ORDERS:
ORDER
STATEMENT
OF THE CASE
The
above-captioned matter is before the Administrative Law Court (“ALC or Court”)
pursuant to S.C. Code Ann. § 44-6-190 (2002) and S.C. Code Ann. § 1-23-600(D)
(Supp. 2006) for an administrative appeal. In this matter, Appellant Amor Home
Healthcare Services (“Amor”) challenges the final administrative decision by
Respondent South Carolina Department of Health and Human Services (“Respondent”
or “Department”). The decision terminated the contract between Respondent and Amor
which allows Amor to provide Medicaid home and community-based services. Specifically,
Amor contends that the termination of its contract with the Department was
arbitrary, prejudicial, and without sufficient cause. In response, Respondent argues
that: 1) pursuant to the signed contract between the parties, Respondent may
terminate the contract upon thirty (30) days written notice to Amor; and 2)
there is substantial evidence in the record to support the Respondent’s
termination of the contract.
After
timely notice to the parties, oral arguments were held on November 15, 2007, at
the Court in Columbia, South Carolina. Based upon the Record on Appeal, the
parties’ briefs and oral arguments, and upon the applicable law, I affirm the
final decision of Respondent in this matter.
BACKGROUND
On
October 27, 2006, Amor entered into a contract (the “contract”) with the
Department to provide Medicaid home and community-based waiver services to
eligible persons under Title XIX of the Social Security Act.
The contract became effective on October 27, 2006 and continued through June
30, 2007, subject to any termination provisions within the contract. Amor’s
services include providing daily living assistance to individuals such as
bathing, dressing, helping to prepare meals, feeding, light housekeeping, and
maintaining basic health care needs. Amor’s employees provide these services
to its clients at the client’s home.
On
Friday, January 19, 2007, Thursday, January 25, 2007, and Friday, February 2,
2007, the Department initiated an interim compliance survey (“compliance
survey”) to ensure that Amor, as a new provider of services, was in compliance
with the requirements contained in the contract. During each of these three
visits no Amor employee was available at the office during normal business
hours. On February 15, 2007 – the Department’s fourth attempt to conduct a
compliance survey with Amor – several deficiencies were noted by Department
staff including Amor’s failure to maintain specific records of its employees
within the office. Based upon the deficiencies found, the Department suspended
Amor’s new client referrals by letter dated March 19, 2007.
In the Department’s notification letter, Christie Culbreath (“Ms. Culbreath”),
Director of Amor, was informed that a “special survey” would be conducted by
the Department within ninety days to ensure that Amor had corrected all noted
deficiencies.
Department
staff initiated another compliance survey with Amor on April 10, 2007; however,
no Amor employee was available at the office during normal business hours. As
a result, Department staff left a message with Ms. Culbreath via voicemail to
contact the Long Term Community Care Division (“Division”) of the Department as
soon as possible. Ms. Culbreath complied with this request.
By
certified letter dated April 16, 2007, the Department notified Ms. Culbreath
that it was terminating its contract with Amor pursuant to Article VII, section
K, of the contract. This provision within the contract permitted termination
of the contract by either party within thirty days of receipt of written notice
to the opposing party. Amor received written notice of the termination letter
by the Department on April 17, 2007. Ms. Culbreath, on behalf of Amor,
appealed the Department’s decision on April 18, 2007 to the Department’s
Division of Appeals and Hearings. A hearing was conducted before Hearing
Officer Barry W. Streeter (“Hearing Officer”) on May 7, 2007. Amor was represented
by counsel at the hearing. In his order, the Hearing Officer determined that the
Department terminated its contract with Amor pursuant to Article VII, section K
of the contract, which permits “either party to terminate for any reason or for
no reason at all when thirty days notice is given.” He further determined that
notice was properly given in this matter, and therefore, the contract was
terminated effective May 17, 2007.
On
May 21, 2007, Ms. Culbreath filed a notice of appeal with the Court to
challenge the Department’s decision in this matter.
STANDARD
OF REVIEW
This
Court’s appellate review of final decisions of the Department is governed by
the standards provided in S.C. Code Ann. § 1-23-380 (Supp. 2006). Section
1-23-380 provides that this Court “may not substitute its judgment for the
judgment of the [Respondent] as to the weight of the evidence on questions of
fact.” § 1-23-380(A)(5). However, this Court, pursuant to § 1-23-380(A)(5),
may
reverse or modify the decision if substantial rights of the appellant have been
prejudiced because the administrative findings, inferences, conclusions or
decisions are:
(a)
in violation of constitutional or statutory provisions;
(b)
in excess of the statutory authority of the [Board];
(c)
made upon unlawful procedure;
(d)
affected by other error of law;
(e)
clearly erroneous in view of the reliable, probative, and substantial evidence
on the whole record; or
(f)
arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.
Id.; see
also Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981)
(stating “‘[s]ubstantial evidence’ is not a mere scintilla of evidence nor the
evidence viewed blindly from one side of the case, but is evidence which,
considering the Record as a whole, would allow reasonable minds to reach the
conclusion that the administrative agency reached or must have reached in order
to justify its action.” Id. at 135, 276 S.E.2d at 306. “The findings of the agency are presumed correct and will be
set aside only if unsupported by substantial evidence.” Hull v. Spartanburg
County Assessor, 372 S.C. 420, 424, 341 S.E.2d 909, 911 (Ct. App. 2007)
(citing Kearse v. State Health and Human Servs. Fin. Comm'n, 318
S.C. 198, 200, 456 S.E.2d 892, 893 (1995). Accordingly, “[t]he
‘possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency’s finding from being supported by substantial
evidence.’” Grant v. S.C. Coastal Council, 319 S.C. 348, 461 S.E.2d 388
(1995) (citing Palmetto Alliance, Inc. v. S.C. Pub. Serv. Comm., 282
S.C. 430, 432, 319 S.E.2d 695, 696 (1984)).
Further,
an
abuse of discretion occurs when an administrative agency’s ruling is based upon
an error of law, such as application of the wrong legal principle; or, when
based upon factual conclusions, the ruling is without evidentiary support; or,
when the trial court is vested with discretion, but the ruling reveals no
discretion was exercised; or, when the ruling does not fall within the range of
permissible decisions applicable in a particular case, such that it may be
deemed arbitrary and capricious. State v. Allen, 370
S.C. 88, 94, 634 S.E.2d 653, 656 (2006) (application of standard to circuit
court) (citing Fontaine v. Peitz, 291 S.C. 536, 539, 354 S.E.2d 565, 566
(1987); see also Converse
Power Corp, 350 S.C. 39, 47 564 S.E.2d 341, 345 (Ct. App. 2002) (quoting Deese
v. State Bd. of Dentistry, 286 S.C. 182, 184-85, 332 S.E.2d 539, 541 (Ct. App.
1985) (“A decision is arbitrary if it is without a rational basis, is based
alone on one's will and not upon any course of reasoning and exercise of
judgment, is made at pleasure, without adequate determining principles, or is
governed by no fixed rules or standards.”).
DISCUSSION
In
this appeal, Amor essentially contends that Respondent’s decision to terminate the
contract with Amor was arbitrary and capricious in that Respondent did not
allow Amor to correct any noted deficiencies before terminating the contract. Amor
further argues that Respondent’s decision to terminate its contract with Amor
was clearly erroneous in view of the reliable, probative, and substantial
evidence on the whole record. § 1-23-380(A)(5)(e).
Contract
Termination
Article
VII, sections K and L, of the contract signed between Amor and Respondent
contain the following language:
Either party may
terminate this contract upon providing the other party with thirty (30) days
written notice of termination. Such termination shall be sent by Certified
Mail, Return Receipt Requested, and be effective thirty (30) days after the
date of receipt.
In the event of any
termination of the contract under this Article, the party terminating the
contract shall give notice of such termination in writing to the other party.
Notice of termination shall be sent by certified mail, return receipt
requested. If terminated pursuant to Sections C, D and/or K or this Article,
termination shall be effective thirty (30) days after the date of receipt
unless otherwise provided by law. If terminated pursuant to Sections A, B, E,
F, H, I and/or J of this Article, termination shall be effective upon receipt
of such notice. . . .
(emphasis
added).
In
South Carolina, it is well-established that “[w]hen a
contract is unambiguous, clear, and explicit, it must be construed according to
the terms the parties have used.” Century
Indem. Co. v. Golden Hills Builders, Inc., 348 S.C. 559, 561 S.E.2d 355 (S.C. 2002) (citing B.L.G. Enterprises, Inc. v. First Financial Ins. Co.,
334 S.C. 529, 514 S.E.2d 327 (1999)). Further, “[i]f a contract's
language is clear and capable of legal construction, this Court's function is
to interpret its lawful
meaning and the intent of the parties as found in the agreement. A clear and
explicit contract must be construed according to the terms the parties have
used, with the terms to be taken and understood in their plain, ordinary, and
popular sense.” Gilbert v. Miller, 356 S.C. 25, 30-31, 586 S.E.2d 861, 864 (Ct. App.
2003) (citations omitted). While an unambiguous provision within a contract
may produce a harsh result, “[t]he court must
enforce an unambiguous contract according to its
terms, regardless of the contract's wisdom or folly, or the parties' failure to guard their
rights carefully.” State v. Compton, 366 S.C. 671, 678, 623 S.E.2d 661, 665 (Ct. App. 2005)
(citing Ellis v. Taylor, 316 S.C. 245,
248, 449 S.E.2d 487, 488 (1994)). During the hearing before the Hearing
Officer on May 7, 2007, both parties agreed that this matter would be governed
by the “four corners” of the contract signed between Amor and Respondent.
Further, during oral arguments, Ms. Culbreath acknowledged that she read and
understood the contract – to the best of her ability – and that she signed it
accordingly.
Based
upon the above-referenced authorities, I find that the termination provision of
the contract in this matter is unambiguous and explicit. The provision only
requires a party to provide thirty days written notice to the other party that
it is terminating the contract. The termination provision contains no other
requirements or exceptions, and there is no other provision within the contract
that requires either party to give cause or reason as to why it is exercising
its right to terminate the contract between the parties. While it is
unfortunate that Amor entered into a contract of this magnitude without the
assistance of legal counsel, the Court is constrained in interpreting this
contract based upon the clear meaning of the terms used within the contract.
Accordingly, the Court must affirm the Hearing Officer’s decision in upholding
Respondent’s decision to terminate its contract with Amor based upon the
language set forth in Article VII, section K of the contract between the
parties.
Substantial
Evidence
Appellant
also argues that Respondent’s decision to terminate its contract with Appellant
was arbitrary and capricious. On that assertion, Appellant points to the
letter by Respondent, dated March 19, 2007, which purports to give Appellant
approximately ninety (90) days to correct any noted deficiencies found during a
compliance check by Respondent. Appellant essentially argues that Respondent’s
decision to terminate the contract was substantially motivated by the March 19,
2007 letter, and that Appellant was not given the allotted time to correct the
deficiencies before Respondent terminated the contract.
Accordingly, Appellant argues that Respondent’s decision was arbitrary and
capricious. I disagree. There is substantial evidence in the record to
support Respondent’s decision in this matter – aside from its lawful right to
terminate the contract with Appellant pursuant to Article VII, section K.
As
a condition of licensure by the Department, Amor, a new service Provider with
the Department, must submit to compliance reviews by the Department’s Division
of Community Long Term Care to ensure that Amor is in full compliance with the
contract. One of the provisions within the contract requires Amor to “maintain
an office open and available by telephone during normal business hours and staffed
with qualified personnel.” Appendix A-2, Medicaid Home and Community-Based
Waiver, Scope of Services for Personal Care I Services. On January 19, 2007,
January 25, 2007, and February 2, 2007, Department staff attempted to conduct
compliance reviews with Amor. During each of these three visits, no Amor
employee was available or present at the office during normal business hours.
On April 10, 2007, Department staff attempted to conduct another compliance survey
with Amor to confirm that all deficiencies found during the February 15, 2007
compliance survey had been corrected by Appellant. However, no Amor employee
was present at the office during normal business hours.
On
four separate occasions, Department staff visited Amor’s office during normal
business hours in an attempt to conduct standard compliance reviews but were
unsuccessful as Amor’s office was closed. Appendix A-2 of the signed contract
between the parties clearly requires that Amor maintain an open office during
normal business hours. This was not done. Appellant’s failure to maintain an open
office and staffed with qualified personnel on just one occasion is grounds for
termination within the contract. In fact, during the hearing, Department
staff testified that the decision was made to terminate the contract based on
numerous considerations, including Appellant’s failure to maintain an open
office during normal business hours. Even though Respondent terminated the
contract pursuant to Article VII, section K, there is substantial evidence in
the record to support termination of the contract based upon Amor’s failure to
adhere to conditions of licensure by the Department as set forth in the
contract.
Taken
together with the entire record, Appellant’s contentions do not support a
finding that Respondent’s decision to uphold termination of the contract
between Appellant and Respondent was clearly erroneous or an abuse of
discretion. The record is simply devoid of any evidence that would support
Appellant’s arguments. Accordingly, the record in this matter mandates that Respondent’s
decision be affirmed.
ORDER
For
the reasons set forth above,
IT
IS HEREBY ORDERED that Respondent’s final agency determination upholding
the termination of the contract between Respondent and Amor is AFFIRMED.
AND
IT IS SO ORDERED.
______________________________
Marvin F.
Kittrell
Chief Administrative
Law Judge
December 3, 2007
Columbia, South Carolina
This suspension letter allowed Amor to continue to provide contracted services
with its existing clients; it prohibited Amor from providing contracted
services with new clients.
The Department informed Ms. Culbreath that if the deficiencies were corrected,
the suspension of referrals may be lifted; however, if the deficiencies were
not corrected, the contract would be terminated.
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