IN THE SUPREME COURT OF IOWA

No. 15–0714

Filed November 18, 2016

AUTO-OWNERS INSURANCE COMPANY,

Appellant,

vs.

IOWA INSURANCE DIVISION,

Appellee.

Appeal from the Iowa District Court for Polk County, Robert B. 

Hanson, Judge.

Insurer appealed insurance commissioner’s decision to decline to 

consider the merits of an insured’s complaint and the district court 

dismissed for lack of standing. APPEAL DISMISSED.

CeCelia C. Ibson of Ibson Law Firm, Des Moines, for appellant.

Thomas J. Miller, Attorney General, Jordan G. Esbrook, Assistant 

Attorney General, for appellee.
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APPEL, Justice.

In this case, we are asked to consider whether an insurer may 

bring an appeal under the Iowa Administrative Procedures Act of an

action by the insurance commissioner when the commissioner declined 

to consider the merits of an insured’s complaint challenging the insurer’s 

termination of workers’ compensation insurance on the ground that the 

complaint raised factual issues that could not be resolved by the agency. 

For the reasons expressed below, we conclude the appeal is moot and 

thus dismiss the appeal.

I. Factual and Procedural Background.

Subject to exceptions not relevant to this case, Iowa employers are 

required by law to obtain insurance covering their liability for workers’ 

compensation benefits. Iowa Code § 87.1 (2015). When an employer in 

good faith is entitled to insurance but is unable to procure it in the open 

market, Iowa’s assigned risk plan provides a mechanism by which 

coverage is available. Iowa Code § 515A.15. Auto-Owners Insurance 

Company (Auto-Owners) is a participant in Iowa’s assigned risk plan.

The National Council on Compensation Insurance (NCCI) is a 

rating organization operating in Iowa and is administrator of the 

assigned risk plan. As we noted in Travelers Indemnity Co. v. 

Commissioner of Insurance, NCCI “adopted rules for the administration, 

management, and enforcement of the assigned risk plan in Iowa.” 767 

N.W.2d 646, 647–48 (Iowa 2009).

On February 28, 2014, Health Dimensions Rehabilitations, Inc. 

(Health Dimensions) submitted an application for workers’ compensation 

insurance to the assigned risk plan. Health Dimensions has its home 

office in Minnesota. It conducts business in Minnesota, Iowa, South 

Dakota, and Wisconsin. Pursuant to the assigned risk plan, NCCI 
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assigned Auto-Owners as Health Dimensions workers’ compensation 

insurance carrier.

On assignment from Auto-Owners, Travelers Indemnity Company 

issued a workers’ compensation policy. The policy provided coverage 

only for Health Dimensions’ Iowa workers engaged in its Iowa operations.

Carolina Casualty Insurance Company provided coverage for Health 

Dimensions’ Minnesota employees.

A dispute arose between Health Dimensions and Carolina Casualty 

regarding the proper premium for coverage of its Minnesota employees. 

The dispute led to NCCI sending a letter to Auto-Owners on June 17, 

which stated that Health Dimensions had been identified as ineligible for 

assigned risk coverage because the company was “identified as having an 

undisputed premium or other monetary obligation on a prior/current 

workers compensation policy.” The NCCI instructed Auto-Owners to 

verify that the policy with Health Dimensions was an assigned risk policy 

and, if so, Auto-Owners was instructed to initiate cancellation of the 

policy.

On June 19, Auto-Owners issued a notice of cancellation to Health 

Dimensions, effective July 4. The notice indicated that Health 

Dimensions’ workers compensation policy was “cancelled by underwriter 

and/or plan admin.”

Health Dimensions responded to the notice of cancellation in two 

ways. First, in August, Heath Dimensions filed an action in Minnesota 

state court against Auto-Owners claiming breach of contract. In the 

lawsuit, Health Dimensions sought a declaratory judgment as well as 

punitive damages.

Second, on September 11, Health Dimensions sent a letter to the 

Iowa insurance commissioner complaining about the cancellation of its 
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Iowa policy and claiming the cancellation violated Iowa law. On October 

10, Auto-Owners submitted its response. In its response, Auto-Owners

provided an extensive history of the dispute.

On October 28, John Leonhart, an enforcement attorney for the 

Iowa Insurance Division, wrote Health Dimensions regarding its 

September 11 complaint. In the letter, Leonhart stated,

It appears from the matters raised in your letters, the 

response from Auto-Owners and the complaint filed in the 

District Court for the County of Isanti, State of Minnesota 

that you have a factual dispute with Auto-Owners and NCCI. 

The Division as a state administrative agency does not have 

the authority to resolve such a factual dispute. The proper 

forum for this is a court of law and that is where this matter 

now resides. The Division cannot intervene in a matter that 

is currently being litigated before a judicial tribunal.

Auto-Owners filed a petition for judicial review in Polk County 

District Court on November 20. The petition sought a declaration that 

the insurance commission should have exercised jurisdiction over the 

dispute between Health Dimensions and Auto-Owners. The 

commissioner filed a motion to dismiss the petition, arguing that AutoOwners was not “a person aggrieved by the application of a rating 

system” under Iowa Code section 515A.9. In an amended filing, the 

commissioner argued that Auto-Owners had no standing to challenge the 

commissioner’s action under Iowa Code section 17A.19.

The district court entered its ruling on March 31, 2015. In its 

ruling, the district court held that Auto-Owners lacked standing to

litigate the issues. The district court stated that the only requirement of 

standing at issue in the case was whether Auto-Owners is “aggrieved or 

adversely affected” by the commissioner’s decision under Iowa Code 

section 17A.19(1).
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The district court applied the test developed by this court in Polk 

County v. Iowa State Appeal Board, 330 N.W.2d 267, 273 (Iowa 1983). In 

Polk County, we applied a two-prong test to standing under the Iowa 

Administrative Procedure Act. Id. The first Polk County standing 

requirement, the interest prong, required a party to show a “specific,

personal and legal interest in the subject matter” of the agency action. 

Id. The second Polk County standing requirement, the prejudice prong, 

required an appealing party to demonstrate the agency action has a 

specific or injurious effect on the appealing party’s interest. Id. The 

district court concluded that while Auto-Owners met the interest prong 

of the Polk County test, it failed to meet the prejudice prong. The district 

court granted the motion to dismiss.

Auto-Owners appealed the district court decision. For the reasons 

expressed below, we dismiss the appeal as moot.

II. Discussion.

At oral argument in this matter, we were advised by counsel that 

Health Dimensions had accepted a refund check from Auto-Owners

related to the cancelled insurance policy and did not appear at a hearing 

in state court in Minnesota dealing with questions related to cancellation 

of the Health Dimensions’ policy with Auto-Owners. The dispute 

regarding cancellation of the insurance policy which was presented to the 

insurance commissioner thus appears to be moot. See Electra Ad Sign 

Co. v. Cedar Rapids Truck Ctr., 316 N.W.2d 876, 879 (Iowa 1982) (holding 

that an obligation is discharged when valid consideration is offered, 

intended, and accepted as full satisfaction of the original claim); Kissner 

v. Brown, 487 N.W.2d 97, 98 (Iowa Ct. App. 1992) (per curiam) (stating 

plaintiff accepting and cashing check for judgment without reservation or 

protest rendered plaintiff’s appeal moot). Under the circumstances
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presented and applying our established caselaw, we dismiss the appeal 

as moot.

III. Conclusion.

For the above reasons, the appeal is now moot and must be 

dismissed.

APPEAL DISMISSED.