De Dios v. Indemnity Insurance Company of North America et al

Filing 46

OPINION AND CERTIFICATION of Question to State Court. The Clerk of Court shall forward this order and my June 13, 2018, Opinion And Order Regarding Defendant Broadspire's Motion To Dismiss And Regarding Certification Of Questions To The Iowa Sup reme Court (Doc. no. 35 ) to the Iowa Supreme Court under official seal, as required under Iowa Code § 684A.4, as well as the portions of the record designated by the parties, as set out in the next paragraph. See order for details. Signed by Judge Mark W Bennett on 7/16/2018. Order and docket no. 35 mailed to Iowa Supreme Court with Court's seal. (src)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
SAMUEL DE DIOS,
No. C 18-4015-MWB
Plaintiff,
vs.
INDEMNITY INSURANCE COMPANY
OF NORTH AMERICA and
BROADSPIRE SERVICES, INC.,

OPINION AND ORDER
CERTIFYING QUESTION TO THE
IOWA SUPREME COURT

Defendants.
___________________________
This case is before me on my June 13, 2018, Opinion And Order Regarding
Defendant Broadspire’s Motion To Dismiss And Regarding Certification Of Questions
To The Iowa Supreme Court. In that Opinion And Order, I concluded that, rather than
grant Broadspire’s Motion To Dismiss, which sought dismissal of plaintiff De Dios’s bad
faith claim against Broadspire, a third-party claims administrator, I would sua sponte
certify some form of the following question to the Iowa Supreme Court:

In what

circumstances, if any, concerning a third-party claims administrator’s duties and
relationship with a workers’ compensation insurer, can an injured employee hold the
third-party claims administrator liable for the tort of bad faith for failure to pay workers’
compensation benefits? I set a deadline of June 25, 2018, for the parties to offer
amendments to this question or to offer different and additional questions to be certified.
Broadspire was the only party to propose alternatives to the question I proposed
by the deadline.
alternatives.

De Dios also filed no timely response to Broadspire’s proposed

Broadspire proposes the following alternative questions to be certified to the Iowa
Supreme Court: (1) Since third-party administrators, unlike insurance carriers and selfinsured employers, do not “insure” losses, may they nonetheless be deemed an “insurer”
for purposes of establishing the insured/insurer relationship that is necessary to maintain
a claim of bad faith tort liability? and (2) If yes, what specific circumstances must be
present in order to find that a third-party administrator is an “insurer” for purposes of
the insurer/insured relationship necessary to maintain a claim for bad faith?
I note that these proposed questions both reflect Broadspire’s premise that a
defendant must be an “insurer” and/or “insure” losses to be liable on a tort claim for bad
faith. I rejected that premise in my Opinion And Order. Nevertheless, I recognized a
subsidiary question in this litigation is whether the tort of bad faith is only available
against an insurer. See Opinion And Order, 19. I reiterate my belief that the principal
question, as I have formulated it, encompasses this specific subsidiary question. I also
believe that the first question proposed by Broadspire improperly narrows the inquiry
concerning the circumstances, if any, in which a third-party claims administrator can be
held liable for the tort of bad faith.
Broadspire’s second proposed question is essentially a paraphrase of the question
that I proposed. What is different is that, while improperly narrowing the question to
whether or not a third-party claims administrator must be an “insurer” to be liable for
bad faith, it broadens (or does not limit) what other circumstances might permit a bad
faith claim to lie against a third-party claims administrator, without any apparent
limitation to a third-party claims administrator’s duties or relationship with a workers’
compensation insurer or insured. In ruling on Broadspire’s Motion For Reconsideration,
I rejected Broadspire’s contention that my Opinion And Order had focused exclusively
and improperly on the relationship between the third-party claims administrator and the
insurer, without considering the relevance or importance of the relationship between the
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third-party claims administrator and the insured. I do believe, however, that my proposed
question for certification did inadvertently focus on the insurer-administrator relationship
without explicitly including the administrator-insured relationship or other circumstances,
such as regulation. For example, in Bremer v. Wallace, 728 N.W.2d 803 (Iowa 2007),
the Iowa Supreme Court concluded that an uninsured employer was not equivalent to an
insurer or a self-insured employer, because it did not meet any of the precise statutory
and regulatory requirements to acquire the standing of a self-insured employer. 728
N.W.2d at 805-06.
Consequently, I will revise the question to be certified to the Iowa Supreme Court
to ask the following: In what circumstances, if any, can an injured employee hold a
third-party claims administrator liable for the tort of bad faith for failure to pay workers’
compensation benefits? I believe that this revised question not only encompasses the
subsidiary questions I identified in my Opinion And Order, at 19, but the alternative
questions proposed by Broadspire, without imposing improper limitations on the inquiry.
I also conclude that certifying this question and staying the trial and the dispositive
motions deadline in this case pending an answer are appropriate, notwithstanding that the
certified question does not impact De Dios’s claims against defendant Indemnity
Insurance Company Of North America, the workers’ compensation insurer. Much of the
proof on the claims against both defendants is likely overlapping, where Broadspire
allegedly performed most or all of the acts leading to denial of De Dios’s workers’
compensation claim, so that separate trials on the claims against the two defendants would
be inefficient. The stay does not extend to discovery, however, which I believe can
reasonably continue during the pendency of the certified questions before the Iowa
Supreme Court, thereby minimizing the effects of any delay while the Iowa Supreme
Court considers whether to answer the certified question and, if so, provide an answer.
The certified question is dispositive of the only claim against defendant Broadspire. It
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would be unwise, in my view, for a single federal district judge, in the absence of clear
guidance from the Iowa Supreme Court, to decide this issue. This is precisely the type
of question of Iowa law that should be determined by the Iowa Supreme Court. I also
find that the parties, including defendant Indemnity, will not be unduly prejudiced by
awaiting an answer to the certified question—particularly where I will not stay discovery.
In contrast, unnecessary expenses and proceedings could result from my attempt to
answer the question, with the likelihood of a subsequent appeal.
THEREFORE,
1.

The trial and the dispositive motions deadline in this case are stayed pending

answer to the question certified to the Iowa Supreme Court, below.
2.

I hereby certify the following question to the Iowa Supreme Court:
In what circumstances, if any, can an injured employee hold
a third-party claims administrator liable for the tort of bad
faith for failure to pay workers’ compensation benefits?

3.

The Clerk of Court shall forward this order and my June 13, 2018, Opinion

And Order Regarding Defendant Broadspire’s Motion To Dismiss And Regarding
Certification Of Questions To The Iowa Supreme Court (docket no. 35) to the Iowa
Supreme Court under official seal, as required under Iowa Code § 684A.4, as well as the
portions of the record designated by the parties, as set out in the next paragraph.
4.

Not later than August 6, 2018, the parties shall designate portions of the

record for the Clerk of Court to forward to the Iowa Supreme Court under official seal.
5.

Pursuant to Rule 6.302(b)(4) of the Iowa Rules of Appellate Procedure, I

designate the plaintiff as the party to file the first brief, because the plaintiff asserts the
bad faith claim against defendant Broadspire.
6.

The parties and their representatives are as follows: Plaintiff Samuel De

Dios is represented by Anthony J. Bribriesco, BRIBRIESCO LAW FIRM, PLLC, 2407
18th Street, Suite 200 Bettendorf, IA 52722, and Al Sturgeon, AL STURGEON LAW
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OFFICE, 911 – 6th St., Sioux City, IA 51101; defendant Broadspire Services, Inc., is
represented by Anthony Lee Osborn and Jeana L. Goosmann, Goosmann Law Firm
P.L.C., 410 5th Street, Sioux City, IA 51101, and Jennifer G. Cooper, Alexander F.
Koskey, III, and Matthew J. Leonard, Baker, Donelson, Bearman, Caldwell & Berkowitz
P.C., 3414 Peachtree Road NE, Suite 1600, Atlanta, GA 30326.
7.

The parties shall file status reports promptly upon receiving notice of the

Iowa Supreme Court’s decision to consider or to decline to consider the certified question
and, if the Iowa Supreme Court does consider such certified question, upon notice of a
decision by the Iowa Supreme Court.
IT IS SO ORDERED.
DATED this 16th day of July, 2018.

______________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA

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