Roofer calls Iowa insurance-adjuster law unconstitutional

(CN) — A roofing contractor told an Eighth Circuit panel Thursday that Iowa’s law banning businesses without state licenses from advising homeowners on how to deal with their insurance companies violates the First Amendment right to free speech.

Shamrock Hills Roofing, an Overland Park, Kansas, company that does business in Iowa and eight other states, claims Iowa’s law limiting what a contractor may say when it helps homeowners with insurance claims violates the contractor’s right of free speech.

In making that argument to a three-judge Eighth Circuit panel in St. Louis on Thursday, Adam Barney of Voegele Anson Law in Omaha said, “The problem with this case comes from how Iowa defines a public adjuster. They are defined, in substantial part, by speech, and residential contractors are barred from being public adjusters. In other words, in Iowa, residential contractors are barred from engaging in certain speech.”

Shamrock Hills sued the state September 2024 after Iowa insurance regulators warned the company it was potentially engaged in the practice of “unlicensed public insurance adjusting” based on the company’s use of terms and phrases in social media such as “Our knowledgeable insurance claim specialists work through an easy claims process to help you get covered by insurance.”

Shamrock Hills claims the statute prohibiting its use of such words violates its free speech rights under the First Amendment. A federal judge dismissed the case, saying Iowa’s public-adjuster law regulates conduct and has only incidental impact on speech.

U.S. Circuit Judge Jane Kelly, a Barack Obama appointee, asked Barney about the difference between speech and conduct under Iowa’s law. “If a contactor says, ‘Do you have insurance, and who is it with, and how much is it for and what does it cover,’ that’s not negotiating or affecting a settlement. But that is talking about insurance.”

Barney responded: “That is talking about insurance, and Iowa is applying [the law] by saying that contractors cannot speak to those things.”

Iowa Assistant Attorney General Patrick Valencia told the panel the heart of this case is the question of whether the statute regulates conduct or speech.

U.S. Circuit Judge L. Steven Grasz, a Donald Trump appointee, said Shamrock Hills claims it can’t talk to the homeowner about insurance. “What’s your take on that?”

Valencia said the Iowa Insurance Division advised that contractors can talk to a potential client generally about the insurance process. They run into trouble “once you get into individualized advice, interpreting the policy, exercising judgment on behalf the client. “

Grasz said, “If it’s advice, that sounds like speech.”

Valencia disagreed. “I don’t think advice is necessarily speech given the context of the statute."

In abrief filed with the appeals court, Shamrock explained what it does for potential customers.

“Shamrock, as a residential contractor, helps homeowners make repairs to their homes following damage from storms and other catastrophic events,” the company said. “Those repairs are often covered by insurance policies — convoluted contracts that are often narrowly enforced by swarms of claims representatives and lawyers to minimize payouts and increase profits for insurance companies. Homeowners want Shamrock to aid and assist them in navigating the red tape.”

The company said it cannot do that under Iowa’s law, which makes it a crime for contractors to aid and advise homeowners in the insurance claims process.

Iowa’s law generally forbids residential contractors from acting as a “public adjuster,” which is defined as a licensed insurance professional hired by a policyholder to negotiate and settle property damage claims. Because it is not a licensed public adjuster, Shamrock runs afoul of the law in the way it speaks to its customers about the insurance claims process. Iowa law requires public adjusters to hold a license and bars residential contractors from becoming licensed public

In response, the state said in its brief that Iowa’s public-adjuster license requirement does not violate the free speech of residential contractors.

“Iowa is one of 45 states that prohibit residential contractors from holding such a license, recognizing that assigning insurance benefits to contractors can often lead to higher premiums as the contractors conduct unnecessary or needlessly expensive work and file lawsuits against insurers that deny or dispute the claims,” the state said in its brief.

The law regulates conduct, not speech, the state said. “Accepting payment for taking defined actions on behalf of a client is the hallmark of professional conduct. Shamrock cannot point to any particular message, idea, subject matter or content it is barred from expressing through the operation of these statutes.”

U.S. Circuit Judge Jonathan Kobes, also a Trump appointee, rounded out the panel. The judges did not say when a decision would be issued.

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