Secret settlement reached in Iowa Judiciary Branch debt collection dispute
A lawsuit regarding the legality of work performed on behalf of the Iowa judiciary was settled out of court, with the terms of the settlement confidential.
The result is that the public may never know if a law firm that raised $58.6 million from Iowa under a contract with the Iowa judiciary – while collecting nearly $12 million in court fees for himself – acted illegally using deceptive and high-pressure tactics to force payment of court costs.
A federal lawsuit filed in the fall of 2020 by Iowa Legal Aid and two other entities alleges that the law firm Linebarger, Googan, Blair & Sampson was hired by the Iowa Judicial Branch in 2010 to collect the monies. due to the state.
As part of this arrangement, the state was to pay Linebarger 25% of all debts collected. However, when Linebarger sent collection notices to Iowans, the company allegedly added 25% to the amount owed and called the total a court-ordered liability. He allegedly ordered the recipients to pay that amount to the state or face contempt of court action and possible revocation of their driver’s licenses, all in violation of the federal Fair Tax Collection Practices Act. debts and Iowa law on debt collection practices.
The Linebarger firm countered that it was not a debt collection company but a “law firm that represented the Iowa judiciary under a contract for services.” He says the terms “debt”, “debt collection” and “collector” do not apply to his work “because government fines and legally imposed fees” are not legally considered debt.
Court records indicate that the parties signed a settlement agreement last September, although the two sides are still arguing in court over legal fees in the case. The terms of the settlement were not disclosed, and in documents recently filed in court, plaintiffs’ attorneys informed the judge that both parties had agreed that “they would not publicly disclose any terms of the settlement.”
Under Iowa law, public agencies are not allowed to enter into secret settlement agreements to resolve lawsuits and other disputes.
In this case, however, the Iowa Judiciary is not a party to the settlement, although the case involves work done on its behalf. And although Iowa Legal Aid receives public funding for its work, it is a nonprofit organization acting as a plaintiff’s attorney, not a plaintiff.
It is possible that a central element of the trial will still be addressed by the judge in charge of the case. The Linebarger firm challenged the legal fees claimed by plaintiffs’ attorneys, in part arguing that the lawsuit was unfounded. The judge may decide on this issue, if only indirectly, simply to settle the dispute over legal costs.
Iowa charges indigent defense differently
Alexander Vincent Kornya, director of litigation and general counsel for Iowa Legal Aid, said Friday that while he can’t comment on any aspect of the settlement, the lawsuit itself “is about liability — specifically, whether law firms he private lawyers who collect debts for the government are beyond the reach of the laws that govern their peers. We thought they were responsible when we filed the case, that they broke the law, and we still believe that.
He noted that Linebarger’s contract with the Iowa judiciary ended in January 2021, after the legislature assigned the debt collection portfolio to the Iowa Department of Revenue. Even so, Kornya said, the issues raised in the lawsuit could resurface.
“For example,” he said, “we understand that the Iowa Department of Revenue has contracted with Transworld Inc. – a well-known private national collection company – to collect the debt on behalf of the State of Iowa. Transworld’s activities may or may not include some role in collecting the same court debt that was at one time collected by Linebarger. To the extent that there may be similar issues in the future – with Transworld or any other private sector contractor collecting debt on behalf of the state – we hope this case will create some sense of responsibility and respect for laws that have governed the private sector. debt collectors for 50 years.
Kornya noted that the lawsuit against Linebarger was not about unpaid fines and penalties, but about indigent defense costs. The consequences faced by poor people who do not pay their attorneys’ fees are far greater than those faced by wealthy people who hire a private lawyer, he said. People in poverty who owe indigent defense costs can have their criminal cases denied, have their tax refunds offset, and – as the Linebarger lawsuit alleges – they can face threats driving license revocation or even imprisonment.
Kornya also noted that while 45 states charge some sort of fee for indigent defense, Iowa is different in that the fee represents the actual cost of defense. Most states impose a cap that translates to much lower fees, he said.
Additionally, he said, a person in Iowa is charged for the defense of the indigent whether they win or lose their case, and many people are charged those fees even in non-criminal cases.
A spokesperson for the Iowa Judiciary Branch declined to comment on Friday.
The battle over attorney fees continues
In the ongoing litigation over attorney fees in the Linebarger lawsuit, the Linebarger firm accused Iowa Legal Aid and its co-attorney of “running the meter” in terms of expenses and said it “is right for the court to reflect”. whether the lawsuit was filed for the benefit of plaintiffs or for “the financial benefit of plaintiffs’ counsel”.
Kornya said Friday that Iowa Legal Aid and its partners in the case had more clients than they could handle and there was no need to direct more “case” to their way.
“We serve approximately 14,000 Iowans each year, free of charge, on civil legal matters that deal with access to the necessities of life,” he said. The lawsuit, he added, was aimed at reducing “the number of people in crisis who come through our doors, who cannot meet the necessities of life because they are the subject of unjustified threats and without legal basis. imprisonment, license revocation and other penalties”.
With at least 2,300 government customers nationwide, Linebarger reportedly collects more than $1 billion in government debt each year, but has come under scrutiny for its debt collection tactics and been accused of having threatened debtors with arrest and imprisonment.