Opinion
No. 3-142 / 02-0913
Filed June 13, 2003
Appeal from the Iowa District Court for Woodbury County, James D. Scott, Judge.
The petitioner appeals from the district court's affirmance on judicial review of an administrative ruling requiring it to repay the Iowa Department of Human Services for skill development services it failed to document. AFFIRMED.
Charles L. Corbett and Michael W. Cameron of Corbett, Anderson, Corbett, Poulson, Vellinga Buckmeier, Sioux City, for appellant.
Thomas J. Miller, Attorney General, and Gordon E. Allen, Deputy Attorney General, for appellee.
Heard by Mahan, P.J., and Miller and Vaitheswaran, JJ.
Boys and Girls Home and Family Services, Inc. (Home) appeals from the district court's affirmance on judicial review of an administrative ruling requiring it to repay the Iowa Department of Human Services for skill development services it failed to document. We affirm.
I. Background Facts Proceedings
The Home entered into a contract with the department to provide "Enhanced Residential Treatment" at its facility in Graettinger, Iowa. The contract incorporated administrative rules which provide:
This case is related to Boys Girls Home Family Servs., Inc. v. Iowa Dep't of Human Servs., No. 3-139/02-866 (Iowa Ct.App. June 13, 2003), but involves a separate facility, and separate issues.
a.Children in enhanced residential treatment shall receive the following services: restorative living and social skills development several times per day and group or individual therapy or counseling. An average of three hours per week of therapy and counseling services shall be provided to each child.
Iowa Admin. Code r. 441-185.83(3) (1999) (emphasis added).
The department has interpreted this provision to require at least two social skills development sessions for each child each day. In 1999 the department conducted an audit of the Graettinger facility and discovered the Home had documented only one skill development session for each child on Saturday and Sunday of each week. The department asked to be reimbursed $80,824.56, which represented the per diem per client for each day the client only received one skill development session.
The Home is reimbursed per client per day, but sends one billing each month to the department. Before July 1, 1999, the Home received $95.28 per client per day, and after July 1, 1999, it received $97.29 per client per day for Enhanced Residential Treatment.
The Home requested a hearing, claiming the department should not receive the full per diem for each day a client did not receive at least two skill development sessions. The Home pointed out that the clients received one documented session each day during the weekend. The department determined its original request was correct. On judicial review, the district court upheld the department's decision. The Home appeals, claiming the agency's decision is unreasonable, arbitrary, and capricious.
II. Standard of Review
Judicial review of agency action is guided by Iowa Code section 17A.19(10) (Supp. 1999). See Wal-Mart Stores, Inc. v. Caselman, 657 N.W.2d 493, 498 (Iowa 2003). Agency action may be reversed if it is based upon a determination of facts that is not supported by substantial evidence in the record before the court when the record is viewed as a whole, or is otherwise unreasonable, arbitrary, capricious, or an abuse of discretion. Dawson v. Iowa Bd. of Med. Exam'rs, 654 N.W.2d 514, 518 (Iowa 2002) (citing Iowa Code § 17A.19(10)(f), (n)).
An agency action is arbitrary or capricious when it is taken without regard to the law or facts of the case. Dico, Inc. v. Employment Appeal Bd., 576 N.W.2d 352, 354 (Iowa 1998). Agency action is unreasonable when it is clearly against reason and evidence. Id. An abuse of discretion occurs when the agency action rests on grounds or reasons clearly untenable or unreasonable. Id. "An abuse of discretion is synonymous with unreasonableness, and involves lack of rationality focusing on whether the agency has made a decision clearly against reason and evidence." Schoenfeld v. FDL Foods, Inc., 560 N.W.2d 595, 598 (Iowa 1997).
III. Amount of Overpayment
The Home claims it should not be required to reimburse the department the full per diem for each day it was out of compliance. The Home compares the situation to the sale of goods, such as hot dogs, and states that if it agreed to sell the department twelve hot dogs, but only delivered eleven, the department would only be entitled to recoup the price of one hot dog. Similarly, the Home suggests the department is only entitled to the value of the missed skill development sessions. The Home claims the value of a skill development session was $31.12 prior to July 1, 1999, and $31.74 after July 1, 1999.
The department does not agree with the Home's analogy. The department claims the situation involves medical treatment, and asserts no one would pay for partial surgery, a partial root canal, or a partial prescription for medication.
Leaving aside all analogies, we find no evidence in the record that the services required for Enhanced Residential Treatment were severable. The parties entered into a contract for a bundle of services, which a licensed health professional determined was required to assist a child. The children who receive Enhanced Residential Treatment have severe social, emotional or behavioral disabilities. We determine the district court and the department properly required the Home to repay the entire per diem it received for each day it was out of compliance with the contract.
IV. Improper Rulemaking
The Home contends the formula for repayment established by the department, and affirmed by the district court, constituted improper rulemaking. Agency action is classified into three distinct categories, rulemaking, contested cases, and other agency action. Greenwood Manor v. Iowa Dep't of Health, 641 N.W.2d 823, 833 (Iowa 2002). Rulemaking is the process for adopting, amending, or repealing a rule. Iowa Code § 17A.2(12). A contested case is a proceeding in which the legal rights of a party are determined after an evidentiary hearing. See Iowa Code § 17A.2(5). Other agency action is action that does not constitute rulemaking or a contested case. Greenwood Manor, 641 N.W.2d at 834.
We find the present case is clearly a contested case proceeding. In a contested case proceeding, after an evidentiary hearing, the agency adjudicates disputed facts pertaining to particular individuals in specific circumstances. Id. This is precisely what happened in this case. We determine the department did not engage in improper rulemaking.
We affirm the department and the district court.