirmative obligation which satisfies
2 4 all of the following criteria:
2 5 (1) The excuse actually existed during any period in which
2 6 there was a failure by an employer to perform.
2 7 (2) The excuse was preceded by a reasonable investigation
2 8 and evaluation by the employer of whether benefits were due.
2 9 (3) The excuse was actually the cause of the failure to
2 10 perform upon which the employer contemporaneously relied when
2 11 failing to perform an affirmative obligation.
2 12 (4) The excuse is reasonable under the facts and
2 13 circumstances.
2 14 A claim by an employer that an affirmative obligation was
2 15 fairly debatable as a matter of law, which can be objectively
2 16 determined, does not constitute a legal excuse.
2 17 2. An employer has an affirmative obligation to pay
2 18 benefits in full on or before the due date. The affirmative
2 19 obligation arises on the date that an employer becomes aware
2 20 that an injury arising out of and in the course of employment
2 21 may have been sustained or is claimed by an employee to have
2 22 been sustained. The affirmative obligation continues until
2 23 all benefits due have been paid in full. An affirmative
2 24 obligation arises regardless of whether an employee makes a
2 25 claim for benefits that are due or which will become due.
2 26 3. The commissioner shall impose a penalty on an employer
2 27 as provided in subsection 4, if the commissioner makes both of
2 28 the following findings:
2 29 a. The employer failed to perform an affirmative
2 30 obligation.
2 31 b. The employer failed to prove the existence of a legal
2 32 excuse for the employer's failure to perform an affirmative
2 33 obligation.
2 34 4. A penalty shall be imposed by the commissioner on an
2 35 employer for failure to perform an affirmative obligation
3 1 pursuant to subsection 3 that is payable to the employee to
3 2 whom the affirmative obligation is owed in an amount that is
3 3 equal to the amount of the benefits that were not paid on or
3 4 before the due date, unless the commissioner finds that there
3 5 are mitigating facts and circumstances. If the commissioner
3 6 finds that there are mitigating facts and circumstances the
3 7 commissioner may reduce the amount of the penalty imposed on
3 8 the employer to an amount that is not less than fifty percent
3 9 of the amount of the benefits that were not paid on or before
3 10 the due date. For the purposes of this subsection, mitigating
3 11 facts and circumstances include but are not limited to any of
3 12 the following:
3 13 a. The brevity of the failure to perform the affirmative
3 14 obligation owed to the employee.
3 15 b. The low dollar value or the low number of the benefits
3 16 that were not paid on or before the due date.
3 17 c. The lack of any prior penalty assessment against the
3 18 employer.
3 19 d. The fact that the employer made a good faith attempt to
3 20 inform the employee of the reason for the employer's failure
3 21 to perform and to seek input from the employee concerning the
3 22 validity of the reason given.
3 23 e. The lack of harm to the employee or to the workers'
3 24 compensation system caused by the employer's failure to
3 25 perform the affirmative obligation.
3 26 f. Other mitigating facts and circumstances determined by
3 27 the commissioner to be relevant.
3 28 5. Alternatively, or in addition to receiving penalties
3 29 under this section, an employee may file a lawsuit in district
3 30 court for actual and punitive damages against an employer
3 31 based on the employer's failure to perform an affirmative
3 32 obligation as provided in this section. The court may award
3 33 actual and punitive damages to the employee upon a finding of
3 34 both of the following:
3 35 a. The employer failed to perform an affirmative
4 1 obligation owed to the employee.
4 2 b. The employer failed to prove the existence of a legal
4 3 excuse for the employer's failure to perform an affirmative
4 4 obligation owed to the employee.
4 5 6. If an employee claims punitive damages under subsection
4 6 5, the employer may offer as a defense against imposition of
4 7 punitive damages, evidence of mitigating facts and
4 8 circumstances as provided in subsection 4. If the employer
4 9 offers such a defense, the employee may offer evidence that a
4 10 penalty was imposed by the commissioner previously against the
4 11 employer at any time either pursuant to section 86.13, Code
4 12 2007, or pursuant to this section.
4 13 7. If punitive damages are awarded in the district court,
4 14 the amount of such damages shall be reduced by the amount of
4 15 any penalty that was imposed by the commissioner pursuant to
4 16 this section for the employer's failure to perform the
4 17 affirmative obligation that is the subject of the lawsuit.
4 18 8. A claim for failure to perform an affirmative
4 19 obligation shall be made under this section within five years
4 20 of the failure to perform the affirmative obligation.
4 21 Sec. 3. INTENT == APPLICABILITY. It is the intent of the
4 22 general assembly in enacting this section to abrogate the
4 23 common law tort based on a failure to pay workers'
4 24 compensation benefits for all failures to perform an
4 25 affirmative obligation that occur on or after July 1, 2008.
4 26 However, if a failure to perform an affirmative obligation
4 27 occurred prior to July 1, 2008, an employee may file a claim
4 28 either for imposition of benefits under section 86.13,
4 29 unnumbered paragraph 4, Code 2007, or under this section if
4 30 the claim is made within five years of the employer's failure
4 31 to perform the affirmative obligation.
4 32 EXPLANATION
4 33 This bill strikes the current penalty provision for failure
4 34 to pay workers' compensation benefits contained in Code
4 35 section 86.13 and creates new Code section 86.13B, which
5 1 requires the imposition of a penalty on employers for certain
5 2 delays in commencement or terminations of workers'
5 3 compensation benefits.
5 4 The bill provides that an employer has an affirmative
5 5 obligation to pay workers' compensation benefits on or before
5 6 the date the benefits are due. An "affirmative obligation" is
5 7 defined as a duty to pay benefits in full on or before the due
5 8 date and includes the duty to investigate and evaluate whether
5 9 or not such benefits are due.
5 10 The workers' compensation commissioner is required to
5 11 impose a penalty on an employer payable to the employee if the
5 12 commissioner finds that the employer failed to perform an
5 13 affirmative obligation to pay benefits and failed to prove the
5 14 existence of a legal excuse for such failure to pay. The
5 15 amount of the penalty is required to equal the amount of the
5 16 benefits that were not timely paid, unless the commissioner
5 17 finds that there are mitigating facts and circumstances. In
5 18 that case the penalty may be reduced to an amount that is not
5 19 less than 50 percent of the amount of the benefits that were
5 20 not timely paid.
5 21 Alternatively, or in addition to the right to receive
5 22 penalties under the new Code section, an employee may file a
5 23 lawsuit in district court for actual and punitive damages
5 24 based on an employer's failure to perform an affirmative
5 25 obligation to pay workers' compensation benefits. Punitive
5 26 damages may be awarded only upon a finding that the employer
5 27 failed to perform an affirmative obligation owed to the
5 28 employee and failed to prove the existence of a legal excuse
5 29 for that failure. An employer may present evidence of
5 30 mitigating facts and circumstances as a defense. In response,
5 31 an employee may present evidence that prior penalties have
5 32 been assessed against the employer.
5 33 The expressed intent of the bill is to abrogate the common
5 34 law tort based on the failure to pay workers' compensation
5 35 benefits, for all such failures that occur on or after July 1,
6 1 2008. However, if a failure to perform an affirmative
6 2 obligation occurred prior to July 1, 2008, an employee may
6 3 file a claim either for imposition of benefits under Code
6 4 section 86.13, unnumbered paragraph 4, which is stricken by
6 5 the bill, or under new Code section 86.13B if the claim is
6 6 made within five years of such failure.
6 7 LSB 5566SS 82
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