may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
In the Matter of an Assessment
and Denial of Renewal of
License Issued to
Health Personnel/Silver Lining
Filed March 18, 1997
Minnesota Department of Health
Agency File No. 73-0900-8852-2
Kevin P. Staunton, Craig W. Trepanier, Popham, Haik, Schnobrich & Kaufman, Ltd., 3300 Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, MN 55402, John M. Broeker, Halleland, Lewis, Nilan, Sipkins & Johnson, 100 Washington Square, Suite 755, Minneapolis, MN 55401 (for relator Health Personnel/Silver Lining Assisted Lifestyle)
Hubert H. Humphrey III, Attorney General, Mary L. Stanislav, Assistant Attorney General, 525 Park Street, Suite 500, St. Paul, MN 55103 (for respondent Minnesota Department of Health)
Considered and decided by Short, Presiding Judge, Amundson, Judge, and Mulally,[*] Judge.
Relator challenges, by writ of certiorari, the Department of Health's order imposing assessments on relator and denying renewal of its license. Relator argues that: (1) if the decision to deny renewal of the license was not based on "objective criteria," then the decision was arbitrary and capricious; (2) if the decision was based on "objective criteria," then those criteria constitute invalid rules that cannot be enforced; and (3) the Department of Health abused its discretion in denying renewal of the license because relator "substantially complied" with the department's correction orders and made "good faith efforts" to comply with those orders. We affirm.
Relator Health Personnel/Silver Lining Assisted Lifestyle has been a provider of home health care services since 1979. In 1987, the Minnesota legislature enacted the home health care licensure law, Minn. Stat. § 144A.45, which required the commissioner of health to "adopt rules for the regulation of home care providers." In June 1993, the rules adopted pursuant to Minn. Stat. § 144A.45 became effective. Under these rules the Department of Health (department) issued provisional licenses to home health care services providers pending later inspections or surveys of the operations of the licensees. On July 1, 1993, the department granted relator a provisional license.
The department began conducting surveys of licensees in October 1993. Relator was one of the licensees surveyed. The department surveyed relator again in January 1994 and November 1994. In August 1994, the department conditionally renewed relator's license for six months.
In December 1995, the department initiated a contested case hearing against relator. Following a hearing, the administrative law judge (ALJ) issued findings of fact, conclusions of law, and a recommendation that the department deny renewal of relator's license and impose assessments. The Commissioner of Health upheld the penalty assessments in the amount of $8,800 and nonrenewal of the conditional license. Relator appealed. The commissioner denied relator's request for a stay of enforcement of the order and this court denied relator's motion to stay pending appeal because relator did not show that the department abused its discretion in denying a stay. Relator challenges the department's decision to deny renewal of its license rather than impose a less severe sanction.
D E C I S I O N
An administrative agency's assessment of penalties or sanctions is an exercise of its discretionary power. In re Haugen, 278 N.W.2d 75, 80 n.10 (Minn. 1979). A reviewing court, therefore, may not interfere with the penalties or sanctions imposed by an agency decision unless a clear abuse of discretion is shown by the party opposing the decision. See In re Minn. Tipboard Co., 453 N.W.2d 567, 569 (Minn.App. 1990), review denied (Minn. May 30, 1990).
I. Arbitrary and Capricious
Relator argues that the department did not give any reasons or rely on "objective criteria" for choosing to deny renewal of the license rather than a less severe sanction, such as suspension or conditional licensure. Relator argues that because the department gave no such reasons, the decision was arbitrary and capricious. Alternatively, relator argues that if the department did use some objective criteria for deciding to deny renewal of the license, then those criteria constitute invalid rules and cannot be enforced.
Relator notes that the rules allow the commissioner to deny renewal of a license, or suspend, revoke, or make a license conditional, if the licensee "is in violation, or during the term of the license has violated, any of the requirements" of the licensure statute. See Minn. R. Pt. 4668.0012, subp. 15A (1995). Relator claims that this gives the commissioner "unbridled discretion" and makes it impossible for licensees to know what conduct will result in a suspension or conditional licensure and what conduct will result in loss of license.
Relator does not indicate what "rule" the department applied in this case to reach the conclusion it did. Thus, we cannot conclude that the department's decision was based on an invalid rule.
Relator cites no authority for the proposition that an administrative agency must specify standard sanctions for rules violations before it can take any adverse action against a licensee. The failure to rely on "objective criteria" does not necessarily mean that a decision was arbitrary and capricious. An agency is allowed to make decisions regarding sanctions on a case-by-case basis as long as it does not clearly abuse its discretion in imposing that sanction. Thus, we conclude that the alleged failure to rely on objective criteria for determining when a license should not be renewed does not make the sanction arbitrary or capricious.
II. Unenforceable Rules
Relator argues that many of the department's rules underlying the assessments made by the department were invalid and that "a review of the transcript * * * will show many instances where promulgated rules are legally unenforceable." Relator does not indicate which rules were invalid, cite authority, or give citations or references to the record in this brief argument, and we do not consider it further.
III. Abuse of Discretion
Relator makes various arguments in support of its contention that the sanction was an abuse of discretion. It first argues that the department's decision was an abuse of discretion because it "substantially complied" with the department's correction orders, but cites only one Minnesota case regarding substantial compliance. See Palmquist v. Onan Corp., 482 N.W.2d 791 (Minn. 1992). In Palmquist, the supreme court determined that an employer had substantially complied with a statute requiring report of an independent medical examination to be served upon the employee and filed with the commissioner within 120 days of a workers' compensation claim petition. Id. at 792-93. Because the medical exam was done promptly and the report was served on the employee's workers' compensation lawyer within 120 days (but not the employee or the commissioner), the court held that the employer substantially complied with the statute. Id. Allowing evidence to be admitted in a workers' compensation case because of substantial compliance with a time-specific, workers'-compensation-specific statute is very different from not allowing an administrative agency to take adverse action because of an allegation of substantial compliance with that agency's orders.
Relator notes that new federal nursing home regulations recognize substantial compliance. However, as the department properly notes, these regulations are not binding on the Minnesota Department of Health, nor are they binding regarding home health care. If a substantial compliance standard is to be adopted, it is for the Department of Health or the legislature to do so, not this court.
Thus, because a substantial compliance standard does not apply to this case, it is not necessary to consider whether relator substantially complied with the department's orders.
Relator argues that this court should consider its "good faith intentions" in determining whether the department abused its discretion. In support of this argument, relator cites a case in which the supreme court affirmed the district court's reversal of the Commissioner of Securities's decision to revoke a corporate broker's license for improper expenditure of trust funds. See In re Haugen, 278 N.W.2d 75. Relator concedes that the supreme court reversed the commissioner on the ground that the alleged violation did not occur, but argues that the court noted that the revocation would have been reversed even if the alleged violation had occurred because the licensee had acted in good faith. In the opinion, good faith was just one of several reasons the supreme court gave to support its conclusion that the drastic sanction was a clear abuse of discretion. Id. at 80-81. Even if relator is correct in that this professional discipline case should be extended to licensing a health care or other kind of business (and no Minnesota case has), we note that the "good faith" in Haugen relates to the original alleged wrongdoing, not to efforts to correct admitted problems. Thus, Haugen does not support relator's "good-faith-efforts-to-correct" argument.
Because a "good-faith-efforts-to-correct" standard does not apply to this case, it is not necessary to consider whether relator made good faith efforts to correct its problems.
Relator argues that, although the department found 51 violations, those violations fall in seven "categories" or "areas of concern" and thus the "51 violations" figure is "clearly a distorting of the reality of Health Personnel's situation as it attempted to comply and meet state rules." It is not necessary for us to determine the precise number of rule violations because we conclude that there was no clear abuse of discretion.
Relator claims that the department unreasonably enforced the rules, making various arguments. Relator first claims that the department singled out a few home health care agencies for surveys. As the state notes, however, relator was selected to be surveyed because it had been terminated from the Medicare program and the department had received complaints about its operations. According to the state, relator was the only home care provider in Minnesota that was terminated from the Medicare program.
Relator next argues that the department unfairly applied the same standards to large and small home health care agencies. It is for the legislature and the department to determine which standards to apply for which types of businesses, not this court.
Relator also claims that the department took away licensure when it was seeking to comply with the rules. However, the department gave relator a period of time to comply, but repeatedly determined that relator continued to be in violation of various rules. In addition, the department's home care supervisor testified that relator had the worst record of any home care agency in Minnesota.
Relator asserts that the department neglected to give written answers to questions it submitted and refused to meet and discuss matters raised by correction orders. Relator was issued a conditional license, given a chance to correct problems, and had ample opportunities to raise its concerns during the eight-day hearing.
Relator argues that it was difficult for it, a small business, to comply with the rules because it was "smaller, less sophisticated, and less accustomed to regulation than most nursing homes, hospitals, and residential facilities." As the department properly notes, however, relator points to no evidence in the record that it was unable to comply with any particular regulation.
Relator argues that Minnesota statutes require agencies to consider the impact of rules on small businesses. See Minn. Stat. § 14.115 (1994). Not only was the statute repealed, but also, as the department points out, this statute only applied at the rulemaking stage, not to contested cases like this one.
Thus, we conclude that the department did not clearly abuse its discretion in imposing the assessments and denying renewal of relator's license.
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
[ ]1 Minn. Stat. § 14.115 was repealed in 1995. See 1995 Minn. Laws ch. 233, art. 2, § 57.