ROBERT F. COLWELL JR., Appellee,
IOWA DEPARTMENT OF HUMAN SERVICES, Appellant.
from the Iowa District Court for Polk County, Arthur E.
agency appeals an adverse judicial review decision by the
J. Miller, Attorney General, J. Bradley Horn and Gretchen
Kraemer, Assistant Attorneys General, for appellant.
Rebecca A. Brommel of Brown, Winick, Graves, Gross,
Baskerville and Schoenebaum, P.L.C., for appellee.
managed care organization (MCO) denied reimbursement of
claims submitted by a dentist who contracts with the MCO as a
provider. The dentist sought review by the Iowa Department of
Human Services (DHS) of the MCO's denials of
reimbursement. DHS denied the dentist's requests for a
state fair hearing, reasoning that the issue was a contract
dispute between the MCO and the dentist and thus was not
appealable to DHS under Iowa law. The dentist filed a
petition for judicial review, challenging DHS's denials
of his requests for state fair hearings. The district court
agreed with the dentist and found DHS incorrectly interpreted
Iowa Code section 249A.4(11) (2016). The district court held Iowa
law "allows and requires DHS to create a review
mechanism for providers." The district court also held
under Iowa Administrative Code rule 441-7.1 (2014),
dentist had both an individual right and the right as a
provider on behalf of his patients to be heard at a state
fair hearing. Further, the district court held the dentist
could seek reimbursement from his indigent patients for
claims not covered or reimbursed by the MCO. Lastly, the
district court found DHS must pay for the dentist's
attorney fees because DHS's decision to deny a state fair
hearing was "legally unsound, unreasonable and
unsupported by substantial evidence." DHS appeals on all
appeal, we find section 249A.4(11) does not require DHS to
give the dentist a state fair hearing. However, we find the
administrative rules do require DHS to give the dentist a
state fair hearing. We also find the dentist may bill
patients for services not covered or reimbursed by the MCO,
but only to the extent as set forth in this opinion. Finally,
we reverse the judgment of the district court awarding the
dentist attorney fees under Iowa Code section 625.29(1).
we remand the case back to the district court to enter a
judgment consistent with this opinion. After doing so, the
district court shall remand the case back to DHS to provide a
state fair hearing appeal to the dentist.
Background Facts and Proceedings.
2013, the Iowa legislature established the Iowa Health and
Wellness Plan (the Plan), which expanded healthcare coverage
for low-income, uninsured adults who were not previously
eligible for Medicaid. See 2013 Iowa Acts ch. 138,
div. XXXIII (codified at Iowa Code ch. 249N (2014)). The Plan
includes coverage for certain dental benefits-i.e., the
Dental Wellness Program. See id. § 170
(codified at Iowa Code § 249N.5(1) (2014)).
in April 2014, DHS and Iowa Medicaid Enterprise (IME) entered
into a series of amended contracts with Delta Dental of Iowa,
establishing Delta Dental as an MCO for the dental benefits.
As such, Delta Dental conducts all aspects of the
implementation and ongoing management of the Dental Wellness
Program, including processing claims and building a network
of dentists to serve in the program. Pursuant to the contract,
DHS and IME make capitated payments to Delta Dental for Delta
Dental's administration of the plan. These capitated
payments are the total obligation of DHS with respect to the
costs of dental care and services provided. Delta Dental is
responsible for paying providers for all covered services
rendered. In the event a payment is in dispute, the contract
provides, "[Delta Dental] shall have a system in place
for Enrollees and Providers acting upon their behalf, which
includes a Grievance process, an Appeal Process, and access
to the Agency's fair hearing system."
Robert Colwell is a dentist practicing in Council Bluffs,
Iowa, and Bellevue, Nebraska. Colwell became a participating
dentist in Delta Dental's network in April 2014. At that
time, he entered into a Participating Dentist's Dental
Wellness Plan Agreement with Delta Dental, which incorporated
the Delta Dental Wellness Plan Office Manual (Office Manual).
Gretchen Hageman, government program director at Delta
Dental, testified the documents Delta Dental uses with it its
providers are approved by DHS. This includes the Office
Manual that incorporates the state fair hearing appeal
provided services to Plan participants until late 2014. He
submitted claims to Delta Dental for the Plan patients, and
Delta Dental denied reimbursement for a number of those
claims in whole or in part for a lack of documentation and
thereafter, in January 2015, Delta Dental terminated its
provider agreements with Colwell and his associates. Colwell
appealed, which ultimately led to a settlement agreement
between the parties. The 2016 settlement agreement reinstated
Colwell as a provider and allowed Colwell to seek an appeal
for claims denied in whole or in part prior to January 2015,
pursuant to the formal appeals process set forth in the 2016
Office Manual. Colwell appealed those denied claims.
October 12, 2016, Delta Dental issued two letters stating its
final decisions on Colwell's appeals. Delta Dental upheld
nearly all of its prior decisions denying claims Colwell
submitted. On November 10, Delta Dental sent Colwell an
addendum to the October 12 letters, stating, "You have
the right to seek a state fair hearing with respect to the
claims that were re-reviewed and disallowed. The state fair
hearing process is outlined in the DWP Provider Manual."
The DWP Provider Manual is the Office Manual incorporated in
the Participating Dentist's Dental Wellness Plan
Agreement with Delta Dental.
sought a state fair hearing for the denied claims. In a
letter to DHS, Colwell wrote, "We are making an appeal
on behalf of . . . our patients, the enrollees." DHS
declined to grant Colwell a state fair hearing, saying,
"The issue you appealed is not an issue [DHS] can grant
a hearing on. This appears to be a contract issue between
Delta Dental and yourself." Colwell requested that DHS
reconsider, stating he satisfied the criteria for which DHS
could grant a state fair hearing for a provider. Again, DHS
denied Colwell's request to reopen the appeal based on
its conclusion this was a contract issue between Delta Dental
and Colwell because Colwell's claims arose from the 2016
2016 Office Manual, in effect at all times material to this
Covered Enrollees, and Participating Dentists acting on the
behalf of a Covered Enrollee, have access to the Grievance
This system includes an Appeals and Complaint Process and
access to the Iowa Department of Human Service's state
fair hearing system.
Office Manual further states, "A Participating Dentist
may request the hearing if the State permits the
Participating Dentist to act as the Covered Enrollee's
authorized representative." The terms of these provider
contracts depend upon what the state allows.
Code section 249A.4(11) creates the review process mandated
by federal law. It provides the DHS director "[s]hall
provide an opportunity for a fair hearing . . . to an
individual whose claim for medical assistance under this
chapter is denied or is not acted upon with reasonable
promptness." Iowa Code § 249A.4(11). DHS created
chapter 7 to define the nature of the appeal rights.
See Iowa Admin. Code r. 441-7. Rule 441-7.1 states
in relevant part,
"Aggrieved person" means a person against
whom the department has taken an adverse action. This
includes a person who meets any of the following conditions:
7. For providers, a person or entity:
• Whose claim for payment or request for prior
authorization of payment has been denied in whole or in part
and who states that the denial was not made according to
department policy. Providers of Medicaid services must accept
reimbursement based on the department's methodology.
• Who has been notified that the managed care
reconsideration process has been exhausted and who remains
dissatisfied with the outcome.
• Who, as a managed care organization (MCO) provider or
Iowa plan contractor when acting on behalf of a member, has a
dispute regarding payment of claims.
Id. r. 441-7.1. Colwell sought judicial review,
claiming he was entitled to a state fair hearing under the
Code and the rules. The district court found Colwell was
entitled to a state fair hearing under the Code and the
rules. Colwell also sought a ruling that he could seek
reimbursement from his indigent patients for claims not
covered or reimbursed by Delta Dental. The district court
found he could. Finally, the district court found DHS must
pay for the dentist's attorney fees under Iowa Code
section 625.29 because DHS's decision to deny a state
fair hearing was "legally unsound, unreasonable and
unsupported by substantial evidence." DHS appeals.
raises four issues in this appeal. First, whether Iowa Code
section 249A.4(11) requires DHS to provide state fair
hearings for providers. Second, whether Colwell has a right
to a state fair hearing individually and on behalf of his
patients under the rules. Third, whether Colwell may bill
patients for services not covered or reimbursed by Delta
Dental. Fourth, whether Colwell is entitled to an award of
Standard of Review.
Code section 17A.19 governs judicial review of agency action.
Iowa Code § 17A.19. In a judicial review action on
appeal, our job is to determine whether in applying the
applicable standards of review under section 17A.19(10), we
reach the same conclusions as the district court. Banilla
Games, Inc. v. Iowa Dep't of Inspections &
Appeals, 919 N.W.2d 6, 12 (Iowa 2018). The petitioner
challenging agency action has the burden of demonstrating the
prejudice and invalidity of the challenged agency action.
Iowa Code § 17A.19(8)(a).
applicable standard of review depends upon the error asserted
by the petitioner. Burton v. Hilltop Care Ctr., 813
N.W.2d 250, 256 (Iowa 2012). When the legislature has clearly
vested interpretive authority with an agency, we defer to the
agency's interpretation of the statutory language and
reverse only when the agency's interpretation is
"irrational, illogical, or wholly unjustifiable."
Gartner v. Iowa Dep't of Pub. Health, 830 N.W.2d
335, 343 (Iowa 2013) (quoting NextEra Energy Res. LLC v.
Iowa Utils. Bd., 815 N.W.2d 30, 37 (Iowa 2012)).
However, when the legislature has not clearly vested
interpretive authority with an agency, our standard of review
is for errors of law. Id. "To determine whether
an agency has been given authority to interpret statutory
language, 'we carefully consider "the specific
language the agency ...