Iowa commissioners can now override physicians' workers' comp impairment ratings when doctors misapply AMA Guidelines, potentially reducing claim payouts.
The decision in Klein v. Whirlpool Corporation, handed down January 7 by the state's Court of Appeals, settles a question that's been vexing the industry: Can commissioners independently apply medical guideline modifiers when a doctor gets it wrong, or are they stuck choosing between competing expert opinions?
The answer, according to the court, is that commissioners have the authority to correct mistakes when physicians misapply the AMA Guides to the Evaluation of Permanent Impairment.
The case involved Brian Dale Klein, who spent 35 years working at Whirlpool Corporation before injuring his shoulder while feeding tubing through a machine. After extensive surgery that included several procedures on his right shoulder, Klein's doctor initially rated him at just 4 percent impairment for his upper extremity.
Klein then hired his own medical expert, Dr. Mark Taylor, who came back with a much higher number: 15 percent. That rating included 6 percent for loss of range of motion and another 10 percent for a distal clavicle excision, a procedure that removes part of the collarbone.
Here's where things got interesting. The deputy commissioner agreed that Dr. Taylor's opinion deserved more weight than the employer's expert, who had assessed only 2 percent impairment. But she didn't just rubber-stamp Taylor's 15 percent figure. Instead, she applied a 25 percent modifier specified in the AMA Guides for distal clavicle excisions.
That adjustment dropped the final impairment rating to 9 percent.
Klein wasn't happy. He appealed, arguing that commissioners are prohibited from using their own expertise and must simply choose between the ratings offered by medical experts. His attorneys pointed to Iowa law stating that "agency expertise shall not be utilized" in determining permanent impairment percentages.
The Court of Appeals wasn't buying it. Writing for the panel, Judge Schumacher noted that Iowa law requires impairment ratings to be "determined solely by utilizing the guides" published by the American Medical Association. The problem, the court found, is that the statute doesn't say who gets to interpret those guides.
The district court had found that "there is no distinction between commissioners and physicians interpreting the AMA Guides," a conclusion the appeals court affirmed. Preventing commissioners from verifying that doctors correctly applied the standardized modifiers would "allow experts to vary in their application of modifiers, leading to inconsistent or absurd results," the court wrote.
The court was careful to draw a line, though. Commissioners can't substitute their own medical judgment for expert opinions. They can't completely replace an expert's medical opinion with their own prohibited expertise. What they can do is act as quality control, making sure physicians follow the rulebook when they calculate impairment percentages.
In this case, the court found the commissioner "simply corrected Dr. Taylor's expert opinion to conform with the Guides and did not substitute the opinion with agency expertise."
Klein's lawyers also tried another angle, arguing the commissioner improperly relied on a previous agency decision without giving them notice. The court dispatched that argument quickly, noting that the AMA Guides are incorporated into Iowa law by statute and administrative rule. Using them doesn't require special notification any more than citing any other legal standard would.
The decision comes at a time when workers' compensation insurers are increasingly focused on controlling claim costs while navigating a patchwork of state regulations. Iowa law adopted the fifth edition of the AMA Guides specifically to create uniformity and objectivity in rating permanent impairments.
For claims professionals, the ruling provides useful clarity. When reviewing independent medical evaluations, adjusters and commissioners don't have to accept physician ratings at face value if the calculations don't match the AMA Guides' requirements. That authority could prove valuable when dealing with doctors who may not be intimately familiar with the Guides' various tables and modifiers.
The case also underscores the importance of thorough medical record review. Had someone caught the modifier issue earlier in the process, Klein might have avoided the appeals altogether.
While the decision is specific to Iowa, it may influence how other states approach similar questions about the role of commissioners in ensuring accurate application of standardized impairment guidelines.
