FILED Oct 30 2025, 9:08 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
IN THE
Court of Appeals of Indiana Indiana Department of Education, Appellant-Respondent
v.
Mt. Zion’s Loving Day Care Ministry, Lambert Gates, Sheryl Jennings, and Patti Jones, Appellees-Petitioners
October 30, 2025 Court of Appeals Case No. 25A-PL-291 Appeal from the Hamilton Superior Court The Honorable David K. Najjar, Judge Trial Court Cause No. 29D05-2312-PL-11816
Opinion by Judge Bailey Judges Tavitas and Kenworthy concur.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 1 of 23 Bailey, Judge.
Case Summary [1] The Indiana Department of Education (“the DOE”) appeals the trial court’s
order reversing the DOE’s decision to terminate and disqualify Mt. Zion’s
Loving Day Care Ministry, Lambert Gates, Patti Jones, and Sheryl Jennings
(collectively, “Mt. Zion”) from the Child and Adult Care Food Program (“the
CACFP”) and ordering Mt. Zion’s reinstatement in the program. The DOE
raises three issues, which we consolidate and restate as the following dispositive
issue: whether the termination and disqualification of Mt. Zion from the
CACFP was invalid as an abuse of the DOE’s discretion, in excess of its
statutory authority, done without observance of procedure required by law,
and/or unsupported by substantial evidence. Because we find the DOE’s action
was valid, we reverse.
Facts and Procedural History [2] The CACFP is a federal program created by Congress and overseen by the
United States Department of Agriculture (“the USDA”) and its Food and
Nutrition Service (“FNS”) division. See 42 U.S.C. §§ 1751-1769j. The program
is designed to “provide aid to … day care homes for the provision of nutritious
foods that contribute to the wellness, healthy growth, and development of
young children ….” 42 U.S.C. § 1766(a)(1)(A)(ii). It achieves this purpose by
providing participating institutions reimbursements “for their costs in
connection with food service operations.” 7 C.F.R. § 226.4(a). The USDA has
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 2 of 23 enacted regulations establishing program requirements, see 7 C.F.R. § 226.1 et
seq., but the federal government leaves administration of the program to the
states, which oversee the participating institutions, provide them with training
and assistance, and ensure the federal funds are spent properly. See 7 C.F.R. §
226.6(a). Indiana administers the CACFP through the DOE.
[3] Pursuant to the federal regulations governing the CACFP, the DOE must
conduct administrative reviews of participating institutions like Mt. Zion at
least once every three years. See 7 C.F.R. § 226.6(i)(5); 7 C.F.R. §
226.6(m)(6)(i). The DOE must review institutions for “compliance with the
[Program] requirements,” 7 C.F.R. § 226.6(m)(3), and “shall take appropriate
action to correct any irregularities” with an institution’s “operation of the
Program,” 7 C.F.R. § 226.6(n). Institutions are to receive “technical assistance”
from the DOE to help correct irregularities. 7 C.F.R. § 226.6(a)(2).
[4] Mt. Zion is a non-profit day care center in Indianapolis that has participated in
the CACFP as an institution through agreements with the DOE since 1999,
serving four meals a day to infants and children from predominantly
impoverished communities suffering from food insecurity. Mt. Zion is managed
by Kingdom Apostolic Ministries, which is chaired by Bishop Lambert Gates.
Mt. Zion’s Director, Patti Jones, is responsible for Mt. Zion’s CACFP-related
duties, including menu planning, ordering food, and completing reports. Sheryl
Jennings is responsible for Mt. Zion’s CACFP-related financial management.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 3 of 23 [5] The DOE reviews of Mt. Zion’s CACFP in 2015 and 2018 resulted in notices of
serious deficiencies, followed by Mt. Zion’s timely corrective action. In July
2022, the DOE conducted another review of Mt. Zion’s CACFP program. On
October 12, the DOE sent Mt. Zion a three-page notice that it 1 was “seriously
deficient in its operation of the CACFP[,]” and the notice specified each
instance of noncompliance. App. v. 8 at 167. The notice informed Mt. Zion
that, if it did not “fully and permanently correct all of the serious deficiencies
and submit documentation of the corrective action by November 11, 2022,” the
DOE would propose to terminate Mt. Zion’s agreement to participate in the
CACFP and disqualify it from future CACFP participation. Id. The notice
defined “corrective action” and informed Mt. Zion that its “corrective action
plan [“CAP”] must be submitted and fully implemented by November 11, 2022.”
Id. at 169 (emphasis added).
[6] The notice further stated, in relevant part,
If [the DOE] receives the documentation of the institution’s corrective action by November 11, 2022 and determines that the corrective action plan fully and permanently corrects all of the serious deficiencies, [the DOE] will temporarily defer the determination of serious deficiency. [The DOE] may conduct an unannounced follow-up review to verify the adequacy of the corrective action. If [the DOE] finds in a follow-up review or any subsequent review that any of these serious deficiencies have not been fully and permanently corrected, [the DOE] will immediately propose to
1 The notices, requirements, and proposed agency actions referenced in this opinion applied to both Mt. Zion as an institution and to Jones, Jennings, and Gates as the individuals responsible for Mt. Zion’s CACFP.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 4 of 23 terminate [Mt. Zion’s] agreement and propose to disqualify [Mt. Zion] without any further opportunity for corrective action.
Id. at 170-71 (emphasis added). The notice informed Mt. Zion that federal law
prohibited it from appealing the determination of serious deficiencies, but that
Mt. Zion could seek administrative review if the DOE later proposed to
terminate and disqualify Mt. Zion from the CACFP.
[7] On November 3, Mt. Zion submitted a CAP to the DOE. The DOE
acknowledged receipt of the CAP in an e-mail dated November 7 and informed
Mt. Zion that the DOE “would communicate with them as soon as [it] had an
opportunity to review the CAP and documentation.” Id. at 237. There was no
further contact between the DOE and Mt. Zion until February 20, 2023, at
which time the DOE sent Mt. Zion a notice of proposed termination and
disqualification from the CACFP. The notice stated that the DOE had received
Mt. Zion’s CAP and other documentation before the deadline and reviewed it
but found that Mt. Zion still had not “fully and permanently corrected the
serious deficiencies” the DOE had identified in its October 12, 2022, notice,
including deficiencies in Mt. Zion’s menu. Id. at 179. The notice stated that
“[t]he corrective action plan provided was not acceptable,” in that it did not
include “ways to ensure” that the noncompliance would be “fixed.” Id. at 181.
The notice then gave specific details explaining each noncompliance.
[8] The notice concluded that, since Mt. Zion had not “fully and permanently
corrected the serious deficiencies identified” in the notice of deficiency, the
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 5 of 23 DOE was proposing to terminate and disqualify Mt. Zion from the CACFP. Id.
at 182. However, the notice continued, in relevant part,
[the DOE] procedures allow for one final opportunity for corrective action after the issuance of a proposed termination and disqualification notice. The state agency may only accept corrective action up until a hearing begins …. Submitting additional corrective action does not prevent the proposed termination and disqualification from moving forward.
Id. (emphasis added). The notice informed Mt. Zion of its appeal rights and
that, if Mt. Zion appealed, it could “continue to participate in the CACFP …
until the hearing official issues a decision.” Id.
[9] On February 24, Mt. Zion submitted to the DOE an updated CAP. In an e-mail
dated March 3, the DOE informed Mt. Zion that it had received and reviewed
the updated CAP and “found that the procedures [in the CAP] would correct
the serious deficiencies.” Id. at 150. However, it asked that Mt. Zion submit an
updated menu by March 6, and Mt. Zion did so. In an email dated March 7,
the DOE informed Mt. Zion that it had received the updated menu but that it
still required some work. But because the menu “wasn’t a required document
for the corrective action (just a supporting document to demonstrate
compliance),” the DOE stated that it was “accepting the corrective action and
no longer proposing termination/disqualification.” Id. at 149. The DOE stated
that it would continue to work with Mt. Zion on the “final corrections” to the
menu. Id.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 6 of 23 [10] On March 24, the DOE sent Mt. Zion a notice of compliance which stated, in
relevant part:
This letter concerns the determination in the Serious Deficiency Notice dated October 22, 2022.
***
While [the DOE] originally received an unacceptable corrective action plan and proposed termination and disqualification, additional corrective action was provided and accepted prior to the appeal deadline.
SERIOUS DEFICIENCY DETERMINATION TEMPORARILY DEFERRED
Based on the review of the documentation, [the DOE] has determined that [Mt. Zion] has fully and permanently corrected the serious deficiencies that were cited in the Serious Deficiency Notice. As a result, the serious deficiency determination has been temporarily deferred as of the date of this letter. This also means that [the DOE] will not propose to terminate [Mt. Zion’s] agreement based on this serious deficiency finding and disqualify [Mt. Zion] on that basis.
Id. at 161 (emphasis in original). The notice concluded:
[the DOE] has temporarily deferred the serious deficiency determination. However, if, in any subsequent review, any of these serious deficiencies have not been fully and permanently corrected, [the DOE] will immediately propose to terminate [Mt. Zion’s] agreement and propose to disqualify [Mt. Zion] without any further opportunity for corrective action.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 7 of 23 Id. at 162 (emphasis added).
[11] On May 19, 2023, the DOE conducted a follow-up review of Mt. Zion’s
CACFP and found that the serious deficiencies identified on October 12, 2022,
had recurred. In a notice dated August 9, the DOE informed Mt. Zion of the
continued serious deficiencies, described each instance of noncompliance, and
proposed termination of the agreement and disqualification from the program
“[e]ffective 15 days from the date [Mt. Zion] receive[d]” the notice. App. v. 7 at
16. The notice informed Mt. Zion of its administrative appeal rights and that,
“[i]f appealed, the proposed actions will not take effect until the hearing official
issues a decision.” Id. at 19. It further noted that, if Mt. Zion appealed, it could
continue to participate in the CACFP until the appeal decision was issued.
[12] Mt. Zion hired attorneys and a CACFP “[s]pecialist” to help it correct the
continuing serious deficiencies. App. v. 8 at 240. On August 24, Mt. Zion filed
a request for administrative review of the DOE’s August 9 decision, and an
evidentiary hearing on the request was conducted before an Administrative
Law Judge (“ALJ”) on October 2 and November 3. On November 16, the ALJ
issued the Final Administrative Decision upholding the DOE’s termination and
disqualification of Mt. Zion. The ALJ noted that Mt. Zion had taken additional
corrective action while its administrative appeal was pending, but found that
the DOE could, but was “not required to[,]” accept the additional corrective
action. Id. at 241. The ALJ further found that “Mt. Zion had not presented a
CAP with supporting documentation to [the] DOE that demonstrated Mt. Zion
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 8 of 23 had fully and permanently correct[ed] the serious deficiency” and cited the
DOE employees’ testimonies in support. Id.
[13] On December 15, Mt. Zion filed a timely petition for judicial review of the final
administrative decision. Following briefing and a November 14, 2024, hearing,
the trial court granted the petition. In its January 7, 2025, order, the trial court
found that the DOE’s termination and disqualification of Mt. Zion was an
abuse of its discretion because the DOE “secretly imposed an arbitrary
unwritten policy banning the federally mandated regulation providing for
corrective action opportunities through the conclusion of the administrative
hearing.” App. v. 9 at 182. The court concluded that the DOE’s “secret” policy
was arbitrary and capricious and in excess of statutory authority. Id. at 183-84.
The trial court found that the DOE “never disputed” possessing and employing
this secret policy. Id. at 183. Having found these grounds “dispositive,” the trial
court concluded that “the overwhelming evidence supports a finding that Mt.
Zion was willing and capable of correcting any remaining noted deficiencies or
had materially done so” and that the “legal standard put forth by the federal
regulations to measure if a [Program] should be terminated is whether the
participant is ‘unwilling or incapable of correcting a serious problem.’” Id. at
185.
[14] The trial court vacated the final administrative decision and ordered the DOE
to reinstate Mt. Zion in the CACFP. In addition, the court ordered the DOE
“to provide technical assistance and consider corrective action to address any
potential remaining items of deficiency and in the future[,] consistent with
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 9 of 23 applicable federal and Indiana laws and regulations.” Id. at 188. This appeal
ensued.
Discussion and Decision Standard of Review [15] In an appeal of a decision by an administrative agency, the standard of review is
governed by the Administrative Orders and Procedures Act (“AOPA”) (Ind.
Code §§ 4-21.5-1-1 to 4-21.5-7-9), and an appellate court is bound by the same
standard of review as the trial court. See, e.g., Walker v. State Bd. of Dentistry, 5
N.E.3d 445, 448 (Ind. Ct. App. 2014), trans. denied. That is,
[w]e do not try the case de novo and do not substitute our judgment for that of the agency. We will reverse the administrative decision only if it is: (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to a constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (4) without observance of procedure required by law; or (5) unsupported by substantial evidence. Ind. Code § 4-21.5-5-14.
Courts that review administrative determinations are prohibited from reweighing the evidence or judging the credibility of witnesses and must accept the facts as found by the administrative body [if they are supported by the record]…. Although an appellate court grants deference to an administrative agency’s [supported] findings of fact, no such deference is accorded to its conclusions of law. The burden of demonstrating the invalidity of the agency action is on the party who asserts the invalidity.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 10 of 23 Id. at 448-49 (case citations omitted).
Agency Reviews and Decisions under CACFP [16] The issue in this case is not whether the DOE was correct when it determined
that the serious deficiencies identified in Mt. Zion’s program in October 2022
recurred in May 2023; that decision unquestionably is not subject to
administrative review. See 7 C.F.R. § 226.6(k)(3)(ii). Rather, the issue is
whether the DOE’s action was valid under AOPA when it terminated Mt.
Zion’s CACFP agreement and disqualified it from participation on August 9,
2023, based on the recurrence of the deficiencies originally identified in October
2022. Deciding this issue requires that we construe the meaning of the federal
CACFP law, which includes both the federal regulations and applicable USDA
Handbook. 2 Statutory construction and interpretation are matters of law and we
review them de novo. E.g., Suggs v. State, 51 N.E.3d 1190, 1193 (Ind. 2016).
[17] Our rules of statutory construction are well-established and clear.
When construing a statute our primary goal is to ascertain the legislature’s intent. Adams v. State, 960 N.E.2d 793, 798 (Ind. 2012). To discern that intent, we look first to the statutory
2 The CACFP regulations provide that, as part of the reviews of participating institutions, state agencies such as the DOE “must assess each institution’s compliance with the requirements” of the CACFP law, taking into consideration “[a]ny applicable instructions and handbooks issued by FNS and the [USDA] to clarify or explain [the CACFP]” and “which are not inconsistent with the provisions of [CACFP].” 7 C.F.R. § 226.6(m)(3)(iv). The USDA has issued such a handbook entitled “Serious Deficiency, Suspension, & Appeals for State Agencies & Sponsoring Organizations, A Child and Adult Care Food Program Handbook” (“the Handbook”). App. v. 7 at 171. Thus, we look to the language of both the federal regulations themselves and the USDA’s explanation of the regulations as provided in the Handbook, to the extent the latter are consistent with the former.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 11 of 23 language itself and give effect to the plain and ordinary meaning of statutory terms. Pierce v. State, 29 N.E.3d 1258, 1265 (Ind. 2015). “If a statute is unambiguous, that is, susceptible to but one meaning, we must give the statute its clear and plain meaning.” State v. Evans, 810 N.E.2d 335, 337 (Ind. 2004) (quotation omitted). However, if a statute admits of more than one interpretation, then it is ambiguous; and we thus resort to rules of statutory interpretation so as to give effect to the legislature’s intent. Adams, 960 N.E.2d at 798.
Suggs, 51 N.E.3d at 1193-94.
Opportunities for Corrective Action
[18] The first dispute between the parties regarding the meaning of the CACFP law
is how many opportunities for corrective action the DOE must allow Mt. Zion
before terminating and discontinuing Mt. Zion’s involvement in the program
due to serious deficiencies. Mt. Zion contends (and the trial court found) that
federal law requires the DOE to allow Mt. Zion to take corrective action
“through the conclusion of the administrative hearing.” App. v. 9 at 182. The
DOE maintains that the law only requires it to provide one opportunity for
corrective action but gives it discretion to allow additional opportunities until
the beginning of the administrative hearing. Given the plain language of the
applicable law, we agree with the DOE.
[19] A plain and ordinary reading of the language used in these regulations discloses
that state agencies such as the DOE have certain mandatory obligations. The
term “must” is construed as expressing a mandatory action or obligation. See
Must, Merriam-Webster.com, https://www.merriam- Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 12 of 23 webster.com/dictionary/must?src=search-dict-box [https://perma.cc/8HM6-
TQJL] (defining “must” as “be obliged to”; “be required by law”); see also, e.g.,
Romine v. Gagle, 782 N.E.2d 369, 379-80 (Ind. Ct. App. 2003) (citation
modified) (“When the word ‘shall’ appears in a statute, it is construed as
mandatory rather than directory unless it appears clear from the context or the
purpose of the statute that the legislature intended a different meaning. The
term ‘must’ carries with it the same meaning.”), trans. denied. The use of the
permissive word “may,” on the other hand, indicates there is no requirement to
act, but rather discretion to act. See Welch v. 1106 Traub Tr., 204 N.E.3d 243,
251 (Ind. Ct. App. 2023). In addition, when an indefinite article like “an”
precedes a countable noun, it indicates the drafter’s intent to signify a “discrete,
countable thing.” Niz-Chavez v. Garland, 593 U.S. 155, 162-63 (2021). More
specifically, it evidences the intent to identify a “single” item. Id. at 163
(holding that the statutory phrase “‘a notice’ … suggests the government must
issue a single statutorily compliant document”).
[20] Applying these rules of statutory construction to the regulations, it is clear that
the DOE was required to give Mt. Zion one opportunity to take corrective action
after it notified Mt. Zion of a serious deficiency. When a state agency’s review
of an institution’s CACFP program discloses a violation of the program
requirements that is a “serious deficiency,” the state agency “must” notify the
institution of that deficiency and provide “an opportunity to take corrective
action.” 7 C.F.R. § 226.6(c)(3)(iii) (emphases added). A notice of serious
deficiency “must” also warn the institution that “failure to fully and
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 13 of 23 permanently correct the serious deficiency(ies) within the allotted time will
result in the State agency’s proposed termination of the institution’s agreement
and the proposed disqualification of the institution….” 7 C.F.R. §
226.6(c)(3)(iii)(A)(5) (emphases added); see also Prototype Letter 1, Notice of
Serious Deficiency for Institutions,3 the Handbook, Part 13, App. v. 8 at 17-20.
[21] If the institution takes corrective action that “fully and permanently correct[s]
the serious deficiency(ies) within the allotted time and to the State agency’s
satisfaction, the State agency must …[n]otify the institution …that the State
agency has temporarily defer[red] its serious deficiency determination.” 7
C.F.R. § 226.6(c)(3)(iii)(B)(1); see also Prototype Letter 2, Notice of Successful
Corrective Action and Temporary Deferment of Serious Deficiency for
Institutions, the Handbook, Part 13, App. v. 8 at 21-22. However, the notice
should also inform the institution that, “if, in any subsequent review, any of these
serious deficiencies have not been fully and permanently corrected, the State
agency will immediately propose to terminate [the] institution’s agreement and
propose to disqualify [the] institution …without any further opportunity for
corrective action.” Prototype Letter 2. App. v. 8 at 22 (emphases added); see also 7
C.F.R. § 226.6(c)(3)(iii)(B)(3) (emphasis added) (“If the State agency initially
determines that the institution’s corrective action is complete, but later
determines that the serious deficiency(ies) has recurred, the State agency must
3 The prototype letters in the Handbook are example letters that USDA FNS “developed for use in the steps of the CACFP serious deficiency process.” App. v. 8 at 14.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 14 of 23 move immediately to issue a notice of intent to terminate and disqualify the
institution…”). Similarly, if the institution fails to take corrective action that
“fully and permanently correct[s] the serious deficiency(ies)” within the allotted
time, “the State agency must notify the institution[] … that the State agency is
proposing to terminate the institution’s [CACFP] agreement and to disqualify
the institution” from the program. 7 C.F.R. § 226.6(c)(3)(iii)(C) (emphasis
added); see also Prototype Letter 3, Notice of Proposed Termination and
Disqualification of Institutions, the Handbook, Part 13, App. v. 8 at 23-25.
[22] The plain language of the CACFP law also clearly allows, but does not require,
an agency to accept additional corrective action up to the date of an appeal
hearing. 7 C.F.R. § 226.6(c)(4)(i) provides, in relevant part, that a state agency
is “prohibited from allowing more than 90 days for corrective action from the
date the institution receives the serious deficiency notice.” However, “[f]or
serious deficiencies requiring the long-term revision of management systems or
processes, the State agency may permit more than 90 days to complete the
corrective action as long as a corrective action plan is submitted to and
approved by the State agency within 90 days….” 7 C.F.R. § 226.6(c)(4)(iii). The
USDA has explained that the regulations permit, but do not require, the agency
to “accept corrective action at any point up until the hearing begins.” App. v. 7
at 194; see also id. at 199, 239 (stating the same).
[23] In the “Outcomes of the Serious Deficiency Process” portion of the Handbook,
the USDA further clarifies that
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 15 of 23 [the] CACFP regulations allow only two possible outcomes of the serious deficiency process: the correction of the serious deficiency to the State agency’s satisfaction within stated timeframes, or the State agency’s proposed termination of the agreement and disqualification of the institution…. Program regulations do not allow any other outcome, including “warnings”, “probation periods”, or the use of “settlement agreements or negotiated settlements” for institutions that have been declared seriously deficient, or that have been issued a notice of proposed termination and disqualification.
The issuance of the proposed termination and disqualification does not mean that the institution should stop working on corrective action. In fact, the State agency can accept corrective action at any point up until the [appeal] hearing begins. If the institution submits documented evidence which convinces the State agency that the institution has fully and permanently corrected the serious deficiency, the State agency may accept the institution’s corrective action and temporarily defer the proposed termination. This is not considered a “settlement agreement” because it would be acceptable corrective action. Note, again, that if the institution later fails to maintain this corrective action, the State must immediately re-issue its notice of proposed termination and disqualification….
However, corrective action may not be submitted to the hearing official once the hearing begins.
App. v. 7 at 194 (emphases added).
[24] In summary, the plain language of the CACFP regulations and the CACFP
Handbook provides that the DOE was permitted to allow Mt. Zion further
opportunities for corrective action after the first opportunity, but it was not
required to do so. The DOE gave Mt. Zion an initial opportunity to correct the Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 16 of 23 October 2022 serious deficiencies, as required by law, 7 C.F.R. §
226.6(c)(3)(iii), and, when Mt. Zion failed to timely comply, the DOE lawfully
exercised its discretion to allow Mt. Zion one additional opportunity for
corrective action before the date of an appeal hearing, App. v. 7 at 194, 199,
239. When Mt. Zion eventually successfully corrected the deficiencies, the
DOE notified Mt. Zion that it would have no further opportunities to take
corrective action if the deficiencies identified in October 2022 recurred. 4 When
those deficiencies did recur in May 2023, the DOE lawfully moved to terminate
and disqualify Mt. Zion from the program without additional opportunities for
corrective action. 7 C.F.R. § 226.6(c)(3)(iii)(B)(3); App. v. 7 at 194. The trial
court erred when it ruled that the DOE’s refusal to accept further corrective
action was arbitrary, capricious, an abuse of discretion, otherwise not in
accordance with law, in excess of statutory authority, and unsupported by
substantial evidence.
Standard for Termination
[25] The second dispute between the parties regarding the meaning of the CACFP
law is the standard to be used by the agency to determine that termination and
disqualification from the program is appropriate. The DOE points again to the
4 Thus, the DOE’s policy regarding additional opportunities for corrective action was not “secret,” as Mt. Zion claims and the trial court found. Rather, the DOE informed Mt. Zion in writing that it had a policy of allowing one additional opportunity for corrective action after the issuance of a termination and disqualification notice and that it would allow no further opportunities for corrective action if Mt. Zion initially corrected the deficiencies but a later review showed they had recurred. See App. v. 8 at 171 (October 12, 2022, notice); id. at 182 (February 20, 2023, notice); id. at 161-62 (March 24, 2023, notice).
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 17 of 23 plain language of the regulations, which provide that an agency “must” move
to terminate and disqualify an institution when it does not correct a serious
deficiency within the time allotted by the agency. See 7 C.F.R. §
226.6(c)(3)(iii)(A)(5) (providing the notice of serious deficiency must warn the
institution that “failure to fully and permanently correct the serious
deficiency(ies) within the allotted time will result in the State agency’s proposed
termination of the institution’s agreement and the proposed disqualification of
the institution...”); 7 C.F.R. § 226.6(c)(3)(iii)(B)(3) (providing the state agency
“must move immediately to terminate and disqualify the institution” if the
agency “initially determines that the institution’s corrective action is complete
but later determines that the serious deficiency(ies) has recurred”); 7 C.F.R. §
226.6(c)(3)(iii)(C) (providing the state agency “must notify [the institution] that
the State agency is proposing to terminate … and disqualify the institution” if
“timely corrective action is not taken to fully and permanently correct the
serious deficiencies”).
[26] Despite this clear regulatory language, Mt. Zion alleges (and the trial court
found) that, even if the institution does not timely, fully, and permanently
correct a serious deficiency, “federal regulations” prohibit the DOE from
moving to terminate and disqualify Mt. Zion unless the DOE finds that Mt.
Zion is “unwilling or incapable of correcting a serious problem.” App. v. 9 at
173. As an initial matter, we note that—contrary to the trial court’s finding—
the federal regulations themselves do not contain the language “unwilling or
incapable of correcting a serious deficiency.” Id. Rather, the Handbook contains
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 18 of 23 the following statement in its overview of the serious deficiency process: “If
institutions are unwilling or incapable of correcting serious problems, the
serious deficiency process protects Program integrity by removing the
institution from the Program….” App. v. 7 at 180; see also id. at 233-34 (noting
that an institution that has been declared seriously deficient and demonstrates
that it is “unwilling or unable to take appropriate corrective action” must be
notified that the agency proposes to terminate it from the program). However,
in describing the steps of the serious deficiency process, the Handbook clarifies
that, “[i]f the institution fails to implement timely corrective action to fully and
permanently correct the serious deficiencies cited, the State agency must notify
the institution … that the State agency is proposing to terminate the institution’s
agreement and to disqualify the institution …). Id. at 191 (emphasis added); see
also id. at 180.
[27] Thus, the Handbook—like the regulations—provides that a state agency must
move to terminate an institution from the program if the institution has not
completed full and permanent corrective action by the relevant deadline. It
provides further “guidance” about what a failure to correct a serious deficiency
may look like—i.e., an “unwillingness or inability” to take corrective action—
but it does not change the legal standard for termination. See App. v. 5 at 135
(testimony of the DOE employee that the “unwilling or incapable of
correct[ive]” action language is a “general kind of guidance” regarding
termination of a CACFP program).
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 19 of 23 [28] The unambiguous, plain language of the applicable CACFP regulations and the
Handbook provide a clear standard for when a state agency must move to
terminate and disqualify an institution from the program: when the institution
fails to implement timely corrective action to fully and permanently correct the
serious deficiencies cited. The DOE complied with that clear legal standard
when it moved to terminate Mt. Zion from the program on August 9, 2023,
after Mt. Zion initially corrected the serious deficiencies noted in October 2022
but subsequently allowed those deficiencies to recur. Thus, the DOE’s action
was not arbitrary, capricious, an abuse of discretion, otherwise not in
accordance with law, in excess of statutory authority, and/or unsupported by
substantial evidence. See I.C. § 4-21.5-5-14.
Technical Assistance
[29] The final dispute between the parties regarding the meaning of the CACFP law
is whether the DOE violated the legal requirement to provide technical
assistance to Mt. Zion before moving to terminate it from the program. The
regulations provide that
The State agency must provide technical and supervisory assistance to institutions and facilities to facilitate effective Program operations, monitor progress toward achieving Program goals, and ensure compliance with all requirements of [the law]…. The State agency must maintain documentation of supervisory assistance activities, including reviews conducted, corrective actions prescribed, and follow-up efforts.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 20 of 23 7 C.F.R. § 226.6(m)(1). Mt. Zion maintains, and the trial court found, that the
termination and disqualification of Mt. Zion must be reversed because the DOE
failed to provide Mt. Zion with the required technical assistance.
[30] However, the ALJ specifically found as a fact in the final administrative
decision that the DOE provided Mt. Zion with technical assistance in October
of 2022 and February and March of 2023. Mt. Zion acknowledges the provision
of technical assistance in those instances, but contends the DOE was required
to provide even more technical assistance. However, Mt. Zion points to no
regulation or part of the Handbook that requires a specific amount of, or timing
for, the provision of technical assistance, and we find none. In fact, contrary to
Mt. Zion’s contentions, not only did the DOE have no obligation to negotiate
with Mt. Zion’s attorneys following the August 2023 notice of termination, but
it was specifically prohibited from doing so. See App. v. 7 at 194 (“Program
regulations do not allow any other outcome, including ‘warnings’, ‘probation
periods’, or the use of ‘settlement agreements or negotiated settlements’ for
institutions that have been declared seriously deficient, or that have been issued
a notice of proposed termination and disqualification.”).
[31] Further, we note that the trial court’s conclusion that the DOE violated the law
by failing to provide technical assistance to Mt. Zion after March of 2023 is
based on its erroneous conclusion that the regulations required the DOE to
accept additional corrective action after that date. However, as noted above,
once the DOE found that the serious deficiencies noted in October 2022 had
recurred in May 2023, the DOE was not required to—and did not—accept any
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 21 of 23 further corrective actions. See 7 C.F.R. § 226.6(c)(3)(iii)(B)(3). As no further
corrective action was permissible at that point, the provision of technical
assistance to Mt. Zion would have been pointless. Therefore, the lack of that
assistance did not prejudice Mt. Zion. See I.C. § 4-21.5-5-14(d) (providing that a
court may grant relief only if it finds the person seeking relief has been
prejudiced by the agency action it appeals). 5
[32] The substantial evidence establishes that the DOE did not violate the CACFP
law by failing to provide technical assistance to Mt. Zion.
Conclusion [33] The DOE’s August 9, 2023, decision to terminate Mt. Zion’s CACFP program
without further opportunities to take corrective action was not “secret” and was
not arbitrary, capricious, an abuse of discretion, in excess of statutory authority,
or without observance of procedure required by law. App. v. 9 at 184. And the
DOE’s action was supported by substantial evidence that the serious
deficiencies identified in October 2022 recurred in May 2023. 6 The trial court
erred when it ruled otherwise.
5 Mt. Zion also alleges that the DOE violated the law by failing to document the technical assistance it did provide to Mt. Zion. However, again, Mt. Zion points to no harm to it from that alleged lack of documentation. 6 Because we reverse the trial court’s ruling against the DOE, we do not address the propriety of its remedy, as raised by the DOE in the alternative.
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 22 of 23 [34] Reversed.
Tavitas, J., and Kenworthy, J., concur.
ATTORNEYS FOR APPELLANT Theodore E. Rokita Indiana Attorney General Evan Matthew Comer Supervising Deputy Attorney General Indianapolis, Indiana
ATTORNEYS FOR APPELLEES Maggie L. Smith Kristopher N. Kazmierczak Frost Brown Todd LLP Indianapolis, Indiana
Court of Appeals of Indiana | Opinion 25A-PL-291 | October 30, 2025 Page 23 of 23