Endress v. Iowa Dep't of Human Servs., No. 18-1329

CourtUnited States State Supreme Court of Iowa
Writing for the CourtCHRISTENSEN, Chief Justice.
Citation944 N.W.2d 71
Docket NumberNo. 18-1329
Decision Date29 May 2020
Parties Terri ENDRESS, Appellee, v. IOWA DEPARTMENT OF HUMAN SERVICES, Appellant.

944 N.W.2d 71

Terri ENDRESS, Appellee,
v.
IOWA DEPARTMENT OF HUMAN SERVICES, Appellant.

No. 18-1329

Supreme Court of Iowa.

Filed May 29, 2020


Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor General, and Tabitha J. Gardner, Assistant Attorney General, for appellant.

Trent W. Nelson of Sellers, Galenbeck & Nelson, Des Moines, for appellee.

CHRISTENSEN, Chief Justice.

In this case, the Iowa Department of Human Services (DHS) waited two years to attempt recoupment of $16,003.94 for child-care services rendered by the provider during agency review of her cancelled provider agreement. We must decide whether the provider was given constitutionally sufficient notice of DHS's intent to recoup payments. DHS sent a notice cancelling the agreement. The notice advised the provider of a right to appeal but cautioned, "Any benefits you get while your appeal is being decided may have to be paid back if the Department's action is correct." On appeal, DHS affirmed its decision to cancel the provider's agreement. Years later, DHS also found that the provider had to pay back the $16,003.94. On judicial review, the district court reversed DHS's decision on recoupment. It reasoned DHS's notice to the provider did not afford her procedural due process. The district court, however, denied attorney fees to the provider under Iowa Code section 625.29(1)(b ) (2017). On appeal, the court of appeals affirmed the decision of the district court on the merits while reversing with respect to the award of attorney fees.

We granted further review. Upon our review, we conclude DHS's notice meets procedural due process requirements. However, we also conclude that DHS erred in refusing to consider the provider's unjust-enrichment defense to the recoupment proceeding. On remand to the agency, the provider should be allowed an opportunity

944 N.W.2d 75

to raise unjust enrichment as an offset to DHS's effort to recoup overpayments. With respect to attorney fees, DHS's role was primarily adjudicative, and it is not liable for attorney fees. Therefore, we vacate the decision of the court of appeals and affirm in part and reverse in part the judgment of the district court. We remand the case to the district court to remand to DHS for consideration of the provider's equitable relief.

Three justices of this court have joined this entire opinion. The concurrence in part and dissent in part filed by Justice McDonald on behalf of three justices joins divisions III.A and III.C of this opinion, while dissenting as to division III.B. The concurrence in part and dissent in part filed by Justice Appel contingently joins division III.B of this opinion, while dissenting as to divisions III.A and III.C. Accordingly, this opinion controls all aspects of the resolution of this appeal.

I. Background Facts and Proceedings.

In 2012, Terri Endress received DHS registration as an approved Category B DHS child-care provider. Endress entered into a Child Care Assistance Provider (CCAP) agreement with DHS on March 6, 2013. This agreement allowed Endress to receive state funds to provide child care for eligible children, not to exceed twelve children at any one time. The agreement had a two-year term and provided that if it was terminated, termination "may prevent" Endress from reapplying to be a provider for six months.

DHS received at least three reports against Endress, indicating more children were present in her day care than allowed under her registration.1 The DHS investigator never found more than twelve children present during his spot checks. Nor did DHS find any other health or safety violations associated with the day care. However, on reviewing the billings, DHS found Endress had submitted billings that would have indicated thirteen to fifteen children were present at the same time.

On July 17, 2014, Endress received notice from DHS cancelling her CCAP agreement because she had repeatedly submitted claims for payment to which she was not entitled (based on the number of children shown under her care at specific times). The notice of cancellation explained Endress may keep her benefits until an appeal is final. However, the notice cautioned, "Any benefits you get while your appeal is being decided may have to be paid back if the Department's action is correct."

Endress elected to receive funding while she appealed the decision cancelling her CCAP agreement. As a result, Endress received a July 31, 2014 notice:

You have timely appealed the cancellation or denial of your CCA provider agreement. You are therefore allowed to continue to receive child care assistance funding pending the outcome of your appeal. Any benefits you get while your appeal is being decided may have to be paid back if the Department's action is correct.

(Emphasis added.) DHS issued a final decision on November 17, 2014, sustaining the proposed decision to cancel Endress's CCAP agreement because she repeatedly made billings for children in excess of the numbers allowed for her care at any one time.

On March 17, 2017, Endress was approved by DHS for another CCAP agreement. On April 3, Endress received a "Notice of Child Care Assistance Overpayment"

944 N.W.2d 76

in the amount of $16,003.942 for the months of July 2014 to November 2014. DHS alleged the overpayment was due to "[a] mistake by [Endress] that caused DHS to pay [her] incorrectly for child care services" and that the "overpayment happened because of [her] choice to continue benefits pending an appeal." Endress appealed, and an administrative law judge (ALJ) affirmed DHS's computation of overpayment for child-care assistance.

This proposed decision was adopted as DHS's final decision, and Endress petitioned for judicial review. She argued DHS violated her due process rights through insufficient notice of its intent to recoup payments during her pending appeal. She also argued that she had not been overpaid; she had provided appropriate child care at DHS rates for the children entrusted to her. Endress pointed out that if there was any overpayment, based on the DHS audit, it amounted only to $623.28 at most and not the full amount (over $16,000) she was paid over four months for child-care services rendered. The district court granted Endress's petition and reversed the decision of DHS. On judicial review, it determined DHS exceeded its statutory authority in promulgating the recoupment provisions of its administrative rules, the administrative rules were unconstitutionally vague, and DHS's implementation of the administrative rules violated Endress's procedural due process rights. Endress also sought attorney fees, which the district court denied.

DHS appealed, and Endress cross-appealed the denial of attorney fees. On appeal, the court of appeals agreed that Endress maintained a protected property interest in payments made under the CCAP agreement and that the notice of recoupment was constitutionally deficient. However, it reversed the district court's determination that Endress was not entitled to attorney fees.

DHS applied for further review, and we granted its application.

II. Standard of Review.

Different standards of review apply to the claims raised by Endress. First, the Iowa Administrative Procedure Act defines the standards we apply in our judicial review of agency action to determine whether we reach the same conclusion as the district court. See Iowa Code § 17A.19(10) ; Brewer-Strong v. HNI Corp. , 913 N.W.2d 235, 242 (Iowa 2018). "The district court may properly grant relief if the agency action prejudiced the substantial rights of the petitioner and if the agency action falls within one of the criteria listed in section 17A.19(10)(a ) through (n )." Brakke v. Iowa Dep't of Nat. Res. , 897 N.W.2d 522, 530 (Iowa 2017).

Second, Endress's constitutional claims in agency proceedings are reviewed de novo. Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 326 (Iowa 2015).

Finally, with respect to whether attorney fees are available, we apply the standard of correction of errors at law. Colwell v. Iowa Dep't of Human Servs. , 923 N.W.2d 225, 232 (Iowa 2019).

III. Analysis.

A. Procedural Due Process. Endress alleges a violation of her procedural due process rights under the Fourteenth Amendment to the United States Constitution and article I, section 9 of the Iowa Constitution. We will apply the federal

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substantive standards because Endress does not suggest we follow different substantive standards under the Iowa Constitution. See Behm v. City of Cedar Rapids , 922 N.W.2d 524, 566 (Iowa 2019) (applying federal substantive standards to a party's procedural due process claim raised under the Iowa Constitution); State v. Russell , 897 N.W.2d 717, 732 & n.7 (Iowa 2017) ("Russell also did not present an argument for why we should depart from established precedent in our interpretation of the Iowa Constitution's due process clause. We therefore treat both [federal and state] claims as the same.").

Endress is entitled to procedural due process if a state action threatens to deprive her of a protected interest in life, liberty, or property. Behm , 922 N.W.2d at...

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8 practice notes
  • Myers v. Myers, No. 20-0122
    • United States
    • Court of Appeals of Iowa
    • November 4, 2020
    ...the principle "that one party should not be unjustly enriched at the expense of another party." Endress v. Iowa Dep't of Human Servs. , 944 N.W.2d 71, 80 (Iowa 2020). Although often called a quasi-contract theory, unjust enrichment "is not grounded in contract law but rather is a remedy of ......
  • Kurt v. Platinum Supplemental Insurance, Inc., 19 C 4520
    • United States
    • U.S. District Court — Northern District of Illinois
    • July 22, 2021
    ...plaintiff, (3) under circumstances that make it unjust for the defendant to retain the benefit.” Endress v. Iowa Dep't of Human Servs., 944 N.W.2d 71, 80 (Iowa 2020); see also Slade v. M.L.E. Inv. Co., 566 N.W.2d 503, 506 (Iowa 1997) (“A plaintiff seeking recovery under this doctrine must p......
  • Bethany Lutheran Health Servs. v. Cumpston, 20-1700
    • United States
    • Court of Appeals of Iowa
    • December 15, 2021
    ...Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010) 7 (providing elements for breach of contract), and Endress v. Iowa Dep't of Hum. Servs., 944 N.W.2d 71, 80 (Iowa 2020) (providing elements for unjust enrichment); see also Davis v. Ottumwa Young Men's Christian Ass'n, 438 N.W.2d 10, 14 (Iowa 19......
  • Mowery v. City of Carter Lake, No. 19-2014
    • United States
    • Court of Appeals of Iowa
    • March 3, 2021
    ...with the government's fundamental duty and authority to protect the public fisc. See generally Endress v. Iowa Dep't of Human Servs., 944 N.W.2d 71, 94 (Iowa 2020) (McDonald, J., dissenting in part) (noting the government's general duty and authority to protect the fisc is "fundamental to t......
  • Request a trial to view additional results
8 cases
  • Myers v. Myers, No. 20-0122
    • United States
    • Court of Appeals of Iowa
    • November 4, 2020
    ...the principle "that one party should not be unjustly enriched at the expense of another party." Endress v. Iowa Dep't of Human Servs. , 944 N.W.2d 71, 80 (Iowa 2020). Although often called a quasi-contract theory, unjust enrichment "is not grounded in contract law but rather is a remedy of ......
  • Kurt v. Platinum Supplemental Insurance, Inc., 19 C 4520
    • United States
    • U.S. District Court — Northern District of Illinois
    • July 22, 2021
    ...plaintiff, (3) under circumstances that make it unjust for the defendant to retain the benefit.” Endress v. Iowa Dep't of Human Servs., 944 N.W.2d 71, 80 (Iowa 2020); see also Slade v. M.L.E. Inv. Co., 566 N.W.2d 503, 506 (Iowa 1997) (“A plaintiff seeking recovery under this doctrine must p......
  • Bethany Lutheran Health Servs. v. Cumpston, 20-1700
    • United States
    • Court of Appeals of Iowa
    • December 15, 2021
    ...Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010) 7 (providing elements for breach of contract), and Endress v. Iowa Dep't of Hum. Servs., 944 N.W.2d 71, 80 (Iowa 2020) (providing elements for unjust enrichment); see also Davis v. Ottumwa Young Men's Christian Ass'n, 438 N.W.2d 10, 14 (Iowa 19......
  • Mowery v. City of Carter Lake, No. 19-2014
    • United States
    • Court of Appeals of Iowa
    • March 3, 2021
    ...with the government's fundamental duty and authority to protect the public fisc. See generally Endress v. Iowa Dep't of Human Servs., 944 N.W.2d 71, 94 (Iowa 2020) (McDonald, J., dissenting in part) (noting the government's general duty and authority to protect the fisc is "fundamental to t......
  • Request a trial to view additional results

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