American Home Assurance v. Liberty Mutual Fire Insurance Company
20-0769
| Iowa Ct. App. | Jul 21, 2021Background:
- Claimant filed for workers’ compensation and amended the injury date; a deputy found the injury date was June 16, 2008.
- American Home (carrier named in arbitration) paid 125 weeks of permanent partial disability benefits, completing payments in 2013.
- In 2016 American Home discovered it was not the insurer on the established injury date and applied for a §85.21 consent order in January 2017 to permit a reimbursement claim against Liberty Mutual.
- American Home sought contribution for benefits paid (including those paid before the §85.21 order); Liberty moved for partial summary judgment arguing reimbursement is limited to benefits paid after an §85.21 order is sought/issued.
- The deputy initially awarded reimbursement for all payments; the commissioner on intra-agency appeal limited reimbursement to benefits paid after American Home obtained the §85.21 order, following long-standing agency precedent.
- The district court reversed the commissioner; the court of appeals reversed the district court and remanded, upholding the commissioner’s timing limitation as consistent with §85.21 and agency practice.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurer may obtain reimbursement under Iowa Code §85.21 for benefits paid before seeking a §85.21 order | American Home: §85.21 broadly empowers the commissioner; no time limit prevents reimbursement for mistakenly paid benefits even if paid years earlier | Liberty: Reimbursement is limited to benefits paid after an §85.21 order is sought/issued; insurers must give early notice or be barred from retroactive recovery | Court: Upheld commissioner rule and precedent requiring insurers to seek an §85.21 order prior to/at evidentiary hearing; reimbursement may be limited to payments made after such order (agency interpretation reasonable) |
| Proper standard of review for the commissioner's statutory interpretation | American Home: statute plain and broad; agency misapplied it | Liberty: agency has rulemaking/adjudicative authority to interpret §85.21 | Court: Agency is clearly vested with interpretive authority; applied deferential "irrational, illogical, or wholly unjustifiable" standard and found the agency's interpretation neither irrational nor erroneous |
Key Cases Cited
- Christensen v. Iowa Dep't of Revenue, 944 N.W.2d 895 (Iowa 2020) (explains standards of deference to agency statutory interpretation)
- Zomer v. W. River Farms, Inc., 666 N.W.2d 130 (Iowa 2003) (recognizes broad commissioner authority under §85.21 to resolve coverage and liability issues)
- Second Injury Fund of Iowa v. Bergeson, 526 N.W.2d 543 (Iowa 1995) (endorses resolving reimbursement issues at arbitration to encourage voluntary payments and avoid double recovery)
- Mike Brooks, Inc. v. House, 843 N.W.2d 885 (Iowa 2014) (establishment of injury date is a factual finding for the commissioner)
- Wilson Food Corp. v. Cherry, 315 N.W.2d 756 (Iowa 1982) (general principle that mistaken payments in workers' compensation may be recoverable)