Southern Mutual Help Association, Inc. v. Joseph A. Califano, Jr., Secretary of Health, Education and Welfare

574 F.2d 518, 187 U.S. App. D.C. 307, 1977 U.S. App. LEXIS 5498
CourtCourt of Appeals for the D.C. Circuit
DecidedDecember 23, 1977
Docket76-1748
StatusPublished
Cited by54 cases

This text of 574 F.2d 518 (Southern Mutual Help Association, Inc. v. Joseph A. Califano, Jr., Secretary of Health, Education and Welfare) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Mutual Help Association, Inc. v. Joseph A. Califano, Jr., Secretary of Health, Education and Welfare, 574 F.2d 518, 187 U.S. App. D.C. 307, 1977 U.S. App. LEXIS 5498 (D.C. Cir. 1977).

Opinions

TAMM, Circuit Judge.

Appellant Southern Mutual Help Association (SMHA) commenced this action in the United States District Court for the District of Columbia, challenging a decision by the appellee Secretary of Health, Education and Welfare (HEW) to disapprove, after three years of federal support, an annual application submitted to obtain continued funding for appellant’s migrant worker health care facility in Franklin, Louisiana. The Secretary took this action without providing SMHA the opportunity for a hearing. The district court granted the appel-lee’s motion for summary judgment, holding that neither HEW regulations nor the due process clause of the fifth amendment required HEW to hold a hearing. We vacate the order of the district court, and remand to that court with the instruction to remand to the Secretary for further proceedings consistent with this opinion.

I

Under authority of the Migrant Health Act (section 310 of the Public Health Service Act), 42 U.S.C. § 242h (1970),1 the Secretary of HEW awards grants to public and other nonprofit organizations to establish and operate family health service clinics for domestic agricultural migratory workers. Generally, the “Project Period System” is used to obligate funds for such grants. Under this system, projects are approved for multi-year support, but are funded in annual increments called budget periods. Grantees must file annual, noncompeting applications for continued funding, and HEW “is committed to fund the project in succeeding budget periods, subject to the availability of funds, unless the grantee fails to comply with the terms and conditions of the grant or [HEW] determines that continued funding is not in the best interest of the Government.”2

[520]*520In 1971, SMHA, a nonprofit Louisiana Corporation, was awarded a grant to provide health services to migrant farm workers and sugarcane cutters in southwestern Louisiana. Attached to the letter informing SMHA of its grant was an HEW form entitled “Notice of Grant Awarded.”3 In pertinent part, it contained the following data:

Project Period 7/1/71-6/30/76
Grant Period 7/1/71-6/30/76
* * * * * *
Budget Period 7/1/71 through 6/30/72
* * * * * Total Approved Budget $204,584
******
Future Support Recommended
Budget Period Amount
(72) 7/1/72-6/30/73 $286,060
(73) 7/1/73-6/30/74 321,966 ***
(74) 7/1/74-6/30/75 341,162 ***
(75) 7/1/75-6/30/76 363,328 ***

******

In 1972 and 1973, SMHA filed the required applications for continued funding, and each was approved. A revised “Notice of Grant Award” form was attached to each, and in pertinent part, the 1973 document indicated the following:4

Project Period 7/1/71 through 6/30/76
Budget Period 7/1/73 through 6/30/74
******
Total Approved Budget $298,403
******
Recommended Future Support (Subject to availability of funds)
Budget Period Total Direct Costs
7/1/74-6/30/75 $341,162
7/1/75-6/30/76 341,162
******

Significantly, there is no mention on the document of “grant,” “grant period,” or “grant expiration date.” The document does, however, indicate HEW’s concern over the fact that SMHA had not yet established a project policy board, designed to promote greater community participation in the project, as required by HEW regulations.5

In November 1973, HEW instituted its first comprehensive fiscal audit of SMHA. The results of this audit were released on May 22, 1974, and SMHA was advised that it had thirty days to present “any comments or additional information that [it] believe[d] may have a bearing on [HEW’s] final determination.”6 On June 6, 1974, SMHA was notified that its 1974 application for continued funding was not being approved, and that the funds instead were to be awarded to a competing applicant, Teche Action Board (TAB).

Stating that it was “unable to find sufficient merit in the continuation of the somewhat cumbersome and unresponsive project administration through SMHA,” HEW listed six principal areas of major concern that prompted its decision:7

1. It is apparent from the considerable amount of correspondence this office has received from individuals and groups located in the Saint Mary Parish area, telephone communications and personal discussion between my staff and interested citizens from the target area that the community has lost confidence in SMHA.
2. SMHA has failed to reconstitute its Board of Directors or to make appropriate provision for the community at large, particularly the target population, to participate in the planning, development and implementation of the project.
3. The sponsor has failed to give consideration to the advice and counsel of the medical and dental committees on Saint Mary Parish, the primary focus of the project’s activities.
4. There appears to have been usurpation of the Project Director’s administrative and management authority by the Executive Staff of the Southern [521]*521Mutual Help Association in respect to the negotiation of contracts, i. e., purchase of film, obtaining consultants for staff and board training. Also it is apparent that employment procedures and practices have not been consistent with program guidelines and requirements.
5. The Farm Workers Advisory Board, Professional Advisory Committee and project staff have indicated that they have had virtually no communication with the SMHA Executive Staff or the governing board of SMHA.
6. Of particular concern is the practice of SMHA which allows members of the Board and/or relatives of Board members to work as salaried staff for SMHA-sponsored programs and projects. This creates a basic conflict of interest.

On June 11, SMHA notified HEW that it intended to challenge and appeal the denial decision.8 On June 25, HEW gave final approval to the TAB proposal,9 and the next day informed SMHA that “our administrative decision not to renew this grant at the end of the budget period does not constitute grant termination. Therefore, those rules and regulations governing grant termination procedures ... do not apply in this instance.”10 On July 16, representatives of SMHA met with the HEW regional health administrator to discuss the denial decision, and thereafter this official informed SMHA that the decision would not be altered.11

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574 F.2d 518, 187 U.S. App. D.C. 307, 1977 U.S. App. LEXIS 5498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-mutual-help-association-inc-v-joseph-a-califano-jr-cadc-1977.