In the Matter of the Appeal by Kind Heart Daycare, Inc. of the Order of License Revocation and the Appeal by Yasmin Muhina Salim of the Disqualification Determination, Appellants,
Commissioner of Human Services, Respondent.
of Appeals Office of Appellate Courts
A. Gangi, Daniel J. Bellig, Farrish Johnson Law Office,
Chtd., Mankato, Minnesota, for appellants.
Swanson, Attorney General, Heather N. Kjos, Assistant
Attorney General, Saint Paul, Minnesota, for respondent.
person charged with obtaining "the receipt of payments
to which the individual is not entitled" under Minn.
Stat. § 256.98, subd. 1(3) (2016), is liable only if the
person receives payments for public assistance to which the
person would not have otherwise been entitled in the absence
of a misrepresentation or concealment.
Minnesota Department of Human Services did not violate Minn.
Stat. § 14.69 (2016) by revoking a child care
provider's license and disqualifying its owner.
court of appeals engaged in proper judicial review of the
Minnesota Department of Human Services (the Department)
determined by a preponderance of the evidence that appellant
Yasmin Salim wrongfully obtained public assistance for
appellant Kind Heart Daycare, Inc. (Kind Heart), in violation
of Minn. Stat. § 256.98, subd. 1(3) (2016). Kind Heart
had submitted bills to Blue Earth County (the County) under
the State of Minnesota's Child Care Assistance Program
(CCAP), representing that children from low-income families
were present at Kind Heart when in fact they were absent or
no longer enrolled with the daycare. The Department
disqualified Salim from providing daycare services and
revoked Kind Heart's license. The Commissioner of Human
Services (the Commissioner) issued an order affirming these
decisions, and the Commissioner's order was affirmed in
its entirety by the court of appeals. Appellants Salim and
Kind Heart assert that: (1) they were actually entitled to
the CCAP payments; (2) the Department's actions violated
Minn. Stat. § 14.69 (2016); and (3) the court of
appeals' review failed to provide adequate judicial
oversight of agency action. We affirm.
Minnesota's Child Care Assistance Program.
helps low-income parents pay for child care. In order for a
licensed provider like Kind Heart to receive CCAP payments,
it must fill out attendance records using CCAP's MEC2PRO
billing system. Each county uses this billing system to
administer CCAP and disburse payments directly to the
provider. The Department, which is responsible for licensing
child care providers, has a CCAP Child Care Provider
Guide that sets forth the requirements to
receive CCAP payments.
Guide extensively addresses how to receive CCAP payments for
days on which a child is absent. CCAP "will pay for up
to 25 absent days per calendar year, per child, " but
the provider may bill CCAP for those absent days only if the
"hours are identified in the provider's attendance
records as absent." The Guide includes a sample Billing
Form, which shows how to fill out the attendance record and
expressly includes a section for identifying absences. The
Guide directs, "Fill in an 'A' for any day the
child is absent." The Guide also states, "Providers
who give false information on a Billing Form could be
disqualified from receiving future CCAP payments and could
face criminal charges."
Kind Heart's billing history.
was the sole owner, controlling individual,  and license
holder for Kind Heart. CCAP payments for services provided by
Kind Heart were directly deposited into a Wells Fargo
business account in Salim's name. Appellants primarily
obtained CCAP payments from the County. In order to obtain
such payments, Salim signed a Blue Earth County MEC2PRO Child
Care Provider Assurance Form, wherein she acknowledged the
importance of (1) ensuring that CCAP funds were appropriately
utilized, and (2) preventing the misuse of public funds. In
the same form, Salim authorized the County to access Kind
Heart's child attendance records to ensure accurate
submission of billing forms and appropriate use of CCAP
funds. Kind Heart also maintained records acknowledging that
Salim was the license holder for Kind Heart and that
"wrongfully obtaining child care assistance will be
investigated and may be charged as a crime."
October 2013 until March 14, 2014, Diane Sorenson was
responsible for submitting Kind Heart's CCAP bills, which
Salim occasionally reviewed. Both Salim and Sorenson were
listed as authorized users on the MEC2PRO billing system. The
authorization forms included language to "prevent misuse
of public funds, " including an acknowledgment that the
provider is required to "authenticate the accuracy of
the billing forms."
eventually resigned from Kind Heart. Her last day was March
14, 2014. Sorenson last submitted a bill seeking a CCAP
payment on March 3, 2014.
Sorenson left, Salim set up a new MEC2PRO account for which
she was the sole authorized user. The Department alleges that
an "egregious amount of discrepancies" began to
appear in Kind Heart's CCAP bills. Salim asserts that she
asked another employee, Kim Patterson, to take over
Sorenson's CCAP billing responsibilities, but Patterson
asserts that she only submitted two weeks' worth of bills
and that Salim did the vast majority of the billing after
Sorenson left. Salim disputes Patterson's account and
alleges that Patterson did the billing.
The County's investigation.
spring of 2014, the Blue Earth County Sheriff's Office
received reports indicating that Kind Heart was committing
child care financial fraud. Investigator Ginger Peterson
confirmed hundreds of instances in March, April, and May
2014, in which Kind Heart had submitted CCAP bills to the
County, representing that children were present at Kind
Heart, when in fact they were absent or no longer enrolled in
the daycare. In total, the County determined that there was
probable cause to believe that Kind Heart had billed for $12,
437.94 to which it was not entitled. On June 17, 2014, the
State of Minnesota charged Salim with one felony count of
wrongfully obtaining child care payments, in violation of
Minn. Stat. § 256.98, subd. 1(3), and two additional
felony counts of theft. The criminal case has not been
The Department's actions.
County informed the Department of its investigation and the
charge against Salim. The Department considered whether the
evidence supported disqualifying Salim from providing child
care services. Specifically, Minn. Stat. § 245C.14,
subd. 1(a)(2) (2016), requires the Commissioner to disqualify
an individual from direct contact with persons receiving
child care services if a preponderance of the evidence
indicates that the individual has committed an act that meets
the definition of a crime listed in Minn. Stat. §
245C.15 (2016). That statute's list includes Minn. Stat.
§ 256.98 (2016), which states:
A person who commits any of the following acts or omissions
with the intent to defeat the purposes of . . . child care
assistance programs . . . is guilty of theft . . .: (3)
obtains or attempts to obtain, alone or in collusion with
others, the receipt of payments to which the individual is
not entitled as a provider of subsidized child care, or by
furnishing or concurring in a willfully false claim for child
Minn. Stat. § 256.98, subd. 1; see Minn. Stat.
18, 2014, the Department sent an e-mail asking for one of its
staff attorneys to volunteer to conduct a
preponderance-of-the-evidence (POE) review under Minn. Stat.
§ 245C.14, subd. 1(a)(2). The e-mail's subject line
was "Be a part of history in the making…"
and asked if there was a staff attorney who had "time to
drop everything and review this POE today?" The e-mail
asked that this be done "right away."
the staff attorneys for the Department volunteered to conduct
the POE review. She correctly understood that a POE review
"is a record review to determine whether it's more
likely than not that the person committed an act" that
warrants disqualification under Minn. Stat. § 245C.14,
which includes violating Minn. Stat. § 256.98 by
wrongfully obtaining child care assistance. But she
mistakenly thought that "[p]robable cause is higher than
preponderance of evidence." The staff attorney reviewed
the County's incident report, a supplemental report, and
the criminal complaint. Based on these documents, she
determined that a preponderance of the evidence supported the
conclusion that Salim had wrongfully obtained child care
on the staff attorney's report, on June 20, 2014, the
Department disqualified Salim from "any position
allowing direct contact with, or access to, persons receiving
services from programs licensed by [the Department]."
Because Salim was the controlling individual for Kind Heart,
the Department revoked Kind Heart's child care center
license on June 23, 2014. The Department also advised county
CCAP administrators to make Kind Heart ineligible for future
30, 2014, Kind Heart appealed the license revocation.
Consistent with standard procedure, Kind Heart was allowed to
continue operating pending a final order from the
Commissioner, and Salim submitted a supervision plan allowing
her to continue working at Kind Heart in the interim.
7 and 9, 2014, the Department sent two licensing
investigators to Kind Heart to see whether the facility was
complying with licensing requirements while the appeal was
pending. The Department identified 14 new licensing
violations, including failure to properly supervise Salim
after her disqualification, failure to submit a background
study request for an employee who had direct contact with
children, failure to properly supervise children, failure to
have required documentation establishing proper employee
education and training, failure to maintain required
staff-to-child ratios, failure to provide meals containing
sufficient nutritional value, and hygiene violations. On July
24, 2014, the Department issued a supplemental order of
license revocation to Kind Heart, determining that the
violations constituted "additional reasons to revoke the
license." That same day, Salim requested reconsideration
of the Department's order to disqualify her.
Salim's reconsideration request, a senior staff attorney
for the Department (not the staff attorney who conducted the
POE review) reviewed Salim's disqualification on July 31,
2014, to determine whether the disqualification should be set
aside. The review was governed by Minn. Stat. § 245C.22,
subd. 4 (2016), which allowed the Department to set aside
Salim's disqualification upon a showing that she did not
"pose a risk of harm to any person served by" Kind
Heart. The statute required the senior staff attorney to
consider nine factors in determining whether Salim posed a
risk of harm. Minn. Stat. § 245C.22, subd. 4(b)(1)-(9).
The senior staff attorney expressly analyzed each factor and
determined that Salim failed to show that she did not pose a
risk of harm. Accordingly, Salim's request to set aside
her disqualification was denied.
The Administrative Law Judge's decision.
Department consolidated Salim's disqualification, Kind
Heart's license revocation, the senior staff
attorney's decision not to set aside Salim's
disqualification, and the supplemental revocation order for
the 14 licensing violations, for consideration by an
administrative law judge (ALJ). The ALJ held an evidentiary
hearing over 4 days.
subsequently issued findings of fact, conclusions of law, and
recommendations. The ALJ found that Kind Heart's
post-Sorenson CCAP billings from March to May 2014 were
submitted by Patterson and Salim, and that the "pattern
of errors in the bills they submitted demonstrated
incompetence in billing and dishonesty." The ALJ
determined that Patterson's billing "demonstrate[d]
a lack of competency" but there was "no evidence
she intentionally submitted false billings." The ALJ
determined that Salim, however, "more likely than not,
had knowledge of both Patterson's erroneous billing as
well as her own, " that "she knew of
Patterson's errors and failed to correct them, " and
that "it is more likely than not that Salim knew exactly
what was going on with the bills, whether she submitted them
herself or not." The ALJ ultimately found that Salim
"billed public child care assistance for $9, 434 that
[she] was not entitled to."
also found that, although the staff attorney "mistakenly
believed that the preponderance of evidence review . . . was
a lower standard of review than the probable cause required
for an arrest warrant . . . the evidence demonstrates that it
is more likely than not that [Salim] wrongfully obtained
public child care assistance for Kind Heart."
Accordingly, the ALJ concluded that Salim "wrongfully
obtained child care assistance in violation of Minn. Stat.
§ 256.98 and, therefore, was properly disqualified
pursuant to Minn. Stat. § 245C.14."
ALJ disagreed with the senior staff attorney's
determination that Salim posed a risk of harm to people
served by Kind Heart. The ALJ found that "the purpose of
[Salim's] activity was to aid families in obtaining and
keeping access to child care." Accordingly, the ALJ
recommended that the Department's decision to disqualify
Salim was proper, but that the disqualification be set aside.
the ALJ concluded that the 14 licensing violations in the
supplemental revocation order did not "reflect the need
for license revocation." Thus, the ALJ concluded and
recommended that the order revoking Kind Heart's license
The Commissioner's order.
August 6, 2015, the Commissioner issued a final order,
through a designee, accepting in part and rejecting in part
the ALJ's recommendations.
the Commissioner accepted the ALJ's recommendation to
disqualify Salim. Specifically, the Commissioner adopted the
ALJ's finding regarding the staff attorney's mistaken
understanding of the relative burdens of proof, and the
ALJ's conclusion that a preponderance of the evidence
supported a determination that Salim wrongfully obtained
public child care assistance. Regarding Salim's intent
and knowledge of the wrongful billing, the Commissioner
agreed with the ALJ's finding that Salim either submitted
the erroneous bills herself or knew of them and did not stop
them. Accordingly, the Commissioner concluded that the
Department properly disqualified Salim. The Commissioner
amended the dollar amount fraudulently obtained to $9, 766
from the $9, 434 found by the ALJ.
the Commissioner disagreed with the ALJ's conclusion that
Salim did not pose a risk of harm and rejected the ALJ's
recommendation that her disqualification should be set aside.
The Commissioner struck the ALJ's finding that "the
purpose of [Salim's] activity was to aid families in
obtaining and keeping access to child care, " instead
finding that Salim posed a risk of harm due to "the harm
suffered by the government and other families needing child
care." In a supporting memorandum, the Commissioner
I rejected the ALJ's recommendation that [Salim's]
disqualification should be set aside. The ALJ found that
[Salim] established that she does not pose a risk of harm to
children enrolled in Kind Heart and that the Department had
not demonstrated otherwise. I rejected both the findings and
the ALJ's conclusion. As the Department pointed out,
[Salim's] fraudulent billing is an indication that she
may provide erroneous information in other situations.
[Salim's] failure ...