Opinion ID: 1622303
Heading Depth: 1
Heading Rank: 8

Heading: whether the chancery court erred in upholding the division of medicaid's decision to award its fiscal agent contract to consultec.

Text: A. Substantial Evidence ¶ 32. EDS argues Wetherbee acted as DOM's executive director and on Consultec's behalf within the same particular matter in accordance with 18 U.S.C. § 207(a)(1) [9] and 5 C.F.R. § 2637.201. [10] EDS also contends the 1999 and 2000 RFPs operated as a single decision to acquire services of a contractor. EDS further argues that DOM did not prepare an APD or an APD update for HCFA approval because there was no new or substantially changed project. EDS asserts because of these facts, Consultec was a non-responsive offeror causing the contract to be void. ¶ 33. DOM argues this Court may not disturb the decision of the chancery court if it is valid and fairly debatable. DOM also contends substantial evidence supports the chancellor's determination that the 1999 and 2000 procurements were distinct and separate. ¶ 34. The chancery court concluded that DOM's award of the fiscal agent contract to Consultec was supported by substantial evidence. The chancery court also determined the PSCRB thoroughly considered the ethical issues raised by EDS. In finding those issues were fairly debatable, the chancery court found the decision to award the contract to Consultec was not arbitrary or capricious. ¶ 35. The chancery court found the use of the same APD was not a fatal error which would require the contract to be cancelled. Even though Wetherbee participated in the preparation of the 1999 APD and the subsequent issuance of the 1999 RFP, the chancellor could find no evidence that she either participated in the 2000 RFP or attempted to influence DOM employees regarding the 2000 RFP. The chancery court, therefore, determined the 1999 and 2000 RFPs to be separate and distinct. ¶ 36. This Court accords great deference to an administrative agency's construction of its own rules and regulations and the statutes under which it operates. Melody Manor Convalescent Ctr. v. Miss. State Dep't of Health, 546 So.2d 972, 974 (Miss.1989); Grant Ctr. Hosp. v. Health Group of Jackson Miss., Inc., 528 So.2d 804, 808 (Miss.1988); State Tax Comm'n v. Edmondson, 196 So.2d 873 (Miss.1967); Winston County v. Woodruff, 187 So.2d 299 (Miss.1966). See also Briscoe v. Buzbee, 163 Miss. 574, 143 So. 407 (1932). The burden of proof rests with the party challenging the actions of an administrative agency. Melody Manor Convalescent Ctr., 546 So.2d at 974. We have also held that we will not substitute our judgment for the judgment of an administrative agency when the action of the agency is not arbitrary or unreasonable, and when it is supported by substantial evidence. The only grounds for overturning administrative agency action by the appellate process is that the state agency has acted capriciously, unreasonably, arbitrarily; has abused its discretion or has violated a vested constitutional right of a party. See State Board of Psychological Examiners v. Coxe, 355 So.2d 669 (Miss.1978); Mainstream Savings and Loan Association v. Washington Federal Savings and Loan Association, 325 So.2d 902 (Miss. 1976); First National Bank of Vicksburg v. Martin, 238 So.2d 856 (Miss. 1970); Eidt v. City of Natchez, 421 So.2d 1225 (Miss.1982); City of Meridian v. Hill, 447 So.2d 641 (Miss.1984). Melody Manor Convalescent Ctr., 546 So.2d at 974. In Dep't of Health v. S.W. Miss. Reg'l Med. Ctr., 580 So.2d 1238 (Miss.1991), this Court stated: An act is arbitrary when it is done without adequately determining principle; not done according to reason or judgment, but depending upon the will alone,absolute in power, tyrannical, despotic, non-rational,implying either a lack of understanding of or a disregard for the fundamental nature of things.... An act is capricious when it is done without reason, in a whimsical manner, implying either a lack of understanding of or a disregard for the surrounding facts and settled controlling principles. Id. at 1240 (quoting In re Housing Auth. of City of Salisbury, 235 N.C. 463, 468, 70 S.E.2d 500, 503 (1952)). See also Melody Manor Convalescent Ctr., 546 So.2d at 974; Miss. State Tax Comm'n v. Dyer Inv. Co., 507 So.2d 1287, 1289 (Miss.1987); State Bd. of Psychological Examiners v. Coxe, 355 So.2d 669, 671 (Miss.1978). ¶ 37. Miss.Code Ann. § 25-4-105 states in pertinent part: (2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member. (3) No public servant shall: (e) Perform any service for any compensation for any person or business after termination of his office or employment in relation to any case, decision, proceeding or application with respect to which he was directly concerned or in which he personally participated during the period of his service or employment. ¶ 38. In Huey Stockstill, Inc. v. Hales, 730 So.2d 539 (Miss.1998), an unsuccessful bidder appealed the decision of a County Board of Supervisors. The circuit court determined the Board of Supervisors took all steps necessary to avoid a possible conflict of interest by seeking the advice of the Ethics Commission. Id. at 545. The circuit court concluded there was substantial evidence in the record to support the actions of the Board, thus its actions were not arbitrary or capricious. Id. This Court, finding that the actions of the Board were not arbitrary or capricious, affirmed the judgment of the circuit court. Id. at 545-46. ¶ 39. Accordingly, we are of the firm opinion that the ethical issues raised regarding the award of the fiscal agent contract to Consultec were thoroughly reviewed by both the chancellor and the PSCRB. Those issues were certainly fairly debatable; therefore, DOM's decision to award the contract to Consultec was supported by substantial evidence and was not arbitrary or capricious. B. Violation of Constitutional Right ¶ 40. EDS argues the chancellor erred in dismissing its substantive due process claims pursuant to 42 U.S.C. § 1983. [11] Because EDS sought an injunction to prevent ongoing violations of federal law and because DOM and Lewis-Payton allegedly failed to follow state and federal law, EDS claims DOM and Lewis-Payton are not immune from suit. EDS argues this federal violation stems from the reasonable expectation that DOM would conduct source selection processes fairly and in accordance with state and federal law. EDS contends these violations of essential standards of ethical conduct were under color of state law. Therefore, EDS argues it is entitled to § 1983 injunctive relief pursuant to federally created statutory rights. ¶ 41. DOM argues EDS's substantive due process claim must fail because EDS has no identifiable property interest. DOM likewise asserts that EDS's argument regarding procedural regulations creating a property interest is without merit because property interests are a creature of the state. DOM also argues that DOM and Lewis-Payton are immune from suit in this case because neither DOM nor Lewis-Payton is considered a person under 42 U.S.C. § 1983. DOM likewise asserts that because EDS seeks no prospective injunctive relief based on a violation of federal law, EDS's substantive due process argument is without merit. ¶ 42. The chancellor held EDS's constitutional claim failed because Consultec was not operating under color of state law; it was simply exercising its right as a private business. The chancellor also held EDS failed in proving that it had a property right in the future contract awarded to Consultec. The chancellor determined DOM, the office of the Governor, the State of Mississippi, and Lewis-Payton, in her official capacity, were immune from the suit because suits against state agencies and their officers are suits against the state which are barred by the Eleventh Amendment to the U.S. Constitution. The chancellor also found that DOM, the office of the Governor, the State of Mississippi and Lewis-Payton, in her official capacity, were not persons for the purposes of 42 U.S.C. § 1983. The chancellor found that because DOM was not engaged in any continuing violation of federal law, EDS was not entitled to prospective injunctive relief pursuant to Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). ¶ 43. In Will v. Mich. Dep't of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), the United States Supreme Court held that neither a State nor its officials acting in their official capacities are `persons' under § 1983. See also Lofton v. United States, 785 So.2d 287, 290 (Miss.2001); Wright v. White, 693 So.2d 898, 904-05 (Miss.1997); Lawson v. State, 784 So.2d 983, 984 (Miss.Ct.App.2001). However, if a state official was sued in his or her official capacity for declaratory or injunctive relief, that official would be considered a person under § 1983 because official-capacity actions for prospective relief are not treated as actions against the State. Will, 491 U.S. at 71 n. 10, 109 S.Ct. 2304 (citations omitted). ¶ 44. The United States Supreme Court has established two requirements for a section 1983 cause of action for a due process violation. First, there must be a recognized liberty or property interest within the purview of the Fourteenth Amendment. Bd. of Regents v. Roth, 408 U.S. 564, 571, 92 S.Ct. 2701, 2706, 33 L.Ed.2d 548. 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Second, a violation of the underlying constitutional right under color of state law must be proven. Daniels v. Williams, 474 U.S. 327, 330, 106 S.Ct. 662, 664-88 L.Ed.2d 662 (1986). See also Wood v. Ostrander, 879 F.2d 583, 587 (9th Cir.1989). ¶ 45. In Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976), a former police officer brought action against the city, city manager and chief of police contending that his due process rights were violated when he was discharged from his job. The officer, who held his position at the will and pleasure of the city, argued that his permanent classification gave him a sufficient expectancy of continued employment to constitute a protected property interest. Id. at 344-45, 96 S.Ct. 2074. The Supreme Court found that the officer was not deprived of a property interest protected by the Fourteenth Amendment upon his discharge. Id. at 347, 96 S.Ct. 2074. In the absence of any claim that the public employer was motivated by a desire to curtail or to penalize the exercise of an employee's constitutionally protected rights, we must presume that official action was regular and, if erroneous, can best be corrected in other ways. The Due Process Clause of the Fourteenth Amendment is not a guarantee against incorrect or ill-advised personnel decisions. Id. at 350, 96 S.Ct. 2074. ¶ 46. In Bd. of Regents v. Roth , the Supreme Court held that an untenured state teacher did not have a protected interest or the right to a hearing prior to the non-renewal of his contract. The Supreme Court stated: To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. 408 U.S. at 577, 92 S.Ct. 2701. Similarly, EDS has no protected interest in the renewal or award of DOM's fiscal agent contract. Because EDS has failed to fulfill the first requirement of proving a section 1983 cause of action, this Court need not address the alleged violation of such a property right. ¶ 47. We find that the chancellor correctly determined EDS failed to sufficiently prove it had a property interest in DOM's awarding of the fiscal agent contract. The unilateral expectation of the contract is not sufficient to fulfill the section 1983 requirement. Therefore, we further find that there was no constitutional violation in DOM's award of the fiscal agent contract to Consultec. C. Preliminary Injunction ¶ 48. EDS claims this issue of preliminary injunctive relief is moot. EDS contends the only remaining question regarding an injunction is whether the chancellor should grant a permanent injunction to rescind DOM's contract with Consultec. DOM argues that because this decision was one well within the chancellor's discretion, the chancellor correctly denied EDS's motion for preliminary injunctive relief. DOM also argues EDS should have sought a motion to stay instead of filing for preliminary injunctive relief. ¶ 49. In reviewing the issue of the preliminary injunction, the chancellor correctly applied the four-prong test: (1) whether there exists a substantial likelihood that plaintiff will prevail on the merits; (2) the injunction is necessary to prevent irreparable injury; (3) threatened injury to the plaintiffs outweighs the harm an injunction might do to the defendants; and (4) entry of a preliminary injunction is consistent with the public interest. City of Durant v. Humphreys County Mem'l Hosp./Extended Care Facility, 587 So.2d 244, 250 (Miss.1991). After weighing each factor, the chancellor denied EDS's motion. ¶ 50. While we find from the record that the chancellor appropriately reviewed this issue before this case was appealed and did not abuse her discretion in denying EDS's motion for preliminary injunctive relief, we also agree that EDS is correct in its assertion that the issue of a preliminary injunction is moot.