               IN THE SUPREME COURT OF IOWA
                                  No. 15–0714

                        Filed November 18, 2016


AUTO-OWNERS INSURANCE COMPANY,

      Appellant,

vs.

IOWA INSURANCE DIVISION,

      Appellee.


      Appeal from the Iowa District Court for Polk County, Robert B.

Hanson, Judge.



      Insurer appealed insurance commissioner’s decision to decline to

consider the merits of an insured’s complaint and the district court

dismissed for lack of standing. APPEAL DISMISSED.



      CeCelia C. Ibson of Ibson Law Firm, Des Moines, for appellant.


      Thomas J. Miller, Attorney General, Jordan G. Esbrook, Assistant

Attorney General, for appellee.
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APPEL, Justice.

      In this case, we are asked to consider whether an insurer may

bring an appeal under the Iowa Administrative Procedures Act of an

action by the insurance commissioner when the commissioner declined

to consider the merits of an insured’s complaint challenging the insurer’s

termination of workers’ compensation insurance on the ground that the

complaint raised factual issues that could not be resolved by the agency.

For the reasons expressed below, we conclude the appeal is moot and

thus dismiss the appeal.

      I. Factual and Procedural Background.

      Subject to exceptions not relevant to this case, Iowa employers are

required by law to obtain insurance covering their liability for workers’

compensation benefits. Iowa Code § 87.1 (2015). When an employer in

good faith is entitled to insurance but is unable to procure it in the open

market, Iowa’s assigned risk plan provides a mechanism by which

coverage is available.    Iowa Code § 515A.15.    Auto-Owners Insurance

Company (Auto-Owners) is a participant in Iowa’s assigned risk plan.

      The National Council on Compensation Insurance (NCCI) is a

rating organization operating in Iowa and is administrator of the

assigned risk plan.        As we noted in Travelers Indemnity Co. v.

Commissioner of Insurance, NCCI “adopted rules for the administration,

management, and enforcement of the assigned risk plan in Iowa.” 767

N.W.2d 646, 647–48 (Iowa 2009).

      On February 28, 2014, Health Dimensions Rehabilitations, Inc.

(Health Dimensions) submitted an application for workers’ compensation

insurance to the assigned risk plan. Health Dimensions has its home

office in Minnesota.     It conducts business in Minnesota, Iowa, South

Dakota, and Wisconsin.       Pursuant to the assigned risk plan, NCCI
                                   3

assigned Auto-Owners as Health Dimensions workers’ compensation

insurance carrier.

      On assignment from Auto-Owners, Travelers Indemnity Company

issued a workers’ compensation policy.     The policy provided coverage

only for Health Dimensions’ Iowa workers engaged in its Iowa operations.

Carolina Casualty Insurance Company provided coverage for Health

Dimensions’ Minnesota employees.

      A dispute arose between Health Dimensions and Carolina Casualty

regarding the proper premium for coverage of its Minnesota employees.

The dispute led to NCCI sending a letter to Auto-Owners on June 17,

which stated that Health Dimensions had been identified as ineligible for

assigned risk coverage because the company was “identified as having an

undisputed premium or other monetary obligation on a prior/current

workers compensation policy.”     The NCCI instructed Auto-Owners to

verify that the policy with Health Dimensions was an assigned risk policy

and, if so, Auto-Owners was instructed to initiate cancellation of the

policy.

      On June 19, Auto-Owners issued a notice of cancellation to Health

Dimensions, effective July 4.       The notice indicated that Health

Dimensions’ workers compensation policy was “cancelled by underwriter

and/or plan admin.”

      Health Dimensions responded to the notice of cancellation in two

ways. First, in August, Heath Dimensions filed an action in Minnesota

state court against Auto-Owners claiming breach of contract.      In the

lawsuit, Health Dimensions sought a declaratory judgment as well as

punitive damages.

      Second, on September 11, Health Dimensions sent a letter to the

Iowa insurance commissioner complaining about the cancellation of its
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Iowa policy and claiming the cancellation violated Iowa law. On October

10, Auto-Owners submitted its response. In its response, Auto-Owners

provided an extensive history of the dispute.

      On October 28, John Leonhart, an enforcement attorney for the

Iowa Insurance Division,      wrote   Health    Dimensions   regarding    its

September 11 complaint. In the letter, Leonhart stated,

      It appears from the matters raised in your letters, the
      response from Auto-Owners and the complaint filed in the
      District Court for the County of Isanti, State of Minnesota
      that you have a factual dispute with Auto-Owners and NCCI.
      The Division as a state administrative agency does not have
      the authority to resolve such a factual dispute. The proper
      forum for this is a court of law and that is where this matter
      now resides. The Division cannot intervene in a matter that
      is currently being litigated before a judicial tribunal.

      Auto-Owners filed a petition for judicial review in Polk County

District Court on November 20. The petition sought a declaration that

the insurance commission should have exercised jurisdiction over the

dispute   between    Health   Dimensions        and   Auto-Owners.       The

commissioner filed a motion to dismiss the petition, arguing that Auto-

Owners was not “a person aggrieved by the application of a rating

system” under Iowa Code section 515A.9.          In an amended filing, the

commissioner argued that Auto-Owners had no standing to challenge the

commissioner’s action under Iowa Code section 17A.19.

      The district court entered its ruling on March 31, 2015.         In its

ruling, the district court held that Auto-Owners lacked standing to

litigate the issues. The district court stated that the only requirement of

standing at issue in the case was whether Auto-Owners is “aggrieved or

adversely affected” by the commissioner’s decision under Iowa Code

section 17A.19(1).
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      The district court applied the test developed by this court in Polk

County v. Iowa State Appeal Board, 330 N.W.2d 267, 273 (Iowa 1983). In

Polk County, we applied a two-prong test to standing under the Iowa

Administrative Procedure Act.      Id.   The first Polk County standing

requirement, the interest prong, required a party to show a “specific,

personal and legal interest in the subject matter” of the agency action.

Id. The second Polk County standing requirement, the prejudice prong,

required an appealing party to demonstrate the agency action has a

specific or injurious effect on the appealing party’s interest.    Id.   The

district court concluded that while Auto-Owners met the interest prong

of the Polk County test, it failed to meet the prejudice prong. The district

court granted the motion to dismiss.

      Auto-Owners appealed the district court decision. For the reasons

expressed below, we dismiss the appeal as moot.

      II. Discussion.

      At oral argument in this matter, we were advised by counsel that

Health Dimensions had accepted a refund check from Auto-Owners

related to the cancelled insurance policy and did not appear at a hearing

in state court in Minnesota dealing with questions related to cancellation

of the Health Dimensions’ policy with Auto-Owners.            The dispute

regarding cancellation of the insurance policy which was presented to the

insurance commissioner thus appears to be moot. See Electra Ad Sign

Co. v. Cedar Rapids Truck Ctr., 316 N.W.2d 876, 879 (Iowa 1982) (holding

that an obligation is discharged when valid consideration is offered,

intended, and accepted as full satisfaction of the original claim); Kissner

v. Brown, 487 N.W.2d 97, 98 (Iowa Ct. App. 1992) (per curiam) (stating

plaintiff accepting and cashing check for judgment without reservation or

protest rendered plaintiff’s appeal moot).      Under the circumstances
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presented and applying our established caselaw, we dismiss the appeal

as moot.

     III. Conclusion.

     For the above reasons, the appeal is now moot and must be

dismissed.

     APPEAL DISMISSED.
