IOWA INDIVIDUAL HEALTH BENEFIT REINSURANCE ASSOCIATION, Appellant, v. STATE UNIVERSITY OF IOWA, Iowa State University of Science and Technology, and University of Northern Iowa, Appellees.
No. 14-1605.
Supreme Court of Iowa.
March 18, 2016.
876 N.W.2d 800
Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor General, and Diane M. Stahle, Special Assistant Attorney General, for appellees.
WATERMAN, Justice.
In this appeal, we must determine whether a nonprofit corporation, the Iowa Individual Health Benefit Reinsurance Association (IIHBRA), has the capacity to sue its members for unpaid assessments it is statutorily obligated to collect and, if so, whether this case is subject to mandatory arbitration under
For the reasons explained below, we hold the IIHBRA has the capacity to sue its members in district court for unpaid assessments. The 2001 amendment to chapter 513C left intact the IIHBRA‘s capacity to sue under chapter 504A, and the IIHBRA is not an “administrative department, commission or board of the state government” subject to mandatory arbitration under section 679A.19. Accordingly, we vacate the decision of the court of appeals, reverse the district court‘s dismissal order, and remand the case for further proceedings.
I. Background and Procedural History.
This appeal involves two statutes addressing access to health insurance, specifically high-risk policies for individuals with preexisting medical conditions. An overview of this legislation provides context for the issues on appeal. In 1986, the legislature enacted
In 1995, the legislature enacted
The purpose and intent of this chapter is to promote the availability of health insurance coverage to individuals re
gardless of their health status or claims experience, to prevent abusive rating practices, to require disclosure of rating practices to purchasers, to establish rules regarding the renewal of coverage, to establish limitations on the use of preexisting condition exclusions, to assure fair access to health plans, and to improve the overall fairness and efficiency of the individual health insurance market.
In 2001, the legislature amended chapters 513C and 514E to merge the boards of directors of the IIHBRA and the ICHIA and delete from chapter 513C the enumeration of certain powers, including the power to sue. See
The IIHBRA filed this civil action on November 1, 2013. The IIHBRA‘s petition alleges that the State University of Iowa (SUI), Iowa State University of Science and Technology (ISU), and the University of Northern Iowa (UNI) (collectively, the universities) are members required to submit annual reports and pay assessments due under
On January 17, 2014, the universities filed a preanswer motion to dismiss the petition. The universities conceded solely for purposes of the motion (and this appeal) that they are members of the IIHBRA, which they otherwise deny. The motion to dismiss asserted two grounds: (1) that the IIHBRA lacks the capacity to sue based on the 2001 amendment to chapter 513C; and (2) that the district court lacks subject matter jurisdiction because the IIHBRA is required to arbitrate this case under
On August 28, the district court, without reaching the arbitration issue, granted the universities’ motion to dismiss on the first ground. The district court ruled that the 2001 amendment to chapter 513C “revoke[d] the authority to sue which [the legislature] had previously bestowed upon IIHBRA.”
The IIHBRA appealed, and we transferred the case to the court of appeals, which affirmed the dismissal without reaching the arbitration issue. The court of appeals concluded that the 2001 amendment eliminated the IIHBRA‘s power to sue. We granted the IIHBRA‘s application for further review.
II. Standard of Review.
“We review a district court‘s ruling on a motion to dismiss for the correction of errors at law.” Shumate v. Drake Univ., 846 N.W.2d 503, 507 (Iowa 2014) (quoting Mueller v. Wellmark, Inc., 818 N.W.2d 244, 253 (Iowa 2012)). We accept the petition‘s well-pleaded factual allegations as true, but not its legal conclusions. Id.; see also Estate of Dyer v. Krug, 533 N.W.2d 221, 222 (Iowa 1995) (reviewing for correction of errors at law a ruling dismissing petition on grounds that plaintiff lacked the capacity to sue). We review
III. Analysis.
This appeal presents two questions of statutory interpretation. First, we must decide whether the legislature intended in 2001 to eliminate the IIHBRA‘s power to sue its members to collect assessments that the organization remained obligated to collect under chapter 513C and its members remained obligated to pay.2 We conclude the IIHBRA retained its power to sue under
We begin our analysis with familiar rules of statutory interpretation. An entity created by statute is “limited in power to that authority granted by the legislature to it.” Llewellyn v. Iowa State Commerce Comm‘n, 200 N.W.2d 881, 884 (Iowa 1972). “The goal of statutory construction is to determine legislative intent.” Star Equip., Ltd. v. State, 843 N.W.2d 446, 455 (Iowa 2014) (quoting Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004)). “We derive legislative intent not only from the language used but also from the statute‘s subject matter, the object sought to be accomplished, the purpose to be served, underlying policies, remedies provided, and the consequences of the various interpretations.” Id. (quoting Postell v. Am. Family Mut. Ins. Co., 823 N.W.2d 35, 49 (Iowa 2012)). “We read related statutes together and attempt to harmonize them.” In re A.M., 856 N.W.2d 365, 372 (Iowa 2014).
A. Capacity to Sue.
The universities’ primary assertion is that the IIHBRA has no capacity to sue. “[A] party must have capacity to sue before the party may commence and maintain a cause of action.” Iowa Coal Min. Co. v. Monroe County, 555 N.W.2d 418, 428 (Iowa 1996). Capacity to sue is
distinct from, although closely allied to, legal existence, or the quality of being a person in law, and the possession of the requisite interest to support an action, or “standing,” to sue. Capacity relates to a party‘s personal or official right to litigate the issues presented by the pleadings. Want of capacity to sue has reference, not to the existence of a plaintiff, but to legal disability, such as infancy, mental incompetence, and the like, which deprives a party of the right to come into court.
Id. (quoting 59 Am. Jur. 2d Parties § 24 (1987)).
The fighting issue is the effect of the 2001 amendment to chapter 513C. See 2001 Iowa Acts ch. 125. The universities argue the 2001 amendment to chapter 513C stripped the IIHBRA of its capacity to sue by deleting a provision expressly empowering it to sue. The district court and
Because the IIHBRA is a nonprofit corporation created by statute, the Iowa Code must establish the IIHBRA‘s capacity to sue. See Llewellyn, 200 N.W.2d at 884 (holding entities created by statute can only exercise the powers granted to them by the legislature). We construe the 2001 amendment “mindful of the state of the law” at the time it was enacted and of our duty to “harmonize the statute, if possible, with other statutes on the same subject matter.” Jud. Branch v. Iowa Dist. Ct., 800 N.W.2d 569, 576 (Iowa 2011) (quoting State v. Dann, 591 N.W.2d 635, 638 (Iowa 1999)). “When an amendment to a statute adds or deletes words, a change in the law will be presumed unless the remaining language amounts to the same thing.” Davis v. State, 682 N.W.2d 58, 61 (Iowa 2004).
A review of the history of the legislation is instructive. The Act that created the IIHBRA stated that “a nonprofit corporation is established” and “shall be incorporated under chapter 504A.” 1995 Iowa Acts ch. 5, § 12 (codified at
Each corporation, unless otherwise stated in its articles of incorporation, shall have the power:
....
2. To sue and be sued, complain and defend, in its corporate name.
Id. The enabling legislation that created the IIHBRA nevertheless included a redundant power to sue:
5. The association has the general powers and authority enumerated by this section.... In addition, the association may do any of the following:
....
b. Sue or be sued, including taking any legal action necessary or proper for recovery of any assessments for, on behalf of, or against members of the association or other participating persons.
1995 Iowa Acts ch. 5, § 12 (emphasis added) (codified at
The parties disagree whether that power was eliminated by the 2001 amendment to chapter 513C. As part of the 2001 amend
So what was the purpose of the 2001 amendment?4 Plainly, to merge the boards of directors of the ICHIA and the IIHBRA for greater efficiency. By its terms, the 2001 amendment provided that the IIHBRA, which previously had its own board of directors, would thereafter “exercise its powers through the [ICHIA‘s] board of directors established under chapter 514E.” 2001 Iowa Acts ch. 125, § 4 (codified at
The legislative history confirms the purpose of the 2001 amendment was to merge the board of directors of the ICHIA and the IIHBRA. The preamble to the 2001 amendment stated the Act
relat[ed] to the Iowa individual health benefit reinsurance association and the Iowa comprehensive health insurance association, by changing the board of directors, membership, and assessment related to the associations, and making changes relating to adjustments in the coverage of basic and standard health plans.
2001 Iowa Acts ch. 125. The amendment was accompanied by a bill explanation stating in relevant part,
The bill deletes subsections of Code section 513C.10 that address the board of directors for the [IIHBRA].
....
The bill amends Code section 514E.2 to provide that the [ICHIA] shall be responsible for administering the [IIHBRA] pursuant to all of the terms and conditions contained in Code chapter 513C....
The bill also amends Code section 514E.2 regarding the composition of the board of directors of the [IIHBRA], resulting in a merger of the boards of the [ICHIA] and the [IIHBRA].
H.F. 733, 79th G.A., 1st Sess., explanation (Iowa 2001) (emphasis added); see Star Equip., 843 N.W.2d at 454 & n. 3 (noting explanations attached to bills are indications of legislative intent).
Notably, the 2001 amendment did not eliminate the IIHBRA‘s statutory duty to collect reports and assessments from its
The universities rely on
Subsequent amendments to section 513C.10 reinforce our conclusion that the IIHBRA retained its capacity to sue. In 2003, the legislature again amended section 513C.10 to add this section regarding members’ obligation to comply with reporting requirements and pay assessments:
For purposes of calculating and conducting the assessment, the association shall have the express authority to require members to report on an annual basis each member‘s total health insurance premiums and payments for subscriber contracts and paid losses. A member is liable for its share of the assessment calculated in accordance with this section regardless of whether it participates in the individual health insurance market.
2003 Iowa Acts ch. 91, § 26 (emphasis added) (codified at
After this 2003 amendment to chapter 513C, the statute governing nonprofit corporations was changed to state, “A corporation engaging in an activity that is subject to regulation under another statute ... shall be subject to all limitations of the other statute.” 2004 Iowa Acts ch. 1049, § 24 (codified at
The universities contended at oral argument that the insurance commissioner has the authority to sue for the IIHBRA, obviating the IIHBRA‘s need to litigate on its own behalf. However, no provision in chapter 513C grants the insurance commissioner the power to sue members of the IIHBRA. Other statutes expressly grant the insurance commissioner power to file a civil action.7 If the legislature had intended the insurance commissioner to collect assessments from recalcitrant members of the IIHBRA, it could have said so in chapter 513C. It did not.
We recognize the insurance commissioner has broad powers to enforce the insurance laws of this state. See
For these reasons, we hold the IIHBRA has the capacity to sue its members to compel reporting and to collect assessments owed under chapter 513C. We next consider whether the IIHBRA‘s civil action may proceed in district court or instead is subject to mandatory arbitration.
B. Jurisdictional Challenge.
The universities argue that even if the IIHBRA has capacity to sue, this dispute is subject to mandatory arbitration. Neither the district court nor court of appeals decided this issue.
Any litigation between administrative departments, commissions or boards of the state government is prohibited. All disputes between said governmental agencies shall be submitted to a board of arbitration of three members to be composed of two members to be appointed by the departments involved in the dispute and a third member to be appointed by the governor. The decision of the board shall be final.
If the legislature had intended to make the IIHBRA a board, commission, or department, it presumably would have used one of those terms to describe it, as it has done in numerous other statutes creating such entities. The legislature identifies boards of state government as “boards” in our statutes. See, e.g.,
partment.” See, e.g.,
The IIHBRA notes other indications that it is not an arm of state government. The employees of the IIHBRA are not paid by the State of Iowa. By contrast, the staff members of state boards and commissions are state employees. Most of the members of the IIHBRA are private entities. A majority of its board of directors are private persons or representatives of private insurers, although our state boards and commissions are also populated with private citizens. The IIHBRA is represented by private legal counsel, while the universities and other state boards, commissions, and departments are represented by the Iowa Attorney General. The IIHBRA is funded by its assessments collected primarily from private sources. It does not receive appropriations or funding from the state treasury (except indirectly to the extent public entities pay assessments).
Section 679A.19 was enacted to reduce the costs of resolving disputes between two state agencies. When this provision was proposed, the purpose of the bill was to lower litigation costs for internecine disputes between state departments:
This bill would prevent litigation between state departments over disputes of questions of law or fact. Such litigation is expensive, time-consuming and wasteful of public funds. Legal counsel is employed on both sides and in many cases such litigation continues for years. This bill would submit such internecine disputes to arbitration.
H.F. 594, 58th G.A., Reg. Sess., explanation (Iowa 1959). This case is not a dispute between two public entities with both sides represented by the attorney general at public expense—the recurring situation this statute was enacted to address.
The universities note that the legislature has created various nonprofit corporations for economic development and research purposes through statutes that expressly provide the entity is not a state agency or subject to the privileges or requirements of a state agency. See, e.g.,
In their appellate brief, the universities raise for the first time a state constitutional challenge to any assessment against them under
The credit of the State shall not, in any manner, be given or loaned to, or in aid of, any individual, association, or corporation; and the State shall never assume, or become responsible for, the debts or liabilities of any individual, association, or corporation, unless incurred in time of war for the benefit of the State.
The universities, relying on Grout v. Kendall, 195 Iowa 467, 192 N.W. 529 (1923), argue this provision prohibits the state from “incurring obligations by the indirect method of secondary liability.” They contend, “The assessments at issue are redistributed to cover the losses of private insurance carriers. The Regents would thus become responsible for the debts of a corporation, which is constitutionally prohibited.” The universities neglected to cite our more recent decision in Star Equipment, which rejected a challenge under article VII, section 1. 843 N.W.2d at 462-63. Regardless, we decline to reach the universities’ constitutional challenge because they did not raise it in district court. “It is a fundamental doctrine of appellate review that issues must ordinarily be both raised and decided by the district court before we will decide them on appeal.” Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002). The universities may raise that constitutional issue on remand, and we express no opinion on its merits.
IV. Conclusion.
For these reasons, we vacate the opinion of the court of appeals and reverse the district court ruling that granted the universities’ motion to dismiss. We remand this case for further proceedings consistent with this opinion.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT ORDER REVERSED; CASE REMANDED.