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Four Oaks Family and Children's Services v. Iowa Department of Education

Court of Appeals of Iowa

March 8, 2017

FOUR OAKS FAMILY AND CHILDREN'S SERVICES and TIM CART, Plaintiffs-Appellees,
v.
IOWA DEPARTMENT OF EDUCATION, BUREAU OF NUTRITION AND HEALTH SERVICES, Defendant-Appellant.

         Appeal from the Iowa District Court for Linn County, Christopher L. Bruns, Judge.

         An administrative agency appeals the district court's decision on judicial review. REVERSED.

          Thomas J. Miller, Attorney General, and Meghan L. Gavin, Assistant Attorney General, for appellant.

          Nancy J. Penner and Steven J. Pace of Shuttleworth & Ingersoll, P.L.C., Cedar Rapids, for appellees.

          Heard by Danilson, C.J., and Vogel and Vaitheswaran, JJ.

          VOGEL, Judge.

         The Iowa Department of Education and its Bureau of Nutrition and Health Services (the Department) claim the district court erred in its judicial review decision reversing the Department's decision to pursue termination of Four Oaks Family and Children Services' (Four Oaks) participation in the Child and Adult Care Food Program (the CACFP) and to place Four Oaks on the national disqualified list. Because we agree that federal law allowed the Department to terminate Four Oaks's participation in the CACFP and place it on the national disqualified list, we reverse the district court's judicial-review decision.

         I. Background Facts and Proceedings

         Four Oaks is a nonprofit organization that offers services related to child welfare and juvenile justice, such as afterschool childcare and other community-based prevention programs. Four Oaks participates in the CACFP, which reimburses daycare providers for meals and snacks given to children and adults. The CACFP was created by the Federal Agricultural Risk Protection Act and is administered in Iowa by the Department.

         Four Oaks operates two facilities that participate in the CACFP, one in Cedar Rapids and one in Iowa City. On August 30, 2012, the Department conducted an unannounced visit at Four Oaks's Cedar Rapids facility. The Department employee who conducted the review noted several issues and discussed them with Tim Cart, the Four Oaks employee responsible for managing the program. On September 27, 2012, the Department initiated an administrative review of Four Oaks's CACFP records. On October 11, Four Oaks emailed the Department and voluntarily terminated its participation in the CACFP program at the Cedar Rapids facility retroactive to August 31.

         On October 25, the Department issued a citation to Four Oaks, which cited "serious deficiencies" with Four Oaks's participation in the CACFP, including: failure to operate the program in conformance with the performance standards set forth in paragraph (b)(18)(iii) of the program accountability section of the agreement; failure to maintain program operations that met CACFP requirements following staff turnover; failure to maintain fiscal integrity and accountability under 7 C.F.R. section 226.15(e) and failure to process claims accurately; failure to maintain adequate records; and failure to provide adequate and regular training or monitor sponsored facilities in accordance with section 226.16(d) of the agreement.[1] The citation directed Four Oaks to complete corrective actions within one month or risk being terminated from the program and placed on the national disqualified list. Four Oaks did not complete the necessary corrective actions, claiming it was unable to do so because it was no longer participating in the CACFP. On December 7, the Department proposed termination of Four Oaks's ability to participate in the CACFP and disqualification from future participation by placement on the national disqualification list.

         On January 29, 2013, Four Oaks filed its appeal of the Department's decision. Four Oaks argued the Department's decision was improper because it had already voluntarily terminated its participation in the CACFP in an October 11 email, prior to the Department's formal notice of deficiency on October 25. Following a contested hearing, an administrative law judge (ALJ), determined:

The evidence presented here amply supports a finding that Four Oaks was seriously deficient in the management of the CACFP program and further that Four Oaks failed to attempt to correct the serious deficient practices with which it was cited during the site visit on August 31, 2012, and the administrative review on September 27, 2012.

         In response to Four Oaks's argument it voluntarily terminated its participation prior to the ...


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