Opinion ID: 1598423
Heading Depth: 1
Heading Rank: 3

Heading: Workers' Compensation Settlement.

Text: Cynthia argues that the district court and court of appeals ignored Brent's workers' compensation settlement in calculating his new support obligation. She is correct insofar as neither court explained its calculation of support under the guidelines nor did they justify any departure from the guidelines' amount. Our child support guidelines are to be strictly followed unless their application would lead to an unjust or inappropriate result. State ex rel. Reaves v. Kappmeyer, 514 N.W.2d 101, 104 (Iowa 1994) (citing Iowa Code § 598.21(4)(a) (1991)). A court should first determine the amount of support owed under the guidelines and then decide whether an adjustment of that amount is warranted. Id. Under these principles, the district court should have first calculated the amount that Brent would owe under the guidelines for two children based on the parties' current incomes. Cynthia presently has net monthly income of $338.71. Brent works a few hours a week at the YMCA. His net income from this employment is minimal. That brings us to the primary issue in this casedo we treat Brent's lump-sum settlement of his workers' compensation claim as income for purposes of determining his child support obligation. We have previously stated in dicta that workers' compensation benefits are properly considered as income in setting the amount of child support. In re Marriage of Lee, 486 N.W.2d 302, 305 (Iowa 1992). We believe this statement is correct. Workers' compensation benefits are not a windfall. They are directly related to the worker's former earnings and his or her ability to earn income in the future. See Deaver v. Armstrong Rubber Co., 170 N.W.2d 455, 466 (Iowa 1969) (Ordinarily, compensation is awarded for incapacity to earn or industrial disability and not for the injury as such.); Iowa Code § 85.36 (1993) (The basis of compensation shall be the weekly earnings of the injured employee at the time of the injury.). In this respect, benefits received by Brent represent a replacement of income he could otherwise have earned had he not been injured. The nature of these benefits is the same whether Brent receives them weekly or in a lump sum. Therefore, we hold that Brent's settlement proceeds should be considered as income in setting his child support obligation. In re Marriage of Dodds, 222 Ill.App.3d 99, 164 Ill.Dec. 692, 583 N.E.2d 608 (1991), cert. denied, 144 Ill.2d 632, 169 Ill.Dec. 140, 591 N.E.2d 20 (1992); Babish v. Babish, 361 Pa.Super. 118, 521 A.2d 955 (1987). Although courts in other states have included lump-sum workers' compensation benefits as income for child support purposes, they have apportioned the money in different ways. The Montana Supreme Court included a lump-sum payment of workers' compensation benefits as income for the year in which it was received, noting that the trial court would have to recalculate child support at the end of that year. In re Marriage of Sullivan, 258 Mont. 531, 853 P.2d 1194, 1198 (1993). In Lenz v. Wergin, 408 N.W.2d 873 (Minn. Ct.App.1987), the Minnesota Court of Appeals reached the opposite conclusion. It reversed the district court's decision to treat a mother's receipt of a lump-sum workers' compensation payment as income in the year it was received. Lenz, 408 N.W.2d at 877. The Minnesota appellate court held that the trial court should allocate the lump-sum payment over the years from the date of the injury to the date the mother's support obligation ceased. Id. We think it is unwise to establish one rule to be applied in all cases. The appropriate treatment of a lump-sum payment of workers' compensation benefits depends on the circumstances of each case. Here Brent received 126 weeks of benefits in a lump sum. The 126-week period expires in May of 1995 which coincidentally is when Brent will complete his schooling. Despite his injury Brent can be gainfully employed and presumably will obtain a full-time job after May of 1995. Under all the circumstances of this case, we conclude that Brent's workers' compensation settlement should be considered income to him for the period of 126 weeks. We use the net proceeds that he actually received, [1] $42,304.25, and apportion this sum over 126 weeks. This apportionment results in a net monthly income of $1454.92 through May 1995. Under the child support guidelines, Brent must pay $117.51 per week in child support. Brent advances no reason to deviate from the guidelines. Therefore, we will require him to pay the guidelines' amount. Any adjustment of this amount when the imputed workers' compensation income ends in May 1995 will depend upon the financial situation of the parties at that time. Either party may request a modification of the amount of child support then or at any prior time upon proof of a substantial change in circumstances.