Court Opinion

ID: 4469753
Source: CourtListenerOpinion
Date Created: 2020-01-07 13:06:21.379194+00
Date Added: 2024-06-11T08:48:58.350534
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA19-416

                               Filed: 7 January 2020

N.C. Industrial Commission, I.C. No. TA-26087

NANNY’S KORNER DAY CARE CENTER, INC., Plaintiff,

             v.

NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES,
DIVISION OF CHILD DEVELOPMENT, Defendant.

      Appeal by Plaintiff from order entered 21 December 2018 by the North

Carolina Industrial Commission. Heard in the Court of Appeals 17 October 2019.

      Ralph T. Bryant, Jr., for Plaintiff-Appellant.

      Attorney General Joshua H. Stein, by Special Deputy Attorney General Charles
      Whitehead, for Defendant-Appellee.

      COLLINS, Judge.

      Nanny’s Korner Day Care Center, Inc. (“Plaintiff”), appeals from order entered

on 21 December 2018 by the North Carolina Industrial Commission dismissing

Plaintiff’s claim against the North Carolina Department of Health and Human

Services, Division of Child Development (“Defendant”), under the North Carolina

Tort Claims Act. Because Plaintiff’s claim is barred by the statute of limitations, we

affirm.
                   NANNY’S KORNER DAY CARE CTR. V. N.C. DHHS

                                  Opinion of the Court

                       I. Factual and Procedural History

      This is the third time the parties have been before this Court in the last five

years. A detailed factual history of this case can be found at Nanny’s Korner Day

Care Ctr., Inc. v. N.C. Dep’t of Health & Human Servs., 825 S.E.2d 34 (N.C. Ct. App.

2019) (“Nanny’s Korner II”). The facts relevant to this case are as follows:

      On 23 April 2010, Defendant notified Plaintiff that Defendant had decided to

issue administrative disciplinary action based on substantiation by the Robeson

County Department of Social Services that child abuse had occurred at Plaintiff’s day

care facility. Defendant then issued a notice of administrative action to Plaintiff on

15 June 2010, invoking disciplinary action. Plaintiff appealed Defendant’s decision

through the administrative appeal process, first to the Office of Administrative

Hearings, then to Wake County Superior Court, and then to this Court. On 20 May

2014, this Court held that Defendant had violated Plaintiff’s rights by not conducting

an independent investigation into the alleged child abuse, and reversed Defendant’s

decision. Nanny’s Korner Care Ctr. v. N.C. Dep’t of Health & Hum. Servs., 234 N.C.

App. 51, 64, 758 S.E.2d 423, 431 (2014) (“Nanny’s Korner I”).

      On 23 January 2017, Plaintiff filed a claim with the Industrial Commission

under the Tort Claims Act, seeking $600,000 in compensatory and consequential

damages due to Defendant’s negligent failure to conduct an independent

investigation prior to initiating disciplinary action. Defendant responded by filing a

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                                   Opinion of the Court

motion to dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure

on the ground, inter alia, that Plaintiff failed to file the tort affidavit within three

years of Defendant’s 15 June 2010 administrative action, as required by the Tort

Claims Act. After a hearing on 19 April 2017, Deputy Commissioner Robert J. Harris

issued an order on 4 May 2017, dismissing Plaintiff’s claim with prejudice because

the claim was barred by the statute of limitations. Plaintiff appealed to the Full

Commission (the “Commission”).

      The Commission conducted a hearing on 18 October 2017. On 21 December

2018, the Commission issued an order dismissing Plaintiff’s claim with prejudice,

holding that the claim was barred by the statute of limitations. The Commission

concluded that “the time period for Plaintiff to bring a claim for damages under the

Tort Claims Act began on 15 June 2010 and its Affidavit, filed on 23 January 2017,

fell outside of the Tort Claims Act’s three-year statute of limitations.”

      Plaintiff timely filed notice of appeal to this Court.

                                    II. Discussion

      Plaintiff argues that the Commission erred by dismissing Plaintiff’s claim as

barred by the Tort Claims Act’s three-year statute of limitations. Plaintiff contends

that (1) the statute of limitations was tolled while Plaintiff exhausted administrative

remedies; (2) the Court of Appeals’ May 2014 decision in Nanny’s Korner I signified

Plaintiff’s exhaustion of administrative remedies and, accordingly, marked the

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                   NANNY’S KORNER DAY CARE CTR. V. N.C. DHHS

                                  Opinion of the Court

beginning of the three-year limitations period; and (3) therefore, Plaintiff’s January

2017 claim was timely filed. We disagree.

      We review a decision by the Commission under the Tort Claims Act “for errors

of law only under the same terms and conditions as govern appeals in ordinary civil

actions, and the findings of fact of the Commission shall be conclusive if there is any

competent evidence to support them.” N.C. Gen. Stat. § 143-293 (2018). When

considering a motion to dismiss under Rule 12(b)(6) of the Rules of Civil Procedure,

“[t]he question for the court is whether, as a matter of law, the allegations of the

complaint, treated as true, are sufficient to state a claim upon which relief may be

granted under some legal theory . . . .” Grant Const. Co. v. McRae, 146 N.C. App. 370,

373, 553 S.E.2d 89, 91 (2001) (internal quotation marks and citation omitted). We

review an order allowing a motion to dismiss for failure to state a claim de novo.

Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4 (2003).

      “The statute of limitations may be raised as a defense by a Rule 12(b)(6) motion

to dismiss if it appears on the face of the complaint that such a statute bars the

plaintiff’s action.” Laster v. Francis, 199 N.C. App. 572, 576, 681 S.E.2d 858, 861

(2009) (citation omitted). After a defendant has raised this affirmative defense, the

burden shifts to the plaintiff to prove that he commenced the action within the

statutory period. Id.

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                   NANNY’S KORNER DAY CARE CTR. V. N.C. DHHS

                                   Opinion of the Court

      The Tort Claims Act prescribes a three-year statute of limitations for

negligence claims. N.C. Gen. Stat. §143-299 (2018).

             The accrual of the statute of limitations period typically
             begins when the plaintiff is injured or discovers he or she
             has been injured. However, when the General Assembly
             provides an effective administrative remedy by statute,
             that remedy is exclusive and the party must pursue and
             exhaust it before resorting to the courts. Nevertheless, the
             exhaustion of administrative remedies doctrine is
             inapplicable when the remedies sought are not considered
             in the administrative proceeding.            Under those
             circumstances, the administrative remedy will not bar a
             claimant from pursuing an adequate remedy in civil court.

Nanny’s Korner II, 825 S.E.2d at 39-40 (internal quotation marks, brackets, and

citations omitted). See White v. Trew, 217 N.C. App. 574, 579-80, 720 S.E.2d 713, 719

(2011) (holding that plaintiff’s libel claim seeking monetary damages caused by false

statements was not barred by the exhaustion doctrine because the statutory remedy

was to remove statements from employee file, not to award damages), rev’d on other

grounds, 366 N.C. 360, 736 S.E.2d 166 (2013). Money damages are not available

under the North Carolina Administrative Procedure Act (“NCAPA”). Nanny’s Korner

II, 825 S.E.2d at 40.

      In Nanny’s Korner II, Plaintiff made a similar argument to the one it makes in

this case, but in the context of a procedural due process claim filed in the trial court:

             Plaintiff argues the statute of limitations was tolled while
             Plaintiff exhausted its administrative remedies through
             the appeal of Defendant’s final agency decision in Nanny’s
             Korner I.       Plaintiff contends the exhaustion of

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                                   Opinion of the Court

             administrative remedies doctrine required Plaintiff to
             exhaust its remedy through the claim under the NCAPA
             before Plaintiff’s right to bring a constitutional claim arose.
             Accordingly, Plaintiff argues that its cause of action for the
             alleged due process violation did not accrue until 9 June
             2014, when this Court issued its mandate in Nanny’s
             Korner I.

Id.

       We disagreed and concluded that Plaintiff’s constitutional procedural due

process claim was properly dismissed under Rule 12(b)(6) because the statute of

limitations on Plaintiff’s constitutional claim was not tolled while Plaintiff exhausted

its administrative remedies. Id. at 40-41. This Court held that

             the statute of limitations began to run on or about 15 June
             2010, when Defendant issued the written warning to
             Plaintiff. Defendant’s written warning was the “breach”
             that proximately caused—in Plaintiff’s own words—a
             “real, immediate, and inescapable” injury. The statute of
             limitations began to run when Plaintiff was injured or
             discovered the injury, which in this case happened almost
             simultaneously. The statute of limitations was not tolled
             while Plaintiff pursued its administrative remedies in
             Nanny’s Korner I because in that action, Plaintiff sought a
             remedy not available through the NCAPA—namely,
             monetary damages.            In its complaint, Plaintiff
             acknowledges that the NCAPA “does not provide a remedy
             for . . . lost income and profits.” Therefore, the statute of
             limitations was not tolled while Plaintiff pursued its
             administrative remedies, and the filing of the instant claim
             on 22 May 2017 fell outside the statute of limitations.

Id. at 40.

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                   NANNY’S KORNER DAY CARE CTR. V. N.C. DHHS

                                  Opinion of the Court

      The same analysis is applicable in this case. Despite the fact that Plaintiff

brought this action before the Commission under the Tort Claims Act, as opposed to

the superior court with a constitutional claim in Nanny’s Korner II, the statute of

limitations began to run on or about 15 June 2010, when Defendant issued the

written warning to Plaintiff. The statute of limitations was not tolled while Plaintiff

pursued its administrative remedies in Nanny’s Korner I because Plaintiff seeks

monetary damages, a remedy not available under the NCAPA. Accordingly, the filing

of the instant claim on 23 January 2017 fell outside the three-year statute of

limitations prescribed in the Tort Claims Act. See N.C. Gen. Stat. §143-299.

      Plaintiff argues that Abrons Family Prac. & Urgent Care, PA v. N.C. Dep’t of

Health & Human Servs., 370 N.C. 443, 810 S.E.2d 224 (2018), demands application

of the exhaustion of administrative remedies doctrine. In Abrons, plaintiffs—all of

whom were health care providers—filed suit against DHHS and Computer Sciences

Corporation (“CSC”). Id. at 444-45, 810 S.E.2d at 226. DHHS had entered into a

contract with CSC to implement a new Medicaid Management Information System.

Id. at 445, 810 S.E.2d at 226. After the system went live, plaintiffs began submitting

claims to DHHS for Medicaid reimbursements. Id. However, glitches in the software

resulted in delayed, incorrectly paid, or unpaid reimbursements to plaintiffs. Id.

Plaintiffs filed claims—including claims for monetary damages—alleging that CSC

was negligent in its design and implementation of the system and that DHHS

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                   NANNY’S KORNER DAY CARE CTR. V. N.C. DHHS

                                   Opinion of the Court

breached its contracts with each of the plaintiffs by failing to pay Medicaid

reimbursements. Id. Further, plaintiffs alleged that “they had a contractual right to

receive payment for reimbursement claims and that this was ‘a property right that

could not be taken without just compensation.’” Id. Moreover, plaintiffs “sought a

declaratory judgment that the methodology for payment of Medicaid reimbursement

claims established by DHHS violated Medicaid reimbursement rules.” Id. at 445, 810

S.E.2d at 227.

      After receiving adverse determinations on their reimbursement claims,

plaintiffs failed to request a reconsideration review or file a petition for a contested

case, as specifically required by DHHS procedures. Id. at 448, 810 S.E.2d at 228; see

also id. at 446-47, 810 S.E.2d at 227-28 (discussing DHHS regulations and provisions

of the NCAPA which specifically require Medicaid providers to request a

reconsideration review and file a petition for a contested case hearing before

obtaining judicial review). As a result, our Supreme Court held that the trial court

correctly dismissed plaintiffs’ claims because they failed to exhaust their

administrative remedies and failed to demonstrate that such exhaustion would be

futile. Id. at 453, 810 S.E.2d at 232. The Court explained: “Because resolution of

the reimbursement claims must come from DHHS, simply inserting a prayer for

monetary damages does not automatically demonstrate that pursuing administrative

remedies would be futile. Notwithstanding the claims that are outside the relief that

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                                   Opinion of the Court

can be granted by an administrative law judge, the reimbursement claims ‘should

properly be determined in the first instance by the agenc[y] statutorily charged with

administering’ the Medicaid program.” Id. at 452, 810 S.E.2d at 231 (quoting Jackson

ex rel. Jackson v. N.C. Dep’t of Human Res., 131 N.C. App. 179, 188-89, 505 S.E.2d
899, 905 (1998)).

      In this case, Plaintiff has filed a claim with the Commission under the Tort

Claims Act, seeking compensatory and consequential damages due to Defendant’s

negligence. Unlike the relevant claims in Abrons, this claim is exclusively one for

negligence and, therefore, it is not a mere “insertion of a prayer for monetary

damages” into what is otherwise a claim that is primarily administrative. Id. See

Intersal, Inc. v. Hamilton, 834 S.E.2d 404, 416 (N.C. 2019) (distinguishing Abrons:

“Here, plaintiff has filed a claim against the State Defendants for their alleged

violations of plaintiff's media rights under the 2013 Settlement Agreement. Unlike

the relevant claims in Abrons, this claim is exclusively one for common law breach of

contract and, therefore, it is not a mere ‘insertion of a prayer for monetary damages’

into what is otherwise a claim that is primarily administrative.”) (citation omitted).

                                   III. Conclusion

      Because the statute of limitations on Plaintiff’s claim began to run on or about

15 June 2010, the filing of the instant claim on 23 January 2017 fell outside the three-

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                                 Opinion of the Court

year statute of limitations prescribed by the Tort Claims Act. Accordingly, we affirm

the Commission’s order dismissing Plaintiff’s claim with prejudice.

      AFFIRMED.

      Judges ARROWOOD and HAMPSON concur.

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