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decided: April 24, 1975.


Appeal from the Order of the Secretary of Public Welfare in case of In the Matter of Albert Grady, Commonwealth Concerns, Inc. and Commonwealth Concerns of Hawley, Inc., Order of May 28, 1974.


Joseph N. Bongiovanni, III, with him Joseph L. Della Guardia and Speese, Kephart & Bongiovanni, for appellants.

Marx S. Leopold, Chief Counsel, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Wilkinson, Jr.

Author: Wilkinson

[ 18 Pa. Commw. Page 483]

This case is an appeal from an order of the Secretary of the Public Welfare granting a license to appellants

[ 18 Pa. Commw. Page 484]

    to operate group homes*fn1 for mentally retarded individuals subject to certain restrictions contained in that order. Appellants argue that the Secretary's action in restricting their license was not based on competent evidence and deprived appellants of their property without due process of law. In order to pass upon these questions, we must set forth in some detail the relevant facts that form the basis of this appeal.

We are dealing with three entities in this case: the two appellants, Albert Grady, an individual renowned in the field of treatment and care of mentally retarded persons, and Commonwealth Concerns, Inc., a corporation set up to deliver mental health services; and also Commonwealth Concerns of Hawley, Inc. (Hawley), a corporation owned by Commonwealth Concerns, Inc., and set up to operate an institutional for retarded young males at Hawley, Pennsylvania. Hawley is not a party to this action. It appears from the record that Grady was instrumental in organizing Hawley, but did not personally direct the day-to-day operations there. However, it also appears that there is a close correlation between the officers and directors of Hawley and the officers and directors of Commonwealth Concerns. Inc.*fn2

After two tragic deaths occurred at the Hawley institution in August of 1971, the Secretary immediately closed Hawley and subsequently prevented various counties which were dealing with Commonwealth Concerns, Inc. from funding any Commonwealth Concerns, Inc.

[ 18 Pa. Commw. Page 485]

    institutions. An appeal was filed to this Court contesting the Secretary's order closing Hawley; however this appeal was dropped upon an agreement of prior counsel for Commonwealth Concerns, Inc. and the Department of Public Welfare*fn3 that a hearing would be held to ascertain the competency of Grady, Commonwealth Concerns, Inc., and Hawley to operate group homes in accordance with the regulations contained in 3 Pa. Bull. 338 (February 17, 1973).

The Secretary specially appointed a hearing examiner who took testimony and filed a report and recommendation. Based on that report, the Secretary ordered: that Hawley was not competent to operate any facility in Pennsylvania; that Albert Grady and/or Commonwealth Concerns, Inc. would be limited to operation of three group homes at any time, and those homes must be located within fifty miles of Grady's home or Commonwealth Concerns, Inc.'s principal place of business. The order also provided for possible additional group homes after two years. This appeal has been taken from the above order.

The evidence of record in this case concerns, for the most part, the conditions and occurrences at the Hawley institution. Appellants object to the relevancy of such evidence because, they argue, the issue to be determined is the competency of appellants to run group homes, not what happened at the Hawley facility run by a separate corporation. We believe that such evidence is relevant and properly admitted. Merely because we are dealing with a separate corporation, we cannot hold that the Secretary must completely ignore the nexus between appellants

[ 18 Pa. Commw. Page 486]

    and Hawley that was shown to exist. In a licensing proceeding involving the discretion of the Secretary,*fn4 the manner in which a corporation, set up by one appellant and wholly owned by the other appellant, operated a mental health facility is clearly relevant to ascertain the competency of those appellants to run other mental health facilities. That Commonwealth Concerns, Inc. and Grady were not directly involved in the day-to-day operations of Hawley is a factor that was correctly considered in weighing the evidence concerning Hawley and constituted a proper exercise of the Secretary's fact-finding powers.

However, even though we hold the Hawley evidence to be relevant, this is not dispositive of the case. We are dealing with a licensing procedure to determine the competency of appellants to run group homes in accordance with regulations contained in 3 Pa. Bull. 338. The record is devoid of any evidence or findings*fn5 concerning the group homes criteria set forth in those regulations, i.e., budgeting, staffing, expensing, living arrangements, etc. Since there have been totally inadequate findings of fact, a remand for further administrative action is necessary for the fulfillment of the administrative process. See Bergis v. Industrial Board of the Department of Labor and Industry, 9 Pa. Commonwealth Ct. 558, 308 A.2d 643 (1973). We, therefore, remand this record to the Secretary to take additional evidence and make findings of fact and conclusions of law which relate to the competency of appellants to hold a license for the operation of group homes in light of the regulations adopted for group homes, and the regulations, if any, pertaining to licensing in general.

Accordingly, we enter the following

[ 18 Pa. Commw. Page 487]


Now, April 24, 1975, this record is remanded to the Secretary of Public Welfare for action not inconsistent with this opinion.



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