IN THE COURT OF APPEALS OF IOWA

No. 14-0290

Filed March 11, 2015

SHARON MOAD, Individually and as

Personal Representative of the ESTATE

OF DOUGLAS MOAD, et al.,

Plaintiff-Appellant,

vs.

RICHARD LIBBY, as Personal Representative

of the ESTATE OF MATTHEW LIBBY, et al.,

Defendant,

and

DAKOTA TRUCK UNDERWRITERS, et al.,

Intervenor-Appellee.

________________________________________________________________

Appeal from the Iowa District Court for Johnson County, Nancy A.

Baumgartner, Judge. 

Appeal from an order denying the plaintiff’s motion to strike the 

intervenor’s subrogation lien. AFFIRMED.

Martin Diaz and Elizabeth Craig of Martin Diaz Law Firm, Iowa City, for 

appellant.

Sasha L. Monthei, of Scheldrup Blades Schrock Smith, P.C., Cedar 

Rapids, for appellee.

Considered by Mullins, P.J., and Bower and McDonald, JJ.
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MCDONALD, J.

This case involves a dispute between Dakota Truck Underwriters

(hereinafter “DTU”), a workers’ compensation carrier, and the plaintiff Sharon 

Moad, in her individual capacity and as the representative of the estate of 

Douglas Moad, relating to reimbursement of workers’ compensation benefits paid 

to Douglas prior to his death. The question presented on appeal is “whether the 

law of Iowa or South Dakota should apply to determine whether a South Dakota 

workers’ compensation carrier is entitled to subrogation for payments made to its 

insured by underinsured and uninsured insurance carriers arising out of a 

settlement resulting from third-party litigation in Iowa.” Moad v. Dakota Truck 

Underwriters, 831 N.W.2d 111, 112 (Iowa 2013).

I.

This is the second time this matter has been on appeal. The facts and 

circumstances giving rise to the dispute and the procedural posture of the case 

are set forth in sufficient detail in the supreme court’s prior opinion and need not 

be repeated at any great length here. See Moad, 831 N.W.2d at 111-13. As 

relevant here, Douglas Moad was a resident of South Dakota. He was employed 

as a truck driver by a South Dakota trucking company. Pursuant to South 

Dakota law, DTU voluntarily paid workers’ compensation benefits to Moad arising 

out of a work-related traffic accident occurring in Iowa. We use the term 

“voluntarily paid” to mean the workers’ compensation benefits were paid without 

Moad’s entitlement to the benefits being challenged through a contested case or 
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similar proceeding. Douglas Moad accepted the workers’ compensation benefits

paid by DTU. Douglas deceased several months after the traffic accident. 

Sharon sought workers’ compensation benefits in Iowa. She also filed this civil 

suit against the motorist causing the traffic accident. DTU intervened in this 

case, asserting a workers’ compensation subrogation lien for the benefits paid to 

Douglas. Ultimately, Sharon settled this case with the underinsured and 

uninsured motorist insurance carriers and moved to strike the subrogation lien on 

the settlement proceeds. The parties agreed that DTU had a right to 

reimbursement if South Dakota law controlled the subrogation question and no 

right to reimbursement if Iowa law controlled the subrogation question. The 

district court held Iowa law applied and “granted Moad’s motion to extinguish 

DTU’s lien and denied DTU’s motion to vacate the order approving the 

settlement.” Moad, 831 N.W.2d at 113. DTU appealed that decision. 

In the first appeal, the supreme court concluded the district court and this 

court incorrectly analyzed the conflict of laws issue. The court held Restatement 

(Second) Conflict of Laws section 185 should be used to determine whether Iowa 

law or South Dakota law applied to the subrogation issue. Id. at 118. The 

supreme court also held “to the extent Restatement (Second) section 185 [did] 

not apply,” then Restatement (Second) section 145 provided “the proper 

approach to determining subrogation rules in a cause of action for personal 

injuries.” Id. The supreme court remanded the case “to the district court to 

consider the extent to which section 185 of the Restatement (Second) applies in 

this case.” Id. 
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On remand, Sharon renewed her motion to strike DTU’s subrogation lien. 

DTU resisted the motion to strike on the ground that the lien was allowed 

pursuant to South Dakota law. The district court concluded Restatement 

(Second) section 185 applied to this case, concluded that South Dakota law 

controlled the subrogation question, and held that DTU had a valid lien against 

the settlement proceeds under South Dakota law for compensation benefits 

already paid to Moad. In the order denying the motion to strike, the district court 

stated it believed the parties had stipulated that the amount of the subrogation 

lien was $84,446.55. The district court also stated that if the parties had not 

stipulated to the amount of the lien, the court would consider the matter further. 

Sharon timely appealed the district court’s order, which is now before us. On 

appeal, DTU disputes the amount of the lien and states it was not able to obtain 

a hearing on the amount of the lien because the plaintiff filed her notice of appeal 

before the issue could be resolved by the district court.

II.

Our review of the district court’s ruling is for corrections of errors at law. 

See Iowa R. App. P. 6.907; see also Comes v. Microsoft Corp., 709 N.W.2d 114, 

117 (Iowa 2006). On appeal, the plaintiff first contends the district court erred in 

concluding Restatement (Second) section 185 was applicable to this case. 

Section 185 provides as follows:

The local law of the state under whose workmen’s compensation 

statute an employee has received an award for an injury 

determines what interest the person who paid the award has in any 

recovery for tort or wrongful death that the employee may obtain 

against a third person on account of the same injury.
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Restatement (Second) of Conflict of Laws § 185 (1971). The plaintiff contends 

an “award” can only be paid following an adjudicative determination of 

entitlement to benefits, i.e., the entitlement to benefits must have been 

established in a contested case or similar proceeding. Here, the plaintiff argues, 

DTU voluntarily paid workers’ compensation benefits pursuant to South Dakota 

law without a contested case proceeding. Therefore, the plaintiff argues, section 

185 is inapplicable. DTU contends that section 185 includes those situations in 

which the employer or insurance carrier has paid and the employee accepted 

workers’ compensation benefits without regard to whether there was a contested 

case proceeding. We conclude DTU has the better of the argument. 

The plaintiff’s interpretation of section 185 is too narrow. First, the plaintiff

has not cited any cases adopting the narrow definition of “award.” Second, there 

is authority to the contrary. Kaiser v. North River Insurance Co., 605 N.W.2d 

193, 196 (S.D. 2000), holds that benefits voluntarily paid under South Dakota’s 

workers’ compensation statute give rise to a statutory lien for benefits already 

paid. Third, parsing the text of the Restatement as if it were statutory authority is 

misplaced. “In general, we look to the Restatement not as the law but as a 

guide.” Heinz v. Heinz, 653 N.W.2d 334, 339 (Iowa 2002). Our courts adopt the 

rules and rationale set forth in a particular Restatement only to the extent the 

rules and rationale are deemed consistent with our body of law and have 

persuasive force. See Thompson v. Kaczinski, 774 N.W.2d 829, 839 (Iowa 

2009). Thus, although our court may adopt the rules or rationale set forth in a 

particular Restatement, we do not necessarily do so jot-for-jot. 
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Most important, the plaintiff has not set forth any reason why an employer 

or insurance carrier that voluntarily paid workers’ compensation benefits should 

receive different treatment, for choice of law purposes, than an employer or 

insurance carrier that paid benefits following a contested case proceeding. 

Sound policy reasons actually militate against Moad’s interpretation of section 

185. One purpose of the workers’ compensation law common to all states is to 

encourage the efficient resolution of claims. See Moad, 831 N.W.2d at 118 

(“[W]orker’s compensation is designed to be an efficient method for dealing with 

workplace injuries . . . .”). It is at odds with workers’ compensation schema, 

generally, to adopt a rule that incents employers and insurance carriers to 

contest claims for no reason other than to preserve subrogation rights. Further, it 

is at odds with workers’ compensation schema, generally, to force an employer 

or insurance carrier to deny a claim without any factual or legal basis for doing 

so, potentially subject to sanction, merely to protect a subrogation right. We thus 

reject the plaintiff’s narrow interpretation of section 185. 

The plaintiff also argues that South Dakota law should not determine the 

subrogation issue because she filed in Iowa a workers’ compensation claim for 

benefits related to Douglas’s death. There is no doubt that Moad was entitled to 

file a claim for workers’ compensation benefits in Iowa even after receiving 

benefits pursuant to the workers’ compensation scheme established in South 

Dakota. See Reid v. Hansen, 440 N.W.2d 598, 602 (Iowa 1988). The fact that 

Moad sought additional benefits in Iowa, however, is not at all relevant to 

whether DTU has subrogation rights for benefits already paid pursuant to another 
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state’s law. Moad cites cases purporting to stand for the proposition that the 

state in which the injured employee chooses to seek compensation benefits 

controls the subrogation question. The cases do not bear such weight. In each 

of the cases cited, the dispositive issue was not where the claimant chose to file

the case, the dispositive issue was under which state’s workers’ compensation 

law were the compensation benefits paid. See Kolberg v. Sullivan Foods, Inc., 

644 N.E.2d 809, 811 (Ill. App. Ct. 1994) (“As to third-party actions, if 

compensation has been paid in a foreign state and suit is brought against a third 

party in the state of injury, the substantive rights of the employee, the subrogated 

insurance company and the employer are ordinarily held governed by the law of 

the foreign state.”); Langston v. Hayden, 886 S.W.2d 82, 85 (Mo. Ct. App. 1994)

(stating “the law generally states that the question of whether and to what extent 

the employer or its insurer is entitled to subrogation or reimbursement is to be 

determined according to the provisions of the workers’ compensation law under 

which the compensation for the employee’s injury was paid”); Am. Interstate Ins. 

Co. v. G & H Serv. Ctr., Inc., 861 N.E.2d 524, 527 (Ohio 2007) (stating “the laws 

of the state in which the workers’ compensation benefits were paid are 

controlling”); Allen v. Am. Hardwoods, 795 P.2d 592, 595 (Or. Ct. App. 1990) 

(stating that the State law pursuant to which compensation was paid determines

the rights of subrogation).

There are sound policy reasons for concluding the law of the state 

pursuant to which benefits were paid is the controlling law with respect to the 

employer or insurance carrier’s subrogation rights:
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First, subrogation rights in the worker’s compensation situation 

arise exclusively under the applicable worker’s compensation act. 

As a result, since the employer’s right to subrogation, if any, is 

created by statute, the state statute creating such rights should be 

applied to determine each of the employer’s rights and liabilities 

thereunder. Second, it has been determined that the state whose 

worker’s compensation program is most significantly involved has 

the most significant interest in the application of its policies. Finally, 

the application of the statute assures uniform and predictable 

results and does not allow one party to take advantage of the 

portion he likes and disregard those portions of which he 

disapproves.

Brown v. Globe Union, a Div. of Johnson Controls, Inc., 694 F. Supp. 795, 798 

(D. Colo. 1988). The same rationale is set forth in the Restatement: 

Situations arise where an employee while acting in the 

course of his employment is injured by the wrongful conduct of a 

third party who is not declared immune from liability for tort or 

wrongful death by an applicable workmen’s compensation statute 

(see § 184). In such situations, the third party remains liable even 

after an award has been rendered and paid. The workmen’s 

compensation statutes differ as to what interest the person who has 

paid the award has in the recovery on the cause of action against 

the third party. Under some statutes, acceptance of compensation 

by an injured employee or his dependents terminates his rights 

against the third party. In such a case, only the person who has 

paid the award (either the employer or an insurer) has an interest in 

the cause of action. Other statutes provide, however, that the 

person who has paid the award shall be reimbursed out of the 

proceeds of the judgment, and that the employee shall receive any 

sum that may remain.

Under the rule of this Section, the local law of the state 

under whose workmen’s compensation statute the claimant has 

received an award for an injury determines what interest the person 

who paid the award has in the recovery on any cause of action for 

tort or wrongful death that the employee may have against a third 

person on account of the same injury.

Restatement (Second) of Conflict of Laws § 185, cmt. a. 

We thus hold that the local law of the state under whose workers’ 

compensation statute an employee has received benefits determines what 
9

interest the person who paid the statutory benefits has in any recovery for tort or 

wrongful death that the employee may obtain against a third person on account 

of the same injury. Here, DTU had an obligation to pay workers’ compensation 

benefits pursuant to South Dakota law. See S.D. Codified Law § 62-8-6 (Supp. 

1999) (subjecting all employers of workers subject to their workers’ 

compensation act to the act). DTU voluntarily paid the statutory benefits

pursuant to South Dakota law, and Moad accepted the same. South Dakota law 

provides DTU is entitled to subrogation. See Kaiser, 605 NW.2d at 196. 

Accordingly, the district court did not err in applying section 185 of the 

Restatement (Second) of Conflict of Laws and did not err in denying the plaintiff’s 

motion to strike the lien.

III.

We have considered each of the parties’ respective arguments, whether 

explicitly discussed herein. For the foregoing reasons, the judgment of the 

district court is affirmed. Because the amount of the subrogation lien is in 

dispute, we remand this matter for determination of the amount of the statutory 

lien pursuant to South Dakota law.

AFFIRMED AND REMANDED.