Opinion ID: 1293222
Heading Depth: 1
Heading Rank: 5

Heading: Payments Made Pursuant to Iowa Code Chapter 225C

Text: The services provided to Anderson after October 10, 1984 were community-based mental health services governed by Iowa Code chapter 225C. The county concedes chapter 225C does not contain any provisions authorizing the county to seek reimbursement for the payments it made under chapter 225C. We have long held the common law of this state does not require a recipient of public assistance to reimburse the provider for the assistance received by the recipient. State v. Brooks, 412 N.W.2d 613, 614 (Iowa 1987). Any assistance furnished by the county is considered a charity to which the recipient is entitled and the county is obligated to provide. In re Estate of Frentress, 249 Iowa 783, 786, 89 N.W.2d 367, 368 (1958). Although there is neither statutory nor common-law authority for the county to seek reimbursement for the payments it made for community-based mental health services under chapter 225C, the county argues it is entitled to reimbursement for the payments it made on Anderson's behalf because (1) the trust created by Anderson's mother's will was a discretionary support trust; (2) the trust entered into a contract with the county to reimburse the county; and (3) the home rule act allows the county to seek reimbursement for chapter 225C expenses. Discretionary Support Trust Claim. The district court found and both parties agree that the trust is a discretionary support trust. A settlor creates a discretionary support trust when the purpose of the trust is to furnish the beneficiary with support, and the trustee has the discretion to pay the income or principal to the beneficiary, as the trustee deems necessary for the support of the beneficiary. In re Barkema Trust, 690 N.W.2d 50, 54 (Iowa 2004). The county argues that because our court of appeals held that a county could consider the assets of a discretionary support trust to determine a beneficiary's eligibility for county funding of mental health services, the county should be able to reach those same assets to reimburse it for the funds it expended on Anderson's behalf for community-based mental health services under chapter 225C. See Strojek v. Hardin County Bd. of Supervisors, 602 N.W.2d 566, 571 (Iowa Ct.App.1999) (holding the assets of a discretionary support trust could be considered when determining a mentally handicapped beneficiary's eligibility for living expenses). Generally, in a discretionary support trust, the beneficiary has a right that the trustee pay him the amount which in the exercise of reasonable discretion is needed for his support ...; and the beneficiary can transfer this interest or his creditors may reach it, unless it is protected by a spendthrift clause. Barkema, 690 N.W.2d at 54 (citations omitted). Under certain circumstances, even the assets of a trust protected by a spendthrift clause, such as the trust in the present case, may be reached to satisfy and enforce a claim against the beneficiary. Restatement (Second) of Trusts, section 157 states: Although a trust is a spendthrift trust or a trust for support, the interest of the beneficiary can be reached in satisfaction of an enforceable claim against the beneficiary, ... (b) for necessary services rendered to the beneficiary or necessary supplies furnished to him; (c) for services rendered and materials furnished which preserve or benefit the interest of the beneficiary. Restatement (Second) of Trusts § 157, at 328 (1959). We have not had the occasion to adopt Restatement (Second) of Trusts section 157(c)'s standard. We have adopted section 157(b)'s standard with qualifications. Those qualifications are: (1) [T]he claim is for necessary goods or services, not officiously rendered, which the settlor intended to be provided the beneficiary by trust funds; and (2) the withholding of payment for the goods and services is not properly within the discretion granted the trustee by the instrument, before a creditor's claim may be enforced against the trustee of a support trust subject to a spendthrift clause. In re Dodge's Estate, 281 N.W.2d at 451. In addressing the county's argument, we are not required to decide whether to adopt the standard in section 157(c), or if the standard of section 157(b), with the qualifications as adopted by this court, applies to the present case because section 157 is inapplicable to the county's claim for reimbursement of chapter 225C expenses. Section 157 only allows a creditor to reach the assets of a spendthrift trust in satisfaction of an enforceable claim against the beneficiary. Restatement (Second) of Trusts § 157, at 328 (emphasis added). We have determined the county has neither a statutory nor a common-law right to recover chapter 225C expenses against Anderson or any other person who may be legally responsible for Anderson's expenses. Without the right to recover the payments it made on Anderson's behalf, the county does not have an enforceable claim against the trust, even though the county may have considered the trust assets to determine Anderson's eligibility for community-based mental health services under chapter 225C. Contract Claim. The county also argues the trust agreed to reimburse the county for chapter 225C expenses when the county agreed to pay part of the cost of community-based services. The district court considered this argument and found the parties did not enter into a contract requiring reimbursement by the trust. Our review of the record reveals that when Anderson made a request for community-based services, he disclosed to the county in his application that the trust had $110,942.63 in assets available for Anderson's support. The county denied Anderson any services under chapter 225C because Anderson had resources in excess of $2000 available to him at the time of the application. Anderson appealed the initial non-eligibility finding by filing a request for a conciliation process. After Anderson filed the request for conciliation, the county reversed its original decision and in a written notice of decision agreed to pay part of the costs for community-based mental health services for Anderson as long as Anderson's trust was willing to pay for part of the services. This arrangement continued through a series of written notices of decision. Each time the county agreed to pay for services for Anderson, the trust was required to pay for part of the services. Not one of the notices of decision contained any language requiring the trust to reimburse the county for the payments it made. Substantial evidence exists in the record supporting the findings of the district court. The district court was correct when it determined the parties did not enter into a contract requiring reimbursement by the trust for chapter 225C expenses advanced by the county for community-based mental health services. Home Rule Claim. The county argues the implementation of home rule in Iowa Code chapter 331 supports its argument that the county is entitled to seek reimbursement for the sums it advanced under Iowa Code chapter 225C. The county contends section 331.756(47), which requires the county attorney to [c]arry out duties relating to the collection of the costs for the care, treatment, and support of persons with mental illness as provided in sections 230.25 and 230.27, gives it the authority to seek reimbursement for payments it made under chapter 225C. See Iowa Code § 331.756(47). The county's reliance on section 331.756(47) is misplaced. By its clear and express terms, section 331.756(47) does not create a right to collect any payments advanced on behalf of a mentally ill person but merely lists the duties of a county attorney under the implementation of home rule. Therefore, Iowa Code chapter 331 does not grant the county any authority to collect payments made on Anderson's behalf for community-based mental health services under chapter 225C. For these reasons, we agree with the district court that the county cannot make a claim against the trust for reimbursement of the expenses it paid on behalf of Anderson for mental health community-based services under Iowa Code chapter 225C.