___________ No. 95-3680

___________ Elise Alexander, Individually, * and as Guardian of Larry * Appeal from the United States Alexander, an incompetent * District Court for the Eastern person, * District of Arkansas. * Appellant, * * v. * * Pathfinder, Inc.; Colleen * Black, Executive Director of * Pathfinder, Inc., Individually * and in her official capacity; * Cindy Crook, Administrator of * Pathfinder Home, Individually * and in her official capacity; * and Tom Dalton, in his official * capacity as Director of Arkansas * Department of Human Services, * * Appellees. *

___________ Submitted: May 16, 1996 Filed: July 29, 1996

___________ Before McMILLIAN, FAGG, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

___________ MORRIS SHEPPARD ARNOLD, Circuit Judge. This case arises from a state administrative hearing that permitted the discharge of a mentally retarded man from a care facility. Afte r losing in the hearing, his guardian filed a complaint in federal court , asserting violations of various federal and state laws. The district cour t found th at the entire complaint was subject to dismissal under th e doctrines of claim and issue preclusion. We affirm in part, reverse i n part, and remand.

### -2- I. Pathf inder, a ten-bed intermediate care facility for the mentall y retarded (ICF/MR), discharged Larry Alexander after he had resided there for a number of months. His mother and legal guardian, Elise Alexander, objected to the disch arge. An administrative hearing under the authority of th e Arkansas Department of Human Services was held to determine th e proprie tyof the discharge, after which the hearing officer issued a n opinion justifying his conclusion that Mr. Alexander had been discharged for "m edical reasons" ( see Arkansas Office of Long-Term Care Regulatio n 353), and for "good cause" ( see 42 C.F.R. § 483.440(b)(4)).
The hearing officer made extensive findings of fact in support of his decision, and we now summarize them. Mr. Alexan der has a number of health problems that demand a high level of care, including Down's syndrome with severe retardation, m orbid obesity, severe asthma, and sleep apnea. With Ms. Alexander's consent, Mr. Alexander was put o n a "behavior modification plan" t o control his weight. A few months after Mr. Alexander began t o reside at Pathfinder, an incident occurred that suggested that Mr

. Alexander might have been beaten. Ms. Alexander complained to Pathfinder but decl ined to pursue the matter with the police. At some point, Ms

. Alexander told Pathfinder that its employees used abusive language and wer e rude to her. Pathfin der officials began taping Ms. Alexander's telephone calls to Pathfinder with her consent in order to discover which of it s empl oyees might have been abusive. Ms. Alexander later withdrew he r consent, yet Pathfinder continued to tape the calls.

The hear ing officer outlined the level of care that Pathfinder ha d to provid e for Mr. Alexander. A "team" of physicians (including a n attending physician who functioned as a "quarter back") had to be available to trea t Mr. Alexander for a variety of problems. Mr. Alexander had t o take quite a number of

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different medications, and had to be monitored to ensure that he did not cease breathing in hi s sleep. Without consulting a physician, Pathfinder administrators decided that, based on Mr. Alexander's medical diagnoses an d what they perceived to be his deteriorating condition, he should b e discharged.
In his conclusions of law, the hearing officer decided that the level of care that Mr. Alexander required was too onerous for Pathfinde r
reason ablyto provide. Although Pathfinder violated a state la w requirement that it consult a physician before authorizing discharge (it did so later), the hearing officer found that the violation was merely a form of harmless error in light of his own findi ng that Pathfinder was ill equip ped to care for Mr. Alexander properly. The hearing officer als o concluded that Pathfinder did not discharge Mr. Alexander as retribution for Ms. Alexander's complaints regarding abuse. He found that despite the dispu tes between Ms. Alexander and Pathfinder regarding behavio r modifica tion plans and the taping of telephone calls, each had Mr

. Alexander's interests at heart. There was, he said, no scheme or plan by Pathfinder to make life difficult for Ms. Alexander so that she woul d voluntarily remove Mr. Alexander from Pathfinder's care.
Rather than appeal the administrativ e decision, the plaintiffs filed
a complaint in federal district court against Pathfinder, two Pathfinder admini strators, and Tom Dalton, Director of the Arkansas Department o f Human Services. Mr. Alexander asserted violations of his federa l constitutional rights under the first amendment, in addition to due proces s and equal protection claims. He also raised claims under the American s with Disabilities Act (ADA), 42 U.S.C. § 12181 e t seq. , and section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, as well as state-law tort claims for invasion of privacy, assault, battery, intentional infliction of emotional distress, and negligence. The due process claims included an allegation that the state had failed to provide a competent hearing office r to preside over the original

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administrative proceeding and that it had made t ime demands on the officer that interfered with his ability to review the record and make a soun d decision. Ms. Alexander asserted violations of her first and fourteenth amendment rights, which appear to amount to a claim that Pathfinde r retaliated against he r by discharging Mr. Alexander because she exercised her right of free speech by criticizing Pathfinder.

The distr ict court reviewed University of Tennessee v. Elliott , 478 U.S. 788 (1986), and, after giving plaintiffs an opportunity to distinguis h its holding, found that they were estopped from litigating their claims in federal court. The court analyzed the plaintiff s' claims under applicable federal regulations, the ADA, and the Rehabilita tion Act, finding that the hearing officer's factfinding had necessarily re solved factual issues that formed a predicate for those claims in favor of the defendants. Alexander v. Pathfinder, Inc. , 906 F. Supp. 502, 507-08 (E.D. Ark. 1995).

II. The Alexanders have challenged the district court's preclusio n analysis. We begin with Mr. Alexander's claims.

Federal c ourts must give a state agency's findings of fact the same preclusive effect that those findings would be e ntitled to in that state's courts, provided that the agency was acting in a judicial capacity, th e questions litigated were properly before the age ncy judge, and the parties had an adequate opportunity to litigate them. Elliott , 478 U.S. at 797-99 ; Plough v. West Des Moines Community School Dist. , 70 F.3d 512, 515-16 (8th Cir. 1995). There is little doubt that all three of these predicates are present here. The he aring officer considered a great deal of evidence in the course of the hearing and rendered a written decision includin g findings of fact and conclusions of law. The issue of the reasonableness of the discharge was properly before

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the hearing officer b ecause a hearing on that issue is provided for under state law. See Ark. Code Ann. § 20-10-1005(a)(2). The parties had ample chance to put on their proof over the course of a proceeding that lasted six days and generate d 1,400 pages of transcript and voluminous exhibits.

In Arkan sas, issue preclusion bars relitigation of an issue of la w
or fact that was litigated in the first suit when the issue sought to be precluded is the same as that involved in the prior litigation, wa s actuall ylitigated, determined by a valid and final judgment, and it s determinationwas essential to the judgment. Crockett & Brown, P.A. v

. Wilson , 314 Ark. 578, 581, 864 S.W.2d 244, 246 (1993). Under Arkansas law , an unappealed administrative decision is a final judgment. See Pine Bluff Warehouse v. Berry , 5 1 Ark. App. 139, 142, 912 S.W.2d 11, 13 (1995). The par ties thoroughly litigated the issue of whether the discharge was fo r medical reasons and g ood cause, and the hearing officer concluded that it
was.

As we have noted, the district court believed that the hearin g officer's factfinding necessarily precluded Mr. Alexander's ADA an d Rehabilitation Act claims. See Alexander v. Pathfinder, Inc. , 906 F. Supp

. at 50 7-08. Mr. Alexander offers almost nothing to refute the distric t court's conclusions in this regard. He makes no argument that the distric t court's rejection of the ADA claim is unfounded (and we therefore do not address it), and dedicates only one sentence to arguing that the hearing officer's factfindingdoes not undermine his Rehabilition Act claim. The RehabilitationAct requires federally-funded programs to make reasonable accommodations, not fundamental or substantial alterations in the nature of the services that they provide. Alexander v. Choate , 469 U.S. 287, 299 (1985)

. The hearing officer's findings are replete with instance s
revea ling that Mr. Alexander required a much higher level of care tha n Pathfinder could reasonably provide. The hearing officer concluded that Mr. Alexander's "physical problems

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are many and interrelated. His weight problem, sleep apnea, reflux , asthma , environmental allergies and Barrett's esophagitis -- whe n considered in toto and in conjunction with his recent medical history -- pose unique daily living problems for which an ICF/MR is ill-equipped to handle." We believe that the hearing officer's findings that caring for Mr. Alexander was mor e than Pathfinder could reasonably be expected to do rather clearly estops him from asserting a claim under the legal principle s outlined in the Rehabilitation Act.

We hold, however, that one of Mr. Al exander's federal claims was not and could not have been litigated at the hearing, namely, the claim that the state (in the person of Mr. Dalton) violated Mr. Alexander's du e process rights in failing to provide a competent hearing officer for the administrative hearing and in making unreasonabl e demands on his time. By hy pothesis, the factual basis for this claim could not have bee n adjudicated in the administrative hearing becaus e the claim could not have finally arisen until that hearing was concluded. The district court thus inappropriatelydismissed the claim against Mr. Dalton when it dismissed the entirety of plaintiffs' case on the basis of preclusion. The district court, moreover, never considered Mr. Dalton's separately-made arguments for dismissal. We believe that the district court should pass on th e merits of Mr. Dalton's arguments in the first instance. See Moses v. Unio n Pacific R.R. , 64 F.3d 413, 419 (8th Cir. 1995).

The hearing officer made other factual findings that supported hi s conclusion that Pathfinder discharged Mr. Alexander for medical reasons an d for good cause, namely, that Pathfinder did not harass Ms. Alexander t o make her remove her son from Pathfinder, and tha t the discharge was not in reta liationfor Ms. Alexander's complaints about her son's care. W e believe that these findings preclude further proceedings on Mr. Alexander' s state-law claim for the intentional infliction o f emotional distress. The hearing officer,

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however, made no find ings that would appear at this point to preclude his claims of invasion of privacy, assault, battery, and negligence. Th e dist rict court must therefore address these state law claims in som e fashion on remand.

III. The complaint sets forth a retaliation claim brought by Ms. Ale xander individually. It appears that she took an active role in her son's case and it is reasonable to treat her as a party to the administrativ e adjudication as a "sponsor" of Mr. Alexander. S ee Ark. Code Ann. § 20-10- 100 5(a)(2)(A). She raised and litigated her retaliation argument in a n effo rt to prove that Mr. Alexander's discharge was improper, and th e hearing officer made findings of fact and conclu sions of law rejecting her allega tions. Hence, issue preclusion prevents her from litigating he r retaliation claim.

IV. Ms
. Alexander argues that the district court impermissibly grante d
summaryjudgment when it dismissed the lawsuit on the basis of th e administ rative decision. We find that the district court's use o f materi als outside the pleadings in resolving to dismiss the complaint , withou t converting the matter to summary judgment, was harmless erro r becaus e appellant had an adequate opportunity to respond to th e contemplated dismissal, and the existence of the administrative decision was not disputed and it was part of the record. See Dorothy J. v. Little Rock School Dist. , 7 F.3d 729, 733 n. 3 (8th Cir. 1993); Gibb v. Scott , 95 8 F.2d 814, 816 (8th Cir. 1994). For the foregoing reasons, we affirm the judgment of the district court in part, reverse it in part, and remand for further proceedings consistent with this opinion.

### -8- A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.