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Iowa Dental Association v. Iowa Insurance Division and Iowa Insurance Commissioner

May 17, 2013


Appeal from the Iowa District Court for Polk County, Mary Pat Gunderson, Judge.

The opinion of the court was delivered by: Mansfield, Justice.

A trade association representing Iowa dentists appeals the district court's ruling upholding a declaratory order of the Iowa Insurance Commissioner. REVERSED AND REMANDED.

This case asks us to decide whether to uphold the Iowa Insurance Commissioner's interpretation of a recently enacted law governing dental insurance plans. See Iowa Code § 514C.3B (2011). Under the Commissioner's interpretation of that law, an insurer may limit the maximum fees charged by dentists for services that are generally included in the insurer's dental plan, even though they are not actually reimbursed by the insurer because of a plan restriction.

On our review, we find that interpretation of the term at issue has not been clearly vested by a provision of law in the discretion of the Commissioner. Therefore, de novo review is appropriate. See id. § 17A.19(10)(c). We then conclude that the services in question do not meet the statutory definition of "covered services," because they have not been "reimbursed under the dental plan." See id. § 514C.3B(3)(a). Accordingly, the fee for them may not be "set by the dental plan." See id. § 514C.3B(1). For these reasons, we reverse the decision of the district court upholding the Commissioner's declaratory ruling and remand for further proceedings consistent herewith.

I. Facts and Procedural Background.

This case centers on the contractual relationships between dentists and insurers that provide dental plans. Many dentists in Iowa enter into these plans, under which insurers reimburse all or part of the costs of various dental procedures. Typically the plan contracts include maximum fee schedules. In the schedule, the insurer sets a maximum amount the dentist can charge for a particular service. Dentists agree to abide by these maximum fees, in exchange for the benefit of providing services to insured patients.

Generally, the plans exclude certain services, such as cosmetic dentistry and teeth whitening. Preventive plans have additional exclusions. But even when services are covered, there may be limits such as deductibles, maximum annual benefits, waiting periods, and frequency limitations. A common frequency limitation is that patients may be reimbursed for up to two teeth cleanings per year, but not for a third cleaning within that same time period.

Before the general assembly passed section 514C.3B, some dental plans contained maximum fees that dentists could charge for services that were never reimbursable under their dental insurance plans, like teeth whitening. In 2010, and in apparent response to this practice, the legislature adopted "An Act prohibiting the imposition by a dental plan of fee schedules for the provision of dental services that are not covered by the plan." 2010 Iowa Acts ch. 1179 (codified at Iowa Code § 514C.3B).

Iowa's law provides:

A contract between a dental plan and a dentist for the provision of services to covered individuals under the plan shall not require that a dentist provide services to those covered individuals at a fee set by the dental plan unless such services are covered services under the dental plan.

Iowa Code § 514C.3B(1). The statute contains the following definition of "covered services":

"Covered services" means services reimbursed under the dental plan.

Id. § 514C.3B(3)(b). And a final subsection of the statute states:

Nothing in this section shall be construed as limiting the ability of an insurer or a third-party administrator to restrict any of the following as they relate to covered services: a. Balance billing. b. Waiting periods.

c. Frequency limitations.

d. Deductibles.

e. Maximum annual benefits.

Id. § 514C.3B(4).

Following enactment of this law, insurers continued imposing maximum fees on services that were actually reimbursed under their dental plans, such as semiannual teeth cleanings. But some insurers went further. They placed maximum fees on services that were potentially reimbursable but were not actually reimbursed because of some plan limit, such as a frequency limit. For example, an insurer would require a dentist to charge no more than a certain amount for any teeth cleaning, even though only the first two cleanings were actually reimbursed under the plan.

According to the Iowa Dental Association (IDA), the petitioner in this action, a number of its dentist--members inquired to insurers about maximum fees on these reimbursable, but not actually reimbursed, services. The insurers responded that such services were "covered services" under section 514C.3B(3)(a), and could accordingly be subject to their fee schedules, even though they were not being reimbursed in a particular instance.

The IDA argued that dentists faced "conflicting interpretations" of the statute: the dentists' own interpretation that such services were not "covered," and the insurers' view that they were. Accordingly, on August 19, 2011, the IDA filed with the Insurance Division a request for a declaratory order clarifying the meaning of "covered services" in section 514C.3B. See id. § 17A.9 (setting forth the procedure for seeking a declaratory order from an agency). The IDA specifically requested an answer to the following question:

Is an insurer permitted to impose and enforce a maximum fee for services that are not reimbursed under the dental plan (except for standard co-payments or deductibles paid by the patient) due to limitations related to balance billing, waiting periods, frequency limitations, deductibles, and maximum annual benefits?

The IDA proposed that the Commissioner answer the question in the negative, based on its reading of the statute's ...

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