Partially applied type family causes GHC internal error since GHC 8.8

On GHC 8.8.0.20190721, the following program

{-# LANGUAGE DataKinds           #-}
{-# LANGUAGE GADTs               #-}
{-# LANGUAGE PolyKinds           #-}
{-# LANGUAGE ScopedTypeVariables #-}
{-# LANGUAGE TypeFamilies        #-}
{-# LANGUAGE TypeApplications    #-}

module Bug where

import Data.Kind
  ( Type )
import Data.Proxy
  ( Proxy(Proxy) )


data HList :: [Type] -> Type where

type family Foo (xs :: [Type]) (ys :: [Type]) :: [Type] where

foo :: forall (is :: [Type]). HList is -> HList (Foo is)
foo = case Proxy @is of
        _ -> undefined

causes a GHC internal error:

bug.hs:21:50: error:
    * Expecting one more argument to `Foo is'
      Expected kind `[*]', but `Foo is' has kind `[*] -> [*]'
    * In the first argument of `HList', namely `(Foo is)'
      In the type signature:
        foo :: forall (is :: [Type]). HList is -> HList (Foo is)
   |
21 | foo :: forall (is :: [Type]). HList is -> HList (Foo is)
   |

bug.hs:22:19: error:
    * GHC internal error: `is' is not in scope during type checking, but it passed the renamer
      tcl_env of environment: []
    * In the type `is'
      In the expression: Proxy @is
      In the expression: case Proxy @is of { _ -> undefined }
   |
22 | foo = case Proxy @is of
   |                   ^^

On GHC 8.6.5, the internal error does not occur and as expected we simply get an error for a partially applied type family.

bug.hs:21:50: error:
    * Expecting one more argument to `Foo is'
      Expected kind `[*]', but `Foo is' has kind `[*] -> [*]'
    * In the first argument of `HList', namely `(Foo is)'
      In the type signature:
        foo :: forall (is :: [Type]). HList is -> HList (Foo is)
   |
21 | foo :: forall (is :: [Type]). HList is -> HList (Foo is)
   |

This came up after I had modified a type family by adding an extra argument, and had forgotten to pass in that extra argument somewhere.