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An Iowa-licensed attorney is appealing the dismissal of his wrongful termination lawsuit against the Iowa Department of Health and Human Services.
Attorney James Sheets of Des Moines worked for Iowa DHHS, then known as the Iowa Department of Human Services, only briefly, from June 10, 2022, until Aug. 19, 2022.
In September 2024, he sued the state and asked that the court seal his entire petition from public view on the grounds that it contained unspecified “personal, sensitive” information. District Court Judge Scott D. Rosenberg consented to the request and sealed the petition. He later unsealed the document after the Iowa Capital Dispatch questioned the move.
The court records indicate Sheets was hired as a “supplemental payment regulatory advisor,” with a job classification of “attorney,” and an annual salary of $99,000. After he was hired, the state alleges, Sheets immediately began identifying himself as an attorney for DHHS in correspondence and in his automated email signature.
The state alleges Sheets’ supervisor, along with Medicaid Director Elizabeth Matney and Deputy Medicaid Director Julie Lovelady, repeatedly asked Sheets to stop referring to himself as a DHHS attorney and instructed him to remove any such references from his email signature.
Each time, the state alleges, Sheets insisted his position was a legal role and that efforts to “reclassify” him to a non-legal role were improper and a potential violation of the Iowa Rules of Professional Conduct that apply to Iowa-licensed attorneys.
On Aug. 18, 2022, while still in his probationary period of employment, Sheets was informed he was being discharged.
Sheets then sued DHHS for defamation related to statements made on the department’s employee separation form that allege he was terminated for “experience, skills and work effort (that) were not a good fit for the position.” He also claimed negligent supervision due to his supervisor being a non-lawyer, wrongful discharge, and tortious interference.
The state denied any wrongdoing and sought dismissal of the case. In a recent decision, Judge Rosenberg agreed to dismiss the case, citing Sheets’ failure to exhaust his administrative remedies before taking the matter to court.
“Iowa case law is crystal clear,” Rosenberg wrote in his decision. “Failing to comply with the administrative exhaustion requirements … deprives the district court of subject matter jurisdiction.”
Sheets notified Polk County’s clerk of court last week he was appealing the dismissal to the Iowa Supreme Court.