IOWA DENTAL ASSOCIATION, Appellant, v. IOWA INSURANCE DIVISION and Iowa Insurance Commissioner, Appellees, and Federation of Iowa Insurers, Intervenor-Appellee.
No. 12-1280.
Supreme Court of Iowa.
May 17, 2013.
833 N.W.2d 856
IV. Conclusion.
The district court correctly concluded the ICPL policy‘s underwriting exclusion would have precluded coverage for the Smiths’ claims even if Federal had been timely notified under the policy‘s notice requirement. Accordingly, we affirm the district court‘s summary judgment in favor of Holmes Murphy.
AFFIRMED.
Thomas J. Miller, Attorney General, and Jeanie Kunkle Vaudt, Assistant Attorney General, for appellees.
Scott A. Sundstrom of Nyemaster Goode, P.C., Des Moines, for intervenor-appellee.
MANSFIELD, Justice.
This case asks us to decide whether to uphold the Iowa Insurance Commissioner‘s interpretation of a recently enacted law governing dental insurance plans. See
On our review, we find that interpretation of the term at issue has not been clearly vested by a provision of law in the discretion of the Commissioner. Therefore, de novo review is appropriate. See
I. Facts and Procedural Background.
This case centers on the contractual relationships between dentists and insurers that provide dental plans. Many dentists in Iowa enter into these plans, under which insurers reimburse all or part of the costs of various dental procedures. Typically the plan contracts include maximum fee schedules. In the schedule, the insurer sets a maximum amount the dentist can charge for a particular service. Dentists agree to abide by these maximum fees, in exchange for the benefit of providing services to insured patients.
Generally, the plans exclude certain services, such as cosmetic dentistry and teeth whitening. Preventive plans have additional exclusions. But even when services are covered, there may be limits such as deductibles, maximum annual benefits, waiting periods, and frequency limitations. A common frequency limitation is that patients may be reimbursed for up to two teeth cleanings per year, but not for a third cleaning within that same time period.
Before the general assembly passed section 514C.3B, some dental plans contained maximum fees that dentists could charge for services that were never reimbursable under their dental insurance plans, like teeth whitening. In 2010, and in apparent response to this practice, the legislature adopted “An Act prohibiting the imposition by a dental plan of fee schedules for the provision of dental services that are not covered by the plan.” 2010 Iowa Acts ch. 1179 (codified at
Iowa‘s law provides:
A contract between a dental plan and a dentist for the provision of services to covered individuals under the plan shall not require that a dentist provide services to those covered individuals at a fee set by the dental plan unless such services are covered services under the dental plan.
“Covered services” means services reimbursed under the dental plan.
Nothing in this section shall be construed as limiting the ability of an insurer or a third-party administrator to restrict any of the following as they relate to covered services:
- Balance billing.
- Waiting periods.
- Frequency limitations.
- Deductibles.
- Maximum annual benefits.
Following enactment of this law, insurers continued imposing maximum fees on services that were actually reimbursed under their dental plans, such as semiannual teeth cleanings. But some insurers went further. They placed maximum fees on services that were potentially reimbursable but were not actually reimbursed because of some plan limit, such as a frequency limit. For example, an insurer would require a dentist to charge no more than a certain amount for any teeth cleaning, even though only the first two cleanings were actually reimbursed under the plan.
According to the Iowa Dental Association (IDA), the petitioner in this action, a number of its dentist-members inquired to insurers about maximum fees on these reimbursable, but not actually reimbursed, services. The insurers responded that
The IDA argued that dentists faced “conflicting interpretations” of the statute: the dentists’ own interpretation that such services were not “covered,” and the insurers’ view that they were. Accordingly, on August 19, 2011, the IDA filed with the Insurance Division a request for a declaratory order clarifying the meaning of “covered services” in section 514C.3B. See
Is an insurer permitted to impose and enforce a maximum fee for services that are not reimbursed under the dental plan (except for standard co-payments or deductibles paid by the patient) due to limitations related to balance billing, waiting periods, frequency limitations, deductibles, and maximum annual benefits?
The IDA proposed that the Commissioner answer the question in the negative, based on its reading of the statute‘s definition of “covered services.”
The Federation of Iowa Insurers—which represents dental plan providers Wellmark Blue Cross and Blue Shield of Iowa, Delta Dental of Iowa, and the Principal Financial Group—petitioned to intervene in the matter. After its petition was granted, the Federation submitted briefs urging the Commissioner to answer the IDA‘s question in the affirmative.
On November 8, the Insurance Commissioner issued a declaratory order that agreed with the Federation‘s position: “covered services” include services that can be reimbursed generally, but that are not actually reimbursed in a particular circumstance due to a policy restriction. The Commissioner reasoned that this reading gave meaning to section 514C.3B(4) and also better served customers because it allowed insurers to keep prices down. As the Commissioner explained,
Subsection 3 must be read in conjunction with subsection 4, to give meaning to the entire statute, which places several limitations on covered services related to balance billing, waiting periods, frequency limitations, deductibles, and maximum annual benefits. Subsection 4 indicates that the “covered service” does not lose its status as a covered service because of limitations placed on reimbursement to the dentist. Thus, the statute does not require . . . a service to actually be reimbursed under the dental plan. Stated another way, non-covered benefits are dental procedures that a dental plan does not cover and never pays for.
This determination fits well within the context of the consumer‘s dental insurance contract.
. . . .
Patients benefit when there [i]s certainty in the amount that will be paid for a given service. They lack the expertise to discuss and/or negotiate dental fees with the dentists that do not fall within the definition of covered services. A patient could end up paying significantly more than the negotiated fee between the insurer and dentist without the benefit of the insurer‘s contract with the dentist.
On December 11, the IDA filed a petition in Polk County District Court requesting judicial review of the Commissioner‘s order. The IDA‘s petition advanced several alternative arguments: (1) the Commissioner lacked clearly vested interpretive authority over the statutory term “covered
The Federation filed a brief in opposition. It argued the district court should uphold the ruling because the Commissioner was clearly vested with interpretive authority and the ruling was neither illogical, irrational, nor unjustifiable. The Federation also asserted that the Commissioner‘s ruling was correct even if the court employed a less deferential standard of review. Finally, the Federation highlighted policy concerns and insisted that the IDA‘s interpretation was anti-consumer because it would allow dentists to charge insured customers higher fees on policy-limited services, such as a third teeth cleaning.
The district court affirmed the Commissioner‘s declaratory ruling. The court relied on
The commissioner shall, subject to chapter 17A, establish, publish, and enforce rules not inconsistent with law for the enforcement of this subtitle and for the enforcement of the laws, the administration and supervision of which are imposed on the division, including rules to establish fees sufficient to administer the laws, where appropriate fees are not otherwise provided for in rule or statute.
The IDA now appeals and the parties make essentially the same arguments before us. At issue here is whether to affirm the Commissioner‘s declaratory order that dental services ordinarily reimbursable, but not actually reimbursed due to some plan policy limit, are “covered services” under section 514C.3B.
II. Scope of Review.
This is an appeal of a district court‘s review of agency action;
10. The court may affirm the agency action or remand to the agency for further proceedings. The court shall reverse, modify, or grant other appropriate relief from agency action, equitable or legal and including declaratory relief, if it determines that substantial rights of the person seeking judicial relief have been prejudiced because the agency action is any of the following:
. . . .
c. Based upon an erroneous interpretation of a provision of law whose interpretation has not clearly been vested by a provision of law in the discretion of the agency.
. . . .
l. Based upon an irrational, illogical, or wholly unjustifiable interpretation of a provision of law whose interpretation has clearly been vested by a provision of law in the discretion of the agency.
. . . .
n. Otherwise unreasonable, arbitrary, capricious, or an abuse of discretion.
We accordingly review an agency‘s interpretation of a provision of law under
Although the district court‘s thorough decision appears to focus largely on whether the Commissioner has been clearly vested with authority to interpret the 2010 legislation, i.e., section 514C.3B, we have clarified the nature of the relevant inquiry in recent years. In Renda v. Iowa Civil Rights Commission, 784 N.W.2d 8, 9 (Iowa 2010), we had to decide whether the Iowa Civil Rights Commission (ICRC) had jurisdiction over an inmate‘s civil rights claim alleging discrimination in employment and housing. Id. at 9. At issue was whether the inmate was an “employee” and whether the correctional facility was a “dwelling” within the meaning of the Iowa Civil Rights Act. Id. at 10. We explained:
We begin by noting that despite the parties’ articulation of the issue as whether the ICRC has the authority to interpret the Act, we do not view the issue so broadly. The focus of our inquiry is not whether the ICRC has the authority to interpret the entire Act. Rather, we must determine whether the interpretation of the specific terms “employee” and “dwelling” has been clearly vested in the discretion of the commission.
We then reviewed our precedents and found they confirmed this approach. Id. at 11-13. In prior cases, despite grants of rulemaking authority to the agencies in question, we had not found that the agencies had been vested with the authority to interpret terms such as competent evidence, hardship, public interest, willful, and confidential. Id. at 13. We did note that an express legislative grant of authority to interpret the statute could resolve the issue. Id. at 11. But a grant of rulemaking authority alone was generally not sufficient. Id. at 13.
We further noted that when a statutory provision “is a substantive term within the special expertise of the agency, we have concluded that the agency has been vested with the authority to interpret the provisions.” Id. at 14. But when the term is found in other statutes or has “an independent legal definition that is not uniquely within the subject matter expertise of the agency, we generally [have] conclude[d] the agency has not been vested with interpretive authority.” Id.
Applying these principles, we held in Renda that the ICRC was not clearly vested with authority to interpret “employee” and “dwelling.” Id. There was no express grant of interpretive authority in the underlying legislation, and “[b]oth terms have specialized legal meaning and are widely used in areas of law other than the civil rights arena.” Id.
A year after Renda, we had to decide whether a paint company was exempt from use tax on purchases of machines it used in its Iowa retail outlets to mix base paint with colorant. See Sherwin-Williams Co. v. Iowa Dep‘t of Revenue, 789 N.W.2d 417, 419 (Iowa 2010). The issue was whether a retail establishment could be considered a “manufacturer” within the meaning of Iowa‘s use tax law. Id. at 423. “Manufacturer” was defined in the statute. See id. at 420 (citing
The insurmountable obstacle to finding the department has authority to interpret the word “manufacturer” in this
context is the fact that this word has already been interpreted, i.e., explained, by the legislature through its enactment of a statutory definition.
See id. at 423-24; §§ 422.45(27)(d)(4), 428.20. Under these circumstances, we do not think the legislature intended that the department have discretion to interpret—give meaning to—this term. Id. at 423-24.
On the other hand, in Evercom Systems, Inc. v. Iowa Utilities Board, 805 N.W.2d 758, 762-63 (Iowa 2011), we found the utilities board had been vested with authority to interpret the term “unauthorized change in service.” Id. at 762. The underlying legislation required the Board to “adopt rules prohibiting an unauthorized change in telecommunication service“; we did not consider that “an explicit grant of the authority to interpret the term.” Id. at 762. However, in light of our precedent and the fact that “unauthorized change in service” was a “substantive term within the special expertise of the agency,” we held that authority had been vested with the board and a deferential standard of review should apply. Id. at 762-63.
In Neal v. Annett Holdings, Inc., 814 N.W.2d 512, 516 (Iowa 2012), we had to address the meaning of the phrase “suitable work” in a workers’ compensation case. Id. at 519. Although the commissioner had been expressly granted statutory authority to “[a]dopt and enforce rules necessary to implement” the workers’ compensation laws, we reiterated that “the mere grant of rulemaking authority does not give an agency authority to interpret all statutory language.” Id. at 519 (citation and internal quotation marks omitted). We noted that the concept of “suitable work” is found in other legal contexts and “has a specialized legal meaning extending beyond the context presented in this case.” Id. Accordingly, we did not give deference to the commissioner‘s interpretation of the phrase. Id.
In Burton v. Hilltop Care Center, 813 N.W.2d 250, 261-62 (Iowa 2012), we held that the legislature, which had provided an independent statutory definition of “gross earnings,” did not clearly vest interpretive authority for that term in the workers’ compensation commissioner. Id. at 261. Instead we applied a de novo standard of review and focused on whether inadvertent overpayments met the legislative definition of “gross earnings“—“payments by employer to the employee for employment.” Id. at 261 (citation and internal quotation marks omitted). Ultimately we concluded, “Money received due to an accounting error would not be money that was earned for employment as the statute requires.” Id. at 263.
Applying Renda and its progeny here, we find that interpretive authority concerning the phrase “covered services” has not been clearly vested with the Insurance Commissioner. As noted by the district court, the legislature has given the Commissioner the power to make rules “not inconsistent with law for the enforcement of this subtitle and for the enforcement of the laws, the administration and supervision of which are imposed on the division.”
Additionally, when we turn to the legislative definition, we find that the relevant word—“reimbursed“—is not a “substantive term within the special expertise of the agency.” Evercom, 805 N.W.2d at 762 (citation and internal quotation marks omitted). Rather, the word “reimbursed” appears hundreds of times within the Iowa Code. For all these reasons, we will review the Commissioner‘s interpretation of the statute for errors at law.
III. Interpretation of Section 514C.3B.
We have to decide whether services that would be reimbursed but for a dental plan restriction constitute “covered services,” i.e., “services reimbursed under the dental plan.”
The parties here essentially dispute the significance of the word “reimbursed,” which has no definition in the statute. “Where the legislature has not defined words of the statute, we may refer to prior decisions of this court and others, similar statutes, dictionary definitions, and common usage.” Bernau v. Iowa Dep‘t of Transp., 580 N.W.2d 757, 761 (Iowa 1998). The IDA argues the definition includes only services that are actually reimbursed under the plan, while the Federation and the Commissioner argue it includes services that are generally reimbursed or reimbursable under a plan, whether or not reimbursed in the specific instance.
When we examine the language of section 514C.3B(3)(a), it appears to favor the IDA‘s position. The word “reimbursed” usually means that the cost has been repaid. See Merriam-Webster‘s Collegiate Dictionary 983 (10th ed.2002) (“reimburse . . . 1: to pay back to someone: REPAY <travel expenses> 2: to make restoration or payment of an equivalent to <him for his traveling expenses> . . . .“); see also Black‘s Law Dictionary 1399 (9th ed.2009) (“reimbursement, n. 1. Repayment. 2. Indemnification.“). When a patient has a third teeth cleaning within a year, and the dental insurer declines to pay for it, we would not normally say that the cleaning has been “reimbursed under the dental plan.”
This meaning of “covered services” finds implicit support in what other states have done. Iowa is not the only state to have enacted legislation that prevents dental insurers from imposing maximum fees on noncovered services. The first to do so was Rhode Island in 2009. See 2009 R.I. Pub. Laws chs. 09-41, 09-52. There the statute defined “covered services” as “services reimbursable under the applicable subscriber agreement, subject to such contractual limitations on subscriber benefits as may apply, including, for example, deductibles, waiting period or frequency limitations.” See
During their respective 2010 legislative sessions, but before Iowa adopted what became section 514C.3B, Arizona, Idaho, Kansas, Mississippi, Oklahoma, South Dakota, Virginia, and Washington all enacted laws that limited the imposition of maximum fees on noncovered dental services
Of course, we must construe section 514C.3B in its entirety. See State v. Adams, 810 N.W.2d 365, 369 (Iowa 2012). Also, legislative history should be taken into account in construing an ambiguous statute. See
4. Nothing in this section shall be construed as limiting the ability of an insurer or a third-party administrator to restrict any of the following as they relate to covered services:
- Balance billing.
- Waiting periods.
- Frequency limitations.
- Deductibles.
- Maximum annual benefits.
As written, subsection 4 does not purport to qualify the definition of “covered services” in subsection 3—i.e., the requirement that the services be “reimbursed.” Rather, it purports to clarify that insurers retain certain rights relating to “covered services.” If this is what it does, subsection 4 is not meaningless. Thus, subsection 4(a) would indicate that an insurer still has the right to limit what a dentist can charge for a particular service above the insurance reimbursement—so-called balance billing. For example, a dental plan could reimburse $50 per teeth cleaning, but also provide that the dentist may charge no more than $60 in total, i.e., can “balance bill” no more than $10. This would be a limit “relating to” covered services. Likewise, subsections 4(d) and 4(e)
With regard to subsections 4(b) and 4(c), it is more difficult for IDA to explain why they are needed. True, insurers would want to have the ability to continue to impose waiting periods and frequency limitations, but it is not clear how that might be jeopardized by IDA‘s interpretation of section 514C.3B. The most one can say is that subsections 4(b) and 4(c) clarify that insurers can still impose waiting periods and frequency limitations as a condition of covering services—in addition to maximum fees on services they do cover.
On the other hand, the Commissioner and the Federation‘s interpretation of subsection 4 suffers from the same infirmity. If the purpose of subsection 4 were to clarify that a “covered service” does not lose its status as a covered service because of limitations placed on reimbursement to the dentist” by the plan, as reasoned by the Commissioner, then subsections 4(b), (c), (d), and (e) serve a purpose, but subsection 4(a) on balance billing seems like surplusage. Balance billing is not a limitation on reimbursement, but on the dentist‘s ability to bill more than the reimbursement.4
Furthermore, the language of subsection 4 does not suggest that every part of it has to have meaning. It says, “Nothing in this section shall be construed . . . .” In our experience, this kind of savings language is sometimes used by a legislature in an abundance of caution, rather than to resolve a genuine controversy that would exist if the language were not present. See, e.g.,
Thus, reading the statute as a whole, we have a straightforward directive in subsection 3 that covered services must be “reimbursed under the dental plan,” followed by a somewhat cloudier statement in subsection 4 that “[n]othing in this section shall be construed as limiting the ability of an insurer or a third-party administrator to restrict any of the following as they relate to covered services.” Had the legislature wanted to provide that insurers could impose maximum fees on services that were reimbursable, but were not reimbursed in a particular instance because of a plan limit, it could have said that directly.
The Commissioner and the Federation also argue that their interpretation of section 514C.3B better protects consumers by allowing insurers to set a maximum price for a dental procedure even when that procedure is not covered because of a plan limitation. However, this argument presumes that in enacting section 514C.3B, the legislature‘s intent was to favor the interests of consumers over those of dentists. It appears, rather, that the general assembly was trying to balance the interests of both groups. If the legislature‘s only goal had been to avoid a situation where insured patients might have to pay whatever the dentist charged without the benefit of a price cap, it would not have enacted section 514C.3B at all. For this reason, we are unable to give much weight to this policy argument. The only evident policy of section 514C.3B is to “prohibit[] the imposition by a dental plan of fee schedules for the provision of dental services that are not covered by the plan.” 2010 Iowa Acts ch. 1179.
Based on our de novo review, we hold that a service is “covered” within the meaning of section 514C.3B only if it is actually reimbursed to some extent under the dental plan. Hence, an insurer may only impose a maximum fee on a service when a reimbursement has been provided for that service.
IV. Conclusion.
For the foregoing reasons, we conclude the district court erred in upholding the Commissioner‘s declaratory order. We accordingly reverse the district court‘s ruling and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
Notes
Nothing in this section shall be construed as limiting the ability of an insurer or a third-party administrator to restrict balance billing, waiting periods, frequency limitations, and deductibles.S. Amendment 5185, 83rd G.A., 2d Sess. (Iowa 2010); see S. Journal, 83rd G.A., 2d Sess. at 768 (Iowa 2010) [hereinafter S. Journal]. Senator Warnstadt then immediately offered an amendment to Senator McCoy‘s amendment (S-5233) that contained what became the final version of subsection 4. S. Journal, at 768; S. Amendment 5233, 83rd G.A., 2d Sess. (Iowa 2010). This was approved by voice vote. S. Journal, at 768. The amended legislation as a whole passed the Senate 49-0. See id. The legislation then returned to the House. In the House, Representative Quirk filed an amendment (H-8490) as follows:
“Covered services” means services eligible for reimbursement under the dental plan, including services not otherwise reimbursed because of applicable contractual limitations, including but not limited to balance billing, deductibles, waiting periods, frequency limitations, and maximum annual benefits.H. Amendment 8490, 83rd G.A., 2d Sess. (Iowa 2010); see H. Journal, at 949. On March 23, this amendment and several others were withdrawn; another amendment was defeated by voice vote. H. Journal, at 1172-73. The House then concurred in the Senate‘s amendment and approved the legislation 98-1. See id. at 1173. The Governor signed the legislation on April 29, 2010. It is difficult to draw definitive conclusions from this legislative history. One might infer that Senator Warnstadt‘s amendment was intended to accomplish something different from Senator McCoy‘s, or that it was just viewed as a better way of saying the same thing. One might infer that Representative Quirk‘s amendment would have altered the meaning of the statute. In this respect, it would have resembled several other amendments that were offered at the same time, that presumably were not supported by the dentists, and that were also withdrawn—i.e., H-8500, H-8502, and H-8519. H. Journal, at 1123-24, 1173. Or, one might infer that Representative Quirk‘s amendment was withdrawn because it was viewed as unnecessary (unlike those other amendments).