Court of Appeals Affirms Commissioner's Decision That Insurer's Claim to Reimbursement is Limited to Benefits Sought and Obtained After a Section 85.21 Order

 American Home Assurance v. Liberty Mutual Fire Insurance Co., No. 20-0769 (Iowa App. July 21, 2021)

In this action, two insurers were involved in a workers' compensation action.  The deputy initially ordered American Home to pay claimant 125 weeks of PPD benefits and this award was affirmed.  American Home paid the benefits.  Claimant subsequently sought review reopening, at which time American Home discovered it was not the insurer on the date of injury in question. American Home filed an Application and Consent Order for Payment of Benefits under 85.21 and subsequently filed a petition for contribution under 85.21 for benefits paid to date as well as benefits due as a result of the pending RR petition.  Liberty filed a motion for summary judgment, indicating that contribution or reimbursement could only be obtained after an 85.21 order was issued and because an order was not issued until January 3, 2017, no benefits issued prior to that date were recoverable.  The commissioner ultimately agreed with Liberty's position, finding that since American Home did not file for contribution until after the original arbitration hearing, it could not recover benefits until after the Order was issued.  The district court reversed, finding there was no time limitation on a carrier's right to recovery.

The Court of Appeals reverses the decision of the district court and affirms the decision of the agency.  The court notes that the commissioner had promulgated rule to implement 85.21 and had also filed numerous decisions interpreting 85.21.  Review, according to the court, was  under the irrational, illogical or wholly unjustifiable standard of 17A.19(10)(l).  The court also ruled on the case under the "erroneous" standard of 17A.19(10)(c).

The court notes that the commissioner's authority under 85.21 is broad.  Prior opinions did not, according to the court, "stand for the proposition that the commissioner is authorized to approve an insurer's reimbursement without considering when it was filed."  The court notes that the distinguishing factor in this case is the fact that Liberty did not participate in the initial hearing.  There was no contention that another insurer was responsible until after the review reopening was filed.  The court finds that 85.21(3) allows for reimbursement "only when liability is finally determined."  In this case, American Home made its last payment in May of 2013, but did not seek an 85.21 order until December 2016.  In this case, American Home had to right to file under 85.21 because claimant's review reopening extended the statute of limitations. The commissioner's rules interpreting 85.21 requires the insurer to provide notice to the commissioner of the contribution issue so the commissioner can address the issue at the arbitration hearing.  The commissioner's decision was found consistent with its earlier decisions, its administrative rules and section 85.21.  The decision of the commissioner was affirmed and American Home was found not to have the right to contribution for the benefits previously paid.