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Cole v. Ohio Department of Mental Health and Addiction Services

Court of Appeals of Ohio, Eighth District, Cuyahoga

April 13, 2017

ELOC COLE I, ET AL., APPELLANTS
v.
OHIO DEPARTMENT OF MENTAL HEALTH AND ADDICTION SERVICES, APPELLEE

         Administrative Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-16-862781.

          ATTORNEY FOR APPELLANTS James J. Leo James J. Leo Law Office

          ATTORNEY FOR APPELLEE Mike DeWine Ohio Attorney General BY: Stephanie Deters Assistant Attorney General Health and Human Services

          BEFORE: E.A. Gallagher, P.J., McCormack, J., and Celebrezze, J.

          JOURNAL ENTRY AND OPINION

          EILEEN A. GALLAGHER, PRESIDING JUDGE

         {¶1} Appellants Eloc Cole I, Eloc Cole II and The Farmington (collectively, "appellants" or "the facilities") appeal the decision of the Cuyahoga County Court of Common Pleas (the "common pleas court") affirming an order of appellee Ohio Department of Mental Health and Addiction Services ("MHAS" or "the agency") in which it revoked the adult care facility ("ACF") licenses of Eloc Cole I and Eloc Cole II and denied the renewal of The Farmington's ACF license pursuant to R.C. 5119.34(F)(2)(a) and Ohio Adm.Code 5122-33-05(G). Appellants contend that there is insufficient reliable, probative and substantial evidence to uphold the revocation and nonrenewal of appellants' licenses, that the agency and common pleas court misinterpreted and misapplied Ohio Adm.Code 5122-33-23(B)(15) and Ohio Adm.Code 5122-33-16 and that Eloc Cole II should not have been held to have violated Ohio Adm.Code 5122-33-16(B) because it was impossible for it to comply with the rule. Finally, appellants contend that that the agency failed to comply with the procedures set forth in R.C. 119.07 in suspending admissions at the facilities without a timely hearing, violating their right to due process. For the reasons that follow, we affirm the decision of the common pleas court.

         Factual and Procedural Background

         {¶2} Appellants are ACFs located in Cuyahoga County. ACFs are residential care facilities that provide accommodations, supervision and personal care services to unrelated adults. Juanita Ladson, a licensed ACF operator since 1999, is the owner and manager of each of the ACFs involved in the case. ACFs are required to be licensed by MHAS and are required to have written resident agreements with each resident of the facility, memorializing the terms of residency at the facility including the services to be provided by the ACF and the rent and any additional sums to be paid to the ACF for such services. Ohio Adm.Code 5122-33-16. Among the items addressed in the resident agreement is whether the ACF is to manage the resident's finances.

         {¶3} In January 2015, MHAS received a complaint from Connections: Health Wellness and Advocacy ("Connections"), a local behavioral healthcare agency, regarding suspicious transactions involving the bank account of one of its clients, J.C. J.C. had been a resident of Eloc Cole I from February 2014 until sometime in late October 2014, when he was transferred to a nursing home.[1] On January 6, 2015, J.C.'s case worker, Lisa Rich, visited him at the nursing home. During her visit, Rich took J.C. to the bank so that he could withdraw money to purchase snacks and cigarettes. While at the bank, they obtained a copy of J.C.'s bank statement. In reviewing the bank statement, Rich noticed four $500 ATM withdrawals on September 22, 2014 and October 1, 16 and 31, 2014 - two of which had occurred on dates J.C. had been hospitalized or in a lock-down room at the nursing home. Rich testified that she asked J.C. about the transactions and that he said he knew nothing about them. When Rich asked J.C. how he obtained funds when he was at Eloc Cole I, J.C. told Rich that he received his spending money from Ladson, i.e., $20 on Mondays and sometimes $20 on Friday. J.C.'s resident agreement with Eloc Cole I expressly stated that J.C. did not wish to have Eloc Cole I manage his funds.

         {¶4} Rich reported the suspicious transactions on J.C.'s bank statement to her supervisor and her supervisor, in turn, notified Michelle Myers, the residential specialist at the Cuyahoga County Alcohol, Drug Addiction and Mental Health Services ("ADAMHS") Board. Based on the concerns raised by Connections, the ADAMHS Board and MHAS commenced an investigation into Ladson's handling of resident finances. During the course of its investigation, MHAS discovered potential financial misconduct by Ladson involving J.C. and two other individuals - another resident of Eloc Cole I, C.B., and a resident of Eloc Cole II, E.H.

         {¶5} C.B. was a resident of Eloc Cole I from October 2010 through June 2015. Although C.B.'s resident agreement did not authorize Eloc Cole I to provide transportation services or cable services for C.B.[2] sometime after C.B. signed his resident agreement, Eloc Cole I began charging C.B. an additional $61 each month (beyond the sum specified in the resident agreement) for cable ($50 per month), a newspaper ($10 per month) and transportation ($1 per month). Ladson could not state when Eloc Cole I began charging C.B. an additional $61 per month for these services.

         {¶6} E.H. was a resident of Eloc Cole II from August 2013 until late May or early June 2015. Although E.H. expressly stated in his resident agreement that he did not wish to have the facility manage his funds, in or around February 2014, Ladson took him to the Social Security Administration ("SSA") office where he completed paperwork making her the payee of his social security insurance ("SSI") benefit payments and opened a checking account in the name of "EH Benef Juanita Ladson Rep Payee" from which to manage E.H.'s funds. Ladson thereafter received SSI checks as a payee for E.H. There was no documentation in E.H.'s file amending his resident agreement or otherwise demonstrating that E.H. had requested that Ladson manage his funds and there was no evidence Ladson had provided E.H. with a complete or final accounting of his funds after he left the facility.

         {¶7} On February 20, 2015, MHAS issued a suspension of admissions notice (the "February 20, 2015 notice") to Ladson relating to Eloc Cole I, Eloc Cole II and The Farmington, ordering her to "immediately suspend admission of residents to all of your facilities" pending further investigation. The notice stated that she had violated Ohio Adm.Code 5122-33-23 by: (1) withdrawing funds from a resident's bank account on multiple occasions "without permission or authorization from the resident" and (2) "requiring a resident to pay an additional $61 per month for cable, without identifying the charge in the resident agreement." MHAS directed Ladson to submit a written plan of correction along with supporting documentation addressing various concerns outlined in the notice by March 9, 2015, and stated that "effective immediately, " Ladson was precluded from exercising any personal control over any resident's funds. The notice further stated that the order suspending admissions would be terminated when MHAS "has received and approved the corrective actions required" and advised Ladson that she could request a conference on the order of suspension.

         {¶8} On March 11, 2015, Ladson submitted her initial plan of correction. The following day, a telephone conference was held regarding the suspension of admissions (the "March 12, 2015 telephone conference"). Ladson, appellants' counsel and various representatives of MHAS and the ADAMHS Board participated in the telephone conference and discussed Ladson's alleged financial misconduct involving J.C. and C.B. At the conclusion of the conference, Howard Henry, staff counsel for MHAS's bureau of legal services, indicated that MHAS would issue an order continuing the suspension of admissions while it reviewed the plan of correction Ladson had submitted. Appellants' counsel stated that he had no objection to the proposed course of action and further indicated that it "sounds like a fine plan." Accordingly, on March 17, 2015, MHAS issued an adjudication order continuing the suspension of admissions (the "suspension order") "[u]ntil such time as the plan of correction has been reviewed and implemented." Several weeks later, at the request of MHAS, Ladson submitted additional information and documentation that was allegedly missing from her initial plan of correction.

         {¶9} On July 13, 2015, MHAS sent a letter to Ladson notifying her that it sought to revoke the ACF licenses for Eloc Cole I and Eloc Cole II and to deny The Farmington's application to renew its ACF license (the "July 13, 2015 notice"). The July 13, 2015 notice listed ten charges consisting of violations of R.C. 5119.34, Ohio Adm.Code 5122-33-12(A)(3) and (5), Ohio Adm.Code 5122-33-16(B)(2) and (4), Ohio Adm.Code 5122-33-21(C)(3) and Ohio Adm.Code 5122-33-23(B)(15). The July 13, 2015 notice did not specifically identify the residents involved in each of the charges.

         {¶10} Ladson requested a hearing on the proposed action and a hearing was originally scheduled for October 19, 2015. Ladson's counsel also requested that MHAS disclose the identity of the residents involved in each of the charges at issue. MHAS complied with his request. Because it had not identified the residents in the July 13, 2015 notice, on October 5, 2015, MHAS sent a letter to Ladson rescinding the July 13, 2015 notice and indicating that MHAS would "reissu[e] the proposed revocation and denial of renewal application under separate cover."

         {¶11} On October 16, 2015, MHAS reissued its notice of proposed action (the "October 16, 2015 notice"). The October 16, 2015 notice was nearly identical to the July 13, 2015 notice except that the October 16, 2015 notice identified the residents involved in each of the charges against Ladson by their initials.[3] Once again, Ladson requested a hearing on the proposed action.

         {¶12} A hearing was held on January 25 and 26, 2016, before a hearing examiner. In support of its proposed action, MHAS offered testimony from Ladson (on cross-examination), Rich, Myers, Terri Hill (behavioral standard surveyor for MHAS) and Janel Pequignot (chief of licensure and certification for MHAS). MHAS's witnesses testified regarding the charges against Ladson and the results of its investigation, explaining that MHAS was seeking revocation because Ladson: (1) had exploited J.C. and made unauthorized ATM withdrawals from J.C.'s bank account when she was not authorized under the resident agreement to manage his funds, (2) had charged C.B. additional sums for services not included in his resident agreement, (3) had received checks as payee for E.H. when she was not authorized under the resident agreement to manage his funds and (4) had failed to provide a final accounting of the funds she had received as E.H.'s SSI payee to E.H. when he left the facility. MHAS also argued that because Ladson was both the individual involved in the exploitation of J.C. and the owner and manager of the facilities at issue, there was no one to supervise her to protect residents from her actions. MHAS sought to deny The Farmington's application for renewal of its ACF license based on the same charges.

         {¶13} Ladson testified on her own behalf at the hearing, denying any wrongdoing. Ladson explained that when J.C. moved into Eloc Cole I in February 2014, his prior caregiver gave her an ATM card linked to his checking account along with the passcode. Ladson indicated that J.C.'s monthly SSI benefit check was deposited into the account and that she promptly changed the passcode and began making transactions using the ATM card to pay J.C.'s rent. According to Ladson, J.C.'s ATM card remained "in his book" at the facility until it was time to go to the bank. Sometimes J.C. would be present when she made ATM withdrawals using his ATM card and other times she "just did it [her]self." During the March 12, 2015 telephone conference, she stated: "I kind of took over his whole financial affairs. Yes, I did."[4]

         {¶14} Ladson admitted making four $500 ATM withdrawals from J.C.'s bank account on September 22, October 1, October 16 and October 31. She initially testified at the hearing that the $500 she withdrew on October 1 was used to pay part of J.C.'s rent, i.e., that $243 went to Ladson for rent and the remaining funds went to J.C. for his "pocket money to purchase cigarettes and coffee. However, she later testified that all four ATM withdrawals were for the purpose of "tak[ing] care of some funeral arrangements [for] J.C."[5] Ladson testified that when she withdrew money from J.C.'s account, she placed the cash in an envelope in a safe at the facility to which only she had access.

         {¶15} Ladson claimed that prior to October 2014, she and J.C. had discussed taking money out of his bank account and putting it aside for his advanced directives. Although she withdrew $2, 000 from J.C.'s account, Ladson testified that she never, in fact, set up any advanced directives because "he was not there for us to plan it." She indicated that when she spoke with J.C. regarding saving and planning for his funeral, their discussions "never matured to [the] point" of actually planning for his funeral - just to the point of her withdrawing funds from J.C.'s bank account. There was no documentation supporting any of Ladson's claims.

         {¶16} Shortly after J.C. moved to the nursing home, Ladson destroyed J.C.'s ATM card and purchased a $2, 000 cashier's check payable to "J.C. Advanced Directives." Ladson then brought the check, dated November 7, 2014, to J.C.'s nursing home. The check was negotiated by the nursing home on November 19, 2014. Ladson claimed that she received no compensation or other personal or monetary benefit from handling J.C.'s funds and that she did it simply because it was "the thing to do."

         {¶17} With respect to C.B., Ladson testified that when C.B. moved into Eloc Cole I, the facility only had standard cable provided to a single television in a common area shared by all residents at a cost of approximately $25 per month. She stated that C.B. enjoyed watching television and requested more channels but that she told him she could not afford it. Ladson testified that C.B. told her he would pay for the upgraded cable and that they orally agreed to upgrade the cable and "split the bill." Accordingly, a cable box was installed in C.B.'s room that gave him access to expanded cable channels. She indicated that the total cost of the upgraded cable was initially $79 per month but later increased to $110 per month on average.[6]

         {¶18} Ladson testified that she and C.B. made similar arrangements with respect to the newspaper. She indicated that at the time C.B. moved into the facility, she was receiving a local newspaper only on Sundays. Because C.B. wanted a local newspaper every day, he orally agreed to pay an additional $10 per month to cover the cost of a daily newspaper as well as an additional $1 each month to transport him back and forth to the bank and store.

         {¶19} Ladson produced a handwritten document that she claimed had been signed by C.B. referencing a "monthly cost" of $774 for rent, $50 for cable, $10 for a newspaper and $1 for "transportation to bank." The handwritten document, which Ladson stated was written by "[o]ne of the staff people, " included a partial date of "Sept. 19" (but no year), and Ladson could not state when it was prepared and executed. On February 19, 2015, C.B. executed a formal "Resident Agreement Addendum" authorizing the additional $61 in monthly charges.

         {¶20} With respect to E.H., Ladson testified that E.H. required 24/7 supervision and had developmental and severe mental disabilities. She indicated that several months after E.H. signed the resident agreement, she, E.H. and E.H.'s case manager went to the SSA office because they were "trying * * * to get his finances straight." After E.H.'s case manager left for another appointment, E.H. signed documents enabling Ladson to become his SSI payee. Ladson testified that E.H. was also present when she set up the bank account to manage his funds. Although Ladson claimed that she became E.H.'s payee at his request and with his consent, E.H.'s resident agreement was never updated to authorize her to manage his funds.

         {¶21} Ladson testified that she was E.H.'s SSI payee from approximately January or February 2014 until approximately February or March 2015. Ladson acknowledged that she failed to submit complete financial records to MHAS related to the time period in which she was managing E.H.'s funds and, specifically, that she did not provide financial records for at least eight months in 2014 when she was managing E.H.'s funds or a final accounting when E.H. left Eloc Cole II.

         {¶22} Ladson testified that on April 10, 2015, after she received a "cease and desist order" from MHAS, she withdrew $1, 227 from the bank account she used to manage E.H.'s funds and delivered a cashier's check in that amount to the SSA along with an uncashed SSI check payable to her as E.H.'s payee in the amount of $501. A balance of $.81 remained in the account. Ladson testified that she did not give E.H. a final accounting of his funds because he left suddenly, without a forwarding address, in late May or early June 2015, and that neither E.H. nor his case manager ever requested an accounting of his funds. Ladson testified that she located E.H., in January 2016, at Lutheran Hospital[7] but that when she went back to speak with him a couple of days later, he was gone. As of the date of the hearing, Ladson still possessed $.81 of E.H.'s funds in the bank account she had set up to manage his funds.

         {¶23} On March 29, 2016, the hearing examiner issued his report and recommendation. He recommended that the ACF licenses for Eloc Cole I and Eloc Cole II be revoked and that the renewal application for The Farmington be denied. Specifically, the hearing examiner found that Ladson, without written authorization to manage J.C.'s funds, had withdrawn $2, 000 from his bank account in violation of Ohio Adm.Code 5122-33-12(A)(3) and (5) and Ohio Adm.Code 5122-33-16(B)(2) and (4) and had exploited J.C. in violation of Ohio Adm.Code 5122-33-23(B)(15). He further found that Ladson had improperly charged C.B. additional monthly fees for cable, newspapers and transportation in violation of Ohio Adm.Code 5122-33-16(B)(2) and (4), had improperly become E.H.'s SSI payee without any documentation showing that E.H. had requested her to manage his funds in violation of Ohio Adm. Code 5122-33-16(B)(4) and failed to provide a final accounting to E.H. in violation of Ohio Adm. Code 5122-33-21(C)(3). The hearing examiner held that although none of Ladson's misconduct involved The Farmington, the findings involving the other ACFs she owned and operated justified the denial of The Farmington's license renewal under Ohio Adm. Code 5122-33-03(F)(2).

         {¶24} Ladson filed objections to the hearing examiner's report and recommendation. She argued that the report and recommendation were "missing many critical facts" related to the case and were, therefore, "significantly flawed." She disputed the claim that she was an "unfit manager" and argued that the hearing examiner's determination that she had violated various administrative rules was not supported by the record. Ladson also claimed that her due process rights had been violated because MHAS suspended the admission of residents at her facilities without a timely hearing.

         {¶25} On May 22, 2016, the director of MHAS overruled Ladson's objections, approved the findings of fact, conclusions of law and recommendations of the hearing examiner and entered an adjudication order (1) revoking the ACF licenses of Eloc Cole I and Eloc Cole II and denying the renewal of The Farmington's ACF licenses (the "adjudication order"). Appellants appealed the adjudication order to the Cuyahoga County Court of Common Pleas pursuant to R.C. 119.12.

         {¶26} On September 19, 2016, the common pleas court affirmed the adjudication order, concluding that the order "is supported by reliable, probative, and substantial evidence and is in accordance with law."

         {¶27} Appellants appealed the decision of the common pleas court, raising the following six assignments of error for review:

Assignment of Error No. 1: The lower court erred in affirming the charge that Eloc Cole I financially exploited resident JC when Ms. Ladson accessed his bank account to assist him with a funeral pre-need matter, because Ms. Ladson did so with JC's permission and there is no evidence whatsoever that Ms. Ladson received a "personal or monetary benefit, profit, or gain" - a legislative element of a financial exploitation charge -from her involvement.
Assignment of Error No. 2: The lower court erred in affirming the charge that Eloc Cole I improperly billed JC for assisting him with the pre[-] need matter because Eloc I [sic] did not bill him whatsoever for such assistance and MHAS has misinterpreted and misapplied O.A.C. 5122-33-16.
Assignment of Error No. 3: The lower court erred [in] affirming the charge that Eloc Cole I improperly billed services to resident CB that he did not agree to, because the record reveals that CB did request additional services and CB agreed, in writing, to pay for them; and there is nothing in the law that precludes and [sic] adult care facility from amending its residential agreement to provide additional services that a resident requests and agrees to pay for.
Assignment of Error No. 4: The lower court erred in affirming the charge that Eloc Cole II improperly billed resident EH for helping him manage his funds, because Eloc Cole II did not bill him whatsoever for such assistance and there is no evidence otherwise; and MHAS has misinterpreted and misapplied O.A.C. 5122-33-16.
Assignment of Error No. 5: The lower court erred in finding that affirming that [sic] Eloc Cole II failed to give EH a proper final accounting of his funds, because EH left that facility with no advance notice and did leave a forwarding address at which he could be located, which made giving a final accounting impossible.
Assignment of Error No. 6: The lower court erred in holding MHAS's actions were in accordance with the law when, in fact, MHAS violated Eloc's due process rights by taking away its ability to accept new clients before giving it an administrative hearing, by failing to follow procedures of R.C. 119.07, and by failing to give it a timely hearing.

         Law ...


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