Justia Public Benefits Opinion Summaries

Articles Posted in Commercial Law
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This case was the companion interlocutory appeal with facts that mirrored Iowa Dep’t of Human Servs. v. DeWitt Bank and Trust Co., decided on the day of this opinion. As in DeWitt Bank, the Iowa Department of Human Services filed an application for relief against defendant healthcare providers under Iowa Code 249A.44. The district court appointed a receiver. Bank Iowa, a lender that held perfected security interests in Defendants’ property, intervened and challenged the receiver’s applications for fees and expenses. The district court concluded that receivership expenses should be paid out of property in which the Bank had prior lien interests. The Supreme Court reversed based on the reasoning set forth in DeWitt Bank, holding that Iowa follows the common law rule that a receiver may be charged against a third party’s security interest only to the extent the secured creditor has received a benefit from the receivership or the secured creditor has consented to the receivership. Remanded. View "Iowa Dep’t of Human Servs. v. Morse Healthcare Servs., Inc." on Justia Law

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DeWitt Bank & Trust Company (Bank) held perfected security interests on real and personal property of Community Care, Inc. (CCI). When the Iowa Department of Human Services (DHS) determined that CCI had committed Medicaid fraud, DHS filed an application for injunctive relief under Iowa Code 249A.44. The district court enjoined CCI from transferring property or taking action inconsistent with DHS’s right to recover overpayments of medical assistance from CCI. CCI subsequently ceased operations, and the district court appointed a receiver for CCI. The Bank sought clarification that the receiver’s fees and expenses would not be paid out of CCI assets in which the Bank had a prior perfected security lien. The district court denied substantive relief, concluding that Iowa law requires the expenses of the receiver to be paid before secured creditors. The Supreme Court reversed, holding (1) Iowa law does not authorize a receiver to be paid out of assets that are subject to a prior perfected line; and (2) rather, Iowa follows the common law rule that the costs of a receiver may be charged against a third party’s security interest only to the extent the secured creditor has received a benefit from the receivership or the secured creditor has consented to the receivership. View "Iowa Dep’t of Human Servs. v. Cmty. Care, Inc." on Justia Law