Iowa: Lack of “Adequate” Remedy Does Not Mean Exclusive Remedy Provision May Be Circumvented

As observed by Dr. Larson, the exclusiveness defense is part of the quid pro quo
by which “the sacrifices and gains of employees and employers are to some extent put in
balance” [see Larson's Workers' Compensation Law, § 100.04]. It follows, therefore, that the employer should be spared damage liability only when compensation liability has actually been provided in its place. In some particular cases, claimants have argued that the paucity of recovery is such that they have received nothing of adequate value commensurate with the value of immunity afforded the employer. The difficulty in these sorts of cases can be seen in a recent decision by the Court of Appeals of Iowa [Estate of Brehm v. Dubuque Community Sch. Dist., 2012 Iowa App. LEXIS 820 (Oct. 3, 2012).

Background

Brehm was an employee of a community school district and also worked as an electrician
for an electrical company. He had been working full-time at both places of employment
for several years and earned a total of approximately $60,000 per year. Early one
morning, as he was working for the school district at its administration building, he
was struck and run over by a school-owned vehicle operated by a school district
employee. Brehm died at the scene. The school district was subsequently fined $4,500 by
the state Occupational Safety and Health Bureau for inadequate lighting at the place
where the accident occurred.

The carrier for the school district began paying benefits to Brehm's surviving spouse and
minor children. The estate sought a judicial declaration that it was not barred from
suing the school district for damages not covered under the workers' compensation
statute because the workers' compensation statute did not provide adequate redress for
Brehm's death. The district court granted the school district's motion for summary
judgment, finding the workers' compensation commissioner had exclusive jurisdiction over the estate's claims that stemmed from the work-related injury.

Appellate Court Decision

On appeal, the court initially noted that two subsections [Iowa Code § 85.36(9), (12)]
allowed consideration of an employee’s earning from all employment during the
previous twelve months, but that neither apply to Brehm. The court also observed that
in King v. City of Mt. Pleasant, 474 N.W.2d 564 (Iowa 1991), the state supreme
court had addressed the situation of employees who were injured while performing a job
that did not reflect their total earnings. In that case, a town mayor was shot and
killed during a city council meeting and two council members were injured. The mayor
earned an annual salary of $4,800 as mayor and an additional $39,000 through his private employment. The claimant argued that the computation of the deceased mayor’s “weekly earnings” required the aggregation of his income from all sources. While the supreme court was sympathetic, it rejected the claim, finding that the statute as drafted did not permit claimants to add the mayor’s earnings together to determined the average
weekly wage.

In the instant case, the estate argued that because the workers’ compensation scheme
could not consider Brehm’s earnings from his job at the electrical company, the law did
not provide an adequate remedy. Citing, inter alia, Wilson v. IBP, Inc., 558 N.W.2d 132, 137 (Iowa 1996), the estate contended that, at least in limited circumstances, if it could show that the workers’ compensation laws did not provide an adequate remedy, it could proceed outside that scheme within the Iowa court system. In Wilson, the high court allowed an employee to file a breach of fiduciary duty suit against an employer when a company nurse falsely represented to a treating physician that the employee was not following through with his prescribed lifestyle restrictions. The court reasoned that the intentional torts of breach of fiduciary duty and defamation fell outside the exclusive jurisdiction of the workers’ compensation commissioner, and the case was not barred.

The school district countered that the issue was controlled by Ganske v. Spahn &
Rose Lumber Co.
, 580 N.W.2d 812 (Iowa 1998), in which an employee developed an
occupational disease, but not within the statute of limitations for recovery provided in
the workers’ compensation statute. He argued because his workers’ compensation recovery was precluded, he should be allowed to recover under a common-law right of recovery. Quoting Larson’s Workers’ Compensation Law, former § 65.40 (current § 100.04), the court indicated that “[a] distinction must be drawn … between an injury which does not come within the fundamental coverage provisions of the act, and an injury which is in itself covered but for which, under the facts of the particular case, no compensation is payable.” The school district added that just because Brehm’s estate will not be compensated for one hundred percent of his lost wages, it did not mean workers’
compensation provided an inadequate remedy.

The court of appeals agreed. It also indicated the instant case was clearly distinguishable from Wilson. Pointing to Tallman v. Hanssen, 427 N.W.2d 868 (Iowa 1988), the court observed that bad faith claims, such as those in Tallman and Wilson, could proceed in tort outside the workers’compensation laws since intentional torts were not compensable under the workers’ compensation system and the cause of action clearly arose from outside that laws’ framework. The estate’s claim had not alleged bad faith on the part of the school district.

The court added that the workers’ compensation remedy was also not inadequate just
because Brehm’s children were denied the opportunity to recover for lost consortium
under the workers’ compensation statute. Citing Johnson v. Farmer, 537 N.W.2d
770, 773 (Iowa 1995), the appellate court observed that the strate supreme court held
the exclusive remedy provisions of the Workers’ Compensation Act precluded
loss-of-consortium claims for spouses and children of those suffering worker-related
injuries.

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