BEFORE THE IOWA SUPREME COURT No. 15-1248 … O. MASTERS II, D.C., KEVIN MILLER, ... Administrative Agency the Right to Adjudicate Con- ... Bonfield, The Definition of

BEFORE THE IOWA SUPREME COURT No. 15-1248

____________________________

APPEAL FROM THE POLK COUNTY DISTRICT COURT HON. KAREN A. ROMANO, JUDGE PRESIDING

Polk Co. Law No. CVCV048885 _____________________________

LYLE H. ABBAS, D.C., F. DOW BATES, D.C., BRADLEY J. BROWN, D.C., SIDNEY E. CARTER, D.C., BRAD CHICOINE, D.C., RUSSELL J. COX, D.C., PAUL D. EBERLINE, D.C., JOSEPH N. GEELAN, D.C., RICHARD W. HAAS, D.C., REX J. JONES, D.C., KEITH L. KLEMME, D.C., ELIZABETH C. KRESSIN, D.C., STEVEN J. KRAUS, D.C., MARK A. KRUSE, D.C., RODNEY D. LANGEL, D.C., RONALD O. MASTERS II, D.C., KEVIN MILLER, D.C., STEVEN A. MUELLER, D.C., MARK A. NILES, D.C., VALORIE J. PRAHL, D.C., JENNIFER A. RASMUSSEN, D.C., ROD R. REBARCAK, D.C., RANDALL P. STANGE, D.C., LANCE E. VANDERLOO, D.C., KENNETH W. VAN WYK, D.C., and BEN WINECOFF, D.C.,

Petitioners/Appellants, vs. IOWA INSURANCE DIVISION, Respondent/Appellee, WELLMARK, INC d/b/a WELLMARK BLUE CROSS AND BLUE SHIELD OF IOWA, an Iowa corporation, and WELLMARK HEALTH PLAN OF IOWA, INC., an Iowa corporation,

Intervenors.

_______________________________

APPELLANTS’ OPENING BRIEF

_______________________________ Glenn L. Norris AT0005907 HAWKINS & NORRIS, P.C. 2501 Grand Avenue, Suite C Des Moines, Iowa 50312-5399 Telephone: 515-288-6532 Cell: 515-971-9521 Facsimile: 515-281-1474 Email: [email protected] [email protected]

Steven P. Wandro AT0008177 Kara M. Simon AT0009876 WANDRO & ASSOCIATES, P.C. 2501 Grand Avenue, Suite B Des Moines, Iowa 50312-5399 Telephone: (515) 281-1475 Facsimile: (515) 281-1474 E-mail: [email protected] [email protected]

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Table of Contents

Table of Authorities ............................................................................ iii Statement of Issues Presented for Review ........................................... xi Routing Statement ................................................................................ 1 Statement of the Case .......................................................................... 3 Statement of the Facts ......................................................................... 4

Facts Related to Wellmark’s Discrimination Against Chiropractors in Wellmark’s Preferred Provider Network .......................................................................................5 Facts Related to WHPI’s Discrimination Against Chiropractors in WHPI’s HMO Network .................................. 14

I. The Commissioner Erred in His Interpretation of Section 514F.2 as It Relates to Chiropractors in Wellmark’s Provider Network .................................................. 20

Error Preservation Statement .................................................. 20 Scope and Standard of Appellate Review .................................. 21 Argument ................................................................................. 24

A. Iowa Code § 514F.2 Both Authorizes and Prohibits Certain Acts and Practices ........................................................ 25

B. An Examination of the Entirety of Chapter 1180 of

the 1986 Iowa Acts (71 G.A.) Reveals the Meaning of Iowa Code § 514F.2 .................................................................. 30

C. The Meaning of “Limit” under Iowa Code § 514F.2 ................. 36

ii

D. Wellmark’s Limitations on Iowa Chiropractor’s Fees Are “Solely Related to the License or Practices Au-thorized by Chapter 151.” ......................................................... 38

II. ERISA Does Not “Relate to” Contracts Between

Health Insurers or Self-Funded Employers and Health Care Providers .............................................................. 45

Error Preservation Statement .................................................. 45 Scope and Standard of Appellate Review ................................. 45 Argument ................................................................................. 46 III. The Capitated Payment Plan Used for Chiropractic

Coverage by Wellmark Health Plan of Iowa, Inc., Is Unlawfully Discriminatory in Violation of Iowa Code § 514F.2 ........................................................................... 54

Error Preservation Statement .................................................. 54 Scope and Standard of Appellate Review ................................. 54 Argument .................................................................................. 55 IV. The Commissioner’s Order Is Beyond the Authority

Delegated to The Agency, in the Following Specifics:

A. The Conclusion of the Commissioner that Iowa Code, Chapter 514F Does Not Grant the Insurance Commissioner the Judicial Authority to Vindicate the Disputes of Private Parties, in Light of the Provi-sions of Iowa Code, Chapter 17A, Giving Any Iowa Administrative Agency the Right to Adjudicate Con-tested Cases and Declaratory Order Disputes, Is an Erroneous Conclusion of Law .................................................. 58

Error Preservation Statement .................................................. 58 Scope and Standard of Appellate Review ................................. 60

iii

Argument ................................................................................. 60

B. The Rights of the Petitioners to Bring This Con-tested Case Are Not Subject to the Discretion of the Insurance Commissioner, and Do Not Depend Upon a Delegation of Authority from the Commissioner, But Are a Right Given by the Iowa Constitution and Statutes in Accordance with Iowa Code § 17A.2(5) .................. 65

Conclusion .......................................................................................... 67 Request for Oral Argument ............................................................... 68 Certificate of Compliance with Type-Volume Limitation, Typeface Requirements, and Type-Style Requirements.................... 68 Certificate of Service .......................................................................... 69

Table of Authorities Page

Cases Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004) ............. 47, 53 Allegre v. Iowa State Bd. of Regents, 349 N.W.2d 112, 114

(Iowa 1984) ............................................................................. 60, 63 Andover Volunteer Fire Dep’t v. Grinnell Mut. Reinsur-

ance Co., 787 N.W.2d 75, 77 (Iowa 2010) ............................... 54, 60 Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590

(Iowa 2004) .................................................................................. 30 Baker v. City of Ottumwa, 560 N.W.2d 578, 583 (Iowa

1997) ............................................................................................. 42

iv

Blue Cross of Calif. v. Anesthesia Care Assoc. Medical Group, Inc., 187 F.3d 1045, 1051 (9th Cir. 1999) ...........................53

Board of Supervisors of Linn County, 263 N.W.2d 227,

239 (1978) ..................................................................................... 62 Boelman v. Manson State Bank, 522 N.W.2d 73 (Iowa

1994) ........................................................................................ 40, 41 Brummer v. Iowa Dep’t of Corrections, 661 N.W.2d 167,

172-73 (Iowa 2003) ....................................................................... 62 Cagle v. Bruner, 112 F.3d 1510, 1514 (11th Cir. 1997) ........................ 52 Calif. Div. of Labor Standards Enforcement v. Dilling-

ham Constr., N.A., Inc., 519 U.S. 316, 325, 117 S. Ct. 832, 838, 137 L. Ed. 2d 791, 799 (1997) ........................................ 48

Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S. Ct.

2425, 96 L. Ed. 2d 318 (1987) .................................................. 53-54 Christiansen v. Iowa Bd. of Educ. Examiners, 831

N.W.2d 179, 188 (Iowa 2013) ........................................................ 30 Cornick v. Southwest Iowa Broadcasting Co., 252 Iowa

653, 656, 107 N.W.2d 920, 921 (Iowa 1961) ........................... 50, 64 Dent v. West Virginia, 129 U.S. 114, 122, 9 S. Ct. 231, 233

(1889) ................................................................................. 59, 65-66 Freedom Fin., 805 N.W.2d at 812 ..................................................... 32 Greenwood Manor v. Iowa Dept. of Pub. Health, 641

N.W.2d 823, 834, 838 (Iowa 2002) ........................................ 60, 63 Hobbs v. Blue Cross Blue Shield of Ala., 276 F. 3d 1236,

1241 (11th Cir. 2001) ..................................................................... 52 In re Managed Care Litig., 298 F. Supp. 2d 1259 (S.D.

Fla. 2003) ...................................................................................... 52

v

Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138,

142-44 (Iowa 2013) ............................................... 22, 24, 38, 54, 60 Iowa Med. Soc’y v. Iowa Bd. of Nursing, 831 N.W.2d

826, 827 (Iowa 2013) .................................................................... 23 Johnson v. Interstate Power Co., 481 N.W.2d 310, 323

(Iowa 1992) ................................................................................... 42 Magellan Health Servs. v. Highmark Life Ins. Co., 755

N.W.2d 506 (Iowa 2008) ............................................ 45, 46, 48, 49 Mueller v. Wellmark, Inc., 818 N.W.2d 244, 257-58 (Iowa

2012) ...................................................................................... 3, 7, 63 N.Y. State Conference of Blue Cross & Blue Shield Plans

v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S. Ct. 1671, 1676, 131 L. Ed. 2d 695, 704 (1995) .............................................. 48

Paulson v. Board of Medical Examiners, 592 N.W.2d 677,

679 (Iowa 1999) ............................................................................ 62 Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare

Reimbursement Plan, 388 F.3d 393, 400 (3rd Cir. 2004) ....................................................................................... 52, 53

Polk County v. Iowa State Appeal Bd., 330 N.W.2d 267,

276-77 (Iowa 1983) ....................................................................... 60 Purethane, Inc. v. Iowa State Bd. of Tax Review, 498

N.W.2d 706, 708-09 (Iowa 1993) ............................................ 61-62 Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8 (Iowa

2010) ....................................................................................... 22, 24 Sponsler v. Clarke Elec. Coop., Inc., 329 N.W.2d 663, 665

(Iowa 1983) ................................................................................... 42

vi

State ex rel. Turner v. Koscot Interplanetary, Inc., 191 N.W.2d 624, 630 (Iowa 1971) ................................................. 50, 64

State v. Beach, 630 N.W.2d 598, 600 (Iowa 2001) ........................... 32 State v. Conner, 292 N.W.2d 682, 684 (Iowa 1980) .......................... 31 State v. Johnson, 528 N.W.2d 638, 640 (Iowa 1995) ......................... 31 State v. Miller, 132 Iowa 587, 591, 109 N.W. 1087, 1089

(1906) ....................................................................................... 59, 67 State v. Walker, 804 N.W.2d 284, 290 (Iowa 2011) .......................... 31 Summy v. City of Des Moines, 708 N.W.2d 333, 342

(Iowa 2006) .................................................................................. 42 Taft v. Iowa Dist. Ct., 828 N.W.2d 309, 316 (Iowa 2013) .................. 31 Teahan v. Metro-North Commuter R.R., 951 F.2d 511,

515-16 (2d Cir. 1991), cert. denied, 506 U.S. 815, 113 S. Ct. 54, 121 L. Ed. 2d 24 (1992) ....................................................... 41

Travelers Ins., 514 U.S. at 656, 115 S. Ct. at 1677, 131 L.

Ed. 2d at 705) ................................................................................ 48 Statutes U.S. Const. amends. V, XIV, § 1 ................................................... 63, 66 Iowa Const. art. I, § 9 ................................................................... 63, 66 1986 Iowa Acts (71 G.A.), ch. 1180 (also known as “H.F.

2219”) ............................................................................................ 30 1986 Iowa Acts (71 G.A.), ch. 1180, § 10 ....................................... 31-32 29 U.S. C. § 1002(1) (2016) ................................................................. 47 29 U.S.C. § 1002(7) ) (2016) .............................................................. 52

vii

29 U.S.C. § 1002(8) ) (2016) .............................................................. 52 29 U.S.C. § 1144(a) ) (2016) ................................................................ 47 29 U.S.C. § 1144(b)(2)(A) ) (2016) ..................................................... 49 Employee Retirement Income Security Act, 29 U.S.C. §§

1001-1461 (“ERISA”) ...................................................................... 47 H.F. 2219 (1986 Iowa Acts ch. 1180) ..............................................3, 63 I.A.C. § 191-3.27(1) ) (2016) ................................................................. 3 I.A.C., Ch. 191-27) (2016) .....................................................................5 I.A.C. § 191—27.2(514F) ) (2016) .................................................. 46-47 I.A.C. § 191—27.6(514F) ) (2016) ................................................. 23, 50 Iowa Code § 17A.2(2) ) (2016) ........................................................... 62 Iowa Code § 17A.2(5) ) (2016) ...................................................... 59, 61 Iowa Code § 17A.19(10)(c) ) (2016) ................................................... 24 Iowa Code § 17A.20 (2015) ....................................................... 4, 21, 60 Iowa Code §§ 96.4, 96.16, 97B.49, 135B.7, 14A.10, 279.7A,

331.342, 362.5, 486A.306, 488.303, 488.305, 488.404, 488.907, 488.1101, 489.301, 489.304, 484.409, 489.1001, 508B.3, 508C.8, 524.904, 598B.109, 679C.104, and 725.12) (2016) ....................................................... 39

Iowa Code § 147.6) (2016) ............................................................62, 65 Iowa Code § 147.76) (2016) ............................................................... 23 Iowa Code, Ch. 148) (2016) ...................................................... 6, 34, 35

viii

Iowa Code, Ch. 148A) (2016) ............................................................... 6 Iowa Code, Ch. 148C) (2016) ............................................................... 6 Iowa Code ch. 150 (1987) .............................................................. 34, 35 Iowa Code ch. 150A (1987) ........................................................... 34, 35 Iowa Code, Ch. 151) (2016) ................................................. 6, 34, 35, 39 Iowa Code § 151.1) (2016) .................................................................. 39 Iowa Code § 151.8) (2016) ................................................................. 40 Iowa Code, Ch. 152) (2016) .................................................................. 6 Iowa Code, Ch. 152E) (2016) ............................................................... 6 Iowa Code, ch. 490) (2016) ..................................................................5 Iowa Code, ch. 505) (2016) ................................................................. 61 Iowa Code § 505.29) (2016) ............................................................... 61 Iowa Code, ch. 508) (2016) ..................................................................5 Iowa Code, Ch. 509) (2016) ......................................................... 28, 32

Iowa Code § 509.1) (2016) ................................................................. 28

Iowa Code § 509.3) (2016) ................................................................ 28

Iowa Code § 509.3(1)(f) ) (2016) ........................................... 28, 30, 49 Iowa Code § 509.3(6) (1987) [from 1986 Iowa Acts, ch.

1180 § 2] ........................................................................................ 33 Iowa Code, ch. 514) (2016) ............................................................. 5, 32 Iowa Code § 514.5, 2nd ¶) (2016) ...................................................... 49

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Iowa Code § 514.7) (2016) ................................................................... 3 Iowa Code § 514.7 (3rd ¶) (1987)[from 1986 Iowa Acts, ch.

1180 § 5] .................................................................................. 33, 49 Iowa Code § 514.23(2) (2016)) ............................................................ 3 Iowa Code, ch. 514B) (2016) ........................................................... 5, 32 Iowa Code § 514B.1(5)(c) ) (2016) ................................................. 3, 49 Iowa Code § 514B.1(5)(c) (1987) [from 1986 Iowa Acts, ch.

1180 § 7] ........................................................................................ 33 Iowa Code § 514F.2) (2016) ........................................................ passim Iowa Code § 514F.2 (1987)[from 1986 Iowa Acts, ch. 1180

§ 10]............................................................................................... 33 Iowa Code § 514F.3) (2016) ............................................ 5, 9, 23, 46, 64 Iowa Code § 515.8(2) ) (2016) ........................................................... 23 Iowa Code § 515.8(1) ) (2016) ............................................................ 23 Section 504 of the Rehabilitation Act of 1973, as amended,

29 U.S.C. § 794 .............................................................................. 40 Other Authorities 2013:http://www.cms.gov/Medicare/Medicare-Fee-for-

Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-Items/RVU13A.html?DLPage=1&DLSort=0&DLSortDir=descending; ................................................................................ 14

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-Items/RVU13A.html?DLPage=1&DLSort=0&DLSortDir=descending





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2014: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-Items/RVU14A.html?DLPage=1&DLSort=0&DLSortDir=descending ................................................................................. 14

Bonfield, The Definition of Formal Agency Adjudication

Under the Iowa Administrative Procedure Act, 63 Iowa L. Rev. 285, 288 (1977) ........................................................ 62

Interpretation of ERISA by the United States Department

of Labor, Employee Benefits Security Administration, http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html ............................................................................................. 51-52

Merriam Webster’s Collegiate Dictionary, 11th ed. p. 722

(2011) ............................................................................................. 37 Merriam-Webster’s Collegiate Dictionary, 11th ed. “relate”

(2011) ............................................................................................ 39 Random House Webster’s Unabridged Dictionary, 2d ed.,

p. 1115 (2001) ................................................................................. 37 Random House Webster’s Unabridged Dictionary, 2d ed.

“relate” (2001) ............................................................................... 39






http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html


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Statement of Issues Presented for Review I. The Commissioner Erred in His Interpretation of Sec-

tion 514F.2 as It Relates to Chiropractors in Wellmark’s Provider Network

Error Preservation Statement

Iowa Code § 17A.20 (2013) Scope and Standard of Appellate Review Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138, 142-44 (Iowa 2013) Andover Volunteer Fire Dep’t v. Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa 2010) Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8 (Iowa 2010) Iowa Code § 147.76 Iowa Med. Soc’y v. Iowa Bd. of Nursing, 831 N.W.2d 826, 827 (Iowa 2013) Iowa Code § 514F.2 Iowa Code § 515.8(1) Iowa Code § 515.8(2) Iowa Code § 514F.3 I.A.C. § 191—27.6(514F) Iowa Code § 17A.19(10)(c) Argument

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Iowa Code § 514F.2 (2013) A. Iowa Code § 514F.2 Both Authorizes and Prohibits Cer-

tain Acts and Practices Iowa Code § 514F.2 (2016) Iowa Code, Chapter 509 (2016) Iowa Code § 509.1 (2016) Iowa Code § 509.3 (2016) Iowa Code § 509.3(1)(f) (2016) Iowa Code, Chapter 151 (2016)

B. An examination of the entirety of Chapter 1180 of the 1986 Iowa Acts (71 G.A.) reveals the meaning of Iowa Code § 514F.2 1986 Iowa Acts (71 G.A.), ch. 1180 (also known as “H.F. 2219”) Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004) Christiansen v. Iowa Bd. of Educ. Examiners, 831 N.W.2d 179, 188 (Iowa 2013) Taft v. Iowa Dist. Ct., 828 N.W.2d 309, 316 (Iowa 2013) State v. Conner, 292 N.W.2d 682, 684 (Iowa 1980) State v. Walker, 804 N.W.2d 284, 290 (Iowa 2011) State v. Johnson, 528 N.W.2d 638, 640 (Iowa 1995) 1986 Iowa Acts (71 G.A.), ch. 1180, § 10 Freedom Fin., 805 N.W.2d at 812

xiii

State v. Beach, 630 N.W.2d 598, 600 (Iowa 2001) Iowa Code ch. 509 (2016) Iowa Code ch. 514 (2016) Iowa Code ch. 514B (2016) Iowa Code § 509.3(6) (1987) [from 1986 Iowa Acts, ch. 1180 § 2] Iowa Code § 514B.1(5)(c) (1987) [from 1986 Iowa Acts, ch. 1180 § 7] Iowa Code § 514.7 (3rd ¶) (1987)[from 1986 Iowa Acts, ch. 1180 § 5] Iowa Code § 514F.2 (1987)[from 1986 Iowa Acts, ch. 1180 § 10] Iowa Code ch. 148 (1987) Iowa Code ch. 150 (1987) Iowa Code ch. 150A (1987) Iowa Code ch. 151 (1987)

C. The meaning of “limit” under Iowa Code § 514F.2 Iowa Code § 514F.2 Merriam Webster’s Collegiate Dictionary, 11th ed. p. 722 (2011) Random House Webster’s Unabridged Dictionary, 2d ed., p. 1115 (2001) Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138, 147-48 (Iowa 2013)

xiv

D. Wellmark’s limitations on Iowa chiropractor’s fees are “solely related to the license or practices authorized by chapter 151.” Iowa Code, ch. 151 (2016) Iowa Code §§ 96.4, 96.16, 97B.49, 135B.7, 14A.10, 279.7A, 331.342, 362.5, 486A.306, 488.303, 488.305, 488.404, 488.907, 488.1101, 489.301, 489.304, 484.409, 489.1001, 508B.3, 508C.8, 524.904, 598B.109, 679C.104, and 725.12 (2016) Merriam-Webster’s Collegiate Dictionary, 11th ed. “relate” (2011) Random House Webster’s Unabridged Dictionary, 2d ed. “re-late” (2001) Iowa Code § 151.1 (2016) Iowa Code § 151.8 (2016) Iowa Code § 514F.2 (2016) Boelman v. Manson State Bank, 522 N.W.2d 73 (Iowa 1994) Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794 Teahan v. Metro-North Commuter R.R., 951 F.2d 511, 515-16 (2d Cir. 1991), cert. denied, 506 U.S. 815, 113 S. Ct. 54, 121 L. Ed. 2d 24 (1992) Johnson v. Interstate Power Co., 481 N.W.2d 310, 323 (Iowa 1992) Baker v. City of Ottumwa, 560 N.W.2d 578, 583 (Iowa 1997) Sponsler v. Clarke Elec. Coop., Inc., 329 N.W.2d 663, 665 (Iowa 1983)

xv

Summy v. City of Des Moines, 708 N.W.2d 333, 342 (Iowa 2006)

II. ERISA Does Not “Relate to” Contracts Between Health Insurers or Self-Funded Employers and Health Care Providers


Scope and Standard of Appellate Review

Magellan Health Servs. v. Highmark Life Ins. Co., 755 N.W.2d 506 (Iowa 2008)

Argument

Iowa Code § 514F.2 Magellan Health Servs. v. Highmark Life Ins. Co., 755 N.W.2d 506 (Iowa 2008) Iowa Code § 514F.3 (2016) I.A.C. § 191—27.2(514F) (2016) Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 (“ERISA”) Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004) 29 U.S. C. § 1002(1) (2016) 29 U.S.C. § 1144(a) (2016) N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S. Ct. 1671, 1676, 131 L. Ed. 2d 695, 704 (1995)

xvi

Calif. Div. of Labor Standards Enforcement v. Dillingham Con-str., N.A., Inc., 519 U.S. 316, 325, 117 S. Ct. 832, 838, 137 L. Ed. 2d 791, 799 (1997) Travelers Ins., 514 U.S. at 656, 115 S. Ct. at 1677, 131 L. Ed. 2d at 705) Iowa Code § 509.3(7) (2016) Iowa Code § 514.5, 2nd ¶ (2016) Iowa Code 514.7, 3rd ¶) (2016) Iowa Code § 514B.1(5)(c) (2016) 29 U.S.C. § 1144(b)(2)(A) (2016) Cornick v. Southwest Iowa Broadcasting Co., 252 Iowa 653, 656, 107 N.W.2d 920, 921 (Iowa 1961) State ex rel. Turner v. Koscot Interplanetary, Inc., 191 N.W.2d 624, 630 (Iowa 1971) I.A.C. 191—27.6(514F) (2016) Interpretation of ERISA by the United States Department of La-bor, Employee Benefits Security Administration, http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html 29 U.S.C. § 1002(7) (2016) 29 U.S.C. § 1002(8) (2016) Hobbs v. Blue Cross Blue Shield of Ala., 276 F. 3d 1236, 1241 (11th Cir. 2001) Cagle v. Bruner, 112 F.3d 1510, 1514 (11th Cir. 1997) Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reim-bursement Plan, 388 F.3d 393, 400 (3rd Cir. 2004)


xvii

In re Managed Care Litig., 298 F. Supp. 2d 1259 (S.D. Fla. 2003) Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004) Blue Cross of Calif. v. Anesthesia Care Assoc. Medical Group, Inc., 187 F.3d 1045, 1051 (9th Cir. 1999) Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S. Ct. 2425, 96 L. Ed. 2d 318 (1987)

III. The capitated payment plan used for chiropractic cov-erage by Wellmark Health Plan of Iowa, Inc., is unlaw-fully discriminatory in violation of Iowa Code § 514F.2.

Error Preservation Statement Scope and Standard of Appellate Review

Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138, 142-44 (Iowa 2013) Andover Volunteer Fire Dep’t v. Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa 2010)

Argument Iowa Code § 514F.2 (2016)

IV. The Commissioner’s Order is beyond the authority del-egated to the agency, in the following specifics:

A. The conclusion of the Commissioner that Iowa Code,

Chapter 514F does not grant the insurance commis-sioner the judicial authority to vindicate the disputes of private parties, in light of the provisions of Iowa Code, Chapter 17A, giving any Iowa administrative agency the right to adjudicate contested cases and de-claratory order disputes, is an erroneous conclusion of law;

xviii


Iowa Code § 17A.2(5) (2016) Dent v. West Virginia, 129 U.S. 114, 122, 9 S. Ct. 231, 233 (1889) State v. Miller, 132 Iowa 587, 591, 109 N.W. 1087, 1089 (1906) Greenwood Manor v. Iowa Dept. of Pub. Health, 641 N.W.2d 823, 834, 838 (Iowa 2002) Allegre v. Iowa State Bd. of Regents, 349 N.W.2d 112, 114 (Iowa 1984) Polk County v. Iowa State Appeal Bd., 330 N.W.2d 267, 276-77 (Iowa 1983) Iowa Code § 17A.20 (2016)


Iowa Code § 17A.2(5) (2016) Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138, 142-44 (Iowa 2013) Andover Volunteer Fire Dep’t v. Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa 2010)

Argument

Iowa Code § 514F.2 (2016) Iowa Code § 17A.2(5) (2016) Iowa Code Ch. 505 (2016) Iowa Code § 505.29 (2016)

xix

Purethane, Inc. v. Iowa State Bd. of Tax Review, 498 N.W.2d 706, 708-09 (Iowa 1993) Iowa Code § 147.6 (2016) Paulson v. Board of Medical Examiners, 592 N.W.2d 677, 679 (Iowa 1999) Board of Supervisors of Linn County, 263 N.W.2d 227, 239 (1978) Iowa Code § 17A.2(2) (2016) Bonfield, The Definition of Formal Agency Adjudication Under the Iowa Administrative Procedure Act, 63 Iowa L. Rev. 285, 288 (1977) Brummer v. Iowa Dep’t of Corrections, 661 N.W.2d 167, 172-73 (Iowa 2003) U.S. Const. amends. V, XIV, § 1 Iowa Const. art. I, § 9 Mueller v. Wellmark, Inc., 818 N.W.2d 244, 255 (Iowa 2012) Greenwood Manor v. Iowa Dept. of Pub. Health, 641 N.W.2d 823, 836 (Iowa 2002) Allegre v. Iowa State Bd. of Regents, 349 N.W.2d 112, 115 (Iowa 1984) Cornick v. Southwest Iowa Broadcasting Co., 252 Iowa 653, 656, 107 N.W.2d 920, 921 (Iowa 1961) State ex rel. Turner v. Koscot Interplanetary, Inc., 191 N.W.2d 624, 630 (Iowa 1971) I.A.C., Ch. 191-27 (2016)

xx

B. The rights of the Petitioners to bring this contested case are not subject to the discretion of the Insurance Commissioner, and do not depend upon a delegation of authority from the Commissioner, but are a right given by the Iowa Constitution and statutes in accord-ance with Iowa Code § 17A.2(5)

Iowa Code § 17A.2(5) (2016) Iowa Code § 147.6 (2016) U.S. Const. amend XIV, § 1 Iowa Const. art. I, § 9 Dent v. West Virginia, 129 U.S. 114, 122, 9 S. Ct. 231, 233 (1889) State v. Miller, 132 Iowa 587, 591, 109 N.W. 1087, 1089 (1906)

1

Routing Statement

The Supreme Court should retain this case because it presents

substantial issues of first impression. Iowa R. App. P. 6.1101(2)(c).

Iowa Code § 514F.2 (2016) has not been interpreted by this court and

the issues in this case involve the property rights of an entire learned

profession. In particular, the insurance commissioner made the fol-

lowing rulings without any substantive reference to judicial case law:

1. Petitioners have no legal right to bring a contested case proceed-

ing before the insurance commissioner. Iowa Code, Chapter 514F

does not grant to the insurance commissioner the judicial author-

ity to vindicate the disputes of private parties, whether the com-

plaining entities are health care insurance policyholders or

healthcare providers. [App. 473, ¶4]

2. The administrative enforcement powers to prosecute alleged vio-

lations of Iowa Code, Chapter 514F reside exclusively with the in-

surance commissioner. [App. 473, ¶5]

3. Private citizens cannot prosecute an enforcement action alleging

violations of Iowa Code § 514F.2. [App. 475, ¶11]

4. Iowa Code § 514F.2 does not prohibit insurers, nonprofit service

corporations, health maintenance organizations, or self-insurers

2

for health care benefits to employees from engaging in any par-

ticular act or practice. [App. 478, ¶19 & 491, ¶87]

5. Iowa Code § 514F.2 does not actually prohibit a limit or making

optional payment or reimbursement. Ruling [App. 478-79, ¶20 &

491, ¶87]

6. Any Wellmark limitation of fees to chiropractors is based upon

numerous factors other than the license or practices of chiroprac-

tors. [App. 480, ¶¶ 24 & 25]

7. Even if § 514F.2 can be interpreted to prohibit conduct, the statute

does not preclude insurers from considering licensure when de-

veloping a payment system. [App. 489, ¶75]

8. The differing RVUs are not solely based on licensure. [App. 490,

¶79]

9. As a matter of law, ERISA preempts Iowa Code § 514F.2. [App.

491, ¶85]

10. Iowa Code § 514F.2 does not preclude Wellmark Health Plan of

Iowa (WHPI) from entering into a capitated payment agreement

only with a clinic without walls as an Iowa chiropractor’s only av-

enue to be paid for services by the WHPI HMO. [App. 492, ¶¶ 89-

94]

3

Statement of the Case

This action was brought as a contested case before the Iowa In-

surance Division on November 30, 2012, pursuant to a directive of

the Iowa Supreme Court in Mueller v. Wellmark, Inc., 818 N.W.2d

244, 257-58 (Iowa 2012), that the Iowa Insurance Commissioner has

exclusive powers to regulate health insurance practices under Iowa

Code §§ 514.7, 514.23(2), 514B.1(5)(c), and 514F.2, enacted as part of

H.F. 2219 (1986 Iowa Acts ch. 1180). [App. 9] The Insurance Division

transferred the dispute to the Division of Administrative Hearings for

a contested case hearing. [App. 22] The hearing was held September

16-18, 2013 before Heather L. Palmer, Administrative Law Judge.

[App. 35]

ALJ Palmer issued a proposed decision on February 21, 2014.

[App. 405] On March 21, 2014, Petitioners appealed the Proposed De-

cision to the Iowa Insurance Commissioner pursuant to Insurance Di-

vision Rule 191-3.27(1). [App. 422] On August 29, 2014, after the par-

ties filed briefs, the Commissioner held a short hearing devoted al-

most exclusively to the issues raised by the Commissioner in Notice of

Hearing dated July 29, 2014, questioning whether the Petitioners had

a right to bring a contested case and whether the Insurance Division

4

had jurisdiction to hear the case. [App. 438-71]

The Commissioner issued a ruling on October 21, 2014. [App.

472] Petitioners filed a Petition for Judicial Review with the Polk

County District Court on November 20, 2014. [App. 494] The district

court, Hon. Karen A. Romano, affirmed the Insurance Commissioner

on June 24, 2015. [App. 512] Petitioners, the aggrieved parties, filed

Notice of Appeal with this Court on July 21, 2015. App. 525] This

Court has jurisdiction of the subject matter pursuant to Iowa Code §

17A.20 (2016).

Statement of the Facts1

Petitioners are 26 Iowa licensed chiropractic physicians. Inter-

venors in this case and Respondents in the proceedings before the

agency, are Wellmark, Inc. d/b/a Wellmark Blue Cross and Blue

1 The administrative record in this case is under seal pursuant

to a Protective Order filed by district court on December 22, 2014 [App. 501]; hence, the transcripts and many of the exhibits are in the Amended Confidential Appendix, designated [Conf. App. __ ].

5

Shield of Iowa,2 and Wellmark Health Plan of Iowa, Inc.,3 . (hereinaf-

ter, generally, “Wellmark”).

Facts Related to Wellmark’s Discrimination Against Chiro-practors in Wellmark’s Preferred Provider Network

Petitioner chiropractors have entered into Practitioner Services

Agreements [Exs. 39.41, 39.42, 41A & 41B, App. 73, 89, 145, 171] with

Wellmark. These Agreements are preferred provider contracts within

the meaning of Iowa Code §§ 514F.2 and .3 and the rules of the Iowa

Insurance Division found at IAC Ch. 191-27. The Practitioner Services

Agreement states that the Practitioner agrees to accept the Wellmark

payment for services to its members and not to balance bill the mem-

bers for the difference between the practitioner’s actual charge for

2 Intervenor Wellmark, Inc., was originally incorporated in Iowa

on September 19, 1939, to operate a nonprofit health service plan un-der [now] Iowa Code, Chapter 514 to provide payment for health care furnished to subscribers under contract with the corporation. (Second Restated Articles of Incorporation, filed September 1, 1989). On Octo-ber 1, 1991, Wellmark adopted a plan of mutualization to become a mutual insurance company under Iowa Code, Chapter 508. The com-pany merged with South Dakota Medical Service, Inc., on July 25, 1996, and on May 15, 1997, it changed its name to Wellmark, Inc., an Iowa corporation and mutual insurance company.

3 Intervenor Wellmark Health Plan of Iowa, Inc., was incorpo-

rated in Iowa on March 13, 1996, as an Iowa domestic profit corpora-tion under Chapter 490 of the Code of Iowa. Its stated purpose in its articles of incorporation is to establish and operate a health mainte-nance organization under Iowa Code, Chapter 514B.

6

service and the payment amount made by Wellmark. [See, e.g., App.

92-93, Ex. 39.42, §§ 6.2, 6.3, & 8.2] Wellmark uses the same form of

Practitioner Services Agreement for various different Iowa licensed

healthcare providers, such as Doctors of Medicine and Surgery4

(“MD’s”), Doctors of Osteopathic Medicine and Surgery5 (“DO’s”),

Doctors of Chiropractic6 (“D.C.’s”), Physician’s Assistants7 (“P.A.’s),

Advanced Registered Nurse Practitioners8 (“A.R.N.P.’s”) and Physical

Therapists9 (“P.T.’s”).

On August 28, 2013, the parties agreed to a stipulation of fact,

with attachments [App. 24]:

1. Petitioners will present this Stipulation as their prima facie case for the hearing in this matter, in-cluding “Wellmark, Inc.’s July 1, 2013, PPO Fees for Se-lected CPT and Provider Types,” which is attached and which the Petitioners will designate as Exhibit 1. Petition-ers claim that the difference in the amount of the fees paid to chiropractors for the same or similar CPT codes as

4 Governed by Iowa Code Chapter 148 (2016). 5 Governed by Iowa Code Chapter 148 (2016). 6 Governed by Iowa Code Chapter 151 (2016). 7 Governed by Iowa Code Chapter 148C (2016). 8 Governed by Iowa Code Chapters 152 & 152E (2016). 9 Governed by Iowa Code Chapter 148A (2016).

7

compared to what is paid to MDs and DOs, including the differences in the fees paid for CMT codes as opposed to OMT codes, constitutes a violation by Wellmark, Inc. of Iowa Code § 514F.2.

2. The parties further stipulate that the fees shown on Exhibit 1 are not used by Wellmark Health Plan of Iowa (“WHPI”), which instead contracts with the Iowa Chiropractic Physicians Clinic (“ICPC”) to provide a chiro-practic network and pays ICPC at a capitated rate, and that ICPC’s reimbursement for the CPT codes listed on the attached exhibit is less overall than the fees paid to chiro-practors by Wellmark’s PPO. Petitioners claim that this constitutes a violation by WHPI of Iowa Code§ 514F.2. WHPI typically pays other providers, and in particular MD’s and DO’s pursuant to the fee schedules and not a contracted network with a capitated rate.

3. WHPI’s Blue Advantage coverage includes a provision with regard to a referral from the member’s pri-mary care physician being required after twelve chiro-practic visits for a particular condition, as set forth in the attached portion of the current Blue Advantage Benefit Certificate. Petitioners claim that this constitutes a viola-tion by WHPI of Iowa Code section 514F.2.

Wellmark purports to employ the Resource Based Relative

Value System (“RBRVS”) developed for the Center for Medicare and

Medicaid Services (“CMS”) for payments to health care providers for

Medicare and Medicaid services. See Mueller v. Wellmark Inc., 818

N.W.2d 244, 251 (Iowa 2012). The CMS publishes an annual National

Physician Fee Schedule Relative Value File which shows the Relative

Value Units for physician services and how they are computed. [Ex.

8

39.28, App. 56-65; Ex. 41H, App. 309] CMS multiplies the RVU for a

particular service by an annually established single conversion factor,

which determines payment to physicians for Medicare and Medicaid

services provided. [Conf. App. 582:8–591:1] For example, the CMS

conversion factor for 2012 was $34.0376 and for 2013 was $34.0230.

[Conf. App. 385, 582]

Exhibit 39.28 [App. 56-65] shows the RVU factors Wellmark

used for services pertinent to this case for years 2003 to 2014. Exhibit

39.1 [Conf. App. 40] shows the CMS RVUs Wellmark employed in the

2013 provider fee schedules as well as the payment per service made

to DCs, MC/DOs and PTs beginning July 1, 2013). Exhibit 39.1 shows

that chiropractors are segregated out from other health care practi-

tioners and are paid a lesser fee than MD/DOs are paid for the same

or similar CPT codes. Exhibit 39.1 also shows that the use of CMS

RVU values for CMT10 and OMT11 codes further categorizes chiro-

practors in an unfavorable manner to MD/DOs.

While CMS uses one conversion factor, Wellmark uses multi-

10 Chiropractic Manipulative Therapy. 11 Osteopathic Manipulative Therapy.

9

ple conversion factors to the invidious detriment of chiropractic phy-

sicians. Exhibit 41I [Conf. App. 88] shows the Wellmark PPO12 con-

version factors for DCs and for MD/DOs for the year beginning July 1,

2013. A chart showing the exact percentage differences is redacted be-

cause of confidentiality designation. [Conf. App. 1] Wellmark pays

Physicians Assistants (PAs) and Advanced Registered Nurse Practi-

tioners (ARNPs) a flat across-the-board 85% of the MD/DO conver-

sion factors. [Conf. App. 423:23–425:11]

Exhibit 39.32 [Conf. App. 44-45] shows that this discrimination

against the license and practices of chiropractors has been at a con-

sistent percentage in relation to MD/DO fees since at least 2004.13

Mike Fay, Wellmark’s Vice President for Health Networks, whose re-

sponsibility is to establish the unit fee costs for all providers of health

care services to Wellmark’s members, concedes that Wellmark sepa-

12 PPO refers to Preferred Provider Organizations, which were

first authorized by Iowa Code § 514F.2 in 1986. PPOs are also gov-erned by Iowa Code § 514F.3 (passed in 1988) and rules of the IID, IAC ch. 191-27, first promulgated in 1991.

13 Conf. App. 1-2.

10

rates out chiropractic and has a separate fee schedule for chiroprac-

tors. [Conf. App. 455:5–456:6, Vol. II15 38-39 (Fay)] Mr. Fay has tes-

tified that essentially he has used the same fee structure which was in

place 14 years ago when he became responsible for determining fees.

[Conf. App. 123-28]

Mr. Fay testified in his deposition taken June 26, 2013, that he

had never before seen Iowa Code § 514F.2 and had never discussed it

with anyone at Wellmark as of that date. [Conf. App. 138, Fay Depo.

178:2-8] Mr. Fay confirmed at the hearing that the first time he even

ever saw Iowa Code § 514F.2 was at his deposition. [Conf. App.

397:15-23] In the 14 years he has been in charge of provider fees, the

statute has never been brought to his attention or discussed in his

presence. [Conf. App. 398:1-8]

Wellmark contends that Mike Fay establishes yearly practi-

tioner fee rates based upon a detailed analysis of seven factors used

by CMS. The circumstantial evidence in the record shows that

Wellmark’s contention lacks credibility because:

15 Hereinafter “Tr. II”.

11

a. Wellmark maintains a steady percentage relationship be-

tween the fees it pays physicians assistants and advanced

registered nurse practitioners at 85% of the MD/DO fee. No

further analysis is done. [Conf. App. 423:23–425:11]

b. Wellmark’s unit fee schedule (Exs. 39.1 & 39.32) for therapy

codes is the same for MD/DO, DC and PT (physical thera-

pists), which indicates that Wellmark does not go through a

detailed analysis of the factors isolated by the Center for

Medicare and Medicaid Services (CMS) to differentiate be-

tween MD/DO, DC and PT in terms of work (time, technical

skill, judgment, and stress), practice expense, and malprac-

tice insurance expense. [Conf. App. 37, Ex. 39.1; Conf. App.

44, Ex. 39.32]

c. To the extent that Wellmark uses or has used the CMS RVU

values in determining unit fee costs (conversion factors), the

only detailed analysis by Wellmark was done in 1998. [Conf.

App. 411:11–412:5] Since that time, Wellmark has made the

decision to just use the total RVU value determined by CMS

and Wellmark has not done a detailed analysis of the three

(or seven) factors underlying the total RVU value determined

12

by CMS to determine different conversion factors. [Conf.

App. 412:6-19]

d. Wellmark does not employ the CMS RBRVS system in the

manner for which it was designed and for which it is used by

CMS. [Conf. App. 590:14–592:6] CMS has used only one

conversion factor for all CPT codes since 1998. Wellmark, on

the other hand, employs five different conversion factors for

chiropractic services, and an additional 10 different conver-

sion factors for MD/DO services. [Conf. App. 37:6–39:6,

388:1—391:19, 582:8–591:1]

e. Anthony Hamm, DC, who is the current chiropractic repre-

sentative on the AMA Specialty Society RVS Update Commit-

tee, testified that the RVUs published by the CMS are re-

viewed and updated every five years. [Conf. App. 768:21–

771:24, See 535:4—536:5] The OMT codes were reviewed

and updated two years ago. [Conf. App. 781:2-7] He further

testified that the difference between the RVU values for OMT

and CMT relate to the practice expense and malpractice in-

surance expense factors; the work factors are about the

same. [Conf. App. 783:13–785:20] In fact, Exhibit 39.28

13

[App. 55] shows that the work factor was the same for com-

parable OMT and CMT codes from 2004 to 2012 – the work

factor for OMT code 98925 and CMT code 98940 was 0.45;

for OMT code 98926 and CMT code 98941 was 0.65, and for

OMT code 98927 and CMT code 98942 was 0.87.

f. This became the case again in 2014 and 2015 when the CMT

codes were updated – the work factor for OMT code 98925

and CMT code 98940 now is 0.46; for OMT code 98926 and

CMT code 98941 now is 0.71, and for OMT code 98927 and

CMT code 98942 now is 0.96. Notably, the work factor for

CMT code 98943 for extraspinal (extremities) manipulation

in 2014 and 2015 is also 0.46, the same as the work factor

for OMT code 98925 and CMT code 98940. Wellmark, how-

ever, pays about 16-17% as much for CMT code 98943 as for

OMT code 98925, based upon no rationale whatsoever.

2013:http://www.cms.gov/Medicare/Medicare-Fee-for-Ser-

vice-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-

Items/RVU13A.html?DLPage=1&DLSort=0&DLSortDir=de-

scending;





14

2014: http://www.cms.gov/Medicare/Medicare-Fee-for-Ser-

vice-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-

Items/RVU14A.html?DLPage=1&DLSort=0&DLSortDir=de-

scending

After examining the description of Chiropractic Manipulation

Therapy and Osteopathic Manipulation Therapy found in the CPT

code book16, Mr. Fay could not identify any difference between OMT

and CMT. In fact, he could not state any reason why a chiropractor

could not be paid under the OMT codes. [Conf. App. 403:1–409:3] “I

don’t know the logic to where they [CPT Code Editors and CMS] came

up with them [OMT and CMT codes]” “I assume for chiropractic ma-

nipulation codes, they are surveying chiropractors, and for osteo-

pathic, they are surveying osteopaths, but I don’t know that for sure

because they don’t share their survey with us.” [Conf. App. 408:1-17

(Fay); 600:21–603:20 (McCann)]

Facts Related to WHPI’s Discrimination Against Chiro-practors in WHPI’s HMO Network

Wellmark Health Plan of Iowa, Inc. (“WHPI”) requires that chi-

ropractors participate in its HMO networks and the Hawk-I HMO

16 Exhibit 41G [App. 307-08]





15

network only through an affiliation with the Iowa Chiropractic Physi-

cians Clinic (“ICPC”). [Ex. 39.52, App. 140] ICPC’s relationship with

WHPI started in 1994 at the time WHPI was incorporated. [Conf.

App. 641:12-18] The unique WHPI Provider Organization Services

Agreement with ICPC is for chiropractic services only, and WHPI

agrees that “[d]uring the term of this Agreement, [WHPI] will not

contract with chiropractic providers (other than [ICPC and its mem-

ber chiropractors]) with respect to [WHPI’s HMO products].” [Ex.

41C, § 13.2, Conf. App. 49, 64, 634:21—635:2] The WHPI Provider

Organization Services HMO Agreement for all other non-chiropractic

practitioner organizations states that “[n]othing herein shall preclude

HMO from contracting with other providers and provider organiza-

tions to provide Covered Services to Covered Persons . . . .” [Ex. 41B, §

13.2, App. 171, 182, 194] Moreover, the non-chiropractor WHPI Pro-

vider Organization Services HMO Agreement does not require a capi-

tated rate payment, but rather states the standard fee for services

payment for claims. [Id., p. A-1, App. 199]

The WHPI HMO fee schedules for MD/DO, PA, ARNP, and PT

use a small discount17 from the PPO rate in the same fee schedules.

17 Actual percentages are found at Conf. App. 2.

16

[Conf. App. 467:1—474:10] WHPI requires none of these providers to

participate in a capitated payment plan. [Id., Conf. App. 650:2—

652:14] WHPI has more MD/DOs, PAs, ARNPs, and PTs in its HMO

provider network than Wellmark has in its PPO provider network.

[Ex. 39.49, App. 105-39; Conf. App. 471:5—474:11]

On the other hand, although Wellmark includes over 90% of all

Iowa chiropractic physicians (approximately 1,322) in its PPO partici-

pating provider network, but less than 25% of that number (approxi-

mately 248) are selected as participating providers for the WHPI

HMO plans, and those chiropractic physicians are paid less than 50%

of the PPO chiropractor payment schedule (which is already substan-

tially less than the MD/DO schedule for the same CPT codes) through

ICPC. [Id.; Conf. App. 650:2—652:14, 657:24—661:7, 862:11—869:20;

Ex. 39.52, App. 140]

Ronald C. Evans, DC, is the founder of ICPC. Initially, he, to-

gether with his office partners, Drs. Ferezy and Norton, administered

ICPC. In recent years, Dr. Evans has retired from chiropractic prac-

tice and lives in Florida. He is not active in the day-to-day operation

17

of ICPC. His sons, who are not chiropractors, are the COO/CFO and

credentialing officers of ICPC in recent years. [Conf. App. 648:20—

649:8]

Dr. Evans does not know how WHPI arrives at its capitated fee

rate paid to ICPC. He believes that a factor in the fee18 is the patient

utilization rate for chiropractic care in Iowa which has been 14 to 20

percent of the total member numbers of WHPI. [Conf. App. 650:2—

656:14]

WHPI self-administers its HMO provider network for MD/DOs,

PAs, ARNPs, and does not charge an additional administrative fee for

so doing. ICPC, on the other hand, charges a huge19 administrative

fee, which goes to Dr. Evans and his sons. [Conf. App. 467:1—474:10,

666:5—667:4]

There can be no doubt that Wellmark is aware of the huge fee

ICPC is taking. In addition to hearing counsel for Wellmark, Mike

Fay, the Wellmark Vice President for Health Networks, and Michel

18 Actual WHPI fee payment is found in the Confidential Appen-

dix p. 2. 19 Actual percentage charged and payment taken by ICPC is

found in the Confidential Appendix p. 2.

18

Druker, Wellmark Vice President and Associate General Counsel,

were present during Dr. Evans’ testimony as Wellmark representa-

tives. On the third day of the hearings, September 18, 2013,

Wellmark’s counsel asserted that the protective order for Wellmark

also covered ICPC. In fact, the two petitioners who were present dur-

ing Dr. Evans’ testimony – Dr. Bradley Chicoine, DC, and Dr. F. Dow

Bates, DC – were called to the stand and examined by Wellmark

counsel on whether they were aware of the protective order. [Conf.

App. 724:7—742:3]

Testimony of Rod Rebarcak, DC, based upon the past years’ ac-

tual disbursements from Iowa Chiropractic Physicians Clinic, shows

that a chiropractor member of ICPC receives approximately 47.92%

of the Wellmark PPO chiropractic fee schedule for services to the

members of the HMO’s of Wellmark Health Plan of Iowa, Inc. [Conf.

App. 862:11—869:20] Dr. Rebarcak testified that the amount received

from ICPC plus patient copayments consistently are about 40% of

what is billed. [Id.] Dr. Rebarcak’s ICPC records for 2012-13 were

marked as Ex. 53, but because they showed patient identification

(HIPPA problem) they were not offered into evidence. The parties

agreed that page 11 (month ending 3/31/2012) would be used as a

19

typical monthly ICPC Explanation of Payment for testimony pur-

poses. [Id.] Page 11 showed $16,108.68 billed and $10,198.75 allowed

with reference to Wellmark’s PPO chiropractic schedule. There was

$2,112.52 received from patients as copay and $191 received from co-

ordination of benefits (other insurance). Subtracting the allowed mi-

nus copay and COB yields $7,895.23 as net allowed. The ICPC pay-

ment, which is made three months after the services are rendered,

amounted to $3,783.19. The ICPC payment divided by net allowed is

47.92%. Compared to the Wellmark PPO chiropractic fee allowed

($10,198.75), the patient copay and COB ($2,303.52) are 22.59% and

the ICPC contribution ($3,783.19) is 37.09%, leaving $4,112.04 or

40.32% unpaid. Dr. Rebarcak has a 50 to 55% overhead of allowed,

which leaves a 5 to 10% profit margin on ICPC business. [Id.]

Dr. Evans testified that he has had discussions with WHPI “that

have always centered on WHPI asking or seeking to have all the [DC]

providers, but not changing the subscriber base.” [Conf. App.

663:13—666:22] Dr. Evans told WHPI, “It’s economically impossible

to do that unless they change something from their side of the for-

20

mula or increase the subscriber base, it was undoable.” That, Dr. Ev-

ans testified, was because the chiropractor could not afford to do the

service. [Id.]

In summary, Dr. Evans testified that the capitated payment rate

of Wellmark to ICPC permits only a limited number of chiropractors

in the ICPC network – 248 in ICPC as opposed to 1,300 to 1,500 in

the Wellmark PPO network. Mr. Fay testified that the PPO and HMO

networks of WHPI’s MD/DO, PA, ARNP, and PT providers are simi-

lar in size and comprise more than 95% of the active Iowa licensed

MD/DO, PA, ARNP, and PT practitioners.

I. The Commissioner Erred in His Interpretation of Sec-tion 514F.2 as It Relates to Chiropractors in Wellmark’s Provider Network


The Commissioner issued his Decision and Declaratory

Order on October 21, 2014. Petitioners filed a Petition for Judi-

cial Review with the Polk County District Court on November

20, 2014. The district court, Hon. Karen A. Romano, affirmed

the Insurance Commissioner on June 24, 2015. Petitioners, the

aggrieved parties, filed Notice of Appeal with this Court on July

21

21, 2015.

The Commissioner’s pronouncement that he does not

have authority to vindicate the disputes of private parties in

contested cases was raised sui sponte by the Commissioner’s

ruling. Petitioners rights to a contested case are raised in Para-

graphs 3 and 4 of Petitioners’ Request for Contested Case Pro-

ceeding and were again raised in briefing before the district

court. [App. 9] This Court has jurisdiction of the subject matter

pursuant to Iowa Code § 17A.20 (2013).


The Insurance Commissioner has no discretionary authority to

interpret Section 514F.2. See Iowa Dental Ass’n v. Iowa Ins. Div., 831

N.W.2d 138, 142-44 (Iowa 2013). In Andover Volunteer Fire Dep’t v.

Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa 2010), the

court stated that ordinarily, “the interpretation of a statute is a pure

question of law over which agencies are not delegated any special

powers by the General Assembly.” The court, however, will defer to

the agency’s interpretations of statutes when the legislature has

clearly vested the agency with the proper authority to do so based on

the agency’s expertise on the subject matter. Renda v. Iowa Civil

22

Rights Comm’n, 784 N.W.2d 8, 11 (Iowa 2010)]. “We do not focus our

inquiry on whether the agency does or does not have the broad au-

thority to interpret the act as a whole.” Id. at 10. Instead, when deter-

mining whether the legislature has clearly vested the agency with au-

thority to interpret, “each case requires a careful look at the specific

language the agency has interpreted as well as the specific duties and

authority given to the agency with respect to enforcing particular stat-

utes.” Id. at 13.

An example of where the court has concluded that an agency

has express authority to interpret certain statutes is found in Iowa

Code § 147.76: “147.76 Rules. The boards for the various professions

shall adopt all necessary and proper rules to administer and interpret

this chapter and chapters 148 through 158, except chapter 148D.”

Iowa Med. Soc’y v. Iowa Bd. of Nursing, 831 N.W.2d 826, 827 (Iowa

2013). The Iowa Insurance Commissioner has no such legislative au-

thority to interpret Iowa Code § 514F.2 (2016). The Insurance Com-

missioner has authority to “enforce the laws of the state relating to

federal and state insurance business transacted in the state.” Iowa

Code § 515.8(1); and to “establish, publish, and enforce rules not in-

consistent with law for the enforcement of this subtitle. Id. § 515.8(2).

23

Iowa Code § 514F.3 (2016) gives the Commissioner the author-

ity to “adopt rules for preferred provider contracts. Section 514F.3

does not contain any substantive statutory authority to interpret, and

it does not grant the Insurance Commissioner authority to interpret

any other statute. The Commissioner, moreover, has not promulgated

any rule interpreting Section 514F.2. In fact, the only rule possibly re-

lated to Section 514F.2 would be rule 191—27.6(514F): “General re-

quirements. A health care insurer subject to this chapter shall be sub-

ject to and is required to comply with all other applicable laws and

rules and regulations of this state.” Of course, that would be the case,

whether or not there was such a rule.

There is no term in the proviso clause of Section 514F.2 that is

“a substantive term within the special expertise of the agency.” Iowa

Dental Ass’n, 831 N.W.2d at 143. “[W]hen 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 author-

ity.’” Id. (quoting Renda, 784 N.W.2d at 14). This judicial review is for

“erroneous interpretation of a provision of law.” Iowa Code §

17A.19(10)(c) (2016); Iowa Dental Ass’n, 831 N.W.2d at 143.

24

Argument

The issue here is the Insurance Commissioner’s interpretation

of Iowa Code § 514F.2 (2016). The district court agreed with the In-

surance Commissioner’s interpretations, and so this brief will focus

on the ruling of the Insurance Commissioner. Section 514F.2 pro-

vides:

Nothing in the chapters of Title XIII, subtitle 1, of the Code shall be construed to prohibit or discourage insur-ers, nonprofit service corporations, health maintenance organizations, or self-insurers for health care benefits to employees from providing payment of benefits or provid-ing care and treatment under capitated payment systems, prospective reimbursement rate systems, utilization con-trol systems, incentive systems for the use of least restric-tive and least costly levels of care, preferred provider con-tracts limiting choice of specific provider, or other sys-tems, methods or organizations designed to contain costs without sacrificing care or treatment outcome, provided these systems do not limit or make optional payment or reimbursement for health care services on a basis solely related to the license under or the practices authorized by chapter 151 or on a basis that is dependent upon a method of classification, categorization, or description based upon differences in terminology used by different licensees un-der the chapters of Title IV, subtitle 3, of the Code in de-scribing human ailments or their diagnosis or treatment. Plaintiffs do not dispute the Commissioner’s findings that

Wellmark, Inc. is an Iowa mutual insurance company and that

25

Wellmark utilizes a preferred provider organization (“PPO”) to con-

tain costs. Further, Wellmark’s utilization control systems are within

the scope of Iowa Code chapter 514F. [App. 478, ¶16] The Commis-

sioner also found, and the parties stipulated, that Wellmark’s July 1,

2013, PPO Fees for Selected CPT and Provider Types differentiate in

the amount of the fees paid to chiropractors for the same or similar

CPT codes as compared to what is paid to MDs and DOs, including

the differences in the fees paid for CMT codes as opposed to OMT

codes. [Id., ¶17]

A. Iowa Code § 514F.2 (2016) Both Authorizes and Pro-hibits Certain Acts and Practices

Plaintiffs also agree with the Commissioner that the intent of

the first phrase of § 514F.2 (2016) (up to the “provided” part) is to

provide authorization for “insurers, nonprofit service corporations,

health maintenance organizations, or self-insurers for health care

benefits to employees” to use “certain utilization and cost control sys-

tems.” “This intent was achieved by stating that no other statute in

the Iowa insurance code can be interpreted to prohibit these

measures.” [App. 478-79, ¶20]

Plaintiffs agree with the Commissioner that the “provided”

26

clause makes the authorization stated in the first part of § 514F.2 con-

ditional upon compliance with the “provided” clause. Plaintiffs dis-

pute the Commissioner’s interpretation of the meaning of the “pro-

vided” clause.

The Commissioner states that “Iowa Code § 514F.2 (2016) does

not prohibit insurers, nonprofit service corporations, health mainte-

nance organizations, or self-insurers for health care benefits to em-

ployees from engaging in any particular act or practice.” [App. 478, ¶

19] The acts or practices authorized in the first part of § 514F.2 (2016)

is “providing payment of benefits or providing care and treatment”

under described “systems” (such as capitated payment systems or

preferred provider contracts limiting the choice of specific provider),

“or other systems, methods or organizations designed to contain costs

without sacrificing care or treatment outcome . . . .” The condition

stated in the “provided” clause refers to certain acts or practices that

these “systems” cannot do. The “systems” cannot “limit or make op-

tional payment or reimbursement for health care services on a basis

solely related to the license under or the practices authorized by chap-

ter 151 or on a basis that is dependent upon a method of classification,

categorization, or description based upon differences in terminology

27

used by different [Iowa health care] licensees . . . in describing hu-

man ailments or their diagnosis or treatment.” Limiting or making

optional payment or reimbursement for health care services is an act

or practice because “payment of benefits or providing care and treat-

ment” is an act or practice. The Commissioner erred in concluding

otherwise.

The Commissioner then goes on to state:

“Even if an insurer’s systems did limit or make optional payment on a basis solely related to the license, and Wellmark’s did not, the condition or qualification in this phrase would still require that the insurance commis-sioner in seeking enforcement allege and prove a statutory or regulatory provision that actually does prohibit a limit or making optional payment or reimbursement. I declare that the prohibition is not found in § 514F.2.”

[App. 479, ¶20] This appears to be a reiteration of his previous con-

clusion that “Iowa Code § 514F.2 does not prohibit insurers, nonprofit

service corporations, health maintenance organizations, or self-insur-

ers for health care benefits to employees from engaging in any partic-

ular act or practice.” [App. 478, ¶19] It is an erroneous conclusion for

reasons stated above.

During all material times, Wellmark, Inc. was an Iowa health

28

insurance company, regulated in Iowa primarily by Iowa Code, Chap-

ter 509 (2016). Chapter 509 regulates policies of group life, accident

or health insurance. § 509.1 (2016). The provisions of accident or

health insurance policies are specifically governed by Iowa Code §

509.3 (2016). Section 509.3(1)(f) is couched in terms of diagnosis and

treatment of human ailments. It essentially mandates payment or re-

imbursement for chiropractic diagnosis and treatment of the human

ailment if the policy provides for payment or reimbursement for diag-

nosis and treatment of the human ailment by medical doctors or oste-

opathic doctors. The section gives the health insurance company the

option of rejecting coverage for diagnosis and treatment for any par-

ticular human ailment:

“if the coverage or provision for diagnosis or treatment of a human ailment by a chiropractor is rejected for all pro-viders of diagnosis or treatment for similar human ail-ments licensed under chapter 148 or 151. A policy of group health insurance may limit or make optional the payment or reimbursement for lawful diagnostic or treatment ser-vice by all licensees under chapters 148 and 151 on any ra-tional basis which is not solely related to the license under or the practices authorized by chapter 151 or is not de-pendent upon a method of classification, categorization, or description based directly or indirectly upon differ-ences in terminology used by different licensees in de-scribing human ailments or their diagnosis or treatment.”

In other words, the health insurance policy could exclude coverage for

29

diagnosis and treatment of human ailments of the back, but it would

have to reject such coverage for chiropractic physicians, medical phy-

sicians and surgeons and osteopathic physicians and surgeons. [See

App. 529, 534-36] Further, the exclusion of coverage for all such li-

censees must be “on any rational basis which is not solely related to

the license under or the practices authorized by chapter 151.” For ex-

ample, an exclusion of coverage for cosmetic surgery would be for all

three physician licensee groups and would not be solely related to chi-

ropractors, because chiropractors cannot perform cosmetic surgery.

Of course, a health insurance policy which excluded from coverage all

human ailments of the back would not be marketable, whereas a pol-

icy excluding merely a cosmetic (as opposed to functional) ailment

treatable by cosmetic surgery could reasonably be marketed.

But whereas Iowa Code § 509.3(1)(f) (2016) is specifically di-

rected at health insurance policies, the policyholders of which are

consumers, Iowa Code § 514F.2 (2016) is directed at contractual rela-

tionships between health insurance companies and healthcare pro-

viders.

30

B. An Examination of the Entirety of Chapter 1180 of the 1986 Iowa Acts (71 G.A.) Reveals the Meaning of Iowa Code § 514F.2

The Iowa Supreme Court has established rules of statutory con-

struction applicable to this contested case:

“The goal of statutory construction is to determine legislative intent.” Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004). “We determine legislative intent from the words chosen by the legislature, not what it should or might have said.” Id. “Absent a statutory definition or established meaning in the law, words in the statute are given their ordinary and common meaning by considering the context within which they are used.” Id.

Christiansen v. Iowa Bd. of Educ. Examiners, 831 N.W.2d 179,

188 (Iowa 2013). The meaning of words in the statute is ambiguous

when “the plain language of the statute leaves room for more than

one reasonable interpretation.” Taft v. Iowa Dist. Ct., 828 N.W.2d

309, 316 (Iowa 2013). In a case of ambiguity, the Supreme Court

turns to the applicable canons of construction. Christiansen, 831

N.W.2d at 189. As stated by State v. Conner, 292 N.W.2d 682, 684

(Iowa 1980):

The polestar of statutory interpretation is legislative intent. . . . To discern that intent, it is necessary to exam-ine the whole act of which the statutory provision in ques-tion is a part. . . . Particularly relevant are substantively

31

related provisions adopted in the same legislative session. . . . From this examination of related provisions, an over-all legislative scheme may become evident. If any single provision, read literally and in isolation, would be repug-nant to the overall purpose or scheme, reasonable minds may be uncertain as to its meaning. Statutory construc-tion is then appropriately invoked. . . . (citations omitted)

As stated in Christiansen, 831 N.W.2d at 189, one canon of stat-

utory construction is to construe ambiguous language to effectuate

the purpose behind the statute. “‘We seek a reasonable interpretation

which will best effectuate the purpose of the statute . . . .’“ State v.

Walker, 804 N.W.2d 284, 290 (Iowa 2011) (quoting State v. Johnson,

528 N.W.2d 638, 640 (Iowa 1995)).

Iowa Code § 514F.2 originated as Section 10 of 1986 Iowa Acts

(71 G.A.), chapter 1180 (also known as “H.F. 2219”), which concerned

itself primarily with health insurance coverage for diagnostic and

treatment services provided by Iowa chiropractors. The language of

the clause beginning with “provided these systems” of Section 514F.2

was patterned after but differs from other sections of H.F. 2219.

An additional canon of construction recognizes that “legislative intent is expressed by omission as well as by inclusion of statutory terms.” Freedom Fin., 805 N.W.2d at 812 (citing State v. Beach, 630 N.W.2d 598, 600 (Iowa 2001)).

32

Christiansen, 831 N.W.2d at 190.

Section 514F.2 regulates (1) insurers for health care benefits

[under Iowa Code ch. 509], (2) nonprofit service corporations for

health care benefits [under Iowa Code ch. 514], (3) health mainte-

nance organizations [under Iowa Code ch. 514B], and (4) self-insurers

for health care benefits to employees. Wellmark itself is a health in-

surance provider and was formerly a nonprofit service corporation for

health care benefits, both covered under Section 514F.2. Wellmark

Health Plan of Iowa is a health maintenance organization, covered

under Section 514F.2. The self-funded group health plans that are ad-

ministered by Wellmark, and the insurers of Blue Card claims admin-

istered by Wellmark, are either insurers or self-insurers for health

care benefits to employees covered under Section 514F.2.

H.F. 2219, as finally passed by the Iowa Senate and Iowa House

and signed by the Governor, contains 10 sections. Iowa Code §

509.3(6) [from 1986 Iowa Acts, ch. 1180 § 2] applicable to health in-

surance policies provided in pertinent part:

A policy of group health insurance may limit or make optional the payment or reimbursement for lawful diagnostic or treatment service by all li-censees under chapters 148, 150, 150A, and 151 on any rational basis which is not

33

solely related to the license under or the practices authorized by chapter 151 or is not dependent upon a method of classification, categorization, or description based directly or indirectly upon dif-ferences in terminology used by different licen-sees in describing human ailments or their diag-nosis or treatment.

Iowa Code § 514B.1(5)(c) [from 1986 Iowa Acts, ch. 1180 § 7]

applicable to health maintenance organizations provided in similar

language, as their diagnosis or treatment, as does Iowa Code § 514.7

(3rd ¶) [from 1986 Iowa Acts, ch. 1180 § 5] applicable to nonprofit ser-

vice corporations.

Iowa Code § 514F.2 comes from 1986 Iowa Acts, ch. 1180 § 10.

The part of the statute beginning with “provided these systems” reads

differently from the three sections cited above:

[outcome], provided these systems do not limit or make optional payment or reimbursement for health care services on a basis solely related to the license under or the practices authorized by chap-ter 151 or on a basis that is dependent upon a method of classification, categorization, or de-scription based upon differences in terminology used by different licensees under the chapters of Title IV, subtitle 3, of the Code in describing hu-man ailments or their diagnosis or treatment.

The words “by all licensees under chapters 148, 150, 150A, and

151 on any rational basis” are omitted from Section 514F.2. The first

34

three statutes quoted regulate health policies with subscribers. Sec-

tion 514F.2 regulates contracts or systems of payment to providers.

The first three quoted statutes essentially say that sub-

scriber policies can limit or make optional for all MDs, DOs, and DCs

categories of human ailments covered or diagnostic or treatment ser-

vices covered, on any rational basis that does not relate solely to chi-

ropractors. For example, if the policy excluded cosmetic surgery, it

would apply to MDs, DOs, and DCs, but it would not solely relate to

chiropractors, because chiropractors do not perform cosmetic sur-

gery. That would be permissible. On the other hand, the exclusion of

chiropractic manipulation therapy would not be a limit or exclusion

for MDs and DOs, but would relate solely to the chiropractic license.

That would not be permissible.

The first three quoted statutes state that the regulated entities

can limit or make optional payment or reimbursement for diagnostic

or treatment services for all licensees under chapters 148 (medical

physicians and surgeons), 150 (osteopathic physicians), 150A (osteo-

pathic physicians and surgeons) and 151 (chiropractic physicians) “on

any rational basis which is not solely related to the license under or

35

the practices authorized by chapter 151 (chiropractic).” But the limita-

tion of payment or option of payment has to apply to all of the practi-

tioners licensed under chapters 148, 150, 150A20 and 151 equally. It

cannot limit payment or make optional payment for just chiropractic

physicians and not apply the same limitation or option to medical and

osteopathic physicians and surgeons.

Section 514F.2 reads differently. By not mentioning licenses un-

der chapters 148, 150 and 150A, it is more inclusive, in that it would

also have application to payment to physicians assistants, advanced

registered nurse practitioners, and physical therapists, as well as to

MDs, DOs, and DCs. The statute does not prohibit PPOs or HMOs or

self-insureds from limiting or making optional the payments to any

group but Iowa licensed chiropractors.

There is a rational legislative purpose behind the difference in

language in Section 514F.2. Beginning in the mid-1980s, MDs, DOs,

PAs, ARNPs, and physical therapists at a greater and greater rate be-

came employees of clinics and hospital groups. In Iowa today, there

are two large hospital groups and several other smaller but sizable

20 Chapters 150 and 150A were merged into Chapter 148 in

2006.

36

groups and clinics which employ most of these health care practition-

ers. These hospital groups and clinics have immense bargaining

power with Wellmark. Iowa chiropractors, on the other hand, were in

the mid-1980s and are today mostly sole practitioners or small group

practitioners, and not employees of large hospital groups and clinics.

Under these facts, it would be rational for the legislature to single out

chiropractors for protection from discriminatory payment schemes by

health insurers who contract directly with provider groups for pay-

ment of subscriber claims. Furthermore, if the PPO limitation on pay-

ment to providers related only to chiropractors, there would not be

any permissible basis.

C. The Meaning of “Limit” under Iowa Code § 514F.2 As used in Section 514F.2, “limit” is a transitive verb. Merriam

Webster’s Collegiate Dictionary, Eleventh Edition p. 722 defines the

transitive verb as (1) to assign certain limits to; (2)(a) to restrict the

bounds or limits of; and (b) to curtail or reduce in quantity or extent.

Random House Webster’s Unabridged Dictionary, Second Edition, p.

1115 defines the transitive verb as (7) to restrict by or if by establish-

ing limits; and (8) to confine or keep within limits. Any other diction-

ary of the English language defines the transitive verb “limit” the

37

same way.

Wellmark pays physicians assistants (PAs) and advanced regis-

tered nurse practitioners (ARNPs), both of whose licenses require

only masters degrees, 85% of the fee paid to MDs and DOs for the

evaluation and management (E&M) codes; chiropractic physicians,

most of whom now have a four-year undergraduate degree and a

four-year Doctor of Chiropractic degree, are paid a substantially les-

sor percentage21 of the MD/DO fee. With respect to radiology codes

(essentially spinal x-rays), PAs and ARNPs are again paid 85% of the

MD/DO rate, while chiropractic physicians are paid a much lesser

rate. Wellmark pays the same fee rate for therapy codes to MD/DOs,

PAs, ARNPs, DCs and physical therapists. With respect to spinal ma-

nipulation codes, chiropractic physicians for codes 98940, 98941 and

98942 are paid substantially less than what osteopathic physicians

are paid for similar codes 98925, 98926 and 98927. With respect to

98943 extraspinal, Wellmark pays chiropractic physicians a pittance

of the comparable 98940 rate for DOs. These percentages have been

substantially the same since at least 2004. [Ex. 39.32, Conf. App. 45;

21 Actual percentages are found at p. 1 of the Confidential Ap-

pendix.

38

388:1—391:19, 432:24—434:8]

The statute reads “limit or make optional. The “make optional”

does suggest no payment or reimbursement at all, but “limit payment

or reimbursement for health care services” clearly suggests dimin-

ished payment or reimbursement, which is not a coverage issue but

an issue of amount of payment to the provider. In Iowa Dental Ass’n

v. Iowa Ins. Div., 831 N.W.2d 138, 147-48 (Iowa 2013), “limit” is dis-

cussed in terms of payment limitation as opposed to coverage limita-

tion:

[S]ubsection 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 reim-burse $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 “re-lating to” covered services.

D. Wellmark’s Limitations on Iowa Chiropractor’s Fees Are “Solely Related to the License or Practices Author-ized by Chapter 151.”

The words “solely related” or “related solely” are found in 63

opinions of the Iowa Supreme Court, 15 published opinions of the

Iowa Court of Appeals, and 99 opinions of the United States Supreme

39

Court. “Solely by reason of” is found in Iowa Code §§ 96.4, 96.16,

97B.49, 135B.7, 14A.10, 279.7A, 331.342, 362.5, 486A.306, 488.303,

488.305, 488.404, 488.907, 488.1101, 489.301, 489.304, 484.409,

489.1001, 508B.3, 508C.8, 524.904, 598B.109, 679C.104, and 725.12

(2016).

Merriam-Webster’s Collegiate Dictionary, Eleventh Edition

(2011) defines “relate” as “to show or establish logical or causal con-

nection between; to have relation or connection. Random House

Webster’s Unabridged Dictionary, Second Edition (2001) defines

“relate” as “to bring into or establish association, connection or rela-

tion; to have reference (often followed by to); to have some relation

(often followed by to).

The Commissioner does not even examine what the “license or

practices authorized by chapter 151” means. Iowa Code § 151.1 (2016)

defines “chiropractic.” [But see App. 534] The chiropractic license

and practices authorized by Iowa law include adjustment of the neu-

romusculoskeletal structures, differential diagnosis and procedures,

performing or utilizing routine laboratory tests, performing physical

examinations and utilizing chiropractic physiotherapy procedures. By

reason of Iowa Code § 151.8, the chiropractor must have training in

40

the procedures authorized by law and is held to the standard of care

applicable to any other health care practitioner in this state.

There is pertinent case law in the Iowa Supreme Court and the

federal courts which gives meaning to “on a basis solely related to” in

Iowa Code § 514F.2. Essentially, if other reasons for Wellmark’s fee

determinations for Iowa chiropractors are causally connected to the

license under or the practices authorized by chapter 151, then the Re-

spondents’ fee determinations are “on a basis solely related to the li-

cense under or the practices authorized by chapter 151.” In Boelman

v. Manson State Bank, 522 N.W.2d 73 (Iowa 1994), an employee,

Boelman, alleged that he was terminated from his employment be-

cause of his multiple sclerosis (MS). His claim was based, in part, on

section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. §

794 (2016). In a trial to the court, the district court ruled against him,

finding that the employer discharged him because of performance

problems and not because of his MS. The Iowa Supreme Court held

(522 N.W.2d at 77):

Where an employer fires an employee based on con-duct shown to be causally connected to the employee’s disability, the termination is “solely by reason of” the dis-ability for purposes of section 504. Teahan v. Metro-North Commuter R.R., 951 F.2d 511, 515-16 (2d Cir. 1991),

41

cert. denied, 506 U.S. 815, 113 S. Ct. 54, 121 L. Ed. 2d 24 (1992).

The Teahan case, upon which the Iowa Supreme Court in Boel-

man relies, states that an employee may be terminated “solely by rea-

son of” his or her handicap even though the employer disclaims any

reliance on it.

An example may help to illustrate this point. An employee has one leg shorter than the other, causing him to limp, which we assume is a “handicap” under § 504. The limp causes the worker to make a loud “thump” when he takes a step. He is fired, his employer says, because of the thumping. . . .

We hold therefore that termination by an employer subject to the Act which is justified as being due to absenteeism shown to be caused by substance abuse is termination “solely by reason of” that substance abuse for purposes of § 504. In sum, whether or not absenteeism is “caused” by a handicap is a question of fact. We note that the relevant inquiry is into the causal connection of those absences.

Teahan v. Metro-North C. R. Co., 951 F.2d 511, 516-17 (2nd Cir. 1991).

Turning by analogy to the many Iowa cases on sole proximate

cause, the court has stated:

“Sole proximate cause means the only proximate cause.” Johnson v. Interstate Power Co., 481 N.W.2d 310, 323

42

(Iowa 1992). It “rests on the notion that some third party or other independent event was the sole cause of the plaintiff’s injuries.” Baker v. City of Ottumwa, 560 N.W.2d 578, 583 (Iowa 1997) (emphasis added); accord Sponsler v. Clarke Elec. Coop., Inc., 329 N.W.2d 663, 665 (Iowa 1983) (stating sole proximate cause “introduces an issue of a third party’s conduct or a separate event into the case”)

Summy v. City of Des Moines, 708 N.W.2d 333, 342 (Iowa 2006).

Every rationale Wellmark has employed and the Commissioner has

cited involve solely the license or practices authorized by Chapter 151.

They target no other category of health care practitioner. There is no

reason independent of a focus on or causal connection to chiropractic

license and practice stated.

The Commissioner found: “The evidence in this proceeding re-

vealed there are three types of CPT codes where Wellmark’s unit fee

costs for chiropractors are lower than for MDs and DOs: (1) the ma-

nipulation codes; (2) the x-ray codes; and (3) the evaluation and man-

agement codes. [App. 489, ¶ 74] The Commissioner concluded: “Even

if § 514F.2 can be interpreted to prohibit conduct, the statute does not

preclude insurers from considering licensure when developing a pay-

ment system.” [Id., ¶ 75] Section 514F.2, however, precludes fee limi-

tations “on a basis solely related to license.” The Commissioner ruled

43

that the “factors used by CMS are not solely based upon licensure.”

The record before the Commissioner, however, shows that CMS does

differentiate E&M, x-ray, and manipulation codes “on a basis solely

related to the license under or the practices authorized by chapter

151.”

Barton McCann, M.D., an expert called by Wellmark, testified

that there are three RVU factors considered in determining any par-

ticular RVU related to a CPT code: (1) work RVU, (2) practice expense

RVU, and (3) malpractice RVU, which CMS adds together to make an

RVU for a particular CPT code. The work RVU has four elements

(time, technical skill, judgment and stress), but the primary factor is

physician time involved. [Conf. App. 525:15—528:15] Exhibit 41H is

an example of data taken from the CMS website for physician services

for 2013. [Conf. App. 105:6—107:17]

Mike Fay agrees that Wellmark pays chiropractors substantially

less than what MD/DO’s are paid for evaluation and management

(E&M codes); substantially less than what MD/DO’s are paid for tak-

ing and reading x-rays; substantially less for spinal manipulation; and

a pittance for extremities manipulation. [Conf. App. 425:2—434:8]

Mr. Fay testified that he (in 1998) isolated seven factors used by the

44

Center for Medicare and Medicaid Services (CMS) and made an esti-

mate of the relative value of chiropractic diagnostic and treatment

services based upon those factors. But CMS only employs three fac-

tors according to its website and Dr. McCann. Mr. Fay concedes that

neither he nor Wellmark has made a study using the six factors to

compare Iowa chiropractors’ diagnostic and treatment services for

the same human ailments with those of Iowa MDs, DOs, PAs, or

ARNPs. Mr. Fay testified that he believes that CMS has made such

studies, but he has never seen or examined them. [Conf. App.

267:13—269:8]

Q [Mr. Norris]. There’s no question that in deter-mining the fees on your 2013 fee schedule that you sep-arate out chiropractic to determine a separate fee schedule for them; isn’t that right?

A [Mr. Fay]. We have a separate fee schedule for chiropractic.

Q. All right. And historically that’s been the case?

A. Yes. [Conf. App. 455:22—456:6]

Q. And you do not look behind the non-facility total as to what the three factors are and re-examine them; isn’t that right?

A. Correct, we don’t adjust the Medicare’s pub-lished RVUs. [Conf. App. 458:16-21]

45

The Commissioner had no factual basis for a conclusion that (1)

CMS does not differentiate solely based on the chiropractic license

and practices, or (2) Wellmark does not differentiate solely based on

the chiropractic license and practices. The record is overwhelming

that both CMS and Wellmark differentiate “on a basis solely related

to” the chiropractic license and practices. Wellmark is in violation of

Iowa Code § 514F.2.

II. ERISA Does Not “Relate to” Contracts Between Health Insurers or Self-Funded Employers and Health Care Providers


The Commissioner issued his Decision and Declaratory Order

on October 21, 2014. Petitioners filed a Petition for Judicial Review

with the Polk County District Court on November 20, 2014. The dis-

trict court, Hon. Karen A. Romano, affirmed the Insurance Commis-

sioner on June 24, 2015. Petitioners, the aggrieved parties, filed No-

tice of Appeal with this Court on July 21, 2015.


The standard of review relating to federal preemption of an

Iowa statute is correction of errors at law. Magellan Health Servs. v.

46

Highmark Life Ins. Co., 755 N.W.2d 506 (Iowa 2008).

Argument

The Commissioner ruled: “As a matter of law, I declare that

ERISA preempts Iowa Code section 514F.2 from application to the

self-funded plans.” [App. 491, ¶85] This court in Magellan Health

Servs. v. Highmark Life Ins. Co., 755 N.W.2d 506, 510 (Iowa 2008),

holds that ERISA does not apply when the controversy does not “re-

late to” an employee benefit plan. The Commissioner’s ruling on

ERISA preemption is erroneous as a matter of law.

Section 514F.2 does not authorize health benefit plans; it au-

thorizes contracts between various insurer-types and providers. The

Commissioner’s ruling ignores his own rules.

The Iowa General Assembly enacted Iowa Code § 514F.3 in

1988, specifying as different subjects “preferred provider arrange-

ments” and “health benefit plans.” The Insurance Commissioner has

defined the difference in his rules:

I.A.C. § 191—27.2(514F) Definitions. “Health benefit plan” means the health insurance policy or sub-scriber agreement between the covered person or the policy-holder and the health care insurer which defines the covered services and benefit levels available.

47

“Preferred provider” means a health care provider or group of providers who have contracted to provide specified covered ser-vices. “Preferred provider arrangement” means a contract between or on behalf of the health care insurer and a preferred provider which complies with all the requirements of this chapter.

Thus, the “preferred provider contracts” described in § 514F.2 are

“preferred provider arrangements” described in the Commissioner’s

rules, and not “health benefit plans.”

The Employee Retirement Income Security Act, 29 U.S.C. §§

1001-1461 (2016) (“ERISA”) was enacted by Congress to provide com-

prehensive regulation of employee benefit plans. Aetna Health, Inc. v.

Davila, 542 U.S. 200, 208 (2004). Under ERISA, an employee benefit

plan is defined as “any plan, fund, or program established or main-

tained by an employer for the purpose of providing for its participants

or their beneficiaries benefits in the event of sickness, accident, disa-

bility, death, or unemployment.” 29 U.S. C. § 1002(1) (2016).

ERISA broadly preempts “any and all State laws insofar as they

may now or hereafter relate to any employee benefit plan” governed

by ERISA. 29 U.S.C. § 1144(a). Thus, first hurdle that must be over-

come to establish ERISA preemption is whether or not the state law,

Iowa Code § 514F.2, relates to an employee benefit plan governed by

48

ERISA. Magellan Health Servs. v. Highmark Life Ins. Co., 755

N.W.2d 506, 510 (Iowa 2008). The United States Supreme Court has

stated that Congress addressed the claims of preemption “with the

starting presumption that Congress does not intend to supplant state

law.” N.Y. State Conference of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 654, 115 S. Ct. 1671, 1676, 131 L. Ed.

2d 695, 704 (1995) A state law has “reference to” ERISA only

“[w]here a State’s law acts immediately and exclusively upon ERISA

plans . . . or where the existence of ERISA plans is essential to a law’s

operation. . . .” Calif. Div. of Labor Standards Enforcement v. Dil-

lingham Constr., N.A., Inc., 519 U.S. 316, 325, 117 S. Ct. 832, 838, 137

L. Ed. 2d 791, 799 (1997). Under Dillingham, the “connection with”

test of ERISA preemption requires the court to look at both “‘the ob-

jectives of the ERISA statute as a guide to the scope of the state law

that Congress understood would survive’ . . . as well as the nature of

the effect of the state law on ERISA Plans.” Id. (quoting Travelers

Ins., 514 U.S. at 656, 115 S. Ct. at 1677, 131 L. Ed. 2d at 705).

It is clear that Iowa Code § 514F.2 does not make “reference to”

ERISA plans and is not targeted directly and exclusively toward

ERISA plans. Section 514F.2 authorizes insurers, nonprofit service

49

corporations, health maintenance organizations, or self-insurers for

health care benefits to employees to enter into contracts with provid-

ers for capitated payment systems, preferred provider contracts, or

other systems, methods or organizations designed to contain costs

without sacrificing care or treatment outcome. Employee benefit

plans, as such, are addressed in Iowa Code § 509.3(7)), §§ 514.5, 2nd

¶, & 514.7, 3rd ¶)), and § 514B.1(5)(c)), which address coverage re-

quirements, but those provisions are exempt from ERISA, because

state insurance, banking, or securities laws are explicitly removed

from preemption under ERISA’s savings clause. 29 U.S.C. §

1144(b)(2)(A).

With respect to whether § 514F.2 is “connected with” ERISA

plans, the main objective of ERISA is providing employees with stable

benefits. Magellan Health Servs., 755 N.W.2d at 513. Section 514F.2

addresses contractual matters between providers and insurers, non-

profit service corporations, health maintenance organizations, or self-

insurers. The statute does not pertain to health benefit plans for em-

ployees and beneficiaries at all.

The Abbas Petitioners have entered into Practitioner Service

Agreements with the Wellmark Respondents that purport to define,

50

in general terms, the payment for services and the prohibition against

balance billing. Under Iowa law, “existing statutes and the settled law

of the land are a part of every contract, and must be read into it as

though it were specifically referred to therein.” Cornick v. Southwest

Iowa Broadcasting Co., 252 Iowa 653, 656, 107 N.W.2d 920, 921

(Iowa 1961). See, e.g., State ex rel. Turner v. Koscot Interplanetary,

Inc., 191 N.W.2d 624, 630 (Iowa 1971). By law, the terms of Iowa

Code § 514F.2 are a part of the Practitioner Services Agreement and

are not subject to modification by other terms imposed in the Agree-

ment. Moreover, a “health care insurer” is, by rule of the Commis-

sioner required “to comply with all other applicable laws and rules

and regulations of this state,” which includes Iowa Code § 514F.2.

I.A.C. 191—27.6(514F).

All providers in the Wellmark preferred provider network have

signed (or otherwise agreed to) the Wellmark, Inc. Practitioner Ser-

vices Agreement [Ex. 41A, App. 146], including MDs, DOs, DCs, PAs,

ARNPs, and PTs. Over 90% of all DCs practicing in Iowa have signed

this Agreement, and over 95% of all MDs, DOs, PAs, ARNPs, and PTs

practicing in Iowa have signed the Agreement. [Conf. App. 141, Fay II

Depo. 191:13—192:4]

51

The providers agree to accept payment of fee directly from

Wellmark, the general factors to determine such fees, but not specif-

ics, are set forth at page A-1 of the Agreement: “For claims incurred,

Provider will be paid for Covered Services, less applicable deductibles,

coinsurance and copayments, as follows: for medical services and

supplies, the lesser of the Provider’s billed charge or the [Maximum

Allowable Fee]; for therapeutic drugs, the lesser of the Provider’s

billed charge or the [Maximum Allowable Fee for Drugs].” The pro-

viders agreed not to “balance bill” their patients in Section 8.2 of the

Agreement. Because of this, the actual patient or consumer is not af-

fected by the payment amount Wellmark determines to make to the

provider, as the consumer patient is not more or less out-of-pocket.

This is pointed out in an interpretation of ERISA by the United

States Department of Labor, Employee Benefits Security Administra-

tion, the agency which administers ERISA:

“A-8: Do the requirements applicable to group health plans apply to contractual disputes between health care providers (e.g., physicians, hospitals) and insurers or managed care organi-zations (e.g., HMOs)?

“No, provided that the contractual dispute will have no effect on a claimant’s right to benefits under a plan. The regulation applies only to claims for benefits. . . . The regulation does not apply to requests by health care pro-viders for payments due them -- rather than due the

52

claimant -- in accordance with contractual arrangements between the provider and an insurer or managed care or-ganization, where the provider has no recourse against the claimant for amounts, in whole or in part, not paid by the insurer or managed care organization.


Healthcare provider claims are usually not subject to complete

preemption because “[h]ealthcare providers . . . generally are not con-

sidered ‘beneficiaries’ or ‘participants’ under ERISA.”22 Hobbs v. Blue

Cross Blue Shield of Ala., 276 F. 3d 1236, 1241 (11th Cir. 2001) (citing

Cagle v. Bruner, 112 F.3d 1510, 1514 (11th Cir. 1997)); see also Pas-

cack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimburse-

ment Plan, 388 F.3d 393, 400 (3rd Cir. 2004) (“We conclude that the

Hospital could not have brought its claims under § 502(a) because the

Hospital does not have standing to sue under that statute.”); In re

Managed Care Litig., 298 F. Supp. 2d 1259 (S.D. Fla. 2003) (noting

22 A “participant” includes “any employee or former employee of

an employer, or any member or former member of an employee or-ganization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7). A “beneficiary” is “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a bene-fit thereunder.” 29 U.S.C. § 1002(8).


53

that only two categories of individuals -- participants and beneficiar-

ies -- are authorized to sue for benefits under § 502(a)(1)(B)). Moreo-

ver, such claims often are not the type of claims that could be brought

under § 502(a) because they do not “duplicate[], supplement[], or

supplant[] the ERISA civil enforcement remedy.” Davila, 542 U.S. at

209, 124 S. Ct. at 2495.

In Blue Cross of California v. Anesthesia Care Associates Medi-

cal Group, Inc., 187 F.3d 1045, 1051 (9th Cir. 1999), the Ninth Circuit

held that the providers’ breach of contract claims were not within the

scope of § 502(a)(1)(B) because the providers’ breach of contract

claims arose solely out of their provider agreements. The Third Cir-

cuit, in Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare

Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004), a post-Davila

case, found no preemption under facts similar to those in Anesthesia

Care.

Coverage and eligibility . . . are not in dispute. In-stead the resolution of this lawsuit requires inter-pretation of the Subscriber Agreement, not the Plan. The Hospital’s right to recover, if it exists, depends entirely on the operation of third-party contracts ex-ecuted by the Plan that are independent of the Plan itself.

Id. at 403 (citing Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S.

54

Ct. 2425, 96 L. Ed. 2d 318 (1987)).

III. The Capitated Payment Plan Used for Chiropractic Coverage by Wellmark Health Plan of Iowa, Inc., Is Un-lawfully Discriminatory in Violation of Iowa Code § 514F.2.


The Commissioner issued his Decision and Declaratory Order

on October 21, 2014. Petitioners filed a Petition for Judicial Review

with the Polk County District Court on November 20, 2014. The dis-

trict court, Hon. Karen A. Romano, affirmed the Insurance Commis-

sioner on June 24, 2015. Petitioners, the aggrieved parties, filed No-

tice of Appeal with this Court on July 21, 2015.



interpret Section 514F.2. See Iowa Dental Ass’n v. Iowa Ins. Div., 831

N.W.2d 138, 142-44 (Iowa 2013). In Andover Volunteer Fire Dep’t v.

Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa 2010), the

court stated that ordinarily, “the interpretation of a statute is a pure

question of law over which agencies are not delegated any special

powers by the General Assembly.”

55

Argument

On this issue, the Commissioner ruled: “90. Dr. Evans, DC, founded the Iowa Chiropractic

Physicians Clinic (“ICPC”), a chiropractic network. When WHPI was first being created, Dr. Evans suggested WHPI contract with a separate entity to provide a chiropractic network. Dr. Evans provided a chiropractic network to WHPI known as the ICPC. ICPC is a clinic without walls. ICPC also provides a chiropractic network to other enti-ties, including Midlands Choice, Account Health, and Corvel.

“93. ICPC has a provider network that contracts with WHPI. ICPC negotiates a capitated rate with WHPI, where ICPC is paid a set amount in advance for each member in the insured plan whether the member uses the provider’s health services, or not. ICPC then contracts separately with chiropractors in its network. WHPI does not control or limit the reimbursement rate ICPC provides to its network.

“94. I declare that Iowa Code § 514F.2 does not pre-clude WHPI from entering into such an arrangement.”

The Commissioner’s ruling is erroneous as a matter of law, and is not

based upon any substantial evidence.

The WHPI HMO fee schedules for MD/DO, PA, ARNP, and PT

use a small discount23 from the PPO rate in the same fee schedules.

[Conf. App. 467:1—474:10] WHPI requires none of these providers to

participate in a capitated payment plan. [Id., Conf. App. 650:2—

23 Actual percentages are found at Conf. App. 2.

56

652:14] WHPI has more MD/DOs, PAs, ARNPs, and PTs in its HMO

provider network than Wellmark has in its PPO provider network.

[Ex. 39.49, App. 105-39; Conf. App. 471:5—474:11]

On the other hand, although Wellmark includes over 90% of all

Iowa chiropractic physicians (approximately 1,322) in its PPO partici-

pating provider network, but less than 25% of that number (approxi-

mately 248) are selected as participating providers for the WHPI

HMO plans, and those chiropractic physicians are paid less than 50%

of the PPO chiropractor payment schedule (which is already substan-

tially less than the MD/DO schedule for the same CPT codes) through

ICPC. [Id.; Conf. App. 650:2—652:14, 657:24—661:7, 862:11—869:20;

Ex. 39.52, App. 140]

Testimony of Rod Rebarcak, DC, based upon the past years’ ac-

tual disbursements from Iowa Chiropractic Physicians Clinic, shows

that a chiropractor member of ICPC receives approximately 47.92%

of the Wellmark PPO chiropractic fee schedule for services to the

members of the HMO’s of Wellmark Health Plan of Iowa, Inc. [Conf.

App. 862:11—869:20]24 This appears from the testimony of Ronald

24 Details of the 47.92% computation are set forth at pages 18 &

19 of the Statement of Facts above.

57

Evans, DC, to be due both to the inadequate capitated rate received

from WHPI and from the fact that a very large administrative fee is

also deducted from the capitated payment with the knowledge of

WHPI of the fact. [Conf. App. 467:1—474:10, 663:13—667:24] Dr. Ev-

ans also testified that the capitated payment rate of Wellmark to ICPC

permits only a limited number of chiropractors in the ICPC network –

in actual fact less than one-fifth of the chiropractor PPO members.

[Conf. App. 656:3—667:4] Michael Fay testified that the PPO and

HMO networks of WHPI’s MD/DO, PA, ARNP, and PT providers are

similar in size and comprise more than 95% of the active Iowa li-

censed MD/DO, PA, ARNP, and PT practitioners. [Conf. App. 471:5—

474:11]

The Commissioner had no factual basis for a conclusion that

WHPI does not differentiate solely based on the chiropractic license

and practices. The record is overwhelming that WHPI differentiates

“on a basis solely related to” the chiropractic license and practices.

WHPI is in violation of Iowa Code § 514F.2.

58

IV. The Commissioner’s Order Is Beyond the Authority Dele-gated to the Agency, in the Following Specifics:

A. The Conclusion of the Commissioner that Iowa Code, Chapter 514F Does Not Grant the Insurance Commis-sioner the Judicial Authority to Vindicate the Disputes of Private Parties, in Light of the Provisions of Iowa Code, Chapter 17A, Giving Any Iowa Administrative Agency the Right to Adjudicate Contested Cases and Declaratory Or-der Disputes, Is an Erroneous Conclusion of Law;


The Commissioner issued his Decision and Declaratory

Order on October 21, 2014. Petitioners filed a Petition for Judi-

cial Review with the Polk County District Court on November

20, 2014. The district court, Hon. Karen A. Romano, affirmed

the Insurance Commissioner on June 24, 2015. Petitioners, the

aggrieved parties, filed Notice of Appeal with this Court on July

21, 2015.

The Commissioner’s pronouncement that he does not

have authority to vindicate the disputes of private parties in

contested cases was raised sui sponte by the Commissioner’s

ruling. Petitioners rights to a contested case are raised in Para-

graph 3 of Petitioners’ Request for Contested Case Proceeding

[App. 9]:

59

3. The matters of which Petitioners complain are within the definition of “contested case” in Iowa Code § 17A.2(5) be-cause they involve ratemaking and price fixing in which the legal rights, duties or privileges of Petitioners are required by Constitution or statute to be determined by this agency after an opportunity for an evidentiary hearing. a. Petitioners are Doctors of Chiropractic, duly licensed by

the Iowa Board of Chiropractic to practice the profession in the State of Iowa. As such, Petitioners have rights to continue in the practice of their profession and charge fees for their services, which rights “cannot be arbitrarily taken from them, any more than their real or personal property can be thus taken.” Dent v. West Virginia, 129 U.S. 114, 122, 9 S. Ct. 231, 233 (1889). These rights are mandated by the Fourteenth Amendment to the United States Constitution.

b. Additionally, the Iowa Supreme Court has long held that the earning power of a licensed professional is property cannot be taken away without due process of law under the Iowa Constitution, Art. I, Sec. 9, which includes the right to be heard. “But, on plainest principles, due pro-cess requires that no tribunal having the power to de-prive one person of his property rights for the benefit of another, or of the public, shall proceed to do so arbitrar-ily: the person who is to suffer the deprivation must have his day in court.” State v. Miller, 132 Iowa 587, 591, 109 N.W. 1087, 1089 (1906).

* * * e. Where a protected property interest of the Petitioner un-

der the Iowa or federal due process clause is shown, the Petitioner is entitled to the protections of contested case proceedings defined and specified in Iowa Code, Chapter 17A. Iowa Code § 17A.2(5) (2011); Greenwood Manor v. Iowa Dept. of Pub. Health, 641 N.W.2d 823, 834, 838 (Iowa 2002)(“ A contested case entitles parties affected

60

by the agency action to an adversarial hearing with the presentation of evidence and arguments and the oppor-tunity to cross-examine witnesses and introduce rebuttal evidence.”); Allegre v. Iowa State Bd. of Regents, 349 N.W.2d 112, 114 (Iowa 1984); Polk County v. Iowa State Appeal Bd., 330 N.W.2d 267, 276-77 (Iowa 1983).

This issue was again raised in briefing before the district court. This

Court has jurisdiction of the subject matter pursuant to Iowa Code §

17A.20 (2015).



interpret Iowa Code § 17A.2(5). See Iowa Dental Ass’n v. Iowa Ins.

Div., 831 N.W.2d 138, 142-44 (Iowa 2013). In Andover Volunteer Fire

Dep’t v. Grinnell Mut. Reinsurance Co., 787 N.W.2d 75, 77 (Iowa

2010), the court stated that ordinarily, “the interpretation of a statute

is a pure question of law over which agencies are not delegated any

special powers by the General Assembly.”

Argument

The Commissioner ruled that only he or his delegated staff can

bring a contested case under Iowa Code § 514F.2 and that he cannot

vindicate disputes of private parties. [App. 473, ¶¶ 4, 5, & 11] An ad-

ministrative contested case is governed by Iowa Code § 17A.2(5)

61

(2016). There is explicit authority in Iowa Code Chapter 505 (2016)

for a contested case arising from conduct governed by Iowa Code §

514F.2. Iowa Code § 505.29 (2016) provides:

505.29 Administrative hearings. The commis-sioner of insurance shall have the authority to appoint as a hearing officer a designee or an independent adminis-trative law judge. Duties of a hearing officer shall include hearing contested cases arising from conduct governed by chapters 502, 502A, this chapter, chapters 505A through 523G, and 523I. . . .

The fundamental rule governing a private party’s entitlement to

bring a contested case is found in Purethane, Inc. v. Iowa State Bd. of

Tax Review:

A “contested case” is defined as a proceeding in which the legal rights, duties, or privileges of a party are required by Constitution or statute to be determined by an agency after an opportunity for an evidentiary hearing. This evidentiary hearing is an oral proceeding whose pur-pose is to determine disputed facts of particular applica-bility known as adjudicative facts--the who, what, when, where, and why of particular individuals in specified cir-cumstances. If a hearing is not required, or the hearing re-quired is not an evidentiary hearing, the adjudication will be categorized as “other agency action.”

Purethane, Inc. v. Iowa State Bd. of Tax Review, 498 N.W.2d 706,

708-09 (Iowa 1993) (citations omitted). The Abbas Petitioners are

chiropractors licensed under Iowa Code Chapter 151 and practicing

62

under that license in Iowa. They have a fundamental statutory right to

practice chiropractic in Iowa:

147.6 Certificate presumptive evidence. Every license issued under this subtitle shall be presumptive evi-dence of the right of the holder to practice in this state the profession therein specified.

Iowa Code § 147.6 (2016).

The key to whether an agency action is a contested case under

the IAPA is stated in Paulson v. Board of Medical Examiners, 592

N.W.2d 677, 679 (Iowa 1999):

The action of any agency falls within the general ad-judication category when it determines the rights, duties and obligations of specific individuals as created by past transactions or occurrences. Board of Supervisors of Linn County, 263 N.W.2d 227, 239 (1978). Furthermore, it is a contested case if the constitution or a statute re-quires an evidentiary hearing. Iowa Code § 17A.2(2). If the hearing required is not an evidentiary hearing, the ad-judication is merely an informal adjudication and falls un-der the rubric of “agency action.” See Bonfield, Formal Agency Adjudication, 63 Iowa L. Rev. at 288.

Brummer v. Iowa Dep’t of Corrections, 661 N.W.2d 167, 172-73

(Iowa 2003), focuses on the constitutional hearing requirement:

The absence of a statutory hearing claim brings us to the primary fighting issue in this case: whether there is a constitutional right to a hearing as part of the risk as-sessment process arising from the Due Process Clauses of

63

the federal and Iowa constitutions. See U.S. Const. amends. V, XIV, § 1; Iowa Const. art. I, § 9. “Generally, a person has a constitutional due process right to an evi-dentiary hearing in accordance with contested case proce-dures if the underlying proceeding involves adjudicative facts,” i.e., “individualized facts peculiar to the parties, [which] ordinarily ‘answer the questions of who did what, where, when, how, why, with what motive or intent.’” . . .

Adjudicative facts should have been presented, con-sidered, and processed to determine the appropriateness of assigning a risk factor value and to ensure the funda-mental constitutional values guaranteed by the Due Pro-cess Clauses and the Iowa Administrative Procedure Act.

The Abbas Petitioners have a specific, personal, and legal inter-

est in the Commissioner’s decision as to whether Wellmark limits

payment to Iowa chiropractors on “a basis solely related to the license

under or the practices authorized by chapter 151 . . .” Indeed, “[t]he

legislature enacted H.F. 2219 to benefit chiropractors as well as con-

sumers.” Mueller v. Wellmark, Inc., 818 N.W.2d 244, 255 (Iowa

2012). The determination of the issues under § 514F.2 necessarily “in-

volves adjudicative facts, i.e., ‘individualized facts peculiar to the par-

ties, [which] ordinarily ‘answer the questions of who did what, where,

when, how, why, with what motive or intent.’” Greenwood Manor,

641 N.W.2d at 836 (quoting Allegre v. Iowa State Bd. of Regents, 349

N.W.2d 112, 115 (Iowa 1984)).

64

The Abbas Petitioners have an interest in the enforcement of

Iowa Code § 514F.2 because they are specially and injuriously affected

by the illegal payment limitations imposed by the Wellmark Respond-

ents and the lack of enforcement of the violations of the Wellmark Re-

spondents. Under Iowa law, “existing statutes and the settled law of

the land are a part of every contract, and must be read into it as

though it were specifically referred to therein.” Cornick v. Southwest

Iowa Broadcasting Co., 252 Iowa 653, 656, 107 N.W.2d 920, 921

(Iowa 1961). See, e.g., State ex rel. Turner v. Koscot Interplanetary,

Inc., 191 N.W.2d 624, 630 (Iowa 1971). By law, the terms of Iowa

Code § 514F.2 are a part of the Practitioner Services Agreement and

are not subject to modification by other terms imposed in the Agree-

ment, just as Iowa Code § 514F.2 is a part of the rules under Iowa

Code § 514F.3 for preferred provider arrangements which cannot be

modified by other terms of the preferred provider rules, Iowa Admin.

Code, Chapter 191-27 (2016).

65

B. The Rights of the Petitioners to Bring This Contested Case Are Not Subject to the Discretion of the Insurance Commissioner, and Do Not Depend Upon a Delegation of Authority from the Commissioner, But Are a Right Given by the Iowa Constitution and Statutes in Accord-ance with Iowa Code § 17A.2(5)

The Abbas Petitioners have a statutory right to practice the pro-

fession of chiropractic in Iowa. Iowa Code § 147.6 (2016). Addition-

ally, they have constitutional rights not to be deprived of their prop-

erty without due process of law under the Fourteenth Amendment to

the United States Constitution and under Article I, Section 9 of the

Iowa Constitution, all as set forth in Paragraphs 3 and 4 of Petition-

ers’ Request for Contested Case Proceeding, filed with the Commis-

sioner on November 30, 2012.

It is undoubtedly the right of every citizen of the United States to follow any lawful calling, business, or profession he may choose, subject only to such restrictions as are im-posed upon all persons of like age, sex and condition. . . The interest, or, as it is sometimes termed, the estate ac-quired in them, that is, the right to continue their prose-cution, is often of great value to the possessors, and can-not be arbitrarily taken from them, any more than their real or personal property can be thus taken.

Dent v. West Virginia, 129 U.S. 114, 122, 9 S. Ct. 231, 233, 32 L. Ed.

66

623, 625-26 (1889). The holding in Dent is very pertinent to this ad-

ministrative proceeding:

It is sufficient, for the purposes of this case, to say that legislation is not open to the charge of depriving one of his rights without due process of law, if it be general in its op-eration upon the subjects to which it relates, and is en-forceable in the usual modes established in the admin-istration of government with respect to kindred matters: that is, by process or proceedings adapted to the nature of the case.

Dent, 129 U.S. at 124, 9 S. Ct. at 234, 32 L. Ed. at 626 (Emphasis

added).

Additionally, the Iowa Supreme Court has long held that the

earning power of a licensed professional is property that cannot be

taken away without due process of law under the Iowa Constitution,

Art. I, Sec. 9, which includes the right to be heard.

Indeed, we are disposed to go a step farther, and say that had there been no reference to such “other matter,” it would still have been the right of the county attorney to be heard when it came to be determined what was a reasona-ble compensation. In a practical sense the allowance to an acting attorney amounts to an appropriation pro tanto of the salary of the county attorney. That no person can be deprived of his property without due process of law is the constitutional provision. Const. Iowa, section 9. And the salary of a county attorney is property within the meaning of the provision thus cited. . . . True, the court is author-ized to determine what is a reasonable compensation, and

67

make allowance thereof, but that is only another way of saying that to compensate for services rendered it shall determine how much of the property of the county attor-ney shall be taken. To this, in view of the statute under which he holds office, the county attorney may well be held to have assented. But, on plainest principles, due process requires that no tribunal having the power to de-prive one person of his property rights for the benefit of another, or of the public, shall proceed to do so arbitrar-ily: the person who is to suffer the deprivation must have his day in court.

State v. Miller, 132 Iowa 587, 590-91, 109 N.W. 1087, 1089

(1906)(Emphasis added). Under either of the constitutional provi-

sions, the refusal of the Insurance Division and its Commissioner to

grant the Abbas Petitioners their right to a contested case is errone-

ous.

Conclusion

For each and all of the above-stated arguments, Petitioners pray

that this court reverse the ruling of the district court affirming the in-

surance commissioner’s Ruling and Declaratory Order. Petitioners

further pray that the court rule that Wellmark and WHPI have vio-

lated Iowa Code § 514F.2 to the invidious detriment of Iowa chiro-

practors.

68

Request for Oral Argument

Petitioners respectfully request to be heard in oral argument in

this appeal.

Dated July 5, 2016.

Respectfully submitted, __/s/ Glenn L Norris___________ Glenn L. Norris AT0005907 HAWKINS & NORRIS, P.C. 2501 Grand Avenue, Suite C Des Moines, Iowa 50312-5399 Telephone: 515-288-6532 Cell: 515-971-9521 Facsimile: 515-281-1474 Email: [email protected] [email protected]

Steven P. Wandro AT0008177 Kara M. Simons AT0009876 WANDRO & ASSOCIATES, P.C. 2501 Grand Avenue, Suite B Des Moines, Iowa 50312 Telephone: 515-281-1475 Facsimile: 515-281-1474 Email: [email protected]

[email protected] ATTORNEYS FOR PETITIONERS-AP-PELLANTS

Certificate of Compliance with Type-Volume Limitation, Typeface Requirements, and Type-Style Requirements

1. This Appellants’ Opening Proof Brief complies with the type-vol-ume limitation of Iowa R. App. P. 6.903(1)(g)(1) or (2) because this





69

brief contains 13,942 words, excluding the parts of the applica-tion/motion exempted by Iowa R. App. P. 6.903(1)(g)(1).

2. This Appellants’ Opening Proof Brief complies with the typeface requirements of Iowa R. App. P. 6.903(1)(e) and the type-style re-quirements of Iowa R. App. P. 5.903(1)(f) because this brief has been prepared in a proportionally spaced typeface using MS Word in Georgia 14 pt.

__/s/ Glenn L Norris___________ Dated: July 5, 2016

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing instrument was filed on the 5th day of July, 2016 with the Clerk of Court using the EDMS system, which will send notification of such filing to the coun-sel below:

__/s/ Glenn L Norris___________ JORDAN G. ESBROOK AT0009996 Assistant Attorney General Iowa Department of Justice Hoover State Office Building, 2nd Fl. 1305 East Walnut Street Des Moines, Iowa 50319 Telephone: (515) 281-8159 Facsimile: (515) 281-4209 Email: [email protected] ATTORNEYS FOR RESPONDENT-APPELLEE IOWA INSURANCE DIVISION Hayward L. Draper, AT0002075 John T. Clendenin, AT0001529 Ryan G. Koopmans, AT0009366 NYEMASTER GOODE, P.C. 700 Walnut Street, Suite 1600 Des Moines, Iowa 50309-3899 Telephone: (515) 283-3100 Facsimile: (515) 283-8045 E-mail: [email protected] [email protected] [email protected] ATTORNEYS FOR INTERVENORS, WELLMARK, INC. d/b/a WELLMARK BLUE CROSS AND BLUE SHIELD OF IOWA, an Iowa corporation, and WELLMARK HEALTH PLAN OF IOWA, INC., an Iowa corporation




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