923 N.W.2d 225
Iowa2019Background
- Delta Dental served as the managed care organization (MCO) administering the Dental Wellness Program under Iowa’s Health and Wellness Plan; DHS made capitated payments to Delta Dental, which in turn paid participating dentists.
- Dr. Robert Colwell, a Delta Dental participating dentist, submitted claims that Delta Dental denied (some for inadequate documentation); Delta terminated him in 2015 but later reinstated him via a 2016 settlement permitting appeals of prior denials under Delta’s Office Manual.
- Delta’s final appeal letters (Oct. 2016) largely upheld denials; an addendum (Nov. 2016) notified Colwell he had a right to seek a state fair hearing per the Provider/Office Manual.
- Colwell sought a state fair hearing from DHS (on his own behalf and purportedly on behalf of enrollees); DHS refused, treating the dispute as a contract issue between provider and MCO and not within DHS’s review obligation under Iowa Code § 249A.4(11).
- Colwell obtained district court review, which held (1) § 249A.4(11) required DHS to provide hearings to providers, (2) administrative rules independently entitled Colwell to a state fair hearing (individually and as an enrollee representative), and (3) Colwell could bill patients in some circumstances; DHS appealed.
- The Iowa Supreme Court: reversed the district court’s statutory holding (§ 249A.4(11) does not mandate provider hearings), affirmed that the administrative rules (and Delta’s contract/policy) grant Colwell a right to a state fair hearing, held providers may bill patients only for noncovered services if proper pretreatment disclosure occurred, and reversed the attorney‑fee award to Colwell.
Issues
| Issue | Colwell’s Argument | DHS’s Argument | Held |
|---|---|---|---|
| Whether § 249A.4(11) requires DHS to provide state fair hearings for providers | "Individual" includes providers; statute mandates hearings for providers | "Individual" means Medicaid recipients; statute mirrors federal law and does not mandate provider hearings | Reversed district court: statute requires hearings for recipients only, not providers |
| Whether administrative rules give Colwell a right to a state fair hearing (individually and on behalf of patients) | Rules and Delta’s Office Manual permit providers to appeal and to act for enrollees with consent; Colwell exhausted MCO process | DHS argued it lacked obligation to hear provider‑MCO contract disputes | Affirmed district court: rules and provider policy grant a state fair hearing; DHS must provide one |
| Whether Colwell may bill patients for services not covered or reimbursed by Delta Dental | Colwell may bill patients for noncovered services (not balance billing) | Providers must accept DHS/MCO adjudicated payment; cannot bill for covered services not paid due to provider error | Affirmed in part: providers may bill only for services that are not covered by program (with required pretreatment disclosure); cannot bill patients for services routinely covered by rule when denial results from provider error |
| Whether Colwell is entitled to attorney fees under Iowa Code § 625.29(1) | Colwell sought fees as prevailing party in judicial review | DHS invoked statutory exceptions (agency primarily adjudicative; dispute between private parties re: monetary entitlement) | Reversed district court: fees denied because DHS’s role was adjudicative and the action concerned entitlement/monetary benefit, fitting statutory exceptions |
Key Cases Cited
- Banilla Games, Inc. v. Iowa Dep’t of Inspections & Appeals, 919 N.W.2d 6 (Iowa 2018) (standard for reviewing agency application of § 17A.19 principles)
- Gartner v. Iowa Dep’t of Pub. Health, 830 N.W.2d 335 (Iowa 2013) (deference to agency interpretations when legislature vests interpretive authority)
- NextEra Energy Res., LLC v. Iowa Utils. Bd., 815 N.W.2d 30 (Iowa 2012) (framework for when to defer to agency statutory interpretations)
- Sunrise Ret. Cmty. v. Iowa Dep’t of Human Servs., 833 N.W.2d 216 (Iowa 2013) (holding § 249A.4 does not grant DHS authority to interpret its own rules)
- Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138 (Iowa 2013) (interpretation of “covered services” in insurance context; court explains limits of that precedent here)
- Banks v. Sec’y of Ind. Family & Servs. Admin., 997 F.2d 231 (7th Cir. 1993) (upholding federal interpretation that Medicaid enrollees are not liable for unpaid charges for covered services)
- Remer v. Bd. of Med. Exam’rs, 576 N.W.2d 598 (Iowa 1998) (defining when an agency’s role is primarily adjudicative for fee‑award exceptions)
- Tarbox v. State, 739 N.W.2d 850 (Iowa 2007) (statutory interpretation principles; give words ordinary meaning)