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09/26/88 Hoardwood, Inc., v. the Department of Public

September 26, 1988

HOARDWOOD, INC., PLAINTIFF-APPELLANT

v.

THE DEPARTMENT OF PUBLIC AID ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

529 N.E.2d 1009, 175 Ill. App. 3d 432, 124 Ill. Dec. 892 1988.IL.1442

Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

APPELLATE Judges:

JUSTICE MANNING delivered the opinion of the court. BUCKLEY and O'CONNOR, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MANNING

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 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 104.320 (1985).) 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, ...


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