Court of Appeals Concludes that Insurer Must Obtain an Order Under Section 85.21 to Receive Reimbursement from Prior Insurer

 In American Home Assurance v. Liberty Mutual Fire Insurance Co., No. 20-0769 (Iowa App. July 21, 2021), claimant filed for workers' compensation benefits and was awarded those benefits against American Home, which American home paid.  Claimant later filed a review-reopening petition, at which point American Home discovered it was not the insurer on the claim as of the time of injury.  American then filed an application for payment of benefits under 85.21.  Claimant later filed a petition for contribution under section 85.21, seeking repayment of all benefits paid from Liberty Mutual, the insurer on the claim as of the time of injury. Liberty argued that they were only responsible for benefits paid after an 85.21 order had been issued.

The deputy found Liberty was on the hook for all benefits paid, but the commissioner partially reversed, finding that "because American Home failed to seek an Iow Code section 85.21 consent order prior to the arbitration hearing, Liberty Mutual is not liable for contribution to American Home for benefits ordered to be paid and paid pursuant to the arbitration decision."  The district court reversed, finding that there was no time limitation on seeking reimbursement under section 85.21.

The court first noted that the commissioner had issued numerous decisions over the years finding that contribution and reimbursement was dependent on an insurer filing and obtaining an order under section 85.21.  The court concludes that "the commissioners actions relative to section 85.21 lead us to conclude that the commissioner is clearly vested with the authority to interpret section 85.21.  Therefore, review was dependent on whether the decision of the commissioner was irrational, illogical or wholly unjustifiable.  Assuming the court was wrong on this point, the court also decides to review the case on whether the actions of the commissioner were legally erroneous.

The court reviewed section 85.21 and concludes that the commissioner's authority in this area is broad.  The opinions on this section did not, however, stand for the proposition that the commissioner is authorized to approve an insurer's reimbursement claim without considering when it was filed.  Under section 85.21(3) an order regarding reimbursement will be entered only when liability is finally determined.  Although American Home made its last payment in 2013, it did not seek reimbursement until 2016.  The court finds that the commissioner's decision was consistent with precedent and was not irrational, illogical or wholly unjustifiable.  The court reverses the action of the district court and remands to the agency for further proceedings.