Iowa Individual Health Benefit Reinsurance Association v. State University of Iowa, Iowa State University of Science and Technology, and University of Northern Iowa
876 N.W.2d 800
Iowa
2016

Background

  • The Iowa Individual Health Benefit Reinsurance Association (IIHBRA) is a statutorily created nonprofit (originally under ch. 504A, later ch. 504) charged by Iowa Code chapter 513C with calculating and collecting annual assessments from members to fund high‑risk individual health coverage.
  • The 1995 enactment creating IIHBRA explicitly incorporated it under the nonprofit corporation law and originally included a redundant clause in §513C.10(5)(b) authorizing it to “sue or be sued” to recover assessments.
  • A 2001 amendment merged IIHBRA’s board with the Iowa Comprehensive Health Insurance Association (ICHIA) and deleted several board‑related and duplicative provisions from §513C.10, including the §513C.10(5)(b) clause that expressly stated the power to sue; the statutory duty to collect assessments remained.
  • IIHBRA sued three regent universities for unpaid assessments (2010–11); the universities moved to dismiss, arguing (1) IIHBRA lacked capacity to sue because the 2001 amendment removed its power to sue, and (2) the dispute required arbitration under Iowa Code §679A.19 as a dispute between state administrative departments/boards.
  • The district court dismissed for lack of capacity to sue; the court of appeals affirmed. The Iowa Supreme Court granted further review and reversed, holding IIHBRA retained capacity to sue and §679A.19 did not apply.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Capacity to sue (whether IIHBRA may sue members to collect assessments) IIHBRA: retained statutory power to sue via nonprofit corporation statute (ch. 504A/504) despite deletion of duplicative clause in §513C; 2001 amendments only merged boards. Universities: 2001 deletion of §513C.10(5)(b) removed IIHBRA’s express authority to sue, so it lacks capacity. Court held IIHBRA retained capacity to sue under nonprofit corporation statute (504A/504). Deletion was cleanup tied to board merger, not a removal of enforcement power.
Mandatory arbitration under §679A.19 (whether IIHBRA is a state department/commission/board requiring arbitration) IIHBRA: is not a state administrative department/board/commission; funded and staffed privately, represented by private counsel, and created as a nonprofit—§679A.19 inapplicable. Universities: IIHBRA functions as a statutorily created public entity; disputes with state universities are between state entities and must be arbitrated under §679A.19. Court held §679A.19 applies only to administrative departments/commissions/boards of state government; IIHBRA is not such an entity for §679A.19, so mandatory arbitration does not bar district court litigation.
State constitutional challenge (raised first on appeal) — whether assessments violate article VII, §1 (state lending/indemnity prohibition) Universities: assessments indirectly make regents responsible for private insurers’ debts, violating the constitutional prohibition. IIHBRA: (not decided below); merits not argued in district court. Court declined to decide because issue was not raised in district court; may be litigated on remand.

Key Cases Cited

  • Shumate v. Drake Univ., 846 N.W.2d 503 (Iowa 2014) (standard of review for motion to dismiss)
  • Mueller v. Wellmark, 818 N.W.2d 244 (Iowa 2012) (motions to dismiss review principles)
  • Estate of Dyer v. Krug, 533 N.W.2d 221 (Iowa 1995) (capacity to sue review)
  • Schaefer v. Putnam, 841 N.W.2d 68 (Iowa 2013) (statutory construction standard)
  • Llewellyn v. Iowa State Commerce Comm’n, 200 N.W.2d 881 (Iowa 1972) (entities created by statute limited to powers granted)
  • Star Equip., Ltd. v. State, 843 N.W.2d 446 (Iowa 2014) (deriving legislative intent; article VII §1 discussion in later opinions)
  • In re A.M., 856 N.W.2d 365 (Iowa 2014) (harmonizing related statutes)
  • Iowa Coal Min. Co. v. Monroe County, 555 N.W.2d 418 (Iowa 1996) (capacity to sue explained)
  • State ex rel. Iowa Dep’t of Health v. Van Wyk, 320 N.W.2d 599 (Iowa 1982) (§679A.19 arbitration applied to disputes between state administrative bodies)
  • Huff v. St. Joseph’s Mercy Hosp. of Dubuque Corp., 261 N.W.2d 695 (Iowa 1978) (insurance commissioner injunctive powers)
  • Meier v. Senecaut, 641 N.W.2d 532 (Iowa 2002) (appellate review limits—issues must be raised below)
  • Grout v. Kendall, 192 N.W. 529 (Iowa 1923) (early discussion of article VII, §1 lending/indemnity prohibition)
Read the full case