PS 02020.018 Iowa
A. PS 06-052 (Iowa) Woodward Youth Corporation
DATE: December 15, 2005
This 2005 opinion concludes that a privately owned organization that contracts with a state agency to provide rehabilitative treatment and supportive is a public institution. Woodward Youth Corporation rents state property located on the grounds of the Woodward State Hospital School and contracts with the Iowa Department of Human Services (DHS) to provide rehabilitative treatment and supportive services to juvenile offenders. DHS retains the authority to approve all services provided, monitors Woodward's performance, directs in specific terms how it is billed for services, and prohibits any changes to the services or the property without the prior written approval of DHS. Both the regulation at 20 CFR §416.201 and Program Operations Manual System (POMS) SI 00520.001B.4, state that a private organization which is controlled by a Federal, State, or local government entity is considered a public institution.
You have requested legal advice regarding the field office's determination that Woodward Youth Corporation (Woodward) is a public institution which renders its residents ineligible for supplemental security income (SSI). 20 C.F.R. § 416.211 (2005). Woodward is a privately owned organization that rents state property located on the grounds of the Woodward State Hospital School and contracts with the Iowa Department of Human Services (DHS) to provide rehabilitative treatment and supportive services to juvenile offenders. Because DHS is disputing the field office's determination, the field office has requested regional office review and approval.
Specifically, you have posed two questions:
Have we correctly interpreted the language in the contract, thus supporting regional office approval of the field office determination that Woodward Academy is a public institution?
2. Does DHS have any legal recourse if they disagree with this determination?
After careful review of the information you provided, which includes the Rehabilitative Treatment and Supportive Services Contract between DHS and Woodward as well as the lease agreement between these parties, we believe the field office reasonably concluded that Woodward is a public institution because DHS has indirect administrative control over its operations.
Indirect Administrative Control
The regulation at 20 C.F.R. § 416.201 defines “public institution” to mean, in part, “an institution that is operated by or controlled by the Federal government, a State, or a political subdivision of a State such as a city or county.” As referenced in your memorandum, the Program Operations Manual System (POMS), SI 00520.001B.4 defines a public institution as “an institution that is operated by or under the direct or indirect administrative control of the Federal government, a State, or political subdivision of a State, such as a city or county.” The POMS at SI 00520.001C.2.a provides more specific guidance and states in relevant part that indirect administrative control exists:
When a governmental unit has control of all fiscal decisions (even though it lacks the authority to hire and fire) [or]
When a governmental unit establishes a contractual arrangement whereby an institution becomes an agent of the governmental unit . . . An institution is an agent when it is acting on behalf of and with the authorization of a governmental unit, and is accountable to the governmental unit. . .
The specific contract provisions supporting the determination that DHS retains indirect administrative control over Woodward are numerous and are set forth in the attachment. In summary, however, they show that DHS leases the property to Woodward for a nominal amount and retains the authority to approve all services provided, monitors Woodward's performance, directs in specific terms how it is billed for services, and prohibits any changes to the services or the property without the prior written approval of DHS. DHS can unilaterally terminate the contract if insufficient funds are available or if Woodward's services do not comply with State rules. In addition, DHS determines when the contract between the parties will expire. Using the factors set forth in the POMS, the information provided shows that DHS has retained fiscal control of Woodward as well as control over the services provided and the use of the leased property. DHS also retained the authority to supervise Woodward's performance under the contract. Under the POMS guidelines, we believe that these facts are sufficient to establish indirect administrative control.
The issue of “public institution” status was litigated under a similar set of facts in th