Hoardwood, Inc. v. Department of Public Aid

• Decision Date: 26 September 1988
• Docket Number: No. 85-0966,85-0966
• Citation: 124 Ill.Dec. 892,175 Ill.App.3d 432,529 N.E.2d 1009
• Parties: , 124 Ill.Dec. 892, 23 Soc.Sec.Rep.Ser. 723, Medicare & Medicaid Guide P 37,878 HOARDWOOD, INC., Licensee of Ora G. Morrow Nursing Center, Plaintiff-Appellant, v. The DEPARTMENT OF PUBLIC AID, William L. Kempiners, Director of Public Health, and the Department of Public Health, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 1009

529 N.E.2d 1009

175 Ill.App.3d 432, 124 Ill.Dec. 892,

23 Soc.Sec.Rep.Ser. 723,

Medicare & Medicaid Guide P 37,878

HOARDWOOD, INC., Licensee of Ora G. Morrow Nursing Center Plaintiff-Appellant, v. The DEPARTMENT OF PUBLIC AID, William L. Kempiners, Director of Public Health, and the Department of Public Health, Defendants-Appellees.

No. 85-0966.

Appellate Court of Illinois First District, First Division.

Sept. 26, 1988.

Fisch, Lansky & Greenburg, Chicago (Barry H. Greenburg, of counsel), for plaintiff-appellant.

Neil F. Hartigan, Atty. Gen., Roma Jones Stewart, Sol. Gen., and Karen Konieczny, Sp. Asst. Atty. Gen., Chicago, for defendants-appellees.

Justice MANNING delivered the opinion of the court:

Plaintiff, Hoardwood, Inc., Licensee of Ora G. Morrow Nursing Center ("facility"), appeals from the March 4, 1985, order of the circuit court of Cook County which affirmed the final administrative decision issued by the defendant, Illinois Department of Public Aid ("IDPA" or "Department"). That decision was to suspend the facility from participating in the Illinois Medical Assistance Program for the period of June 30, 1982, to October 15, 1982. The court also upheld the IDPA's authority to require, as a condition to continued participation in the program, the execution of an indemnification agreement between the plaintiff and the IDPA in order to protect the Department from the potential loss of Federal financial participation.

On March 5, 1982, defendant, Illinois Department of Public Health ("IDPH") inspected the Ora G. Morrow Nursing Center, a skilled nursing facility participating in the Illinois Medical Assistance Program. During the inspection, several deficiencies were found which violated Federal and State regulations. The deficiencies included, "failure to provide the appropriate number of licensed nurses, failure to care for patients and to maintain the facility adequately, and failure to document records appropriately." Subsequently, a plan of correction was submitted for purposes of certification.

On May 21, 1982, the Director of IDPH issued a decision to terminate and not renew the Medicaid certification of the facility effective June 30, 1982. Thereafter, the plaintiff, Hoardwood, Inc., was notified of its opportunity for an administrative hearing to refute the basis of IDPH's decision. The notice of hearing also informed the plaintiff of IDPA's intent to terminate or suspend the eligibility of the plaintiff to participate as a vendor of the Medicaid program because of the termination of the plaintiff's certification by IDPH.

On June 23, 1982, plaintiff submitted a written request for a hearing. On December 7, 1982, a hearing on the merits was convened regarding the facility's termination from the Medicaid program. The administrative hearing was conducted jointly by the IDPH and the IDPA pursuant to regulations. (89 Ill.Admin.Code 1985, ch. I, sec. 104.320.) Prior to the hearing, on October 15, 1982, the IDPH had conducted a survey of the facility and had determined that the nursing facility was certifiable as of October 15, 1982.

On January 7, 1983, the hearing officer concluded that "grounds exist to affirm the action taken by the IDPH to terminate and not renew certification of the facility effective on June 30, 1982, through October 15, 1982." The hearing officer further concluded that the evidence which supports termination, also supports suspension. Therefore, the hearing officer recommended suspension of the nursing facility for the period of June 30, 1982, to October 15, 1982.

On March 15, 1983, the Director of IDPH accepted the hearing officer's recommendation and certified the Ora G. Morrow Nursing Center as an eligible facility to participate in the Medicaid program effective October 16, 1982.

The Executive Deputy Director of the IDPA issued that agency's final administrative decision on February 14, 1984, accepting the hearing officer's recommendation and noted that the IDPA had made payments to the nursing home during the suspension period, amounting to a potential reduction in Federal funds of $219,672. A carbon copy of that decision was forwarded to the Director of the IDPA. Plaintiff's continued participation in the Medicaid program was conditioned on: (1) repaying the IDPA the sum of $219,672 or (2) executing an indemnity agreement which will protect the IDPA from a potential loss of Federal monies.

The plaintiff filed a complaint in the circuit court of Cook County on March 8, 1984, requesting a judicial review of the IDPA's final administrative decision. A hearing was held on March 4, 1985, and the trial court affirmed the IDPA's final administrative decision regarding the June 30, 1982, to October 15, 1982, suspension and the requirement of execution of an indemnification agreement between the plaintiff and the IDPA.

Plaintiff initially maintains that the administrative decision issued by the IDPA is void on its face because the Executive Deputy Director lacks the authority to render a binding administrative decision or to assess and enforce penalties. (Ill.Rev.Stat.1985, ch. 111 1/2, pars. 4153-307, 4153-310, 4153-707). The Illinois Revised Statutes provide that:

"The Director or hearing officer shall make findings of fact in such hearing, and the Director shall render his decision within 30 days after the termination of the hearing, unless additional time not to exceed 90 days is required by him for a proper disposition of the matter. When the hearing has been conducted by a hearing officer, the Director shall review the record and findings of fact before rendering a decision. All decisions rendered by the Director shall be binding upon and complied with by the Department, the facility or the persons involved in the hearing as appropriate to each case." Ill.Rev.Stat.1985, ch. 111 1/2, par. 4153-707.

Conversely, the defendant argues that the final administrative decision issued by the Executive Deputy Director of the IDPA is valid and binding. We agree. The Public Aid Code vests in the IDPA generally, not the Director specifically, the authority to terminate or suspend the eligibility of a Medicaid provider which is not properly licensed and to recover money improperly or erroneously paid. (Ill.Rev.Stat.1985, ch. 23, pars. 12-4.25(B), (E).) However, the Illinois Administrative Code specifically provides that the Director of the IDPA "shall" make a final decision concerning participation in the Medicaid program, based on the findings of fact and the recommended decision of the hearing officer and the final certification determination by the IDPH. 89 Ill.Admin.Code 1985, ch. I, sec. 104.320.

The use of the word "shall" in a statute often indicates mandatory language; however, under certain circumstances, it can be construed as directory rather than mandatory. (In re D.J.B. (1982), 107 Ill.App.3d 482, 484, 63 Ill.Dec. 239, 437 N.E.2d 888; Andrews v. Foxworthy (1978), 71 Ill.2d 13, 21, 15 Ill.Dec. 648, 373 N.E.2d 1332.) Moreover, the entire statute must be considered including the possible consequences in construing it in a certain manner. 107 Ill.App.3d 482, 484, 63 Ill.Dec. 239, 437 N.E.2d 888; In re Armour (1974), 59 Ill.2d 102, 104, 59 Ill.2d 102, 319 N.E.2d 496. It is common practice for a Director of an agency to delegate his authority to a subordinate during periods of unavailability in order for the agency to continue operating at an optimum level. Alternatively, a Director may delegate specific responsibilities to a subordinate on an ongoing basis. In the instant case, the Director was actually provided a carbon copy of the final administrative decision and it was implicit by that action that the Director had delegated his authority to review the recommended decision of the hearing officer and to issue the final administrative decision to the Executive Deputy Director. Administrative agencies must be allowed to develop procedures for handling their business. (Board of Governors v. Illinois Human Rights Comm'n (1982), 109 Ill.App.3d 946, 952, 65 Ill.Dec. 478, 484, 441 N.E.2d 391, 395.) Moreover, where administrative agencies have an expressed statutory grant of power, they are empowered to do all that is reasonably necessary to execute the power or perform the duty. Chemetco Inc. v. Illinois Pollution Control Bd. (1986), 140 Ill.App.3d 283, 286-87, 94 Ill.Dec. 640, 488 N.E.2d 639.

Although the experience of an administrative agency in interpreting the law under which it operates is not controlling, it is considered in reaching a final decision. (Heerey v. Zoning Bd. of Appeals (1980), 82 Ill.App.3d 1088, 1093-94, 38 Ill.Dec. 386, 403 N.E.2d 617; National Consolidated Indus. v. Department of Insurance (1979), 73 Ill.App.3d 816, 822, 29 Ill.Dec. 738, 392 N.E.2d 295.) Moreover, "a reviewing court should accord substantial discretion to administrative agencies in the construction and application of their rules, interfering only if a body's interpretation is plainly erroneous or inconsistent with long-settled constructions." Phillips v. Hall (1983), 113 Ill.App.3d 409, 421, 69 Ill.Dec. 201, 447 N.E.2d 418.

While it may have been preferable for the legislature to expressly use the language of "Director or his designee," as we find in the Nursing Home Reform Act of 1979, (Ill.Rev.Stat.1985, ch. 111 1/2, par. 4151-110), (but which has applicability only to the Director of Public Health and not the Director of Public Aid), the absence of this explicit language does not indicate a contrary intent. Moreover, the consequences of literally applying the plain meaning of the term Director under the facts of this case could be detrimental to the efficient operation of the State Medicaid plan. An application of that...