Dillon Clark, Agnes Dusabe, Musa Ezeirig, Zarpka Green, Abraham Tarpeh, and Dusty Nyonee v. Insurance Company State of Pennsylvania
Dillon Clark, Agnes Dusabe, Musa Ezeirig, Zarpka Green, Abraham Tarpeh, and Dusty Nyonee v. Insurance Company State of Pennsylvania
Opinion
*182 In this case, employees and former employees of an Iowa manufacturing company brought a common law tort claim against the employer's workers' compensation insurance carrier. The claim alleged that the insurance carrier failed to conduct or negligently conducted an insurance inspection at the company's manufacturing facility and that the omission or action caused serious health problems for plaintiffs.
The insurance carrier moved to dismiss the petition based on Iowa Code section 517.5 (2017). 1 This Code provision provides, "No inspection of any place of employment made by insurance company inspectors ... shall be the basis for the imposition of civil liability upon the inspector or upon the insurance company ...." Id. Plaintiffs resisted, arguing that the statutory provision is unconstitutional as violative of equal protection, inalienable rights, and due process under article I, sections 1, 6, and 9 of the Iowa Constitution. The district court held the provision constitutional and dismissed the actions.
We granted interlocutory review. For the reasons expressed below, we affirm the judgment of the district court.
I. Factual and Procedural Background.
TPI Iowa, LLC is a wind blade manufacturing facility located in Newton, Iowa. TPI employs hundreds of employees at its Newton plant. The Insurance Company of the State of Pennsylvania (ICSOP) is TPI's workers' compensation insurer. Plaintiffs Dillon Clark, Agnes Dusabe, Musa Ezeirig, Zarpka Green, Dusty Nyonee, and Abraham Tarpeh are current or former employees of TPI.
Plaintiffs filed a petition in district court naming as defendants ICSOP, TPI, and various TPI affiliates, officers and employees. Plaintiffs' petition included a variety of claims against the various defendants, but the only claims against ICSOP were based on the failure to inspect the premises, or in the alternative, negligent inspection.
Specifically, plaintiffs alleged that employees at TPI were exposed to hazardous chemicals while manufacturing wind blades at the TPI manufacturing facility. Plaintiffs alleged the acts or omissions of ICSOP caused them various injuries, including horrific skin ruptures, rashes, burns, swollen and wounded eyelids, irregular vaginal bleeding, extensive body itches, congestion in the throat and lungs, and erectile dysfunction. Plaintiffs sought compensatory damages for their personal injuries, medical expenses, and lost wages. Plaintiffs also sought punitive damages.
ICSOP moved to dismiss plaintiffs' claims against it. ICSOP noted that the only claims against it arose from alleged failure to inspect or negligent inspections. ICSOP asserted that it had statutory immunity *183 from such claims under Iowa Code section 517.5.
Plaintiffs responded that section 517.5 is unconstitutional. They pointed to article I, sections 1, 6, and 9 of the Iowa Constitution.
The district court granted the motion to dismiss. We granted interlocutory review.
II. Standard of Review.
We review motions to dismiss for failure to state a claim for corrections of errors at law.
Rees v. City of Shenandoah
,
III. Statutory and Constitutional Provisions.
Plaintiffs challenge the constitutionality of Iowa Code section 517.5. That provision states,
No inspection of any place of employment made by insurance company inspectors or other inspectors inspecting for group self-insurance purposes shall be the basis for the imposition of civil liability upon the inspector or upon the insurance company employing the inspector ....
IV. Positions of the Parties.
A. Plaintiffs.
1. Equal protection. With respect to equal protection, plaintiffs assert that similarly situated persons-nonemployee tortfeasors-are treated differently than other nonemployee tortfeasors under the workers' compensation statutes. Ordinarily, nonemployee tortfeasors are subject to common law liability. But, plaintiffs point out, ICSOP as a nonemployee tortfeasor receives absolute immunity under Iowa Code section 517.5. Further, plaintiffs assert the distinction between nonemployee tortfeasor insurance companies and other nonemployee tortfeasors impacts a fundamental interest in access to the courts, and as a result, the classification is subject to strict scrutiny.
In support of their equal protection claim, plaintiffs cite
Suckow v. NEOWA FS, Inc.
,
*184
Plaintiffs in this case recognize that the
Suckow
court concluded that the classification did not involve a fundamental right of access to the courts. Plaintiffs argue, however, that the
Suckow
court emphasized that the statutory immunity granted to employers did not eliminate an employee's ability to recover against the employer, but only required that any recovery be channeled through the workers' compensation process.
Plaintiffs also cite the case of
Seivert v. Resnick
,
The
Seivert
court affirmed the district court's dismissal of the simple negligence claim.
Plaintiffs here point out that under
Seivert
, a potential claimant could still seek a remedy against coemployees based on gross negligence.
See
Plaintiffs assert that Iowa Code section 517.5 is distinguishable from the statutory provisions considered in Suckow and Seivert because section 517.5 completely eliminates any claim against ICSOP. Consequently, plaintiffs assert, the fundamental right of access to the courts is implicated in this case and strict scrutiny applies.
Applying a strict scrutiny test, plaintiffs assert that ICSOP cannot show the statute is narrowly tailored to advance a compelling interest. Although workplace safety is an important government objective, plaintiffs contend, it can be accomplished through the alternative and less burdensome means of occupational safety and health inspections pursuant to Iowa Code section 88.6.
Further, plaintiffs question whether a statute that grants immunity for acts or omissions related to workplace inspections promotes safety at all. In support of this contention, plaintiffs cite
Fireman's Fund American Insurance v. Coleman
,
*185 Plaintiffs urge us to adhere to the reasoning of Justice Jones in a concurring opinion in Fireman's Fund . In his opinion, Justice Jones noted the difference between jurisdictions regarding the quid pro quo in a workers' compensation statute as involving solely the employer and the employee, and those jurisdictions where the quid pro quo involved the employee and a larger "collective interest or enterprise." Id. at 342 (Jones, J., concurring). Under the latter line of cases, according to Justice Jones, a remedy against some party is sufficient to avoid a constitutional problem. Id. Justice Jones rejected the collective interests or enterprise theory, arguing that workers' compensation statutes govern only the relationship between the employer and the employee. Id. at 342-43.
Justice Jones considered the insurance carrier's claim that there was another quid pro quo argument independent of workers' compensation benefits, namely, that immunity from liability for workplace inspections advances the state's interest in eradicating unsafe working conditions. See id. at 345. But Justice Jones rejected this rationale. Id. at 345-46. Justice Jones found that immunity provisions were contrary to the premise of our tort system of accountability and amounted to a declaration that "[i]f you will not hold me responsible for my misconduct, I will be more careful." Id. at 346.
If the court is inclined not to apply strict scrutiny, plaintiffs here argue, the distinction between workers' compensation insurance companies and other nonemployee tortfeasors cannot survive a rational basis challenge. Plaintiffs claim that if encouraging inspections is the goal, the rational way to do so is not to immunize insurance company inspections but to require inspections under certain circumstances.
Plaintiffs finally launch a somewhat different claim. Plaintiffs note that occupational health and safety inspectors of the state operating under Iowa Code section 88.6 receive only qualified immunity under the State Tort Claims Act, Iowa Code section 669.14. According to plaintiffs, there is no rational basis to grant absolute immunity to a private insurance company conducting workplace inspections and only qualified immunity to state inspectors.
2.
Inalienable rights.
Plaintiffs next assert that Iowa Code section 517.5 violates the inalienable rights clause of article I, section 1 of the Iowa Constitution. Plaintiffs point out that under our caselaw, the inalienable rights clause was designed to "secure citizens' pre-existing common law rights (sometimes known as 'natural rights') from unwarranted government restrictions."
Gacke v. Pork Xtra, L.L.C.
,
Plaintiffs recognize that even where a right protected under article I, section 1 is involved, the legislature may reasonably regulate that right.
Steinberg-Baum & Co. v. Countryman
,
3. Due process. Last, plaintiffs claim that Iowa Code section 517.5 violates the due process clause of the Iowa Constitution in article I, section 9 by depriving them of a right to a jury trial. Plaintiffs incorporate their earlier arguments suggesting that there is no rational relationship between the immunity statute and its intended purpose.
*186 B. Defendant's Position.
1. Equal protection. At the outset, ICSOP urges that we apply a rational basis test in this case. ICSOP notes, under Iowa Administrative Code rule 876-4.10, "Whenever any insurance carrier shall issue a policy with a clause in substance providing that jurisdiction of the employer is jurisdiction of the insurance carrier, the insurance carrier shall be deemed a party in any action against the insured." Thus, ICSOP asserts, plaintiffs do have a claim against ICSOP, namely, a claim under the workers' compensation statute, but not a common law claim.
In any case, ICSOP argues there is no "vested right" in a common law claim against an insurer arising out of the failure to inspect or a negligent inspection. ICSOP notes that liability arising out of an insurance carrier's failure to inspect or negligent inspection was first recognized in Iowa in
Fabricius v. Montgomery Elevator Co.
,
ICSOP asserts additional reasons why any legislative classification at issue should be subject to rational basis review. ICSOP contends that while encouraging insurance company inspections was a purpose of the immunity, the immunity must be considered part of the larger workers' compensation system where the overall goal is to minimize appeals and afford an efficient and speedy tribunal to determine and award compensation under the terms of the workers' compensation act.
Suckow
,
Even if subject to strict scrutiny, ICSOP contends it satisfies that test. According to ICSOP, the workers' compensations scheme advances important interests that can only be accomplished by the immunities granted in Iowa Code section 517.5.
ICSOP confronts
Fireman's Fund
, the Alabama case on which plaintiffs extensively rely. ICSOP notes that
Fireman's Fund
was based on
Grantham
,
ICSOP disputes plaintiffs' claim that equal protection is violated when insurance companies engaged in workplace inspection *187 receive absolute immunity but government workplace inspectors receive only qualified immunity. ICSOP claims that the statute itself creates no classification, and therefore, no equal protection problem is present. ICSOP further points out that if government inspectors were inspecting "for group self-insurance purposes," the inspectors would be entitled to absolute immunity under Iowa Code section 517.5.
Further, ICSOP distinguishes an employer's insurance carrier from the state's inspectors. ICSOP notes that the employer's insurance carrier is already liable for "any and all personal injuries sustained by an employee arising out of and in the course of the employment."
2.
Inalienable rights.
ICSOP agrees that under article I, section 1, the court should consider (1) whether the right asserted is protected by the inalienable rights clause and (2) whether the statute is a reasonable exercise of the state's police power.
Gacke
,
Further, ICSOP argues that plaintiffs are wrong when they suggest that Iowa Code section 517.5 does not serve the public interest. ICSOP claims that Iowa Code section 517.5 is part of the overall workers' compensation scheme. Its goal is to provide an expedient forum for injured workers to resolve claims against their employer and the employer's workers' compensation insurance provider. ICSOP thus sees the immunity provision in Iowa Code section 517.5 as part of the grand bargain of the workers' compensation system.
3. Due process. ICSOP points out that under their view of the case, plaintiffs have no claim against the insurance company for the allegedly negligent inspection. According to ICSOP, no right to a jury trial under article I, section 9 of the Iowa Constitution can possibly attach to a nonexistent claim.
V. Discussion.
A. Introduction. This case involves the intersection of two important currents in American law. These are the development of workers' compensation systems and the extension of tort liability to parties who engage in gratuitous or voluntary undertakings.
At the turn of the century, states began adopting workers' compensation systems to compensate workers for workplace injuries. Emily A. Spieler,
(Re)assessing the Grand Bargain: Compensation for Work Injuries in the United States, 1900-2017
,
From the beginning, workers' compensation statutes were challenged on a variety of constitutional grounds. John Fabian Witt,
The Long History of State Constitutions and American Tort Law
,
A second legal current involves the imposition of tort duties on a party that gratuitously or voluntarily engages in undertakings that are reasonably relied upon by third parties.
See
Restatement (Third) of Torts: Liab. for Physical & Emotional Harm § 29, at 493 (Am. Law Inst. 2010). Once he undertakes to provide assistance, the law may require him to do so reasonably.
See
B. Iowa Precedent Regarding Voluntary Undertakings and Scope of Grand Bargain.
1.
Voluntary undertakings.
A significant issue coursing through American law in the middle of the twentieth century was the question of whether one who voluntarily or gratuitously engaged in an undertaking might be liable to third parties. We considered the question in the workers' compensation context in
Fabricius
,
In
Fabricius
, the plaintiff's decedent died after the employer's workers' compensation insurance carrier allegedly negligently inspected or failed to inspect the workplace, machinery, and equipment of the employer.
The
Fabricius
court rejected the insurer's argument.
The
Fabricius
court noted that in
Smith v. American Employers' Insurance Co.
,
*189
2.
Scope of grand bargain.
The first recent Iowa case of importance considering the scope of the grand bargain in a constitutional context is
Seivert
,
We held in
Seivert
that the classification separating coemployee tortfeasors from tortfeasors who are not coemployees was rational in light of the legislative scheme for providing workers' compensation benefits.
In short,
Seivert
stands for the proposition that the grand bargain in Iowa's workers' compensation program not only limits the liability of employers, but also limits the liability of coemployees compared to those who are not coemployees. Such classifications within the grand bargain are subject to rational basis review when attacked on equal protection grounds under the Iowa Constitution.
The second relevant Iowa case is
Suckow
,
The
Suckow
court first considered whether the classification should be reviewed under strict scrutiny or the more deferential rational basis test.
Declining to apply strict scrutiny, the Suckow court turned to applying a rational basis test. Id. at 779. The Suckow court retraced the steps of Seivert and noted the employer's immunity is supported as the quid pro quo of giving up normal defenses while the employee gives up the right to common law verdicts. Id. The Suckow court concluded that there was a rational basis for giving employers more immunity than coemployees. Id. at 780. The Suckow court emphasized that employers have more at stake than coemployees as they must pay for all work-related injury regardless of fault and must pay for the cost of insurance, burdens not borne by coemployees. Id.
C. Application of Principles to Present Dispute. We now turn to application of the principles in the above caselaw to the present dispute. We think it clear under Seivert and Suckow that the grand bargain embraced in our workers' compensation statute is not to be so narrowly construed as to include only provisions related to the employer and the employee.
*190 Suckow stands for the proposition that the legislature may include a limitation on the liability of coemployees as part of the grand bargain of our workers' compensation scheme.
We think the logical extension of
Suckow
is that the legislature may reasonably provide immunity for inspections performed by a workers' compensation carrier as part of the grand bargain. A workers' compensation carrier is bound by a judgment against the employer in a workers' compensation proceeding.
The consequence of including immunity for workers' compensation carriers' inspections in the grand bargain is that the proper standard of review under article I, section 6 of the Iowa Constitution is the rational basis test.
See
Suckow
,
Because the immunity for workers' compensation insurance companies' inspections is part of the grand bargain behind workers' compensation schemes, plaintiffs' challenge to the provision under Iowa Constitution article I, section 1 also fails. The thrust of plaintiffs' claim is that the absolute immunity provision abolishes a claim otherwise available under common law. But if viewed as part of the workers' compensation scheme, that claim lacks merit. Here, the workers' compensation insurer has been hired by the employer to fulfill statutory duties under Iowa's workers' compensation law. As a result, the workers' compensation insurer is part of the workplace and is inextricably tied to the employer. Because of the close relationship between the workers' compensation carrier and the employer, the immunity provided by Iowa Code section 517.5 is part of the grand bargain reflected in Iowa's workers' compensation law. Under the workers' compensations scheme, there is no abolition of the right to recover. Instead, as emphasized in
Suckow
, the state has provided a comprehensive statutory scheme "to provide an expeditious and automatic remedy to injured employees."
*191 claim, there has been no absolute elimination of a right of recovery for on-the-job injuries, but only a reasonable regulation of it.
Because we have found that there is no claim for negligent inspection against a workers' compensation carrier, it follows that there is no right to a jury trial on a nonexistent claim. Thus, plaintiffs' due process claim also fails.
VI. Conclusion.
For the above reasons, the judgment of the district court dismissing the action is affirmed.
AFFIRMED.
All references are to the 2017 Iowa Code unless otherwise noted.
A number of workers' compensation statutes in other jurisdictions expressly state that the term "employer" includes an employer's workers' compensation insurance company or include language that makes clear that workers' compensation insurance companies, to the extent they are subject to liability, are not liable for activities related to safety inspections.
See, e.g.
,
Reference
- Full Case Name
- Dillon CLARK, Agnes Dusabe, Musa Ezeirig, Zarpka Green, Abraham Tarpeh, and Dusty Nyonee, Appellants, v. INSURANCE COMPANY STATE OF PENNSYLVANIA, Appellee.
- Cited By
- 4 cases
- Status
- Published