Foster v. Missouri Department of Health & Senior Services ( 2013 )

United States Court of Appeals
For the Eighth Circuit
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No. 12-3887
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Essie G. Foster, individually, and as majority shareholder in a closely held
corporation, Y. I. W. Inc. Home Healthcare, Inc.; Ralph Foster, individually and as
a major shareholder of a closely held corporation, Y.I.W. Inc. Home Healthcare,
Inc.; Y.I.W. Home Healthcare, Inc., a Missouri Corporation
lllllllllllllllllllll Plaintiffs - Appellants
v.
Missouri Department of Health and Senior Services, a Missouri State Agency;
Debbie Hanson, individually and in her representative capacity as a Supervisor of
the Employee Disqualification Unit of Defendant Missouri Department of Health
and Senior Services; Patricia M. Watkins, individually and in her representative
capacity as Investigator/Counsel for Employee Disqualification Unit of Defendant
Missouri Department of Health and Senior Services; Missouri Department of
Social Services Missouri Health Net Division, Formerly doing business as
Division of Medical Services, a Missouri State agency
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: September 25, 2013
Filed: November 13, 2013
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Before MURPHY, MELLOY, and SHEPHERD, Circuit Judges.
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MURPHY, Circuit Judge.
Essie Foster, her husband, and their jointly owned company brought this action
under 42 U.S.C. § 1983 against Debbie Hansen and Patricia Watkins, two employees
of the Missouri Department of Senior and Health Services, alleging violations of their
due process rights. The district court1 granted summary judgment to Hansen and
Watkins on the basis of qualified immunity, and the Fosters appeal. We affirm.
I.
Essie Foster and her husband Ralph Foster own Y.I.W. Home Healthcare
Services, Inc., a company which provides home health care services to Medicaid
recipients for the Missouri Department of Health and Senior Services. While Foster
was an employee of the company, the Department notified her that a patient had filed
a credible complaint of financial exploitation against her and that it had begun
proceedings to place her on a list it maintains of persons disqualified from working
for a variety of state agencies and private home health care entities.
Foster filed an administrative appeal of the listing proceedings, which she later
abandoned after entering into a settlement agreement with Hansen, the director of the
unit in charge of maintaining the disqualification list, and Watkins, the unit's counsel.
They agreed to stay her placement on the list as long as she took certain actions.
These included making monthly payments to the complaining patient's daughter and
completing the Department's training program for home health care providers. The
agreement stated that Foster's failure to "abide by the terms of this agreement," would
result in her "immediate" placement on the disqualification list "without further
hearing or appeal."
1
The Honorable Rodney W. Sippel, United States District Judge for the Eastern
District of Missouri.
Although Foster made payments, she made them late, to the wrong person, and
in amounts that were fractionally too large. Department attorney Watkins sent Foster
three letters notifying her of her failure to comply with the agreement. Foster did not
respond, and Watkins sent a fourth letter requiring Foster to comply before a given
deadline or be placed on the disqualification list. Foster wrote to Hansen and
Watkins protesting that she had "substantially performed" the agreement and asking
them to reopen her appeal of the listing proceedings. Hansen and Watkins did not
respond to her letter, but instead instructed a Department employee to call the Y.I.W.
Home Healthcare office and notify Foster that she was being placed on the list. The
same employee told a person working for Y.I.W. Home Healthcare that Foster was
being placed on the list and then, after being transferred to Foster, told Foster directly
that the Department would contact her. The parties dispute whether anyone in the
Department attempted to contact Foster again. Hansen did place Foster's name on the
list, and she later testified that the unit's practice at the time was to notify individuals
orally of their placement and to ask their employers to confirm in writing that the
disqualified employees had been terminated.
At the time of Foster's placement on the disqualification list, Y.I.W. Home
Healthcare was applying to renew its service provider agreement with the
Department. Missouri law prohibits the Department from granting provider contracts
to companies employing individuals on the disqualification list. Hansen and Watkins
notified HealthNet, the unit in charge of reviewing provider applications, when
Foster's name was listed. Although Foster had retired from her employee position at
Y.I.W. Home Healthcare before her listing, she remained one of its owners.
Department and HealthNet agents were aware of her retirement, but they denied the
company's renewal application because Foster continued to be named as a company
director.
In late 2010, the Fosters and Y.I.W. Home Healthcare brought this action under
42 U.S.C. § 1983 against the Department, HealthNet, and Hansen and Watkins in
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their official and individual capacities. They alleged the Department failed to provide
Essie Foster with actual notice of her placement on the disqualification list and thus
deprived the Fosters and their company of due process. They also alleged state
claims of tortious interference with contract expectancy, malicious prosecution, and
abuse of process. The Department, HealthNet, and Hansen and Watkins moved for
summary judgment.
In August 2012 the district court granted their motion in part, dismissing the
federal claims against the Department, HealthNet, and Hansen and Watkins in their
official capacities. The court decided that the claims were either barred by the
Eleventh Amendment or by Missouri's sovereign immunity statute. In November
2012 the district court granted a second motion for summary judgment, dismissing
the Fosters' individual capacity claim against Hansen and Watkins on the basis of
qualified immunity and declining to exercise supplemental jurisdiction over the state
law claims.
The Fosters appeal only the district court's grant of summary judgment to
Hansen and Watkins on their individual capacity claims, arguing that the two were
collaterally estopped from asserting qualified immunity and that there were
deficiencies in the notice that the Fosters received before Essie was placed on the list.
As a preliminary matter, we reject the Fosters' collateral estoppel claim. This court
ordinarily "will not consider arguments raised for the first time on appeal." Wiser v.
Wayne Farms, 411 F.3d 923, 926 (8th Cir. 2005) (citations omitted) (internal
quotation marks omitted). The Fosters did not raise collateral estoppel before the
district court, and we decline to consider it now.
This court reviews a grant of summary judgment de novo. Argenyi v.
Creighton Univ., 703 F.3d 441, 446 (8th Cir. 2013). Facts must be construed
favorably for the losing party, and the Fosters are to be given the benefit of all
reasonable inferences in the record. Id. Summary judgment is appropriate only if
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there is no genuine dispute "as to any material fact and the movant is entitled to
judgment as a matter of law." Id. When reviewing a grant of summary judgment on
qualified immunity grounds, we determine, "(1) whether the facts shown by the
plaintiff make out a violation of a constitutional or statutory right, and (2) whether
that right was clearly established at the time of the defendant's alleged misconduct."
Winslow v. Smith, 696 F.3d 716, 731 (8th Cir. 2012). To be "clearly established,"
the "contours of the right [must be] sufficiently clear that a reasonable official would
understand that what he is doing violates that right." Id. at 738. Although officials'
specific actions need "not previously have been held unlawful," a "general
constitutional rule already identified in the decisional law" must apply to the "specific
conduct in question." Id. The court "may decide which determination to make first."
Pearson v. Callahan, 555 U.S. 223, 235–36 (2009).
The Fosters argue that their procedural and substantive due process rights were
violated when Hansen and Watkins placed Essie on the disqualification list without
providing her final oral notice or requesting written confirmation from Y.I.W. Home
Healthcare's that it had terminated her. They allege that Essie's placement on the list
deprived them of her protected interest in employment and their company's interest
in a renewal of its provider contract with the Department. The Fourteenth
Amendment provides that "[n]o State . . . shall . . . deprive any person of life, liberty,
or property, without due process of law." U.S. Const. amend. XIV § 1. Due process
has both a procedural and substantive component. Schmidt v. Des Moines Pub. Sch.,
655 F.3d 811, 816–17 (8th Cir. 2011).
We first address the Fosters' claim that their procedural due process rights were
violated. Procedural due process entitles a person to "predeprivation notice and
hearing" where "deprivations of property are authorized by an established state
procedure." Keating v. Neb. Pub. Power Dist., 562 F.3d 923, 928 (8th Cir. 2009)
(emphasis added). The notice requirement of due process is satisfied by actual notice,
Hroch v. City of Omaha, 4 F.3d 693, 696 (8th Cir. 1993), and the hearing requirement
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is met by providing an opportunity for a hearing at a meaningful time and in a
meaningful manner. Keating, 562 F.3d at 928.
The record indicates that Hansen and Watkins provided Essie Foster with
actual notice of her placement on the list. Their original letter notified her that the
patient complaint had triggered listing proceedings against her. The settlement
agreement stated that Essie would be immediately listed without further hearing or
appeal if she violated its terms. After Essie failed to perform the agreement's required
actions, Watkins sent her three letters warning her that she was in breach. When
Essie did not respond, Watkins sent a fourth letter stating that she had breached the
settlement agreement and notifying her that her name would be listed unless she cured
the breach by a specific date. The deadline passed, and a unit employee called Y.I.W.
Home Healthcare's office and told the employee who answered that Essie's name was
being listed. Essie also had an opportunity to be heard in a meaningful time and
manner because she exercised her statutory right to appeal the listing proceedings that
Hansen and Watkins had initiated. She nevertheless chose to abandon her appeal and
enter into a settlement agreement which would have kept her name permanently off
the disqualification list had she complied with it.
The Fosters also provide no evidence that the failure to give Essie additional
notice and request written confirmation of her termination violated their substantive
due process rights. Substantive due process violations occur where there are
"violations of personal rights so severe, so disproportionate to the need presented, and
so inspired by malice or sadism rather than a merely careless or unwise excess of zeal
that it amounted to brutal and inhumane abuse of power." Winslow, 696 F.3d at 736.
There is no evidence in this record that Hansen and Watkins were inspired by
"malice" or "sadism," or that their failure to provide the Fosters extra notice
"amounted to a brutal and inhumane abuse of power." Id.
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We can find no authority or "general constitutional rule," see id. at 731,
requiring Hansen and Watkins to provide Foster final oral notice or request written
confirmation of her termination in addition to the notice and opportunity for hearing
they had already provided. We conclude that placing Essie Foster on the
disqualification list in these circumstances was not a deprivation of the Fosters'
clearly established due process rights and that Hansen and Watkins are thus entitled
to qualified immunity on the Fosters' individual capacity claims against them.
The Fosters also argue that the Department violated their due process rights by
denying its renewal of Y.I.W. Home Healthcare's provider agreement because of
Essie's disqualification and her continued involvement with the company. This claim
against Hansen and Watkins is without merit because the decision to deny the
company's application was not made by them, but by other agents of the Department.
II.
Because Hansen and Watkins were entitled to qualified immunity on the
§ 1983 claims brought by the Fosters, we affirm the judgment of the district court.
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