                   IN THE COURT OF APPEALS OF IOWA

                                  No. 14-0769
                           Filed December 23, 2015

T. ZENON PHARMACEUTICALS, LLC,
(d/b/a PHARMACY MATTERS),
       Plaintiff/Counterclaim Defendant-Appellant,

vs.

WELLMARK, INC.,
    Defendant/Counterclaimant-Appellee,

and

WELLMARK HEALTH PLAN OF IOWA, INC.,
     Intervenor/Counterclaimant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Johnson County, Paul D. Miller,

Judge.

      A pharmacy appeals the district court’s decision that it breached anti-

assignment clauses and failed to provide “covered services” under its contracts

with a health insurance company. AFFIRMED IN PART, REVERSED IN PART,

AND REMANDED.

      Richard C. Garberson and Kerry A. Finley of Shuttleworth & Ingersoll,

P.L.C., Cedar Rapids, and Anthony Paduano and Jason Snyder of Paduano &

Weintraub, L.L.P., New York, New York, for appellant.

      John F. Lorentzen of Nyemaster Good, P.C., Des Moines, and Sarah J.

Gayer and Kevin H. Collins of Nyemaster Goode, P.C., Cedar Rapids, for

appellees.

      Heard by Potterfield, P.J., and Doyle and Tabor, JJ.
                                          2



TABOR, Judge.

       This case involves a contract dispute between an Iowa City pharmacy and

a mutual insurance company, Wellmark, Inc.1             The pharmacy, T. Zenon

Pharmaceuticals (doing business as Pharmacy Matters), sued Wellmark after the

insurance company declined to pay claims exceeding $7 million for injectable

drugs prescribed for hemophilia patients.        Wellmark (along with intervenor

Wellmark Health Plan of Iowa, Inc. (WHPI))2 counterclaimed, alleging Pharmacy

Matters breached their contracts. After a lengthy trial, the district court decided

Pharmacy Matters materially breached the anti-assignment clauses in the

contracts or, alternatively, did not provide “covered services” to the patients.

       On appeal, Pharmacy Matters contends it fulfilled its contractual obligation

to provide “covered services” by “dispensing” the injectable drugs to the patients.

The pharmacy also contends Wellmark breached the entity contracts by not

paying claims submitted for 118 shipments of injectable drugs.            We agree

Pharmacy Matters provided “covered services” when its pharmacist, Michael

Stein, filled 114 prescriptions for injectable drugs from his location in Iowa City,

but we find Stein did not provide “covered services” for four shipments that did

not physically pass through Iowa. We also find no support for the district court’s

conclusion Pharmacy Matters violated the anti-assignment clauses. Accordingly,

we affirm in part, reverse in part, and remand for a determination, consistent with

this opinion, of damages owed to Pharmacy Matters.


1
  Wellmark is an Iowa health insurance company and independent licensee of the Blue
Cross Blue Shield Association (BCBSA).
2
  WHPI is licensed by the Iowa Division of Insurance as a health maintenance
organization (HMO). We will refer to WHPI and Wellmark collectively as Wellmark.
                                         3



I.       Background Facts and Proceedings

         At the heart of this case are twenty-four patients, mostly children, who

require Factor drugs to treat the rare, inherited disease of hemophilia.

Hemophilia impairs the body’s natural ability to control blood clotting due to the

patient’s lack of sufficient proteins to stop bleeding quickly. Hemophilia patients

require infusions of a blood-clotting factor to prevent a possibly fatal bleed.

Factor drugs have variable concentration levels attuned to each patient. These

drugs, which are often delivered directly to the patient’s home from a specialty

pharmacy, are expensive. The cost for one year’s supply of the Factor drugs

may exceed $1 million per patient. The patients often require coordinated care

and use disease-management companies to assist with their needs.

         The twenty-four patients in this case were all insured by health plans

administered by a BCBSA licensee. The patients also were clients of Factor

Health     Management      (FHM),    a    disease-management        company      and

pharmaceutical wholesaler based in Florida.           The company focused on

coordinating care for patients with hemophilia across the country. As part of its

coordination of care, FHM owned FCS Pharmacy, a Florida-licensed pharmacy

that also possessed a non-resident pharmacy license in Iowa. Because of the

high cost of the Factor drugs, it is critical for the patients to use a pharmacy that

accepts their insurance, while delivering the drugs in a timely fashion.

         In June 2008, FHM began working with A.K., a patient living in Iowa who

was covered by the hawk-i program (Healthy and Well Kids in Iowa). A.K., who

was then five years old, received treatment at the University of Iowa Hospitals
                                       4



Hemophilia Treatment Center when his parents were unable to find a vein

necessary for infusing his Factor drugs.    The drugs were covered under the

hawk-i program only if obtained from a provider within Wellmark’s network of

providers. After an online search for home-infusion therapy providers within the

network, FHM found Pharmacy Matters in Iowa City.

      Pharmacy Matters has been an Iowa-licensed pharmacy since 2006. The

owner, Stein, has been a pharmacist since 1990 and is the only full-time

pharmacist at Pharmacy Matters.      In 2007, Pharmacy Matters entered into

contracts with Wellmark and WHPI to offer home infusion therapy as an in-

network provider. According to Wellmark’s Home Infusion Therapy (HIT) Guide,

home infusion providers are “licensed pharmacies that provide a wide range of

services required to administer home infusion . . . and specialty drugs.” The

guide sets out services that are billed per diem and medications that are

excluded from per diem billing.

      In July 2008, FHM entered into a “contract pharmacy agreement” with

Pharmacy Matters to deliver the Factor drugs to A.K. and other patients around

the country. Under the contract, the designated patients remained as customers

of FHM, but also became customers of Pharmacy Matters once it dispensed the

Factor drugs to them.     FHM wanted an agreement with Pharmacy Matters

because the pharmacy was an in-network BCBSA provider, which would enable

the patients to receive a more favorable reimbursement rate.

      With the contracts signed, the process for distributing the Factor drugs

generally followed these steps. Coordinating with the patients and their doctors,
                                           5



FCS would obtain Factor from FHM and assemble the patient-specific dosages in

compliance with the prescription.       FCS would apply a patient-specific label

containing instructions for how the patients or their caregivers should administer

the drugs. FCS would then package the Factor, which required assembling vials

in baggies and including freezer packs for temperature control. The package

also included the necessary equipment to inject the drugs. FCS would prepare a

delivery ticket and generate other necessary documents.             FCS would send

Pharmacy Matters a delivery ticket and prescription form by facsimile to notify it

of an incoming Factor shipment.        FCS also provided Pharmacy Matters with

shipping labels to facilitate delivery of the Factor to the patients.

       Stein testified Pharmacy Matters received the Factor drugs from the

Florida wholesaler in a large box with room for foam coolers and ice packs. Stein

ensured the drugs were stored properly if he could not process the order right

away. Stein had the patient’s prescription in his possession before the drug

shipment went out.      When Stein was ready to process an order, he would

examine the pre-made labels and prescription to ensure the packages contained

the right product. Stein would identify the National Drug Code (NDC) 3 number

and compare it to the label to verify it matched. Stein then affixed his Pharmacy

Matters label and performed the “prospective drug utilization review.” He also

included a patient advisory leaflet with the drugs before repackaging them for

shipment, usually by Federal Express.          Then Pharmacy Matters would seek


3
  Under the Drug Listing Act of 1972, all drugs prepared for commercial distribution are
identified and reported using a unique number called the National Drug Code, which
serves as a universal product identifier. See www.fda.gov (last visited November 24,
2015).
                                            6



reimbursement from Wellmark. Under the contract between Pharmacy Matters

and FHM, Pharmacy Matters agreed to pay FHM 98.5% of the reimbursement it

received from Wellmark.

       In October 2008, Wellmark began investigating Pharmacy Matters after

the insurance company noticed the pharmacy submitting claims for a large

volume of expensive Factor drugs. BCBSA senior anti-fraud consultant Calvin

Sneed contacted Richard Jensen, Wellmark’s special investigation unit team

leader, about the increase in Factor claims. Jensen assigned senior investigator

Debra Robles to investigate Pharmacy Matters.4

       Robles had an initial meeting with Stein in November 2008. Stein told

Robles that he was referred twelve to fifteen new hemophilia patients from FHM.

Although Wellmark decided to deny the claims for those patients while its

investigation progressed, Robles advised Stein to continue submitting claims.

       Over the course of its investigation, Wellmark shifted among different

grounds for rejecting Pharmacy Matters’ claims. For instance, an email sent by

Sneed in early December 2008 to Jensen, Robles, and others, advised:

       Wellmark may deny claims up front in appropriate circumstances,
       either for records on new claims, or for not having a valid
       prescription (if missing from the records provided). With a valid
       prescription, or once a valid prescription is supplied to Wellmark, [it]
       may still deny for records—in effect, deferring to each of you to
       determine whether the claim should be paid.




4
  The insurer’s investigation was not limited to Pharmacy Matters; it initially focused on
FHM’s nationwide presence. Robles advised Stein the insurance company had been
“chasing these folks for a number of years.” Robles said Wellmark did not want Stein to
be “a target of our investigation but a cooperative witness” against FHM.
                                         7



         Robles replied to Sneed that Wellmark’s pharmacy director, medical

director, and medical policy team were “going to try to put a medical policy in

place that is going to make it difficult for them to use Pharmacy Matters and if

they do [use Pharmacy Matters] to limit the amount of [the F]actor they can

send.”

         In late December 2008, Robles emailed Alanna Lavelle, an investigator for

the Georgia BCBSA licensee, explaining Wellmark’s “strategy” was to deny new

claims for “documentation” or for not having a valid prescription.        For those

claims that Wellmark received documentation and prescriptions, Wellmark’s

pharmacy director Mathew Hosford performed a review to “determine what is the

maximum amount of [the] Factor that the member should receive in a month. If

the member is receiving more than that amount then we are going to deny

whatever is over as provider liability.” Robles again mentioned “putting a medical

policy in place that will restrict the Factor somehow to try and get a handle on this

situation.”   Robles concluded the email: “I would like to adjust these claims

accordingly unless you can think of another reason that the claim can be denied

as I am out of reasons.”

         In April 2009, Robles took two investigators from the Food and Drug

Administration to the home of A.K.’s parents in southeast Iowa. Robles had

asked to see A.K.’s infusion logs and, although the parents agreed to send them

to her, she insisted on coming to their home in person. During the three-hour

visit, the parents accounted for every shipment of infusion drugs they had

received. Robles viewed A.K.’s father as “a bit hostile” regarding her inquiries.
                                             8



At the end of the visit, Robles told the parents they were “getting really close” to

their lifetime cap of $1 million on their HIT coverage because of the amount they

were being charged by their current provider.5 Robles suggested they change to

a specialty pharmacy called Caremark, stating Caremark had better rates.

Robles left A.K.’s parents with an application for Caremark coverage. In an email

exchange with Robles two weeks earlier, Wellmark Pharmacy director Hosford

said, “[I]f you can get them to move to [C]aremark willingly I would definitely owe

you lunch!!”

       Although Stein, as a pharmacist, did not have access to the medical

records of his new customers with hemophilia, he arranged through FHM for the

patient’s records to be provided to Wellmark.             After Wellmark received the

medical records, the insurer searched for a new basis to deny the Factor claims.

The insurer’s conundrum was captured in the following June 2009 email sent to

Robles from Jamie Hanson, an investigator for BCBS licensee Care First:

       I received an inquiry on some of our claims from [P]harmacy
       [M]atters. Currently the claims have been rejected for medical
       records. Since we have those records, is there another rejection
       we should be using based on your provider contract? I will hold
       them off as long as I can. I have a meeting with our attorneys
       today to discuss our litigation strategy.

       Between August 2008 and July 2009, Pharmacy Matters billed Wellmark

for 118 shipments of Factor drugs to the twenty-four patients in eleven states.

Four of the 118 shipments were sent directly from FCS because the patients

urgently needed the medication.            After Pharmacy Matters filed its lawsuit,



5
 A.K.’s father testified it was not true that their son was close to the lifetime cap, having
used only about ten percent of the limit.
                                         9



Wellmark denied all of the claims. According to Robles, Wellmark denied the

claims because the service Stein provided was not covered.

       Pharmacy Matters filed its petition against Wellmark on May 1, 2009,

alleging breach of contract, unjust enrichment, and bad faith. On September 11,

2009, WHPI filed a motion to intervene, an answer, and counterclaims. Wellmark

filed an amended answer and counterclaims as well. The district court granted

WHPI’s motion to intervene.       The counterclaims alleged Pharmacy Matters

breached the contract by delegating its duties in violation of the anti-assignment

clauses. Wellmark also claimed Pharmacy Matters did not provided “covered

services” as defined in the contracts.

       The parties filed stipulated facts in November 2012.       An eighteen-day

bench trial began on November 13, 2012, and concluded on December 13, 2012.

The parties filed proposed findings of facts and conclusions of law. On April 25,

2014, the district court issued its ruling.   Relevant to this appeal, the court

concluded Pharmacy Matters breached its contract with Wellmark by delegating

its duties to FCS. In the alternative, the district court found Pharmacy Matters did

not provide “covered services” as defined under the contracts. The court denied

the claims brought by Pharmacy Matters. The pharmacy now appeals.

II.    Scope and Standards of Review

       We review a breach-of-contract claim tried at law to the district court for

correction of errors at law. NevadaCare, Inc. v. Dep’t of Human Servs., 783

N.W.2d 459, 465 (Iowa 2010). The district court’s factual findings have the effect

of a special verdict and are binding on us if supported by substantial evidence.
                                          10



Id. But the district court’s legal conclusions and application of legal principles are

not binding on us. Id.

       In this case, as in NevadaCare, the appellant asks that we apply a more

exacting standard of review because the district court’s ruling adopted many of

the appellees’ proposed factual findings and legal conclusions verbatim. Our

supreme court has recognized “counsels’ submission of proposed findings of fact

and conclusions of law can be extremely valuable in assisting the district court,

especially in highly technical or complicated cases.” See id. In NevadaCare, our

supreme court discouraged the practice of adopting the prevailing party’s

language    word-for-word     and   emphasized      the   “district   court’s   duty   to

independently determine the facts, articulate the controlling law, and apply the

controlling law to the facts.” Id. at 465–66; see Rubes v. Mega Life & Health Ins.

Co., 642 N.W.2d 263, 266 (Iowa 2002) (“[T]he customary deference accorded

trial courts cannot fairly be applied when the decision on review reflects the

findings of the prevailing litigant rather than the court’s own scrutiny of the

evidence and articulation of controlling legal principles.”).

       As Pharmacy Matters asserts, the district court’s ruling consistently

borrows verbatim passages from Wellmark’s proposed findings of fact and

conclusions of law. In particular, the district court’s analysis of the contract’s anti-

assignment language reflects Wellmark’s proposed ruling nearly word-for-word

across several pages. Due to the court’s heavy reliance on Wellmark’s proposed

analysis, we will scrutinize the record “more closely and carefully” as we perform

our appellate review. See NevadaCare, 783 N.W.2d at 465.
                                         11



       In setting out the standard of review, Wellmark contends we are limited to

assessing whether the district court’s ruling was based on substantial evidence.

See Walsh v. Nelson, 622 N.W.2d 499, 502–03 (Iowa 2001). Wellmark argues

the district court decided Pharmacy Matters did not prove its performance under

the HIT contracts, based on many factual findings, and contends we cannot

reverse the decision concerning lack of performance unless the evidence offered

by Pharmacy Matters was so overwhelming the only reasonable inference was

Pharmacy Matters did provide “covered services” under the contract.

       Wellmark is correct that the question of performance or breach is

generally within the province of the fact finder. See Iowa-Illinois Gas & Elec. Co.

v. Black & Veatch, 497 N.W.2d 821, 825 (Iowa 1993). But we may inquire into

whether the district court’s ultimate conclusions were materially affected by

improper conclusions of law. See Fausel v. JRJ Enter., Inc., 603 N.W.2d 612,

617 (Iowa 1999).

       The district court’s decision rested on its interpretation and construction of

the contract.   In lay terms, “interpret” and “construe” are synonyms.        But in

resolving contract disputes, our courts have identified “a distinct technical

significance” between interpretation and construction. See Connie’s Constr. Co.,

Inc. v. Fireman’s Fund Ins. Co., 227 N.W.2d 207, 210 (Iowa 1975). Contract

interpretation is the process of determining the meaning of the words of a

contract, while contract construction is the process of determining the legal effect

of those words. Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 435 (Iowa

2008). We review a district court’s interpretation of a contract for errors at law
                                          12



unless the court used extrinsic evidence to aid in its interpretation of the contract.

Postell v. Am. Family Mut. Ins. Co., 823 N.W.2d 35, 41 (Iowa 2012). When a

district court reaches its interpretation based upon extrinsic evidence, the court’s

factual findings regarding the extrinsic evidence are binding if supported by

substantial evidence. Id. In contrast, we review a district court’s construction of

a contract for errors at law. Id.

       In this case, the district court considered extrinsic evidence in its efforts to

interpret the phrase “health care services,” which appears in the contract’s

definition of “covered services” and to interpret the phrase “rights, duties or

obligations,” which appears in the anti-assignment clause. We are bound by the

district court’s findings of fact in regard to that extrinsic evidence, recognizing in

this matter tried to the court that the trial judge makes credibility determinations

and settles factual disputes. But the district court’s ultimate construction of the

contract—applying those factual findings—is a legal conclusion, which as an

appellate court we review for correction of errors at law.

       As a final matter in pinpointing our standard of review, we consider the

contention by Pharmacy Matters that its agreement with Wellmark was a contract

of adhesion to be strictly construed against the drafter. See State Farm Auto.

Ins. Co. v. Malcolm, 259 N.W.2d 833, 836 (Iowa 1977) (“An insurance policy is a

contract of adhesion and therefore its provisions will be construed in a light most

favorable to the insured.”). A contract of adhesion is “a standard-form contract

prepared by one party, to be signed by another party in a weaker position,

usually a consumer, who adheres to the contract with little choice about the
                                        13



terms.” Black’s Law Dictionary 390 (10th ed. 2014). The record leaves no doubt

that Wellmark prepared the provider contract and presented it to Pharmacy

Matters on a “take-it-or-leave-it basis.” See generally Mueller v. Wellmark, Inc.,

818 N.W.2d 244, 248 (Iowa 2012). Pharmacy Matters had no bargaining power.

      The American Law Institute explained the rationale behind this rule of

contract construction:

      Where one party chooses the terms of a contract, he is likely to
      provide more carefully for the protection of his own interests than
      for those of the other party. He is also more likely than the other
      party to have reason to know of uncertainties of meaning. Indeed,
      he may leave meaning deliberately obscure, intending to decide at
      a later date what meaning to assert. In cases of doubt, therefore,
      so long as other factors are not decisive, there is substantial reason
      for preferring the meaning of the other party. The rule is often
      invoked in cases of standardized contracts and in cases where the
      drafting party has the stronger bargaining position, but it is not
      limited to such cases.

Restatement (Second) of Contracts § 206 cmt. a (1981).

      In response, Wellmark points to a clause in its contract that purports to

negate this rule of construction. The clause states the contracts “shall not be

construed more strongly against any party regardless of who was more

responsible for its preparation.” At least one other appellate court has held that

enforcing a contract clause negating the protection for the non-drafting party

would be “unconscionable.” See Concept Rehab, Inc. v. Short, No. F-96-019,

1997 WL 103820, at *3 (Ohio Ct. App. Mar. 7, 1997). In our case, because we

find no ambiguity in the contract terms at issue, we do not believe it is necessary

to decide if such a clause may be enforced in Iowa.
                                          14



III.   Analysis of Contract Claims

       The parties’ contract dispute turns on a pair of questions, which are

essentially two sides of the same coin.        First, did Pharmacy Matters provide

“covered services” under the entity agreements with Wellmark? Second, did

Pharmacy Matters breach the anti-assignment provision of the agreement by

delegating the duty of providing “covered services” to FCS/FHM?              To frame

these questions, we first look to the language of the contracts.

       Covered Services. Under its entity agreement with Wellmark, Pharmacy

Matters agreed to “provide Covered Services in accordance with the terms of this

Agreement” to participants or beneficiaries of health plans administered by

BCBSA licensees. The agreement defined “Covered Services” as “health care

services or supplies to which a Member is entitled pursuant to a Benefit

Contract.”6    In turn, Wellmark agreed to “make payment to Provider in

accordance with the terms and conditions of the applicable provisions of Exhibit

A.” Exhibit A to the Wellmark Entity Agreement defined “Provider” as including “a

home infusion therapy provider.” Exhibit A stated, “For claims incurred, Provider

will be paid for Covered Services,” including injectable drugs and specialty drugs.

       No Assignment. The entity agreement’s anti-assignment clause states:

“No assignment of the rights, duties or obligations of this Agreement shall be

made by Wellmark or Provider without the consent of Provider or Wellmark,

respectively.” Similarly, the entity HMO agreement stated: “No assignment of the


6
 One example of a member benefit contract included in the record was A.K.’s coverage
under the hawk-i program. That contract’s glossary of terms defined “covered services”
as “those medically necessary procedures, services, or supplies listed in this policy in
section 1: Benefits.” That section listed home infusion therapy as a covered benefit.
                                          15



rights, duties or obligations of this Agreement shall be made by HMO or Provider

without the consent of Provider or HMO, respectively.”

       Having set out the contract provisions at issue, we next review the district

court’s interpretation of the terms and its construction of the agreements.

       A.     Did Pharmacy Matters Provide Covered Services?

       The district court decided Pharmacy Matters was not entitled to recover for

breach of contract because it did not provide “covered services” to any of the

twenty-four patients who were beneficiaries of health care plans administered by

BCBSA licensees. The district court first focused on the term “provide”—which

was not defined in the entity agreements.          The court noted testimony from

Michael Fay, Wellmark vice president of health networks, explaining the term

“provide” was not defined “[b]ecause depending on the type of entity that’s

contracting with Wellmark, the range of services that they could offer or perform

is very broad. So we don’t define ‘provide’ inside the contract because it covers

a wide range of provider types.”

       In the absence of a definition in the contract, the district court accepted

Wellmark’s contention that the “the parties clearly intended ‘provide’ to mean to

perform or supply rather than to simply make available.”7 Using that definition,

the court concluded Pharmacy Matters did not provide “covered services”

because it “delegated/outsourced all duties that would be associated with

dispensing [the] Factor drugs and performing health care services, essentially




7
 Wellmark’s proposed ruling cited on-line dictionaries that defined “provide” as meaning
both “to supply” and “to make available.”
                                           16



serving as a shipping agent and an avenue by which FCS/FHM could access

Wellmark’s billing system.”

       In reaching its conclusion, the court rejected the position of Pharmacy

Matters that “provide” meant “dispense” as that word was defined in the Iowa

Pharmacy Practice Act.        Under state law, “dispense” means “to deliver a

prescription drug, device, or controlled substance to an ultimate user or research

subject by or pursuant to the lawful prescription drug order or medication order of

a practitioner, including the prescribing, administering, packaging, labeling, or

compounding necessary to prepare the substance for that delivery.” Iowa Code

§ 155A.3(11) (2011). That definition is further refined in the state regulations:

       “Dispense” includes:
              1. Receiving the prescription drug order from the patient, the
       patient’s agent, or the prescriber;
              2. Delivering the filled prescription to the patient or the
       patient’s agent;
              3. Providing drug information concerning a patient’s drug
       therapy;
              4. Providing patient counseling.

Iowa Admin. Code r. 657-18.2.

       The district court found the delivery of a prescription drug was “only a

small part of the dispensing process” and also found “the determinative issue is

not whether Pharmacy Matters satisfied the statutory definition of ‘dispense’ but,

instead, whether it provided Covered Services as a home infusion therapy

provider as contemplated in the contracts with Wellmark and WHPI.”8 The court




8
  The court’s phraseology here closely tracks Wellmark’s response to plaintiff’s proposed
statement of facts and conclusions of law.
                                        17



then concluded: “All of the health care services of a HIT provider were provided

by FCS Pharmacy, not Pharmacy Matters.”

       We believe the district court erred as a matter of law in declining to

consider section 155A.3(11)’s definition of “dispense” in deciding whether

Pharmacy Matters provided health care services under the Wellmark contract.

Wellmark argues chapter 155A does not govern its HIT contracts. We disagree.

As discussed above, according to Wellmark’s own guidebook, home infusion

providers are “licensed pharmacies that provide a wide range of services

required to administer home infusion.” Pharmacy Matters is licensed by the Iowa

Board of Pharmacy. Chapter 155A regulates the practice of pharmacy and the

licensing of pharmacies. See Iowa Code § 155A.2(1). The contract between

Pharmacy Matters and Wellmark contained a provision stating: “This Agreement

shall be construed and enforced in accordance with the laws of the State of

Iowa.” Because Wellmark drafted the contract, we presume it was aware of the

law applicable to its providers.

       By Iowa law, a pharmacy “dispenses” prescription drugs. See Iowa Code

§ 155A.3(31). When considering whether Pharmacy Matters provided “covered

services,” the district court should have acknowledged that Pharmacy Matters

“dispensed” the Factor drugs by packaging and labeling the drugs for delivery.

Pharmacy Matters also received the prescription drug order from the patient’s

agent, delivered the filled prescription to the patient or the patient’s agent, and

provided information concerning the patient’s drug therapy. See Iowa Admin.

Code r. 657-18.2.
                                            18



       While recognizing the Wellmark agreements defined “covered services” as

“health care services or supplies,” the district court’s ruling did not define “health

care services or supplies.”9 In lieu of a definition, the district court listed the

services provided by FCS Pharmacy:

       FCS Pharmacy clinically managed the Patients, coordinated the
       Patients’ care, communicated with the Patients and their
       caregivers, performed the pharmacy assessments, obtained the
       prescriptions, analyzed the prescriptions to determine dosage,
       assembled the patient specific dosages of factor drugs, and applied
       FCS prescription labels to the drugs. Pharmacy Matters was not
       allowed to alter the factor drugs in any way and did not perform any
       “health care services.”

       The district court also adopted the following finding from Wellmark’s

proposed ruling:

       During Wellmark’s fraud investigation, Michael Stein made
       admissions that (1) sometimes he did not even open the box that
       he received from Florida containing the factor drugs . . . and (2) he
       doesn’t review the package or check the number of units, he only
       forwards it on.

       After closely scrutinizing the record, we do not find substantial evidence to

support this factual finding by the court. See NevadaCare, 783 N.W.2d at 465–

66. According to the notes from Wellmark investigator Robles’s November 2008

meeting with Stein, Stein said he matched the dosage units to the patient’s faxed

prescription before shipping the drugs by FedEx to the patients.                  Robles’s




9
   Pharmacy Matters directs us to the definition of “health care services” at Iowa
Administrative Code rule 191–27.2 (defining as “services rendered or products sold by a
health care provider within the scope of provider’s license” and noting term includes but
is not limited to, “hospital, medical, surgical, dental, vision, and pharmaceutical services
or products”). We agree with Wellmark that this definition pertains to preferred providers
and does not expressly apply to the contract at issue.
                                           19



description of the interview is consistent with Stein’s trial testimony, which the

district court found credible on several other points.

       Stein testified that under his contract with FHM, he was “supposed to

dispense Factor medications as, their term, a third-party pharmacy and handle

the billing responsibilities of the Factor that we dispensed.” Stein also described

the services provided by FHM: “[T]heir responsibilities would have been to

provide the medication, the Factor, from their wholesale division.           They also

would provide, maybe what I'll call, back office or home office administrative-type

support, as well as, you know, the disease management portion of the company,

which we would have access to.”

       Stein testified that when he received a Factor shipment from FHM, he

would open it as quickly as he could or store it in the refrigerator until he could

process it.    His process included “pulling out the prescription and other

supporting documents” and comparing the labels to the actual packages to be

sure it was the right product and the right amount. He then would “identify that

NDC number and compare it to the label to make sure it would match.” Stein

also provided advisory leaflets for the patients. He then would affix his labels

and repackage for shipping.        Stein contends once the dispensing pharmacy

affixes its labels on the prescription drugs, it is professionally liable to the patient.

Stein also had some contact with the patients. For example, William Nolan,

whose son had hemophilia, testified that when his family changed pharmacies,

he “had a rule of calling the pharmacist and just, at least, telling them who we
                                        20



were, making sure I could call after hours, making sure I had a number to call at

night, that kind of thing.”

       The key question on appeal is whether Stein’s actions amounted to

providing “health care services or supplies” to which the hemophilia patients, all

BCBSA members, were entitled under their benefit contracts. Stein contends he

“dispensed” the prescribed drugs because “that’s what pharmacists do,” and he

“billed Wellmark for Factor, not services.”       Wellmark replies that it sets

reimbursement rates for the Factor drugs “at a level to provide compensation for

the many services provided to the hemophilia patient,” citing testimony of its vice

president, Michael Fay.10

       But regardless of how Wellmark sets its reimbursement rates, the

language of the entity agreement only required Pharmacy Matters to provide

“health care services or supplies” to the covered patients. By “dispensing” the

Factor drugs, Pharmacy Matters did so. Nothing in the entity agreement required

Pharmacy Matters to provide the whole “constellation” of services required to

manage the disease of hemophilia. Where the language of a contract is clear,

courts must not rewrite it for the parties. See Amish Connection, Inc. v. State

Farm Fire & Cas. Co., 861 N.W.2d 230, 236 (Iowa 2015). The fact that FHM and

FCS provided other pharmaceutical services and coordinated the patients’ care,

as described in the district court’s decision, does not negate the functions

performed by Pharmacy Matters.




10
  Fay acknowledged on cross-examination that for home infusion providers, medical
services and supplies are billed separately from therapeutic drugs.
                                         21



       The district court further concluded Pharmacy Matters did not provide

“health care services” because even its own experts testified FCS could have

dispensed the Factor drugs itself. That conclusion again overlooks the plain

language of the contract. See Broyles v. Iowa Dep’t of Soc. Servs., 305 N.W.2d

718, 721 (Iowa 1981) (stating “when words are free from ambiguity, there is no

occasion for interpretation”). Even if another pharmacy could have provided the

same services as Pharmacy Matters, Wellmark agreed to make payment to the

home infusion therapy provider, here Pharmacy Matters, in accordance with the

terms of their entity agreement, specifically for claims incurred for “covered

services,” including injectable drugs.

       Further, the issue here is not one of double billing.    Only Pharmacy

Matters sought reimbursement for the Factor drugs it “dispensed” to the patients.

Nothing in the entity agreement prohibits a redundancy in the services provided

for the fixed rate of reimbursement. In fact, pharmacist Donna Horn, an expert

witness for Pharmacy Matters, testified: “Redundancy is preferred.” She opined

there was nothing wrong with pharmacist Stein coordinating with another

pharmacy to deliver the Factor to the patients: “[I]f you have two sets of eyes

looking at specific patient dosing, the chances of the patient getting the wrong

medication are significantly decreased.”

       The district court accepted Wellmark’s position that the only unique role

played by Pharmacy Matters was billing as an in-network provider. Wellmark

expert Brian McDonald opined: “Pharmacy Matters provided FCS and FHM with

access to Wellmark’s electronic billing system by which bills were submitted to
                                        22



Wellmark and the BlueCross BlueShield system. FCS or FHM paid Pharmacy

Matters a fee for this service.” In McDonald’s view, the claims Stein submitted to

Wellmark “were based on the false premise that Pharmacy Matters had

performed the pharmacy services and dispensed the prescriptions to the

patients.”11

         Despite McDonald’s skeptical view regarding the bills submitted by

Pharmacy Matters, we see nothing nefarious about these patients choosing their

pharmacy based on the pharmacy’s access to more favorable reimbursement

rates.     William Nolan, one of the BCBSA customers, testified regarding his

concerns about lifetime insurance caps: “If you don’t have a major illness in your

life, you don’t know what that is. But if you have chronic disease or illness, you

know you only have a certain amount of money to spend inside your insurance

policy.”    Pharmacist Robert Gardner testified, if FHM could partner with a

company that had contracts with BCBSA, it would “be able to hold down lifetime

caps for patients, which was a huge concern for patients and their out-of-pocket

responsibilities.”

         The district court—embracing Wellmark’s reasoning—read the entity

contract’s obligation to provide “covered services” as an obligation to be the sole

provider of all services associated with home infusion therapy for patients with

hemophilia. That reading goes beyond the terminology used in the Wellmark-

drafted entity agreements and in the Wellmark-drafted home infusion therapy



11
   McDonald also testified that delivering a drug to the patient was “an element” of
“dispensing” and admitted he had no knowledge of Iowa’s pharmacy laws concerning
“dispensing.”
                                       23



guide. Because the court’s flawed legal analysis had a material effect on its

ultimate decision, we reverse its conclusion regarding the Factor drugs that Stein

“dispensed” from Pharmacy Matters.      See Falczynski v. Amoco Oil Co., 533

N.W.2d 226, 230, 234 (Iowa 1995). Because Pharmacy Matters was a licensed

pharmacy “dispensing” a necessary therapeutic drug as one of the “wide range of

services” associated with home infusion therapy, it met its obligation to provide

“healthcare services or supplies” to which the patients were entitled under their

health insurance coverage. Accordingly, because Pharmacy Matters did provide

“covered services,” we conclude Wellmark breached its contract with Pharmacy

Matters by denying payment.

      Emergency Shipments.         Having decided Pharmacy Matters provided

“health care services” when Stein dispensed the Factor drugs from his pharmacy,

we turn to the question of whether he likewise did so for the emergency

shipments that did not pass through Iowa City. In this case, 114 of the 118

insurance claims at issue involved drug shipments sent to the patients from the

physical location of Pharmacy Matters. Four of the shipments were sent directly

from FCS to the patients in response to health emergencies.

      The district court found: “There is no justification for Pharmacy Matters

submitting more than $1 million of claims for drugs that were never in its

possession.” We agree.

      Pharmacy Matters argues “Stein was the dispensing pharmacist for those

four emergency shipments, even though the Factor did not pass through his

pharmacy.” Stein testified he gave approval for the shipments to be sent directly
                                          24



from FHM, in coordination with the FCS pharmacist in charge. When questioned

by Wellmark’s attorney concerning the labeling of those prescriptions, Stein

testified: “[T]he labeling was probably not as high in my mind priority-wise as

getting that patient Factor medication to get them through a critical situation.”

       Regardless of the emergency situations, Pharmacy Matters could not

dispense drugs that never passed through Iowa.           Katherine Linder, a former

member of the Iowa Board of Pharmacy, testified that Stein, as an Iowa

pharmacist, cannot dispense a drug simply by declaring that he is taking

responsibility for the drug shipment. Linder opined it “wouldn’t be possible for

[Stein] to be the ‘health care provider’ in that circumstance at all.”

       As discussed above, “dispense” means to package or label the drugs for

delivery. See Iowa Code § 155A.3(11). Stein did not package or label the four

shipments that did not go through his pharmacy. He did not check the NDC

numbers on those prescriptions, nor did he have the opportunity to compare the

contents of the shipments to the prescribed doses. Unlike the other shipments,

Stein did not deliver those four prescriptions to the patient or the patient’s agent.

       Because Pharmacy Matters did not provide “covered services” for the four

emergency shipments, we affirm the district court’s conclusion that Pharmacy

Matters breached its contractual obligation in those four instances. Accordingly,

Pharmacy Matters is not entitled to reimbursement for those four shipments in

the amount of $1,025,025.20.
                                            25



          B.     Did Pharmacy Matters Violate the Anti-Assignment Clauses of

the Entity Contracts?

          We next turn to Wellmark’s claim that Pharmacy Matters breached the

entity contracts by assigning its rights or delegating its duties without Wellmark’s

consent. As discussed above, both the Wellmark and WHPI contracts included a

clause prohibiting the “assignment of the rights, duties or obligations of this

Agreement.”

          The district court found these provisions reflected the parties’ intentions to

prohibit “not only the transfer of rights, but also the delegation of duties and

obligations.” The court opined: “The terms ‘assign’ and ‘delegate’ are synonyms

and commonly used interchangeably.” The court concluded: “Pharmacy Matters

impermissibly delegated its contractual duties and obligations to FCS Pharmacy

(by virtue of FCS Pharmacy supplying all of the health care services to the

Patients) and impermissibly made a de facto assignment to FHM of its

contractual payment rights (by remitting 100% of payments to FHM).”12 We do

not find support in the record or in Iowa law for the court’s conclusions.

          The word “assignment,” according to an early pronouncement by our

supreme court, “has acquired a peculiar and appropriate meaning in law, is a

technical word, and must be construed according to that peculiar and appropriate

meaning.” Cowles & Co. v. Ricketts, 1 Iowa 582, 582 (1855). “An assignment

involves the transfer of the entire rights under a contract from the assignor to the

assignee so that the assignee assumes not only the benefits of the contract, but


12
     This conclusion is adopted verbatim from Wellmark’s proposed ruling.
                                         26



also the rights and remedies.” Ross v. First Sav. Bank, 675 N.W.2d 812, 817

(Iowa 2004) (citing Red Giant Oil Co. v. Lawlor, 528 N.W.2d 524, 533 (Iowa

1995)). Anti-assignment clauses “are construed narrowly whenever possible.”

29 Williston on Contracts § 74:22 (4th ed. May 2015).

       “[D]uties cannot be assigned, they are delegated by the obligor to a

person who assumes the obligation.” Barker Dev. Co. v. Unibank & Trust Co.,

314 N.W.2d 175, 178 (Iowa Ct. App. 1981). The district court correctly noted that

parties often do not distinguish between these terms of art. See id. Although

delegation is a distinct concept from assignment, “‘[u]nless the language or the

circumstances indicate the contrary, . . . an assignment of ‘the contract’ or of ‘all

my rights under the contract’ or an assignment in similar general terms is an

assignment of the assignor’s rights and a delegation of his unperformed duties

under the contract.’” See Midland Mut. Life Ins. Co. v. Mercy Clinics, Inc., 579

N.W.2d 823, 833 (Iowa 1998) (quoting Restatement (Second) of Contracts

§ 328(1) (1979)).

       After closely reviewing the trial record, we do not find substantial evidence

to support the district court’s conclusion that Pharmacy Matters assigned all of its

rights or delegated its duties as delineated in the Wellmark entity agreements.

The “contract pharmacy agreement” that Pharmacy Matters entered into with

FHM did not mention any assignment or delegation by Pharmacy Matters. In

fact, that agreement required Pharmacy Matters to distribute the Factor products

for FHM. The “contract pharmacy agreement” also stated Pharmacy Matters was

“solely responsible for confirming, dispensing, and labeling all Factor products
                                        27



sold to customers.” Further, the “contract pharmacy agreement” placed a host of

other requirements on Pharmacy Matters. For example, Pharmacy Matters, as

the contracting pharmacy, had to be licensed; had to be authorized to dispense

the Factor products; had to be on-call twenty-four hours a day, seven days a

week, 365 days a year to respond to emergency calls from customers and from

FHM; and had to keep “timely, accurate and complete records” of the pharmacy

services provided.

      Nevertheless, the district court decided Pharmacy Matters delegated

“virtually all” of its contractual duties under the Wellmark entity agreements to

FHM without Wellmark’s consent. In finding Pharmacy Matters breached the

anti-assignment clauses, the district court emphasized the following facts:

              1. It was FCS Pharmacy, rather than Pharmacy Matters, that
      supplied health care services for the Patients. FCS Pharmacy
      clinically managed the Patients; had communications with the
      Patients, their caregivers, and the Providers; and prepared the
      pharmacy assessments and progress notes.
              2. FCS pharmacists interpreted the prescriptions for Factor
      Drugs based on the current weight information that FCS obtained
      regarding the Patients. FCS assembled the Factor Drugs into
      patient-specific assays.
              3. All of the Factor Drugs left Florida bearing an FCS
      Pharmacy prescription label after having been checked by an FCS
      pharmacist.
              4. More than $1 million of the Factor Drugs did not pass
      through Pharmacy Matters’ facility.
              5. Even when it did have physical possession of the Factor
      Drugs for a period of time, Pharmacy Matters was not allowed to
      alter the Factor Drugs it received from FCS Pharmacy.

      These factual findings, which were also set out in Wellmark’s proposed

ruling, do not show Pharmacy Matters delegated its duty to provide “covered

services” under the Wellmark entity agreements.          At most, these findings
                                        28



illustrate the view of the Pharmacy Matters’ expert that the provision of the

“covered services” to the hemophiliac patients “was really a team approach.”

Kenneth Baker, a pharmacy consultant, opined:

      It was a beautiful way of putting it together, so that you had the
      expertise [in Factor Health]; you had a guy with a contract with the
      insurance company who could actually fill the prescription; and . . .
      the Blue Cross member could get taken care of. . . . That’s a
      beautiful system from a quality assurance standpoint. . . . [Y]et, it’s
      what confused everybody when they started looking at this.

      Confusion aside, nowhere in the record did Pharmacy Matters expressly

assign its rights or delegate unperformed duties under its entity agreements with

Wellmark to FHM/FCS. In its “contract pharmacy agreement” with Pharmacy

Matters, FHM did not assume the obligation of providing “covered services” as

contemplated in the Wellmark agreements. It was Pharmacy Matters that took

sole responsibility for “confirming, dispensing, and labeling all Factor products

sold to customers.”

      The question really returns to whether the “constellation” of services

associated with home infusion therapy for hemophiliac patients can be

unbundled.   The district court embraced Wellmark’s position that Pharmacy

Matters violated the anti-assignment clauses by performing only the labeling,

packaging, and delivery of the Factor drugs to the patients and leaving the

clinical management of the patients to FHM and FCS. As our previous analysis

concluded, that position was inconsistent with the unambiguous terms of the

entity agreements.

      We also find error in the district court’s legal conclusion that Pharmacy

Matters made a de facto assignment of its rights under the Wellmark agreements
                                         29



by contracting to send “100% of any reimbursement” from the third-party payor to

FHM in exchange for a 1.5% dispensing fee.” Iowa has no case law discussing

de facto assignments. We recognize no specific words are required to effect an

assignment. See In re Wagner, 144 B.R. 430, 437 (Bankr. N.D. Iowa 1991). Any

language will suffice if it shows an intent to transfer the right to the assignee. Id.

But an agreement to transfer future reimbursements is not an assignment. See

Carey v. Chase, 175 N.W. 60, 62 (Iowa 1919). “To constitute a valid assignment,

there must be a perfected transaction between the parties, intended to vest in the

assignee a present right in the thing assigned.” Id. The “contract pharmacy

agreement” between Pharmacy Matters and FHM did not vest in FHM a present

right to payments from Wellmark. Because Pharmacy Matters retained control

over the future reimbursements from Wellmark and had the authority to collect

them, Pharmacy Matters’ arrangement with FHM did not constitute an

assignment. See id. at 61-62.

       Wellmark Provider Guide. In addition to interpreting the language in the

entity contract, the district court also adopted Wellmark’s position that the

Wellmark Provider Guide—incorporated by reference into the entity agreement—

included a “warning” to Pharmacy Matters that the kind of relationship it entered

into with FHM and FCS was prohibited by the anti-assignment clause. At issue is

the following language from the Provider Guide’s chapter on Contracts and

Credentialing, under the subheading of Supervisory responsibilities:

       There may be situations when a practitioner who is not eligible to
       contract with Wellmark directly hires or contracts with eligible
       practitioners as a consultant and uses the eligible practitioner’s
                                          30



           direct contracting status with Wellmark to file claims and receive
           payment. Such arrangements are not accepted by Wellmark.

           We find the court’s reliance on the Provider Guide was misplaced. In

carefully scrutinizing the record, we conclude the cited paragraph does not apply

to Pharmacy Matters’ relationship with FHM and FCS.             The Provider Guide

divides “licensed providers” into three categories: (1) practitioners, (2) facilities,

and (3) entities.      The Provider Guide’s list of practitioners includes doctors,

nurses, and other individual professionals. The list of facilities includes hospitals

and other medical centers. The list of entities includes services such as Home

Infusion Therapy Providers—the category under which Pharmacy Matters was

billing.     Accordingly, the Provider Guide’s “warning” regarding non-eligible

“practitioners” filing claims using the status of an eligible “practitioner” does not,

by its very terms, apply to an entity like Pharmacy Matters.

           Personal Services Contract. The district court also ruled that the entity

agreements were “a type of personal service contract” under which the

obligations were “not delegable.” We disagree with this legal conclusion.

           “A contract for personal services contemplates performance of duties

involving the exercise of special knowledge, judgment, taste, skill, or ability.”

Corell v. Teamsters Local Union No. 828, No. 00-1098, 2002 WL 31018534, at *2

(Iowa Ct. App. Sept. 11, 2002). Under personal services contracts, the assigned

duties are so specialized that they cannot be delegated to another party. Id.

(citing Restatement (Second) of Contracts § 318(2) (1981)). Courts have found

authentic personal-services contracts in the following instances: “[A] contract to

paint a picture; a contract between an author and his publisher; an agreement to
                                        31



sing; an agreement to render service as a physician.” See In re Compass Van &

Storage Corp., 65 B.R. 1007, 1011 (Bankr. E.D.N.Y. 1986) (collecting cases);

see also Lemat Corp. v. Barry, 80 Cal. Rptr. 240, 245 (Cal. Ct. App. 1969)

(discussing contract for unique personal services of star athlete).

       Initially, Pharmacy Matters suggests business entities or corporations do

not generally enter into personal-service contracts.        While it is true most

contracts “falling within the ‘personal services' exception are employment

contracts of individuals, it does not follow that a corporation cannot enter into

such an agreement.” See Ford, Bacon & Davis, Inc. v. Holahan, 311 F.2d 901,

903–04 (5th Cir. 1962). So, while Pharmacy Matters may be capable of entering

a personal-services contract, we conclude it did not do so when it entered into

the entity agreements with Wellmark.

       First, the agreements between Wellmark and Pharmacy Matters did not

contain language expressing that the pharmacy would be providing “personal

services.”   Second, while Pharmacy Matters, through pharmacist Stein,

possessed certain specialized knowledge and expertise, it was not the kind of

unique skill set that would justify a finding he was providing personal services to

Wellmark by dispensing the Factor drugs. See Corell, 2002 WL 31018534, at *3

(finding skills of union’s office secretary were “not unique or nondelegable”). We

reject this basis for finding Pharmacy Matters breached its agreements with

Wellmark.
                                       32



IV.    Conclusion

      We reverse the district court’s ruling that Pharmacy Matters materially

breached the entity agreements with Wellmark by not providing “covered

services” in relation to the 114 shipments of Factor drugs that Stein dispensed

from his pharmacy in Iowa City. We affirm the court’s ruling in regard to the four

emergency shipments that did not pass through Iowa.         We also reverse the

district court’s ruling that Pharmacy Matters breached the anti-assignment

clauses of the entity agreements. Conversely, we conclude Wellmark breached

the agreements by not paying those 114 claims submitted by Pharmacy Matters.

We remand for the district court to determine, consistent with this opinion, what

damages are owed to Pharmacy Matters.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
