Court Opinion

ID: 4018716
Source: CourtListenerOpinion
Date Created: 2016-07-25 20:06:24.528108+00
Date Added: 2024-06-11T12:52:31.278372
License: Public Domain

This opinion will be unpublished and
                         may not be cited except as provided by
                         Minn. Stat. § 480A.08, subd. 3 (2014).

                              STATE OF MINNESOTA
                              IN COURT OF APPEALS
                                    A15-1470

                In the Matter of the Appeal by Kind Heart Daycare, Inc.
                          of the Order of License Revocation

                                          and

                         the Appeal by Yasmin Muhina Salim
                         of the Disqualification Determination

                                          vs.

                          Commissioner of Human Services.

                                  Filed July 25, 2016
                                       Affirmed
                                      Ross, Judge

                       Minnesota Department of Human Services
                           OAH Docket No. 5-1800-31716

Daniel J. Bellig, Joseph A. Gangi, Farrish Johnson Law Office, Chtd., Mankato, Minnesota
(for relators)

Lori Swanson, Attorney General, Kelly L. Meehan, Assistant Attorney General, St. Paul,
Minnesota (for respondent)

      Considered and decided by Connolly, Presiding Judge; Cleary, Chief Judge; and

Ross, Judge.
                         UNPUBLISHED OPINION

ROSS, Judge

       The commissioner of human services determined that Kind Heart Daycare operator

Yasmin Salim scammed the state’s Child Care Assistance Program out of $9,766 using

exaggerated billing statements that falsely represented that the daycare provided child care

for children who were either absent or no longer enrolled. The commissioner disqualified

Salim and revoked the daycare’s license. On Salim’s appeal, we hold that the commissioner

correctly applied the law, did not follow unlawful procedures, and did not act arbitrarily

and capriciously. We therefore affirm Salim’s disqualification and the commissioner’s

decision to revoke the daycare’s license.

                                            FACTS

       The Blue Earth County Sheriff’s Office received reports in spring 2014 that

Mankato daycare Kind Heart Daycare Inc. had submitted bills for Child Care Assistance

Program (CCAP) payments for children as though they were present when in fact they had

been absent. Investigators compared the daycare’s attendance records to the billing forms

that daycare owner Yasmin Salim submitted for assistance funds, and they noticed that for

several months the daycare had erroneously billed for its services.

       The state accused Salim of wrongfully obtaining child care assistance in violation

of Minnesota Statutes section 256.98 (2014), by erroneously billing the assistance program

between January and April 2014. Minnesota Department of Human Services (DHS) staff

attorney Jill Sholts completed a preponderance of evidence (POE) review based on the

investigation, and the department disqualified Salim from providing direct-contact services

                                              2
to persons served by licensed facilities based on its conclusion that she likely violated

section 256.98. The DHS also revoked Kind Heart’s license based on Salim’s controlling

interest in the daycare. The DHS authorized the daycare to continue operating pending a

final order from the commissioner, on specified conditions. The DHS inspected Kind Heart

and supplementally revoked its license, citing 14 violations.

       Salim asked the DHS to rescind or set aside her disqualification. The DHS denied

her request. Salim initiated a contested case hearing, where an administrative-law judge

heard competing testimony about who submitted the erroneous billings. Diane Sorensen,

the former director at the daycare, testified that she was responsible for the billing until two

weeks before she resigned from the daycare on March 14, 2014. Kim Patterson, who

became assistant director when Sorensen departed, testified that she submitted bills only

once after Sorensen left and that Salim otherwise submitted the bills. Salim denied this and

blamed Patterson, claiming that Salim had not submitted any bills.

       The administrative-law judge found that Sorensen alone submitted the daycare’s

bills from October 2013 until March 3, 2014. The judge found some errors in the billing

before Sorensen left but found that the errors increased substantially afterward. He found

that from March 11 through May 13, 2014, the bills were submitted by Patterson and Salim

and that their billing included a “pattern of errors” that “demonstrated incompetence . . .

and dishonesty.” He found that although some of the errors favored the government, “most

occurred in favor of Kind Heart,” conferring a $9,434 windfall for services claimed but

never provided between January 1 and April 30, 2014. The judge recommended that the

commissioner affirm Salim’s disqualification. He considered the credibility of Salim’s

                                               3
claimed innocence and found that it was more likely than not that Salim either submitted

the erroneous bills herself or knew of their inaccuracy but failed to correct them.

       The administrative-law judge deemed the violations “not serious or chronic,”

however, and recommended that Salim’s disqualification be set aside and that the order

revoking Kind Heart’s license be rescinded. He reasoned that Salim “poses no risk of harm

to the children or families” that the daycare serves, emphasizing that the clients have

“unique needs” as Somali immigrant families.

       The parties filed exceptions to the commissioner of human services. The

commissioner issued a final order correcting the administrative-law judge’s findings to

conclude that the total erroneously billed was $9,766. The commissioner adopted the

administrative-law judge’s conclusion that Salim’s disqualification had been appropriate

but rejected his set-aside and revocation-rescission recommendations.

       Salim appeals by writ of certiorari.

                                     DECISION

       Salim challenges the commissioner’s decision to revoke her license and, as a

consequence, Kind Heart’s license. We presume that administrative-agency decisions are

correct and reverse them “only when they are arbitrary and capricious, exceed the agency’s

jurisdiction or statutory authority, are made upon unlawful procedure, reflect an error of

law, or are unsupported by substantial evidence in view of the entire record.” In re Family

Child Care License of Burke, 666 N.W.2d 724, 726 (Minn. App. 2003); see also Minn.

Stat. § 14.69 (2014). We defer to the agency’s fact-findings and will not replace those

findings with our own. In re Rocheleau, 686 N.W.2d 882, 891 (Minn. App. 2004), review

                                              4
denied (Minn. Dec. 22, 2004). By contrast, we are not bound by the agency’s ruling on

matters of law. Burke, 666 N.W.2d at 726. Salim argues that she should not have been

disqualified from providing services, that the commissioner should have set aside the

disqualification, and that the commissioner should not have revoked Kind Heart’s license.

We take the arguments in turn.

                                              I

       Salim first challenges her disqualification from providing direct-contact services to

persons served by licensed facilities. The DHS must disqualify a person from licensed

programs if a preponderance of the evidence shows that she has committed a disqualifying

crime. Minn. Stat. § 245C.14, subd. 1(a)(2) (Supp. 2015). The commissioner disqualified

Salim on the basis of theft as defined by Minnesota Statutes section 256.98, subdivision

1(1) and (3) (2014). That statute provides in relevant part as follows:

              A person who commits any of the following acts or omissions
              with intent to defeat the purposes of . . . child care assistance
              programs . . . is guilty of theft[:]
              ...
              (1) obtains or attempts to obtain, or aids or abets any person to
              obtain by means of a willfully false statement or
              representation, by intentional concealment of any material fact,
              or by impersonation or other fraudulent device, assistance or
              the continued receipt of assistance, to include child care
              assistance . . . to which the person is not entitled or assistance
              greater than that to which the person is entitled;
              ...
              (3) obtains or attempts to obtain, alone or in collusion with
              others, the receipt of payments to which the individual is not
              entitled as a provider of subsidized child care, or by furnishing
              or concurring in a willfully false claim for child care assistance.

                                              5
       Salim argues that her disqualification was based on unlawful procedure, is arbitrary

and capricious, is unsupported by substantial evidence, and results from an error of law

concerning her legal entitlement to the absence-day payments. None of these arguments

persuades us to reverse.

Unlawful Procedure

       Salim maintains that the commissioner engaged in unlawful procedure. She says she

was disqualified based merely on probable cause rather than on the higher proof standard

of a preponderance of the evidence. The argument has initial appeal but then fades. Salim

points out that staff attorney Sholts’s POE determination seems to rest entirely on the police

report indicating that Salim was charged with a disqualifying crime. Sholts confirmed this

when she testified at the contested case hearing, revealing that she believes that probable

cause is a higher standard of proof than preponderance of the evidence. Sholts

misunderstands the standards of proof. Probable cause is a lower, not higher standard.

“Unlike proof beyond a reasonable doubt or preponderance of the evidence, probable cause

requires only a probability or substantial chance of criminal activity, not an actual showing

of such activity.” State v. Harris, 589 N.W.2d 782, 790–91 (Minn. 1999) (quotation

omitted).

       Despite Sholts’s misconception, Salim’s argument fails because it ignores the fact

that the administrative-law judge’s findings and the commissioner’s ultimate

disqualification decision rest expressly on the proper preponderance-of-the-evidence

standard of proof. The record indicates that the judge and commissioner’s designee based

their decisions on the evidence presented at the contested case hearing, not on the police

                                              6
report. In fact the administrative-law judge acknowledged Sholts’s error directly and

emphasized that his decision was based on the preponderance of the evidence. Salim has

not demonstrated that the disqualification decision rests on an unlawful procedure.

Arbitrary and Capricious

       Salim argues that the disqualification decision was arbitrary and capricious. An

agency decision is arbitrary and capricious if the agency relied on factors not intended by

the legislature, if an important aspect of the problem was ignored, if the explanation for its

decision is against the evidence, or if its decision is so implausible it could not be attributed

to a difference in view or agency expertise. Minn. Transitions Charter Sch. v. Comm’r of

Minn. Dep’t of Educ., 844 N.W.2d 223, 235 (Minn. App. 2014), review denied (Minn. May

28, 2014). An agency also acts arbitrarily when its decision is the product of its will rather

than its judgment. Id.

       Salim argues that the department acted arbitrarily by having already made up its

mind to disqualify her as early as the POE review. She bases this argument on an email

between DHS attorneys that included the statement, “Be a part of history in the making,”

in the subject line. Context suggests that this statement refers only to the first-of-its-kind

nature of a prosecution for child care-assistance fraud. In the email, a supervising DHS

attorney asks for a volunteer to perform Salim’s POE review because it needed to be done

“right away.” Sholts responded that she would perform the review. Based on the email

exchange Salim asserts, “It is apparent Sholts was simply doing what she was instructed to

do—disqualify [her] ‘right away.’” The email does not support Salim’s conclusion. The

                                               7
email indicates only that a POE review, not a disqualification, needed to occur “right

away.” And Sholts testified that she did not feel pressured to disqualify Salim.

       Salim next points to the supplemental revocation order as evidence that the

commissioner’s decision was not reasoned. Salim identifies nothing in the record to suggest

that the commissioner’s decision lacked deliberation or was based on pretext. She argues

instead that many of the violations cited in the supplemental order were based on

misrepresentations of statements made by daycare staff, and she maintains that the state’s

witnesses provided only conclusory, after-the-fact justifications for the initial, flawed POE

determination. Her arguments implicitly ask us to reweigh the evidence. But it is not our

prerogative to do so, Vargas v. Nw. Area Found., 673 N.W.2d 200, 205 (Minn. App. 2004),

review denied (Minn. Mar. 30, 2004), or to replace the fact-finder’s credibility findings

with our own, Rocheleau, 686 N.W.2d at 891.

       Salim’s most persuasive argument on this issue is her contention that the

commissioner appears to have acted arbitrarily by rejecting one of the administrative-law

judge’s findings without any explanation. But this argument also ultimately fails. An

agency is not bound to an administrative-law judge’s report after a contested-case hearing.

In re Denial of Eller Media Co.’s Applications for Outdoor Advert. Device Permits, 664

N.W.2d 1, 6 (Minn. 2003). And the agency decisionmaker owes no particular deference to

the judge’s findings, conclusions, or recommendations. In re Excess Surplus Status of Blue

Cross & Blue Shield of Minn., 624 N.W.2d 264, 278 (Minn. 2001). But Minnesota Statutes

section 14.62, subdivision 1 (2014), requires an agency to give reasons for modifying an

administrative-law judge’s findings of fact, conclusions, or recommendation, and failure

                                             8
to do so suggests that the agency’s decision was arbitrary and capricious. Bloomquist v.

Comm’r of Nat. Res., 704 N.W.2d 184, 190 (Minn. App. 2005). Salim points out that the

commissioner’s designee failed to explain why he struck the judge’s finding of Salim’s

motive for submitting the false billing statements. In particular, the judge found, “[T]he

purpose of [Salim’s] activity was to aid families in obtaining and keeping access to child

care.” Salim asserts that the finding’s deletion unfairly prevented her from arguing that she

did not act with the intent “to defeat the purpose of . . . child care assistance programs.”

See Minn. Stat. § 256.98, subd. 1.

       Salim is correct that the commissioner did not expressly explain why she struck that

particular finding, but we will not reverse on this ground. The administrative-law judge

more fully characterized the finding of Salim’s intent as her “‘Robin Hood-like’ approach

to her concerns about the County’s handling of child care assistance.” The deleted intent

finding that Salim essentially lied in order to steal money to help her clients does not

contradict her intent to “defeat the purpose of . . . [a] child care assistance program[].” The

two intents are perfectly consistent: deliberately falsifying billing entries in order to draw

aid for services that have not been provided intentionally defeats the program’s purpose of

extending aid for services that have been provided. Even if, in someone’s sense of fairness,

Robin Hood could truly justify stealing from the rich so that he could give to the poor,

Salim fails even the Robin Hood justification; she was essentially skimming from program

funds that were earmarked for the poor, not the rich. Anyway, the commissioner’s designee

implicitly and reasonably explained why he rejected the finding, saying, “Billing for

services that were not provided and billing for days for which Minnesota law prohibits

                                              9
payment defeats, rather than advances, the purposes of the program.” Omitting the

administrative-law judge’s euphemistic explanation of Salim’s intent was not improper. It

was sufficiently explained, and alternatively, the original finding was not material to or

conflicting with the commissioner’s conclusion.

Substantial Evidence

       Salim argues that substantial evidence does not support the commissioner’s

conclusion that she unlawfully obtained child care assistance. Substantial evidence means:

“(1) such relevant evidence as a reasonable mind might accept as adequate to support a

conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more

than any evidence; or (5) the evidence considered in its entirety.” Cannon v. Minneapolis

Police Dep’t, 783 N.W.2d 182, 189 (Minn. App. 2010) (quotation omitted).

       Salim maintains that there is no evidence that she herself submitted the erroneous

bills or that she allowed them to be submitted knowing they were false. She is wrong.

Patterson testified that she submitted only two weeks’ worth of bills after Sorensen’s

departure and that Salim submitted all others. Salim denied submitting any bills and put all

the blame on Patterson. On appeal, we “defer to an agency’s conclusions regarding

conflicts in testimony.” Blue Cross & Blue Shield, 624 N.W.2d at 278. The administrative-

law judge concluded that Salim either submitted the erroneous bills herself or she knew of

the erroneous bills and did nothing to correct them. The commissioner adopted that finding.

The finding is supported amply by documentary and testimonial evidence and by

reasonable inferences from the circumstances. We accept the finding.

                                            10
       Salim argues next that even if she submitted some of the bills, the evidence cannot

support a conclusion that she acted with the specific intent to defeat the purpose of the child

care assistance program. We have already explained why the argument fails. We add here

that, by finding that Salim unlawfully obtained assistance, the commissioner made an

implicit finding of fact that Salim intended fraud. See Welch v. Comm’r of Pub. Safety, 545

N.W.2d 692, 694 (Minn. App. 1996) (stating that when a reviewing court is able to infer

findings from the district court’s conclusions, it is not necessary to remand the case for

additional findings of fact). Salim’s argument that the evidence does not support a finding

that she acted with intent to defraud also overlooks the fact that the commissioner accepted

the judge’s finding that she submitted or knew about the erroneous bills and that intent may

be established by inferences from a person’s actions. State v. Andrews, 388 N.W.2d 723,

728 (Minn. 1986). Our review of the record informs us that substantial evidence allows the

commissioner to conclude that Salim had the requisite intent to defraud. This evidence

consists, among other things, of Salim’s submission of the erroneous bills and the fact that

payments were deposited in her checking account.

       We are similarly unpersuaded by Salim’s contention that the commissioner

incorrectly applied a negligence standard to an intent-based crime. We are satisfied from

the record that the commissioner applied the correct standard.

Legally-Entitled Challenge

       Salim argues that the commissioner erred as a matter of law because she was entitled

to bill 25 absent days per child. Salim is correct that qualifying daycare providers may bill

up to 25 absent days. Minn. Stat. § 119B.13, subd. 7(a) (2014); Minn. R. 3400.110, subp.

                                              11
9 (2015). But providers must mark absences with “A” on the bills they submit or the

statutory cap is unenforceable, and Salim failed to so mark the submissions. Her argument

also overlooks the fact that some of the false entries did not concern children who were

merely absent but who were no longer even enrolled in the daycare.

       Salim maintains that she was “entitled” to the payments regardless of whether

absences were correctly noted in the bills she submitted. She cites this provision of the

CCAP guidance manual:

              Licensed providers may bill CCAP for absent days if:

                  The care was authorized by CCAP and scheduled by the
                   parent, but the child was absent AND
                  It is the provider’s policy to bill all of their families for
                   absent days AND
                  The schedule hours are identified in the provider’s
                   attendance records as an absent day AND
                  The care is available.

The argument is unavailing. It ignores the additional requirement just mentioned, that

providers must accurately designate absences on their billing forms. The manual warns,

“Providers who give false information on a Billing Form . . . could face criminal charges.”

       We reject Salim’s related argument that her obtaining child care assistance funds

with false billing statements does not become unlawful until the 26th payment. She draws

a comparison to prescription fraud and cites a Wisconsin case holding that attempted

fraudulent acquisition of a controlled substance is not a crime until the person who presents

an altered prescription tries to get more medication than is lawful. State v. Henthorn, 581

N.W.2d 544, 546–47 (Wis. Ct. App. 1998), review denied (Wis. June 12, 1998). Even if

we were bound by Wisconsin caselaw (we are not), the cited case is easily distinguished.

                                             12
Salim was not entitled to any payment unless she “[f]ill[ed] in an ‘A’ for any day the child

[was] absent.” And even if she were entitled to 25 days’ worth of payments regardless of

what she indicated in the billing form, some of the false billing in this case included more

than 25 absences.

                                             II

       Salim argues that the commissioner erred by not setting aside her disqualification.

After a request for reconsideration, the commissioner may (not must) set aside a

disqualification if “the individual has submitted sufficient information to demonstrate that

the individual does not pose a risk of harm to any person served by the applicant, license

holder, or other entities as provided in [chapter 245C].” Minn. Stat. § 245C.22, subd. 4(a)

(2014). The disqualified individual bears the burden of showing that she does not pose any

risk of harm. See id. When addressing an individual’s reconsideration request, the

commissioner must consider nine factors. Id., subd. 4(b)(1)–(9) (2014). Any one factor

may be dispositive, but preeminent weight goes to the safety of the individuals served.

Minn. Stat. § 245C.22, subd. 3 (2014).

       The administrative-law judge found that Salim did not pose a risk of harm to the

children served by Kind Heart. The commissioner rejected that finding, concluding that

Salim’s fraudulent billing suggests possible dishonesty in other situations, potentially

exposing the daycare children to harm. The commissioner took a “broader view” than the

judge and found that the county, the department of human services, taxpayers, and families

waiting to receive CCAP assistance were also harmed by the fraudulent billing. Apparently

relying on the first factor, which concerns the nature, severity, and consequences of the

                                            13
events that led to disqualification, id., subd. 4(b)(1), the commissioner determined that

Salim’s fraudulent billing alone was sufficient to reject her set-aside request. The

commissioner further noted that Salim’s fraudulent bills were “recent and numerous,”

totaling $9,766 over a four-month period, and that Salim refused to take responsibility for

her illegal actions.

       Salim counters, maintaining that the commissioner’s conclusion is arbitrary and

unsupported by substantial evidence because no evidence suggests a waiting list for CCAP

assistance. She is mistaken. A human services staff attorney testified that she “believe[d]

there’s a long waiting list for individuals seeking to receive assistance,” and that “if those

funds are being used improperly, the individuals who need them are not able to have access

to them.” The testimony was not refuted and the finding is therefore supported.

       Salim next maintains that the commissioner’s “broader view” of harm fails to give

preeminent weight to the safety of the children served by the daycare and that the human

services attorney who conducted the risk-of-harm assessment did not consider affidavits

from parents attesting to the safety of the daycare. The record informs us that the attorney

did in fact testify that she considered the affidavits. The commissioner’s findings also refer

to the affidavits. And even if the children and families served by Kind Heart saw no harm

and even arguably somehow benefited from Salim’s dishonest billing practices, the

commissioner was not prohibited from considering that funds stolen from the CCAP by

Salim are no longer available for those qualifying families on a waiting list. Salim’s refusal

to take responsibility for the theft also does not suggest that she intends to stop the practice.

We are satisfied that the commissioner appropriately reasoned through the reconsideration

                                               14
request based on the statutory factors, and we repeat that subdivision 4(a) permits, but does

not require, a set aside.

                                             III

       Salim and Kind Heart contend finally that the commissioner erred by revoking Kind

Heart’s license. The commissioner can revoke a facility’s license when the facility or a

controlling individual has been disqualified. Minn. Stat. § 245A.07, subds. 1, 3(a)(2)

(2014). Because the commissioner did not err by disqualifying Salim as the controlling

individual or by declining to set aside her disqualification, the commissioner acted within

her authority by revoking Kind Heart’s license.

       Affirmed.

                                             15