Wia vs. local user application - authorize process

Question

I have an application that authorizes users to ADFS using the /adfs/oauth2/authorize/wia command. The application also stores local users in the database. When a local user logs in, they receive a 401 "WWW-Authenticate NTLM" error. ADFS won't let the local user into the application. Do you have a workaround to distinguish between WIA and local logins so the user doesn't receive a 401? Or some other logic. Or is this an application-specific issue and requires code modification?