Iowa: Third-Party Administrators Immune from Bad Faith Claims

A common law cause of action for bad-faith failure to pay workers’ compensation benefits may not be pursued against a third-party administrator of a workers’ compensation insurer, held the Supreme Court of Iowa, in a divided (5-2) decision. Answering a question certified to it by a U.S. District Court, the Court noted that such an action could be maintained against the insurer and against a self-insured employer, but in as much as TPAs had no statutorily-mandated duties, they were beyond suits brought by the injured employee. The Court acknowledged that TPAs had been found subject to suit in other states (e.g., Colorado), but said the statutory and administrative framework in Iowa was sufficiently different as to make those other court decisions distinguishable.

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is co-author of Larson’s Workers’ Compensation Law (LexisNexis).

LexisNexis Online Subscribers: Citations below link to Lexis Advance.

See De Dios v. Indemnity Ins. Co. of N. Am. & Broadspire Servs., 2019 Iowa Sup. LEXIS 56 (May 10, 2019)

See generally Larson’s Workers’ Compensation Law, § 114.02

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law

For a more detailed discussion of the case, see