Background
Clean & Clear Advantage, LLC operates a drug and alcohol rehabilitation center in Parkersburg, West Virginia. After receiving initial licensure from OHFLAC in 2020 and subsequent construction approval to expand its facility to 300 beds, Clean & Clear applied in August 2023 for an amended license authorizing 160 additional substance abuse treatment beds. OHFLAC denied the application, citing a March 2023 legislative amendment—West Virginia Code § 16-2D-9(5)—that bars issuance of certificates of need for facilities seeking to add licensed substance abuse treatment beds in counties that already exceed 250 such beds, without evaluating whether the application otherwise complied with governing regulations.
Clean & Clear appealed to the DHHR Board of Review, arguing the new statute was inapplicable to its amended licensure application and that OHFLAC was estopped from denying the license given Clean & Clear’s substantial construction investment made in reliance on prior agency approval. The Board of Review upheld the denial, stating it lacked authority to look past the statutory bar. Clean & Clear then filed a notice of appeal with the Intermediate Court of Appeals (Case No. 24-ICA-22), but failed to perfect it; the ICA dismissed the appeal on April 12, 2024. Clean & Clear did not appeal that dismissal and instead filed a new civil action in Kanawha County Circuit Court seeking declaratory and injunctive relief on constitutional, statutory, vested-rights, and estoppel grounds.
OHFLAC moved to dismiss for lack of subject matter jurisdiction on grounds that Clean & Clear had not exhausted its administrative remedies. The circuit court initially denied the motion, but reconsidered after the Supreme Court of Appeals of West Virginia issued State ex rel. Adkins v. Bailey, 251 W. Va. 586, 915 S.E.2d 364 (2025), and ultimately dismissed the action without prejudice. Clean & Clear appealed that dismissal to the ICA.
The Court’s Holding
The ICA affirmed the dismissal in all respects, holding that Clean & Clear was required to exhaust its administrative remedies before seeking circuit court intervention and that it failed to do so. The court rejected Clean & Clear’s argument that West Virginia’s Administrative Procedures Act is merely an enabling statute creating an optional right of appeal. Under settled West Virginia common law, where a statute or regulatory scheme provides an administrative process capable of affording an adequate remedy, exhaustion is required—regardless of whether the legislature has expressly mandated it. The behavioral health licensure regulations neither provide alternative avenues to circuit court nor make the administrative appeal process optional.
The court further held that exhaustion requires more than initiating administrative procedures—it demands pursuing them to their appropriate conclusion. Clean & Clear filed a notice of appeal with the ICA in Case No. 24-ICA-22 but abandoned it before any decision on the merits. That abandonment, not any final adjudication, was what the ICA dismissed. Drawing on analogous SCAWV precedent in Ragione and Schade, the court held that the substitution of the ICA for circuit courts as the appellate body for administrative appeals does not alter the exhaustion obligation: a party must take and complete its appeal to the ICA to satisfy exhaustion.
The court also rejected the futility exception. Although the Board of Review declared itself unable to grant relief beyond applying § 16-2D-9(5), had Clean & Clear perfected its ICA appeal, the court would have had full authority under W. Va. Code § 29A-5-4(g) to address whether OHFLAC and the Board even had authority to enforce that provision against a licensure application, and to reverse or remand on constitutional or statutory grounds. A remand for further factual findings was also available. Because an adequate administrative remedy existed and could have provided the relief sought, the futility exception did not apply.
Key Takeaways
- Exhaustion of administrative remedies under West Virginia common law requires completing the entire appellate process—including an appeal to the ICA—not merely initiating it; abandoning a perfected appeal before a merits decision is a failure to exhaust.
- The APA’s savings clause (“nothing in this chapter shall be deemed to prevent other means of review”) does not excuse exhaustion; the operative framework is the specific regulatory scheme governing the substantive claim, here the behavioral health licensure regulations.
- The futility exception requires that the administrative process be genuinely incapable of affording the desired relief; an agency’s or board’s refusal to consider constitutional or statutory arguments does not establish futility where a reviewing court (here the ICA) has express statutory authority to reach those issues.
- The 2023 amendment to W. Va. Code § 16-2D-9(5) capping licensed substance abuse treatment beds per county at 250 is actively being applied to block expanded licensure, even for facilities that received prior construction approval from OHFLAC.
Why It Matters
This decision clarifies the exhaustion landscape for West Virginia healthcare providers challenging adverse OHFLAC licensure decisions in the post-ICA era. Providers must recognize that filing—and then abandoning—an ICA appeal does not preserve the right to seek de novo relief in circuit court; only a completed appellate process satisfies the exhaustion requirement. The ruling also signals that the ICA will not lightly apply the futility exception: the mere fact that an agency below claimed it lacked authority to grant relief is insufficient where the ICA itself could have remedied the error on statutory or constitutional grounds.
For substance abuse treatment providers operating in West Virginia, the decision leaves unresolved the underlying merits questions about whether § 16-2D-9(5) retroactively disrupts vested rights arising from prior OHFLAC construction approvals and whether the county bed cap applies to amended licensure applications as distinct from certificates of need. Those issues await a case where the petitioner has properly exhausted the administrative process.