Olympic Healthcare Servs. II LLC v. Dep't of Soc.

• Decision Date: 19 June 2013
• Docket Number: No. 42992–6–II.,42992–6–II.
• Citation: 175 Wash.App. 174,304 P.3d 491
• Court: Washington Court of Appeals
• Parties: OLYMPIC HEALTHCARE SERVICES II LLC, Appellant, v. DEPARTMENT OF SOCIAL & HEALTH SERVICES, State of Washington, Respondent.

175 Wash.App. 174

304 P.3d 491

OLYMPIC HEALTHCARE SERVICES II LLC, Appellant,

v.DEPARTMENT OF SOCIAL & HEALTH SERVICES, State of Washington, Respondent.

No. 42992–6–II.

Court of Appeals of Washington, Division 2.

June 19, 2013.

Thomas Huber Grimm, Ryan Swanson & Cleveland PLLC, Seattle, WA, for Appellant.

Angela Coats McCarthy, Attorney at Law, Olympia, WA, for Respondent.

QUINN–BRINTNALL, J.

[175 Wash.App. 176]¶ 1 Olympic Healthcare Services II LLC (Olympic II) appeals the superior court's decision affirming the Department of Social and Health Services (DSHS) Board of Appeals' (Board) final order revoking its adult family home license. Olympic II argues that the Board's reviewing judge (1) erred by using preponderance of the evidence as the standard of proof, (2) violated the appearance of fairness doctrine, and (3) erred by concluding that Olympic II was operating overcapacity. Olympic II's legal arguments lack merit and the Board's reviewing judge properly concluded that Olympic II was operating overcapacity. We affirm.

FACTS

¶ 2 Galina Baida is a licensed practical nurse. Baida owns Olympic II, an adult family home. Baida also owns a second adult family home, Olympic Healthcare Services I (Olympic I). Olympic I is located across the street from Olympic II. The residents of Olympic I are primarily adults with developmental disabilities and the residents of Olympic II are adults with dementia. Baida and her mother are the caregivers for Olympic I. Baida hires staff as caregivers for Olympic II. Olympic II is staffed with one caregiver per shift to meet the minimum requirement of one caregiver per six dementia residents. ¹

¶ 3 On November 2, 2009, at approximately 1:30 P.M., Candace Corey, a DSHS complaint investigator, arrived at Olympic II to conduct an investigation into a complaint received by DSHS's Complaint Resolution Unit. When Corey arrived at Olympic II, she observed one caregiver, the 6 residents of Olympic II, and 2 residents from Olympic I. Around 3:00 P.M., 2 additional residents from Olympic I arrived at Olympic II. Between 3:30 and 4:00 P.M., a fifth resident from Olympic I arrived at Olympic II resulting in as many as 11 residents from both homes in Olympic II while Corey was there. During this period of time, there was one caregiver in the home and Baida, who was primarily speaking with Corey.

¶ 4 Based on her observations on November 2, 2009, Corey cited Olympic II for operating over the maximum license capacity of six residents. Former WAC 388–76–10960 (2008).² In addition to Corey's observations of Olympic II operating overcapacity on November 2, 2009, the citation included two additional incidents when residents from Olympic I were at Olympic II. On December 16, DSHS issued a “Stop Placement of Admissions and Revocation of License” notice for Olympic II. On January 6, 2010, Baida requested an administrative hearing to contest the stop placement and revocation notice.

¶ 5 At the administrative hearing, Corey testified to the events she had observed on the afternoon of November 2, 2009. Tami Shumake, one of the caregivers working at Olympic II at the time of the investigation testified that the residents from Olympic I often came over to Olympic II on Saturdays when Baida and her mother were at church and there was no caregiver at Olympic I. Paul Tosch, the Regional Long–Term Care Ombudsman, testified that he had received two complaints about Olympic I residents spending Saturdays at Olympic II. On November 9, 2009, Tosch had received a call from two of his volunteers who reported that the residents from Olympic I were still being taken to Olympic II on Saturdays. On November 21, 2009, Tosch went to Olympic II to investigate the complaint. He observed four residents from Olympic II and two residents from Olympic I in the living room. The other two Olympic II residents were asleep in their rooms.

¶ 6 Baida testified that the Olympic I residents had formed relationships with the Olympic II residents during a period when all the residents had to reside in one home due to flooding.³ As a result, the Olympic I residents would visit the Olympic II residents but they were never required to go to Olympic II. Prior to allowing Olympic I residents to visit Olympic II, Baida would check with the Olympic II caregiver. Gary Otterness, Olympic II's resident care manager, also testified. Otterness's testimony was similar to Baida's.

¶ 7 On August 3, 2010, the administrative law judge (ALJ) issued her initial order. The ALJ concluded that DSHS had failed to prove Baida operated Olympic II overcapacity. DSHS petitioned for Board review of the ALJ's initial order.

¶ 8 On April 8, 2011, the Board's reviewing judge issued a review decision and final order. The Board's reviewing judge based her findings of fact

upon careful consideration of the record, including the demeanor and motivations of the witnesses as observed and recognized by the ALJ and the undersigned, respectively; the reasonableness of the testimony and exhibits; the amount of time that has elapsed between when any particular incident occurred and when various individuals provided statements or evidence about that incident; and the totality of the evidence presented.

Administrative Record (AR) at 30. The Board's reviewing judge also made explicit and detailed credibility findings when there was conflicting evidence.

¶ 9 The Board's reviewing judge concluded that the appropriate standard of proof in this case was preponderance of the evidence, upon which she made 15 findings of fact specifically related to the overcapacity allegation. The Board's reviewing judge found that Olympic I residents were regularly sent to Olympic II because there was no caregiver at Olympic I, especially on Saturdays when Baida and her mother were at church. The Board's reviewing judge also addressed the conflicting testimony by making a detailed credibility finding:

There was substantial evidence put forth by various individuals that [Baida] was often absent from [Olympic I] and [Olympic II] on Saturdays; that this was [Baida's] day of worship as a Seventh Day Adventist and she did attend church with her mother and Mr. Otterness; that [Olympic I] residents were staying at [Olympic II] on these days; that some [Olympic I] residents did not always like being at [Olympic II] but had no other choice; and that there was no caregiver at [Olympic I] and only one caregiver at [Olympic II] at these times. The sheer number of people of [sic] who provided this information coupled with their overall lack of motivation for fabricating such facts, when weighed against [Baida's] and Mr. Otterness's reasons for disputing this information and in light of Mr. Otterness's tendency during his testimony to contradict many facts not favorable to [Baida's] case and to change his testimony while testifying, lead the undersigned to conclude that [Baida's] and Mr. Otterness's testimony are not credible. They often attended church with her mother, the [Olympic I] caregiver, on Saturdays and required some [Olympic I] residents to go to [Olympic II] during this time.

AR at 55 (footnotes omitted).

¶ 10 Based on the definitions of “capacity” found in ch. 70.128 RCW and former ch. 388–76 WAC, the Board's reviewing judge rejected Olympic II's argument that “capacity” refers to only the number of residents actually living in the home. Therefore, the Board's reviewing judge concluded that Olympic II had operated overcapacity and she upheld DSHS's license revocation.

¶ 11 Olympic II filed a petition for review in the Lewis County Superior Court. The superior court affirmed the Board's reviewing judge's final order. Olympic II timely appeals.

ANALYSIS

¶ 12 Our review of an agency action is governed by the Administrative Procedure Act (APA), ch. 34.05 RCW. The party seeking relief bears the burden of demonstrating the invalidity of the agency action. RCW 34.05.570(1)(a). We may reverse an agency action if the agency erroneously interpreted or applied the law, the order is not supported by substantial evidence, or the order is arbitrary or capricious. RCW 34.05.570(3)(d), (e), (i). We review the Board's reviewing judge's final order, not the ALJ's decision or the superior court's order. See Tapper v. Empl. Sec. Dep't, 122 Wash.2d 397, 402, 858 P.2d 494 (1993). “An agency order is supported by substantial evidence if there is ‘a sufficient quantity of evidence to persuade a fair-minded person of the truth or correctness of the order.’ ” Hardee v. Dep't of Soc. & Health Servs., 172 Wash.2d 1, 7, 256 P.3d 339 (2011) (internal quotation marks omitted) (quoting Thurston County v. W. Wash. Growth Mgmt. Hearings Bd., 164 Wash.2d 329, 341, 190 P.3d 38 (2008)). We review conclusions of law de novo. Hardee, 172 Wash.2d at 7, 256 P.3d 339.

Burden of Proof

¶ 13 Olympic II argues that the Board's reviewing judge erred by applying the wrong burden of proof. The Board's reviewing judge determined that the appropriate burden of proof was preponderance of the evidence. But Olympic II contends that the burden of proof should have been the clear and convincing evidence standard. Our Supreme Court has held that the burden of proof for revoking a facility license is preponderance of the evidence. Accordingly, the Board's reviewing judge did not err by applying the preponderance of the evidence standard.

¶ 14 Our Supreme Court has articulated two different burdens of proof that apply to license revocations. In Nguyen v. Department of Health Medical Quality Assurance Commission, 144 Wash.2d 516, 526, 29 P.3d 689 (2001), cert. denied,535 U.S. 904, 122 S.Ct. 1203, 152 L.Ed.2d 141 (2002), our Supreme Court applied the three-part Mathews⁴ test to conclude that due process requires proof by clear and convincing evidence to revoke a professional license. In determining that the state must be held to a higher burden of proof before revoking Nguyen's medical license, the court primarily relied on an individual's “profou...