Evercom Systems, Inc. v. Iowa Utilities Board, 2011 Iowa Sup. LEXIS 82

Evercom provides inmate telephone service; Bridewell Detention Center used, with Dial Tone Detection (DTD) to prevent glare fraud.
Glare fraud occurred when inmate and outside party caused collect calls billed to Silver’s business line; Evercom investigated and credited Silver after determining glare fraud.
Board pursued a cramming allegation under Iowa Code 476.103 and rule 199—22.23(1) for charging Silver for five collect calls not received by him.
ALJ found cramming occurred and assessed a $2,500 civil penalty; Board affirmed.
District court reversed Board, finding that collect calls are excluded from cramming under rule 199—22.23(1) and that the Board violated the Iowa Administrative Procedure Act; court of appeals reinstated the penalty, which the supreme court vacated and remanded.
Supreme Court held that collect calls fall within an exclusion in rule 199—22.23(1) and that charging for collect calls due to third-party fraud does not constitute cramming; Board’s decision deemed irrational and invalid.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether billing for collect calls qualifies as cramming under rule 199—22.23(1).	Evercom: collect calls are excluded from cramming.	Board: collect calls can be cramming without an intent requirement.	No; collect calls are excluded from cramming; charge-not-received billing not cramming.
Whether the Board properly interpreted rule 199—22.23(1) under chapter 17A.19(10).	Board’s interpretation was irrational.	Board’s rule interpretation should be given deference.	Board interpretation upheld only if not irrational; here exclusion renders cramming definition inapplicable.
Whether the statutory two-step analysis for liability and penalties was misapplied.	Board conflated liability and penalties.	Two-step analysis properly applied.	Court adopts proper view that rule excludes collect calls from cramming; rescind penalty.

Office of Consumer Advocate v. Iowa Utils. Bd., 744 N.W.2d 640 (Iowa 2008) (agency has interpretive authority over 476.103; defer to Board’s interpretation)
Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8 (Iowa 2010) (judicial review of agency interpretation; defer when agency has expertise)