Sunshine Childcare center, LLC v. Ramsey CountySunshine Childcare center, LLC v. Ramsey County
- Reporters:
- ,
- Before:
- Larson, Reyes, Ede
A childcare provider does not possess a protected property interest in suspended Child Care Assistance Program payments or a revoked Child Care Assistance Program authorization when the agency temporarily suspends payment and authorization during a
OPINION
LARSON, Judge
Appellants Sunshine Childcare, LLC, City Child Care Center, LLC, and Angel‘s Fun Area, LLC, are childcare providers who previously served families qualifying for the Child Care Assistance Program (CCAP). In August 2022, the Minnesota Bureau of Criminal Apprehension (BCA) executed search warrants on appellants’ childcare centers based on alleged probable cause that appellants submitted inaccurate attendance records. About a week later, respondent Minnesota Department of Human Services (DHS) sent letters to appellants temporarily suspending CCAP payments and temporarily revoking appellants’ authorization to receive CCAP payments. Approximately six months later, BCA and DHS continued to have open investigations, but neither had brought any legal action against appellants. In response, appellants sued DHS, respondent Jodi Harpstead individually and in her capacity as commissioner of human services, respondent Hennepin County, and defendant Ramsey County,1 challenging DHS‘s temporary decisions. The district court dismissed appellants’ complaints for failure to state a claim upon which relief could be granted. Appellants argue the district court erred in dismissing their procedural-due-process claims because the district court applied an erroneous interpretation of the relevant statutory framework. For the reasons set forth below, we affirm.
The legislature adopted CCAP to expand access to affordable childcare by paying childcare costs for children of income-eligible families. See
Appellants’ complaints alleged that, prior to September 1, 2022, appellants provided authorized CCAP services to qualified families. In late August 2022, BCA obtained and executed warrants to search appellants’ childcare centers. The search warrants were based on alleged probable cause that appellants submitted inaccurate attendance records. Pursuant to the warrants, BCA officers and CCAP personnel seized records and computers from appellants.
On September 1, 2022, appellants received letters from DHS titled “Temporary Payment Stop,” which informed them that:
[CCAP] will temporarily stop paying [appellants], including any unpaid bills, until further notice AND all authorizations for CCAP [will] be closed or denied because:
- Your program intentionally gave materially false information on billing forms and/or provided false attendance records. (
[Minn. Stat. § 119B.13, subd.] 6(d)(1) or (2) ); and/or- Your program meets criteria for temporary payment suspension under [
Minn. Stat. § 245E.02 .]
On October 20, 2022, DHS responded to appellants in writing, citing the procedure in
On December 12, 2022, appellants sent a letter to DHS demanding that it commence an administrative-disqualification action against appellants. DHS responded on December 20, 2022, informing appellants that it conducted an administrative review under section 119B.161, subdivision 4, on December 13, 2022. In this letter, DHS informed appellants that it was not obligated to commence an administrative-disqualification action while there was an ongoing criminal investigation.
On March 7, 2023, appellants filed civil complaints with the district court. As relevant to this appeal, appellants asserted procedural-due-process claims pursuant to
This appeal follows.
ISSUE
Did appellants fail to state a claim upon which relief can be granted because they lack a protected property interest in the temporarily suspended CCAP payments and temporarily revoked CCAP authorization?
ANALYSIS
Appellants challenge the district court‘s decision to dismiss their complaints for failure to state a claim under
“Procedural due process protections restrain government action which deprives individuals of liberty or property interests within the meaning of the due process clause[s] of the
Property interests are protected, but not created, by the Constitution. Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972). Rather, property interests arise from an
DHS has the authority to investigate suspected financial misconduct. See
When DHS temporarily suspends CCAP payments and temporarily revokes CCAP authorization (hereinafter, “temporary suspension and revocation“), the childcare provider has a right to administrative review.
If the agency does not find good cause to cease temporary suspension and/or revocation, the decision remains in effect until:
(1) the commissioner or a law enforcement authority determines that there is insufficient evidence warranting the action and the commissioner does not pursue an additional administrative remedy under chapter 245E or section 256.98; or
(2) all criminal, civil, and administrative proceedings related to the provider‘s alleged misconduct conclude and any appeal rights are exhausted.
Appellants allege that they were denied procedural due process because DHS did not comply with the relevant statutes. According to appellants, section 256.046, subdivision 3(a), required DHS to commence administrative-disqualification proceedings when DHS first accused appellants of intentional program violations—i.e., when it sent the September 1 and September 3, 2022 letters. Appellants assert that DHS‘s failure to commence those proceedings means that appellants are currently entitled to—that is, have a property interest in—CCAP payments and CCAP authorization because section 119B.161, subdivision 3, no longer authorizes any temporary actions. In short, appellants assert that the statutes do not permit an interim period of investigation after DHS accuses a childcare provider of intentional program violations.
Appellants’ argument presents a question of statutory interpretation that we review de novo. Cocchiarella v. Driggs, 884 N.W.2d 621, 624 (Minn. 2016). When interpreting
We disagree with appellants that section 256.046, subdivision 3(a), required DHS to commence an administrative-disqualification proceeding immediately upon accusing appellants of intentional program violations for two reasons. First, the statute governing investigations provides that administrative disqualification is just one of several sanctions DHS may impose when a preponderance of the evidence shows an intentional program violation. See
Respondents argue that, because the statutes permit temporary suspension and revocation during a pending investigation, appellants have failed to allege constitutionally protected property interests on which to base their procedural-due-process claims. Appellants disagree, arguing that even if the statutes allow for some period of investigation—and we conclude they do—the length of the investigation in this case violates their right to due process.
We agree with respondents that appellants have not alleged a protected property interest because the temporary suspension and revocation are indisputably tied to a pending investigation. As set forth above, the statutes governing the CCAP program allow temporary suspension and revocation during a pending investigation. See
Our nonprecedential decision in Shire v. Harpstead, No. A19-0807, 2019 WL 7287088 (Minn. App. Dec. 30, 2019), rev. denied (Minn. Mar. 25, 2020) is instructive.5 There, applying the relevant statute, DHS suspended Medicaid payments during a pending fraud investigation, but did not prohibit the providers from serving clients. Id. at *4. Appellants sued DHS arguing the suspension of Medicaid payments “deprived them of their protected interests without due process.” Id. at *2. The district court granted DHS‘s motion to dismiss, and we affirmed, concluding a medical-care provider did not have a protected property interest in the temporarily suspended Medicaid payments. Id. at *1-2. Citing federal authorities, we noted that numerous courts have rejected the argument that a temporary suspension from a government program during a fraud investigation implicates a protected property right. Id. at *4-5 (citing Personal Care Prods., Inc. v. Hawkins, 635 F.3d 155, 159 (5th Cir. 2011); Guzman v. Shewry, 552 F.3d 941, 953 (9th Cir. 2009);
Similarly here, the Minnesota statutes specifically allow temporary suspension and revocation during a pending investigation.6
We note that, at its core, appellants’ claim is that the length of this investigation has converted a temporary decision into a permanent loss of CCAP payments and CCAP authorization. Like in Shire, we do find it troubling that the investigations in this matter have taken over a year with no concrete results. But unlike other investigations under the CCAP program, see, e.g.,
Because appellants lack a protected property interest in temporarily suspended CCAP payments and temporarily revoked CCAP authorization during a pending investigation, the district court correctly dismissed appellants’ procedural-due-process claims.
Affirmed.