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Good v. Iowa Department of Human Services

Court of Appeals of Iowa

October 23, 2019

EERIEANNA GOOD and CAROL BEAL, Petitioners-Appellants,
v.
IOWA DEPARTMENT OF HUMAN SERVICES, Defendant-Appellee.

          Appeal from the Iowa District Court for Polk County, Arthur E. Gamble, Judge.

         The petitioners, who successfully challenged a department rule as violating provisions of law, appeal the district court's denial of their request for attorney fees and costs.

          Seth A. Horvath, F. Thomas Hecht, and Tina B. Solis of Nixon Peabody LLP, Chicago, Illinois, Rita Bettis Austen of ACLU of Iowa Foundation Inc., Des Moines, and John Knight of ACLU Foundation LGBT & HIV Project, Chicago, Illinois, for appellants.

          Thomas J. Miller, Attorney General, and Matthew K. Gillespie, Assistant Attorney General, for appellee.

          Heard by Vaitheswaran, P.J., and Potterfield and Mullins, JJ. Gamble, S.J., takes no part.

          POTTERFIELD, JUDGE.

         EerieAnna Good and Carol Beal successfully challenged a regulation adopted by the Iowa Department of Human Services (DHS) that prohibited Iowa Medicaid coverage of surgical procedures related to "sex reassignment" and "gender identity disorders." See Iowa Admin. Code r. 441-78.1(4). In a recent ruling, our supreme court determined the rule's exclusion of coverage for gender-affirming procedures violates the Iowa Civil Rights Act (ICRA), which includes "gender identity" as a protected characteristic. See Good v. Iowa Dep't of Human Servs., 924 N.W.2d 853');">924 N.W.2d 853, 862-63 (Iowa 2019).

         In this case, Good and Beal appeal the district court ruling denying their application for attorney fees and costs incurred in their challenge of the regulation.[1] They brought their request for fees under the ICRA, see Iowa Code § 216.16(6) (2018), and the Iowa Equal Access to Justice Act, see id. § 625.29. The district court determined neither statute permitted an award of fees and denied the request. Good and Beal maintain the district court erred in its interpretation of the statutes; they ask us to reverse the denial of their request and remand to the district court for the determination of the amount of reasonable attorney fees.

         I. Background Facts and Proceedings.

         In early 2017, Good sought Medicaid preapproval of expenses for an orchiectomy. The managed care organization (MCO) denied the request based on Iowa Administrative Code rule 441-78.1(4).[2] Good initiated an internal appeal, which the MCO denied. Good then appealed the MCO's decision to DHS, arguing the denial of her request violated the ICRA's prohibition against gender-identity and sex discrimination and violated the Iowa Constitution.[3]Following a hearing, an administrative law judge (ALJ) issued a proposed decision affirming the MCO's denial. The ruling enumerated the evidence and arguments presented before noting, "Whatever the merits of [Good's] claims, an administrative proceeding such as this can only preserve and not decide claims whose resolution is entrusted only to those wielding judicial authority. This includes deciding whether the MCO acted appropriately in denying [Good's] prior authorization request." (Footnote omitted.) Good appealed the proposed decision to the Director of DHS, who affirmed the ALJ's proposed decision and adopted it as the agency's final decision. Good filed a petition for judicial review in the district court.

         In separate proceedings, Beal requested Medicaid preapproval of expenses for vaginoplasty, penectomy, bilateral orchiectomy, clitoroplasty, urethroplasty, labiaplasty, and perineoplasty to treat her gender dysphoria. The MCO denied her request, stating that gender reassignment surgery is not a covered benefit under Medicaid. Beal sought internal review, and the MCO denied her appeal, relying on rule 441-78.1. Beal challenged the MCO's decision to DHS. After a hearing, an ALJ issued a proposed decision affirming the MCO's decision. Like in Good's case, the ALJ noted the agency lacked authority to decide the merits of Beal's claims that the administrative rule in question violated the Iowa Constitution. However, the proposed decision considered Beal's claim that the rule violated the ICRA. The ALJ considered "whether sex reassignment surgery prohibited by an Iowa Administrative Code Medicaid rule properly falls within the parameters of a public accommodation," before concluding the MCO's decision had to be affirmed due to current case law. Beal appealed the proposed decision to the Director of DHS, who adopted the proposed decision as the final agency action.[4] Beal filed a petition for judicial review.

         Based upon the joint request of all parties, the district court consolidated the two cases.

         In a June 2018 ruling, the district court determined the challenged regulation violated the ICRA's prohibition against discrimination based on gender identity. As previously noted, this ruling was ultimately affirmed by our supreme court.[5] See Good, 924 N.W.2d at 856.

         Shortly thereafter, Good and Beal filed an application for attorney fees and costs in the amount of $467, 285.67. They based their request on two separate statutory theories of recovery. DHS resisted, arguing section 216.16 did not apply because the petitioners did not bring their case under ICRA procedures and section 625.29 did not apply because two exceptions to the fee-shifting provision prevented the petitioners from recovering fees and costs. Additionally, DHS maintained the fees requested were unreasonable.

         The district court agreed with DHS that the statutes relied upon did not allow the petitioners to recover fees and costs. Good and Beal appeal.

         II. Standard of Review.

         We review the district court's interpretation of statutes for correction of errors at law. Colwell v. Iowa Dep't of Human Servs., 923 N.W.2d 225, 232 (Iowa 2019).

         III. ...


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