GERRARD, J.
Nebraska's Uniform Credentialing Act (UCA)
The primary issue Zawaideh presents in this appeal is whether the execution of the assurance of compliance, and the Attorney General's refusal to vacate it, deprived Zawaideh of due process of law. We find no merit to Zawaideh's due process arguments. But we do find that Zawaideh has alleged sufficient facts to at least state a claim for fraudulent concealment, and we reverse the district court's order of dismissal to that extent.
The UCA provides for the credentialing of persons and businesses that provide health, health-related, and environmental services,
When a complaint is made against a credential holder pursuant to the UCA, the Division of Public Health of the Department of Health and Human Services (Department) is responsible for the initial investigation.
One of the Attorney General's options is to refer the matter to the appropriate professional board for the opportunity to resolve the matter by recommending that the Attorney General enter into an assurance of compliance with the credential holder in lieu of filing a disciplinary petition.
The UCA expressly provides that "[a]n assurance of compliance shall not constitute discipline against a credential holder."
The district court dismissed Zawaideh's complaint in this case pursuant to Neb. Ct. R. Pldg. § 6-1112(b)(6). As a result, the following facts are taken from the allegations made in the complaint
Zawaideh alleged that he is a physician, licensed by and practicing in the State of Nebraska. In 2006, the Department began an investigation into a case involving obstetrical care Zawaideh provided to a patient in 2001. Terri Nutzman, an assistant attorney general, sent Zawaideh a proposed petition for disciplinary action and offered the option of an agreed settlement that would have constituted a disciplinary action against Zawaideh's license. Zawaideh refused, denying any unprofessional conduct. After another proposed disciplinary settlement was refused, Nutzman offered Zawaideh an assurance of compliance, to provide that Zawaideh would no longer provide obstetrical care. Nutzman emphasized that the assurance of compliance was not a disciplinary procedure. Zawaideh had already given up obstetrical care, so he agreed.
Zawaideh alleges that he was not informed of any adverse effects that might be caused by the assurance of compliance. But, according to Zawaideh, the Attorney General's office knew or should have known that as a practical matter, assurances of compliance were causing professional difficulties for many physicians who had signed them.
As provided by the UCA, Zawaideh's assurance of compliance was made part of his public record.
Zawaideh alleges that he would not have entered into the assurance of compliance had he known about the potential consequences, which he alleges were issues known to Nutzman at the time she assured Zawaideh that the assurance of compliance was not disciplinary. According to Zawaideh, the incident that formed the basis of the investigation into his conduct is no longer subject to discipline under Nebraska law,
Based on these facts, Zawaideh's complaint asserts four claims for relief against the Department and the Attorney General:
(1) The UCA is facially unconstitutional because it permits discipline to be carried out without due process of law, as assurances of compliance are not appealable.
(2) The UCA is unconstitutional as applied in this case because Zawaideh no longer practices obstetrics, of his own accord, and the underlying occurrence is no longer subject to discipline under Nebraska law.
(3) The Attorney General carried out his statutory authority in an arbitrary and capricious manner.
(4) The Attorney General committed fraudulent misrepresentation by concealing the material fact that the assurances of compliance were having the effect of a disciplinary order on other physicians.
The Department and the Attorney General filed a motion to dismiss the complaint pursuant to § 6-1112(b)(6). After a hearing, the district court granted the motion. The district court found that Zawaideh had not alleged that the assurance of compliance damaged any of Zawaideh's liberty or property interests. So, the court concluded that Zawaideh had not stated a constitutional due process claim. The court found no merit to Zawaideh's assertion that the Attorney General had acted in an arbitrary and capricious manner. And the court rejected Zawaideh's fraudulent misrepresentation claim, based on its conclusion that the Attorney General had no duty to disclose the possibility of collateral consequences to the assurance of compliance. Zawaideh appeals.
Zawaideh assigns that the district court erred in finding (1) that his complaint failed to state a claim with regard to the constitutionality of the UCA, on its face and as applied; (2) that the Attorney General's
An appellate court reviews a district court's order granting a motion to dismiss de novo.
Generally speaking, this case presents an instance of buyer's remorse. Zawaideh entered into a voluntary agreement with the Attorney General, but later found he did not like the deal — at least the deal as Zawaideh claims it was represented to him by the Attorney General. But as explained in more detail below, Zawaideh's change of mind does not mean that the agreement was unlawful or that the Attorney General was obliged to release Zawaideh from it. Instead, Zawaideh's only viable claim for relief rests on his allegation that the Attorney General concealed the potential consequences of the agreement from him before he entered into it.
We begin with Zawaideh's constitutional arguments, which underlie his first and second assignments of error. We first note that although Zawaideh is presenting a facial challenge to the constitutionality of a statute, he did not file a notice of a constitutional question pursuant to Neb. Ct. R.App. P. § 2-109(E) (rev.2008), which requires that a party challenging a statute's constitutionality file and serve notice with the Supreme Court Clerk at the time of filing the party's brief.
The district court, in concluding that Zawaideh had not stated a claim for relief, relied upon the Eighth Circuit's decision in Kloch v. Kohl.
The plaintiff in Kloch was a credentialed physician who received a letter of concern arising out of an allegation that he had failed to keep proper medical records.
But the Eighth Circuit concluded that the plaintiff had not alleged the deprivation of a protected liberty or property interest. The court explained that "[a] plaintiff is entitled to due process only when a protected property or liberty interest is at stake. . . . Abstract injuries, by themselves, do not implicate the due process clause."
Zawaideh argues that Kloch is distinguishable, because in this case, he alleged practical consequences to the assurance of compliance: the effects on his Washington license and his board certification. We agree that Kloch is distinguishable in those respects, although a good argument can be made that Zawaideh's complaint should be directed in part at the State of Washington, not the State of Nebraska. But Kloch is also distinguishable in a more fundamental way that demonstrates the defect in Zawaideh's due process claim: unlike a letter of concern, an assurance of compliance is voluntary.
Although Zawaideh is not perfectly clear on this point, it is apparent that he is advancing a procedural due process claim. Due process claims are generally subjected to a two-part analysis: (1) Is the asserted interest protected by the Due Process Clause and (2) if so, what process is due?
It is difficult to see how Zawaideh was denied notice and an opportunity to be heard when he negotiated with the Attorney General and affirmatively agreed to the entry of the assurance of compliance. Zawaideh's argument seems to be that due process requires some sort of review procedure for the continuation of the assurance of compliance. But it is well established that only a party aggrieved by an order or judgment can appeal, and one who has been granted that which he or she sought has not been aggrieved.
And Zawaideh does not dispute the fact that had he refused the assurance of compliance, any discipline imposed upon him would have required a hearing and permitted a judicial review that would have satisfied the requirements of due process. That process was available to him — he simply declined to pursue it, and settled the complaint instead. In other words, the review procedure to which Zawaideh claims he was entitled was available to him, but he waived it.
Zawaideh contends that the Attorney General's refusal to discontinue the assurance of compliance is "arbitrary and capricious." We read this argument as being part of Zawaideh's due process claim, because simply alleging an "arbitrary and capricious" action is not, in itself, a claim for relief.
Zawaideh argues the Attorney General's action was arbitrary and capricious because, under our decision in Mahnke v. State,
It is far from clear that Mahnke, even if it applied to the incident underlying the investigation, would provide any basis for relief. Generally speaking, where a doubt as to the law has been settled by a compromise, a subsequent judicial decision upholding a view favorable to one of the parties affords no basis for that party to upset the compromise.
In sum, we find no merit to the due process claims presented in Zawaideh's first and second assignments of error. Zawaideh voluntarily entered into the assurance of compliance, and notions of "fundamental fairness"
Zawaideh also argues he stated a claim for fraudulent misrepresentation or concealment, based upon the allegedly false impression given by the Attorney General's failure to inform Zawaideh of other cases involving collateral consequences to assurances of compliance. To prove fraudulent concealment, a plaintiff must prove these elements: (1) The defendant had a duty to disclose a material fact; (2) the defendant, with knowledge of the material fact, concealed the fact; (3) the material fact was not within the plaintiff's reasonably diligent attention, observation, and judgment; (4) the defendant concealed the fact with the intention that the plaintiff act or refrain from acting in response to the concealment or suppression; (5) the plaintiff, reasonably relying on the fact or facts as the plaintiff believed them to be as the result of the concealment, acted or withheld action; and (6) the plaintiff was damaged by the plaintiff's action or inaction in response to the concealment.
Zawaideh's argument relies upon the Restatement (Second) of Torts § 551,
Although the circumstances of each case typically determine whether a duty to disclose exists, there are several situations which have been consistently recognized as creating a duty to disclose,
First, Zawaideh argues that the Attorney General owed him a fiduciary duty, based in the fiduciary relationship between public officers and the people they have been elected or appointed to serve.
Nor do we agree that the collateral consequences of an assurance of compliance were facts basic to the transaction. A "fact basic to the transaction" is a "fact that goes to the basis, or essence, of the transaction, and is an important part of the substance of what is bargained for or dealt with."
But finally, Zawaideh argues that the Attorney General was required to disclose the possibility of collateral consequences in order to prevent Zawaideh from being misled by Nutzman's representation that the assurance of compliance was not disciplinary. Nutzman's representation was literally true, at least as far as Nebraska law is concerned.
For instance, a statement that contains only favorable matters and omits all reference to unfavorable matters is as much a false representation as if all the facts stated were untrue.
In this case, Zawaideh alleges that he was told that the assurance of compliance "was not a disciplinary procedure." In law, "discipline" usually refers to a sanction or penalty imposed after an official finding of misconduct.
In other words, Zawaideh has alleged that the Attorney General misled him by stating only favorable matters and omitting unfavorable ones. Those facts could, if substantiated, support a finding that Nutzman had a duty to inform Zawaideh of the fact that other physicians had suffered "disciplinary" consequences from assurances of compliance. Other issues, such as whether the fact was within Zawaideh's reasonably diligent attention or whether Zawaideh reasonably relied on Nutzman's statement, or any potential affirmative defenses, are not before us in this proceeding, and we make no comment on them. Rather, those matters are left to further proceedings in the district court following remand.
We affirm the district court's order of dismissal with respect to Zawaideh's due process claims — his first, second, and third claims for relief. However, we reverse the district court's order with respect to Zawaideh's fraudulent concealment claim and remand the cause for further proceedings on that claim.
AFFIRMED IN PART, AND IN PART REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.
WRIGHT and CONNOLLY, JJ., not participating.