964 F.3d 1247
8th Cir.2020Background
- Parties: LM Insurance (insurer) sued Dubuque Barge & Fleeting Service Co. d/b/a Newt Marine (insured) for refusing to pay additional premiums under three consecutive workers’ compensation policies.
- Newt Marine is an Iowa marine-construction employer whose workers include seamen working on a dredge barge; seamen are excluded from Iowa workers’ compensation coverage and instead covered by separate P&I insurance.
- Policies (issued via Iowa assigned risk plan) required an estimated premium up front and a final premium after audit; final premium calculated by applying rates to "remuneration" per sections C.1 and C.2.
- Section C.1 covered officers and employees engaged in work covered by the policy; section C.2 referenced "all other persons engaged in work that could make us liable," which LM interpreted to permit inclusion of seamen payroll.
- Newt Marine refused to pay additional premiums based on LM’s inclusion of seamen payroll; LM sued for breach seeking over $1 million. The district court granted summary judgment to Newt; LM appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether section C.2 permits charging premiums for payroll paid to seamen employees excluded from coverage | C.2 covers "other persons" whose work could make insurer liable, so seamen may be included because they could be reclassified into covered work | C.2 targets nonemployees (e.g., independent contractors); seamen are employees excluded from covered work and not captured by C.2 | C.2 applies to nonemployees; seamen employees are not included by C.1 or C.2, so premiums based on seamen payroll were not merited (affirm Newt) |
| Whether the mere possibility that an employee might be reclassified during the policy period allows insurer to include all seamen payroll under C.2 | The potential for reclassification during the policy period justifies including seamen payroll under C.2 | Only actual reclassification would shift an employee into C.1’s scope and would be accounted for in the post-period audit; possibility alone is insufficient | Possibility of future reclassification does not authorize preemptive inclusion; reclassification, if it occurs, is addressed at audit |
Key Cases Cited
- Johnson v. Cont’l Grain Co., 58 F.3d 1232 (8th Cir. 1995) (explaining that "master or member of the crew" refines the Jones Act concept of seaman)
- Harvey’s Casino v. Isenhour, 724 N.W.2d 705 (Iowa 2006) (Iowa Supreme Court: seamen have a private right of action that divests Iowa workers’ compensation commission jurisdiction)
- Mich. Millers Mut. Ins. Co. v. Asoyia, Inc., 793 F.3d 872 (8th Cir. 2015) (de novo review of district court’s interpretation of insurance policies)
- Liberty Mut. Ins. Co. v. Pella Corp., 650 F.3d 1161 (8th Cir. 2011) (Iowa law: parties’ intent as expressed in policy language controls interpretation)
- Nationwide Agri-Bus. Ins. Co. v. Goodwin, 782 N.W.2d 465 (Iowa 2010) (principles for interpreting insurance contracts under Iowa law)
- Ill. Nat’l Ins. Co. v. Farm Bureau Mut. Ins. Co., 578 N.W.2d 670 (Iowa 1998) (construction and interpretation of insurance contracts are matters of law)