               IN THE SUPREME COURT OF IOWA
                             No. 72 / 06-0032

                           Filed August 3, 2007

RANEE GREENFIELD and
STUART GREENFIELD,

      Appellants,

vs.

THE CINCINNATI INSURANCE
COMPANY,

      Appellee.


      Appeal from the Iowa District Court for Polk County, Michael J.

Huppert, Judge.



      Plaintiffs appeal the district court’s ruling to offset a prior workers’

compensation settlement against a jury award for past and future loss of

bodily function. Insurance company cross appeals, seeking to offset the

settlement against the entire jury verdict.     AFFIRMED IN PART AND

REVERSED IN PART; CASE REMANDED WITH INSTRUCTIONS.



      R. Ronald Pogge, David S. Gorham, and Barrie J. Terrones of Hopkins

& Heubner, P.C., Des Moines, for appellants.



      Patrick J. McNulty and Lisa R. Perdue of Grefe & Sidney, P.L.C., Des

Moines, for appellee.
                                       2

APPEL, Justice.

        In this case, the proceedings take us to an intersection of insurance

and workers’ compensation law. Specifically, we must decide whether an

injured employee’s recovery under the underinsured motorist provision of

her employer’s automobile policy is reduced in whole or in part by workers’

compensation benefits she received for injuries arising out of the same

accident.      The district court offset the workers’ compensation recovery

against jury awards for medical expenses, lost wages, and past and future

loss of function, but refused to allow an offset against jury verdicts for past

and future pain and suffering and loss of spousal consortium. For the

reasons set forth below, we affirm in part, reverse in part, and remand the

matter to the district court for further proceedings.

        I.      FACTUAL BACKGROUND AND PRIOR PROCEEDINGS.

        Ranee Greenfield and other passengers traveled by van to Des Moines

in order to testify at a hearing regarding the operations of East Lane Care

Center (East Lane), Ranee’s employer. A motor vehicle driven by Zachary

Hedgecock ran a red light and struck the van, causing it to roll at least

once.        Although Ranee was wearing her seat belt, another unbelted

passenger was thrown into her upon impact.

        Ranee was transported to Iowa Methodist Medical Center, where she

complained of head, neck, and chest pain. She was treated with ibuprofen

and released.        While the majority of her symptoms dissipated or

disappeared during her recovery, her chest pain continued.              Ranee

eventually was diagnosed as suffering from fractures in the costochondral

cartilage in her chest. In order to combat her pain, she was twice treated at

the Mayo Clinic Pain Center in Rochester, Minnesota.
                                      3

      Ranee filed a workers’ compensation claim against her employer and

its workers’ compensation carrier, Cincinnati Insurance Company

(Cincinnati). The parties settled the claim in a “Compromise Special Case

Settlement Agreement” pursuant to Iowa Code section 85.35 (2005). The

total amount of the settlement was $154,404.28, which consisted of a

$17,109.61 payment for medical expenses, $37,294.67 in indemnity

payments, and a $100,000 lump sum payment.

      Ranee and her husband, Stuart Greenfield, also settled their personal

injury claims against the tortfeasor for his liability insurance coverage limit

of $30,000. This settlement, however, was subrogated to the interest of

Cincinnati, as Ranee’s workers’ compensation insurer, pursuant to Iowa

Code section 85.22(1). As a result, Cincinnati received $19,728.00.

      The Greenfields further pursued a claim against East Lane’s

underinsured motorist carrier (UIM), which also happened to be Cincinnati.

This claim was not resolved, and the matter proceeded to trial.

      The jury returned a verdict in favor of the Greenfields, awarding

Ranee $123,000 and Stuart $50,000 in damages. The special jury verdict

in favor of Ranee allocated $10,000 for medical expenses, $25,000 for past

pain and suffering, $30,000 for future pain and suffering, $20,000 for past

loss of function, $30,000 for future loss of function, $8,000 for lost wages,

and $0 for future loss of earning capacity. The special jury verdict in favor

of Stuart allocated $20,000 for past loss of consortium and $30,000 for

future loss of consortium.

      After trial, the district court filed a judgment entry and order in the

case. The order applied a provision in Cincinnati’s UIM policy with East

Lane which allowed a credit/offset for benefits received by Ranee from her

workers’ compensation settlement and tortfeasor recovery. In applying the
                                               4

offset provision, the district court determined that the offset was limited by

the policy language to duplicative “elements of loss.” The district court

determined that jury awards for medical expenses, lost wages, and past and

future loss of function were “elements of loss” covered by the workers’

compensation settlement.             The district court also determined that the

verdict must be further offset by the Greenfields’ recovery from Hedgecock.

The Greenfields’ settlement with Hedgecock, however, did not allocate the

proceeds between them or their injuries. Nevertheless, the district court

decided to allocate the $30,000 offset equally between the Greenfields. After

removing duplicative “elements of loss” from the jury verdict and applying

the $30,000 offset, the district court reduced the award to Ranee to $40,000

and the award to Stuart to $35,000.

       Both parties filed motions to reconsider. The district court sustained

its prior ruling except with respect to the allocation of the tortfeasor

recovery, which was reallocated entirely against Ranee’s recovery. Ranee’s

award was, therefore, reduced to $25,000, with Stuart’s award increased to

$50,000.

        Ranee and Stuart filed a timely notice of appeal. 1 On appeal, the
Greenfields argue that the district court erred in allowing the workers’

compensation benefits to be offset against the jury awards for past and

future loss of function and in allowing Cincinnati to receive “a double credit”

by not reducing the amount of the workers’ compensation offset by the

funds reimbursed to Cincinnati under Iowa Code section 85.22(1).

        Cincinnati filed a timely notice of cross appeal. In its cross appeal,

Cincinnati asserted that the district court erred in not applying an offset of

       1Although   Stuart as well as Ranee filed a notice of appeal, the district court left the
special jury verdicts awarding Stuart damages for lost consortium intact. While a cross
appeal was filed, the defendant does not challenge the jury’s awards to the defendant. As a
result, Stuart no longer has a stake in the outcome of this appeal.
                                      5

the total workers’ compensation recovery against the total jury award.

Cincinnati also maintained that the district court erroneously refused to

apply an offset against the jury’s special verdicts for past and future pain

and suffering.

       II.    STANDARD OF REVIEW.

       The interpretation of an insurance policy is a matter of law. A.Y.

McDonald Indus., Inc. v. Ins. Co. of N. Am., 475 N.W.2d 607, 618 (Iowa

1991). This court’s review, therefore, is for errors at law. Iowa R. App. P.

6.4.

       III.   DISCUSSION.

       A.     Offsets of Workers’ Compensation Recoveries Under
              Reduction-of-Benefits Provisions of Underinsured Motorist
              Policies.

              1.   Statutory Authorization of Reduction-of-Benefits Provisions.

       Iowa Code section 516A.1 requires all automobile insurance policies,

absent a written rejection by the insured, to include coverage for uninsured

and underinsured motorist claims. Iowa Code section 516A.2(1) further

provides that “. . . forms of coverage may include terms, exclusions,

limitations, conditions, and offsets which are designed to avoid duplication

of insurance or other benefits.” When such language is included in policies

covering underinsured motorists, it is referred to generically as a reduction-

of-benefits provision.

       In Gentry v. Wise, 537 N.W.2d 732 (Iowa 1995), this court emphasized

that reduction-of-benefits provisions were permissible under Iowa Code

section 516A.2(1) so long as their design is to avoid duplication of coverage.

Gentry, 537 N.W.2d at 735. Where an insurance contract does not contain

a reduction-of-benefits provision authorized by statute, however, reduction

of benefits may be denied. Detroit Auto Inter-Ins. Exch. v. Ayvazian, 233
                                      6

N.W.2d 200 (Mich. Ct. App. 1975); Progressive Am. Ins. Co. v. Vasquez, 502

S.E.2d 10 (N.C. Ct. App.), aff’d in part, rev’d in part, 515 S.E.2d 8 (N.C.

1998).

            2.     Offsets of Recoveries from Workers’ Compensation.

      In McClure v. Employers Mutual Casualty Co., 238 N.W.2d 321 (Iowa

1976) [hereinafter McClure I], this court considered whether the Iowa

legislature, in enacting Iowa Code section 516A.2(1), authorized offsets of

workers’ compensation benefits. The question was not free from doubt as

Iowa Code section 516A.2(1) does not expressly authorize offsets of workers’

compensation benefits, but only offsets to avoid duplication of “insurance or

other benefits.”

      The McClure I court concluded that notwithstanding the failure to

specifically authorize reduction of coverage as a result of workers’

compensation payments, the Iowa legislature intended to allow insurance

companies to offset workers’ compensation benefits against uninsured and

underinsured motorist claims. While offsets are permissive under Iowa

Code section 516A.2(1), they are not mandatory. The particular policy

language at issue is controlling. Cincinnati, therefore, is entitled to an

offset of workers’ compensation benefits to avoid duplication only to the

extent that its reduction-of-benefits provision authorizes such offsets.

      B.    Meaning of Language in Cincinnati’s Reduction-of-Benefits
            Provision in its Underinsured Motorist Policy.

            1.     Overview of Reduction-of-Benefits Provisions.

      In light of McClure I, a central question in this case is the meaning of

Cincinnati’s policy language as it relates to underinsured motorist claims.

The applicable language is as follows:
                                     7
      3.    No one will be entitled to receive duplicate payments for
            the same elements of “loss” under this Coverage and any
            Liability Coverage Form.

            We will not make a duplicative payment under this
            Coverage for any element of “loss” for which payment has
            been made by or for anyone who is legally responsible.

            We will not pay for any element of “loss” if a person is
            entitled to receive payment for the same element of “loss”
            under any workers’ compensation, disability benefits or
            similar law.

(Emphasis added.) The Cincinnati policy further contains language defining

“loss.” According to the policy, “loss” means “direct or accidental loss or

damage.”

      The reduction-of-benefits language in Cincinnati’s policy relating to

underinsured motorist claims differs significantly from that relating to

claims involving uninsured motorists (UM).       The reduction-of-benefits

provision related to uninsured motorists is as follows:

      2.    With respect to damages resulting from an “accident”
            with an “uninsured motor vehicle” . . . the Limit of
            Insurance shall be reduced by:
            a.    All sums paid or payable under any workers’
                  compensation, disability benefits or similar law,
                  and

            b.    All sums paid by or for anyone who is legally
                  responsible, including all sums paid under this
                  Coverage Form’s Liability Coverage.
(Emphasis added).

      The difference between these reduction-of-benefits provisions is not

happenstance. These provisions recognized the fundamental distinction in

the policy goals of uninsured and underinsured motorist coverage. The

purpose of uninsured motorist coverage is to make certain that an injured

party receives minimum compensation for his or her injuries. Uninsured

motorist protection thus provides a safety net of coverage. In contrast, the
                                     8

purpose of underinsured motorist coverage is not to provide a minimum

safety net, but to enhance the ability of a claimant in an automobile

accident to be made whole for his or her losses. Veach v. Farmers Ins. Co.,

460 N.W.2d 845, 848 (Iowa 1990); McClure v. Northland Ins. Co., 424

N.W.2d 448, 449-50 (Iowa 1988) [hereinafter McClure II].

      Because of these differences, we have adopted a “broad coverage view”

of underinsured motorist coverage, while recognizing a “narrow coverage

view” of uninsured motorist coverage. Benefits that are duplicative in the

context of uninsured motorist coverage, therefore, may not necessarily be so

in the underinsured motorist context. Veach, 460 N.W.2d at 848.

      Cincinnati’s two different reduction-of-benefits provisions are

consistent with the approach taken in McClure II and Veach. Any recovery

from a third party is “duplicative” in the context of uninsured motorist

coverage, while only payments that cover the same type of injury are

“duplicative” of underinsured motorist coverage.

              2.   Meaning of Reduction-of-Benefits Provision Related to
                   Underinsured Motorist Coverage.

      The basic rules for determining the meaning of provisions in an

insurance policy are well established. Ultimately, the intent of the parties

must control the outcome. Ordinarily, this is determined by the language of

the policy.   See A.Y. McDonald Indus., Inc., 475 N.W.2d at 618.         The

insurance policy must be construed as a whole, with the words “given their

ordinary, not technical, meaning [in order] to achieve a practical and fair

interpretation.” West Bend Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co.,

624 N.W.2d 422, 424 (Iowa Ct. App. 2001). Where the meaning of the terms

is susceptible to two interpretations, however, the one favoring the insured

is adopted. Id.; see also Wildman v. Nat’l Fire & Marine Ins. Co., 703 N.E.2d
                                       9

683, 687 (Ind. Ct. App. 1998) (contract provision related to reduction of

benefits construed in favor of insured); Sisco v. Am. Family Mut. Ins. Co., 806

S.W.2d 409, 411 (Mo. 1991) (same).

      The plaintiffs claim that Cincinnati’s reduction-of-benefits provision

relating to underinsured motorist coverage limits any reduction to “those

‘elements of loss’ which are compensable under the workers’ compensation

statute.”   Plaintiffs argue that the “elements of loss” language in the

underinsured reduction-of-benefits provision requires that each claim for

recovery must be separately analyzed to determine whether it amounts to

an identical claim for which payment has already been made.              Under

plaintiffs’ theory, the beginning point of analysis is not the total recovery of

$123,000 obtained from the cumulation of special jury verdicts, but instead

commences with an analysis of each separate jury award. Each separate

award must then be evaluated to determine if they are the same “element of

loss,” or “duplicative,” of recovery that plaintiff obtained pursuant to the

workers’ compensation settlement.

      Cincinnati asserts, however, that the underinsured policy language

means that the entirety of the workers’ compensation settlement must be

offset against the cumulative jury verdict. According to Cincinnati, under

its policy a plaintiff cannot recover more than the entire amount of the

jury’s verdict in an underinsured motorist case. In other words, Cincinnati

claims that if a workers’ compensation settlement exceeds the total amount

awarded against the underinsured motorist insurer, nothing is owed to its

insured as a result of its reduction-of-benefits provision.         Cincinnati

advances a dollar-for-dollar theory, under which each dollar of recovery

from workers’ compensation must be offset against any dollar of recovery

awarded by the jury.
                                     10

      We believe that the reduction-of-benefits language in Cincinnati’s

policy supports the plaintiffs’ position.    With respect to underinsured

motorist coverage, the Cincinnati policy expressly limits offsets to payments

for “elements of loss” that are “duplicative.” While “elements of loss” is not

defined in the policy, ordinary usage of the term “element” or “elements”

establishes that the word connotes a part of a larger whole and not the

larger whole itself. See Webster’s Third New International Dictionary 734

(2002) (definitions of element or elements include “one of the constituent

parts” and “one of a number of distinct or disparate units, parts,” etc.); The

American Heritage Dictionary: College Edition 444-45 (2d ed. 1985) (definition

of element or elements includes “a fundamental, essential, or irreducible

constituent of a composite entity” and a “member of a set”). Cincinnati’s

policy language for underinsured motorist coverage clearly suggests the

need to break down the total loss or recovery awarded by the jury into

“elements of loss” and then analyze each “element of loss” separately to

determine whether the recovery for that “element” is “duplicative” or

amounts to “the same element of loss” recovered under a workers’

compensation settlement.

      Our common sense interpretation of the reduction-of-benefits

language for underinsured motorist claims is supported by Cincinnati’s use

of substantially different reduction-of-benefits language in the policy for

uninsured motorists.     For uninsured motorists, the Cincinnati policy

provides that insurance coverage is reduced by “[a]ll sums paid or payable

under any workers’ compensation, disability benefits or other similar

law. . . .” Indeed, if the language applicable for uninsured motorist coverage

applied to underinsured motorist claims, Cincinnati would be in a

comparatively stronger position.
                                     11

      A cardinal rule of contract interpretation is that the use of

substantially different language in provisions of a contract must have been

intentional and must be recognized by a reviewing court. See Restatement

(Second) of Contracts: Rules in Aid of Interpretation § 202(2) (1981) (“A

writing is interpreted as a whole . . . .”); Bowers Hydraulic Dredging Co. v.

United States, 211 U.S. 176, 188, 29 S. Ct. 77, 80, 53 L. Ed. 136, 141

(1908) (“To separate the words [of that provision] from all the other

provisions of the contract, in order to give them an assumed . . . meaning,

repugnant to their significance in the contract, would be to destroy, and not

to sustain and enforce, the contract requirements.”). The policy language

chosen by Cincinnati for offsetting workers’ compensation recoveries in the

context of an underinsured claim must be regarded as narrower than in

cases involving uninsured motorist claims.

      Case law from other jurisdictions which supports our interpretation is

overwhelming. Where reduction-of-benefits provisions state that “all sums

paid or payable” under workers’ compensation are subject to offsets, the

total amount of the workers’ compensation award is offset against either the

total recovery or, in some jurisdictions, the policy limit. See, e.g., State

Farm Mut. Auto. Ins. Co. v. Coe, 855 N.E.2d 173 (Ill. App. Ct. 2006) (total

offset of “any amount paid or payable” provision); Park v. Am. Cas. Ins. Co.,

555 N.W.2d 720 (Mich. Ct. App. 1996) (total offset under “all sums paid or

payable” provision).

      In contrast where the policy language allows for offsets only where

elements of loss are duplicative, or involve “the same element of loss,”

courts routinely break down the total recovery into its separate claims and

determine whether a reduction of benefits is appropriate for each individual

element. See, e.g., Nat’l Ins. Ass’n v. Sockwell, 829 So. 2d 111, 132 (Ala.
                                    12

2002) (upholding jury award, in part, on bad faith claim as a result of the

insurer’s failure to segregate out elements of loss that were duplicated by

the workers’ compensation recovery); Vitanza v. Amica Mut. Ins. Co., 820

A.2d 324, 331 (Conn. Ct. App. 2003) (provision allowing reduction for

“duplicate payments for same elements of loss” does not mean reduced

liability, as costs of medical services are not plausibly the same as losses

attributable to lost wages or to pain and suffering); St. Paul Fire & Marine

Ins. Co. v. Employers Ins. Co. of Nevada, 146 P.3d 258, 263 (Nev. 2006)

(distinguishing dollar-for-dollar reduction of benefits under “any amount

payable” reduction-of-benefits provision with more restrictive “elements of

loss” language).

      Cincinnati relies on our decision in Matthess v. State Farm Mutual

Automobile Insurance Co., 548 N.W.2d 562 (Iowa 1996). In Matthess, we

held that an underinsured insurance carrier was entitled to an offset of

funds received through workers’ compensation. Unlike the policy language

here, the insurer’s underinsurance reduction-of-benefits provision in

Matthess provided that “all sums paid or payable” under workers’

compensation should be deducted under its coverage. The contractual

issue of whether the jury recovery was “duplicative” of the same “element of

loss” covered by workers’ compensation was not presented in the case.

Further, the statutory issue in the case was whether Iowa Code section

516A.4, which limits an underinsured carrier’s right of reimbursement to

persons or organizations “legally responsible for the bodily injury,”

prevented any offset for workers’ compensation benefits under section

516A.2(1). The only holding of the court in Matthess is that an offset for

duplicate payments under section 516A.2(1) did not conflict with section

516A.4.
                                           13

       Cincinnati also relies on Imre v. Lake State Insurance Co., 803 N.E.2d

1126 (Ind. Ct. App. 2004).           In Imre, the plaintiff was injured by the

negligence of both an uninsured tortfeasor and an underinsured tortfeasor.

The case did not involve a determination of the degree to which a workers’

compensation settlement was duplicative of a jury award for underinsured

coverage, but rather whether the claimant could recover under both the UM

and UIM coverage of the same policy. The issue presented in Imre was thus

entirely different from that presented in this case. Further, the Imre court

emphasized the case’s unique policy language which distinguished “loss”

from “damages.” In the matter before us, however, the Cincinnati policy

defines “loss” as “direct or accidental loss or damage.” We thus find Imre

unpersuasive on the issues presented here.

       The bottom line is that Cincinnati asks us to alter its reduction-of-

benefits provision related to underinsured motorist claims to make it

identical with the reduction provision related to uninsured motorist claims.

We decline the invitation to rewrite Cincinnati’s own contract. 2 As a result,

we agree with plaintiffs that it is necessary to determine which elements of

loss awarded by the jury are, in fact, duplicative or the same as payments

made under the workers’ compensation settlement. As the proponent of the

offset, Cincinnati has the burden of proving that without an offset, plaintiffs




        2We note that Iowa Code section 516A.2(1) requires that any reduction or offset be

designed to avoid “duplication” of insurance or other benefits. There is authority for the
proposition that under such statutory provisions, “total damages must be divided into each
component loss.” 12 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 171:38
(2007). As a result, there is a substantial question as to whether the dollar-for-dollar
reduction advocated by Cincinnati as a result of the workers’ compensation settlement
would comply with this statute. Because we interpret Cincinnati’s reduction-of-benefits
provision for underinsured motorists not to authorize a dollar-for-dollar reduction, but
instead allows reduction only for duplicative or the same elements of loss, it is not
necessary to reach the statutory issue.
                                      14

would receive duplicative payment for the same element of loss. Williams v.

Am. States Ins. Co., 986 P.2d 1260, 1262 (Ore. Ct. App. 1999).

      C.     Cincinnati’s Contractual Entitlement             to   Offset   for
             Duplicative “Elements of Loss.”

             1.    Offset Against Jury Award for Past and Future Pain and
                   Suffering.

      The jury awarded Ranee $25,000 for past pain and suffering and

$30,000 for future pain and suffering. The district court did not allow

Cincinnati to offset amounts recovered in the workers’ compensation

settlement against these amounts, holding that pain and suffering would

not be part of any benefits awarded under workers’ compensation.
      We agree with the district court’s resolution. Nothing in the workers’

compensation statute authorizes recovery for pain and suffering not related

to an industrial disability. Black v. Chicago Great W. Ry., 187 Iowa 904,

917, 174 N.W. 774, 778-79 (1919) (“The amount of the recovery for tort

might be in a greater amount than the compensation fixed by the [workers’

compensation] statute, since there may be other elements of damage

allowed in an action for tort, as, for instance, pain and suffering, etc.”); see

also Reliance Ins. Co. v. Blackford, 100 P.3d 578, 580 (Colo. Ct. App. 2004)

(pain and suffering not recoverable under workers’ compensation statute);

Brooks v. Chicola, 514 So.2d 7, 13 (La. 1987), superseded by statute, La.

Rev. Stat. Ann. § 23:1103, as recognized in Harris v. Ballanshaw, 576 So.2d

602 (La. Ct. App. 1991) (no double recovery with workers’ compensation

where employee retains one hundred percent of pain and suffering award);

Shutter v. Philips Display Components Co., 688 N.E.2d 235, 238 (N.Y. 1997)

(workers’ compensation award not duplicative of pain and suffering under

reduction-of-benefits provision); Fanning v. Davne, 795 A.2d 388, 397 (Pa.
                                     15

Super. Ct. 2002) (workers’ compensation payment for lost wages and

medical bills does not entitle UIM insurer to offset for pain and suffering).

      In this case, the special verdict form segregated loss of past and

future earnings from past and future pain and suffering. Cincinnati does

not claim that the jury did not properly segregate these elements of loss.

See, e.g., Thompson v. Nat’l R.R. Passenger Corp., 621 F.2d 814, 823 (6th

Cir. 1980) (“Damage awards by a trial court without a jury are findings of

fact, which must stand unless they are clearly erroneous.”). As a result, the

jury’s award of $55,000 is not duplicative of payments for the same element

of loss received by Ranee in the workers’ compensation settlement.

Cincinnati is not entitled to an offset regarding this element under its

reduction-of-benefits provision for underinsured motorist coverage.

            2.     Offset Against Jury Award for Past and Future Loss of
                   Function.

      The jury awarded Ranee $20,000 for past loss of function and

$30,000 for future loss of function. The district court’s ruling allowed an

offset of these amounts as a result of the workers’ compensation settlement.

      We disagree with the district court’s reduction of Ranee’s jury award

on this issue.    It was undisputed that Ranee obtained a workers’

compensation settlement for an unscheduled injury. Industrial disability

payments made as a result of unscheduled injuries are designed to

compensate an employee for lost earning capacity. Second Injury Fund v.

Nelson, 544 N.W.2d 258, 265 (Iowa 1995). The focus is not solely on what

the worker can and cannot do, but is instead on the ability of the worker to

be gainfully employed. Keystone Nursing Care Ctr. v. Craddock, 705 N.W.2d

299, 306 (Iowa 2005); Second Injury Fund, 544 N.W.2d at 265-66.
                                      16

      Recovery for loss of bodily function in tort is a different concept. At

trial, Ranee presented evidence regarding her inability to engage in hobbies,

such as gardening, riding in a car, and even eating. Under Iowa law, tort

recovery for loss of function is allowed “for the full deprivation of full mind

and body, separate and apart from impairment of earning capacity.”

Schnebly v. Baker, 217 N.W.2d 708, 726 (Iowa 1974), abrogated on other

grounds by Franke v. Junko, 366 N.W.2d 536, 539 (Iowa 1985); see also

Iowa Practice: Civil Litigation Handbook § 18:10, at 195 (2006) (loss of

bodily function is element of damage separate and apart from impairment of

earning capacity).

      Cincinnati simply cannot successfully argue that the tortious recovery

for loss of function, which is “separate and apart” from recovery for

impairment of earning capacity under our workers’ compensation statute, is

“duplicative” or represents the same “element of loss” under its

underinsured motorist reduction-of-benefits provision.           The lack of

duplication or sameness is underscored in this case by the jury verdicts for

past and future loss of earning capacity, which the jury awarded separate

and apart from the loss of bodily function. In light of this analysis, the

district court erred in allowing an offset with respect to these recoveries.

              3.     Offset Against Award for Medical Expenses and Lost
                     Wages.

      The jury awarded Ranee $10,000 for medical expenses and $8,000 for

lost wages.    Plaintiffs concede that these recoveries are duplicative of

payments made as part of the workers’ compensation settlement.

      Plaintiffs argue, however, that Cincinnati is not entitled to an offset

against these duplicative elements of loss because Cincinnati has already

been reimbursed for these amounts as a result of plaintiffs’ settlement with
                                         17

the tortfeasor. Plaintiffs point out that the entire $30,000 recovered from

the tortfeasor was assigned to Cincinnati. Although the plaintiffs and the

tortfeasor did not allocate the settlement amount obtained from the

tortfeasor, plaintiffs claim that $18,000 of the $30,000 settlement amount

should be attributable to medical care and lost wages.

      While not expressly stated in this fashion, the thrust of the plaintiffs’

argument is that there has not simply been two payments for medical

expenses and lost wages, but in fact three payments: (1) through the

workers’ compensation settlement; (2) as a result of the jury verdict; and (3)

as a result of the settlement with the tortfeasor. Because the insurer has

already been reimbursed for the jury’s award of medical care and lost wages

through the settlement with the tortfeasor, the plaintiffs seek to keep the

jury award on the ground that Cincinnati is not entitled to be reimbursed

twice for medical expenses and lost wages. Plaintiffs dub it a “double

credit.”

      Cincinnati responds that under plaintiffs’ scenario, Ranee would

receive double compensation for medical expenses and lost wages.

Cincinnati further counters that under its reduction-of-benefits provision

for underinsured motorist claims, it is entitled to a pro tanto offset of the

entire amount of settlement funds paid by a co-defendant. Cincinnati

argues that plaintiffs impermissibly seek to force Cincinnati to pay

plaintiffs’ attorneys’ fees and costs.

      The question of whether a payment of funds received by a claimant

from a tortfeasor to a workers’ compensation carrier defeats a claim for

reduction of underinsured policy benefits has been considered by a number

of courts. An appellate court in Illinois over forty years ago held that such

payments have no effect on the insurer’s right to offset. Niekamp v. Allstate
                                     18

Ins. Co., 202 N.E.2d 126, 128 (Ill. App. Ct. 1964). A more recent decision

from an appellate court in North Carolina held that such payments reduce

or eliminate the right of offset, as claimed by the plaintiffs in this case.

Manning v. Fletcher, 402 S.E.2d 648, 652 (N.C. Ct. App. 1991), aff’d, 413

S.E.2d 798 (N.C. 1992).

      We find that the issue here is controlled by the policy language in

Cincinnati’s underinsured reduction-of-benefits provision. This provision

unconditionally states that Cincinnati will not make “duplicative” payments

for the same “element of loss” covered by workers’ compensation benefits.

The plaintiffs candidly concede that the special jury verdicts for medical

expenses and past wages are, in fact, duplicative of workers’ compensation

payments.

      As a result, any payment by Cincinnati for lost wages or medical

expenses is duplicative and therefore subject to offset under the reduction-

of-benefits provision for underinsured motorist claims. We enforce the

contract as written.

            4.     Offset of Settlement Proceeds from Tortfeasor.

      The district court reduced the jury award to Ranee by the entire

$30,000 settlement with the tortfeasor. The plaintiffs do not challenge the

district court’s allocation of the entire $30,000 in settlement proceeds

received from the tortfeasor to Ranee, nor do the plaintiffs challenge the

trial court’s reduction of Ranee’s jury’s award by $30,000 as a result of this

payment.

      Cincinnati asserts that Stuart’s recovery must be offset by the

recovery from the tortfeasor. Stuart’s award of consortium, however, is not

duplicative of any “element of loss” recovered in the workers’ compensation

settlement. Consortium is “the separate property right of each spouse; it is
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an independent, nonderivative claim.” In re Estate of Sylvester, 559 N.W.2d

285, 288 (Iowa 1997) (quoting Huber v. Hovey, 501 N.W.2d 53, 57 (Iowa

1993)). Therefore, Cincinnati is not entitled to an offset as a result of

Stuart’s recovery.

      IV.     CONCLUSION.

      The ruling of the district court is affirmed in part and reversed in

part. The judgment in favor of Ranee totaling $123,000 is offset by $18,000

because the jury’s special verdicts for lost wages and medical expenses are

duplicative of elements of loss covered by Ranee’s workers’ compensation

benefits. The district court’s further reduction of Ranee’s total jury award

by $30,000 as a result of the settlement with the tortfeasor has not been

appealed and, as a result, Ranee’s recovery should also be reduced by that

amount. The jury’s special verdicts with respect to pain and suffering and

loss of function, however, are not subject to offset because they are not

“duplicative” of “elements of loss” recovered in the workers’ compensation

settlement.

      As a result of the permissible offsets, Ranee is entitled to judgment in

the amount of $75,000, plus interest at the rate of 6.18% from December 1,

2005. Stuart is entitled to the award of $50,000, plus interest at the same

rate. Judgment should be entered accordingly.

      AFFIRMED IN PART AND REVERSED IN PART; CASE REMANDED

WITH INSTRUCTIONS.
