Opinion ID: 1599033
Heading Depth: 1
Heading Rank: 4

Heading: Iowa Code Section 507BInsurance Trade Practices.

Text: Plaintiff contends that this court should recognize a private cause of action based on Iowa Code chapter 507B. Defendants object to this contention on the ground that chapter 507B does not provide for such a cause of action. Plaintiff, however, argues that a private cause of action is authorized under the case law of this state and by Iowa Code section 668.9 (1985). The statutory provision at issue provides: The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: .... 9. Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following: .... f. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. Iowa Code § 507B.4(9)(f). In determining whether a private cause of action is cognizable under chapter 507B, this court has employed a four part test as modified from the United States Supreme Court case of Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). Pursuant to that test, we held in Seeman v. Liberty Mutual Insurance Company, 322 N.W.2d 35, 40 (Iowa 1982), that four considerations should be analyzed in determining whether a statute creates a private cause of action. Those considerations are: first, whether the plaintiff is a member of a class for whose special benefit the statute was enacted; second, whether there is legislative intent, either explicit or implicit, to create or deny a remedy; third, whether a private cause of action is consistent with the underlying purpose of the chapter; and fourth, whether the implication of a private cause of action will intrude into an area over which the federal government has exclusive jurisdiction or which has been delegated exclusively to a state administrative agency. Id. at 41-43. In Seeman, we specifically concluded that the legislative intent indicated that no private cause of action was intended by chapter 507B. Id. We based our conclusion in Seeman on several factors. First, we concluded that section 507B.1 provided that the purpose of the statute was regulatory and was to be used to regulate trade practices in the business of insurance. Id. at 42. Second, the act explicitly vested the insurance commissioner with administrative powers, further indicating that the statute was regulatory in nature. Id. Third, section 507B.8 provides that the chapter in no way relieves or absolves a person from liability under other laws of the state, once again indicating that the chapter is essentially regulatory and not grounds for a private cause of action. Finally, we found that the legislature, in enacting chapter 507B, intended only to invest the insurance commissioner with administrative enforcement powers and that the chapter not be expanded in the exercise of administrative or judicial discretion. Id. Plaintiff does not contend that the present case is distinguishable from Seeman. Rather, he contends that through our other decisions in the area, and section 668.9, the law has changed since Seeman was handed down. More specifically, plaintiff contends that the rationale of Dolan, the growing majority of states finding first-party bad faith, and the willingness of several courts and legislatures to examine this field seem to compel a recognition of common law third-party actions for breach of the duty of fair dealing and the tort of bad faith. We disagree. A careful review of the host of cases cited by plaintiff, as well as chapter 668, reveal no indication that chapter 507B creates a private cause of action as suggested by plaintiff. The fact that Iowa has adopted comparative fault and has prohibited insurance companies from improperly applying it does not create a private cause of action. In fact, our analysis in Seeman is very explicit in indicating that the intention of chapter 507B is not to create a private cause of action. Therefore, in refusing to adopt such a common law tort, we have specifically rejected the analysis advanced by plaintiff. To hold that chapter 507B creates a private cause of action would be in direct contradiction to existing Iowa law and would create a cause of action not intended by the legislature.