Ceaser v. Dep't of Human Servs.

311 Or.App. 702

493 P.3d 66

Nicole CEASER; and Happy Valley Children's Garden, LLC, Petitioners,

v.DEPARTMENT OF HUMAN SERVICES, Respondent.

A171908

Court of Appeals of Oregon.

Submitted March 12, 2021.

May 26, 2021

Vivien Lyon filed the briefs for petitioners.

Ellen F. Rosenblum, Attorney General, Benjamin Gutman, Solicitor General, and Inge D. Wells, Assistant Attorney General, filed the brief for respondent.

Before Ortega, Presiding Judge, and Shorr, Judge, and Powers, Judge.

SHORR, J.

Petitioners, child-care providers for low-income families, seek judicial review of a Department of Human Services (DHS) final order. In its order, DHS suspended petitioners from receiving employment related day care (ERDC) subsidy payments for a period of six months, pursuant to former OAR 461-165-0180(3)(c) (Jan. 24, 2019), renumbered as OAR 461-165-0180(3)(d) (Oct. 1, 2019),¹ after determining that petitioners had failed to comply with a condition of eligibility under OAR 461-165-0180(8)(h)(B). On judicial review, petitioners raise four assignments of error. First, they argue that DHS erred in concluding that they had been provided proper notice of the suspension. Second, they assert that DHS erred in concluding that a Notice of Awareness that DHS sent to petitioners following the initial suspension did not waive DHS's suspension rights by providing a 60-day period for petitioners to "come into compliance." Third, they argue that relevant provisions of OAR 461-165-0180 are unconstitutionally vague. Lastly, they request plain-error review of their argument that OAR 461-165-0180(8)(h)(B) exceeds DHS's rule-making authority. For the reasons that follow, we reject all of petitioners’ assignments of error, and therefore affirm.

Under the Administrative Procedures Act, ORS 183.310 to 183.690, "[r]eview of a contested case shall be confined to the record, and the court shall not substitute its judgment for that of the agency as to any issue of fact or agency discretion." ORS 183.482(7). We review an agency's order to determine if it is "supported by substantial evidence in the record." ORS 183.482(8)(c). Accordingly, we recite the relevant facts from DHS's final order, which adopted an administrative law judge's (ALJ) proposed order in its entirety, and the relevant evidence from the record.

Petitioners Happy Valley Children's Garden, LLC (Happy Valley) and its owner Nicole Ceaser are child-care providers licensed by the DHS Office of Child Care. They operate two separate facilities in Portland. In October 2017, Happy Valley applied for listing with ERDC as an approved child care provider.² That application process was completed by a then-director at one of the Happy Valley sites, and required that petitioners agree to various terms, including the requirement that petitioners report any involvement with Child Protective Services (CPS) to the Direct Pay Unit (DPU) within five days of that involvement. Happy Valley was approved for ERDC listing, and petitioners subsequently enrolled ERDC-eligible children and received ERDC subsidy payments directly from DPU. All of the nearly 110 children enrolled at the Stark Street location received ERDC subsidies as of April 2019.

DHS's administrative rules require ERDC-approved providers to report to DPU within five days "[a]ny involvement of any subject individual or individual described in section (5) of this rule with CPS or any other agencies providing child or adult protective services." OAR 461-165-0180(8)(h)(B). The term "subject individual" is defined to mean any individual who is subject to a criminal record check by an administrative agency. OAR 125-007-0210(10). All Happy Valley employees are subject to a background check requirement.

In January 2018, DHS mailed petitioners a Child Care Provider Notice of Awareness, informing them that they had failed to report two instances of CPS contact in August and December 2017 to the DPU within five days of those occurrences. That notice explained the DPU reporting requirements and warned that failure to report such contacts "may result in a suspend[ed] status [for] a minimum of six months and [ineligibility] for subsidy payments from the ERDC program." DHS did not impose any sanction at that time. Ceaser claims to have never received that notice.

On November 5, 2018, CPS began investigating petitioners in response to an allegation of abuse at the Stark Street facility. CPS spoke to a director at that facility as part of the investigation, and ultimately determined that the allegation was "unfounded." Petitioners did not report that involvement with CPS to DPU within five days, in violation of ERDC program requirements. On January 25, 2019, DHS sent petitioners a notice via regular mail placing Happy Valley in suspended status and immediately suspending its ERDC child care provider payments for a six-month period for violating that DPU reporting requirement. However, shortly after the suspension was initiated, petitioners requested a contested-case hearing, and DHS agreed to reinstate petitioners’ eligibility for payments pending that hearing and final resolution of the matter. On February 15, 2019, DHS sent petitioners another Child Care Provider Notice of Awareness, which stated, in part:

"The purpose of this letter is to provide additional clarifying information regarding the DHS Child Care Provider suspended status rule. Information previously shared by the Direct Pay Unit (DPU) may not have accurately conveyed the parameters of [former ] OAR 461-165-0180 (3)(c)(B)(i) to (iii). After reviewing with DPU, we wanted to ensure you are aware of the rule and associated parameters of a suspended provider. DHS is allowing a 60-day window to support compliance with this rule."

The notice went on to clarify the provisions of former OAR 461-165-0180(3)(c)(B)(i) to (iii), including that, when a provider is in suspended status, DHS will not pay "any other child care provider" for child care at the suspended site, and that DHS will not pay for child care at a suspended provider's second location unless DHS determines that the reasons for the suspension are unrelated to the second location. One week later, on February 22, 2019, DHS issued an amended notice of suspension, delaying petitioner's placement in suspended status until April 15, 2019, after the scheduled contested-case hearing.³ That notice informed petitioners that they were "being placed in a suspended status as a Department of Human Services (DHS) child care provider starting 04/15/2019 , and will no longer [be] eligible for subsidy payments for providing child care." (Boldface in original.)

A contested-case hearing was held on April 11, 2019, before an ALJ from the Office of Administrative Hearings. Petitioners raised several legal challenges but did not contest the allegation that they failed to report their November CPS contact to DPU. Buss, the DHS analyst who sent the various mailings at issue and made the decision to suspend petitioners, testified that she considered petitioners’ "history of failures to comply" in reaching her decision to suspend petitioners for the November 2018 failure to report. Buss also testified to her reasons for sending the February 15, 2019, Notice of Awareness. She stated that the purpose of the notice was to "inform the provider about how a suspension would work when there's multiple sites."

"This is not meant to be a second chance of compliance. This notice was just to inform them that if an action is taken against one of the locations that *** any other site the provider is involved in in regards to care cannot be conducted while in suspen [ded] status, so it's not a secondary chance."

The ALJ found that petitioners had "failed to meet the requirement of OAR 461-165-0180(8)(h)(B) when [they] failed to report [their] involvement with CPS within five days to the DPU." (Footnotes omitted.) The ALJ also rejected petitioners’ legal challenges to the imposition of the suspension. First, the ALJ rejected petitioners’ arguments that DHS had provided insufficient notice of the suspension and concluded that those arguments were "unpersuasive" because "the suspension applied to both of Claimant's child care provider numbers" or locations and "the Department served notice via regular mail, which *** is permissible per ORS 411.103(1)." Next, the ALJ rejected petitioners’ arguments that certain sections of OAR 461-165-0180 were unconstitutionally vague. The ALJ credited DHS's interpretation of the term "[a]ny involvement" in OAR 461-165-0180(8)(h)(B) as meaning "any contact between a provider and CPS." The ALJ also rejected petitioners’ other vagueness arguments, concluding that, "[a]lthough the regulation is broad, it does not afford the Department any discretion in its application. Neither does the regulation rely on ‘shifting or subjective judgments’ of the Department, nor is it so poorly written as to fail to provide fair warning of the conduct it prohibits." In regards to petitioners’ argument that the February Notice of Awareness waived DHS's suspension rights, the ALJ concluded that that argument was "unpersuasive because, although the letter afforded Claimant additional time to become compliant with OAR 461-165-0180, nowhere in the letter does it state that the Department would not suspend Claimant after the 60 days expired." Having disposed of those legal arguments, the ALJ ruled that, "[p]ursuant to [former ] OAR 461-[165]-0180(3)(c)(B)(i), claimant is ineligible for child care provider payments for a period of at least six months." Petitioners filed exceptions to that proposed order. After considering those exceptions, DHS rejected them and adopted the ALJ's entire proposed order as its final order.

On judicial review, petitioners first assert that DHS failed to provide them with proper notice of the suspension. We review DHS's legal conclusions, including the adequacy of DHS's notice, for legal error. See ORS 183.482(8)(a) ; Villanueva v. Board of Psychologist...