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Abbas v. Iowa Insurance Division

Supreme Court of Iowa

April 21, 2017

LYLE H. ABBAS, F. DOW BATES, BRADLEY J. BROWN, SIDNEY E. CARTER, BRAD CHICOINE, RUSSELL J. COX, PAUL D. EBERLINE, JOSEPH N. GEELAN, RICHARD W. HAAS, REX J. JONES, KEITH L. KLEMME, ELIZABETH C. KRESSIN, STEVEN J. KRAUS, MARK A. KRUSE, RODNEY D. LANGEL, RONALD O. MASTERS II, KEVIN MILLER, STEVEN A. MUELLER, MARK A. NILES, VALORIE J. PRAHL, JENNIFER A. RASMUSSEN, ROD R. REBARCAK, RANDALL P. STANGE, LANCE E. VANDERLOO, KENNETH W. VAN WYK, and BEN WINECOFF, Appellants,
v.
IOWA INSURANCE DIVISION, Appellee, WELLMARK, INC. d/b/a WELLMARK BLUE CROSS AND BLUE SHIELD OF IOWA, and WELLMARK HEALTH PLAN OF IOWA, INC., Intervenors.

         Appeal from the Iowa District Court for Polk County, Karen A. Romano, Judge.

         A group of chiropractors appeals a judicial review proceeding in which the district court upheld a decision of the insurance commissioner finding the insurers did not violate Iowa Code section 514F.2 (2013). AFFIRMED.

          Glenn L. Norris of Hawkins & Norris, P.C., Des Moines, and Steven P. Wandro and Kara M. Simon of Wandro & Associates, P.C., Des Moines, for appellants.

          Thomas J. Miller, Attorney General, and Jordan Esbrook, Assistant Attorney General, for appellee.

          Ryan G. Koopmans and Hayward L. Draper of Nyemaster Goode, P.C., Des Moines, for intervenors.

          WIGGINS, Justice.

         Twenty-six chiropractors petitioned for judicial review of the Iowa Insurance Commissioner's decision that health insurers did not violate Iowa Code section 514F.2 (2013). The district court upheld the commissioner's decision, and the chiropractors appealed. We hold that (1) the interpretation of section 514F.2 has not been clearly vested by a provision of law in the discretion of the commissioner, (2) section 514F.2 regulates payments to providers, (3) the health insurer's payments for chiropractic care are not based solely on licensure, and (4) the Employee Retirement Security Program (ERISA) preempts the application of Iowa Code section 514F.2 to self-funded health plans. Accordingly, we affirm the judgment of the district court.

         I. Background Facts and Proceedings.

         The appellants are Iowa-licensed chiropractors. Chiropractors obtain a license in Iowa by completing a high-school education, graduating from an approved college of chiropractic, and passing an exam issued by the board of chiropractic. Iowa Code § 151.3. A chiropractic license does not authorize a chiropractor to practice surgery or administer or prescribe prescription drugs or controlled substances. Id. § 151.5.

         The intervenor in this case is Wellmark, Inc. d/b/a Wellmark Blue Cross and Blue Shield of Iowa and Wellmark Health Plan of Iowa, Inc. Wellmark sells health insurance plans to individuals and employer groups. It also provides administrative services to assist others who provide health insurance coverage, such as self-funded governmental entity plans. Mueller v. Wellmark, Inc., 818 N.W.2d 244, 248 (Iowa 2012). Wellmark offers both preferred provider organization (PPO) plans and health maintenance organization (HMO) plans.

         For the PPO, Wellmark creates a network of preferred healthcare providers, including doctors of chiropractic, medical doctors, and osteopathic doctors. Mueller, 818 N.W.2d at 248. It incentivizes its members to use its preferred provider panel. Id. Chiropractors are preferred providers of Wellmark's PPO network. Wellmark enters into contracts governing the terms and conditions of treatment as well as fee schedules with its preferred providers. Id. Preferred providers must adhere to these contracts to receive compensation from Wellmark for services provided to Wellmark's members. Id. Preferred provider arrangements are expressly encouraged by the Iowa legislature as a healthcare cost control mechanism. See Iowa Code § 514F.2. The legislature has directed the commissioner to regulate these preferred provider arrangements. Id. § 514F.3.

         For the HMO, Wellmark has an agreement with the Iowa Chiropractic Physicians Clinic (ICPC), a chiropractic network, to provide care to its members. Wellmark pays ICPC a certain rate per member regardless if members seek chiropractic care, which is an arrangement known as a capitated rate.

         Prior to 1986, Iowa law prohibited coverage for chiropractic services by healthcare service corporations. Health Care Equalization Comm. of Iowa Chiropractic Soc. v. Iowa Med. Soc., 501 F.Supp. 970, 990 (S.D. Iowa 1980), aff'd, 851 F.2d 1020 (8th Cir. 1988). In 1986, the legislature enacted House File 2219 to provide for the "payment by corporations subject to chapters 509, 514, and 514B for services performed by chiropractors." 1986 Iowa Acts ch. 1180. The Code now requires

payment or reimbursement for necessary diagnosis or treatment provided by a chiropractor licensed under chapter 151, if the diagnosis or treatment is provided within the scope of the chiropractor's license and if the policy would pay or reimburse for the diagnosis or treatment by [medical doctors and osteopathic doctors] of the human ailment, irrespective of and disregarding variances in terminology employed by the various licensed professions in describing the human ailment or its diagnosis or its treatment.

Iowa Code § 509.3(1)(f) (2013). It is undisputed chiropractors have agreements with Wellmark to provide services to its members in the PPO and HMO networks for payment or reimbursement. It is also undisputed Wellmark's PPO pays chiropractors less than licensed medical doctors and osteopathic doctors for several services, including office visits, manual adjustments, and x-rays. Further, the fees paid at a capitated rate to the chiropractors in the HMO network are less than the fees paid by Wellmark to the chiropractors in Wellmark's PPO network.

         Following our decision in Mueller v. Wellmark, 818 N.W.2d at 258, where we ruled that Iowa Code section 514F.2 does not grant a private right of action and dismissed the claim, the chiropractors brought this action. On November 30, 2012, the chiropractors submitted a request for contested case proceeding to the commissioner, alleging Wellmark wrongfully imposes restrictions and pays lower rates for chiropractic services than for equivalent services offered by medical and osteopathic doctors in violation of Iowa Code section 514F.2.

         Section 514F.2 provides,

Nothing contained in the chapters of Title XIII, subtitle 1, of the Code[1] shall be construed to prohibit or discourage insurers, nonprofit service corporations, health maintenance organizations, or self-insurers for health care benefits to employees from providing payments of benefits or providing care and treatment under capitated payment systems, prospective reimbursement rate systems, utilization control systems, incentive systems for the use of least restrictive and least costly levels of care, preferred provider contracts limiting choice of specific provider, or other systems, methods or organizations designed to contain costs without sacrificing care or treatment outcome, provided these systems do not limit or make optional payment or reimbursement for health care services on a basis solely related to the license under or the practices authorized by chapter 151 or on a basis that is dependent upon a method of classification, categorization, or description based upon differences in terminology used by different licensees under the chapters of Title IV, subtitle 3, of the Code in describing human ailments or their diagnosis or treatment.

Iowa Code § 514F.2.

         On December 14, the parties submitted a stipulation outlining the issues for the commissioner to decide:

1. Are the fees paid by Wellmark, Inc. to chiropractors unlawfully discriminatory in violation of Iowa Code § 514F.2?
(a) Does the Wellmark annual fee schedule for the year beginning July 1, 2012, applicable to individual or other fully-insured coverages limit payment for health care services on a basis solely related to the license under or the practices authorized by Iowa Code chapter 151 in such a manner as to violate the provisions of Iowa Code § 514F.2?
(b) Does the Wellmark annual fee schedule for the year beginning July 1, 2012, applicable to self-funded group health plans that are administered by Wellmark, or to Blue Card claims administered by Wellmark, limit payment for health care services on a basis solely related to the license under or the practices authorized by Iowa Code chapter 151 in such a manner as to violate the provisions of Iowa Code § 514F.2?
2. Is the capitated payment plan used for chiropractic coverage by Wellmark Health Plan of Iowa, Inc., unlawfully discriminatory in violation of Iowa Code § 514F.2?
(a) Does the capitated services payment system which Wellmark Health Plan of Iowa, Inc., has put in place for its Blue Advantage coverage for payment for services of Iowa chiropractors limit payment for health care services on a basis solely related to the license under or the practices authorized by Iowa Code chapter 151 in a manner that violates Iowa Code § 514F.2?
(b) Does the provision in the capitated services payment system used for Wellmark Health Plan of Iowa, Inc.'s Blue Advantage coverage violate the provisions of Iowa Code § 514F.2 with regard to a referral from the member's primary care physician being required after 12 chiropractic visits for a particular condition?

         On August 28, 2013, the parties substituted updated stipulations that set forth the only issues to be decided by the agency. The updated stipulations are as follows:

1. Petitioner will present this Stipulation as their prima facie case for the hearing in this matter, including "Wellmark, Inc.'s July 1, 2013, PPO Fees for Selected CPT and Provider Types, " which is attached and which the Petitioners will designate as Exhibit 1. Petitioners claim that the difference in the amount of the fees paid to chiropractors for the same or similar CPT codes as compared to what is paid to MDs and DOs, including the differences in the fees paid for CMT codes as opposed to OMT codes, constitute a violation by Wellmark, Inc. of Iowa Code § 514F.2.
2. The parties further stipulate that the fees shown on Exhibit 1 are not used by Wellmark Health Plan of Iowa (WHPI), which instead contracts with the Iowa Chiropractic Physicians Clinic (ICPC) to provide a chiropractic network and pays ICPC at a capitated rate, and that ICPC's reimbursement for the CPT codes listed on the attached exhibit is less overall than the fees paid to chiropractors by Wellmark's PPO. Petitioners claim that this constitutes a violation by WHPI of Iowa Code § 514F.2. WHPI typically pays other providers, and in particular MD's and DO's pursuant to the fee schedules and not a contracted network with a capitated rate.
3. WHPI's Blue Advantage coverage includes a provision with regard to a referral from the member's primary care physician being required after twelve chiropractic visits for a particular condition, as set forth in the attached portion of the current Blue Advantage Benefit Certificate. Petitioners claim that this constitutes a violation by WHPI of Iowa Code § 514F.2

         The agency transferred the matter to the division of administrative hearings for a contested case hearing, and an administrative law judge (ALJ) held the hearing on September 16-18. The ALJ issued a proposed decision on February 21, 2014, concluding,

Petitioners have not proven Wellmark has violated Iowa Code section 514F.2[.] ERISA preempts application of Iowa Code section 514F.2 to the self-funded health plans Wellmark administers. The plain meaning of Iowa Code section 514F.2 does not require payment parity, but precludes insurers from restraining or restricting payment or reimbursement solely based on licensure. Petitioners have failed to prove Wellmark's differing unit fee costs for services are solely based on licensure. WHPI's use of a capitated fee agreement with ICPC does not violate Iowa Code section 514F.2. The Division shall take any steps necessary to implement this decision.

         After reviewing the ALJ's proposed decision and the record, the commissioner issued a declaratory order instead of treating the matter as a contested case. The commissioner explained that the enforcement of insurance laws "resides exclusively in the office of insurance commissioner" and not with private parties. The commissioner opined that Iowa Code section 514F.2 does not grant

the insurance commissioner the judicial authority to vindicate the disputes of private parties, whether the complaining entities are health insurance policyholders or health care providers. Iowa Code, Chapter 514F exhibits no legislative intent to transform the insurance commissioner into an insurance claim court.

         The commissioner then went on to address the threshold legal question of whether Iowa Code section 514F.2 requires Wellmark to compensate the chiropractors equally with medical and osteopathic doctors in network, concluding that it did not. The commissioner determined Wellmark did not violate section 514F.2, because the statute "does not prohibit insurers, nonprofit service corporations, health maintenance organizations, or self-insurers for health care benefits to employees from engaging in any particular act or practice." But even if it was a regulatory statute, the commissioner found "that any limitation of fees or reimbursement by Wellmark is based upon numerous other factors that have been well established through information gathered in these proceedings." Thus, the commissioner concluded that section 514F.2 "does not preclude Wellmark from differing reimbursements in its annual fee schedule . . . applicable to individual or other fully-insured coverages." The commissioner also declared ERISA preempts "Iowa Code section 514F.2 from application to the self-funded plans." Additionally, the commissioner concluded the capitated payment systems under Wellmark's HMO do not limit payment for services on a basis solely related to a chiropractor's license in violation of section 514F.2. Finally, the commissioner ruled that the twelve-visit rule under Wellmark's HMO does not violate section 514F.2.

         The chiropractors filed a petition for judicial review pursuant to Iowa Code section 17A.19, and the district court affirmed the commissioner's decision. The district court ruled that the proviso clause of section 514F.2 "concerns coverage availability and does not regulate provider in-network fee schedules." The district court found the legislature created section 514F.2 to clarify that House File 2219 "did not prevent insurance companies from utilizing preferred provider contracts as long as the contracts did not limit coverage solely on a basis related to license." "[I]n an abundance of caution, " the district court declared "that even if section 514F.2 was regulatory or applied to fee schedules, the Insurance commissioner's determination that Wellmark did not violate section 514F.2 is supported by substantial evidence in the record." The court further affirmed the commissioner's decision that the twelve-visit rule under Wellmark's HMO did not violate section 514F.2, and ERISA preempts section 514F.2 as to Wellmark's self-funded health plans.

         The chiropractors appealed the district court's decision.

         II. Issues.

         This appeal presents four issues for review. They are (1) whether the commissioner has the authority to adjudicate a contested case between Wellmark and the chiropractors, (2) whether Iowa Code section 514F.2 regulates payments to providers, (3) whether Wellmark's payments for chiropractic care are based solely on licensure, and (4) whether ERISA preempts the application of Iowa Code section 514F.2 to self-funded health plans. The chiropractors did not present an argument on appeal as to the commissioner's decision on the twelve-visit rule; thus, we will let the district court's decision stand as the final decision on that issue.

         III. ...


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