Am. Home Assurance v. Liberty Mut. Fire Ins. Co.

975 N.W.2d 427

AMERICAN HOME ASSURANCE, Appellee,

v.LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellant.

No. 20-0769

Supreme Court of Iowa.

Submitted January 20, 2022

Filed June 10, 2022

Benjamin T. Erickson (argued) and Andrew D. Hall of Grefe & Sidney, P.L.C., Des Moines, for appellant.

Aaron T. Oliver (argued) of Hansen, McClintock & Riley, Des Moines, for appellee.

Appel, J., delivered the opinion of the court, in which all justices joined.

APPEL, Justice.

In this appeal, American Home Assurance, a workers’ compensation insurance carrier, paid benefits to an employee injured in June 2008 pursuant to an arbitration award. American Home did not file a notice prior to the arbitration that, pursuant to Iowa Code section 85.21 (2016), it was paying the claim subject to a potential coverage issue. By 2013, American Home paid all the benefits owed to the employee under the arbitration award.

In 2016, however, the employee filed a petition to reopen the case. After the petition to reopen was filed, American Home filed a notice under Iowa Code section 85.21 seeking reimbursement of benefits paid to the employee on the ground that on the date of injury Liberty Mutual Fire Insurance Company was providing the employer with workers’ compensation coverage.

The parties filed cross-motions for summary judgment on the reimbursement question. The deputy workers’ compensation commissioner concluded that American Home was entitled to make a retroactive claim for reimbursement of benefits paid. The commissioner reversed, holding that in order to be entitled to reimbursement, American Home was required to file notice under Iowa Code section 85.21 before the arbitration proceeding. Because American Home did not file such a notice, the commissioner reasoned that the company could not years later seek to be reimbursed for benefits paid pursuant to the arbitration order.

American Home filed a petition for review of agency action in district court. The district court reversed the commissioner. The district court concluded that Iowa Code section 85.21 gave the commissioner broad power to order reimbursement and that the broad powers were not time-limited in the statute.

Liberty Mutual appealed. The court of appeals, agreeing with the commissioner, reversed. We granted further review. For the reasons expressed below, we reverse the judgment of the district court.

I. Factual Background and Proceedings.

An employee filed a workers’ compensation claim against an employer for injuries allegedly sustained on November 15, 2007, while the employee was on the employer's jobsite. The employee later amended the petition, alleging an injury date of June 30, 2008. After an arbitration hearing, the deputy workers’ compensation commissioner found the injury occurred on June 16, 2008. The deputy commissioner ordered the employer and its apparent insurer, American Home, to pay the claimant 125 weeks of permanent partial disability benefits. The commissioner affirmed the award on appeal. American Home commenced making weekly payments. American Home made its final payment to the claimant in 2013.

In 2016, the claimant filed a petition to reopen his case. After the petition to reopen was filed, American Home discovered it was not the insurer when the claimant's injury occurred. As a result, American Home filed with the commissioner an "Application and Consent Order for Payment Benefits Under Iowa Code Section 85.21."

The deputy commissioner granted the application on January 3, 2017. The deputy's order granted American Home the ability to petition or intervene in the proceedings before the agency and seek a determination of which insurer was liable for the claim. Shortly thereafter, American Home filed a petition for contribution under Iowa Code section 85.21, seeking reimbursement from Liberty Mutual. American Home claimed that Liberty Mutual, and not American Home, provided the employer with workers’ compensation coverage at the time of the worker's compensable injury.

Liberty Mutual filed a motion for partial summary judgment with the workers’ compensation commissioner. Liberty Mutual asserted that American Home could only seek reimbursement from a third party for benefits paid after a consent order pursuant to Iowa Code section 85.21 was entered. Such an order, according to Liberty Mutual, was not entered in the present case until January 3, 2017; thus, Liberty Mutual argued that American Home was not entitled to any benefits paid prior to that date.

American Home filed a cross-motion for summary judgment. American Home requested a determination that Liberty Mutual owed contribution for benefits paid in the past by American Home and for any future benefits. The deputy workers’ compensation commissioner determined American Home was entitled to "contribution for benefits paid, at any time, in connection with [the claimant's] June 16, 2008 work injury."

On intra-agency appeal, the commissioner by delegation disagreed with the deputy commissioner and reversed the determination that American Home was entitled to reimbursement for benefits paid before January 3, 2017. The commissioner relied on the language of Iowa Code section 85.21 and concluded Liberty Mutual was not liable for contribution to American Home for benefits paid before the consent order.

American Home filed a petition for judicial review. The district court reversed the agency's final decision and sustained American Home's motion for summary judgment. According to the district court, Iowa Code section 85.21 vests broad authority in the commissioner to enter orders of reimbursement and that authority is not time-limited by the text of the statute.

Liberty Mutual appealed. We transferred the case to the court of appeals. The court of appeals reversed the district court's ruling. The court of appeals held that the commissioner's decision limiting American Home's reimbursement claim to benefits paid after it sought and obtained an Iowa Code section 85.21 order was consistent with past precedents and represented a sound interpretation of the statute.

We granted further review. We now affirm the decisions of the commissioner and the court of appeals and reverse the judgment of the district court.

II. Standard of Review.

Iowa Code section 17A.19(1) permits parties who are "aggrieved or adversely affected by any final agency action" to seek judicial review. See Des Moines Area Reg'l Transit Auth. v. Young , 867 N.W.2d 839, 841–42 (Iowa 2015). The standard of review applied to an agency's determination of legal issues depends upon whether this court gives deference to interpretations of law by the agency. "When discretion has been vested in the commissioner, ‘we reverse only if the commissioner's application was "irrational, illogical, or wholly unjustifiable." ’ " Id. at 842 (quoting Larson Mfg. Co. v. Thorson , 763 N.W.2d 842, 850 (Iowa 2009) ); see Iowa Code § 17A.19(10)(l ). On the other hand, if discretion to interpret a statute has not been vested in the agency, our review is for errors at law. Iowa Code § 17A.19(10)(c ).

We have noted that "[i]n recent years, [this court has] repeatedly declined to give deference to the commissioner's interpretations of various provisions in chapter 85." Iowa Ins. Inst. v. Core Grp. of the Iowa Ass'n for Just. , 867 N.W.2d 58, 65 (Iowa 2015) ; see also Warren Props. v. Stewart , 864 N.W.2d 307, 311 (Iowa 2015) (recognizing that "the legislature has not vested the commissioner with the authority to interpret" Iowa Code chapter 85). This court will consider "the precise language of the statute, its context, the purpose of the statute, and the practical considerations involved."

Mosher v. Dep't of Inspections & Appeals , 671 N.W.2d 501, 509 (Iowa 2003) (quoting Arthur E. Bonfield, Amendments to Iowa Administrative Procedure Act (1998), Report on Selected Provisions to Iowa State Bar Association and Iowa State Government 63 (1998)). As will be seen below, the question of standard of review has no impact on this case as even if we engage in de novo review, we would reverse the district court and affirm the approach of the commissioner.

III. Discussion.

A. Overview of Iowa Code Section 85.21. This case involves Iowa Code section 85.21. This prolix provision states that an insurance carrier may seek a consent order and pay benefits to an injured worker while reserving the right to seek indemnity or contribution from another carrier. Id. Specifically, the statute provides:

1. The workers’ compensation commissioner may order any number or combination of alleged workers’ compensation insurance carriers and alleged employers, which are parties to a contested case or to a dispute which could culminate in a contested case, to pay all or part of the benefits due to an employee or an employee's dependent or legal representative if any of the carriers or employers agree, or the commissioner determines after an evidentiary hearing, that one or more of the carriers or employers is liable to the employee or to the employee's dependent or legal representative for benefits under this chapter or under chapter 85A or 85B, but the carriers or employers cannot agree, or the commissioner has not determined which carriers or employers are liable.

....

3. When liability is finally determined by the workers’ compensation commissioner, the commissioner shall order the carriers or employers liable to the employee or to the employee's dependent or legal representative to reimburse the carriers or employers which are not liable but were required to pay benefits. Benefits paid or reimbursed pursuant to an order authorized by this section do not require the filing of a memorandum of agreement. However, a contested case for benefits under this chapter or under chapter 85A or 85B shall not be maintained against a party to a case or dispute resulting in an order authorized by this section unless the contested case is commenced within three years from the date of the last benefit payment under the order. The

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