___________

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. After

losing in the hearing, his guardian filed a complaint in federal court,

asserting violations of various federal and state laws. The district court

found that the entire complaint was subject to dismissal under the

doctrines of claim and issue preclusion. We affirm in part, reverse in

part, and remand.
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I.

Pathfinder, a ten-bed intermediate care facility for the mentally

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 discharge. An administrative hearing under the authority

of the Arkansas Department of Human Services was held to determine the

propriety of the discharge, after which the hearing officer issued an

opinion justifying his conclusion that Mr. Alexander had been discharged

for "medical reasons" (see Arkansas Office of Long-Term Care Regulation

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. Alexander has a number of health

problems that demand a high level of care, including Down's syndrome with

severe retardation, morbid obesity, severe asthma, and sleep apnea. With

Ms. Alexander's consent, Mr. Alexander was put on a "behavior modification

plan" to control his weight. A few months after Mr. Alexander began to

reside at Pathfinder, an incident occurred that suggested that Mr.

Alexander might have been beaten. Ms. Alexander complained to Pathfinder

but declined to pursue the matter with the police. At some point, Ms.

Alexander told Pathfinder that its employees used abusive language and were

rude to her. Pathfinder officials began taping Ms. Alexander's telephone

calls to Pathfinder with her consent in order to discover which of its

employees might have been abusive. Ms. Alexander later withdrew her

consent, yet Pathfinder continued to tape the calls.

The hearing officer outlined the level of care that Pathfinder had

to provide for Mr. Alexander. A "team" of physicians (including an

attending physician who functioned as a "quarterback") had to be available

to treat Mr. Alexander for a variety of problems. Mr. Alexander had to

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 his sleep. Without consulting a physician, Pathfinder

administrators decided that, based on Mr. Alexander's medical diagnoses and

what they perceived to be his deteriorating condition, he should be

discharged.

In his conclusions of law, the hearing officer decided that the level

of care that Mr. Alexander required was too onerous for Pathfinder

reasonably to provide. Although Pathfinder violated a state law

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 finding that Pathfinder was ill

equipped to care for Mr. Alexander properly. The hearing officer also

concluded that Pathfinder did not discharge Mr. Alexander as retribution

for Ms. Alexander's complaints regarding abuse. He found that despite the

disputes between Ms. Alexander and Pathfinder regarding behavior

modification 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 would

voluntarily remove Mr. Alexander from Pathfinder's care.

Rather than appeal the administrative decision, the plaintiffs filed

a complaint in federal district court against Pathfinder, two Pathfinder

administrators, and Tom Dalton, Director of the Arkansas Department of

Human Services. Mr. Alexander asserted violations of his federal

constitutional rights under the first amendment, in addition to due process

and equal protection claims. He also raised claims under the Americans

with Disabilities Act (ADA), 42 U.S.C. § 12181 et 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 officer

to preside over the original
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administrative proceeding and that it had made time demands on the officer

that interfered with his ability to review the record and make a sound

decision. Ms. Alexander asserted violations of her first and fourteenth

amendment rights, which appear to amount to a claim that Pathfinder

retaliated against her by discharging Mr. Alexander because she exercised

her right of free speech by criticizing Pathfinder.

The district court reviewed University of Tennessee v. Elliott, 478

U.S. 788 (1986), and, after giving plaintiffs an opportunity to distinguish

its holding, found that they were estopped from litigating their claims in

federal court. The court analyzed the plaintiffs' claims under applicable

federal regulations, the ADA, and the Rehabilitation Act, finding that the

hearing officer's factfinding had necessarily resolved 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 preclusion

analysis. We begin with Mr. Alexander's claims. 

Federal courts must give a state agency's findings of fact the same

preclusive effect that those findings would be entitled to in that state's

courts, provided that the agency was acting in a judicial capacity, the

questions litigated were properly before the agency 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 hearing officer considered a great deal of evidence in

the course of the hearing and rendered a written decision including

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 because 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 generated 1,400 pages of transcript and voluminous exhibits.

In Arkansas, issue preclusion bars relitigation of an issue of law

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, was

actually litigated, determined by a valid and final judgment, and its

determination was 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, 51 Ark. App. 139, 142, 912 S.W.2d 11, 13 (1995). The

parties thoroughly litigated the issue of whether the discharge was for

medical reasons and good cause, and the hearing officer concluded that it

was.

As we have noted, the district court believed that the hearing

officer's factfinding necessarily precluded Mr. Alexander's ADA and

Rehabilitation Act claims. See Alexander v. Pathfinder, Inc., 906 F. Supp.

at 507-08. Mr. Alexander offers almost nothing to refute the district

court's conclusions in this regard. He makes no argument that the district

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 factfinding does not undermine his Rehabilition Act claim. The

Rehabilitation Act 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 instances

revealing that Mr. Alexander required a much higher level of care than

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 -- when

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 more than Pathfinder could reasonably be expected to do

rather clearly estops him from asserting a claim under the legal principles

outlined in the Rehabilitation Act.

We hold, however, that one of Mr. Alexander'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 due

process rights in failing to provide a competent hearing officer for the

administrative hearing and in making unreasonable demands on his time. By

hypothesis, the factual basis for this claim could not have been

adjudicated in the administrative hearing because the claim could not have

finally arisen until that hearing was concluded. The district court thus

inappropriately dismissed 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 the

merits of Mr. Dalton's arguments in the first instance. See Moses v. Union

Pacific R.R., 64 F.3d 413, 419 (8th Cir. 1995).

The hearing officer made other factual findings that supported his

conclusion that Pathfinder discharged Mr. Alexander for medical reasons and

for good cause, namely, that Pathfinder did not harass Ms. Alexander to

make her remove her son from Pathfinder, and that the discharge was not in

retaliation for Ms. Alexander's complaints about her son's care. We

believe that these findings preclude further proceedings on Mr. Alexander's

state-law claim for the intentional infliction of emotional distress. The

hearing officer,
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however, made no findings that would appear at this point to preclude his

claims of invasion of privacy, assault, battery, and negligence. The

district court must therefore address these state law claims in some

fashion on remand.

III.

The complaint sets forth a retaliation claim brought by Ms. Alexander

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 administrative

adjudication as a "sponsor" of Mr. Alexander. See Ark. Code Ann. § 20-10-

1005(a)(2)(A). She raised and litigated her retaliation argument in an

effort to prove that Mr. Alexander's discharge was improper, and the

hearing officer made findings of fact and conclusions of law rejecting her

allegations. Hence, issue preclusion prevents her from litigating her

retaliation claim.

IV.

Ms. Alexander argues that the district court impermissibly granted

summary judgment when it dismissed the lawsuit on the basis of the

administrative decision. We find that the district court's use of

materials outside the pleadings in resolving to dismiss the complaint,

without converting the matter to summary judgment, was harmless error

because appellant had an adequate opportunity to respond to the

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, 958

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.
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A true copy.

Attest:

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