An Iowa workers’ compensation insurance carrier is not entitled to retroactive reimbursement from another insurer for benefits it paid in error, the state Supreme Court ruled this month.
American Home Assurance paid 125 weeks of permanent partial disability benefits to an injured employee only to discover afterward it was not the insurer when the claimant’s injury occurred. American Home filed a petition for reimbursement from the employer’s insurer at the time of the injury, Liberty Mutual. The deputy commissioner granted the petition, but on intra-agency appeal the commissioner reversed the deputy commissioner’s decision. The commissioner determined American Home could not seek reimbursement for benefits prior to when they entered a petition for contribution under Iowa Code section 85.21 in January 2017.
Under judicial review, a district court reversed the commissioner’s decision and sustained American Home’s motion for summary judgment, arguing the commissioner is vested broad authority to enter orders of reimbursement and that authority is not time-limited by the text of the statute. However, a court of appeals reversed the district court’s ruling, holding that the commissioner’s decision to limit American Home’s reimbursement claim to benefits paid after it sought and obtained an Iowa Code section 85.21 order was “consistent with past precedents and represented a sound interpretation of the statute.”
The Supreme Court affirmed the court of appeals’ decision.
The case, American Home Assurance v. Liberty Mutual Fire Insurance Company, involves an employee who initially filed a workers’ compensation claim against an employer for injuries allegedly sustained on November 15, 2007. The employee later amended the injury date to June 30, 2008. After an arbitration hearing, the deputy commissioner ordered the apparent insurer, American Home, to pay the claimant 125 weeks of permanent partial disability benefits. American Home made its final payment in 2013.
In 2016, the claimant filed a petition to reopen his case, during which time American Home discovered it was not the insurer when the employee’s injury occurred. American Home filed notice under Iowa Code section 85.21 seeking reimbursement of benefits paid to the employee on grounds that on the date of the injury, Liberty Mutual was providing the employer with workers’ compensation coverage. Iowa Code section 85.21 states that a carrier may seek a consent order and pay benefits to an injured worker while reserving the right to seek indemnity or contribution from another carrier.
American Home argues that there is no provision within Iowa Code section 85.21 that limits the language or imposes time constraints when requesting reimbursement from another insurance carrier, to which Liberty Mutual disagrees. Liberty Mutual argues that a failure to seek an order under the statute prior to an evidentiary hearing prevents retroactive reimbursement.
In its decision, the Supreme Court turned to a previous case, Employers Mutual Casualty Cos. v. Van Wyngarden & Abrahamson, that determines an Iowa Code section 85.21 order must be obtained by a carrier prior to an evidentiary proceeding in order to assert rights of indemnification or contribution from other carriers.
Though the Supreme Court allows that certain exceptions to the Van Wyngarden rule might arise, in this case American Home was not “blindsided by a late determination of the date of injury” because the employee filed an amended claim in March 2011, about eight months before the evidentiary hearing in the case.
Topics Carriers Workers' Compensation Iowa
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