Marshall v. State Department of Human Services
This text of 559 N.W.2d 612 (Marshall v. State Department of Human Services) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
The trial court held that the law applicable in this case demands a harsh result. The remedy accorded to the State initially does seem excessive. To his considerable credit, the assistant attorney general, as appellate counsel, tendered a lesser remedy that we feel obliged to reject. We agree with the trial court that incorrect information on a public benefits application rendered all benefits subject to recoupment by the State.
The petitioner Tina Marshall received aid to dependent children (ADC) 1 benefits from the Iowa department of human services (the department) from July 1, 1983, until February 28, 1987. The payments were made on the basis of Tina’s application which failed to disclose the existence of bank accounts and bank certificates of deposit held jointly in her name, the name of her husband (from whom she was separated and later divorced), and the names of her children. These accounts, to which Tina had access, totaled $1482.98.
When Tina applied for ADC benefits in July 1983 she filled out an initial application form. One section of this form was entitled “Resources” and asked: “Does anyone in your home have any of the following resources? Check “Yes’ or ‘No’ for each item. Complete the information line for items cheeked ‘yes’.” The form listed several suggested resources. Tina only cheeked yes for her own checking accounts. She did not check yes for “Savings Account” and “Time Certificates.”
Thus Tina did not report the savings accounts and certificates of deposits previously mentioned. Their total exceeded by $482.98 *614 the eligibility limit of $1000 for financial assets held by members of the same household. It is clear that, if Tina had correctly disclosed these accounts, she would not have been eligible for ADC benefits. Tina also failed to disclose these accounts in subsequent reports and applications to the department, and thus exceeded the program limits throughout the period she received ADC.
Tina viewed the money in these accounts as her children’s, to be used for their future education, and did not think she needed to list them on the application or subsequent reports to the department. It is undisputed that Tina did not knowingly or intentionally act to defraud the department. Tina testified that, had she known these accounts were to be reported and failure to report them would render her ineligible for benefits, she would have spent the money for family necessities or placed them beyond her, or her husband’s, control.
After the department learned of the existence of the accounts, it sent Tina a letter demanding repayment of $9720, all the benefits Tina received. After a hearing before an administrative law judge, the department entered a final decision that Tina was required to repay the entire $9720.
Tina sought judicial review to challenge the department’s decision. She claimed there was no basis for such repayment because there was no showing she had a fraudulent intent, and that the collection action was untimely. The district court affirmed the department’s ruling. The court determined the repayment action was taken pursuant to Iowa administrative code rule 441— 46.1 (1994) which permits repayment of benefits upon client error including the providing of false or misleading statements which affect eligibility. The court determined that the rule did not require a showing of fraudulent intent. The court also rejected Tina’s argument that the collection action was untimely.
The matter is before us on Tna’s appeal. We review appeals from final agency action on error. Iowa Code § 17A.19(8) (1993).
I. In State ex rel. Iowa Department of Human Services v. Pierce, 460 N.W.2d 467, 468-69 (Iowa 1990), we held the State has a common-law right to recover public assistance benefits that are paid by the department in error. We took care to point out that this right was derived from common law and was not based on a state 2 or federal statute. Id.
Federal law requires states to recoup overpayments of welfare benefits. 42 U.S.C.A. § 602(a)(22) (West 1991). This obligation applies to the State even in the absence of fault on the part of an applicant. Johnston v. Iowa Dep’t of Human Servs., 932 F.2d 1247, 1249 (8th Cir.1991). Federal law demands that “the state agency will promptly take all necessary steps to correct any overpayment ... of aid.” 42 U.S.C.A. § 602(a)(22). This same federal statute also requires that if overpayment is made “to any individual who is no longer receiving aid ... recovery shall be made by appropriate action under state law against the income or resources of the individual or the family.” Id. § 602(a)(22)(B).
Federal regulations implementing this statute define “overpayment” as “a financial assistance payment received by or for an assistance unit for the payment month which exceeds the amount for which that unit was eligible.” 45 C.F.R. § 233.20(a)(13)(i) (1996). These regulations also provide that “[t]he State shall recover overpayment from ... any individual members of the overpaid assistance unit whether or not currently a recipient.” Id. § 233.20(a)(13)(i)(B).
Thus under federal law the State is required to recover ADC benefit overpay-ments made to Tina. She was ineligible for *615 assistance in each month she received benefits. Her ADC benefits therefore exceeded her eligible amount of aid by the full amount of assistance she received. Thus under federal law she owes the entire $9720. See 45 C.F.R. § 233.20(a)(13)(i).
II. The attorney general suggests we allow the State to recover only $1482.98 (the amount of the bank accounts that rendered Tina ineligible for ADC benefits). Counsel makes this suggestion because of Iowa code of professional responsibility for lawyers EC 7-14 (1996) which governs the conduct of government lawyers. 3 But we lack authority to order this equitable result and therefore decline to do so. See Johnston, 932 F.2d at 1249.
There is a certain logic at the heart of the stem rule requiring full repayment. To limit the right of recoupment as suggested by counsel would be impractical. Even if we could adopt the suggestion and did so, applicants would lose a prime incentive for meticulous honesty in disclosing personal resources. The applicant who provides false information should face more than restoration to maximum entitlement.
III. Tina also contends the State’s suit was barred by Iowa Code sections 614.1(4) and 614.4 (five-year limitation for bringing an action for fraud) because the action was brought more than seven years after the final ADC payment.
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559 N.W.2d 612, 1997 Iowa Sup. LEXIS 66, 1997 WL 66102, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marshall-v-state-department-of-human-services-iowa-1997.