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OAH 2-1800-19815-2 |
STATE OF
OFFICE OF
ADMINISTRATIVE HEARINGS
FOR
THE DEPARTMENT OF HUMAN SERVICES
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In the Matter of the
Revocation of the |
FINDINGS
OF FACT, CONCLUSIONS, AND ORDER |
This matter comes before Chief Administrative
Law Judge (ALJ) Raymond R. Krause following a hearing pursuant to New
Generation Child Development Center’s (Licensee or NGCDC) appeal from a March
13, 2008 Order of License Revocation.
The hearing in this matter was held on April 1, 2009 at the Office of
Administrative Hearings,
Steven H. Alpert, Assistant Attorney General,
appeared on behalf of the Department. Samuel
A. McIntosh, Sr., appeared on behalf of Licensee.
STATEMENT OF ISSUE
Did the Department demonstrate reasonable cause for finding that the
license holder failed to fully comply with applicable laws or rules, or that a
controlling individual has a disqualification which has not been set aside? The
ALJ finds that the Department did not establish reasonable cause to revoke
NGCDC’s license.
Based
on the hearing record, the Administrative Law Judge makes the following:
FINDINGS OF FACT
1.
On or
about August 30, 2006, NGCDC applied for a Child Care Program license pursuant
to Minnesota Rules, Parts 9503.0005 through 9503.0170, also known as Rule 3,
which governs day care center licenses.[1]
2.
On the
Child Care Program application, NGCDC is listed as the “Name of Person(s),
organization, corporation that license is issued to.”[2]
3.
New
Generation Child Development Center, Inc. was incorporated in
4.
Geneve
Marshall, president, and Emmelyn Johnson, director, are listed as the
controlling individuals on the application, and Geneve Marshall is specified as
the person to whom sensitive information should be sent.[5]
5.
On the
Initial Application Information form, which was signed by Geneve Marshall on
August 24, 2006, the name of license holder is specified as “
6.
The
Department’s database lists the license holder for Licensee as
7.
The
Department issued day care center licenses in 2007, 2008 and 2009 to
8.
On June
20, 2007, Geneve Marshall and Emmelyn Johnson each transferred 150 shares of
common stocks in
9.
On July
2, 2007, Henrika Marshall was appointed Licensee’s Managing Director.[10]
10.
Geneve
Marshall and Emmelyn Johnson jointly held a family child care license which was
first issued to them in February, 2005. This
license was distinct from any licenses granted to NGCDC. The Department revoked
Ms. Marshall and Ms. Johnson’s family child care license in April, 2007. [11] Following an appeal to the Commissioner of
Human Services by Ms. Marshall and Ms. Johnson, the revocation became final on
January 3, 2008.[12]
11.
Other
than the common involvement of Ms. Marshall and Ms. Johnson, there was no
evidence to show that their home day care program was in any way connected with
the Licensee, NGCDC.
12.
In a
letter dated March 13, 2008, the Department revoked Licensee’s license to
operate a child care center. In the
Order of License Revocation, the Department stated that the reason for the
revocation was because Geneve Marshall and Emmelyn Johnson had had their home
day care license revoked and they are controlling individuals of Licensee. The letter cited Minn. Stat. §§ 245A.04, subd.
7(e) and 245A.08, subd. 5a(a) as authority for the revocation.[13]
13.
The
revocation letter served on NGCDC cited no licensing violations by NGCDC as the
basis for the revocation. The letter
only cited the revocation of the license previously held by Ms. Marshall and
Ms. Johnson.
14.
Licensee
timely appealed the revocation of its license on March 20, 2008.[14]
15.
Licensee’s
2008 license expired on December 31, 2008. It was issued a temporary
provisional license effective January 1, 2009 so it could continue to operate
pending the outcome of this appeal.[15]
CONCLUSIONS
1.
The
Administrative Law Judge and the Commissioner of Human Services have
jurisdiction over this matter pursuant to Minn. Stat. §§ 14.50 and 245A.08.
2.
The
Notice of Hearing is proper in all respects and the Department has complied
with all procedural requirements of law and rule.
3.
The Licensee
or License Holder in this matter is the New Generation Child Development
Center, Inc.
4.
At all
times relevant to these proceedings, Licensee was licensed as a child care
center.
5.
6.
7.
Pursuant
to
8.
Geneve
Marshall, Emmelyn Johnson, Henrika Marshall, and New Generation Child
Development Inc. are all controlling individuals of
9.
10.
Minn.
Stat. § 245A.07 permits the Commissioner to sanction a license holder for
failure to comply with applicable law or rule.
Subdivision 3 of this section permits the Commissioner to “suspend or
revoke a license, or impose a fine if a license holder fails to comply fully
with applicable laws or rule” or “if a license holder, [or] a controlling
individual . . . has a disqualification which has not been set aside. . . .”
11.
Because
the Department failed to allege that the license holder violated any applicable
law or rule and neither the license holder nor any controlling individual has a
disqualification, the Department failed to show that there was a basis to
revoke NGCDC’s day care center license.
12.
When a
license holder continues to operate a program during an appeal and the existing
license expires, Minn. Stat. § 245A.07, subd. 1(b) requires the Commissioner to
issue a temporary provisional license pending the outcome of the appeal.
13.
14.
The
Administrative Law Judge adopts as Conclusions any Findings that are more
appropriately described as Conclusions.
15.
The
Memorandum that follows explains the reasons for these Conclusions, and the
Administrative Law Judge therefore incorporates that Memorandum into these
Conclusions.
Based
upon these Conclusions, and for the reasons explained in the accompanying
Memorandum, the Administrative Law Judge makes the following:
RECOMMENDATION
IT
IS RECOMMENDED that the Commissioner REVERSE the decision to revoke the day care
center license of New Generation Child Development Center and issue a license
to New Generation Child Development Center as required by Minn. Stat. §
245A.07, subd. 1(b).
Dated:
June _23rd_, 2009.
/s/
Raymond R. Krause
|
RAYMOND R. KRAUSE Chief Administrative Law Judge |
Reported:
Digitally Recorded (No Transcript Prepared).
NOTICE
This
report is a recommendation, not a final decision. The Commissioner of the Minnesota Department
of Human Services will make the final decision after a review of the
record. The Commissioner may adopt,
reject or modify the Findings of Fact, Conclusions, and Recommendations. Under Minn. Stat. § 14.61, the final decision
of the Commissioner shall not be made until this Report has been made available
to the parties to the proceeding for at least ten days. An opportunity must be afforded to each party
adversely affected by this Report to file exceptions and present argument to
the Commissioner. Parties should contact
Cal Ludeman, Commissioner, Minnesota Department of Human Services, P.O. Box,
64998,
If
the Commissioner fails to issue a final decision within 90 days of the close of
the record, this report will constitute the final agency decision under Minn.
Stat. § 14.62, subd. 2a. The record closes upon the filing of exceptions to the
report and the presentation of argument to the Commissioner, or upon the
expiration of the deadline for doing so.
The Commissioner must notify the parties and the Administrative Law
Judge of the date on which the record closes.
Under
Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final
decision upon each party and the Administrative Law Judge by first class mail
or as otherwise provided by law.
MEMORANDUM
The Department is essentially making two related
arguments. First, Ms. Johnson and Ms. Marshall are really the license holders,
not NGCDC. The license is, therefore, subject to revocation because, as
controlling individuals and license holders, they are ineligible due to their
previous individual license revocations.
Second, even if NGCDC is the license holder, it failed to comply with
applicable law by having controlling individuals that had other licenses
revoked.
The Notice of Revocation in this
matter cites only provisions relating to granting
a license to a license applicant. The
action was not brought under the statute relating to sanctions on existing licenses. This does not appear
to be an oversight on the part of the Department because the standard for
refusing to grant a license is lower than the standard for revoking a license.
In this case, the Department has established facts that indicate that granting
a new license may not be appropriate. That, however, is not the action before
the ALJ. The Department has not
established facts that meet the standard for revocation of an existing license.
Minn. Stat. § 245A.07 spells out the kinds of
sanctions to existing licenses available to the Department, and the
circumstances under which various sanctions can be imposed. This provision clearly
distinguishes between situations where a license
holder’s license can be revoked (the “license holder fails to comply fully
with applicable laws or rules”) and the circumstances where a controlling individual’s behavior can
lead to revocation of a license (“if a . . . controlling individual . . . has a
disqualification . . . .”). There is no
claim that any of Licensee’s controlling individuals have a disqualification so
the only relevant inquiry is to whether the license holder has failed to comply
with applicable law.
The Department argues that Ms.
Marshall and Ms. Johnson are the license holders, and thus held to the higher
standards of license holders in § 245A.07. The Department’s only support for
the proposition that these two individuals are the license holders is that
Minn. Stat. § 245A.02, subd. 9 includes in the definition of “license holder,”
a requirement that the license holder also be a controlling individual. Indeed, both individuals are “controlling
individuals” of NGCDC. That does not, however, automatically make them the
license holders. Both the definitions of “license holder” and of “controlling
individual” include corporations.[16] New Generation Child Development, Inc., therefore,
also qualifies as a controlling individual for purposes of the definition of a
license holder. In other words, a
license holder must be a controlling individual but not every controlling
individual is a license holder. NGCDC, as a controlling individual, can be, and
is also the license holder. Ms. Johnson and Ms. Marshall are controlling
individuals but not license holders.
While Ms.
Marshall apparently applied for the license on behalf of NGCDC, the documents clearly
show that the intended Licensee was NGCDC.
The Department’s own documents consistently recognize NGCDC as the
holder of the child care center license.
The Department also implies that, by
permitting two controlling individuals to continue in their positions following
revocation of their home day care license, the Licensee has failed to comply
with applicable laws or rules. This
argument might be persuasive were it not for the language in § 245A.07
explicitly distinguishing between the qualifications for license holders and
those for controlling individuals.
Under Minn. Stat. §§ 245A.04, subd.
7 (e) and 245A.08, subd. 5a (a), when any of a license applicant’s controlling
individuals has had a human services license revoked, the Commissioner cannot issue a license to that applicant. The legislature could have written a similar
provision into section 245A.07, regarding existing licenses, but it did
not. This is not simply a matter of
different headings on interchangeable provisions, as the Department
argues. Application for a license and
revocation of a license are different procedures with different requirements
and different rights attaching to the license-holders.[17] It is not illogical that the legislature
would establish different standards for applicants and existing license
holders.
The legislature made the past
conduct of controlling individuals (short of conduct that resulting in a
disqualification) a potential bar to granting
a license. It could easily have done so
in §245A.07, which discusses sanctions on an existing license. The statute, however, set a different
standard (disqualification) for sanctions of an existing license. This fact
weighs heavily against a finding that the license revocation of controlling
individuals should be included in a general catch-all of failure by the license
holder to comply with applicable laws and rules.
The Department cites
§ 645.17 (1) and (2) in arguing that the statutes governing license applicants
and license holders should be interpreted to establish the same standards to
avoid an absurd result. But § 645.16
limits application of § 645.17 to circumstance where the words of a law are
ambiguous.[18] The words of the applicable statutes in this case are not
ambiguous.
Finally, the Department argues that,
even if Licensee’s license could not be revoked, the Commissioner may not issue
a new license at the conclusion of this case.
The language of § 245A.07, subd. 1 (b) does not support this argument. The Department issued Licensee a temporary
provisional license during the pendency of this appeal. If the Commissioner issues an order reversing
the revocation consistent with this recommendation, Licensee will have prevailed
on appeal. Minn. Stat. § 245A.07, subd.
1 (b) requires the Department to issue a license if the Licensee “prevails on
appeal . . . upon payment of any fee required under section 245A.10.” The revocation records of the controlling
individuals can only be considered at the time of re-licensure for 2010.
In summary, having controlling
individuals who were subject to a previous revocation may be cause for denial
of a license application but that alone is insufficient cause, under the proper
statutory provisions, for revoking an existing license.
R.R.K.
[1] Department’s Hearing Ex. (Ex.) 2; see Minn. R. 9503.0005, subp. 3.
[2] Ex. 2.
[3] Licensee’s Hearing Ex. (Ex.) A.
[4] Ex. B.
[5]
[6] Ex. 3.
[7] Ex. 5
[8] Ex. E.
[9] Ex. C.
[10] Ex. G; testimony of Henrika Marshall.
[11] See In the Matter of the Revocation of the Family Child Care License of Geneve Marshall and Emmelyn Johnson, Findings of Fact, Conclusions and Recommendation, OAH Docket No. 8-1800-18084-2 (November 2, 2007).
[12] Ex. 1.
[13] Ex. 8.
[14] Ex. 9
[15]
Ex. E. See
[16] See
[17]
For example, when the Department denies an applicant a license, the applicant
bears the burden of proof on appeal of the Department’s decision. When the Department sanctions an existing
license, the Department bears the initial burden of proof.
[18] See