Shenandoah Center, Inc. v. State of W. Va., 93-1489
| Decision Date | 08 February 1994 |
| Docket Number | No. 93-1489,93-1489 |
| Citation | 30 F.3d 130 |
| Parties | NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. SHENANDOAH CENTER, INCORPORATED, t/a Concord, Plaintiff-Appellant, v. STATE of West Virginia; Georgew. Lilly, Jr.; John Russell, Defendants-Appellees. . Argued: |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeal from the United States District Court for the Northern District of West Virginia, at Martinsburg. William M. Kidd, Senior District Judge. (CA-91-46-M)
Jack L. Gould, Fairfax, Virginia, for Appellant.
Marvin Richard Dunlap, Dickie, McCamey & Chilcote, P.C., Pittsburgh, Pennsylvania, for Appellees.
Jeffrey A. Holm, strand, Rhonda L. Wade, Bachmann, Hess, Bachmann & Garden, Wheeling, West Virginia, for Appellees.
Before PHILLIPS and NIEMEYER, Circuit Judges, and ELLIS, United States District Judge for the Eastern District of Virginia, sitting by designation.
Shenandoah Center, Inc., t/a Concord ("Concord"), a private residential behavioral health center licensed by the State of West Virginia, brought this 42 U.S.C. Sec. 1983 action against two state officials in connection with the threatened revocation and the eventual renewal of its operating license. Concord alleged that improper actions of state officials deprived it of a property interest in its operating license and a liberty interest in its reputation as a health care provider in violation of its Fourteenth Amendment due process rights. The district court granted the defendants' motion to dismiss on the ground that Concord suffered no deprivation of either a property or liberty interest. On appeal, Concord challenges only the district court's dismissal of its substantive due process claim alleging wrongful deprivation of a property interest. We affirm.
Concord's facility, located in Yellow Springs, West Virginia, was granted an initial two-year operating license in 1986 by what is now the Division of Health in West Virginia's Department of Health and Human Resources. Concord's license was renewed without incident in 1988 for another two-year period. On October 21, 1989, however, an investigation team led by John Russell, an employee of the Division of Health, arrived unannounced at Concord to investigate charges made against the facility. 1 Concord alleges that the officials refused, in violation of state law, to reveal the substance of the complaint lodged against it. The investigation continued during the next two days.
Three days after the conclusion of the on-site investigation, the State filed a petition in state court seeking access to certain of Concord's records. On October 31, 1989, George Lilly, then-acting director of the Division of Health, advised Concord that its license would be revoked effective November 6, 1989, primarily because it refused to permit the Division of Health to review its records. Lilly also informed Concord that it was entitled to a hearing challenging the revocation.
Concord requested a hearing, which was set for November 6, the date of announced revocation. While the hearing was pending, Lilly notified officials of Maryland, the District of Columbia, and Fairfax County, Virginia, as well as facilities in West Virginia, that Concord was under criminal investigation on allegations of mismanagement, client abuse, medical neglect, and license violations, and that its license would be revoked and the facility closed on November 6th. These jurisdictions, which had citizens who were patients at Concord, were told they would need to find other housing for their residents.
At the November 6th hearing, Concord and the State reached an agreement staying revocation of Concord's license and limiting the scope of the state investigation. The State also agreed to inform Concord of the specific substantive charges against it and to notify the various officials and facilities mentioned above that Concord was to remain open. The agreement was incorporated in a consent order filed in state court.
A second state court hearing was set for December 14, 1989, to consider the State's request for access to Concord's records. A few days before the hearing, Lilly mailed to officials of Fairfax Co., the District of Columbia and Maryland a 103 page Statement of Deficiencies concerning the Concord facility. Concord was sent a copy of the statement and a letter indicating that the State would seek revocation of its license.
At the December 14 hearing, the state court sealed the Statement of Deficiencies upon the parties' agreement to the appointment of an independent monitor who was to observe Concord for six months and then report to the court. This agreement was incorporated in a Consent Decree entered by the court.
The independent monitor issued a final report in October of 1990. The State nevertheless conducted its own relicensing investigation, as permitted under the Consent Decree, 2 during the period August to December of 1990. After submitting two plans of correction to the State, the second of which the State approved, Concord was issued a full operating license.
Concord then filed this Sec. 1983 action alleging wrongful deprivation of its liberty and property interests, naming as defendants the State of West Virginia, Russell, and Lilly. The claim against the state was dismissed on Concord's concession of its immunity to suit under Sec. 1983. The claims against the individual defendants were dismissed on their Rule 12(b)(6) motions (converted to motions for summary judgment by the court's consideration of materials outside the pleadings in accordance with the Rule). The district court held that, as a matter of law, Concord had suffered no deprivation of a property or liberty interest by virtue of the defendants' actions related to its license. Alternatively, the court found that the defendants had qualified immunity.
This appeal followed. On it, Concord only challenges the dismissal of its claim of deprivation of a property interest without due process.
The critical first questions in this as in any claim of deprivation of property without due process are whether the claimant has a constitutionally protected property interest and, if so, of what nature? Board of Regents v. Roth, 408 U.S. 564, 570-71 (1972). Only if there is such an interest can there be any deprivation, and if there is such an interest, its exact nature may determine whether the challenged state action did operate as a specific deprivation of the interest. Id. at 569-70; Sui v. Johnson, 748 F.2d 238, 244 (4th Cir.1984).
The district court ruled, implicitly assuming arguendo that Concord had a protectible property interest in its state-granted license, that no deprivation of that...
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