Four Oaks Family and Children's Services and Tim Cart v. Iowa Department of Education, Bureau of Nutrition and Health Services, 16-0163

Four Oaks, a nonprofit childcare provider, participated in the federal Child and Adult Care Food Program (CACFP) administered in Iowa by the Department of Education’s Bureau of Nutrition and Health Services.
Department performed an unannounced site visit (Aug 30, 2012) and later an administrative review (Sept 27, 2012) that identified alleged "serious deficiencies" in program operation, recordkeeping, training, fiscal accountability, and claims processing.
Four Oaks emailed the Department on Oct 11, 2012, voluntarily terminating CACFP participation at its Cedar Rapids facility retroactive to Aug 31; it later also voluntarily terminated participation at its Iowa City facility retroactive to Sept 30.
On Oct 25, 2012, the Department issued a formal citation of serious deficiencies and directed corrective action; Four Oaks did not complete corrective actions, contending it could not because it had already voluntarily terminated participation.
On Dec 7, 2012, the Department proposed formal termination and placement of Four Oaks on the national disqualified list; an ALJ upheld the Department’s action, finding Four Oaks was seriously deficient and accountable through Aug 31.
The district court reversed, reasoning 7 C.F.R. § 226.6(c)(3)(iii)(A)(6) implies voluntary termination before receiving notice precludes formal termination and disqualification; the Court of Appeals reversed the district court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal CACFP regulations allow the State to formally terminate and disqualify an institution that voluntarily terminated participation before receiving a formal notice of serious deficiency	Four Oaks: voluntary termination before receiving notice prevents formal termination and placement on the national disqualified list	Department: once the State determines serious deficiencies and they are not corrected, it must initiate termination/disqualification even if the institution later attempts voluntary termination	Court of Appeals: Held for Department — federal regulations permit (and require) State to pursue termination/disqualification based on pre-termination findings and investigation
Whether 7 C.F.R. § 226.6(c)(3)(iii)(A)(6)’s express statement about voluntary termination after notice implies voluntary termination before notice bars enforcement	Four Oaks: the explicit reference to post-notice voluntary termination implies pre-notice voluntary termination is effective to avoid penalties	Department: that provision belongs to notice content and does not imply pre-notice termination halts enforcement; regulatory scheme read as whole allows enforcement	Court: Rejected Four Oaks’ implication; contextual reading shows no gap allowing institutions to evade penalties by timely voluntary termination

Burton v. Hilltop Care Ctr., 813 N.W.2d 250 (Iowa 2012) (standard of review for agency decisions)
Meyer v. IBP, Inc., 710 N.W.2d 213 (Iowa 2006) (review for errors at law when agency interpretation of law is challenged)
Top of Iowa Coop. v. Sime Farms, Inc., 608 N.W.2d 454 (Iowa 2000) (authority on interpreting federal law while considering federal decisions)
Goldstar Med. Servs., Inc. v. Dep’t of Social Servs., 955 A.2d 15 (Conn. 2008) (rejecting interpretation that allows providers to evade sanctions by voluntarily terminating before audit/notice)