In this matter, the requesting attorneys believed Iowa Code Section 249F and Iowa Administrative Code Section 441-89 deprive the plaintiffs of certain rights under 42 USC Section 1396p and wanted to enjoin the defendants from seeking recovery of assets transferred to plaintiffs by their mother, who was a recipient of Medicaid from the Iowa Department of Human Services. The Foundation provided a $10,000 grant in support.
The Hefner/Dennison case resulted from a client (Dennison) who utilized a gift plus annuity strategy to preserve resources in Iowa. In this case the Department of Human Services applied a penalty period for the transfer of the gift but also tried to recover those resources from the recipients (children) of the gift. Iowa has an overreaching statute (Iowa Code 249F) which seemingly allows the state to apply a double penalty. Said another way, Iowa believes they can apply a penalty period to the Medicaid applicant but also come after the resources which were transferred that created the penalty period.
In this case counsel filed a complaint in federal court for declaratory and injunctive relief to obtain declaration that the DHS’ application of Iowa Code 249F and Iowa Administrative Code section 441-89 deprives certain rights under 42 USC section 1396p and to prevent the DHS from seeking recovery of assets transferred to the Dennison’s children.
Counsel filed a Plaintiff’s Brief in Support of Complaint for Declaratory Judgment on 11/15/2017. In response to this, the Iowa Attorney General’s office sent a settlement letter outlining some weaknesses of counsel’s case. The primary weakness identified: there was a penalty period from the husband that could have been transferred to the wife because the husband passed away prior to his penalty period running entirely. In those situations the DHS has the ability to take the unused penalty period and apply it to the wife’s penalty period. The DHS incorrectly did not do that in this case. For this reason, counsel made a counter to this offer and DHS agreed to that amount.