GAB Decision 196
June 30, 1981 Lakota Indiana Alcohol and Drug Abuse Program, Inc.,
Salem, Oregon; Docket No. 79-212 Settle, Norval; Teitz, Alexander
Garrett, Donald
Lakota Indian Alcohol and Drug Abuse Program, Inc. (LIADAP, Grantee)
appealed on October 29, 1979 a decision dated September 24, 1979 by the
Alcohol, Drug Abuse and Mental Health Administration (ADAMHA) Grant
Appeals Committee. The ADAMHA Grant Appeals Committee sustained the
decision by the National Institute on Alcohol Abuse and Alcoholism
(NIAAA) to terminate the grant for cause. /1/
We find that the decision of the ADAMHA Grant Appeals Committee
should be sustained for reasons set forth below.
The record on which this decision is based consists of LIADAP's
application for review, the Agency's response to the appeal, and the
record before the ADAMHA Grant Appeals Committee. On April 7, 1981, the
Panel Chair issued an order requesting LIADAP to show cause why NIAA's
decision to terminate the grant should not be sustained. The Grantee
declined to respond to the order. /2/ The Agency was not required to
respond to the order and did not do so. Although LIADAP had earlier
requested a hearing to be held at the Oregon State Penitentiary, the
Board did not grant this request because it concluded that oral
testimony would not materially assist the resolution of any remaining
factual disputes or legal questions. The Board, however, advised the
Grantee (2) that it would accept the testimony of Grantee's Directors in
the form of affidavits as well as any other written evidence the Grantee
might consider pertinent to the Board's considration of the case.
Grantee, however, chose not to present any additional evidence.
Background
LIADAP was funded for the first budget period of a three year project
period. Grantee received $65,000 on October 1, 1978 for the first
budget period, with the same amount recommended for each succeeding
budget period. The target population of the program was comprised of
Indian inmates of three penal institutions located in Salem, Oregon:
Oregon Stae Penitentiary, Oregon Women's Correctional Center, and Oregon
Correctional Institution. The program outlined in the grant application
was to focus on alcholism counseling, education, and cultural identity
with inmates and alcholism prevention work with children of inmates.
The program staff included a Program Director and Counselor, two
Advocate/Counselors, and a Secretary/Data Coordinator. The Grantee
Organization, which was founded in 1971, was governed by a nine-member
Board of Directors composed of Indian inmates and outside Indian people
with the inmate members always in majority.
In February, 1979, the NIAAA Indian desk was informed that the LIADAP
Board of Directors had replaced the former Program Director with a new
Program Director and had also appointed a new Administrative Assistant.
The former Program Director, alleging that she had been wrongfully fired
on January 31, 1979 at what she considered an illegal Board of Directors
meeting, took all the records and books of the program and the keys to
the facilities. It appears that the Board of Directors instituted legal
proceedings in order to restrain the former Director from continuing
such actions and to regain custody of the records of the program. Based
on this information, which was received by the NIAAA Indian desk in
February, 1979, NIAAA sent a fact finding team on a site visit to LIADAP
in March, 1979. At the same time NIAAA, by memorandum dated March 6,
1979, requested the Chief of the Federal Assistance Financing Branch to
suspend all cash payments to the Grantee until all the facts surrounding
the allegations could be investigated. Based on the findings contained
in the reports of the members of the site visit team, as well as a
report from the Alcohol Coordinator, State of Oregon Mental Health
Division, concerning a site visit made by him on January 30, 1979,
NIAAA, by letter dated May 17, 1979, communicated its decision to
terminate the grant effective two weeks from the date LIADAP received
the letter. LIADAP, by written request dated June 19, 1979, appealed
the NIAAA decision to the ADAMHA Grant Appeals Committee.
(3) The ADAMHA Grant Appeals Committee reviewed five reasons given by
NIAAA for terminating the grant and concluded that the NIAAA decision
was warranted. The Grant Appeals Committee also determined, however,
that the Agency had not properly notified the Grantee of the suspension
of the grant and that NIAAA must reimburse the Grantee for allowable
expeditures which the Grantee incurred up to the date of termination.
The Grantee has not yet been reimbursed for these costs. (Letter from
Grantee dated April 17, 1981.)
The major issues presented by the Grantee concern the validity of the
termination of the grant. The Grantee raises both substantive and
procedural arguments which will be discussed below.
Discussion
Validity of ADAMHA Grant Committee Decision
The Grantee, in its application for review, questioned the validity
of the ADAMHA Grant Appeals Committee decision due to two alleged
procedural defects. The first alleged defect was that the decision is
vague and fails to address the specific allegations made by NIAAA in its
notice of termination. The Grantee was informed of the ADAMHA decision
by letter dated September 24, 1979. That letter informed the Grantee of
the Committee's decisiion to uphold NIAAA's determination to terminate
the grant. The written record submitted to the Board by the Agency at
the Grantee's request indicates that this letter was intended to
summarize the written decision of the ADAMHA Grant Appeals Committee and
to set forth the Grantee's right to appeal to this Board. The written
decision dated September 24, 1979 of the ADAMHA Grant Appeals Committee,
submitted with the record in this matter, however, specifically and
clearly addressed each of the five reasons for termination of the grant
listed in NIAA's letter of May 17, 1979. /3/ The ADAMHA Grant Appeals
Committe decision fully discussed each of the allegations made by NIAAA.
The Grantee's argument of lack of specificity is, therefore,
unpersuasive.
The Grantee also argues that the ADAMHA decision was not made in
accordance with proper administrative procedures because the Grantee had
no advance opportunity to challenge the ADMAH reasons for sustaining the
termination. This argument lacks merit inasmuch as the record indicates
that the Grant Appeals Committee made its decision only after it
reviewed the materials (4) submitted by the parties in support of their
positions. The Grantee was afforded an opportunity to present its
position to the Committee. Nothing requires the ADAMHA Grant Appeals
Committee to issue a preliminary decision to the Grantee so that the
Grantee might have the advance opportunity to challenge the Committee's
reasons for sustaining the decision. Futhermore, the Grantee is
entitled under the provisions of 45 CFR Part 16, after exhausting the
informal review procedures, to further appeal to this Board a
determination by the Agency that a grant should be terminated. The
Grantee, on appeal to this Board, had been given an opportunity to
challenge the ADAMHA decision.
Precedence of a Policy Statement
Grantee questioned the validity of a statement in the ADAMHA decision
that a policy statement takes precedence over a regulation, namely 45
CFR Part 74, where ADAMHA based its suspension of grant funds on a
policy statement. We do not have to reach that question here inasmuch
as the withholding of grant funds and the suspension of the grant are
not issues before this Board. The ADAMHA Grant Appeals Committee agreed
with the Grantee that the grant fund had been wrongfully withheld and
that the grant had not been "officially" suspended. The only issue
before this Board is whether the grant has been properly terminated.
The argument that a policy statement cannot take precedence over 45
CFR Part 74 is not relevant as far as the issue of termination of the
grant is concerned as there is no conflict between the Public Health
Serice (PHS) Grants Administration Manual (GAM) and Grants Policy
Statement (GPS) provisions on termination and the provisions of Part 74.
The Board, therefore, need not determine whether the policy statement
can take precedence over the regulation.
Method of Grant Closeout
The Grantee alleges that NIAAA, recognizing Grantee's right to be
reimbursed for the four months the grant was improperly suspended,
promised to send the forms necessary to recover the questioned funds but
instead sent grant closeout forms. The Grantee contendes that this was
an attempt by the Agency to force grant closeout and thereby deprive
Grantee of its right to appeal. Grantee argues that it should have been
allowed to recover the funds merely by filling out the forms usually
used for monthly expediture reports, forms DFAFS 27 an 27A.
(5) The Agency did in its termination notice of May 17, 1979, request
that the Grantee close out the grant by submitting an expenditure
report. Closeout forms were transmitted to the Grantee by letter dated
June 12, 1979. Both to these actions were, however, prior to June 19,
1979, the date of Grantee's letter appealing to ADAMHA and are
consistent with the temination procedures at 45 CFR Part 74, Subpart M.
Grantee has not provided any evidence to indicate that the Agency took
any action to require submission of the closeout forms pending the
appeal. /4/
In any event, the Grantee has not shown how filling out the closeout
forms per se would have affected its appeal rights. Nothing precludes
appeal under such circumstances. Grantee here did not fill out the
forms, but presumably could have given the required information with
respect to costs incurred and funds obligated without prejudicing its
right to claim for futher allowable costs if successful on appeal. In
the circumstances here, where Grantee has been given a full opportunity
to present its case and offer evidence, but has not demonstrated that
the termination action was improper, we do not think that an unsupported
allegation that the Agency tried to foreclose a right to appeal provides
any basis on which to overturn the termination. The Agency should,
certainly, allow the Grantee to show that it had allowable costs during
the four month "suspension" period, but may reasonably require that
the
Grantee's claim for those costs be supported by adequate documentation
in addition to the normal expenditure reports.
Termination of the Grant
"Termination" of a grant is defined in the Public Health Service
Supplement to the Grants Administration Manual (PHS) as "withdrawl of
support through cancellation of Federal assistance in whole, or in part,
under a grant at any time prior to the date of completion." As set forth
in PHS 1-500-30, the Agency may terminate a grant if a grantee has
failed to comply with the terms and conditions of a grant. This chapter
sets forth that PHS policy is to take such action after a grantee has
been informed of the deficiencies and given time to correct them.
(6) However, this policy, as stated in PHS 1-500-30A.1, "does not
preclude. . . immediate termination when such action is reasonable in
the circumstances and necessary to protect the interests of the
government." /5/
The Grantee also alleges that the Agency failed to comply with the
provisions of 45 CFR 74.115 to notify the Grantee promptly in writing of
its determination and reasons for termination of the grant. That
section states:
The granting agency may terminate any grant in whole or in part, at
any time before the date of expiration, whenever it determines that the
grantee has materially failed to comply with the terms of the grant.
The granting agency shall promptly notify the grantee in writing of the
determination and the reasons for the termination, together with the
effective date.
Although the Agency may have improperly suspended the grant by
failing to give the Grantee written notice, this procedural failure of
the Agency to notify the Grantee in writing of the suspension does not
taint the Agency's actions in terminating the grant. Suspension and
termination are procedurally two separate and distinct actions. In
suspending a grant, the Agency is preserving the federal government's
interest while it determines whether a grantee is complying with the
grant. In the present case, however, upon determining that the Grantee
had materially failed to comply with the grant, the Agency promptly
notified the Grantee in writing of its decision to terminate and gave
the Grantee two weeks to close out the grant. The Agency, therefore,
complied with the provisions for prompt notice set forth in 45 CFR
74.115.
Inasmuch as the Agency complied with the proper procedure for
terminating the grant, both under the Public Health Service Supplement
to the Grants Adminstration Manual and under 45 CFR Part 74, the only
question left is whether the decision to terminate the grant was valid.
The ADAMHA Grant Appeals Committee, in its decision dated September 24,
1979, reviewed the validity of the NIAAA decision to terminate the
grant.
(7) ADAMHA examined five points as listed in NIAAA's termination
letter as a basis for LIADAP's material failure to comply with the terms
of the grant. Although ADAMHA felt that there was not sufficient
evidence presented by either party to prove or refute two of the five
points, ADAMHA found sufficient proof of the validity of three of the
points to conclude that the NIAAA decision was warranted. /6/
After an independent review of the record in this appeal, which
includes evidence submitted by both the Grantee and Agency to the ADAMHA
Grant Appeals Committee, we agree that Grantee did materially fail to
comply with the terms of the grant. The authorizing statute, 42 U.S.C.
4577, requires grant programs awarded under this statute to provide
alcohol abuse treatment to persons in need of this treatment. The
record indicates that this purpose was not being carried out. On
February 9, 1979 the superintendnet of the Oregon State Penitentiary
terminated operation of LIADAP within the confines of the penitentiary
because of the disruptive influence it had produced. (Memorandum dated
February 9, 1979 to Dave Francis from H. C. Cupp, Superintendent, Oregon
State Penitentiary.) This termination resulted in the providers of the
alcohol treatment services being barred from the prison and unable to
provide treatment to the clients as required by the grant terms.
Evidence in the record also indicates that rather than providing
alcholism counseling, the program was providing assistance in the form
of parole appeals and parole planning. (Site Visit Report prepared by
Joseph Weeda, dated April 23, 1979.) Furthermore, based on the job
resumes submitted by Grantee to the ADAMHA Grant Appeals Committee, the
Board's order indicated that the program staff did not possess alcohol
related education or experience and were not qualified to provide the
necessary services. The Grantee has not contested the Board's analysis
on any of these points. The Grantee's evidence does not contradict the
fact that LIADAP was barred from entering the penitentiary, that the
staff did not possess related education or experience and that LIADAP's
Board of Director's was not exercising (8) adequate management control.
Therefore, the evidence in the record justifies the conclusion that the
purposes of the grant were not being carried out and that termination in
this instance was proper.
Conclusion
For the reasons set forth above, we concluded that the decision of
the ADAMHA Grant Appeals Committee to uphold NIAAA's decision to
terminate the grant should be sustained. /1/ For purposes of 45 CFR
Part 16 the constituent agency in this matter is the Office of
the Assistant Secretary for Health, Public Health Service (hereinafter
referred to as the Agency) of which ADAMHA and NIAAA are a part. The
Board was informed by the Attorney for the Grantee on May 22, 1981 that
the Grantee did not intend to respond to the Order to Show Cause.
/3/ The record indicated that the Grantee received the September 24,
1979 letter informing the Grantee of the ADAMHA Committee's decision.
The Grantee has never alleged that it did not also receive a copy of the
written decision of the ADAMHA Grant Appeals Committee. /4/ Such
an action might have been contrary to applicable regulations. 42 CFR
Sec. 50.406(c) and 45 CFR Sec. 16.7. /5/ Immediate action is an
exception to normal PHS procedures, which allow this action on
advice from the Office of General Counsel. The record indicates that
the Office of Geneal Counsel cleared the action. Part 74 of 45 CFR,
however, provides that the granting agency may terminate a grant "at any
time." The regulation, therefore, does not preclude termination with two
weeks notice. /6/ The three points on which ADMHA found
sufficient proof to conclude that the NIAAA decision was warranted were:
1. the Grantee staff was suspended from entering the penitentiary, 2.
the program staff did not possess related education or experience, 3.
LIADAP's Board of Directors were not exercising adequate management of
fiscal control.
OCTOBER 22, 1983