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00U T OF APPEALS
DIVISIM if
2013 JUN 19 AN 8: 31
ST,i
P,Y

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION II
OLYMPIC HEALTHCARE SERVICES II No. 42992 6 II - -

LLC,

Appellant,
V.

DEPARTMENT OF SOCIAL & HEALTH

PUBLISHED OPINION

SERVICES, STATE OF WASHINGTON,

US
BRINTNALL, J. QUINN--

Olympic Healthcare Services II LLC ( Olympic II)appeals the

superior court's decision affirming the Department of Social and Health Services (DSHS)Board
of Appeals' Board)final order revoking its adult family home license. Olympic II argues that ( the Board's reviewing judge ( erred by using preponderance of the evidence as the standard of 1)

proof, 2) ( violated the appearance of fairness doctrine, and (3) erred by concluding that Olympic
II
was

operating overcapacity. Olympic II' legal arguments lack merit and the Board's s

reviewing judge properly concluded that Olympic II was operating overcapacity. We-ffirm. a
FACTS

Galina Baida is a licensed practical nurse. Baida owns Olympic II,an adult family home.

Baida also , owns a second adult family home, Olympic Healthcare Services I (Olympic I).
Olympic
I is located
across

the street from

Olympic

II. The residents of

Olympic

I

are

primarily

No. 42992 6 II - -

adults with developmental disabilities and the residents of Olympic II are adults with dementia.
Baida and her mother
are

the

caregivers

for

Olympic

I.

Baida hires staff as caregivers for

Olympic II. Olympic II is staffed with one caregiver per shift to meet the minimum requirement

of one caregiver per six dementia residents.'
On November 2, 2009, at approximately 1:0. Candace Corey, a DSHS complaint PM, 3
investigator, arrived at Olympic II to conduct an investigation into a complaint received by
DSHS's

Complaint Resolution

Unit.

When Corey arrived at Olympic II, she observed one

caregiver, the 6 residents of Olympic II, and 2 residents from Olympic I. Around 3:0 PM, 2 0
additional residents from Olympic I arrived at Olympic II. Between 3:0 and 4:0 PM, a fifth 3 0

resident from Olympic I arrived at Olympic II resulting in as many as 11 residents from both

homes in Olympic II while Corey was there. During this period of time, there was one caregiver
in the home and Baida, who was primarily speaking with Corey. Based on her observations on November 2, 2009, Corey cited Olympic II for operating

over the maximum license capacity of six residents. Former WAC 388 76 10960 (2008).In - addition to Corey's observations of Olympic II operating overcapacity on November 2,2009, the citation included two additional incidents when residents from Olympic I were at Olympic II. On December 16, DSHS issued a "Stop Placement of Admissions and Revocation of License"

Former WAC 388 76 10195 ( 008). - 2
2

Former WAC 388 76- 10960 reads, in relevant part, DSHS] may impose a remedy or remedies if DSHS] finds any person listed in [
WAC 388 76 10950 has: -

14)Exceeded license capacity in the operation of an adult family home.
2

No. 42992 6 II - -

notice for Olympic II. On January 6,2010, Baida requested an administrative hearing to contest
the stop placement and revocation notice.

At the administrative hearing, Corey testified to the events she had observed on the
afternoon of November 2,2009. Tami Shumake, one of the caregivers working at Olympic II at .

the time of the investigation testified that the residents from Olympic I often came over to

Olympic II on Saturdays when Baida and her mother were at church and there was no caregiver
at

Olympic

I.

Paul Tosch, the Regional Long Term Care Ombudsman, testified that he had about

received two

complaints

Olympic

I residents

spending Saturdays

at

Olympic

II.

On

November 9, 2009, Tosch had received a call from two of his volunteers who reported that the

residents from Olympic I were still being taken to Olympic II on Saturdays. On November 21,

2009, Tosch went to Olympic II to investigate the complaint. He observed four residents from
Olympic
II and two residents from

Olympic

I in the

living

room.

The other two Olympic II

residents were asleep in their rooms.

Baida testified that the Olympic I residents had formed relationships with the Olympic II

residents during a period when all the residents had to reside in one home due to flooding. As a
result, the Olympic I residents would visit the Olympic II residents but they were never required

to go to Olympic II. Prior to allowing Olympic I residents to visit Olympic II, Baida would check with the Olympic II caregiver. Gary Otterness, Olympic II' resident care manager, also s
testified. Otterness's testimony was similar to Baida's.

3

Olympic I suffered serious structural damage during the flooding and was uninhabitable for a

period of time. During this period, Baida had sought and received permission from DSHS to
combine the residents of the two houses temporarily. During the period that Olympic I residents

were combined with Olympic II residents, DSHS carefully monitored the situation and kept in
close contact with Baida.
3

No. 42992 6 II - -

On August 3, 2010, the administrative law judge ( ALJ)issued her initial order. The ALJ
concluded that DSHS had failed to prove Baida

operated Olympic

II

overcapacity.

DSHS

petitioned for Board review of the ALJ's initial order. On April 8, 2011, the Board's reviewing judge issued a review decision and final order.
The Board's reviewing judge based her findings of fact upon careful consideration of the record, including the demeanor and motivations of the witnesses as observed and recognized by the ALJ and the undersigned, respectively; the reasonableness of the testimony and exhibits; the amount of time that has elapsed between when any particular incident occurred and when various individuals provided statements or evidence about that incident; and the totality of the evidence presented.

Administrative Record ( R)at 30. The Board's reviewing judge also made explicit and detailed A credibility findings when there was conflicting evidence.

The Board's reviewing judge concluded that the appropriate standard of proof in this case

was preponderance of the evidence, upon which she made 15 findings of fact specifically related
to the overcapacity allegation. The Board's reviewing judge found that Olympic I residents were

regularly sent to Olympic II because there was no caregiver at Olympic I, especially on
Saturdays
when Baida and her mother
were

at church.

The Board's reviewing judge also

addressed the conflicting testimony by making a detailed credibility finding:
There was substantial evidence put forth by various individuals that Baida] was often absent from [Olympic I]and [Olympic II] on Saturdays; that this was [Baida's] of worship as a Seventh Day Adventist and she did attend day church with her mother and Mr. Otterness; that [Olympic I] residents were staying

at [Olympic II]on these days; that some [Olympic I]residents did not always like
being at [Olympic II]but had no other choice; and that there was no caregiver at
Olympic I] and only
one

caregiver

at [ Olympic

II] at

these times. The sheer

number of people of [sic] who provided this information coupled with their overall lack of motivation for fabricating such facts, when weighed against Baida's] Mr. Otterness's reasons for disputing this information and in light and of Mr. Otterness's tendency during his testimony to contradict many facts not favorable to [Baida's] case and to change his testimony while testifying, lead the
El

No. 42992 6 II - -

undersigned to conclude that [Baida's] and Mr. Otterness's testimony are not credible. They often attended church with her mother, the [Olympic I]caregiver, on Saturdays and required some [ Olympic I] residents to go to [ Olympic II]
during this time. AR at 55 (footnotes omitted).

Based on the definitions of capacity"found in ch. 70. 28 RCW and former ch. 388 76 " 1 =

WAC,the Board's reviewing judge rejected Olympic II' argument that " apacity"refers to only s c
the number of residents actually living in the home. Therefore, the Board's reviewing judge concluded that Olympic II had operated overcapacity and she upheld DSHS's license revocation. Olympic II filed a petition for review in the Lewis County Superior Court. The superior
court affirmed the Board's reviewing judge's final order. Olympic II timely appeals.
ANALYSIS

Our review of an agency action is governed by the Administrative Procedure Act APA), .(

ch. 34. 5 RCW. The party seeking relief bears the burden of demonstrating the invalidity of the 0

agency

action.

RCW

a). 570( 34. 5. We may reverse an agency action if the agency 1)( 0

erroneously interpreted or applied the law, the order is not supported by substantial evidence, or
the order is

arbitrary

or

capricious.

RCW

d), 570( 34. 5. 3)(( 0 e), We review i).

the Board's (

reviewing judge's final order, not the ALJ's decision or the superior court's order. See Tapper v.

Empl. Sec. Dep't, Wn. d 397, 402, 858 P. d 494 (1993).An agency order is supported by 122 2 2 "

substantial evidence if there is `a sufficient quantity of evidence to persuade a fair minded person
of the truth
or

correctness of the order. "' Hardee

v.

2 Dep't of Soc. & Health Servs.,172 Wn. d 1,

7, 256 P. d 339 (2011)internal quotation marks omitted)quoting Thurston County v. W. Wash. 3 ( (
Growth Mgmt, Hearings Bd., Wn. d 329, 341, 190 P. d 38 (2008)). review conclusions 164 2 3 We
of law de novo. Hardee, 172 Wn. d at 7. 2

R

No. 42992 6 II - -

BURDEN OF PROOF

Olympic II argues that the Board's reviewing judge erred by applying the wrong burden
of

proof. The Board's reviewing judge determined that the appropriate burden of proof was

preponderance of the evidence. But Olympic II contends that the burden of proof should have been the clear and convincing evidence standard. Our Supreme Court has held that the burden of

proof for revoking a facility license is preponderance of the evidence. Accordingly, the Board's reviewing judge did not err by applying the preponderance of the evidence standard.
Our Supreme Court has articulated two different burdens of proof that apply to license revocations. In Nguyen v. Department of Health Medical Quality Assurance Commission, 144

Wn. d 516, 526, 29 P. d 689 (2001), 2 3 cent. denied, 535 U. . 904 (2002), Supreme Court S our

applied the three part Mathews test to conclude that due process requires proof by clear and convincing evidence to revoke a professional license. In determining that the state must be held to a higher burden of proof before revoking Nguyen's medical license, the court primarily relied

on an individual's profound"interest in his or her professional license. Nguyen, 144 Wn. d at " 2 527: In Ongom v. Department ofHealth, Office ofProfessional Standards, 159 Wn. d 132, 148 2 P. d 1029 (2006), 3 overruled by Hardee, 172 Wn. d 1, our Supreme Court held that revocation of 2
State registration as a nursing assistant was indistinguishable from revocation of a medical
license and, thus, due process required proof by clear and convincing evidence. But after the decisions in Nguyen and Ongom, our Supreme Court recognized that "the Court of Appeals [ had] struggled to determine which evidentiary standard should apply to

4

Mathews v. Eldridge, 424 U. . 319, 96 S. Ct. 893, 47 L.Ed. 2d 18 (1976).Under Mathews, the S courts apply a threefactor test to determine the level of due process protections required in procedural situations. The three Mathews factors are (1) private interest at stake, 2) risk the ( the of erroneous deprivation, and (3) government interest. 424 U. .at 335. the S
6

No. 42992 6 II - -

administrative hearings that affect an individual's ability to engage in [his or] her occupation of
choice." Hardee, 172 Wn. d at 9 (citing Eidson v. Dep't of Licensing, 108 Wn. App. 712, 32 2
Kabbae P. d 1039 (2001); 3
v.

3 Dep't of Soc. & Health Servs.,144 WA. App. 432, 192 P. d 903

2008); Brunson v. Pierce County, 149 Wn. App. 855, 205 P. d 963 (2009); 3 Islam v. Dep't of Early Learning, 157 Wn. App. 600, 238 P. d 74 (2010); 3 Chandler v. Office oflns. Comm'r, 141
Wn. App. 639, 173 P. d 275 (2007), 3 review denied, 163 Wn. d 1056 (2008); 2 Nims v. Wash. Bd.

of Registration, 113 Wn. App. 499, 53 P. d 52 (2002)). clarify this confusion, our Supreme 3 To
Court explicitly overruled its decision in Ongom. Hardee, 172 Wn. d at 18. 2

In doing so, our Supreme Court drew a distinction between professional licenses and
other state licenses. Hardee, 172 Wn. d at 8 9. Under Hardee, administrative revocation of a 2 nonprofessional
license

requires proof by

a

preponderance

2 of the evidence. 172 Wn. d at 18.

However, Nguyen continues to control the revocation of a professional license, which requires
proof by clear and convincing evidence.. Hardee, 172 Wn. d at 18. 2
To determine the difference between a professional license and a nonprofessional license,

the court considered "the time, expense, and education invested to obtain the license."Hardee,
172 Wn. d at 16. Hardee addressed the standard of review required to revoke a home child care 2
license.

172 Wn. d at 3 - . The court indentified three factors that distinguished a home child 2 4
a

care

license from

professional

license: ( 1) The

license adheres to the facility and not the

individual provider, 2) ( DSHS can revoke the license for the misconduct of someone other than -

the provider, and (3)obtaining a license only requires completion of state approved training.
2 Hardee, 172 Wn. d
at 10.

Because Olympic II' adult family home license shares the same s

three characteristics as Hardee's home child care license, we hold the same standard of proof

applies to revocation of adult family home licenses.
7

No. 42992 6 II - -

Olympic II is licensed as an adult family home under ch. 388 76 WAC. An adult family home is "[ a] residential home in which a person or entity [is]licensed to provide personal care,

special care, room, and board to more than,one but not more than six adults who are not related by blood or marriage to the person or persons providing the services." Former WAC 388 7610000 (2008).Therefore, the adult family home license attaches to the facility used as the adult
family
home and not to the

provider

who obtains the license.

Hardee, 172 Wn. d at 10. 2

Furthermore, DSHS may revoke an adult family home license for any violation of the applicable
statutes
or

codes

regardless

of who committed the violation.

Former WAC 388 76710960; -

Hardee, 172 Wn. d at 10. Finally, the relevant minimum qualifications to obtain an adult family 2 home license are state mandated training and either practical experience or a professional
healthcare license (i. physician, physician's assistant, registered nurse, e., Former etc.). WAC

388 76- 10130; Hardee, 172 Wn. d at 10. Because the characteristics of an adult family home 2 license are most similar to the characteristics the Hardee court held to be dispositive, the Board's

reviewing judge did not err by concluding the burden of proof for revoking an adult family home
license is preponderance of the evidence.
APPEARANCE OF FAIRNESS

Olympic II also alleges that the Board's reviewing judge violated the appearance of
fairness doctrine. Specifically, Olympic II argues that the Board's reviewing judge was biased

because she was employed by DSHS and that the Board's reviewing judge's bias was evident
because she rewrote many of the ALJ's findings of fact and conclusions of law in order to
reverse the ALJ's initial decision. Olympic II' contention lacks merit. s

The appearance of fairness doctrine is meant to prevent " biased or potentially interested a
judge from ruling on a case." In re Marriage of Meredith, 148 Wn. App. 887, 903, 201 P. d 3
3

No. 42992 6 II - -

1056 (citing State v. Carter, 77 Wn. App. 8, 12, 888 P. d 1230, review denied, 126 Wn. d 1026 2 2
2 review denied, 167 Wn. d 1995)),
fairness
was

1002 ( 2009).

Sustaining a claim that the appearance of
bias.

violated
v.

requires

evidence of the

judge's

Meredith, 148 Wn. App. at 903

citing

State

Under the 2 2 2 Post, 118 Wn. d 596, 619, 826 P. d 172, 837 P. d 599 (1992)). "

appearance of fairness doctrine, a judicial proceeding is valid only if a reasonably prudent and disinterested person would conclude that all parties obtained a fair, impartial, and neutral

hearing."Meredith, 148 Wn. App. at 903 (citing State v. Bilal, 77 Wn. App. 720, 722, 893 P. d 2
674, review denied, 127 Wn. d 1013 (1995)). 2

Olympic II' " vidence" of bias is that the Board's reviewing judge rewrote the ALFs s e
findings of
fact and conclusions of law in favor of DSHS.

But the Board's reviewing judge

shall exercise all the decision making power that the

reviewing

judge] would have had to

decide and enter the final order had the reviewing [judge] presided over the hearing." RCW

464( 34. 5. Therefore, the Board's reviewing judge acted within her authority when she 4 0 ).

rewrote the ALFs initial order, findings of fact, and conclusions of law. A Board's reviewing judge properly exercising her authority to review an ALFs initial order does not evince improper
bias.

Accordingly, Olympic II' contention that the Board's reviewing judge violated the s

appearance of fairness lacks merit.
OVERCAPACITY

Olympic .II contends that the Board's reviewing judge erroneously applied the law by counting the Olympic I residents toward Olympic II' capacity and concluding that Olympic II s

operated overcapacity. Olympic II argues that " apacity"refers to the number of people living in c
the adult family home and does not include visitors to the home, regardless of whether those
visitors are residents of another adult family home. We disagree. In this context, the Board's
6

No. 42992 6 II - -

reviewing judge correctly interpreted the meaning of " capacity" and properly concluded that
Olympic II was operating over its capacity. Olympic II argues that the Olympic I residents should be considered visitors because t] is no evidence that Ms. Baida ever forced them to come to [Olympic II]from [Olympic here

I]." Br. of Appellant at 26. Olympic II' assertion rests solely on the testimony of Baida and s
Otterness. But their testimony directly conflicted with other testimony that Olympic I residents were often at Olympic II for long periods of time because there was no caregiver at Olympic I.

The Board's reviewing judge specifically found that Baida's testimony was not credible and
instead relied on Shumake's, s, Tosch's testimony. The testimony that the Board's Corey' and

reviewing judge found credible establishes that Olympic I residents were regularly required to

spend long periods at Olympic II because there was no caregiver at Olympic I;therefore, the
Board's reviewing judge's findings of fact are supported by substantial evidence.

Olympic II also argues that " capacity"refers to residents of the adult family home and the Board's reviewing judge erroneously interpreted " apacity"to mean any person who receives c
personal
care, even if that person

does not live at the adult

family

home.

The proper

interpretation of a regulation or statute is a conclusion of law, which we review de novo. See
Hardee, 172 Wn. d at 6 7. Under former WAC 388 762 - 10960, DSHS "may impose a remedy or
remedies. if [ DSHS] finds any person listed in WAC 388 76 10950 has ... (

14) e] [ xceeded

licensed capacity in the operation of an adult family home."Olympic II relies on former WAC 388 76- 10030, " icense capacity," support its argument that "capacity" refers to residents L to
living in the adult family home.
Former WAC 388 76 10030 states, - -

10

No. 42992 6 II - -

1) [ DSHS] will only issue an adult family home license for more than one but not
more than six residents.

2) determining the home's capacity, DSHS] must consider the: In [ a) Structural design of the house; b) Number and qualifications of staff; c)Total number of people living in the home who require personal or
special care, including: i) Children; and ii) Other household members;

d) The number of people for whom the home provides adult day care; and

e)The ability for the home to safely evacuate all people living in the
home.

According to Olympic II, former WAC 388 76 10030 establishes that the capacity of an adult - family home is calculated solely on the number of residents or people living in the home. But
Olympic
II' s

interpretation

of " capacity

".is flawed because (1)it ignores the definition of

capacity" in former WAC 388 76- 10000, and (2)it reads former WAC 388 76 10030 out of - context with the entirety of Title 388 WAC.

Former WAC 388 76 10000 defines "capacity"as "the maximum number of persons in - -

need of personal or special care permitted in an adult family home at a given time and includes
related children or adults in the home who receive personal or special care and services."

Personal care services" is defined as " both physical assistance andor prompting and /

supervising the performance of direct personal care tasks as determined by the resident's needs."
Former WAC 388 76 1000. It is undisputed that the Olympic I residents were residents of an - adult family home in need of personal care services. Therefore, at the time that the Olympic I residents were at Olympic II, there were between 8 and 11 persons iff need of personal care
services in one adult family home. As a result, Olympic II exceeded its capacity, which allowed
for no more than 6 persons in need of personal care services in the home.

11

No.42992 6 II - -

Furthermore, former WAC 388 76 10030 does not govern how DSHS calculates capacity - -

for the purposes of determining whether an adult family home is operating over its license

capacity. Rather, former WAC 388 76 10030 provides the guidelines DSHS is required to use - when determining what the adult family home's. capacity will be. Reading former WAC 388 7610030 in the context of Title 388 WAC shows that the "license capacity" regulation is used to

determine what the license capacity is; the definition of " apacity" in former WAC 388 76c 10000 is then used to determine whether, at any given time, the adult family home is operating

above the previously determined capacity.

Olympic II' interpretation of " apacity" also leads to an absurd result that we do not s c
believe the

legislature

intended.

In

Washington, "` r] of statutory construction apply to [ ules
where ...

administrative rules and

regulations, particularly

they are adopted pursuant to express

2 3 legislative authority. "' Cannon v. Dept of Licensing, 147 Wn. d 41, 56, 50 P. d 627 (2002)

internal quotation marks omitted; alteration in original) quoting City of Kent v. Beigh, 145 (
Wn. d 33, 45, 32 P. d 258 (2001)). avoid a construction that results in unlikely, absurd, or 2 3 We

strained consequences because we presume that the legislative body did not intend absurd
results. Cannon, 147 Wn. d at 57. Under Olympic II' interpretation of the regulations, an adult 2 s

family home can have an unlimited number of vulnerable adults in need of personal care or
services in the home during the day, provided that only six of them actually reside in the adult

family home. Such a result would clearly undermine the purpose of regulating the capacity of an
adult family home.

The Board's reviewing judge did not erroneously interpret the law when she concluded

that Olympic I residents requiring personal care counted toward the overall capacity of Olympic
II. Therefore, the Board's reviewing judge did not err when she concluded that Olympic II was
12

No. 42992 6 II - -

operating overcapacity when Olympic I residents were at Olympic II,not merely visiting, but
were there because there was no caregiver available at Olympic I.

The overcapacity citation is, alone, sufficient to support DSHS's decision to revoke
Olympic
II' license. s

However, DSHS also cited Olympic II for numerous other violations
of
care

related to the

provision

and services.

Olympic II has also challenged these additional

violations. After a thorough, independent review of the record, we hold that substantial evidence
supports the Board's reviewing judge's findings of fact and she properly concluded that, in
addition to overcapacity, DSHS proved the other cited violations.
ATTORNEY FEES

Olympic

II

350. 8 350( 1 8 ), requests attorney fees under RCW 4.4. Under RCW 4.4.a

"

court shall award a qualified party that prevails in a judicial review of an agency action fees and other expenses, including reasonable attorneys' fees."We affirm the Board's reviewing judge's
decision

revoking Olympic

II' adult s

family

home license.

Therefore, Olympic II is not the

prevailing party and is not entitled to attorney fees.

OUINNBRINTNALL, J.
We concur:

HUNT, J.

CrSON,

J. A. . C

13



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