# Gregory v. Second Injury Fund of Iowa > Supreme Court of Iowa · January 22, 2010 · 777 N.W.2d 395 URL: https://www.frixlaw.com/law-library/cases/9743269 ## Case - **Full name:** Lori A. GREGORY, Appellant, v. SECOND INJURY FUND OF IOWA, Appellee - **Court:** Supreme Court of Iowa - **Decided:** January 22, 2010 - **Citations:** 777 N.W.2d 395; 2010 Iowa Sup. LEXIS 5; 2010 WL 199305 - **Precedential status:** Published - **Opinion:** Dissent by Cady - **Judges:** Hecht, Cady, Ternus, Streit - **Cited by:** 21 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9743269 ## How later opinions describe it (automated extraction) - concluding that the Fund is liable under section 85.64 if the first and second qualifying injuries caused a compensable injury to an enumerated member “regardless of whether the injuries caused other enumerated scheduled injuries, or other nonenumerated or unscheduled injuries… - stating liability “under section 85.64 is not affected by the fact that the incident also caused bilateral shoulder impairment and was therefore compensated as an unscheduled injury” - noting “[j]ust as a first qualifying injury need not be a work-related injury, the method of calculating 8 compensation for a first qualifying injury cannot be controlling on [the] issue” of whether the injury qualifies as a first injury under section 85.64 - noting the reasoning of what constitutes a second injury is relevant 7 to the reasoning of what constitutes a first injury ## Opinion text CADY, Justice (dissenting). I respectfully dissent. I would affirm the district court. Gregory did not sustain a qualifying first injury. The majority builds its decision upon the often-repeated declared purpose of the *402 Iowa Second Injury Fund statute — to encourage the employment of disabled persons. Second Injury Fund v. Shank, 516 N.W.2d 808, 812 (Iowa 1994). While this observation is a part of our case law, it is incorrect and has likely contributed to an overly broad interpretation of our Second Injury Fund statute over the years. Today’s decision by the majority continues this unfortunate trend. In truth, the Second Injury Fund concept was not conceived to encourage employers to employ disabled workers. Instead, it was enacted to resolve a fundamental dilemma that surfaced early in the development of our workers’ compensation law. This dilemma can be traced to a faulty assumption upon which the early compensation scheme was predicated. This early scheme assumed a worker, prior to a compensable injury, was a “normal [person], with a body and all members” that functioned normally. Pappas v. N. Iowa Brick & Tile Co., 201 Iowa 607, 609 , 206 N.W. 146, 147 (1925). Of course, not all workers have limbs and body parts that function normally. Thus, when a worker with an existing disability suffers a work-related injury, the disability produced by combining the existing disability and the new injury can be “far greater than would be reflected by merely adding together the schedule allowances for each injury existing separately.” 5 Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation Law § 90.01, at 90-2 (2009) [hereinafter Larson’s Workers’ Compensation]. A classic example of the successive injury problem is a leg amputee who loses a second leg in a work-related accident. The problem, of course, is “[t]he loss of a leg, which would ordinarily mean only partial disability to a normal person, results in total disability to the man who has already, from whatever cause, lost the other leg.” Id. This dilemma impacts both the disabled worker and the employer and is responsible for the tension that gave rise to the need for a Second Injury Fund statute. For employees faced with such successive injuries, a fair compensation system would include compensation for the additional disability produced by the combined effect of the injury to an employee with the existing disability. For employers faced with successive injuries to employees, a fair system of compensation would not impose liability for disability not caused by the employment. Some courts sided with the employee by holding the employer fully responsible for the total disability from successive injuries, while other courts sided with the employer by apportioning responsibility for successive injuries by limiting the responsibility of the employer to the disability caused only by the second injury. In recognizing the merits of both positions, the Second Injury Fund was conceived as a legislative solution to the dilemma courts were forced to grapple with by adopting one side or the other, or by fashioning some form of apportionment. One of the first cases to discuss the successive-injury dilemma was from the state of New York in 1915. In this case, a worker named Jacob Schwab had his left hand amputated in 1892 for an unknown reason and later suffered the severance of his right hand in a work-related accident. Schwab v. Emporium Forestry Co., 167 A.D. 614 , 153 N.Y.S. 234, 235 (1915). The court found the employer liable for Schwab’s total permanent disability, rejecting the employer’s argument that it should be responsible only for the scheduled amount for the loss of the right hand. Id. at 236. The next year, the New York legislature responded with a novel solution — the country’s prototype second-inju *403 ry-fund law. Harry W. Dahl, The Iowa Second Injury Fund — Time for Change, 39 Drake L.Rev. 101, 104 (1989) [hereinafter Dahl]. The New York law provided second-injury-fund compensation for “an employee who has previously incurred permanent partial disability through the loss of one hand, one arm, one foot, one leg, or one eye, [and who] incurs permanent total disability through the loss of another member or organ....” 1916 N.Y. Laws 2045 . As early as 1919, we confronted the successive-injury dilemma by holding the employer responsible for the resulting total disability. Jennings v. Mason City Sewer Pipe Co., 187 Iowa 967, 971 , 174 N.W. 785 , 786 (1919). Yet, we subsequently interpreted two statutory amendments relating to the successive-injury problem by requiring the subsequent injury be “apportioned according to the proportion of incapacity and disability caused by the respective injuries.” Pappas, 201 Iowa at 612 , 206 N.W. at 148 . Importantly, we acknowledged the hardship this limited recovery would place on the employee, even in light of our rule of liberal construction of compensation statutes. Id. at 613 , 206 N.W. at 149 . At the time of these early cases, the idea of a Second Injury Fund in Iowa to pay for the additional disability produced by the combined effect of successive injuries was not a vision shared by our legislature. Nor did the concept become an immediate national phenomenon. By 1945, however, a different attitude had surfaced around the country. During World War II, hospital ships laden with disabled veterans returned to America, prompting lawmakers to examine the laws and programs that would aid the returning soldiers. See Dahl at 104 (“Second injury funds became popular at the end of World War II as an attempt to remove obstacles facing disabled veterans who were re-entering the job market.”). Around the same time, data began to emerge from around the country to show handicapped workers in states that did not apportion responsibility for successive injuries were at a competitive disadvantage due to the full responsibility rule. See Larson’s Workers’ Compensation § 91.01, at 91-2 (stating “[a]s soon as it became clear that a particular state had adopted a rule requiring an employer to bear the full cost of total disability for loss of the worker’s remaining leg or arm, employers had a strong financial incentive to discharge all workers who might bring upon them this kind of aggravated liability”). The competitive disadvantage occurred because employers did not want to become liable for the combined disability of successive injuries by hiring or retaining handicapped workers. Id. Consequently, in those states that followed the full responsibility rule for employers, the Second Injury Fund statute was viewed as a means to encourage the employment of handicapped workers by making the current employer only responsible for the disability caused by a second injury. Id. at 91-4. This observation is the source of the statutory purpose declared by the majority. Yet, in states like Iowa, that already protected employers from full responsibility for successive injuries, the Second Injury Fund statute was not needed to encourage the employment of handicapped workers by making the current employer responsible only for the disability caused by the current employment. See Lee M. Jackwig, The Second Injury Fund of Iowa: How Complex Can a Simple Concept Become?, 28 Drake L.Rev. 889, 890-91 (1978-1979) (recognizing that employers were not liable for the total disability of successive injuries at the time the Second Injury Fund was adopted, *404 but were only liable for the loss caused by the second injury). Instead, the purpose of adopting the Second Injury Fund statute in states like Iowa was simply to provide a remedy for inadequate awards to handicapped workers caused by the apportionment of disability. Id. at 891 (recognizing purpose of Second Injury Fund was to provide means to fully compensate a worker for the combined total of successive injuries). It simply makes no sense for us to continue to proclaim a false legislative purpose behind Iowa’s Second Injury Fund statute. Moreover, it is not merely an academic debate at stake. It is important to correctly articulate the legislative purpose of all statutes because the statutory purpose guides us in the interpretation of the statute. Courts risk making an incorrect interpretation of a statute by failing to recognize the true purpose of the statute. If there is a single element of clarity under the statute, it is that the legislature did not intend to include all handicapped workers under its umbrella. Instead, the language of the Second Injury Fund statute only includes persons who had previously lost, or lost the use of, “one hand, one arm, one foot, one leg, or one eye.” Iowa Code § 85.64 (2001). Thus, the legislature clearly did not intend to include handicapped persons due to a disability to other parts of the body, such as the back, neck, hip, or shoulder. See Second Injury Fund v. Nelson, 544 N.W.2d 258, 269 (Iowa 1995) (providing examples of unscheduled injuries). This cannot be disputed. While there may be no clear explanation why the statute would give special benefits (full compensation for combined effects of successive injuries) to some handicapped workers and not others, such line drawing is not up to courts, but is done by the legislature, who is responsible for doling out benefits based on limited resources and policy making. Nevertheless, the fundamental question is whether the legislature intended for the Second Injury Fund statute to cover handicapped workers with an existing disability that extended to both a specified and unspecified portion of the body. In my mind, the portion of the Second Injury Fund statute that provides the greatest clarity in answering this question is the language that requires “the compen-sable value of the previously lost member or organ” to be deducted from the Second Injury Fund award. Iowa Code § 85.64 . In other words, the Second Injury Fund statute makes the employer “liable only for the degree of disability” as if there was “no pre-existing disability.” Id. Once the employer has completed making such payments, the statute makes the Fund responsible for paying the remainder of the total combined disability. Id. However, since this total combined disability necessarily includes the first injury that was previously compensated by a workers’ compensation award if it was work-related (or not compensated as a nonwork-related injury or disability), the statute requires “the compensable value of the previously lost member or organ” to be deducted from the Second Injury Fund award to prevent double recovery. Id. As such, the Second Injury Fund statute works as it should — to provide fair compensation to those handicapped workers chosen by the legislature to receive benefits. Importantly, the phrase “previously lost member or organ” in the deduction portion of the statute refers only to the first injury or disability to “one hand, one arm, one foot, one leg, or one eye,” not the back, neck, shoulder, or hip. See id. (“If an employee who has previously lost, or lost the use of, one hand, one arm, one foot, one leg, or one eye, becomes permanently disabled by a compensable injury which *405 has resulted in the loss of or loss of use of another such member or organ .... ” (emphasis added)). Thus, the statute clearly only mandates that the compensable value of the first injury to a hand, arm, foot, leg, or eye be deducted from the compensation paid by the Fund. If the statute is interpreted to include handicaps involving both a hand, arm, foot, leg, or eye and another area of the body (back, neck, shoulder, or hip), there is no corresponding language in the statute directing the prior compensa-ble value of the back, neck, shoulder, or hip to be deducted. As a result, if the Second Injury Fund statute is interpreted to include first injuries or disabilities that extend to the back, neck, shoulder, or hip, then the handicapped worker with such a disability will be compensated twice for a portion of the first injury or disability, or will be compensated for a nonwork-related disability. This clearly could not have been the intent of the legislature. The majority obviously recognizes the absence of any language in the statute that calls for the full amount of the first injury to be deducted from the amount of compensation payable by the Fund. They, of course, avoid this flaw by simply directing the commissioner to determine the new combined disability based on the combined effect of only the first and second qualifying injuries, ignoring the portion of the prior disability, and the new combined disability, attributable to the nonqualifying portion of the first injury covering the back, neck, shoulder, or hip. Thus, the majority lowers the threshold of the statute to include workers with comprehensive disabilities (handicap due to injuries to both qualified and nonqualified parts of the body under the statute) by simply directing the commissioner to apply the statute as if workers are burdened with a different, less severe disability. While we strive to interpret workers’ compensation statutes liberally in favor of the worker, the majority’s maneuver goes well beyond any acceptable rule of construction. The majority is no longer interpreting the statute, but rewriting the statute. Such an approach has serious and broad implications. Moreover, the approach adopted by the majority falls well short of the true goal of the statute to provide full compensation for disabled workers who suffer a new injury. If the commissioner must ignore the true nature of the first disability in applying the statute as directed by the majority, then the worker will likely not be fully compensated for the true combined disability that results when the existing disability is combined with the new injury. Of course, the majority is able to accept this result by continuing to maintain that the purpose of the statute was merely to encourage employment of disabled workers, instead of recognizing its true fundamental goal of full compensation. I agree the Second Injury Fund is confusing, if not outdated, and even perhaps unfair as it is currently written. However, it is not up to the courts to rewrite a statute. Instead, the legislature is the governmental body that should revisit the statute and decide whether or not it should be extended to include handicapped workers with whole body injuries as the first injury. 6 For those reasons, I respectfully dissent. TERNUS, C.J., and STREIT, J„ join this dissent. . It has been suggested that Second Injury Fund statutes in those states that impose low *406 thresholds have become expensive and counterproductive. Larson's Workers' Compensation § 91.03(8), at 91-58. Low thresholds can tend to place such states at a competitive disadvantage to neighboring states with high thresholds by requiring larger annual assessments or the imposition of other funding burdens thought to discourage new business. Id. Many states have eliminated or severely restricted their Second Injury Funds, including Nebraska, Minnesota, and South Dakota. Id. at 91-58.1. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9743269. Public record. Not legal advice.