Lyle H. Abbas, F. Dow Bates, Bradley J. Brown, Sidney E. Carter, Brad Chicoine, Russell J. Cox, Paul D. Eberline, Joseph N. Geelan, Richard W. Haas, Rex J. Jones, Keith L. Klemme, Elizabeth C. Kressin, Steven J. Kraus, Mark A. Kruse, Rodney D. Langel, Ronald O. Masters II, Kevin Miller, Steven A. Mueller, Mark A. Niles, Valorie J. Prahl, Jennifer A. Rasmussen, Rod R. Rebarcak, Randall P. Stange, Lance E. Vanderloo, Kenneth
2017 Iowa Sup. LEXIS 39
| Iowa | 2017Background
- Twenty-six Iowa-licensed chiropractors challenged Wellmark’s payment practices, alleging violations of Iowa Code § 514F.2 because chiropractors received lower in‑network fees (PPO and HMO/capitated) than MDs/DOs for comparable services.
- Wellmark operates PPO fee schedules and an HMO that pays a capitated rate to a chiropractic network (ICPC); chiropractors earn less under both arrangements for certain CPT-coded services.
- The chiropractors requested a contested‑case hearing before the Iowa Insurance Commissioner; an ALJ held a hearing and proposed findings; the commissioner issued a declaratory order rejecting the chiropractors’ claims and declaring ERISA preempts § 514F.2 for self‑funded plans.
- The district court affirmed the commissioner, holding the proviso in § 514F.2 concerns coverage availability (not rate regulation) and, alternatively, that substantial evidence supported the commissioner’s factual finding that Wellmark’s rates were not based solely on licensure; ERISA preemption was also affirmed.
- The Iowa Supreme Court affirmed, holding (1) the commissioner lacked exclusive interpretive authority over § 514F.2 (reviewed de novo), (2) § 514F.2 regulates insurer payments to providers, (3) substantial evidence supports that Wellmark’s lower payments were not based solely on licensure, and (4) ERISA preempts application of § 514F.2 to self‑funded plans.
Issues
| Issue | Plaintiffs' Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to adjudicate contested case | Chiropractors relied on agency contested‑case procedure to enforce § 514F.2 | Commissioner argued statute does not give commissioner judicial authority to resolve private disputes; declaratory order appropriate | Court need not decide authority to adjudicate; reviewed final agency action under standard administrative review |
| Scope of § 514F.2 (coverage vs. rate regulation) | § 514F.2 prohibits limiting or making payment optional on basis solely related to licensure — plaintiffs read this to constrain payments/rates | Wellmark and commissioner (and district court partly) read proviso as addressing coverage nondiscrimination, not fee schedules | Court found § 514F.2 ambiguous but, on legislative history, concluded the statute regulates insurer reimbursement to providers (not merely coverage) |
| Whether Wellmark’s lower payments are based solely on licensure | Plaintiffs argued differential fees show impermissible discrimination "solely related" to licensure | Wellmark showed it uses CPT codes, CMS RVUs, time/skill/cost factors, provider supply, overhead, malpractice, and other factors — not licensure alone | Substantial evidence supports commissioner’s factual finding that Wellmark’s payment differentials are not based solely on licensure; affirmed |
| ERISA preemption of § 514F.2 for self‑funded plans | Plaintiffs: § 514F.2 addresses insurer‑provider contract matters, not ERISA plans, so no preemption | Wellmark: state law "relates to" ERISA plans and is preempted as applied to self‑funded plans | Court held § 514F.2 is connected with and references ERISA plans; ERISA preempts application to self‑funded plans |
Key Cases Cited
- Mueller v. Wellmark, 818 N.W.2d 244 (Iowa 2012) (prior holding that § 514F.2 does not create a private cause of action)
- Ramirez‑Trujillo v. Quality Egg, 878 N.W.2d 759 (Iowa 2016) (standard for deference to agency statutory interpretation)
- Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138 (Iowa 2013) (limits of agency interpretive authority and review standards)
- Mycogen Seeds v. Sands, 686 N.W.2d 457 (Iowa 2004) (agency fact‑finding authority in contested cases)
- Prudential Ins. Co. of Am. v. Nat’l Park Med. Ctr., Inc., 154 F.3d 812 (8th Cir. 1998) (test for state law ‘‘relates to’’ ERISA plan)
- Daley v. Marriott Int’l, Inc., 415 F.3d 889 (8th Cir. 2005) (ERISA preemption principle for state laws affecting employee benefit plans)