Iowa Individual Health Benefit Reinsurance Association v. State University of Iowa, Iowa State University of Science and Technology, and University of Northern Iowa

IN THE COURT OF APPEALS OF IOWA

No. 14-1605
Filed June 24, 2015

IOWA INDIVIDUAL HEALTH BENEFIT REINSURANCE ASSOCIATION,
Plaintiff-Appellant,

vs.

STATE UNIVERSITY OF IOWA, IOWA STATE
UNIVERSITY OF SCIENCE AND TECHNOLOGY,
and UNIVERSITY OF NORTHERN IOWA,
Defendants-Appellees.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Dennis J. Stovall,

Judge.

Iowa Individual Health Benefit Reinsurance Association appeals the

dismissal of its suit against the universities. AFFIRMED.

Gregory M. Lederer of Lederer Weston Craig, P.L.C., Cedar Rapids, for

appellant.

Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor

General, and Diane M. Stahle, Special Assistant Attorney General, for appellees.

Considered by Vogel, P.J., and Potterfield and Mullins, JJ.
 2

POTTERFIELD, J.

The Iowa Individual Health Benefit Reinsurance Association (Reinsurance

Association) appeals the dismissal of its suit against three state universities,

contending the district court erred in concluding it did not have the authority to

bring the suit. Finding no error, we affirm.

I. Background Facts.

The Reinsurance Association filed a suit against the three Iowa state

universities (University of Iowa, Iowa State University, and University of Northern

Iowa), asserting each university was a member of the Reinsurance Association

pursuant to Iowa Code section 513C.10(1)(a) (2009)1 and, despite demands, had

failed to pay a 2010 assessment and failed to submit a 2011 reporting form or

pay that year’s assessment determined under section 513C.10(6). The

universities filed a pre-answer motion to dismiss, contending the Reinsurance

Association did not have authority to sue, and, even if it did have such authority,

litigation between governmental entities must be submitted to arbitration under

Iowa Code section 679A.19.2 The district court dismissed the action, concluding

the Reinsurance Association had only the limited powers granted to it by the

legislature, which no longer included the authority to sue.

The Reinsurance Association appeals.

1
The 2010 asserted assessment is governed by the 2009 version of the Iowa Code and
the 2011 assessment by the 2011 code. No substantive changes occurred between
those versions.
2
Section 679A.19 provides:
Any litigation between administrative departments, commissions
or boards of the state government is prohibited. All disputes between
said governmental agencies shall be submitted to a board of arbitration of
three members to be composed of two members to be appointed by the
departments involved in the dispute and a third member to be appointed
by the governor. The decision of the board shall be final.
 3

II. Scope and Standard of Review.

Because this dispute raises an issue of statutory interpretation, our review

is for correction of errors at law. Bank of Am., N.A. v. Schulte, 843 N.W.2d 876,

880 (Iowa 2014).

III. Discussion.

The Reinsurance Association was established by the legislature in 1995.

See 1995 Iowa Acts ch. 103, § 12. The provision establishing the Reinsurance

Association, codified in Iowa Code section 513C.10 (1997), then provided:

1. A nonprofit corporation is established to be known as the
Iowa individual health benefit reinsurance association. All persons
that provide health benefit plans in this state including insurers
providing accident and sickness insurance under chapter 509, 514,
or 514A; fraternal benefit societies providing hospital, medical, or
nursing benefits under chapter 512B; and health maintenance
organizations, organized delivery systems, and all other entities
providing health insurance or health benefits subject to state
insurance regulation shall be members of this association. The
association shall be incorporated under chapter 504A, shall operate
under a plan of operation established and approved pursuant to
chapter 504A, and shall exercise its powers through a board of
directors established under this section.
....
5. The association has the general powers and authority
enumerated by this section and executed in accordance with the
plan of operation approved by the commissioner under subsection
3. In addition, the association may do any of the following:
a. Enter into contracts as necessary or proper to
administer this chapter.
b. Sue or be sued, including taking any legal action
necessary or proper for recovery of any assessments for, on
behalf of, or against members of the association or other
participating persons.
c. Appoint from among members appropriate legal,
actuarial, and other committees as necessary to provide
technical assistance in the operation of the association,
including the hiring of independent consultants as
necessary.
d. Perform any other functions within the authority of
the association.
 4

(Emphasis added.)

But in 2001, the statutory language was amended and no longer

enumerated the association’s powers. See 2001 Iowa Acts, ch. 125, § 4. The

Reinsurance Association argues, however, that because it was created as a

nonprofit corporation, it possesses all of the general powers enumerated in

section 504.302, which includes the power to “sue and be sued.” Iowa Code

§ 504.302(1). We disagree.

Entities created by statute are “limited in power to that authority granted by

the legislature.” Llewellyn v. Iowa State Commerce Comm’n, 200 N.W.2d 881,

884 (Iowa 1972). The Reinsurance Association ignores critical language in its

establishing statutory provision—the responsibilities of the Reinsurance

Association are no longer exercised through a section 513C.10 board of

directors. See Iowa Code 513C.10(1). Rather, the Reinsurance Association now

is statutorily required to exercise its responsibilities through a section 514E board

of directors. Id. The amended statutory scheme now provides:

1. The Iowa individual health benefit reinsurance association
is established as a nonprofit corporation.
a. All persons that provide health benefit plans in this state
including insurers providing accident and sickness insurance under
chapter 509, 514, or 514A, whether on an individual or group basis;
fraternal benefit societies providing hospital, medical, or nursing
benefits under chapter 512B; and health maintenance
organizations, organized delivery systems, other entities providing
health insurance or health benefits subject to state insurance
regulation, and all other insurers as designated by the board of
directors of the Iowa comprehensive health insurance association
with the approval of the commissioner shall be members of the
association.
b. The association shall be incorporated under chapter 504
or 504A, shall operate under a plan of operation established and
approved pursuant to chapter 504 or 504A, and shall exercise its
 5

powers through the board of directors established under chapter
514E.

Id. (emphasis added).

Turning to chapter 514E, section 514E.2(1) establishes the Iowa

Comprehensive Health Insurance Association, which is to “assure that benefits

authorized in section 514E.1, subsection 2” were made available and “shall also

be responsible for administering the Iowa individual health benefit reinsurance

association pursuant to all of the terms and conditions contained in chapter

513C.” Id. § 514E.2(1) (emphasis added). We are not free to ignore this

statutory language. Iowa’s Nonprofit Corporation Act recognizes that not all

nonprofit corporations can exercise the general powers granted by chapter 504.

Specifically, Iowa Code section 504.301(2) states: “A corporation engaging in an

activity that is subject to regulation under another statute of this state may

incorporate under this chapter only if incorporation under this chapter is not

prohibited by the other statute. The corporation shall be subject to all limitations

of the other statute.” (Emphasis added).

There can be little doubt that the Reinsurance Association is regulated by

Iowa Code chapter 513C. Because of that, the limitations of chapter 513C

prevail over the more general provisions of chapter 504.

When interpreting statutes, we seek the legislature’s intent.
Schaefer v. Putnam, 841 N.W.2d 68, 75 (Iowa 2013). . . . Rather
than analyzing words or phrases in isolation, we assess the entire
statute. Hardin Cnty. Drainage Dist. 55, Div. 3, Lateral 10 v. Union
Pac. R.R., 826 N.W.2d 507, 512 (Iowa 2013). We consider a
statute’s legislative history, including prior versions of the statute.
State v. Romer, 832 N.W.2d 169, 176 (Iowa 2013). Under the
pretext of construction, we may not extend a statute, expand a
statute, or change its meaning. Id. On the other hand, we look no
further than the language of the statute when it is unambiguous.
 6

Estate of Ryan v. Heritage Trails Assocs., Inc., 745 N.W.2d 724,
730 (Iowa 2008).

Schulte, 843 N.W.2d at 880.

“When a general statute is in conflict with a specific statute, the latter

generally prevails whether enacted before or after the general statute.”

Llewellyn, 200 N.W.2d at 884; see also Iowa Code § 4.7 (“If a general provision

conflicts with a special or local provision, they shall be construed, if possible, so

that effect is given to both. If the conflict between the provisions is irreconcilable,

the special or local provision prevails as an exception to the general.”).

Pursuant to section 514E.2, the Iowa Comprehensive Health Insurance

Association “shall operate under a plan of operation established and approved

under subsection 3 and shall exercise its powers through a board of directors

established under this section.” Further,

The [Iowa Comprehensive Health Insurance] association has
the general powers and authority enumerated by this subsection
and executed in accordance with the plan of operation approved by
the commissioner under subsection 3. The association has the
general powers and authority granted under the laws of this state to
carriers licensed to issue health insurance. In addition, the
association may do any of the following:
a. Enter into contracts as necessary or proper to carry
out this chapter.
b. Sue or be sued, including taking any legal action
necessary or proper for recovery of any assessments for, on
behalf of, or against participating carriers.

Iowa Code § 514E.2(5) (emphasis added).

We do not believe the statute at issue in this case is ambiguous. The

Iowa Comprehensive Health Insurance Association is statutorily “responsible for

administering the Iowa individual health benefit reinsurance association pursuant

to all of the terms and conditions contained in chapter 513C.” Id. § 514E.2(1).
 7

This explicit placement of the exercise of section 513C.10 powers with the Iowa

Comprehensive Health Insurance Association, including the right to sue, must be

read in conjunction with the statutory elimination of the Reinsurance

Association’s enumerated powers. The district court did not err in concluding the

Reinsurance Association was without authority to bring this suit, and therefore we

affirm.

AFFIRMED.