Childfirst Servs., Inc. v. Dep't of Human Servs.

• Decision Date: 29 March 2022
• Docket Number: 681 C.D. 2021
• Citation: 277 A.3d 622
• Parties: CHILDFIRST SERVICES, INC., Petitioner v. DEPARTMENT OF HUMAN SERVICES, Respondent
• Court: Pennsylvania Commonwealth Court

277 A.3d 622

CHILDFIRST SERVICES, INC., Petitioner

v.DEPARTMENT OF HUMAN SERVICES, Respondent

No. 681 C.D. 2021

Commonwealth Court of Pennsylvania.

Submitted on Briefs March 7, 2022

Decided March 29, 2022

Publication Ordered June 8, 2022

Nancy Abrams, Philadelphia, for Petitioner.

Shane J. Langan, Assistant Counsel, Wilkes-Barre, for Respondent.

BEFORE: HONORABLE ANNE E. COVEY, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge, HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY JUDGE COVEY

ChildFirst Services, Inc. (ChildFirst) petitions this Court for review of the Department of Human Services (DHS), Bureau of Hearings and Appeals’ (BHA) June 7, 2021 order adopting the Administrative Law Judge's (ALJ) April 23, 2021 adjudication and recommendation (Recommendation) that granted DHS's Motion to Dismiss (Motion). There are three issues for this Court's review: (1) whether the BHA's determination that it lacks authority to award monetary damages as a remedy for an alleged breach of a settlement agreement deprived ChildFirst of its constitutional right to procedural due process; (2) whether the BHA's determination that it lacks authority to grant injunctive relief for DHS's alleged disparate treatment of ChildFirst as compared to similarly situated, non-minority owned programs deprived ChildFirst of its constitutional right to equal protection; and (3) whether the BHA erred by concluding that the ALJ and the BHA lacked the power to award damages or grant an injunction. After review, this Court affirms.

ChildFirst is a non-profit corporation that operates multiple licensed child residential facilities, including Williams House and Glenn Clark House. Prior to April 14, 2016, ChildFirst filed applications with DHS to operate two additional child residential facilities known as Empowerment House and Danken House. On April 14, 2016, DHS revoked the licenses for Williams House and Glenn Clark House (Revocation Decisions). On May 4, 2016, DHS denied ChildFirst's applications to operate Empowerment House and Danken House (Application Decisions). ChildFirst appealed from the Revocation Decisions and the Application Decisions to the BHA.

On December 18, 2017, DHS and ChildFirst entered into a settlement agreement (Agreement) pertaining to the Revocation Decisions and the Application Decisions. The Agreement provided that DHS would promptly process ChildFirst's Empowerment House and Danken House applications, and would issue provisional licenses for Williams House and Glenn Clark House within 15 days. The Agreement also stated that, within 30 days, DHS would notify all providers, referral sources, and stakeholders involved in making placement decisions for children that DHS issued provisional licenses for Williams House and Glenn Clark House. Finally, paragraph 18 of the Agreement specified that "[t]he BHA shall have exclusive original jurisdiction, subject to appellate judicial review of its [o]rder, over any dispute that may arise with respect to the interpretation, application or enforcement of the terms of this Agreement." Reproduced Record (R.R.) at 32a. Although DHS issued provisional licenses to Glenn Clark House and Williams House, it did not process the Empowerment House and Danken House applications, or issue the corrective notices to stakeholders regarding Williams House and Glenn Clark House.

On March 15, 2019, the Northeast Regional Director of DHS's Office of Children, Youth and Families, Jacqulyn Maddon (Maddon), informed ChildFirst that DHS would not be renewing the Williams House and Glenn Clark House licenses. On March 18, 2019, DHS removed all children from those facilities. ChildFirst appealed from these and other license refusals to the BHA and a hearing was held on November 12, 2019. Although the hearing did not involve the Empowerment House and Danken House licenses, ChildFirst raised DHS's failure to process the Empowerment House and Danken House applications.¹ At the hearing, the BHA ordered DHS to issue all of the licenses for all of the facilities including Empowerment House and Danken House.

On December 13, 2019, DHS issued licenses for Empowerment House and Danken House. On June 22, 2020, ChildFirst filed a Complaint for Violation of Settlement Agreement (Complaint) with the BHA. On July 2, 2020, the BHA issued a Rule to Show Cause why the Complaint should not be dismissed because it was unsigned, and notified ChildFirst: "If [ChildFirst] wishes to pursue an appeal of this matter, [ChildFirst] must submit a written request for hearing, with signature, to the [BHA] within thirty (30) days of the mailing date of this [o]rder." R.R. at 62a.

On July 15, 2020, ChildFirst filed an original, signed copy of the Complaint, retitled "Request for Hearing Regarding Breach of 061-16-0008 Settlement Agreement[.]" R.R. at 64a-77a. In the Complaint, ChildFirst alleged that, at Maddon's direction, DHS breached the Agreement by delaying its issuance of provisional licenses to Empowerment House and Danken House, and failed to inform providers, referral sources, and stakeholders that provisional licenses were issued for Williams House and Glenn Clark House. ChildFirst averred that Maddon's conduct was motivated by racial animus, and demanded $2,780,140.00 in damages.²

On September 16, 2020, DHS issued the corrective notices to stakeholders that it issued the first provisional licenses to Williams House and Glenn Clark House. On October 5, 2020, DHS filed the Motion, contending therein that sovereign immunity barred ChildFirst's claims against DHS and, even if sovereign immunity did not bar ChildFirst's claims, the BHA lacked subject matter jurisdiction over the breach of contract claim for monetary damages.

On October 13, 2020, ChildFirst filed its response to the Motion, reasoning that the Commonwealth of Pennsylvania (Commonwealth) has waived sovereign immunity for breach of contract claims. Further, ChildFirst asserted that, since the applicable General Rules of Administrative Practice and Procedure (GRAPP)³ empower ALJs to recommend "the appropriate regulation, order, sanction, relief, or denial thereof[,]" the ALJ was authorized to award money damages. Section 35.205 of GRAPP, 1 Pa. Code § 35.205.⁴

On April 23, 2021, the ALJ issued the Recommendation, concluding that the BHA should grant the Motion. The ALJ reasoned:

In [its] [C]omplaint, [ChildFirst] alleges [DHS] breached the Agreement by failing to promptly process [ChildFirst]’s applications for Empowerment House and Danken House[,] as [DHS] did not issue provisional licenses for Empowerment House and Danken House until two years later on December 13, 2019. [ChildFirst] further alleges [DHS] failed to inform providers, referral sources, and stakeholders involved in making placement decisions for children that provisional licenses were issued for Williams House and Glenn Clark House. Per the Agreement, the [BHA] can interpret whether [DHS] "promptly" processed [ChildFirst]’s applications for Empowerment House and Danken House, and the [BHA] can determine whether [DHS] failed to inform providers, referral sources, and stakeholders that provisional licenses were issued for Williams House and Glenn Clark House, and if necessary, issue an order directing [DHS] to comply with the terms of the Agreement.

However, [ChildFirst] is not disputing the terms of the Agreement, nor is [ChildFirst] seeking enforcement of the terms of the Agreement. Rather, [ChildFirst] is seeking monetary damages in the amount of $2,780,140.00. The Agreement however does not include any provisions regarding monetary damages. Since the [BHA]’s jurisdiction is limited to the interpretation, application, and enforcement of the terms of the Agreement, and the Agreement does not contain any provisions for damages, the [BHA] does not have jurisdiction regarding monetary damages for [ChildFirst].

At a pre-hearing conference on October 14, 2020, [ChildFirst]’s counsel stated that [ChildFirst] is also seeking an injunction to stop the disparate treatment of [ChildFirst] as compared to other facilities. Again[,] however, the [BHA]’s jurisdiction is limited to the interpretation, application, and enforcement of the Agreement. Thus, the [BHA] lacks authority to issue such an injunction.

Certified Record (C.R.) at 125-126 (footnote omitted). On June 7, 2021, the BHA adopted the Recommendation in its entirety. ChildFirst appealed to this Court.⁵

ChildFirst first argues that the BHA violated its procedural due process rights by depriving it of a meaningful remedy for DHS's alleged breach of the Agreement.

The Pennsylvania Supreme Court has recognized:

Ubi jus, ibi remedium translates to: "Where there is a right, there is a remedy." B[lack's] L[aw] D[ictionary] 1520 (11th ed. 2019). The right to a remedy is, itself, a right protected by due process. See, e.g. , United States v. Loughrey , 172 U.S. 206, 232 [,19 S.Ct. 153, 43 L.Ed. 420] (1898) ("The maxim, ‘Ubi jus, ibi remedium ,’ lies at the very foundation of all systems of law."); Marbury v. Madison , 5 U.S. (1 Cranch) 137, 163 (1803) ("[I ]t is a general and indisputable rule , that where there is a legal right , there is also a legal remedy by suit or action at law , whenever that right is invaded .... [F]or it is a settled and invariable principle in the laws of England, that every right, when withheld, must have a remedy, and every injury its proper redress." (quoting Blackstone's Commentaries)). The right to a remedy is a core component of ordered liberty. Id .

Commonwealth v. Koehler , 658 Pa. 658, 229 A.3d 915, 933 n.10 (2020) (emphasis added).

The basic elements of procedural due process are adequate notice, the opportunity to be heard, and the chance to defend oneself before a fair and impartial tribunal having jurisdiction over the case. A due process claim requires a two-part analysis: (1) whether there is a life, liberty, or property interest with which the state has interfered; and (2) whether the procedures attendant to that deprivation

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