The Iowa Supreme Court was recently confronted with the question of whether, under Iowa law, a commercial general liability insurance policy purchased by an employer, which included its employees as insureds, could provide insurance coverage for a claim of gross negligence brought by an employee against a co-employee. The Iowa Supreme Court held that under Iowa law, insurance coverage could exist under the insurance policy involved for that claim. The insurance company had brought a declaratory judgment action against the plaintiffs, including the family and estate of the employee who had died in the accident. The insurance company asserted that the degree of intentionality required in establishing a claim of gross negligence under Iowa law was inherently inconsistent with the definition of an “occurrence” under the insurance policy which required that the negligence involved be an “accident.” The insurance company argued the high standard of intentional conduct and knowledge required to establish gross negligence under Iowa law had to, therefore, mean that the act of the co-employee was not an accident and, tus, not an occurrence thereby precluding coverage under the insurance policy.
The Iowa Supreme Court began by examining Iowa’s standards for a gross negligence claim against a co-employee. Normally, under Iowa’s workers’ compensation statute found at Iowa Code Chapter 85, an injury or death arising out of employment may only be compensated under workers’ compensation and precludes a claim against the employer, and only allows a lawsuit to be brought against a co-employee where the co-employee was grossly negligent. The Iowa Supreme Court analyzed the Iowa decisions assessing the standard of gross negligence and in particular the required element of proving that a co-employee had knowledge that an injury was probable as opposed to possible and engaged in a conscious failure to avoid that peril. The Court found that the co-employee must engage in gross negligence amounting to wanton neglect for the safety of another, but that wantonness is less blameworthy than an intentional act. The Iowa Supreme Court found coverage may exist under a commercial general liability insurance policy because it is possible a factfinder could conclude that a co-employee “acted without intent to harm and with the expectation that an injury was more likely than not, but not with the expectation that the injury was highly likely or substantially certain to result. In other words, some, but not all, acts of gross negligence may not be accidents.” The Iowa Supreme Court reversed the district court’s granting of summary judgment to the insurer, requiring a trial to resolve the factual issue noted above.
The case at issue is T.H.E. Insurance Company v. Glen and Estate of Booher, et al., and was decided on June 5, 2020. A copy of that decision is linked here. https://www.iowacourts.gov/courtcases/8265/embed/SupremeCourtOpinion