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De Dios v. Indemnity Insurance Co. of North America

United States District Court, N.D. Iowa, Western Division

June 13, 2018

SAMUEL DE DIOS, Plaintiff,
v.
INDEMNITY INSURANCE COMPANY OF NORTH AMERICA and BROADSPIRE SERVICES, INC., Defendants.

          OPINION AND ORDER REGARDING DEFENDANT BROADSPIRE'S MOTION TO DISMISS AND REGARDING CERTIFICATION OF QUESTIONS TO THE IOWA SUPREME COURT

          MARK W. BENNETT U.S. DISTRICT COURT JUDGE.

         TABLE OF CONTENTS

         I. INTRODUCTION ........................................................................... 2

         A. Factual Background ............................................................... 2

         1. The parties ................................................................... 2

         2. The accident and aftermath .............................................. 4

         3. Denial of the claim ......................................................... 5

         B. Procedural Background ........................................................... 6

         C. Arguments Of The Parties ........................................................ 8

         II. LEGAL ANALYSIS ...................................................................... 10

         A. Standards For Stating

         A Claim ................................................ 10

         B. Application Of The Standards .................................................. 13

         1. Plausible factual allegations ........................................... 13

         2. Legal cogniz ability of the claim ....................................... 15

         C. Certification Of The Question .................................................. 16

         1. Standards for certification .............................................. 16

         2. Application of the standards ........................................... 18

         3. Formulation of the question ............................................ 19

         III. CONCLUSION ............................................................................ 20

         A plaintiff who alleges that he suffered an injury in a vehicle collision on a construction site in the course of his employment brought this lawsuit against his employer's workers' compensation insurer and the third-party claims administrator it had hired to investigate, handle, manage, administer, and pay workers' compensation claims. The plaintiff alleges bad faith denial of workers' compensation benefits by both the insurer and the third-party claims administrator and vicarious liability of the insurer for the third-party claims administrator's bad faith denial of benefits. The third-party claims administrator has moved to dismiss the plaintiff's claim against it on the ground that a bad faith claim will not lie against it under Iowa law, because it does not have an insurer-insured relationship with the plaintiff. Because I conclude that this case presents a novel question of state law best answered by the Iowa Supreme Court, I conclude sua sponte that I should certify that question.

         I. INTRODUCTION

         A. Factual Background

         1. The parties

         Because this case is before me on a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, this statement of the factual background is necessarily drawn from plaintiff Samuel De Dios's controlling pleading, his March 20, 2018, Amended Complaint, and should not be construed as findings of fact.[1] De Dios alleges that, at all material times, he has been a resident of Woodbury County, Iowa, and that he was employed by Brand Energy & Infrastructure Services. He alleges that Brand had a workers' compensation insurance policy with defendant Indemnity Insurance Company of North America, but that Indemnity “delegated its authority of investigating, handling, managing, administering, and paying benefits under Iowa Workers' Compensation Laws to [defendant] Broadspire Services, Incorporated.” Amended Complaint, ¶ 4.

         More specifically, De Dios alleges the following about Broadspire's duties and its relationship with Indemnity:

5. At all times material to the Petition, the INSURANCE COMPANY and BROADSPIRE were responsible for making timely payment of workers' compensation benefits to employees of the EMPLOYER, including SAMUEL. Plaintiff will refer to both the INSURANCE COMPANY and BROADSPIRE collectively as “the Defendants.” 6. BROADSPIRE and the INSURANCE COMPANY are essentially one and the same entity for purposes of the instant action.
7. The INSURANCE COMPANY lacked the necessary support staff to investigate on-the-job injuries in Iowa, including SAMUEL's on-the-job injury.
8. The INSURANCE COMPANY lacked the necessary support staff that had the experience or knowledge to make an informed decision on whether to pay benefits pursuant to Iowa Workers' Compensation Laws.
9. The INSURANCE COMPANY obligated BROADSPIRE to provide actuarial services for workers' compensation claims, including ...

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