Court Opinion

ID: 4249752
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:20:54.474754+00
Date Added: 2024-06-11T13:53:58.530499
License: Public Domain

IN THE SUPREME COURT OF IOWA
                              No. 09–0040

                         Filed October 29, 2010

THE TRAVELERS INDEMNITY COMPANY,

      Appellant,

vs.

D.J. FRANZEN, INC.,

      Appellee.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Polk County, Douglas F.

Staskal, Judge.

      Workers’ compensation assigned risk insurer seeks further review

of court of appeals’ decision affirming district court’s summary judgment

ruling for insured on insurer’s claim for additional premiums after

reclassification of insured’s workers.      DECISION OF COURT OF

APPEALS VACATED; JUDGMENT OF DISTRICT COURT REVERSED

AND CASE REMANDED WITH INSTRUCTIONS.

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

      Stanley J. Thompson of Davis Brown Law Firm, Des Moines, for

appellee.
                                          2

BAKER, Justice.

       The    Travelers     Indemnity     Company        (Travelers),   a    workers’

compensation assigned risk insurer, seeks further review of the court of

appeals’ decision affirming the district court’s summary judgment ruling

for the insured on Travelers’ claim for payment of additional premiums

as a result of Travelers’ reclassification of the insured’s workers as

employees.       Travelers asserts that the court of appeals erred in

(1) determining Travelers could not raise the doctrine of exhaustion of

administrative remedies to bar the insured from presenting a defense to

Travelers’ suit and (2) determining the employment status of the

insured’s workers, arguing the court of appeals’ decision conflicts with

case law supporting the administrative resolution of the underlying

premium rate dispute. We hold the administrative exhaustion doctrine

bars the insured from raising a defense to Travelers’ claim. Accordingly,

the decision of the court of appeals is vacated, and the district court

judgment reversed.

       I. Background Facts and Proceedings.

       In September 2003, D.J. Franzen, Inc. (Franzen), an over-the-road

trucking company, applied for workers’ compensation insurance through

the State of Iowa’s assigned risk plan.           Iowa’s assigned risk plan is a

statutorily created program that matches insurance providers with

employers who are unable to obtain workers’ compensation insurance on

the open market.       See Iowa Code § 515A.15 (2003) 1 (outlining Iowa’s

assigned risk plan).      Under Iowa law, employers are required to carry

workers’ compensation insurance for certain employees. See id. § 87.14A

(“An employer subject to this chapter and chapters 85, 85A, 85B, and 86

        1The legislature has made several nonrelevant changes to some of the applicable

provisions. Unless otherwise noted all references are to the 2003 Iowa Code.
                                          3

shall not engage in business without first obtaining insurance covering

compensation benefits or obtaining relief from insurance as provided in

this chapter . . . .”).

       The National Council on Compensation Insurance, Inc. (NCCI) has

been licensed as an approved rating organization in Iowa.             See id.

§ 515A.6 (providing authority for organizations to apply to the insurance

commissioner of Iowa to become licensed rating organizations for specific

types of insurance). NCCI administers Iowa’s assigned risk plan. See id.

§ 515A.15B (“An agreement among licensed insurers to offer workers’

compensation insurance for applicants unable to procure workers’

compensation       insurance    through       ordinary   methods    shall   be

administered by a rating organization licensed under this chapter.”).

NCCI    selected    Travelers   to   be   Franzen’s   workers’   compensation

insurance carrier.

       Travelers’ contract with Franzen offered insurance coverage for one

year, starting September 15, 2003. At the time Travelers offered Franzen

the coverage, Travelers calculated Franzen’s deposit premium to be

$1775. This figure was computed using figures Franzen had provided on

its application to the assigned risk plan. On this application, Franzen

was required to identify its total number of employees, its estimated

annual payroll, and the class code of each employee that needed to be

covered under the policy. The cost of the insurance plan varies based on

the covered employees’ class code and total payroll. Franzen listed seven

clerical office employees with an estimated annual payroll of $230,000.

Franzen did not list drivers on its application because it considered its

drivers to be owner-operators, not employees.

       As the administrator of Iowa’s assigned risk plan, NCCI prepares

reports for the insurers participating in the plan. These reports contain
                                      4

information concerning the insured’s workers’ compensation coverage

and claims for three years prior to the date of the report. NCCI prepared

a report for Travelers, revealing that in the previous three years Franzen

carried workers’ compensation insurance for its drivers in addition to its

clerical employees.   After receiving this report and discovering that

Franzen owned Hartland Lease Inc., a truck lease company, a Travelers’

underwriter became concerned with the status of Franzen’s drivers.

      The underwriter for Travelers, Joseph Pinto, attempted to perform

a preliminary audit of Franzen’s employment practices, but Franzen was

allegedly uncooperative.   Travelers claims that Franzen refused to give

Travelers’ auditors access to any documentation regarding the company’s

relationship with its drivers. As a result, Travelers sent Franzen a letter

stating that Franzen’s policy would be cancelled on January 14, 2004.

The letter stated that the coverage would not be reinstated until Franzen

cooperated with the preliminary audit. Franzen then provided copies of

contracts that stated the drivers were in fact owner-operators and did not

need to be covered by the policy.

      After reviewing the sample contract between Franzen and its

drivers, Pinto declared that “any trucker signing these documents would

be excluded from coverage under our policy.”        Thus, Travelers would

consider any driver who had signed a contract to be an owner-operator,

but all other drivers would be deemed employees and included in the

workers’ compensation policy.       Travelers, however, determined that it

needed to perform a second audit in early 2004. After performing this

second audit, which included a review of Franzen’s payroll documents for

drivers, Travelers determined that only eight of Franzen’s drivers were

owner-operators, but the rest of the drivers were employees and should
                                    5

be included under the insurance policy. This reclassification of drivers

significantly increased Franzen’s premium for the policy.

      On April 16, 2004, Travelers sent Franzen a premium adjustment

notice showing that the company’s total premium had increased to

$580,601. Franzen refused to pay the increased premium, insisting it

had no employee drivers, only owner-operators that did not need to be

covered under the policy. Travelers refused to revise its audit. Travelers,

on several occasions, informed Franzen that if the company wished to

appeal the premium determination it must file a written request with the

NCCI. Franzen did not appeal the determination, nor did the company

pay the additional premium. The policy was cancelled on June 4, 2004.

After cancelling the policy, Travelers again adjusted Franzen’s premium.

The adjusted premium for the pre-cancellation term of the policy was

$552,436.

      In June 2007, Travelers filed a petition seeking judgment against

Franzen for the increased premium. Franzen filed a motion for summary

judgment, arguing that its drivers were independent contractors and

should not have been included in the insurance policy. Travelers filed a

resistance to Franzen’s motion and a cross-motion for summary

judgment.    Franzen also sought to strike Travelers’ cross-motion as

untimely.   After a hearing on the motions, the district court denied

Travelers’ motion for summary judgment and granted Franzen’s motion.

The court did not address the motion to strike the cross-motion.

      Travelers appealed and argued that as a matter of law, Travelers

alone was authorized to determine all matters related to the calculation

of premiums; the majority of Franzen’s drivers were correctly determined

to be employees; and Franzen’s failure to appeal Travelers’ decision to
                                     6

NCCI constitutes a failure to exhaust administrative remedies and bars

Franzen’s defense of any and all claims.

      The court of appeals determined Franzen did not need to exhaust

its administrative remedies to defend Travelers’ claims, and Travelers did

not generate a fact question as to whether the drivers at issue were

employees or independent contractors. The court of appeals affirmed the

district court’s grant of Franzen’s motion for summary judgment.

      Travelers filed an application for further review with this court,

which we accepted.

      II. Scope of Review.

      The scope of review on a district court’s grant of summary

judgment is well established. We review rulings on motions for summary

judgment for the correction of errors at law. Farm Bureau Life Ins. Co. v.

Chubb Custom Ins. Co., 780 N.W.2d 735, 739 (Iowa 2010). A grant of

summary judgment is only appropriate when the “ ‘moving party [has]

affirmatively establish[ed] the existence of undisputed facts entitling that

party to a particular result under controlling law.’ ”         Id. (quoting

Interstate Power Co. v. Ins. Co. of N. Am., 603 N.W.2d 751, 756 (Iowa

1999)). In determining whether this standard has been met, the record

must be viewed in the light most favorable to the nonmoving party.

Schoff v. Combined Ins. Co. of Am., 604 N.W.2d 43, 45 (Iowa 1999).

            When no extrinsic evidence is offered on the meaning
      of language in a policy, “the interpretation and construction
      of an insurance policy are questions of law for the court.”
      “[W]e adhere to the rule ‘that the intent of the parties must
      control’ ” when construing insurance contracts. Except in
      cases of ambiguity, the intent of the parties is determined by
      what the policy says.

Farm Bureau Life Ins. Co., 780 N.W.2d at 739 (quoting Lee v. Grinnell

Mut. Reins. Co., 646 N.W.2d 403, 406 (Iowa 2002) (first quote); Swainston
                                     7

v. Am. Family Mut. Ins. Co., 774 N.W.2d 478, 481 (Iowa 2009) (second

quote)). “We review questions of statutory construction for the correction

of errors at law.” Zimmer v. Vander Waal, 780 N.W.2d 730, 733 (Iowa

2010).

      III. Discussion and Analysis.

      A. Failure to Exhaust Administrative Remedies. Travelers first

claim of error is that the court of appeals erred in determining Travelers

could not use the doctrine of exhaustion of administrative remedies to

bar Franzen from presenting a defense in a suit for damages. Travelers

appears to be making two separate arguments for why the district court

erred in this determination.

      First, Travelers argues that the language of the insurance contract

signed by Franzen incorporated the entirety of the NCCI Basic Manual’s

policies and procedures into the contract, and the dispute resolution

section   of   the   Manual    requires   exhaustion   of   NCCI’s   offered

administrative procedures.

      Section IX of the Manual outlines NCCI’s dispute resolution

procedures. The pertinent provisions of this section provide:

            Any person affected by the operation of the Plan
      including, but not limited to, participating companies,
      insureds . . . and assigned carriers, who may have a dispute
      with respect to any aspect of the Plan . . . may seek a review
      of the matter by the Plan Administrator by setting forth in
      writing with particularity the nature of the dispute, the
      parties to the dispute, the relief sought, and the basis
      thereof. . . .
            Appeals from employers and insurers on Plan matters
      . . . shall be within the jurisdiction of the mechanism
      established to handle such appeals under the applicable
      rating law.

While the language of this section does provide the insured with an

administrative remedy to challenge the provider’s rate determinations,
                                           8

there is nothing in this section that makes exhaustion of this remedy

mandatory.

       Further, we are unable to find any language within Travelers’ and

Franzen’s insurance contract that incorporates the entirety of the NCCI

Basic Manual’s policies and procedures into the contract.                    At two

separate locations in the contract the contract states that “[t]he premium

for   this   policy   will   be   determined    by     our   Manuals    of   Rules,

Classifications, Rates and Rating Plans.”            The NCCI Manual contains

specific sections with the titles “Premium Basis and Payroll Allocation,”

“Rules,” and “Rating Definitions and Application of Premium Elements.”

It is these Manual sections that are incorporated into Franzen’s contract,

not the section outlining NCCI’s dispute resolution procedures. We find

that the language of the insurance contract signed by Franzen did not

incorporate NCCI’s dispute resolution procedures into the contract.

Further, even if the dispute resolution section of the Manual had been

incorporated into the contract, there is no language in that section

making       exhaustion      of   NCCI’s   offered     administrative    procedure

mandatory.

       Alternatively,     Travelers   argues    that     exhaustion     of   NCCI’s

administrative remedy was required by statute and case law. Travelers

asserts that under Iowa Code section 515A.9, use of the administrative

procedure offered by NCCI is required. This Code section provides:

       Every rating organization and every insurer which makes its
       own rates shall provide within this state reasonable means
       whereby any person aggrieved by the application of its rating
       system may be heard, in person or by the person’s
       authorized representative, on the person’s written request to
       review the manner in which such rating system has been
       applied in connection with the insurance afforded the
       person. If the rating organization or insurer fails to grant or
       reject such request within thirty days after it is made, the
       applicant may proceed in the same manner as if the
                                    9
      application had been rejected. Any party affected by the
      action of such rating organization or such insurer on such
      request may, within thirty days after written notice of such
      action, appeal to the commissioner, who, after a hearing held
      upon not less than ten days’ written notice to the appellant
      and to such rating organization or insurer, may affirm or
      reverse such action.

Iowa Code § 515A.9.
      As a threshold matter, we must determine if section 515A.9 applies

to the dispute at issue here, premium disputes. Section 515A.9 provides

that Travelers and NCCI have the ability to set its own rates. “Rates” and

“rating systems” refer to overall rates applicable to classes of insurance

based on

      past and prospective loss experience within and outside this
      state; to the conflagration and catastrophe hazards, to a
      reasonable margin for underwriting profit and contingencies,
      to dividends, savings, or unabsorbed premium deposits
      allowed or returned by insurers to their policyholders,
      members, or subscribers, to past and prospective expenses
      both countrywide and those specially applicable to this state,
      and to all other relevant factors within and outside this
      state.

Id. § 515A.3(1)(b); see also Iowa Admin. Code r. 191—60.4.

      Pursuant to Travelers’ policy, premiums are then determined based

on “rates, rating plans, and classifications.” Section 515A.9 authorizes

dispute resolution procedures not only for both rates and rating systems

but also for those “aggrieved by the application of its rating system.”

Iowa Code § 515A.9. Since premiums are derived from rates and rating

plans, entities paying premiums “are aggrieved by the application” of the

rating system. Therefore, section 515A.9 provides a procedure for

premium disputes.     Next, we turn to whether section 515A.9 requires

administrative exhaustion.

      Administrative exhaustion is only imposed when two conditions

are present:   (1) “an administrative remedy must exist for the claimed
                                     10

wrong,” and (2) “the statutes must expressly or impliedly require that

remedy to be exhausted before resort to the courts.” N. River Ins. Co. v.

Iowa Div. of Ins., 501 N.W.2d 542, 545 (Iowa 1993). We address each

requirement in turn.

      NCCI is a rating agency organization licensed to do business in the

State of Iowa under chapter 515A. However, this Court has noted that

“[t]he legislature has delegated to the commissioner of insurance

authority to determine whether rates charged by companies providing

workers’ compensation insurance are excessive.” Travelers Indem. Co. v.

Comm’r of Ins., 767 N.W.2d 646, 650 (Iowa 2009) (citing Iowa Code

section 515A.1 for the proposition that chapter 515A’s purpose “is to

promote the public welfare by regulating insurance rates to the end that

they shall not be excessive”).      The Commissioner of Insurance has

exercised this statutory authority by delegating a portion of its charged

task to NCCI. See Iowa Code § 515A.15B (stating Iowa’s assigned risk

plan for workers’ compensation insurance “shall be administered by a

rating organization licensed under this chapter”). NCCI is acting, at least

when offering these dispute resolution procedures, as an arm of the

Commissioner of Insurance and in an administrative manner.

      Furthermore,     the   statutory    scheme   spells   out   a   remedial

administrative process for premium disputes. Iowa Code section 515A.9

clearly outlines the process to be followed and allows for appeals of NCCI

decisions to the commissioner. Id. § 515A.9 (“Any party affected by the

action of such rating organization or such insurer on such request may,

within thirty days after written notice of such action, appeal to the

commissioner, who, after a hearing held upon not less than ten days’

written notice to the appellant and to such rating organization or insurer,

may affirm or reverse such action.”). These procedures are coupled with
                                    11

Iowa Code section 515A.18, which provides that judicial review of the

commissioner’s decisions must be done in accordance with Iowa Code

chapter 17A. See id. § 515A.18(3) (“Judicial review of the actions of the

commissioner may be sought in accordance with the terms of the Iowa

administrative procedure Act.”). Because NCCI is acting pursuant to the

commissioner’s delegation of authority and the statutory scheme

expresses a clear administrative remedial process an administrative

remedy exists for the claimed wrong in this case.

      With respect to the second requirement, we must determine

whether Iowa Code section 515A.9 expressly or implicitly requires

administrative exhaustion.      Travelers has not provided us with any

statutory language that expressly requires NCCI’s dispute resolution

procedures be exhausted before the parties may resort to the courts, nor

have we found any.

      Iowa Code section 515A.9 states that rating organizations licensed

under chapter 515A, “shall provide . . . reasonable means whereby any

person aggrieved by the application of its rating system may be heard.”

The statute does not explicitly require that the aggrieved individual

utilize those means.   There is also nothing in the administrative rules

which requires parties to exhaust the dispute resolution procedures

offered by NCCI before resorting to judicial review. See generally Iowa

Admin.   Code   r.   191—60.4    (detailing   the   rate   or   manual   filing

procedures). Finally, the language contained in NCCI’s Basic Manual is

permissive. It states that any aggrieved party “may seek a review of the

matter by the Plan Administrator.”       (Emphasis added.)      Since section

515A.9 does not expressly require administrative exhaustion we consider

whether the section’s remedial scheme impliedly requires exhaustion.
                                    12

      We look to the intent of the legislature in determining whether to

imply a requirement that administrative remedies be exhausted. Keokuk

County v. H.B., 593 N.W.2d 118, 125 (1999).

      We consider the objectives the legislature sought to
      accomplish and construe the statute to best affect legislative
      intent. Where no explicit statutory direction exists, we
      consider whether the exhaustion requirement would be
      consistent with the statutory scheme, so that any implied
      exhaustion requirement is tailored to fit the role the
      legislature assigned to the agency.

Id. (citation omitted).
      We find the comprehensive nature of the statute’s remedial scheme

implies that section 515A.9 is mandatory. The section provides detailed

procedures as well as means for an appeal to the commissioner of NCCI’s

determination.    Iowa Code § 515A.9.     In addition, Iowa Code section

515A.18 specifically provides that “[j]udicial review of the actions of the

commissioner may be sought in accordance with the terms of the Iowa

administrative procedure Act, chapter 17A.”           The comprehensive

statutory scheme suggests exhaustion is implied under section 515A.9.

      The purposes of the exhaustion doctrine further support a finding

that Franzen exhaust all available administrative remedies. The doctrine

      is a highly utilitarian principle of administrative law both as
      an expression of administrative autonomy and a rule of
      sound judicial administration.         The agency has been
      legislatively created as an entity vested with its own powers
      and duties. It should be free to work out its own problems,
      and courts should not interfere with its work until the
      agency has completed its task.

Pro Farmer Grain, Inc. v. Iowa Dep’t of Agric. & Land Stewardship, 427
N.W.2d 466, 469 (Iowa 1988). The exhaustion requirement is intended

to honor agency expertise by mandating that most matters be handled

within the agency. See IES Utils. Inc. v. Iowa Dep’t of Revenue & Fin., 545
                                   13
N.W.2d 536, 538 (Iowa 1996).     It is also intended to preserve judicial

resources. Id.

            The exhaustion rule serves a legitimate state interest
      in requiring parties to exhaust administrative remedies
      before proceeding to court, thereby preventing an
      overworked court from considering issues and remedies that
      were available through administrative channels. It also
      encourages the use of more economical and less formal
      means of resolving disputes and is credited with promoting
      accuracy, efficiency, agency autonomy, and judicial
      economy.

2 Am. Jur. 2d Administrative Law § 474, at 402 (2004).

      Mandating that Franzen exhaust its available administrative

remedies furthers these purposes. NCCI has expertise on how premiums

for workers’ compensation insurance should be calculated, as well as

how an employee’s status is determined. In addition, a determination by

NCCI may have finally resolved this controversy—thus preserving judicial

resources.   The clear implication of this statutory scheme is that

individuals must exhaust the administrative remedies provided for in

Iowa Code chapter 515A before seeking review by the courts.

      Franzen argues Travelers, as plaintiff, cannot use the exhaustion

doctrine offensively to bar Franzen from raising a defense to Travelers’

claim. Franzen cites attenuated authority for this position, and Travelers

does not argue the issue. We find two Supreme Court cases arising in

the Vietnam War and Selective Service System setting to be instructive.

See McGee v. United States, 402 U.S. 479, 91 S. Ct. 1565, 29 L. Ed. 2d
47 (1971); McKart v. United States, 395 U.S. 185, 89 S. Ct. 1657, 23 L.
Ed. 2d 194 (1969).    In these cases the Court considered whether the

government could offensively use the exhaustion doctrine to bar the

defendants from raising a defense to their respective criminal charges.

In McKart, the defendant alleged he was exempt from service as a matter
                                   14

of statutory construction, and in McGee the defendant sought to raise a

conscientious objector defense; both defendants failed to exhaust these

defenses during the Selective Service’s administrative classification

process. McGee, 402 U.S. at 489, 91 S. Ct. at 1571, 29 L. Ed. 2d at 56;

McKart, 395 U.S. at 189–190, 193, 89 S. Ct. at 1660, 1662, 23 L. Ed. 2d

at 201.

      The Court weighed the interests of the defendants against the

government’s interests that underlie the exhaustion doctrine.     McGee,
402 U.S. at 484–86, 91 S. Ct. at 1569–70, 29 L. Ed. 2d at 53–54; McKart,
395 U.S. at 198–99, 89 S. Ct. at 1665, 23 L. Ed. 2d at 205–06.        The

Court conceded “the harsh impact of the doctrine when it is invoked to

bar any judicial review” of the defendants’ claims. McGee, 402 U.S. at

484, 91 S. Ct. at 1569, 29 L. Ed. 2d at 53. Application of the exhaustion

doctrine to the defendants would ensure criminal convictions against the

defendants and bar them from raising potentially viable legal defenses.

However, the Court noted several important government interests

support the exhaustion doctrine such as permitting the development of

an administrative record, utilizing agency expertise, and deterring

deliberate flouting of the administrative process. Id. (citing McKart, 395

U.S. at 194–95, 89 S. Ct. at 1663, 23 L. Ed. 2d at 204).

      In McKart the issue was one of pure statutory interpretation and

the court concluded the government’s interest in exhaustion did not

outweigh the harsh burden imposed on the defendant because statutory

interpretation does not require agency fact finding or expertise. McKart,
395 U.S. at 197–99, 89 S. Ct. at 1665, 23 L. Ed. 2d at 205–06.         In

McGee, however, the primary issue was whether the defendant was in

fact a conscientious objector, an issue of fact. McGee, 402 U.S. at 490,

91 S. Ct. at 1571–72, 29 L. Ed. 2d at 56.           The Court held the
                                    15

government’s interest in agency fact finding, agency expertise, and

deterrence of deliberate refusal to participate in the administrative

process outweighed the harm to the defendant. Id. at 489–91, 91 S. Ct.

at 1571–72, 29 L. Ed. 2d at 56–57.       The Court held the defendant in

McGee could not argue he was a conscientious objector as a defense to

his criminal charges. Id. at 491, 91 S. Ct. at 1572, 29 L. Ed. 2d at 57.

      Using these balancing principles as a guide, we believe on these

facts the policies that underlie the exhaustion doctrine require us to

permit Travelers to offensively use the exhaustion doctrine.      First, we

believe the “harsh impact” faced by Franzen if it is barred from asserting

its defenses is less than the impact imposed upon the defendant in

McGee. McGee is a criminal case, whereas here only a money judgment

is at issue. Id. at 480, 91 S. Ct. at 1567, 29 L. Ed. 2d at 51. We also

find these facts implicate the governmental interests that support the

exhaustion doctrine.   The Commissioner of Insurance is charged with

setting applicable rates and the commissioner and, at times through

delegation, NCCI have the duty to resolve premium disputes. Franzen,

by refusing to utilize available administrative remedies, has inhibited the

opportunity for the input of agency expertise.     Franzen also prevented

the development of an administrative record despite Franzen’s defense

requiring a factual analysis. Finally, Franzen made a deliberate decision

not to exercise its administrative remedies for at least three years despite

being notified in writing at least twice of its right to appeal to NCCI. As

the Supreme Court stated in McGee, “it is not fanciful to think that

‘frequent and deliberate flouting of administrative processes’ might occur

if [Franzen] and others similarly situated were allowed to press their

claims in court despite . . . failure to exhaust.” Id. at 491, 91 S. Ct. at
                                    16

1572, 29 L. Ed. 2d at 57 (quoting McKart, 395 U.S. at 195, 89 S. Ct. at

1663, 23 L. Ed. 2d at 204).

      Thus we hold that Franzen was required to exhaust the remedy in

section 515A.9 before asserting its defense in the courts. Franzen had

the ability to contest both the rate and the employment status of its

drivers. Having failed to do so, Franzen may not now litigate that which

could have been dealt with three years before this action was

commenced.

      B. Motions for Summary Judgment.            Because we hold that

Franzen was required to exhaust its remedy before NCCI, it may not now

contest either Travelers’ determination that the drivers were employees or

the premium charged. We need not address Franzen’s motion to strike

Travelers’ motion for summary judgment for lack of timeliness.         The

district court summarily denied Franzen’s motion.        Franzen has not

asserted the timeliness issue on appeal. It is therefore waived. Pierce v.

Staley, 587 N.W.2d 484, 486 (Iowa 1998) (“When a party, in an appellate

brief, fails to state, argue, or cite authority in support of an issue, the

issue may be deemed waived.).

      Therefore, it must be taken as undisputed that the drivers were

employees and the appropriate premium was $550,661 which is

computed by the amount of the adjusted premium of $552,436 less the

$1775 previously paid. Because of this determination, the district court

erred in granting Franzen’s motion for summary judgment.         It further

erred in determining that the drivers were not employees.        Travelers’

cross-motion for summary judgment should have been granted and

judgment entered accordingly.

      IV. Disposition. We therefore vacate the decision of the court of

appeals. We further reverse the decision of the district court granting
                                 17

summary judgment to Franzen and remand with instructions to enter

summary judgment in favor of Travelers in the amount of $550,661.

     DECISION OF COURT OF APPEALS VACATED; JUDGMENT OF

DISTRICT    COURT    REVERSED      AND    CASE    REMANDED      WITH

INSTRUCTIONS.