On Friday May 4 the Iowa Supreme Court issued a workers compensation decision in the matter of Burton v, Hilltop Care Center which was significant regarding Indemnity Payment Determination. Ms. Burton was an employee of Hilltop. About 18 months prior to her termination at Hilltop Ms. Burton received a raise that is now disputed. Hilltop voluntarily paid Ms. Burton $1000 a month increase in salary. Before her termination Ms. Burton suffered a work-related injury.

During the arbitration proceedings Hilltop claimed that Ms. Burton was to receive a salary increase of $1000 per year in lieu of $1000 per month. As such Hilltop claimed that the $1000 month salary increase should not be considered because it was due to an “accounting error”. Obviously the case worked its way through the judicial process to the Iowa Supreme Court. To reach its decision the Iowa Supreme Court interpreted section 85.36 which essentially states that the compensation rate is based upon gross earnings “for employment”.

The bottom line is that after much technical discussion the court held that a “mistake” resulting in an overpayment would not be included in determining the proper indemnity rate. The Court held that whether it was a mistake is an issue of fact and sent the case back to the Commissioner for determination. It would seem that if there was an accidental underpayment that the same rules would apply.

The court also discussed the issue of whether a bonus could be included in determining the indemnity rate. Starting its discussion with a determination that an irregular bonus would not be included in the determination the court next considered whether Burton received a regular annual bonus. The Court clarified its decision in Noel by holding in essence this determination is done on a case-by-case factual basis and that great deference would be afforded the Commissioner as a result.