(1) The department shall issue a letter to an implementing agency revoking the designation issued pursuant to ARM 17.56.1003 whenever the department determines that there is substantial evidence that:

(a) the implementing agency is not conducting authorized services in accordance with ARM Title 17, chapter 56, applicable industry standards or limitations or conditions contained in the department's designation letter;

(b) the implementing agency has intentionally submitted a claim for reimbursement for services which were not performed;

(c) conditions exist warranting suspension of designation under ARM 17.56.1003 and those conditions show little or no hope of abating; or

(d) insufficient funding exists at the current level of expenditure for the department to maintain the designation.

(2) A revocation of designation by the department is effective upon written or oral notice to the local governmental unit. Following revocation, the local governmental unit may not submit claims for services to the department which services were performed following revocation. Any claims so submitted are considered denied. The department shall reimburse the local unit of government for services performed in accordance with these rules prior to revocation of designation.

(3) An implementing agency designated under ARM 17.56.1003 may surrender the designation of its program by 30 days written notice to the department accompanied by the surrender of its current designation letter. Services shall be conducted by the local governmental unit and reimbursement made pending receipt by the department of the notice required by this rule. Upon receipt of the notice, no reimbursement may be made for subsequent services by the local governmental unit. The department shall reimburse the local government unit for services performed in accordance with these rules prior to surrender of designation.

(4) A revocation of designation by the department under this rule may be appealed in writing to the director. The appeal shall be initiated by a letter to the director from the local governmental unit setting forth the grounds for appeal and attaching any written evidence relevant to the appeal, to which the department shall file a similar response. The director shall determine the appeal on the basis of the written submittals and shall sustain the revocation if he determines that there is substantial evidence of the conditions in (1)(a), (b), (c), or (d). The rules of civil procedure and evidence and Title 2, chapter 4, MCA, do not apply to the director's determination under this rule. The revocation is effective pending appeal to the director.