Holy Redeemer Church of God in Christ, Inc. v. State Dep't of Public Instruction
| Decision Date | 09 December 2014 |
| Docket Number | No. 2014AP293.,2014AP293. |
| Citation | 359 Wis.2d 675,859 N.W.2d 629 (Table) |
| Parties | HOLY REDEEMER CHURCH OF GOD IN CHRIST, INC., d/b/a Holy Redeemer Christian Academy, Petitioner–Appellant, v. STATE of Wisconsin DEPARTMENT OF PUBLIC INSTRUCTION, Respondent–Respondent. |
| Court | Wisconsin Court of Appeals |
Holy Redeemer Church of God in Christ, Inc. (Holy Redeemer) appeals a circuit court order upholding an administrative decision denying reimbursements for its school meals program for September 2010 through March 2012, and appeals an administrative decision prohibiting Holy Redeemer from relitigating meal claims prior to the 2011–12 academic year. We affirm.
¶ 2 Holy Redeemer runs a Milwaukee-area elementary and high school. Many students qualify for free meals under the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). Both programs are funded by the U.S. Department of Agriculture and are administered by the State Department of Public Instruction (DPI).
¶ 3 The NSLP provides states with funds to reimburse public and nonprofit schools that provide meals to students if the schools meet certain standards pertaining to student eligibility and nutrition. According to the Code of Federal Regulations, schools are reimbursed for meals that are accurately counted, recorded, consolidated and reported if the children are eligible for free, reduced priced, or paid meals. The requirements are known as “Performance Standard 1.” See 7 C.F.R. § 210.18(b)(2)(i). Schools are reimbursed after submitting a “benefit issuance list” to the DPI, documenting whether a student is eligible for reimbursable meals, the date the child became approved for eligibility, the category of meals the student is eligible for, and any changes in eligibility made after the initial approval process. See 7 C.F.R. § 210.7(c)(1). Schools must also file monthly claims for any meals for which they seek reimbursement. The final monthly claim must be filed within 60 days of the last day of the month for which reimbursement is sought. See 7 C.F.R. § 210.8(b)(1).
¶ 4 If a state's review of a school reveals violations of Performance Standard 1, states are required to take corrective action to ensure that the school's deficiencies are corrected. See 7 C.F.R. § 210.18(k). State agencies are required to “take fiscal action against school food authorities for Claims for Reimbursement that are not properly payable [under 7 C.F.R. Part 210].” See 7 C.F.R. § 210.19(c). If a school violates Performance Standard 1 and has not taken corrective action within the prescribed compliance deadline, a school may also be placed on “withholding status,” which allows the state agency to withhold payments to the school until the school completes its corrective action. See 7 C.F.R. §§ 210.18(l)(1)-(2) ; 210.24.
¶ 5 The DPI and Holy Redeemer executed an agreement in 2003 governing Holy Redeemer's participation in the NSLP and SBP. On January 10, 2011, the DPI sent Holy Redeemer a letter noting deficiencies in Holy Redeemer's meal program and informing Holy Redeemer that it would not validate reimbursement claims for September and October 2010, thus requiring Holy Redeemer to repay the amounts the DPI had already paid for those months. The letter also informed Holy Redeemer that reimbursement for November 2010 was stopped and that the school was on withholding status as of December 15, 2010. The letter informed Holy Redeemer that it was required to correct the deficiencies, in part by filing an accurate benefit issuance list supported by valid documentation.
¶ 6 Holy Redeemer appealed the determination of the January 10, 2011 letter, but withdrew the appeal on April 11, 2011. Holy Redeemer refunded the DPI roughly $44,000 for September and October 2010, and roughly $22,000 for November 2010, in order to have its withholding status removed.
¶ 7 The DPI sent Holy Redeemer a second letter on November 7, 2011, informing Holy Redeemer that it would not reimburse claims for meals from January 2011 through May 2011 because Holy Redeemer failed to comply with federal regulations. Holy Redeemer appealed this determination by letter, but specifically stated that it was appealing only “the claim status finding, for the months of March, April, and May of 2011.” At a hearing before an Administrative Law Judge (ALJ), Holy Redeemer attempted to also challenge the DPI's denials of reimbursement for September 2010 through December 2010. In a decision dated March 7, 2012, the ALJ upheld the DPI's determination and rejected Holy Redeemer's attempt to challenge the DPI's determinations regarding the September 2010 through December 2010 claims, finding that Holy Redeemer waived its ability to challenge those claims because it withdrew its appeal relating to those months.
¶ 8 On September 26, 2012, the DPI sent Holy Redeemer another letter concerning the time period of September 2011 through March 2012. During that period, as well as during the months of April 2012 through June 2012, Holy Redeemer was in withholding status but continued to file timely reimbursement claims. The letter considered corrective action taken by Holy Redeemer and removed the school from withholding status. The letter also concluded that an accurate benefit list, provided by Holy Redeemer in late April 2012, allowed the DPI to begin reimbursing timely claims from April 2012 onward. The DPI then began validating claims for April, May and June 2012. The letter also concluded, however, that Holy Redeemer could not be reimbursed for claims filed between September 2011 and March 2012 because the claims had inaccurate benefit issuance lists.
¶ 9 Holy Redeemer appealed the DPI's decision not to pay reimbursement claims for meals distributed between September 2010 and March 2012. The DPI moved to dismiss the appeal as it pertained to claims for meals served between September 2010 and December 2010 (prior to the 2011–2012 academic year). The ALJ granted the DPI's motion, but proceeded to a hearing on claims for meals served between September 2011 and March 2012, during the 2011–12 school year.
¶ 10 On February 8, 2013, the ALJ concluded that Holy Redeemer did not satisfactorily complete corrective action until April 2012, when it submitted a valid benefit issuance list, and that the DPI properly denied payment of Holy Redeemer's claims from September 2011 through March 2012. As the circuit court aptly summarized, the ALJ held:
(1) that a school educational agency's removal of a school from withholding status entitles the school to reimbursement only for claims filed during the withholding period that are made in accordance with federal regulations; (2) that DPI is not required to reimburse claims that are 10 percent or less inaccurate; (3) that reimbursement for meals provided to eligible children between September 2011 and March 2012 is not required regardless of whether the claims contained errors; and (4) that a school is required to file final, amended claims within 60 days of the end of the claim month and that schools have no authority to adjust claims after the 60 day deadline.
¶ 11 Holy Redeemer appealed the ALJ's decision to the circuit court. The circuit court affirmed the ALJ. This appeal follows. Additional facts are discussed as relevant to the analysis.
¶ 12 On appeal, Holy Redeemer raises multiple issues. We have discerned the following arguments from Holy Redeemer's brief: (1) the DPI wrongfully converted its withholding of funds to a denial of funds; (2) the ALJ erroneously found that federal regulations require a 60–day time limit for submitting final reimbursement claims; (3) the DPI followed an incorrect procedure when it failed to reimburse Holy Redeemer for meals served between September 2010 and March 2012; (4) Holy Redeemer's due process rights were violated because claims can only be disallowed for meals that do not meet nutritional standards or for “overclaims,” not for inaccurate benefit issuance claims; and (5) Holy Redeemer's claims as to September 2010 through March 2012 reimbursements are not barred by claim or issue preclusion.
¶ 13 “We grant one of three levels of deference to administrative agency decisions: great weight, due weight, or de novo review.” Masri v. LIRC, 2014 WI 81, ¶ 21, 356 Wis.2d 405, 850 N.W.2d 298. “Reviewing courts apply due weight deference to agency interpretations ‘when the agency has some experience in an area, but has not developed the expertise which necessarily places it in a better position to make judgments regarding the interpretation of the statute than a court.’ “ Id., ¶ 23 (citation omitted). “The decision to apply due weight deference is based more on the fact that the legislature charged the agency with administering the statute than on the agency's specialized knowledge or expertise.” Id. “Under due weight deference, a reviewing court will not interfere with the agency's reasonable interpretation if it fits within the purpose of the statute unless there is a more reasonable interpretation available.” Id.
¶ 14 We review the decision of the agency, not the circuit court. See Wisconsin Cent. Ltd. v. Public Serv. Comm'n of Wis., 170 Wis.2d 558, 567, 490 N.W.2d 27 (Ct.App.1992). We apply a due weight standard of review here. The DPI is a state agency with experience administering the federal program described in 7 C.F.R. Part 210. We therefore reject Holy Redeemer's contention that de novo review is appropriate in this case.
¶ 15 Holy Redeemer contends that once it was removed from withholding status, it was entitled to reimbursement for all claims filed during the withholding period—claims pertaining to meals served between September 2010 and March 2012. By not reimbursing Holy Redeemer, the school contends that the DPI essentially converted the withholding of funds into a denial of funds. Holy...
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