BENN v. COUNTY OF LOS ANGELES

Filed 5/2/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

Story Continued from Part I

Similarly, in Omni Behavioral Health v. Miller[1]a non-profit corporation which provided foster care services to wards of the State of Nebraska brought civil rights claims against a police detective whose investigation of allegations of abuse of residents at a foster care facility allegedly resulted in the closing of the facility. Omni, as Angelica in the present case, asserted it had a protected property interest as a result of its contract with the state. The Omni court recognized a contract with a state can give rise to a protected property interest when the state entity can terminate the contract only for cause.[2] However, in Omni either party could terminate the contract for any reason with 30 days written notice, and for this reason the court found the contract did not create a protected property interest.[3] The contract [between Omni and the state] was terminable at willand therefore did not have the permanence of tenure, and the parties did not have a dependency relationship similar to that created by welfare benefits. If every disgruntled contractor were allowed to allege a constitutional violation when it lost a government contract, the federal courts would be overrun with state law contract claims. [Citation.][4]

So too in the case at bar. Although the parties contracts were not at will contracts as in Omni, they contained termination for convenience clauses. The contracts thus gave Angelica no assurance of continued foster children placements, no assurance of continued funding from the County, and thus no permanent rights. This lack of an entitlement to the continued existence of its contractual relationship with the county prevented [Angelica] from acquiring a property interest in its contract with the county.[5]

It is true, the County did not terminate its contracts with Angelica but rather placed Angelica on Do Not Refer status. The Do Not Refer directive prevented future placements and future funding which eventually caused Angelica to have no further dealings with the County. The Countys act thus arguably amounted to a de facto termination of the contract. Nevertheless, whether the contracts were actually terminated is immaterial to the analysis whether the contracts gave Angelica a constitutionally protected property interest. To recall, the hallmark of a constitutionally protected property interest is an entitlement which cannot be removed except for cause.[6] Because Angelicas interest in the contracts could have been taken away for something less than cause, and indeed at the Countys convenienceat the contracts inception or at any time thereafterthis lack of permanence defeats Angelicas claim it was deprived of its constitutionally protected property rights without due process of law.

Accordingly, the trial court did not err in concluding the County was entitled to judgment as a matter of law on Angelicas claim for damages for alleged violations of procedural due process based on its contracts with the County.

III. THE PROVISIONS IN THE ADOPTION ASSISTANCE AND CHILD WELFARE ACT RELIED ON BY ANGELICA DO NOT CREATE INDIVIDUAL RIGHTS ENFORCEABLE IN AN ACTION UNDER SECTION 1983.

Angelica contends it also had a protected property right pursuant to statute, specifically 42 U.S.C. section 671, subdivision (a)(3), (10) and (12) (section 671), of the Adoption Assistance and Child Welfare Act (Act), enforceable in an action under section 1983.

The United States Supreme Court has held section 1983 safeguards certain rights conferred by federal statutes as well.[7] However, [i]n order to seek redress through  1983, . . . , a plaintiff must assert the violation of a federal right, not merely a violation of federal law. [Citation.] [The United States Supreme Court has] traditionally looked at three factors when determining whether a particular statutory provision gives rise to a

federal right. First, Congress must have intended that the provision in question benefit the plaintiff. [Citation.] Second, the plaintiff must demonstrate that the right assertedly protected by the statute is not so vague and amorphous that its enforcement would strain judicial competence. [Citation.] Third, the statute must unambiguously impose a binding obligation on the States. In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms. [Citations.][8]

On the other hand, section 1983 is not available to enforce a violation of a federal statute where Congress has foreclosed such enforcement of the statute in the enactment itself and where the statute did not create enforceable rights, privileges or immunities within the meaning of 1983.[9]

In Wilder v. Virginia Hospital Association[10]the United States Supreme Court found the Boren Amendment to the Medicaid Act created a substantive federal right enforceable by providers under section 1983 to require states to adopt reasonable and adequate reimbursement rates. To qualify for federal financial assistance, states were required to submit a plan to the Secretary of Health and Human Services for approval, which among other requirements, established a scheme for reimbursing health care providers. In 1980 Congress passed the Boren Amendment to the Medicaid Act which required states to establish provider reimbursement rates which were reasonable and adequate to meet the costs of efficiently and economically operated facilities.[11] A nonprofit association of public and private hospitals filed suit against the State of Virginia for declaratory and injunctive relief, claiming the state plan violated the Medicaid Act because its reimbursement rates were not reasonable and adequate. The Supreme Court found there was little doubt that health care providers are the intended beneficiaries of the Boren Amendment. The provision establishes a system for reimbursement of providers and is phrased in terms benefiting health care providers . . . .[12] The Court also found the obligation imposed on the States was not too vague or amorphous to be judicially enforceable because the statute and regulations set out factors the State was required to consider when setting its rates.[13]

In Blessing v. Freestone,[14]by contrast, the United States Supreme Court concluded mothers and children who were entitled to child support services under Title IV-D of the Social Security Act had no private right of action to require state agencies to comply with its provisions. [T]he requirement that a State operate its child support program in substantial compliance with Title IV-D was not intended to benefit individual children and custodial parents, and therefore it does not constitute a federal right. Far from creating an individual entitlement to services, the standard is simply a yardstick for the Secretary to measure the systemwide performance of a states Title IV-D program. Thus, the Secretary must look to the aggregate services provided by the State, not to whether the needs of any particular person have been satisfied.[15]

In Suter v. Artist M.[16]the United States Supreme Court considered the very statute at issue in this case, the Adoption Assistance and Child Welfare Act. The issue in Artist M. was whether subdivision (a)(15) of section 671 created private rights, enforceable by child beneficiaries in a section 1983 action, to require states to make reasonable efforts to prevent removal of children from their homes. The Court reviewed the statute in its entirety and agreed the Act imposed a requirement on the States, but that requirement only goes so far as to ensure that the State have a plan approved by the Secretary which contains the 16 listed features.[17] In reviewing the language of the specific subdivision

the Court concluded section 671, subdivision (a)(15) confers neither an enforceable private right on its beneficiaries nor creates an implied cause of action on their behalf. Careful examination of the language relied upon by [the child beneficiaries], in the context of the entire Act, leads us to conclude that the reasonable efforts language does not unambiguously confer an enforceable right upon the Acts beneficiaries. The term reasonable efforts in this context is at least as plausibly read to impose only a rather generalized duty on the State, to be enforced not by private individuals, but by the Secretary . . . .[18] The Court pointed out other sections of the Act provided enforcement mechanisms. Under the Act the Secretary has the authority to reduce or eliminate payments to a State on a finding the states plan no longer complies with the statute or the state has failed to comply with its own plan.[19]

Congress amended the Social Security Act in 1994 in 42 U.S.C. section 1320a-2 to clarify no provision of the Social Security Act is to be considered unenforceable solely because of its inclusion in a section of the act requiring a state plan or specifying the contents of a state plan. The amendment expressly states it is not intended to limit or expand the grounds for determining the availability of private actions to enforce state plan requirements. Congress further specified the amendment is not intended to alter the holding in Suter v. Artist M. that section 671, subdivision (a)(15) is not enforceable in a private right of action.

Subsequent to the 1994 amendment, the Court in White by White v. Chambliss[20]addressed another one of the provisions at issue in this case. In White, a mother, individually and as the personal representative of the estate of her daughter who died while in foster care, brought suit against several officials of the South Carolina Department of Social Services under section 1983. The mother argued she had a private right of action under section 671, subdivision (a)(10) which specifies in order to receive federal funding the state has to establish standards for foster family homes and child care institutions reasonably in accord with recommended national standards. The White court found that for the same reasons articulated in Suter v. Artist M. section 671, subdivision (a)(10) does not create an enforceable right.[21] As with subdivision (a)(15) at issue in Suter v. Artist M., subdivision (a)(10) similarly provided only general guidelines for the states plan, no specific directives to enforce, and was subject to the alternative enforcement mechanism of the suspension, reduction, or withdrawal of funds by the Secretary. In these circumstances, the court held Suter . . . forecloses the argument that section 671(a)(10) of the AACWA provides the source for an enforceable right through section 1983.[22]

Later in Gonzaga University v. Doe[23]the United States Supreme Court considered whether the Family Educational Rights and Privacy Act provided a personal remedy enforceable under section 1983 to a former undergraduate under provisions of the act prohibiting funding of educational institutions which have a policy or practice of releasing education records to unauthorized persons. The Court reviewed prior section 1983 precedent and expressed the view this precedent made clear that unless Congress speak[s] with a clear voice, and manifests an unambiguous intent to confer individual rights, federal funding provisions provide no basis for private enforcement by 1983. [Citation.][24]

The Gonzaga Court rejected the notion its cases permitted anything short of an unambiguously conferred right to support a cause of action under section 1983. The court emphasized it was rights and not the vaguer and broader benefits or interests which may be enforced under section 1983.[25] Borrowing from cases regarding implied rights of action the Court observed the inquiry overlaps with that under section 1983: [I]n either case we must first determine whether Congress intended to create a federal right.[26] For a statute to create such private rights its text must be phrased in terms of the persons benefited. [Citation.][27] In addition, a plaintiff must show the statute manifests an intent to create not just a private right but also a private remedy. [Citation.][28]

Under these standards the Gonzaga Court found the Family Education Rights and Privacy Act did not confer enforceable rights. First, the Court noted the statutory language lacked the sort of rights-creating language critical to showing the requisite congressional intent to create new rights.[29] The provisions instead spoke to the Secretary of Education, directing no funds be made available to any institution which had a prohibited policy or practice. The Court commented, [t]his focus is two steps removed from the interests of individual students and parents and clearly does not confer the sort of individual entitlement that is enforceable under 1983.[30] Reinforcing its view the act did not create individual rights, the Court noted the statutory provision did not create a private remedy, but instead authorized the Secretary of Education to deal with violations of the Act.[31]

As noted, Angelica claims section 671, subdivisions (a)(3), (10) and (12) of the Adoption Assistance and Child Welfare Act confer an individual entitlement enforceable through a section 1983 action. Section 671 is entitled State plan for foster care and adoption assistance. These subsections of subdivision (a) state: In order for a State to be eligible for payments under this part, . . . it shall have a plan approved by the Secretary which[][] (3) provides that the plan shall be in effect in all political subdivisions of the State, and, if administered by them, be mandatory upon them; . . . 

Subdivision (a)(10) requires a state plan to establish an authority or authorities which shall be responsible for establishing and maintaining standards for foster family homes and child care institutions which are reasonably in accord with recommended standards of national organizations concerned with standards for such institutions or homes, including standards related to admission policies, safety, sanitation, and protection of civil rights, and provides that the standards so established shall be applied by the State to any foster family home or child care institution receiving funds under this part . . . .

Finally, subdivision (a)(12) requires the state plan to provide for granting an opportunity for a fair hearing before the State agency to any individual whose claim for benefits available pursuant to this part . . . is denied or is not acted upon with reasonable promptness; . . . [32]

The context of the Act and language of the provisions indicate Congress intended to benefit foster children and children in need.[33] Nothing in these provisions indicates Congress intent in adopting these measures was to instead ensure continued funding to benefit foster care agencies or operators of group homes for foster children.[34] If Suter v. Artist M. held this statutory language is insufficient to show a Congress speaking with a clear voice and manifesting an unambiguous intent to confer individual rights on the intended beneficiaries, it is certainly insufficient to confer such individual rights on the corporations and agencies which contract to provide services to the foster children.[35] Although contractors are indirectly benefited by the Act, they are at least two steps removed from the language of the statute which is instead directed to the states.[36]

Moreover, these provisions lack specific directives and for this reason are too vague to be readily enforceable by the courts. As noted in both Suter and White the factors listed in section 671 are intended to be general guidelines for the states plan. In its reply brief Angelica properly concedes the required individualized language is not present in at least section 671, subdivision (a)(10) and (a)(15).

Finally, Congress did not provide for a private remedy to enforce these provisions of the Act. As noted in Suter, other provisions in the Act provide the enforcement mechanisms. If a states plan no longer complies with the statutory requirements of the Act, or if the state fails to comply with its own plan, then the Secretary is authorized to reduce or eliminate payments to the state.[37]

Based on this United States Supreme Court opinion and other precedent, we conclude the trial court was correct in finding section 671, subdivision (a)(3), (10) and (12) did not confer enforceable private rights on providers of foster care services. Accordingly, we further conclude the trial court did not err in finding the County was entitled to judgment as a matter of law on Angelicas claim under section 1983 for violation of federal statutory law.

IV. ANGELICAS ASSERTION OF A VIOLATION OF SUBSTANTIVE DUE PROCESS IS WITHOUT MERIT.

Otis Benn in his declaration in opposition to the Countys motion for summary judgment claimed the Angelica foster family agency passed five unidentified audits conducted by the County without requests for a corrective action plan. Angelica thus contends there are triable issues of material fact whether the County knew its act in placing its facilities on Do Not Refer status was arbitrary and capricious and thus violated its substantive due process rights.

The United States Supreme Court has emphasized time and again that [t]he touchstone of due process is protection of the individual against arbitrary action of government, [citation], whether the fault lies in a denial of fundamental procedural fairness, [citation], or in the exercise of power without any reasonable justification in the service of a legitimate governmental objective, [citation.][38]

Under United States Supreme Court precedent only the most egregious official conduct can be said to be arbitrary in the constitutional sense, . . . [39] Thus, a substantive violation of the Due Process Clause can be established by a showing of official conduct which shocks the conscience or violates the decencies of civilized conduct.[40] For example, conduct intended to injure in some way unjustifiable by any government interest is the sort of official action most likely to rise to the conscience-shocking level.[41]

We will assume Angelicas foster family agency survived five additional audits and the County nevertheless maintained its Do Not Refer status. However, this government conduct is insufficiently egregious to shock the conscience or otherwise be considered to violate the decencies of civilized conduct. The Countys action may have caused Angelica harm. However, its decision to place Angelicas facilities on Do Not Refer status cannot be said to be either arbitrary or capricious based on the various findings in the Countys and the States audits. Those audits revealed Angelica had

failed to comply with state regulations, court orders and the program statement; had provided foster children with inadequate food, clothing and medical care; had incurred over $964,000 in questionable expenditures, lacked accounting records, documentation, and the like. Given these allegations the Countys official action in placing Angelicas facilities on Do Not Refer status was objectively justifiable in order to protect the Countys foster children and the quality of the Countys foster care program.

Otis Benns assertion of having survived five additional unidentified audits, is insufficient standing alone to create a triable issue of material fact regarding the Countys alleged arbitrary action in the face of the numerous and detailed audits containing these findings of possible dereliction and malfeasance. Accordingly, we conclude the trial court did not err in finding the County was entitled to judgment as a matter of law on Angelicas claim the Countys actions violated its substantive due process rights.[42]

DISPOSITION

The judgment is affirmed. Respondent is awarded its costs of appeal.

CERTIFIED FOR PUBLICATION

JOHNSON, Acting P. J.

We concur:

WOODS, J.

ZELON, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by San Diego County Property line attorney.

[1]Omni Behavioral Health v. Miller (8th Cir. 2002) 285 F.3d 646.

[2]Omni Behavioral Health v. Miller, supra, 285 F.3d 646, 652.

[3]Omni Behavioral Health v. Miller, supra, 285 F.3d 646, 650.

[4]Omni Behavioral Health v. Miller, supra, 285 F.3d 646, 652-653.

[5]Economic Development Corp. of Dade County, Inc. v. Stierheim, supra, 782 F.2d 952, 954.

[6]Logan v. Zimmerman Brush Co., supra, 455 U.S. 422, 430.

[7]Maine v. Thiboutot (1980) 448 U.S. 1.

[8]Blessing v. Freestone, supra, 520 U.S. 329, 340-341.

[9]Suter v. Artist M. (1992) 503 U.S. 347, 355-356, quoting Wright v. Roanoke Redevelopment and Housing Authority (1987) 479 U.S. 418, 423.

[10]Wilder v. Virginia Hospital Assn. (1990) 496 U.S. 498.

[11]Wilder v. Virginia Hospital Assn., supra, 496 U.S. 498, 503.

[12]Wilder v. Virginia Hospital Assn., supra, 496 U.S. 498, 510.

[13]Wilder v. Virginia Hospital Assn., supra, 496 U.S. 498, 519.

[14]Blessing v. Freestone, supra, 520 U.S. 329.

[15]Blessing v. Freestone, supra, 520 U.S. 329, 343.

[16]Suter v. Artist M., supra, 503 U.S. 347.

[17]Suter v. Artist M., supra 503 U.S. 347, 358.

[18]Suter v. Artist M., supra, 503 U.S. 347, 363.

[19]Suter v. Artist M., supra, 503 U.S. 347, 360.

[20]White by White v. Chambliss (4th Cir. 1997) 112 F.3d 731.

[21]White by White v. Chambliss, supra, 112 F.3d 731, 739.

[22]White by White v. Chambliss, supra, 112 F.3d 731, 739.

[23]GonzagaUniversity v. Doe (2002) 536 U.S. 273.

[24]Gonzaga University v. Doe, supra, 536 U.S. 273, 280, quoting Pennhurst State School and Hospital v. Halderman (1981) 451 U.S. 1, 17, 28 and footnote 21 [rejecting a claim the Developmentally Disabled Assistance and Bill of Rights Act conferred privately enforceable rights].

[25]Gonzaga University v. Doe, supra, 536 U.S. 273, 283.

[26]Gonzaga University v. Doe, supra, 536 U.S. 273, 283.

[27]Gonzaga University v. Doe, supra, 536 U.S. 273, 284.

[28]Gonzaga University v. Doe, supra, 536 U.S. 273, 284, quoting Alexander v. Sandoval (2001) 532 U.S. 275, 286.

[29]Gonzaga University v. Doe, supra, 536 U.S. 273, 287.

[30]Gonzaga University v. Doe, supra, 536 U.S. 273, 287.

[31]Gonzaga University v. Doe, supra, 536 U.S. 273, 289.

[32] Angelica points out some courts have held this subdivision and the regulations implementing it provide foster parents with standing to assert the right to a state administrative hearing to seek reimbursement for expenditures incurred on foster care services. Angelica contends as a provider of foster care services it should similarly have a private right of action under this section. (Citing, Matter of Claudio v. Dowling (1997) 89 N.Y.2d 567 [foster parents denied higher payments for having cared for special needs children were entitled to a state administrative hearing to seek review of the alleged underpayments of foster care benefits]; Timmy S. v. Stumbo (6th Cir. 1990) 916 F.2d 312 [injunction was an appropriate remedy to force the state to provide a hearing to foster parents who sought reimbursement of previously incurred foster care maintenance payments]; Lynch v. Dukakis (1st Cir. 1983) 719 F.2d 504 [a pre-Suter v. Artist M. decision approving a section 1983 cause of action for violations of section 671, subdivision (a)(16)].)

Of course, Angelica does not seek a state administrative hearing under section 671, subdivision (a)(12) or otherwise. Nor does Angelica seek reimbursement for previously incurred foster care maintenance payments. Instead, Angelica seeks damages for being placed on Do Not Refer status which allegedly deprived it of future placements and future maintenance payments. Curiously, even the authority Angelica relies on has held damages are not available in a section 1983 action alleging a violation of the Act. (Timmy S. v. Stumbo, supra 916 F.2d 312, 316, fn. 6, citing Scrivner v. Andrews (6th Cir. 1987) 816 F.2d 261, 264; see also, Guardians Assn. v. Civil Service Commission of the City of New York (1983) 463 U.S. 582, 596 [We have also indicated that make whole remedies are not ordinarily appropriate in private actions seeking relief for violations of statutes passed by Congress pursuant to its power under the Spending Clause to place conditions on the grant of federal funds. PennhurstStateSchool v. Halderman, 451 U.S. 1, 15 (1981)].)

[33] See Cort v. Ash (1975) 422 U.S. 66, 78 [a factor in determining congressional intent for creating a private right of action is whether the plaintiff is one of the class for whose especial benefit the statute was enacted, . . . ]; Suter v. Artist M., supra, 503 U.S. 347, 357 [referring to the child beneficiaries of the Act].

[34] Many other subdivisions in section 671, subdivision (a) refer to foster children sufficient to indicate they are the intended beneficiaries of the Act: subsection (9)(A) [requiring reports of suspected instances of physical or mental injury, sexual abuse or exploitation, or negligent treatment or maltreatment of a child receiving aid . . .  under circumstances which indicate that the childs health or welfare is threatened thereby;  . . . ]; subsection (14) [requires the state to establish specific goals as to the maximum number of children in foster care longer than 24 months]; subsection (15)(A) [states the childs health and safety shall be the paramount concern; . . . ]; subsection (15)(B) [states reasonable efforts shall be made to preserve and reunify families]; subsection (16) [directs the state to develop a case plan for each child receiving foster care maintenance payments]; subsection (22) [requires standards to ensure children in foster care placement are provided quality services that protect the safety and health of the children]; subsection (24) [requires a certification prospective foster parents will be prepared adequately with the appropriate knowledge and skills to provide for the needs of the child, . . . ].

[35]Gonzaga University v. Doe, supra, 536 U.S. 273, 280.

[36]Gonzaga University v. Doe, supra, 536 U.S. 273, 287.

Congresss stated purpose in adopting the Act was [f]or the purpose of enabling each State to provide, in appropriate cases, foster care and transitional independent living programs for children who otherwise would have been eligible for assistance . . . and adoption assistance for children with special needs . . . . (42 U.S.C. 670.)

[37]Suter v. Artist M., supra, 503 U.S. 347, 360-361.

[38]County of Sacramento v. Lewis (1998) 523 U.S. 833, 845-846.

[39]County of Sacramento v. Lewis, supra, 523 U.S. 833, 846.

[40]County of Sacramento v. Lewis, supra, 523 U.S. 833, 846, quoting Rochin v. California (1952) 342 U.S. 165, 172-173.

[41]County of Sacramento v. Lewis, supra, 523 U.S. 833, 849.

[42] In light of our conclusions we need not reach the Countys alternative argument it is protected from liability under the doctrines of absolute and/or qualified immunity.