Silver Lining Group EIC Morrow County et al., Plaintiffs-Appellants, v. Ohio Department of Education Autism Scholarship Program, Defendant-Appellee.
No. 16AP-398 (C.P.C. No. 14CV-12280)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
September 26, 2017
2017-Ohio-7834
BROWN, J.
(REGULAR CALENDAR)
Rendered on September 26, 2017
On brief: Kemp, Schaeffer & Rowe Co., L.P.A., and Erica Ann Probst, for appellants. Argued: Erica Ann Probst.
On brief: Michael DeWine, Attorney General, Jeffrey A. Knight, and Marissa J. Palumbo, for appellee. Argued: Marissa J. Palumbo.
APPEAL from the Franklin County Court of Common Pleas
BROWN, J.
{1} Plaintiffs-appellants, Silver Lining Group EIC: Morrow County (“SLG“) and Behavioral Intervention Institute of Ohio (“BIIO“), appeal from a judgment of the Franklin County Court of Common Pleas granting the
{3} Appellants are limited liability companies that provide “behavioral interventional services” for individuals with autism and similar diagnoses, using a method known as “applied behavioral analysis.” (Wilcock Depo. at 15.) Appellants receive payment for their services from “private pay,” “private insurance,” contracts with school districts “for out-of-district placements,” and contracts with “county Boards of Developmental Disabilities.” (Wilcock Depo. at 18-19.) However, the ASP is one of appellants’ “primary funding streams.” (Wilcock Depo. at 18.)
{4} Thе ASP is “a school choice option that allows parents to access public funding” to have their child‘s individualized education plan (“IEP“) implemented “by registered private providers or alternative public providers.” (Huckins Depo. at 10.) Thus, the ASP provides children diagnosed with autism “an option instead of attending the public schools.” (Murphy Depo. at 18-19.)
{5} In 2007, SLG opened a facility in Mansfield, Ohio. ODE approved SLG‘s application to become a registered private provider, thereby permitting SLG to render services and receive payment under the ASP. In 2009, BIIO opened a facility in Westlake, Ohio, and ODE approved BIIO‘s application to become a registered private provider. In 2012, BIIO opened a second fаcility in Columbus, Ohio. In 2013, SLG opened a second facility in St. Clairsville, Ohio. Kristen Wilcock and Michele Murphy are co-owners of SLG and BIIO. Wilcock is the chief executive officer of the companies, and Murphy is the executive director.
{6} ODE administers the ASP through the non-public education options office within the center for student options at ODE. Sue Cosmo is the director of the non-public education options office, and Lisa Huckins is an education program specialist in the office.
{7} On January 4, 2013, Huckins sent an e-mail to all registered private providers, stating that ODE was aware that “many of our providers have multiple locations that are not currently reflected in the online system.” Huckins informed the providers that “[t]his year, you will need to create new applications for each of your
{8} After receiving the January 4, 2013 e-mail, appellants reviewed the statutes, code provisions, and guidelines governing the ASP, and determined that there was “no change in the OAC code or in the rules.” (Murphy Depo. at 30.) Wilcock responded to Huckins’ e-mail, asking Huckins “to explain why she was making this change and where it was in the rule” that each facility had to register separately. Huckins did not provide Wilcock “with an answer.” (Wilcock Depo. at 40.) Appellants decided that, because their companies were “approved as * * * provider[s],” there was no need to separately register their new SLG and BIIO locations. (Murphy Depo. at 32.) Wilcock explained that she did not submit applications for her companies’ new locations because completing the applications was “a ton of administrative work,” and she found “no reason to do it.” (Wilcock Depo. at 79-80.)
{9} At the time of the events at issue, student applications to participate in the ASP would list the name of “the provider” the student wanted to attend, “but not the location” of the provider. (Huckins Depo. at 43.) Prior to moving to the online system during the 2012-2013 school year, an ODE employee would review the student applications to ensure that the listed “provider was properly registered.” (Huckins Depo. at 36.) After moving to the online system, providers would file student applications with ODE and, based on the information in the application listing the student‘s “address and home school district,” the application would be “routed to the specific school district for review.” (Murphy Depo. at 36; Huckins Depo. at 24.) However, district staff members were not obligated to determine whether the provider “listed by the potential applicant is a registered private provider.” (Huckins Depо. at 38.)
{10} When a registered private provider submitted an invoice to ODE for payment through the online system, the system would automatically approve the invoice and issue payment. An ODE employee would only review the invoice if there was a “question or problem or an issue.” (Huckins Depo. at 27.) Huckins explained that the computer “system only allow[ed] registered providers to submit [a student] application,”
{11} Murphy admitted that she submitted all SLG invoices “[t]hrough Mansfield” and all BIIO invoices “through Westlake.” (Murphy Depo. at 50.) Thus, while students were attending SLG in St. Clairsville and BIIO in Columbus, appellants submitted the student applications and invoices for those students “through Mansfield and Westlake.” (Murphy Depo. at 24.)
{12} On March 8, 2013, Huckins sent another e-mail to all registered private providers reminding the providers that, if they were serving “children at multiple locations, [the provider] should renew [their] original location first. Then, using the New Provider Application option, create new listings for [their] additional locations.” Huckins explained that “each location should be listed under its own physical address.” (Wilcock Depo. at exhibit No. 2.) On March 11, 2013, appellants started an application for their Columbus location to become a registered private provider, but did not submit the application to ODE.
{13} On June 12, 2013 Huckins sent an e-mail to appellants, noting that they had “an autism scholarship provider application in STARTED status.” (Emphasis sic.) Huckins informed appellants that, in order for their “application to be reviewed and possibly approved for the 2013-2014 program year, it will need to be SUBMITTED.” (Emphasis sic.) (Murphy Depo. at exhibit No. 4.) Appellants did not submit their application.
{14} When the 2013-2014 school year began in August 2013, appellants had students attending both their Columbus and St. Clairsville locations. On September 4, 2013, Huckins sent an e-mail to Murphy stating that she had “received a call from a district with questions about an аpplication. They indicated that the student was attending Silver Lining in St. Clairsville. I was not aware of a location in St. Clairsville. Is this facility affiliated with yours?” Murphy responded stating, “[y]es, we are serving
{15} Wilcock responded to Huckins, stating that she would be “happy to register the new site if [Huckins] could please provide [her] with some additional information. Can you please direct me to the rule or the section of the OAC that references this.” Huckins replied that ODE would be “unable to verify the St. Clairsville location‘s compliance with any of the requirements in
{16} On September 30, 2013, Huckins sent an e-mail to Wilcock noting that the applications for both Columbus and St. Clairsville remained “in started status.” Huckins asked Wilcock to “[p]lease submit them so [Huckins could] review them as soon as possible.” Huckins informed Wilcock, “[i]f we cannot get them registered, I will need to hold payment for the students attending those locations.” (Murphy Depo. at exhibit No. 4.)
{17} On October 7, 2013, Huckins sent an e-mail to Wilcock, noting Huckins’ January 4, March 8, June 12, and September 4, 2013 e-mails informing Wilcock of the need to submit applications for the new SLG and BIIO locations. Huckins stated that ODE records demonstrated that appellants had “13 Columbus area students listed as being served by the approved Westlake location of The Behavioral Intervention Institute. You also have 4 Martin‘s Ferry area students listed as being served by the Mansfield location of Silver Lining.” Huckins informed Wilcock that “[u]ntil their local locations have been registered an approved site to provide services, I am holding payments for these students.” (Cosmo Depo. at exhibit D.) Thus, “at this point,” ODE began “to withhold payments for the first time.” (Wilcock Depo. at 64-65.)
{18} On October 8, 2013, appellants submitted their application for St. Clairsville to become a registered private provider. On October 11, 2013, appellants submitted their application for Columbus to become a registered private provider.
{19} Huckins reviewed the applications and placed the applications into correction needed status several times over the following months. The issues requiring
{20} On April 15, 2014, ODE approved SLG‘s St. Clairsville‘s application to become a registered private provider. ODE did not approve or deny BIIO‘s Columbus application during the 2013-2014 school year, as the application continued to be placed in correction needed status throughout the year. Following the 2013-2014 school year, all four of appellants’ locations became registered private providers.
{21} Appellants’ complaint asserted that ODE owed appellants $366,300.25 for the ASP services appellants provided at their Columbus and St. Clairsville locations during the 2013-2014 school year. Following a status conference, the parties agreed to submit briefs regarding the meaning of the term “private provider” in
{22} ODE asserted that, as
{23} Appellants asserted that, because their companies were entities, and the companies had been “approved as a private provider for at least one location, all of its locations are approved.” (Appellants’ Aug. 31, 2015 Brief in Support at 2.) Appellants alleged that neither
{24} On October 2, 2015, the trial court issued a decision finding ODE‘s interpretation of “private provider” in
{25} On October 15, 2015, appellants filed a motion for leave to amend their complaint, which the trial court granted. In the amended complaint, appellants reiterated their claim for collection on a past due account and added a claim for unjust enrichment. Appellants asserted that ODE was unjustly enriched by appellants’ ASP services during the 2013-2014 school year, because appellants’ services allowed ODE to “deduct the aggregate amounts of the awarded scholarship which would otherwise have been owed and paid to the school district in which the serviced student resided.” (First Amended Complaint at 13.) Appellants attached exhibit A to the amended complaint, which listed the monthly amount per student appellants alleged ODE owed them.
{26} On May 2, 2016, ODE filed a motion for summary judgment. ODE argued that the unregistered status of appellants’ Columbus and St. Clairsville locations during the 2013-2014 school year precluded those locations “from providing services to children under the Scholarship program.” (ODE May 2, 2016 Mot. for Summ. Jgmt. at 8.) As such, ODE argued that there was “no provable sum and certainly no obligation for the Department to pay for services allegedly provided” at the Columbus or St. Clairsville locations. (ODE May 2, 2016 Mot. for Summ. Jgmt. at 11.) Regarding appellants’ unjust enrichment claim, ODE argued that “[a]ny allеged benefit was conferred upon students, not the Department,” and that “[a]ny benefit in the direction of the Department [was] necessarily blunted by Plaintiffs’ failure to follow Scholarship requirements.” (ODE May 2, 2016 Mot. for Summ. Jgmt. at 12-13.)
{27} On May 3, 2016, appellants filed their motion for summary judgment. Appellants asserted that “the contract or agreement” between the parties, which formed the basis of the account, was “founded on statute and administrative code, specifically
{28} On May 23, 2016, the trial court issued a decision and entry granting ODE‘s motion for summary judgment and denying appellants’ motion for summary judgment. The court concluded that, as the Columbus and St. Clairsville locations were not registered under
{29} Appellants appeal, assigning the following errors for our review:
I. The Trial Court Determination that
R.C. 3310.41 ‘s definition of “Private Provider” as an “entity” actually means “location” is Contrary To Law and the Administrative Practice of the Department of Education for the Prior Six Years.II. The Trial Court‘s Determination that the State of Ohio Department of Education Has Not Been Unjustly Enriched is Contrary to Fact and Contrary to Law.
{30} Summary judgment is appropriate when the moving party demonstrates that: (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion when viewing the evidence most strongly in favor of the non-moving party, and that conclusion is adverse to the non-moving party. Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, ¶ 29; Sinnott v. Aqua-Chem, Inc., 116 Ohio St.3d 158, 2007-Ohio-5584, ¶ 29. Appellate review of a trial court‘s ruling on a motion for summary judgment is de novo. Hudson at ¶ 29. This means an appellate court conducts an independent review, without deference to the trial court‘s determination. Zurz v. 770 W. Broad AGA, LLC, 192 Ohio App.3d 521, 2011-Ohio-832, ¶ 5 (10th Dist.); White v. Westfall, 183 Ohio App.3d 807, 2009-Ohio-4490, ¶ 6 (10th Dist.)
{31} When seeking summary judgment on grounds that the non-moving party cannot prove its case, the moving party bears the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact on an essential element of the non-moving party‘s claims. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). The moving party does not discharge this initial burden under
{32} Appellants’ first assignment of error asserts the trial court‘s interpretation of
{33} Statutory interpretation is a question of law subject to de novo appellate review. State v. Banks, 10th Dist. No. 11AP-69, 2011-Ohio-4252, ¶ 13, citing State v. Certain, 180 Ohio App.3d 457, 2009-Ohio-148, ¶ 11 (4th Dist.). When conducting such a review, an appellate court does not defer to the trial court‘s determination. Akron v. Frazier, 142 Ohio App.3d 718, 721 (9th Dist.2001), citing State v. Sufronko, 105 Ohio App.3d 504, 506 (4th Dist.1995).
{34} The primary goal of statutory interpretation is to give effect to the General Assembly‘s intent in enacting the statute. Banks at ¶ 13, citing State v. Hairston, 101 Ohio St.3d 308, 2004-Ohio-969, ¶ 11. To determine legislative intent, we first look to the language of the statute. Hubbell v. Xenia, 115 Ohio St.3d 77, 2007-Ohio-4839, ¶ 11,
{35} “It is only where the words of a statute are ambiguous, uncertain in meaning, or conflicting that a court has the right to interpret a statute.” In re Adoption of Baby Boy Brooks, 136 Ohio App.3d 824, 829 (10th Dist.2000). Ambiguity exists if the language of a statute is susceptible of more than one reasonable interpretation. Columbus v. Mitchell, 10th Dist. No. 16AP-322, 2016-Ohio-7873, ¶ 6. If a statute is ambiguous,
{36}
{37} Each scholarship awarded under the ASP “shall be used only to pay tuition for the child on whose behalf the scholarship is awarded to attend a special education program that implements the child‘s [IEP] and that is operated by an alternative public provider or by a registered private provider.”
{38} A “registered private provider” is defined as “a nonpublic school or other nonpublic entity that has been approved by the department of education to participate in the program established under this section.”
{39}
{40} The term “nonpublic entity” in
{41} Pursuant to its statutory authority to do so, ODE promulgated
{42}
{43} To participate in the ASP, an entity must file an application with ODE, and ODE must approve the application.
{44} The provider must demonstrate that it has “the capacity to provide services under the [ASP],” by filing “documentation that the private provider has adequate liability and property and casualty insurance.”
{45} Appellants assert that
{46} However, neither
{47} Appеllants assert that this court has “no duty to give deference to [ODE‘s] interpretation of the relevant O.A.C. and Revised Code sections,” because neither section states “that each facility operated by a registered private provider must be licensed.” Appellants argue that adding such a requirement “is judicial modification in the guise of interpretation.” (Appellants’ brief at 45-46.) We disagree.
{48} ” ‘[W]here an ambiguous statute is subject to an administrative history of interpretation, this court may defer to the administrative construction of the statute, unless the interpretation is clearly in error.’ ” State ex rel. Taylor v. Indus. Comm., 10th Dist. No. 05AP-803, 2006-Ohio-4781, ¶ 10, quoting In re Aultman Hosp., 80 Ohio App.3d 134, 139 (10th Dist.1992). “[C]ourts must give due deference to those interpretations by ‘an agency that has accumulated substantial expertise and to which the Generаl Assembly has delegated enforcement responsibility.’ ” Shell v. Ohio Veterinary Med. Licensing Bd., 105 Ohio St.3d 420, 2005-Ohio-2423, ¶ 34, quoting Weiss v. Pub. Util. Comm., 90 Ohio St.3d 15, 17-18 (2000). See also State ex rel. Clark v. Great Lakes Constr. Co., 99 Ohio St.3d 320, 2003-Ohio-3802, ¶ 10; Frisch‘s Restaurants, Inc. v. Ryan, 121 Ohio St.3d 18, 2009-Ohio-2.
{49} “If a statute provides an administrative agency authority to perform a specified act but does not provide the details by which the act should be performed, the agency is to perform the act in a reasonable manner based upon a reasonable construction of the statutory scheme.” Cosby v. Franklin Cty. Dept. of Job & Family Servs., 10th Dist. No. 07AP-41, 2007-Ohio-6641, ¶ 38. ” ‘An agency‘s reading that fills a gap or defines a
{50} Thus, a “legislative gap” is not “equivalent to a lack of authority for the agency to act.” Northwestern Ohio Bldg. & Constr. Trades Council v. Conrad, 92 Ohio St.3d 282, 289 (2001). Rather, ” ‘the power of an administrative agency to administer a * * * program necеssarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly,’ by the legislature.” (Emphasis sic.) Id., quoting Morton v. Ruiz, 415 U.S. 199, 231 (1974).
{51} As
{52} Additionally,
{54} Appellants contend the trial court failed to “analyze the waiver argument, considering that the ODE had actually paid for services at both the St. Clairsville and Columbus locations” at the beginning of the 2013-2014 school year “and stopped.” (Appellants’ brief at 57-58.) However, “principles of waiver, laches and estoppel ordinarily do not apply against the state or its agencies,” and “estoppel does not apply against a state or its agencies in the exercise of a governmental function.” Cosby at ¶ 30, citing Hortman v. Miamisburg, 110 Ohio St.3d 194, 2006-Ohio-4251, ¶ 25. See also Sun Refining & Marketing Co. v. Brennan, 31 Ohio St.3d 306, 307 (1987). ODE‘s payments to appellants during the beginning of the 2013-2014 school year could not waive the statutory provisions prohibiting ODE from paying ASP scholarship funds to unregistered entities. See Gralewski v. Ohio Bur. of Workers’ Comp., 167 Ohio App.3d 468, 2006-Ohio-1529, ¶ 49 (10th Dist.). Moreover, the record demonstrates appellants only received payments for the students attending their unapproved locations because appellants filed the invoices for those students through their approved locations at Mansfield and Westlake.
{55} Pursuant to our de novo review, we find no error in the trial court‘s interpretation of
{56} Appellants’ second assignment of error asserts that the trial court erred in concluding that ODE had not been unjustly enriched.
{57} To prevail on a claim for unjust enrichment, a plaintiff must prove the following: (1) the plaintiff conferred a benefit on the defendant, (2) the defendant had knowledge of such benefit, and (3) the defendant retained the benefit under
{58} “A claim for unjust enrichment arises not from a true contract, but from a contract implied in law, or quasi contract,” and accordingly the ” ‘doctrine of unjust enrichment provides an equitable remedy.’ ” Grothaus v. Warner, 10th Dist. No. 08AP-115, 2008-Ohio-6683, ¶ 8, quoting Banks v. Nationwide Mut. Fire Ins. Co., 10th Dist. No. 99AP-1413 (Nov. 28, 2000). Restitution is the remedy provided ” ‘to prevent one from retaining property to which he is not justly entitled.’ ” San Allen v. Buehrer, 8th Dist. No. 99786, 2014-Ohio-2071, ¶ 114, quoting Keco Industries, Inc. v. Cincinnati & Suburban Bell Tel. Co., 166 Ohio St. 254, 265 (1957). See also San Allen at ¶ 123 (noting that “Ohio courts have long recognized thаt persons from whom funds have been unlawfully collected and retained by the state may be entitled to equitable restitution“).
{59} Appellants assert that, because they provided “ASP services to twenty-[four] (24) Ohio students,” they relieved “the school districts to which each student belonged from having to providing [sic] ASP services for each student‘s IEP.” (Appellants’ brief at 54-55.) Appellants contend the benefit they conferred on ODE was ODE‘s receipt of “a credit toward monies paid to that district, or rather, * * * allowing the ODE to be relieved of having to pay a certain amount of money for each of the twenty-four (24) students to districts to which they belonged.” (Appellants’ brief at 55.) The record does not support appellants’ contention.
{60}
{61} Parents of some of the affected children filed affidavits averring that their child‘s “application for [ASP] services * * * was approved.” (Appellants’ Mot. for Summ. Jgmt. at exhibit E.) Thus, the children‘s scholarships were approved, but ODE did not release the scholarship funds to appellants. Because the children would have been counted in the average daily membership formula for their respective school districts, state funds would have been allocated to the children‘s school districts’ state aid accounts. However, there is nothing in the record demonstrating whether the scholarship funds at issue remained with the school districts, or whether ODE removed the funds from the districts and retained the funds.
{62} Notably, at oral argument before this court, appellants’ attorney admitted there was no evidence in the record depicting ODE‘s finances. Appellants had the burden to establish their unjust enrichment claim by a preponderance of the evidence. San Allen at ¶ 115. By failing to place evidence in the record demonstrating ODE removed and retained the scholarship funds from the affected school districts, appellants failed to establish they conferred a benefit on ODE.
{63} Furthermore, “a claim for unjust enrichment will not lie when the claimed entitlement to compensation is based upon a contract between the parties.” Parahoo v. Mancini, 10th Dist. No. 97APE08-1071 (Apr. 14, 1998). Unjust enrichment “does not apply when a contract actually exists; it is an equitable remedy applicable only when the court finds there is no contract.” Corbin v. Dailey, 10th Dist. No. 08AP-802, 2009-Ohio-881, ¶ 10. See also Daily Servs., LLC v. Ohio Bur. of Workers’ Comp., 10th Dist. No. 13AP-509, 2013-Ohio-5716, ¶ 23.
{64} In their motion for summary judgment, appellants asserted the “contract or agreement between the parties” was the
{65} Lastly, appellants note “ODE approved the St. Clairsville location * * * in April 2014 for FY 2014 but failed to pay SLG for the provided services.” (Appellants’ brief at 56.) St. Clairsville became a registered private provider on April 15, 2014, and appellants’ claims for payment included claims for students that attended St. Clairsville during April, May, and June 2014. (See First Amended Complaint at exhibit A.)
{66} While appellants argue ODE failed to pay for the services appellants provided after St. Clairsville became a registered private provider, appellants did not assign this argument as an assignment of error. Pursuant to
{67} Based on the foregoing, appellants’ second assignment of error is overruled.
{68} Having overruled appellants’ first and second assignments of error, we affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
SADLER, J., concurs.
LUPER SCHUSTER, J., concurs in judgment only.