Boswell, Inc. v. Harkins

• Decision Date: 27 February 1982
• Docket Number: No. 52737,52737
• Citation: 640 P.2d 1202,230 Kan. 610
• Parties: BOSWELL, INC., d/b/a Reno County Adult Care Home, Appellant, v. Joseph F. HARKINS, Secretary Kansas Department of Health and Environment, Appellee.
• Court: Kansas Supreme Court

Page 1202

640 P.2d 1202

230 Kan. 610

BOSWELL, INC., d/b/a Reno County Adult Care Home, Appellant, v. Joseph F. HARKINS, Secretary Kansas Department of Health and Environment, Appellee.

No. 52737.

Supreme Court of Kansas.

Feb. 27, 1982.

Syllabus by the Court

1. Neither the district court nor the appellate court has the liberty to reweigh the evidence and substitute its judgment for that of the administrative agency.

2. K.S.A. 39-931 (Ensley) specifically limits the district court's authority to a determination whether the administrative order entered was arbitrary, unlawful, or unreasonable. The appellate court then, to determine whether the district court properly limited its scope of review, makes the same review of the administrative agency's action.

3. Ordinarily, an issue that has not been raised in the lower court cannot be raised for the first time on appeal.

4. In an appeal from a decision of the district court upholding an order of the Secretary of the Kansas Department of Health and Environment to deny licensure and certification to an intermediate nursing care home, the record is examined and it is held : (1) The action of the administrative agency was neither arbitrary, unlawful, nor unreasonable, and (2) the decision of the district court is upheld, all as more particularly related in the opinion.

Robert L. Taylor, Hutchinson, argued the cause and was on the brief, for appellant.

Emily E. Cameron, of Kansas Dept. of Health and Environment, Topeka, argued the cause and was on the brief, for appellee.

SCHROEDER, Chief Justice:

Boswell, Inc., d/b/a Reno County Adult Care Home, appeals from the district court decision which affirmed the order of the Secretary of the Kansas Department of Health & Environment (KDHE) denying the facility a license to operate an intermediate nursing care home and denying certification to receive payments under the federal medicaid program. Boswell, Inc., also runs a second adult care facility named Broadacres which is located adjacent to the Reno County Adult Care Home but which operates under a separate license and certification. The licensure and certification of Broadacres is also the subject of appeal before this court. Boswell, Inc. v. Harkins, d/b/a Broadacres, 230 Kan. ---, 640 P.2d 1208 (1982).

The KDHE conducts inspections or field surveys of adult care homes for purposes of state licensure pursuant to authority granted in K.S.A. 39-923 et seq. (All statutory references are to the Ensley editions of the Kansas Statutes Annotated.) The department also conducts field surveys under contract with the Kansas Department of Social & Rehabilitation Services for purposes of certifying that federal requirements for participation in the medicaid program, 42 U.S.C.A. § 1396 et seq., have been met. Thus, KDHE field surveys often serve a dual purpose, depending on whether the nursing home has chosen to participate in the federal medicaid program. In the case at bar, the nursing home had chosen to participate in the federal program, and the two surveys were conducted simultaneously.

Although this appeal involves only the October 24, 1979, application for license and certification by the Reno County Adult Care Home, it is helpful to an understanding of the administrative agency and district court decisions in this case to begin our review of the facts at an earlier point in time. While it is not necessary to this appeal to detail the history of the facility since its inception in 1970, it is important to note that the facility was granted a provisional rather than a full license in November 1978 because of numerous deficiencies. That provisional license expired in March 1979 at which time surveyors from the KDHE made a reinspection. On the basis of their report, the Secretary denied a license application and stated no new provisional license would be issued. Appeal was taken within the administrative agency, but no appeal was taken to the district court from the adverse agency rulings. Instead, on October 24, 1979, the facility submitted a new application for license and certification. On November 15, 1979, the surveyors returned to the facility and filed a re-inspection report with the Secretary, citing a number of deficiencies which are set out in greater detail later in this opinion. Based on this report, the Secretary issued an order on January 15, 1980, denying licensure and certification. The facility appealed and extensive testimony was heard by a hearing officer who subsequently filed findings of fact and conclusions of law and recommended the application for license and certification be denied. On May 19, 1980, the Secretary entered an order approving the hearing officer's report and affirming his previous order denying licensure and certification. On May 28, 1980, the facility appealed to the district court pursuant to K.S.A. 39-931 for determination whether the order was arbitrary, unlawful, or unreasonable. The district court found the Secretary's recommendation of denial of certification to the Department of Social & Rehabilitation Services was not unlawful and further found the order issued (1) was not fraudulent, arbitrary, or capricious, (2) was substantially supported by the evidence, and (3) was within the scope of the Secretary's authority. The district court affirmed the order denying both licensure and certification.

The facility duly filed its notice of appeal in the Court of Appeals, and the case was transferred to the Supreme Court on the court's own motion pursuant to K.S.A. 20-3018(c).

The appellant first argues that because the district court received no additional evidence the appellate court occupies the same position as the district court and can evaluate and weigh evidence in deciding the issues presented. We think the appellant has misconstrued the function of this court as well as that of the district court on review of an order by an administrative agency. Neither court has the liberty to reweigh the evidence and substitute its judgment for that of the administrative agency. Kansas Dept. of Health & Environment v. Banks, 230 Kan. 169, 171, 630 P.2d 1131 (1981); Park South Apts. v. Dibbern, 228 Kan. 784, 789, 620 P.2d 827 (1980); Kansas State Board of Healing Arts v. Acker, 228 Kan. 145, 153, 612 P.2d 610 (1980); Neeley v. Board of Trustees, Policemen's & Firemen's Retirement System, 205 Kan. 780, 783, 473 P.2d 72 (1970); Kansas State Board of Healing Arts v. Foote, 200 Kan. 447, 450, 436 P.2d 828 (1968). Hearings on appeal are "not the equivalent of the initial hearing before the licensing agency which has the responsibility of weighing controverted evidence and arriving at an independent judgment, on the merits, as to entitlement to a license." Rydd v. State Board of Health, 202 Kan. 721, 729, 451 P.2d 239 (1969).

In the case at bar, K.S.A. 39-931 specifically limits the district court's authority to a determination whether the order entered was arbitrary, unlawful, or unreasonable. The appellate court then, to determine whether the district court properly limited its scope of review, makes the same review of the administrative agency's action. Kansas Dept. of Health & Environment v. Banks, 230 Kan. at 172, 630 P.2d 1131; Park South Apts. v. Dibbern, 228 Kan. at 789, 620 P.2d 827; U.S.D. No. 461 v. Dice, 228 Kan. 40, 49, 612 P.2d 1203 (1980); Gillett v. U.S.D. No. 276, 227 Kan. 71, 79, 605 P.2d 105 (1980); Kansas State Board of Healing Arts v. Foote, 200 Kan. at 451, 436 P.2d 828. To this limited extent, it may be said the appellate court occupies the same position as the district court; however, the review by each is limited in the statutorily prescribed manner.

Two considerations, one constitutional and the other a matter of conservation of resources, underlie endorsement of this limited scope of review. On a constitutional level, a broader scope of review would result in judicial usurpation of power delegated by the legislature to the administrative agency and contravention of the separation of powers doctrine. See Neeley v. Board of Trustees, Policemen's & Firemen's Retirement System, 205 Kan. at 783, 473 P.2d 72; Kansas State Board of Healing Arts v. Foote, 200 Kan. at 450, 436 P.2d 828. Beyond the constitutional consideration, broader review would dilute the advantage of fact-finding by a specialized agency and cast the burden on a district judge who may have no expertise in the particular area. See Foote, 200 Kan. at 450-51, 459, 436 P.2d 828.

The appellant next raises issues of (1) unlawful delegation of legislative power by both the state legislature and the United States Congress and (2) denial of due process because duties imposed both as to licensure and certification are not set forth in terms definite enough to serve as a guide to those who have the duty imposed on them. An examination of the petition and brief submitted to the district court reveals these issues were not raised before the district court and consequently are not properly before this court. Ordinarily, an issue cannot be raised for the first time on appeal. See, e.g., City of Salina v. Jaggers, 228 Kan. 155, 170, 612 P.2d 618 (1980); Fleming v. Etherington, 227 Kan. 795, 802, 610 P.2d 592 (1980); Malone v. University of Kansas Medical Center, 220 Kan. 371, 373-74, 552 P.2d 885 (1976); State v. Estes, 216 Kan. 382, 385, 532 P.2d 1283 (1975); Pierce v. Board of County Commissioners, 200 Kan. 74, 434 P.2d 858 (1967).

As its fourth point, the appellant contends the denial of licensure and certification to the Reno County Adult Care Home was arbitrary, unlawful, and/or unreasonable. Several arguments are advanced to support that contention.

A continuing theme in the transcripts and briefs is that the state has shown no incidents of actual harm to residents. Nowhere in the act do we find a requirement of actual harm. On the contrary, special provision is made for the prevention of harm to residents. After detailing an orderly process for...