South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Amor Home Healthcare Services vs. SCDHHS

AGENCY:
South Carolina Department of Health and Human Services

PARTIES:
Appellant:
Amor Home Healthcare Services

Respondents:
South Carolina Department of Health and Human Services
 
DOCKET NUMBER:
07-ALJ-08-0225-AP

APPEARANCES:
For the Appellant:
pro se

For the Respondent:
Byron R. Roberts, Esquire
 

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.[1] 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.[2] 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.[3]

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.[4] 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



[1] 42 U.S.C. § 1396(a) (providing for the establishment of federal grants to States for Medical Assistance Programs).

[2] 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.

[3] 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.

[4] Although the Hearing Officer’s Order does not specifically address Appellant’s argument, the Order does state that “[a]ny issues raised in the proceedings or hearings of this case but not addressed in this Order are deemed denied.” Appellant sufficiently raised the issue relating to Respondent’s March 19, 2007 letter during the hearing below as well as on appeal before this Court.


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