I did some research and it seems .htaccess should work fine with WebDAV. I am no expert, but it looks like you need to add some settings to the httpd.conf file for it to work.
The server may have been configured not to read .htaccess files in WebDAV folders. I am just guessing, here.
Do we have access to that or is that something DH maintains? It is a global config file, I believe that requires a restart of Apache before changes take effect.
Try these links to see if any help: