Partners in Nutrition d/b/a Partners in Quality Care (PIQC)’s Appeals of MDE’s April 15, 2024 Decision Proposing to Terminate Agreement and Proposing to Disqualify PIQC and Responsible Individuals from Future Participation in the Child and Adult Care Food Program.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A24-1195

Partners in Nutrition d/b/a Partners in Quality Care (PIQC)’s Appeals of
MDE’s April 15, 2024 Decision Proposing to Terminate Agreement
and Proposing to Disqualify PIQC and Responsible Individuals from
Future Participation in the Child and Adult Care Food Program.

Filed June 16, 2025
Affirmed
Reyes, Judge

Department of Education

Benjamin D. Eastburn, Emily M. Asp, Stinson LLP, Minneapolis, Minnesota (for relators
Partners in Nutrition, Ryan Seelau, Christine Twait, Jodie Luzum, Julius Scarver, Kara
Lomen, Robyn Tousignant, Daniel Smeriglio, and James Handrigan)

Keith Ellison, Attorney General, Joseph D. Weiner, Assistant Attorneys General, St. Paul,
Minnesota (for respondent Department of Education)

Considered and decided by Bond, Presiding Judge; Bjorkman, Judge; and Reyes,
Judge.
NONPRECEDENTIAL OPINION
REYES, Judge
In this certiorari appeal, relators Partners in Nutrition (Partners) and “responsible
individuals” (collectively, relators) challenge a decision by respondent Minnesota
Department of Education’s (MDE) termination of their participation in the Child and Adult
2
Care Food Program and their disqualification from future program participation.1 Relators
argue that (1) the serious-deficiency notice issued by MDE failed to follow the program
regulations under 7 C.F.R. § 226.6(c)(3)(iii)(A) (2025); (2) the serious-deficiency notice
violated their right to procedural due process; and (3) MDE’s final decision terminating
them from the program is not supported by substantial evidence and is arbitrary and
capricious. We affirm.
FACTS
The Child and Adult Care Food Program (the program) is a federal program
administered in Minnesota by MDE that reimburses sites that participate in the program
for meals provided to eligible children and adults. See 7 C.F.R. § 226.1 (2025). Relators
participated as a sponsor in the program, subject to oversight by MDE. MDE and relators
entered into a permanent agreement in November 2015. As a sponsor within the program,
relators’ responsibilities included the following: (1) “provid[ing] “adequate supervisory”
and operational personnel for management and monitoring of the Program ;
(2) “[c]omply[ing] with all regulations issued by the United States Department of
Agriculture (USDA)”; (3) “accept[ing] final financial and administrative responsibility for
management of a[n] . .
. effective food service”; (4) “maintain[ing] appropriate and
effective management practices to ensure that program requirements are met”; and

1 The responsible individuals identified by MDE were: Ryan Seelau, Christine Twait, Jodie
Luzum, Julius Scarver, Kara Lomen, Robyn Tousignant, Daniel Smerglio, and Jim
Handrigan.
3
(5) “maintain[ing] internal controls and other management systems to ensure fiscal
accountability.” 7 C.F.R. § 226.16 (c), (d) (2025).
Amidst the investigation into increased reimbursement requests by Feeding Our
Future, another sponsor in the program, MDE learned that some individuals who operated
sites sponsored by relators pleaded guilty to submitting fraudulent meal claims for
reimbursement. In total, participants in the broader “Feeding Our Future” fraud scheme
submitted $250,000,000 in false claims during the COVID-19 pandemic. 2 On December
4, 2023, MDE issued a serious-deficiency notice (the deficiency notice) to relators
following the submission of false and fraudulent claims by a number of sites they
sponsored. The notice explained that MDE learned of this activity through a federal
investigation that revealed that various sites made fraudulent claims through Partners.
Partners, including several of their management-level individuals, were responsible for
critical actions within Partners, including (1) verifying claims that relators received from
sites to ensure their accuracy prior to Partners submitting the claims for reimbursement;
(2) executing meal contracts with sites; and (3) managing funds received for reimbursed
meals. As a result of the underlying fraud, MDE determined that relators had been
“seriously deficient in its operation” as a sponsor of the program that is required to
“oversee[] vended meal contracts” in violation of 7 C.F.R. § 226.6 (2025), which governs

2 Five Defendants Found Guilty for Their Roles in $250 Million Fraud Scheme, Dep’t of
Justice (2024), https://www.justice.gov/usao-mn/pr/five-defendants-found-guilty-their-
roles-250-million-fraud-scheme [https://perma.cc/D574-BDX9]. We take judicial notice
of this undisputed fact. See Smisek v. Comm’r of Pub. Safety, 400 N.W.2d 766, 768 (Minn.
App. 1987) (“An appellate court may take judicial notice of a fact for the first time on
appeal.”).
4
the program. The notice indicated that the submission of false or fraudulent claims
constitutes a serious deficiency under 7 C.F.R. § 226.6(c)(5)(ii)(A). In the deficiency
notice, MDE also explained that relators were “seriously deficient” under 7 C.F.R.
§§ 226.6(c)(3)(ii)(H), (I), which state that a sponsor may be terminated from the program
if it commits a serious deficiency such as “[c]laiming reimbursement for meals not served
to participants” and “[c]laiming reimbursement of a significant number of meals that do
not meet [p]rogram requirements.”
The deficiency notice required relators to submit a corrective-action plan to MDE,
“describ[ing] what action was taken to ensure the serious deficiencies are fully and
permanently corrected” by January 5, 2024. It further explained that, if the responsive
documents were not provided by the deadline, MDE would “[p]ropose to terminate
[relators’] agreement” and “[p]ropose to disqualify the responsible individuals from further
. . . participation.” The deficiency notice also included a link to the United States
Department of Agriculture (USDA) CACFP Serious Deficiency handbook, which
explained that a corrective action must “answer the questions what, who, when, where, and
how.” In January 2024, representatives from MDE and relators held an in-person meeting
to discuss the deficiency notice, during which MDE gave realtors an additional 32 days to
respond to the deficiency notice.
In response to the deficiency notice, relators claimed that MDE violated their
procedural due-process rights by summarily denying Partners’ site applications for the
2022-2023 program year, refusing to allow them to submit or adjust any pending or future
claims, and shutting off their access to the online portal. Relators further alleged that MDE
5
acted with bias because MDE viewed them “as a co-conspirator in the fraud perpetrated by
others” following reports that the FBI was investigating fraud within the program and
relators’ suspected relationship with individuals alleged to have perpetrated the fraud in
the Feeding our Future scandal.
Relators further asserted that MDE had not identified a “specific step, function,
activity, or process” indicating that relators “could have and should have been aware of . . .
the food-fraud among certain sites and their vendors.” Relators also submitted a corrective-
action plan which included: (1) refuting that the criminal fraud was the result of their failure
to follow the procedures in its own management plan; (2) a plan to work with professional
advisors and qualified Certified Public Accountants to complete all federal tax -filing
obligations and year-end audits; (3) plans to safeguard the program funds by keeping them
in interest-bearing bank accounts while awaiting the final resolution of all claims; and
(4) relators’ assurance that they were “stand[ing] ready to modify the corrective action plan
based on technical assistance from MDE.”
Following receipt of relators’ response and corrective-action plans, MDE issued an
agency-action notice on April 15, 2024 (the April notice), proposing to terminate relators’
agreement with the program and proposing to disqualify them from future participation in
the program under 7 C.F.R. § 226.6(c)(3)(iii)(C), (c)(3)(ii)(H), (I), because (1) relators ’
response and proposed corrective actions “did not correct the serious deficienc[ies]” or
“state what [relators] would do to correct the false claims submitted to MDE or in future
[program] participation” and (2) relators’ corrective-action response “showed [their]
inability of operating the [program] and future risk for false claims” because it provided
6
“no updated policies, procedures or additional internal controls . . . to show that [relators]
will ensure correct claims are submitted to the [MDE] for federal reimbursement.” Two
weeks later, relators appealed the April notice decision to an appeal panel.
After holding a hearing, the appeal panel issued a final decision on June 28, 2024,
affirming MDE’s proposed termination of Partners and eight “responsible individuals”
from future program participation. It determined that (1) MDE highlighted the severity
and nature of relators’ serious deficiencies in failing to comply with program requirements
for the period relevant to the December 2023 findings and “how they impacted overall
program integrity”; (2) MDE gave relators 90 days to complete its corrective action,
consistent with the USDA directives; (3) relators “did not deny” that they submitted
reimbursement claims to the program for meals that in fact were not served to participants
“but maintained that [they were] unaware of the fraud and deception undertaken by the
sites it sponsored”; and (4) MDE properly relied on the language of s ubsections 7 C.F.R.
§ 226.6(c)(3)(ii)(H), (I), to identify the serious deficiencies which formed the basis of the
April notice and properly proposed termination and disqualification of relators as a result
of its “failure to take timely and successful corrective action” under 7 C.F.R. § 226.6
(c)(3)(ii)(C).
This certiorari appeal follows.

7
DECISION
I. The deficiency notice complied with the notice requirements under 7 C.F.R.
§ 226.6(c)(3) and provided relators with a meaningful opportunity to respond
with updated policies and procedures.

Relators contend that MDE deprived them of an opportunity to provide a
meaningful response to the deficiency notice because (1) they were not given notice of the
specific deficiencies and (2) they were told not to submit updated policies and procedures
because that would not be an acceptable corrective-action plan. We are not convinced.
“[U]nder the food-program regulations, [MDE] cannot immediately terminate (or
propose to terminate) an institution’s food-program agreement.” Partners in Nutrition,
995 N.W.2d 631, 643 (Minn. App. 2023); see also 7 C.F.R. § 226.6(c)(3). It must first
comply with the procedural requirements of the food-program regulations by noticing the
institution’s serious deficiencies and allowing corrective action. See 7 C.F.R.
§ 226.6(c)(3). A notice of serious deficiency must identify:
(1) The serious deficiency(ies);
(2) The actions to be taken to correct the serious
deficiency(ies);
(3) The time allotted to correct the serious
deficiency(ies) in accordance with paragraph (c)(4) of this
section;
(4) That the serious deficiency determination is not
subject to administrative review.
(5) That failure to fully and permanently correct the
serious deficiency(ies) within the allotted time will result in the
State agency’s agreement with proposed termination of the
institution’s agreement and the proposed disqualification of the
institution and the responsible principals and responsible
individuals . . . .

7 C.F.R. § 226.6(c)(3)(iii)(A)(1)-(5).

8
Here, the deficiency notice identified (1) the serious deficiencies; (2) the corrective
actions MDE sought from relators; (3) the deadline by when relators had to respond;
(4) that relators could not appeal the serious-deficiency determination; and (5) that relators’
failure to provide the requested information by the deadline would result in its termination
from the program and disqualification from future participation in the program.
More specifically, the deficiency notice contains two separate paragraphs which
address two different aspects of the fraudulent claims submitted and the corrective action
sought for each claim. The first paragraph identifies that the appropriate corrective action
related to the submission of fraudulent claims is for relators to submit documentation that
“describe[s] what action was taken to ensure the serious deficiencies are fully and
permanently corrected.” The second paragraph discusses the preferred corrective action
for fraudulent claims, which MDE states “would include the reversal of claims.” The
notice further explained that reimbursement would not be appropriate because “[Partners]
and the responsible individuals have not made any attempts to reverse the claims in a timely
manner” and that the Department of Justice is now handling repayment of claims.
Relators’ response to the deficiency notice shows that relators understood the
corrective actions MDE sought because relators acknowledged the two regulatory
provisions MDE relied upon, specifically s ections 226.6(c)(3)(ii)(H) for “[c]laiming
reimbursement for meals not served to participants” and subsection I for “[c]laiming
reimbursement for a significant number of meals that do not meet [p]rogram requirements.”
Relators also confirmed that MDE claimed it was deficient from “ September 2020 to
January 2022” and that MDE “underst[ood] that there may be board members or
9
responsible individuals who were not around during this timeframe, [and] they are
responsible to ensure these deficiencies will not reoccur.”
Further, relators submitted several affidavits from current board members refuting
the deficiency determination, in addition to its assurances that it was implementing a “post-
termination financial accountability” plan, as well as a plan to “[s]afeguard[] [f]ederal
[f]unds [p]ending a [r]esolution of [c]ompeting [c]laims.” The proposed implementation
of these corrective actions cuts against relators’ argument that they were deprived of a
meaningful opportunity to respond or that they were confused about what corrective
actions MDE sought because they responded only after obtaining further clarification from
MDE about the serious deficiencies and corrective actions sought.
Relators also argue that MDE told them that they could not initiate the
reimbursement of the fraudulent claims because it “was too late and therefore not possible,
then fault[ed] them for not stating how they would resolve the issue of false claims.” As
discussed above, the deficiency notice stated that relators could not initiate claims reversal
to pay back the funds obtained for fraudulent claims because “the Department of Justice
and the Federal Attorneys Office” had begun that process and that the appropriate
corrective action included relators “submit[ting] documentation that refutes the . . .
findings of serious deficiency” based on allegations that relators submitted fraudulent
claims for approval. In addition to the guidance provided in the deficiency notice, the
record also shows that MDE granted relators a 32-day extension to respond to the
deficiency notice.
10
Relators also contend that MDE’s “vast expansion of the factual basis” related to
the submission of false claims violated their due-process rights because they were not
provided with the information they needed to protect their interests. However, both the
December deficiency notice and the appeal- panel final decision are based on largely the
same underlying facts of MDE’s findings that relators were seriously deficient in its
responsibilities from September 2020 to January 2022 during which time fraudulent claims
were submitted to MDE.
In sum, relators’ detailed response and submission of a corrective action plan defeats
their contention that the deficiency notice did not notify them of the specific deficiencies
that it needed to correct. We therefore conclude that the deficiency notice comports with
the relevant regulations.
II. MDE’s deficiency notice did not violate relators’ procedural due-process
rights.

Relators argue that MDE violated their procedural due-process rights because it
(1) failed to give them a meaningful opportunity to respond to the deficiency notice with
updated policies and procedures; (2) failed to give them “a meaningful opportunity” to
respond by preventing them from initiating reimbursements for fraudulent claims; and
(3) failed to notify them of their specific deficiencies that needed to be corrected. Relators’
arguments are misguided.
“Due process requires adequate notice and a meaningful opportunity to be heard.”
Staeheli v. City of St. Paul, 732 N.W.2d 298, 304 (Minn. App. 2007) (citing Mathews v.
Eldridge, 424 U.S. 319, 333 (1976)). Appellate courts analyze whether the government
11
has violated an individual’s procedural due-process rights de novo. State v. Rey, 905
N.W.2d 490, 494 (Minn. 2018).
As noted above, the record reflects that the deficiency notice provided relators with
notice of the serious deficiencies that it needed to address. MDE and relators also held a
meeting to discuss the deficiencies, and MDE answered questions that relators had with
respect to the deficiencies. Finally, relators had the opportunity to provide a response to
the serious-deficiency notice. Relators’ procedural-due-process argument fails.
III. The appeal panel’s final decision is supported by sufficient evidence and is not
arbitrary and capricious.

Relators argue that the appeal-panel final decision is not supported by substantial
evidence and instead suggests MDE based its determination to terminate them from the
program on its bias toward them and the guilty pleas of individuals formerly connected to
relators, which were not part of the record. We disagree.
An agency acts in a quasi-judicial capacity by (1) investigating a disputed claim and
weighing evidentiary facts; (2) applying those facts to a prescribed standard; and (3) issuing
a binding decision regarding the disputed claim. Minnesota Ctr. for Env’t Advoc. v. Metro.
Council, 587 N.W.2d 838, 842 (Minn. 1999). “An agency’s quasi-judicial determinations
will be upheld unless they are . . . unsupported by substantial evidence[] or arbitrary and
capricious.” Carter v. Olmsted Cnty. Hous. & Redevelopment Auth., 574 N.W.2d 725, 729
(Minn. App. 1998). “[A]n agency ruling is arbitrary and capricious if the agency (a) relied
on factors not intended by the legislature; (b) failed to consider an important aspect of the
problem; (c) offered an explanation contrary to the evidence; or (d) the decision is so
12
implausible that it could not be explained as a difference in view or the result of the
agency’s expertise.” Citizens Advocating for Responsible Dev. v. Kandiyohi Cnty. Bd. of
Comm’rs, 713 N.W.2d 817, 832 (Minn. 2006).
“[T]he substantial-evidence standard governs judicial review of factual issues
requiring agency judgment.” In re PolyMet Mining, Inc., 965 N.W.2d 1, 8 (Minn. App.
2021), rev. denied (Minn. Sept. 30, 2021). Under this test, appellate courts first analyze
whether the agency “adequately explained how it derived its conclusion” and “whether that
conclusion is reasonable on the basis of the record.” In re Application of Minn. Power for
Auth. to Increase Rates for Elec. Serv., 838 N.W.2d 747, 757 (Minn. 2013) (quotation
omitted). Substantial evidence requires “more than a scintilla of evidence, more than some
evidence, and more than any evidence.” Webster v. Hennepin County, 910 N.W.2d 420,
428 (Minn. 2018) (quotation omitted). “The appellant bears the burden of establishing that
the agency findings are not supported by the evidence in the record.” In re Rev. of 2005
Ann. Automatic Adjustment of Charges for All Elec. & Gas Utils., 768 N.W.2d 112, 118
(Minn. 2009).
Relators contend that MDE did not have substantial evidence that they intended to
defraud the program. But the deficiency notice stated that MDE sought termination of
relators from the program under 7 C.F.R. § 226.6(c)(3)(ii)(H), (I), for submitting fraudulent
claims for reimbursement for meals that were not served to participants and claiming
reimbursement for meals that did not meet the program requirements. Serious deficiencies
under these subdivisions do not require a scienter or intent element. Rather, under the
regulations, relators’ submission of fraudulent claims constituted a serious deficiency,
13
which provided a basis for MDE to terminate relators from participating in the program.
Moreover, relators, before the appeal panel, attempted to shift the responsibility of
accurately describing and submitting claims to the sites but admitted that they “submit[ted]
claims on behalf of sites” that they later learned were “false,” and that they submitted
claims for reimbursement for meals that were not served to participants. According to the
regulation, relators are responsible for managing the program. Relators’ admissions also
showed that, rather than complying with its obligations as a sponsor by ensuring the claims
were accurate prior to reimbursement, see 7 C.F.R. § 226.6(c)(3)(ii), it simply “passed
through the claims believing that they were valid.” Even if the sites are also required to
“accurately describe and submit claims,” relators have a continuing and independent
obligation to ensure its conduct as a sponsor is in compliance with the regulations.
Ultimately, these admissions not only show that relators did not “monitor[]. . . the
program” or “ensure fiscal accountability,” as required by the agreement with MDE, they
also provide substantial support to MDE’s termination of relators’ participation in the
program.
Additionally, the record shows that MDE submitted other documentation, including
its prior deficiency notice, correspondence between MDE and relators clarifying the
corrective action being sought, and that relators did not comply with the deficiency notices.
The appeal panel stated that it relied on relators’ admissions and the parties’ submitted
documents. We conclude that the appeal panel’s final decision is supported by substantial
evidence and is not arbitrary and capricious.
Affirmed.