    Nebraska Advance Sheets
982	289 NEBRASKA REPORTS



        Marion’s Quality Services, Inc., doing business as
       It’s a Kidz World Child Care Center and as Deb’s
           Learning P lace Family Child Care Home II,
              a Nebraska corporation, appellant, v.
               Nebraska Department of Health and
                 Human Services, R egulation and
                  Licensure/Licensure Unit and
                    Division of Public Health,
                         et al., appellees.
                                    ___ N.W.2d ___

                       Filed January 30, 2015.    No. S-13-834.

 1.	 Administrative Law: Final Orders: Appeal and Error. A judgment or
     final order rendered by a district court in a judicial review pursuant to the
     Administrative Procedure Act may be reversed, vacated, or modified by an appel-
     late court for errors appearing on the record.
 2.	 Administrative Law: Judgments: Appeal and Error. When reviewing an order
     of a district court under the Administrative Procedure Act for errors appearing on
     the record, the inquiry is whether the decision conforms to the law, is supported
     by competent evidence, and is neither arbitrary, capricious, nor unreasonable.
 3.	 Administrative Law: Appeal and Error. Deference is accorded to an agency’s
     interpretation of its own regulations unless plainly erroneous or inconsistent.
 4.	 Administrative Law: Evidence. The evidence is sufficient, as a matter of law, if
     an administrative tribunal could reasonably find the facts as it did on the basis of
     the testimony and exhibits contained in the record before it.
 5.	 Administrative Law: Words and Phrases. Agency action is arbitrary and capri-
     cious if it is taken in disregard of the facts or circumstances of the case, without
     some basis which would lead a reasonable person to the same conclusion.

   Appeal from the District Court for Lancaster County: Robert
R. Otte, Judge. Affirmed.
   James R. Place, of Place Law Office, for appellant.
  Jon Bruning, Attorney General, Michael J. Rumbaugh, and
James D. Smith for appellees.
  Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
   Wright, J.
                    NATURE OF CASE
  Marion’s Quality Services, Inc. (Marion’s), is a Nebraska
corporation doing business as It’s a Kidz World Child Care
                  Nebraska Advance Sheets
	    MARION’S v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.	983
	                      Cite as 289 Neb. 982

Center (Center) and as Deb’s Learning Place Family Child
Care Home II (Home). In 2012, the Nebraska Department
of Health and Human Services (DHHS) revoked Marion’s
licenses to operate the Center and the Home.
   Following an appeal hearing, DHHS upheld the revoca-
tion of the Home’s license but reversed the revocation of the
Center’s license, instead imposing additional probation and a
civil penalty.
   This appeal is governed by the Administrative Procedure
Act, and Marion’s appeals from the judgment of the district
court which affirmed DHHS’ disciplinary actions. For the
reasons discussed below, we affirm the judgment of the dis-
trict court.

                     SCOPE OF REVIEW
   [1-3] A judgment or final order rendered by a district court in
a judicial review pursuant to the Administrative Procedure Act
may be reversed, vacated, or modified by an appellate court
for errors appearing on the record. Kerford Limestone Co. v.
Nebraska Dept. of Rev., 287 Neb. 653, 844 N.W.2d 276 (2014).
See, also, Neb. Rev. Stat. § 84-918 (Reissue 2014). When
reviewing an order of a district court under the Administrative
Procedure Act for errors appearing on the record, the inquiry
is whether the decision conforms to the law, is supported by
competent evidence, and is neither arbitrary, capricious, nor
unreasonable. Betterman v. Department of Motor Vehicles, 273
Neb. 178, 728 N.W.2d 570 (2007). Deference is accorded to
an agency’s interpretation of its own regulations unless plainly
erroneous or inconsistent. Belle Terrace v. State, 274 Neb. 612,
742 N.W.2d 237 (2007).

                          FACTS
   Marion’s is owned by Richard Marion and Angela Marion,
a married couple. The Center has been licensed since May 23,
2006, for up to 123 children. The Home has been licensed
since August 28, 2002, for up to 12 children, but it has
not been in operation for some years. DHHS is a state
agency responsible for the enforcement of the Child Care
Licensing Act.
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   On July 21, 2008, DHHS placed the Center on probation
for 1 year and imposed a civil penalty for various violations
relating to the responsibilities of the director and licensing
process, child-staff ratio, and infant care and supervision.
On April 10, 2009, DHHS extended the Center’s probation
another year (until July 21, 2010) because a busdriver had left
two children in a van in subzero temperatures for approxi-
mately 10 minutes. Despite a citation for child abuse/neglect,
the Center allowed the driver to transport children the follow-
ing day.
   On or about May 26, 2010, childcare inspection specialist
Susanne Schnitzer conducted an onsite investigation of allega-
tions of improper discipline at the childcare center of Marion’s
on West Dodge Road in Omaha (Dodge Center), which has
since closed. Schnitzer found that one of the Dodge Center’s
staff members, Carla Marion, had inappropriately disciplined
children by “thumping, kicking and purposely tripping along
[with] throwing an object at a child and twisting the cheek
of . . . another child.” Carla Marion, Richard Marion’s sister,
resigned before the investigation concluded.
   On March 14, 2011, the Center was placed on probation
for another year based on various violations, including mis-
behavior by a member of the Center’s staff and the director’s
failure to supervise and correct the behavior, despite several
complaints from parents. During the investigation of the com-
plaints, the Center was found to have violated a regulation
requiring it to obtain additional background information from
the appropriate law enforcement agency regarding one of its
staff members.
   On April 11, 2011, DHHS received a request to conduct
a check for Cristina Carrizales on the Nebraska Central
Registry of Child Abuse and Neglect and the Nebraska Adult
Protective Services Central Registry, which is required for any
prospective employee prior to beginning work at a licensed
childcare. Although Carrizales did not have a criminal his-
tory, the Center’s timecard records showed that Carrizales
had begun working 2 weeks prior to the registry checks
being completed.
                  Nebraska Advance Sheets
	    MARION’S v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.	985
	                      Cite as 289 Neb. 982

   On May 24, 2011, DHHS issued a “Notice of Revocation”
to the Center. The notice was issued following DHHS’ inves-
tigation into a complaint concerning events that took place on
March 29, only 2 weeks after the Center had been placed on
probation on March 14. The Center had employed two incar-
cerated felons who were on work release, Shannon Tays and
Greta Johnson. Both women failed to completely and accu-
rately disclose their criminal histories.
   Despite being incarcerated, both Tays’ and Johnson’s
“Felony/Misdemeanor Statements” provided incomplete infor-
mation, and one indicated that she had no prior law enforce-
ment contacts. Marion’s did not request additional information
from any law enforcement agency to verify those statements.
Marion’s had been aware that Tays and Johnson were incarcer-
ated on theft by deception charges. On various occasions, it
had provided the women rides from a correctional facility to
the Center. Tays had five previous convictions for felony for­
gery and one for possession of methamphetamine.
   On June 3, 2011, DHHS issued to the Home a “Notice of
Revocation and Denial” of the Home’s application to amend
its license. DHHS issued the notice because the Home did not
conduct background checks for three staff members listed on
the application to ensure that the criminal history disclosures
were accurate. On the application, Marion’s listed as pro-
spective employees both Carla Marion and Shonae Doremus.
Doremus disclosed various misdemeanor tickets and convic-
tions for possession of marijuana, flight to avoid arrest, and
several theft offenses. She did not disclose contacts with law
enforcement for operating a vehicle under suspension, furnish-
ing tobacco to a minor, and failure to appear.
   Marion’s submitted an administrative appeal of both notices,
and the cases were combined for purposes of conducting a
DHHS administrative appeal hearing. The hearing was com-
menced on December 5, 2011; continued on February 27,
2012; and concluded on May 15.
   On October 3, 2012, DHHS issued an order upholding the
denial and revocation of the license for the Home for the
following reasons: hiring without investigating three new
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employees who had not fully disclosed their criminal his-
tories, past violations regarding previously investigated and
substantiated allegations of inappropriate discipline by one of
the staff members, and history of noncompliance by Marion’s
at other licensed locations.
   DHHS did not revoke the license of Marion’s to operate the
Center. But in lieu of revocation of the license, DHHS imposed
an alternative penalty in the form of additional probation and
a civil sanction of $615. This action resulted from the hiring
of Tays and Johnson by Marion’s without conducting a back-
ground check. Tays and Johnson are felons. DHHS found that
hiring two felons with convictions of crimes of moral turpitude
and possession of methamphetamine was against DHHS regu-
lations and therefore violated the Center’s probation.
   Marion’s appealed DHHS’ order to the Lancaster County
District Court, which reviewed the case de novo. On August
26, 2013, the district court affirmed DHHS’ decision. It found
that the Center had violated the terms of its probation by fail-
ing to request additional information about employees that
were hired as staff. The court concluded that the regulations
impose a duty to request additional information from law
enforcement agencies and that Marion’s neglected its responsi-
bility by relying solely on employee self-reporting. The court
rejected the claim of Marion’s that it lacked knowledge about
the employees’ dishonesty in reporting their criminal histo-
ries. The court found that Marion’s had demonstrated it was
either unable or unwilling to comply with DHHS regulations
at its childcare centers and therefore upheld DHHS’ sanctions.
Marion’s appealed.

                 ASSIGNMENTS OF ERROR
   Marion’s assigns two errors: (1) The district court’s ruling
upholding DHHS’ findings regarding the Center’s license did
not conform to law, was not supported by competent evidence,
and was arbitrary, capricious, and not reasonable, and (2) the
district court’s ruling upholding DHHS’ findings regarding
the Home’s license did not conform to law, was not supported
by competent evidence, and was arbitrary, capricious, and
not reasonable.
                  Nebraska Advance Sheets
	    MARION’S v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.	987
	                      Cite as 289 Neb. 982

                           ANALYSIS
   Our inquiry is whether the order of the district court con-
forms to the law, is supported by competent evidence, and is
not arbitrary, capricious, or unreasonable. See Belle Terrace v.
State, 274 Neb. 612, 742 N.W.2d 237 (2007). DHHS had the
authority to deny a license or take disciplinary action against
a licensee pursuant to the Child Care Licensing Act for any of
the following reasons:
         (1) Failure to meet or violation of any of the require-
      ments of the Child Care Licensing Act or the rules and
      regulations adopted and promulgated under the act;
         (2) Violation of an order of [DHHS] under the act;
         ....
         (4) Conduct or practices detrimental to the health or
      safety of a person served by or employed at the pro-
      gram . . . .
Neb. Rev. Stat. § 71-1919 (Reissue 2009).
   The Legislature has authorized DHHS to make various
rules and regulations necessary for the care and protection
of children. That authorization extends to making rules for
childcare providers and facilities. Although DHHS’ rules have
been revised and recodified, those revisions became operative
on May 20, 2013, after the revocations in this case occurred,
so we will refer to the rules in effect at the time of the revo-
cations in May and June 2011. One such rule is 391 Neb.
Admin. Code, ch. 8, § 006 (1998), which provided the fol-
lowing: “Candidates being considered for employment . . .
shall submit a signed ‘Felony/Misdemeanor Statement’ to the
licensee or director. The licensee or director shall request
additional information from the appropriate law enforce-
ment agency as needed to comply with [DHHS] regulations.”
(Emphasis supplied.)
   The      prospective    employee’s     “Felony/Misdemeanor
Statement” must report any arrests, misdemeanor tickets, pend-
ing criminal charges, and/or convictions. See 391 Neb. Admin.
Code, ch. 8, § 007 (1998). Additionally, the administrative
code provides: “The licensee and the director shall not know-
ingly allow any person . . . who has been convicted of . . .
crimes involving the illegal use of a controlled substance, or
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crimes involving moral turpitude to be on the center premises.”
391 Neb. Admin. Code, ch. 8, § 002 (1998).
   Under the Nebraska Administrative Code, a license may be
denied based upon “[t]he applicant’s unwillingness or inability
to comply with regulations.” 391 Neb. Admin. Code, ch. 3,
§ 001.12(1) (1998). Regarding penalties for violations, DHHS
is empowered to
      initiate suspension or revocation proceedings under any
      of the following circumstances:
         1. When a licensee has shown a history of repeated
      violations of regulations;
         2. When a licensee has violated a regulation(s) so as
      to create a situation which places children at substantial
      risk; [or]
         17. When a licensee has violated any regulation[.]
391 Neb. Admin. Code, ch. 4, § 001.04 (1998).
   [4,5] In interpreting administrative agency regulations, def-
erence is accorded to an agency’s interpretation of its own
regulations unless plainly erroneous or inconsistent. Belle
Terrace, supra. The evidence is sufficient, as a matter of law,
if an administrative tribunal could reasonably find the facts as
it did on the basis of the testimony and exhibits contained in
the record before it. Fleming v. Civil Serv. Comm. of Douglas
County, 280 Neb. 1014, 792 N.W.2d 871 (2011). Agency action
is arbitrary and capricious if it is taken in disregard of the facts
or circumstances of the case, without some basis which would
lead a reasonable person to the same conclusion. See Hickey v.
Civil Serv. Comm. of Douglas Cty., 274 Neb. 554, 741 N.W.2d
649 (2007).
   From our review of the record, we conclude that the district
court’s findings were supported by competent evidence and
were not arbitrary, capricious, or unreasonable.

                   Sanctions Against Center
   The Center was on probation effective March 14, 2011, and
was required to maintain compliance with all DHHS regula-
tions as part of its probation. The district court was presented
with sufficient evidence to find that Marion’s violated its
probation by allowing persons convicted of crimes of moral
                  Nebraska Advance Sheets
	    MARION’S v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.	989
	                      Cite as 289 Neb. 982

turpitude and controlled substance possession on the Center’s
premises and by failing to request additional information from
law enforcement agencies about the criminal histories of its
newly hired employees.
   On March 29, 2011, only 2 weeks after the Center began
its probation, the Center was subject to another complaint
leading to an investigation. That investigation revealed that
the Center failed to verify the criminal backgrounds of sev-
eral employees before hiring them. Those employees had
numerous felony convictions, including theft by deception and
fraud. One of the employees had a conviction for possession
of methamphetamine.
   Prior to being hired, all applicants being considered for
employment were required to submit a signed “Felony/
Misdemeanor Statement” to the licensee or director. See 391
Neb. Admin. Code, ch. 8, § 006. “The licensee or director
shall request additional information from the appropriate law
enforcement agency as needed to comply with [DHHS] regula-
tions.” Id. (Emphasis supplied.)
   Despite the plain language of chapter 8, § 006, Marion’s
insists that “[n]o other criminal background check(s) are
required by the [regulations]” unless the prospective employee
indicated that he or she had contacts with law enforcement.
See brief for appellant at 33. Stated simply, the approach of
Marion’s was to rely solely on the prospective employee’s
truthfulness in reporting his or her criminal history without
further investigation. This position is misguided.
   This interpretation of Marion’s as to the regulation contra-
dicts both the plain language and the underlying purpose and
intent of the regulation. Failing to request additional informa-
tion from law enforcement agencies is particularly troubling
given that Marion’s knew both Tays and Johnson were incar-
cerated for theft by deception. We find that the district court’s
finding that Marion’s failed to comply with all DHHS rules
was supported by sufficient evidence. Under chapter 8, § 002,
childcare centers are prohibited from knowingly allowing a
person who has been convicted of crimes involving the use of
a controlled substance or crimes involving moral turpitude to
be on the Center’s premises.
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   Marion’s contends that theft by deception is not an automatic
bar to employment. It references DHHS employee Schnitzer’s
“admission” to that effect. But our reading of the record con-
cludes that Schnitzer merely indicated that whether such an
offense would disqualify a prospective staff member depends
on several factors, such as how long ago the offense occurred,
whether it resulted in a conviction, and whether the offense
was a misdemeanor or a felony. This court has held that “‘[i]t
is generally accepted that larceny . . . and theft are crimes that
involve moral turpitude.’” Hruby v. Kalina, 228 Neb. 713, 716,
424 N.W.2d 130, 132 (1988).
   We reject the contention of Marion’s that it cannot violate
the rule because it did not technically know of Tays’ and
Johnson’s criminal histories. But ignorance of their employ-
ees’ criminal records is not an excuse and would sanction an
employer’s lack of proper investigation of its employees. It is
undisputed that Marion’s knew at the time it hired Tays and
Johnson that each had been convicted of theft by deception.
Marion’s was aware that Tays and Johnson were incarcer-
ated at the Omaha Correctional Center and were participating
in the work release program. Angela Marion gave Tays and
Johnson rides from the facility on 10 to 12 occasions. This
knowledge alone should have been sufficient for Marion’s
to be on notice that these employees had lied on their
“Felony/Misdemeanor Statements.” One stated that she had
no law enforcement contacts. However, being a felon on work
release, she had daily contact with law enforcement. The dis-
trict court had sufficient evidence to find that Marion’s had
violated chapter 8, § 002.
   The record contains sufficient evidence to sustain the dis-
trict court’s finding that Marion’s had a duty under chapter 8,
§ 006, to request additional information from the relevant law
enforcement agencies about prospective staff members and
employees and that it violated that duty. The district court had
sufficient evidence to find that Marion’s had violated chap-
ter 8, § 002, by knowingly allowing persons who had been
convicted of crimes involving the illegal use of a controlled
substance and crimes of moral turpitude to be employed by the
                  Nebraska Advance Sheets
	    MARION’S v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.	991
	                      Cite as 289 Neb. 982

Center. Consequently, we find no error on the record regard-
ing the sanctions against the Center for violating its terms
of probation.

                    Sanctions Against Home
   The Home is licensed as a different type of childcare center
than the Center and was inactive at the time of most of the
violations noted in the record. However, the failure of Marion’s
to comply with DHHS regulations on its application to amend
the Home’s license and violations at its other childcare centers
supports our determination that the district court’s ruling was
not arbitrary, capricious, or unreasonable. Our review of the
record shows a substantial history of complaints, investiga-
tions, sanctions, and other actions against childcare providers
at the Center and the now-closed Dodge Center.
   DHHS regulations impose a duty on the childcare provider
to report to DHHS the criminal history of its employees. See
391 Neb. Admin. Code, ch. 6, § 004.03 (1998). The record
shows that on its application to amend the Home’s license,
Marion’s included Carla Marion and Shantee Richardson, both
of whom claimed not to have had prior law enforcement
contacts or criminal history. Carla Marion, Richard Marion’s
sister, had resigned from the now-closed Dodge Center in the
midst of allegations of improper discipline. Carla Marion had
a number of misdemeanor driving offenses. Richardson had
convictions for carrying a concealed weapon and possession of
a controlled substance.
   Marion’s also included Doremus on its application, despite
her disclosure of misdemeanor tickets, possession of mari­
juana, flight to avoid arrest, and several theft charges.
Doremus did not disclose convictions for driving during sus-
pension, furnishing tobacco to a minor, and failure to appear.
Marion’s did not attempt to confirm any of the employ-
ees’ backgrounds.
   DHHS regulations support sanctions against the Home for
violations that occurred at the other childcare centers owned
by Marion’s. Sanctions and penalties in the regulations are
directed at the owners and operators of childcare centers
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in addition to the individual childcare centers. The regula-
tions contemplate denying a license application based on the
applicant’s unwillingness or inability to comply with DHHS
regulations. See 391 Neb. Admin. Code, ch. 3, § 001.12(1).
Although the Home had not been in operation for some time
when it submitted its application, there was sufficient evidence
for the district court to determine that Marion’s was either
unwilling or unable to comply with DHHS regulations based
on its conduct and numerous other violations at its other child-
care centers.
   In its brief, Marion’s states, “No injuries or damages were
incurred as a result of the alleged violations. No children were
hurt . . . as a result of any of the alleged violations.” Brief for
appellant at 19. This argument fails to recognize the preventa-
tive purpose of the regulations and the prospective deterrent
effect of sanctions. We reject the suggestion that DHHS or a
court must wait until a child is physically injured before tak-
ing action.
   From our review of the record and applicable statutes and
regulations, we conclude that the district court’s finding that
Marion’s failed to adhere to DHHS regulations was supported
by competent evidence, conformed to the law, and was not
arbitrary, capricious, or otherwise unreasonable. Consequently,
we find no error on the record.

                      CONCLUSION
   For the above reasons, we affirm the judgment of the dis-
trict court.
                                                Affirmed.
