Opinion ID: 2123729
Heading Depth: 2
Heading Rank: 2

Heading: Payments to the Second Injury Fund.

Text: At issue in this appeal is the intervenors' claim that payments made to the Fund are compensation within the meaning of chapter 85 of the workers' compensation act. The district court concluded that payments to the Fund were not compensation. To determine the intervenors' rights to indemnification we first look at the language of the statute and the context in which it is used. We must ascertain the intent of the legislature and construe the statutory language consistent with our case law. Bertrand v. Sioux City Grain Exch., 419 N.W.2d 402, 404 (Iowa 1988). We have previously held the language of section 85.22(1) is ambiguous because it does not specify the type of damages to which the employer is entitled. Bertrand, 419 N.W.2d at 404. The term compensation has not been used consistently throughout chapter 85. Intervenors urge the purpose of the lien provision is to indemnify the employer for all payments they were statutorily required to make on account of the employees' deaths. We have previously discussed the purpose of section 85.22(1). In Johnson, we stated: The purpose of ... section 85.22(1) is to permit the employer to recoup monies it has been required to pay under the provisions of chapter 85 from a tortious third party whose conduct has produced the injury which necessitated such payments. 427 N.W.2d at 462. Similarly, we have stated the purpose of the lien provision is to encourage employers to pay bills and benefits with the expectation that they may recoup those payments from responsible third parties. Sladek v. K Mart Corp., 493 N.W.2d 838, 840 (Iowa 1992). The literal words of this section might suggest that an employer has subrogation rights against all wrongful death damages recovered by the estate.... Bertrand, 419 N.W.2d at 404. We have construed the term compensation broadly. See Johnson, 427 N.W.2d at 461. Likewise, we have allowed an employer to be indemnified out of the recovery of damages from a third party allowed for pain and suffering. Sourbier v. State, 498 N.W.2d 720, 724 (Iowa 1993). Although we construe the term compensation broadly, we believe the district court correctly reasoned that compensation under section 85.22 does not extend to include payments to the Fund under section 85.65. To accept intervenors' argument would be inconsistent with the language of the statutes and the policies behind the entire statutory scheme. Section 85.22(1) provides for indemnification for compensation paid to the employee, dependent, or trustee of such dependent. Payments to the Fund, on the other hand, are made to the Treasurer of Iowa. Iowa Code § 85.65. When an employee dies without dependents, the employer's statutory lien encompasses payments for medical expenses, burial expenses, and wages due and unpaid. Id. § 85.29. Section 85.29 states, this shall be the only compensation. These sections omit any reference to payments to the Fund. Our cases have held that an employer has a right to indemnification from a third-party tortfeasor for payments made to the employee or the employee's beneficiaries for certain losses suffered and services rendered. See, e.g., Johnson, 427 N.W.2d at 462. This type of compensation is clearly a benefit to the employee or the employee's estate because it relieves the employee or the beneficiaries of otherwise unavoidable expenses. By contrast, the statutorily required payment to the Fund is related to neither a specific loss suffered nor a service rendered on account of the employee's death. We believe one of the purposes of the right of indemnification is to prevent double recovery by the employee or the beneficiaries. To permit intervenors to recover payments to the Fund would not prevent double recovery, but would really be in the nature of a penalty against the decedents' estates. Because decedents' estates have received no benefit from these payments, there can be no double recovery from the settlement proceeds. We find the language and structure of the Second Injury Compensation Act evinces a clear intent that payments to the Fund are a separate and distinct class not recoverable under section 85.22. Section 85.65 provides, [t]hese payments shall be in addition to any payments of compensation to injured employees or their dependents or of burial expenses as provided in this chapter. Under section 85.65, payments to the Fund are required regardless of whether the employee left dependents. Further, the amount of contribution to the Fund has been arbitrarily fixed by the legislature and is not measured by the character or extent of the employee's loss or injury. We agree with the Minnesota Supreme Court which held such payments are intended to benefit the workers' compensation system as a whole, and, are in reality an assessment imposed by the legislature upon the workers compensation insurer. Illg v. Forum Ins. Co., 435 N.W.2d 803, 805 (Minn.1989). In concluding intervenors payment of $30,000 to the Fund is not subject to indemnification under section 85.22, we join the majority of courts of other jurisdictions who have disallowed similar types of payment to similar funds. See Farm Bureau Mut. Ins. Co. v. Commercial Standard Ins. Co., 5 Kan. App.2d 127, 612 P.2d 1265, 1268 (1980); Illg, 435 N.W.2d at 805-07; Texas Employers Ins. Ass'n v. Myers, 496 S.W.2d 940, 942 (Tex.Civ.App.1973); Allstate Ins. Co. v. Bliss, 725 P.2d 1330, 1333-34 (Utah 1986). Intervenors urge that we follow the California courts which hold that payment into a similar fund is compensation and may be recovered by the employer or insurer against a third-party tortfeasor. See Eli v. Travelers Indem. Co., 190 Cal.App.3d 901, 235 Cal. Rptr. 704 (1987); Travelers Ins. Co. v. Sierra Pacific Airlines, 149 Cal.App.3d 1144, 197 Cal.Rptr. 416 (1983); Associated Indem. Corp. v. Pacific Southwest Airlines, 128 Cal. App.3d 898, 180 Cal.Rptr. 685 (1982). Unlike the Iowa statute, California's workers' compensation statute specifically provides a cause of action to recover sums paid to the department of industrial relations. See Cal.Lab.Code § 3852 (West 1981). The amount of the contribution in California is determined as an amount equal to the total dependent death benefits plus such accrued unpaid compensation.... Associated Indem. Corp., 180 Cal.Rptr. at 688. In California it is clear the legislature intended to hold third parties liable for all consequences of their acts. Id. at 688-90. No such intent can be gleaned from Iowa law. We affirm the district court's conclusion that compensation under section 85.22 does not include the amount paid by intervenors to the Fund pursuant to section 85.65.