FOUR RIVERS SPECIAL EDUCATION DISTRICT v. ILLINOIS STATE BOARD OF EDUCATION (2009)

OPINION

NATURE OF CASE

The Complaint is in the nature of a contract action. On May 30, 2002, Claimant filed an Application for Approval of Private Residential Placement Room and Board Reimbursement (Form 34-37) with the Illinois State Board of Education (ISBE) to recover costs expended for a special education student's placement at a private residential school, Chaddock. On November 14, 2002, Claimant received notice from the Respondent that the Form 34-37 application for reimbursement had been denied for missing information.

On April 6, 2004, Claimant, Four Rivers Special Education District, filed a Complaint before this Court for $49,510.80. Claimant prayed for reimbursement of funds expended for private placement for room and board of a student as a lapsed appropriation. The Respondent subsequently filed a Motion to Dismiss stating that the claim should be dismissed due to the Claimant's failure to submit a completed application for reimbursement in accordance with regulations. The Respondent included a report prepared by the Illinois State Board of Education in its investigation of this claim. However, this Report did not address lapsed appropriation questions therein. This court denied the Respondent's Motion to Dismiss. The lapsed appropriation issue was not specifically addressed in the Court's Order, but we must assume that it remains an issue in this case. A hearing on this Complaint was conducted before a Court of Claims Commissioner on March 13, 2007.

ISSUES PRESENTED FOR REVIEW

1. Whether the Form 34-37 submitted by Claimant on May 30, 2002, seeking private residential placement room and board reimbursement contained sufficient information to comply with 105 ILCS 56/14-7.02, 23 Illinois Administrative Code § 226.330, and the instructions set forth on the Form 34-37 in order to be approved as submitted?

2. Whether Respondent, Illinois State Board of Education (ISBE), complied with the constitutional requirements of procedural due process in its review of the Form 34-37 submitted by Claimant on May 30, 2002, and issuance of a denial letter on November 14, 2002 without providing the Claimant with written Notice of Deficiencies in the application and the opportunity to cure alleged deficiencies in the Form 34-37?

3. Whether and to what extent appropriated funds were available to reimburse the Claimant for a lapsed appropriation?

STATEMENT OF FACTS

The parties stipulated to the basic facts and exhibits that provide the basis for this claim. Four Rivers Special Education District (hereinafter also referred to as “Four Rivers”) is a special education cooperative that assists about twenty school districts in west-central Illinois by providing special education to students. Jacksonville School District #117 is one of the Four Rivers member school districts. If a student's Individual Education Program (IEP) requires residential placement, Four Rivers locates an appropriate residential facility that will fulfill the student's IEP.

This matter involves a special education student attending Jacksonville School District #117. After several years, it became evident that his increasing behavior difficulties required a more restrictive placement to meet his needs. During the 2001/2002 school year he was placed in the Four Rivers Garrison School for a severe behavior disorder. During that school year, and prior to May 30, 2002, an IEP meeting was held to decide the student's needs, services, and placement. The IEP establishes goals and objectives for a student to improve his education and behavior through appropriate services. The IEP team decided the student's educational placement should be in a residential facility. Chaddock School, a residential facility with 24-hour supervision, accepted the student. The student began attending Chaddock during the Summer of 2002 and continued during the 2002/2003 school year.

Relevant sections of 105 ILCS 5/14-7.02 state that the school district in which the child resides shall pay the cost of tuition for special education services outside of those provided by the district. The school district is eligible for reimbursement from the State after the State Board of Education approves the claim. Pursuant to the stipulation of the parties, the ISBE is “the State of Illinois agency authorized to reimburse resident school districts for private residential school tuition as a result of the placement of special education students pursuant to 105 ILCS 5/14-7.02.” The parties also stipulated that ISBE Form 34-37 is the proper form to be completed for private residential school tuition reimbursement pursuant to 105 ILCS 5/1407.02.

When Four Rivers places a student in a residential facility, a Form 34-37 is submitted to the ISBE for approval of room and board expense reimbursement. The original Form 34-37 for reimbursement on the student's placement at the Chaddock facility was submitted by Four Rivers to the ISBE on May 30, 2002. Reimbursement for the student's placement was requested before the summer session began in July 2002. The student attended Chaddock during the summer of 2002, and continued through the next regularly scheduled fall semester of the 2002/2003 school year. On November 14, 2002, Claimant received a letter from the ISBE Operations Consultant for Funding and Disbursements, Gail R. Lehmann. The letter stated that “the application was reviewed and was found to be missing several pieces of vital information” and that the “file had been closed.” No description or report of the omitted “vital information” was included.

The evidence shows that during the period after Claimant submitted its Form 34-37 and before the November 14, 2002 denial ISBE letter was received, Gail Lehmann of the ISBE contacted both Kathy Bader and Helen Klosterman of Four Rivers by telephone seeking additional information. Bader is an administrative secretary at Four Rivers. Her duties do not require her to provide information for Form 34-37 applications. “The most [she] would have ever done on one would be to type it.” During this period Bader had “at least two” conversations with Lehmann about the Form 34-37 concerning the student. The telephone conversations acknowledged that Lehmann had received the Form 34-37, and that Lehmann was also requesting more information. Bader subsequently spoke with the Four Rivers Director, Dr. Donald Aubry, regarding the ISBE request. Four Rivers did not possess the information that Lehmann requested. Bader then contacted Jacksonville School District #117 Special Services Director Helen Klosterman about the information Lehmann had requested. Bader did not recall any deadline dates given by Lehmann for submitting the requested information on the student. Furthermore, Bader had no recollection about the specific information Lehmann had requested to supplement Claimant's Form 34-37. Additionally, Bader recorded no information in her work journals regarding any discussion with Lehmann.

Further, Lehmann also directly contacted Helen Klosterman by telephone to request information on the student during the period after the Claimant's Form 34-37 was submitted and before the November 14, 2002 denial letter was received. Klosterman only remembers one conversation and does not recall the details. Klosterman does “not remember what specifically was asked,” but believes she would have told her secretaries to find requested information “and get that piece of information sent.” Klosterman does not recall any discussion that the failure to submit any supplemental documentation for the Form 34-37 would result in the loss of any funding. Also, Klosterman does not remember any specific deadlines or final dates for submitting supplemental material. She received no other letter or written communication about the Form 34-37 prior to the November 14, 2002 ISBE denial letter. Klosterman remembers no specific conversations with Kathy Bader regarding the student's Form 34-37. Klosterman believes that “if [Lehmann] would have asked for specifics, they would have been sent on.”

After the receipt of the November 14, 2002 ISBE denial letter, the Claimant submitted a second Form 34-37 to the ISBE which was received on February 14, 2003. In addition, Four Rivers' Klosterman wrote a letter to Lehmann explaining the “many unusual circumstances” that led up to alleged deficiencies in Claimant's Form 34-37 dated May 30, 2002. Klosterman also attached six pages of details regarding the student's behavior.

When the February 14, 2003 Form 34-37 was subsequently submitted, Lehmann was no longer reviewing applications at ISBE. Rather, Charles Seybold had reassumed his position with the ISBE as the reviewer of Forms 34-37. Seybold was hired by the ISBE in 1991 as a behavior disorder specialist coordinating the private residential placement process. Seybold had conducted that process for approximately five or six years, before he was transferred to another division of the ISBE. In approximately late 2002 or early 2003, he was transferred back to coordinate the private residential placement process. When Seybold evaluated a Form 34-37 for reimbursement, he testified that it was his practice to “read everything that's submitted to [him].” He would consider all information provided by the applicant as part of the Form 34-37.

In addition to considering all information submitted, Seybold's process for alerting schools of deficiencies in their application was markedly different from Lehmann's. On this point, it is noted that there are no official rules which set out a procedure that examiners must follow in reviewing the submitted forms. The process is something that “each person establishes for themselves.” For example, Lehmann reviewed the application, made some phone calls to the applicant, and then denied the application some six months later with no further follow-up or notice. On the other hand, Seybold would “pick up the phone immediately and make contact with the district and with the contact person and indicate there was a problem with their application.” He would try to work the difficulties out over the telephone. If it could not be worked out “then [he] would send a letter of denial specifically addressing the areas of deficiency” noted in the phone conversation. He would ask the contact persons to submit the necessary material in the next “week or two” so that approval could be granted. If he did “not get a response for a period of time, then [he] would follow it up with a letter of denial specifying the deficiencies in the application.” However, Seybold testified that “none of this is in the code.” It is just a process that each person “establishes for themselves.”

On March 20, 2003, Mr. Seybold sent a letter to Claimant stating that the February 14, 2003 Form 34-37 had been approved, but that reimbursement for the student's private residential room and board would only be granted retroactive to February 14, 2003 through September 30, 2003. This period was retroactive to the date of the second application, but reimbursement retroactive to May 30, 2002 as requested in the initial Form 34-37 application was denied in accordance with the decision of Respondent's Lehmann. Accordingly, although Four Rivers Special Education District provided special education to the student, beginning on May 30, 2002, the Four Rivers Education District was not reimbursed for this period.

ARGUMENT

1. Whether the Claimant's May 30, 2002 Form 34-37 was legally sufficient to gain private residential placement room and board reimbursement to the Claimant?

The evidence shows that the sufficiency of Claimant's Form 34-37 is governed by the instructions contained in the ISBE Form 34-37, the provisions of 105 ILCS 5/14-7.02, and the provisions of 23 Illinois Administrative Code §226.330. Reviewer Gail Lehmann had no other authority to consult in determining whether Claimant's May 30, 2002 Form 34-37 was complete.

According to Respondent's witness Seybold, possible deficiencies of Claimant's May 30, 2002 Form 34-37 may have included that the Form 34-37 did not contain information concerning the student's educational history, non-educational or social history, physical health, identified issues or concerns, psychological health or emotional health, and the student's current levels of educational performance. (“Required Categories”) However, Gail Lehmann, who did not testify, was the ISBE agent who officially reviewed and later denied Claimant's Form 34-37 of May 30, 2002. Therefore, Seybold's theories of Form 34-37 deficiencies may not necessarily reflect the actual reasons for which Lehmann denied the application. There is no written record of the information Lehmann requested from Four Rivers to address the alleged deficiencies and supplement the Claimant's May 30, 2002 Form 34-37. Lehmann only requested this information by telephone. Claimant never received a letter, or any writing that specified what additional information was required. Moreover, no internal notes, memoranda or documents were made by Lehmann, Bader, or Klosterman to document the information requested. Accordingly, the record is incomplete with respect to Lehmann's purported requests.

Notwithstanding the alleged potential deficiencies cited by Respondent's Seybold, the Claimant's May 30, 2002 Form 34-37 included an attached document containing information on the student that was part of the narrative. This narrative addressed the student's educational history, non-educational or social history, physical health, identified issues or concerns, psychological health or emotional health, and the student's current levels of educational performance as required by the instruction on page six of Form 34-37. Specifically, the Claimant's May 30, 2002 Form 34-37 narrative provided as follows:

1. Educational History and Current Levels of Education Performance were addressed by noting that the student has “been placed in behavior/emotional disorder classes for most of their educational career. The student has been involved in various types of educational settings, to more and more restrictive.” “The parents have recently attempted home schooling.” The student began school in District #117's special education classes, but has been moved to more restrictive settings with no success. Even home schooling was not successful.

2. Non-educational and Social History are addressed when Claimant noted that “[the student] has been demonstrating increasing difficulties at home. Parents are encountering much difficulty controlling their son's behavior. It is the mother who initiated the request for residential placement. She is very aware that she does not have the needed control to keep her son out of trouble.” “He has encountered much difficulty in the home setting” and “while unsupervised during non-school hours.”

In his testimony, Seybold admitted that the student's Physical Health, Identified Issues or Concerns, Psychological Health and Emotional Health were all addressed by Claimant's references in the narrative to the student's difficulties at home, others' inability to control the student's behavior, his inability to control his own behavior, and medication issues.

Further evidence that Claimant's narrative on page seven of the May 30, 2002 Form 23-37 contained the information required by the directions on page six, and outlined above, is language indicating that the student's behavior is so severe that no service provided so far has been able to manage the student, and that the student has severe emotional disturbance.

While the instructions on page six of the Form 34-37 require a narrative, Form 34-37 instructions only require that the applicant address the topics referenced in the previous paragraph. There is no standard or instruction advising how the applicant must address the issues within the narrative. It requires only that the issues are addressed in narrative form. Claimant did address the issues outlined in the May 30, 2002 Form 34-37. Again, it is uncertain as to what Lehmann considered in her assessment of the application, but Seybold made it clear that he “considers everything that is submitted” when reviewing an application.

Based upon a review of the record, it appears that the narrative provided by Claimant in the May 30, 2002 Form 34-37 did address educational history, non-educational or social history, physical health, identified issues or concerns, psychological health or emotional health, and the student's current levels of educational performance. Whether the application is adequate is left to the individual reviewer's subjective judgment. It is not based on an objective standard. Accordingly, this Court finds that the information required by the instructions on page six of the Form 34-37 was reasonably provided to the ISBE.

Further, the student's application for reimbursement of May 30, 2002 was filed in compliance with ISBE regulations located on Form 34-37. It states that “ISBE Form 34-37 is to be completed and submitted in a timely manner to allow approval prior to the district effecting the placement.” The first billing period that Claimant paid Chaddock for Brendan's room and board, evidenced by a Chaddock invoice, was July 1, 2002 through October 31, 2002. The invoice was for the July/August Summer School session. The Claimant's Form 34-37 was submitted on May 30, 2002, a month in advance of the student's placement at Chaddock. Claimant acted in accordance with ISBE directions on the Form 34-37 because the Form 34-37 was received by the ISBE before the student was placed at Chaddock. We also know that these costs were incurred by the Claimant. Accordingly, this Court finds that Claimant's May 30, 2002 Form 34-37 for reimbursement of monies expended by Claimant on the student's private residential placement room and board at Chaddock School was sufficient to show substantial compliance with the ISBE directions.

2. UNDER THE PROCEDURAL DUE PROCESS REQUIREMENTS OF THE CONSTITUTION OF THE UNITED STATES, THE LACK OF A DEFINED PROCESS AND NOTICE OF DEFICIENCIES IN THE APPLICATION BY THE ISBE PRIOR TO DENYING CLAIMANT'S MAY 30, 2002 FORM 34-37 IS A VIOLATION OF THE DUE PROCESS RIGHTS OF CLAIMANT IN THE REIMBURSEMENT FOR ROOM AND BOARD OF THE STUDENT'S PLACEMENT AT CHADDOCK SCHOOL.

Since the Court finds that the Claimant's May 30, 2002 Form 34-37 was legally sufficient to receive a claim for reimbursement, it is unnecessary to address the constitutional due process issues raised by the Claimant.

3. WHETHER AND TO WHAT EXTENT APPROPRIATED FUNDS WERE AVAILABLE TO REIMBURSE THE CLAIMANT FOR A LAPSED APPROPRIATION?

Due to the Court's finding that the May 30, 2002, Form 34-37 application was legally sufficient, it is necessary to determine the appropriate lapsed appropriation amount. In breach of contract claims whether the claims are before us on their merits or for approval of a settlement, it is this Court's policy to limit awards so as not to exceed the amount of funds, appropriated and lapsed, with which payment could have been made. To do otherwise, i.e. to award money for debt incurred beyond the sum allotted by the General Assembly, would be tantamount to making a deficiency appropriation. The appropriation of State funds for governmental operations is the constitutional prerogative of the General Assembly. It is this Court's duty to uphold that process and advise the General Assembly. (Thorlief Larsen & Son, Inc. v. State (1990), 42 Ct. Cl. 195; Bojko v. State (1988), 41 Ill. Ct. Cl. 202; J.F. Inc. v. State (1988), 41 Ill. Ct. Cl. 5; Loewenberg/Fitch Partnership v. State (1986), 38 Ill. Ct. Cl. 227; UDE, Inc. v. State (1982), 35 Ill. Ct. Cl. 384). In the case at bar, a Department Report is necessary for this determination. The award will be limited to the lesser amount of $49,510.80 or the amount of lapsed appropriation.

CONCLUSION

IT IS THEREFORE ORDERED:

1. Four Rivers Special Education District is entitled to recovery of the $49,510.80 or the amount of the lapsed appropriation, whichever is less, from the Illinois State Board of Education.

2. The Respondent shall file within 10 days of the date of this Opinion a Departmental Report regarding the amount of funds that lapsed from which this claim would have been paid.

ORDER

This matter is before the Court following its April 30, 2009 order.

The Court entered an Order that the Four Rivers Special Education District was entitled to recovery of $49,510.80 or the amount of the lapsed appropriation, whichever is less.

In that order, we directed the Respondent to file a departmental report regarding the funds lapsed from which this claim could be paid. The Respondent filed its report on May 12, 2009. In its report the Respondent represents that a federal grant award amount (the only monies to pay this claim) of $4,463.00 lapsed.

It is therefore ordered that the Claimant is awarded $4,463.00 payable from the general revenue fund.

This matter is before the Court following its June 29, 2010 order, wherein the Claimant was awarded $4,463.00. The balance of the award was not then payable due to insufficient monies having lapsed.

Funds in the amount of $45,047.80 have been appropriated to the Court of Claims to pay the balance of this claims award, pursuant to the Public Act 97-0057, effective July 1, 2011.

IT IS THEREFORE ORDERED that an award of $45,047.80 is granted to the Claimant.

REID, J

J. Birnbaum