- An adult care home in McDowell County can move forward with a state constitutional lawsuit against the North Carolina Department of Health and Human Services.
- A unanimous North Carolina Court of Appeals panel ruled that Cedarbrook Residential Center was allowed to wait until 2023 to file a suit based on issues that arose in 2015.
- The state Supreme Court ruled in 2022 that Cedarbrook could not pursue its case through a lawsuit based on the State Tort Claims Act.
An adult care home in McDowell County can move forward with a state constitutional lawsuit against the North Carolina Department of Health and Human Services. The state Court of Appeals ruled Tuesday that the home’s complaints against state regulators are not blocked by the statute of limitations.
Cedarbrook Residential Center has been battling DHHS’ Adult Care Licensure Section since 2015. The state Supreme Court ruled against the center in 2022, rejecting a suit filed under the State Tort Claims Act.
“Because the Supreme Court’s decision removed the STCA as a remedy to negligent regulatory actions, Plaintiffs turned to assert constitutional claims that had been previously unavailable under the confines of North Carolina’s STCA,” wrote Judge April Wood for a unanimous three-judge Appeals Court panel.
“Plaintiffs bring forth three separate claims under the North Carolina Constitution: (1) DHHS violated the Plaintiffs’ right to the fruits of their own labor, (2) DHHS interfered with their business which was a regulatory taking under law of the land, and (3) DHHS deprived Plaintiffs of their due process rights,” Wood explained.
Cedarbrook had served “disabled adults with mental illness” for more than a decade with no problems documented with either DHHS’ licensing section or the McDowell County Department of Social Services, Wood wrote.
“From its founding in 2002 through 2015 Cedarbrook consistently received excellent scores from both agencies and had strong working relationships with each agency,” according to the Appeals Court opinion. “Prior to November 2015, Cedarbrook had never been cited for regulatory violations by either agency.”
The situation changed under the federal Obama administration.
“On 6 November 2015, the United States Department of Justice (‘USDOJ’) issued an enforcement letter to the State of North Carolina,” Wood wrote. “North Carolina previously had been cited for failure to provide mentally ill adults with independent housing options, and the USDOJ demanded the State take corrective action. Three days after the USDOJ issued its enforcement letter, the ACLS began its annual inspection of Cedarbrook.”
“Plaintiffs allege the 2015 inspection differed dramatically from the prior thirteen evaluations. For instance, practices that had been in place for years at Cedarbrook and were previously praised by ACLS were assessed as severe violations. Additionally, ACLS alleged violations that had no basis in the governing administrative rules or statutes,” Wood wrote.
State regulators suspended admissions to Cedarbrook, threatened to revoke its license, and assessed a $340,000 fine. The ACLS eventually agreed to “withdraw all agency actions” against the home and restore its rating.
“However, Plaintiffs assert the suspension had caused the sale of Cedarbrook to fall through and the appraised value to decrease to the point that Cedarbrook could no longer be sold at the previously secured purchase price. ACLS’ actions allegedly cost the facility over $500,000.00 in lost revenue, increased operating expenses and added attorney’s fees, as well as costing $790,000.00 in proceeds from the lost sale,” Wood wrote.
Cedarbrook started pursuing its constitutional claims against DHHS in 2023 after the state Supreme Court blocked action through the State Tort Claims Act.
“Not until our Supreme Court’s decision in Cedarbrook II differentiated between the general negligence claims that are permissible under the STCA and ‘negligent regulation’ claims which the Court viewed as discretionary decisions for which the State is not liable in tort negligence did Plaintiffs’ constitutional claims accrue,” Wood wrote.
In other words, the clock for the statute of limitations on constitutional claims started only when the state Supreme Court issued its ruling in the earlier case.
“Once the Supreme Court removed the opportunity for the Plaintiffs to have their claims heard under the STCA, Plaintiffs were free to bring a constitutional ‘Corum’ claim. If the ‘cause of action does not accrue until the injured party is at liberty to sue,’ then the cause of action here did not accrue until 16 December 2022, the date Cedarbrook II was decided,” Wood explained.
A Corum claim refers to a lawsuit filed in North Carolina that alleges violations of fundamental state constitutional rights. Courts will throw out Corum claims if plaintiffs have other ways to pursue their complaints.
Judges Allegra Collins and Toby Hampson joined Wood’s opinion.