Miller v. Workforce Safety & Insurance

2006 ND 1, 707 N.W.2d 809, 2006 WL 22211

• Court: North Dakota Supreme Court
• Decided: January 25, 2006
• Docket: 20040064
• Status: Published

Opinions

MARING, Justice.

[¶ 1] Palmer Miller appealed from a district court judgment affirming a Workforce Safety and Insurance (“WSI”) order denying him further disability and vocational rehabilitation benefits. Miller argued that WSI failed to identify the first appropriate rehabilitation option and that he was denied a fair hearing due to improper ex parte communications. Previously, we remanded for an evidentiary hearing regarding alleged improper ex parte communications. Miller v. Workforce Safety and Insurance, 2004 ND 155, 684 N.W.2d 641. This opinion follows the Administrative Law Judge’s (“ALJ”) findings at the evidentiary hearing, and WSI’s final determination on the issue of ex parte communications on remand. We reverse WSI’s adoption of the ALJ’s findings that there were no improper éx'parte communications and the district court judgment affirming WSI’s order. We conclude Miller was not given a fair hearing, and we remand to WSI for a rehearing on the merits.

I

[¶2] In July 1993, Miller suffered a work-related injury to his lower back while employed as a carpenter with Real Builders, Inc. of Minot. The Worker’s Compensation Bureau, now WSI, accepted Miller’s claim and paid associated medical expenses and disability benefits. Between the time of his injury and the order at issue, Miller underwent numerous functional capacity evaluations (“FCE”) to determine his ability to return to gainful employment. A March 2001 FCE placed Miller at “a light job classification on a full time basis.” In September 2001, WSI notified Miller of its decision to discontinue his benefits effective October 19, 2001. Miller requested reconsideration of WSI’s decision and, in November 2001, WSI issued an order denying further benefits to Miller. In the order, WSI stated Miller was employable, without retraining, on a full-time basis, as a telephone solicitor, customer service representative, floor walker, or mail clerk. Miller requested a formal hearing, which was held in December 2002, before a temporary ALJ. The ALJ issued a recommended findings of fact, conclusions of law, and order, in which he concluded Miller was employable only on a part-time basis, could not obtain substantial gainful employment, and WSI’s rehabilitation plan had not identified an appropriate rehabilitation option.

[¶ 3] After the hearing, WSI’s outside litigation counsel, Lawrence Dopson, wrote a letter to WSI attorney, Tim Wahlin, expressing his concern with the ALJ’s recommendation and informing Wahlin of different possibilities that could arise depending on whether WSI adopted or rejected the ALJ’s decision. At oral argument, WSI’s outside counsel stated this was the normal procedure in these types of cases and he assumed the letter was transferred in some way to Nick Jolliffe, a WSI claims director. A copy of the letter was sent to Miller’s counsel, who acknowledged that he received it, but did not respond to it.

[¶ 4] In April 2003, Jolliffe issued WSI’s findings, conclusions, and order rejecting the ALJ’s recommendations. WSI concluded Miller was employable full time and ineligible for disability benefits after October 19, 2001. Miller appealed to the district court, which affirmed WSI’s order. The district court concluded that the difference between the ALJ’s recommended decision and WSI’s order was based on a difference in the weight and credibility given to the evidence. The district court concluded that Miller had received a fair hearing.

[¶ 5] On appeal, Miller claimed WSI failed to identify the first appropriate rehabilitation option and that he was denied a fair hearing due to improper ex parte communications. This Court temporarily remanded for an evidentiary hearing regarding the alleged improper ex parte communications. Miller, 2004 ND 155, 684 N.W.2d 641. The ALJ found that five relevant communications took place, four of which were ex parte and none of which were improper. Miller argues the agency failed to record pre-decision oral ex parte communications, hid the existence of written ex parte communications, and maintains that impermissible ex parte communications took place.

II

[¶ 6] Ex parte communications in administrative proceedings are those that are “without notice and opportunity for all parties to participate in the communication.” N.D.C.C. § 28-32-37(1). For administrative proceedings under the North Dakota Administrative Agencies Practice Act, ch. 28-32, N.D.C.C., certain ex parte communications are permitted while others are prohibited as improper. N.D.C.C. § 28-32-37. Section 28-32-37(1), N.D.C.C. provides:

Except as provided in subsections 2 and k. or unless required for the disposition of ex parte matters specifically authorized by another statute, an agency head or hearing officer in an adjudicative proceeding may not communicate, directly or indirectly, regarding any issue in the proceeding, while the proceeding is pending, with any party, with any person who has a direct or indirect interest in the outcome of the proceeding, with any other person allowed to participate in the proceeding, or with any person who presided at a previous stage of the proceeding, without notice and opportunity for all parties to participate in the communication.

(Emphasis added). Subsection 2 of § 28-32-37, N.D.C.C. provides:

When more than one person is the hearing officer in an adjudicative proceeding, those persons may communicate with each other regarding a matter pending before the panel. An agency head or hearing officer may communicate with or receive aid from staff assistants if the assistants do not furnish, augment, diminish, or modify the evidence in the record.

(Emphasis added). Subsection 4 of § 28-32-37, N.D.C.C. provides:

In an adjudicative proceeding conducted by a hearing officer other than the agency head, counsel for the administrative agency and the agency head, without notice and opportunity for all parties to participate, may communicate and consult regarding the status of the adjudicative proceeding, discovery, settlement, litigation decisions,. and other matters commonly communicated between attorney and client, to permit the agency head to make informed decisions. This subsection does not apply after recommended findings of fact, conclusions of law, and orders have been issued, except counsel for the administrative agency and the agency head may communicate regarding settlement and negotiation after recommended findings of fact, conclusions of law, and orders have been issued.

[¶ 7] The ALJ found that five relevant communications took place, four of which were ex parte and none of which were improper. The ALJ divided the communications into two categories: those occurring before issuance of ALJ Temanson’s recommended decision (pre-decision); and those occurring after issuance of ALJ Te-manson’s recommended decision (post-decision).

[¶ 8] The ALJ concluded the three communications which occurred prior to issuance of the recommended decision were not improper ex parte communications because they were authorized by N.D.C.C. §' 28-32-37(4).

[¶ 9] The three pre-decision communications were authorized by N.D.C.C. § 28-32-37(4) because they occurred prior to the ALJ’s recommended decision. “Words used in any statute are to be understood in their ordinary sense, unless a contrary intention plainly appears, but any words explained in this code are to be understood as thus explained.” N.D.C.C. § 1-02-02. “Words in a statute are to be understood in their ordinary sense, that is the meaning an ordinary person could get from reading the section.” State v. Velasquez, 1999 ND 217, ¶ 4, 602 N.W.2d 693. We will not read into the statute a requirement that any communications made prior to the decision which were not improper ex parte communications at that time, but which would be improper ex parte communications if they were made after the decision, must be disclosed after the ALJ’s decision. The statute does not require that communications which were not improper ex parte communications before the decision must subsequently be disclosed after the decision has been made. Rather, the statute allows these communications prior to the decision but does not allow these communications to take place once the decision is made. These three communications were not improper ex parte communications.

[¶ 10] Of the two post-decision communications, one, the draft findings of fact, conclusions of law, and final order to substitute for the ALJ’s decision, was found to not be an improper ex parte communication because it fell under the provisions of N.D.C.C. § 28-32-37(2).

[¶ 11] This leaves one final post-decision communication, the letter written by WSI’s outside counsel, mistakenly addressed to WSI’s inside counsel instead of to Nick Jolliffe. Here, the ALJ found that it does not make any difference whether the outside counsel’s letter was addressed to the inside counsel or to Nick Jolliffe. We do not agree.

[¶ 12] At the time of remand, Miller had established that WSI’s outside litigation counsel, Dopson, had written a letter to WSI’s inside claims counsel, Wahlin, expressing his concerns with the ALJ’s recommended findings of fact, conclusions of law, and order. Miller, 2004 ND 155, ¶ 3, 684 N.W.2d 641. At oral argument, outside litigation counsel Dopson told this Court he assumed his letter was transferred to the WSI claims director and decision-maker, Jolliffe. Id. A copy of the letter from Dopson to Wahlin was sent to Miller’s counsel. Id. There was no evidence in the record indicating whether the letter was transmitted to the decision-maker, Jolliffe, or whether the letter was discussed between inside counsel, Wahlin, and the decision-maker, Jolliffe.

[¶ 13] Following the evidentiary hearing on remand, the ALJ found that Jolliffe as claims director for WSI was responsible for reviewing the recommended findings of fact, conclusions of law, and order issued by the ALJ, and issuing WSI’s final order upon the rehearing. The ALJ also found that Jolliffe, as claims director, was the “agency- head” within the meaning of N.D.C.C. § 28-32-37 for the decisions made by WSI for its final order upon a rehearing. The ALJ additionally found that Wahlin was the inside counsel assigned to Miller’s case and Dopson was the outside counsel for Miller’s case.

[¶ 14] Generally, when a recommended findings of fact, conclusions of law, and order are completed by the ALJ assigned to a hearing, the Office of Administrative Hearings sends the ALJ’s decision, together with the hearing file, to Jolliffe. A copy of the ALJ’s decision is also sent to the injured worker or his counsel and to WSI. Jolliffe then reviews the ALJ’s decision and sends it to an administrative assistant in WSI’s legal department, who holds the file until a letter is received by Jolliffe from outside counsel commenting on the decision. When the letter from outside counsel is received by Jolliffe, it is delivered along with the hearing file and the ALJ’s decision to inside counsel assigned to the case for review.

[¶ 15] Here, on remand, the ALJ found that, although there is no evidence of what was done with the Miller file specifically, there is no reason to think it was handled other than in accordance with WSI’s customary practice. The ALJ found that, although customarily the letter from outside counsel commenting on the ALJ’s recommended decision would be written to the decision-maker, in this case, it was mistakenly addressed to WSI’s inside counsel. The ALJ found that outside counsel intended his comments to be communicated to the decision-maker. The ALJ found that although the letter was addressed to Wahlin, the inside counsel, it was likely redirected to Jolliffe, reviewed by him, and after his review, sent to WSI’s legal department and placed in Miller’s file.

[¶ 16] After reviewing Miller’s file, Wah-lin, inside counsel, drafted findings of fact, conclusions of law, and a final order rejecting the ALJ’s decision for Jolliffe’s review. The ALJ found that, typically, when a draft is sent to the decision-maker, outside counsel’s letter commenting on the ALJ’s decision is included. On remand, the ALJ found no evidence that Wahlin furnished, augmented, diminished, or modified the evidence of record for the preparation of the draft decision on Miller. In this case, Jolliffe somehow indicated his approval of the draft and returned the draft to the legal department for preparation of the final order. When the final order was completed, Jolliffe’s signature was applied “electronically” and copies were sent to the parties and the Office of Administrative Hearings.

[¶ 17] Under N.D.C.C. § 28-32-37 of the Administrative Agencies Practice Act:

1. Except as provided in ... an agency head or ... may not communicate, directly or indirectly, regarding any issue in the proceeding, while the proceeding is pending, with any party, with any person who has a direct or indirect interest in the outcome of the proceeding, with any other person allowed to participate in the proceeding,.. .without notice and opportunity for all parties to participate in the communication.

[¶ 18] The clear intent of this law is that Dopson, as outside counsel for WSI and as the person who litigated this proceeding, may not communicate with the WSI agency head, Jolliffe, without notice and an opportunity for Miller to respond. The law prohibits such communications without notice whether “direct or indirect.” Mer-riarn Webster’s Collegiate Dictionary 634-35 (11th ed.2005), defines “indirect” as “deviating from a direct line or course: roundabout.”

[¶ 19] In this case, the ex parte communication between outside counsel, Dopson, and the decision-maker, Jolliffe, occurred indirectly when the letter from Dopson addressed to inside counsel, Wahlin, was redirected to the decision-maker, Jolliffe, and again included with the draft decision sent from Wahlin to Jolliffe without notice and an opportunity for Miller to respond.

[¶ 20] The ALJ concluded on remand that because the letter from Dopson to Wahlin was copied to Miller’s counsel the communication was not improper ex parte. While it is true that the communication between Dopson and Wahlin was not improper ex parte, it does not address the communication that occurred when the letter was provided to the decision-maker Jolliffe. It is that communication from Wahlin to Jolliffe, without notice and an opportunity for Miller to be heard, that is the improper ex parte communication. The communication of outside counsel’s letter to the decision-maker, Jolliffe, was without the knowledge or participation of Miller or his counsel.

[¶ 21] The ALJ relies on Lawrence v. ND Workers Comp. Bureau, 2000 ND 60, ¶ 20, 608 N.W.2d 254, for his conclusion there was no improper ex parte communication. However, the ALJ’s interpretation allows that communication which is prohibited directly to be done indirectly.

[¶ 22] In Lawrence, our Court harmonized N.D.C.C. § 65-01-16(8) and provisions in chapter 28-32, now codified at N.D.C.C. § 28-32-37(1), prohibiting ex parte communications. Lawrence, 2000 , 608 N.W.2d 254. As previously pointed out, N.D.C.C. § 28-32-37(1) prohibits direct and indirect communications between outside WSI counsel and the agency head without notice and opportunity to be heard while the proceeding is pending. Section 65-01-16(8), N.D.C.C., authorizes: “In reviewing recommended findings, conclusions, and orders, the organization may consult with its legal counsel representing it in the proceeding.” In Lawrence, our Court concluded all consultations that take place under N.D.C.C. § 65-01-16(8) cannot be improper ex parte because of N.D.C.C. ch. 28-32. Lawrence, 2000 ND 60, ¶ 20, 608 N.W.2d 254. This Court in Lawrence did not sanction providing a letter from outside counsel to the decision-maker without notice to the claimant and his counsel. See id. Miller and his counsel had no notice that the letter addressed to inside counsel would be provided to the decision-maker and had no opportunity to be heard by the decision-maker on the contents of that letter.

[¶ 23] In Lawrence, this Court recognized the strong policy reasons for prohibiting ex parte communications between an attorney who represented WSI’ at the adjudicative hearing and the agency decision-maker:

“One of the fundamental premises inherent in the concept of an adversary hearing, particularly if it is of the evidentiary type, is that neither adversary be permitted to engage in an ex parte communication concerning the merits of the case with those responsible for the decision. ... It is difficult to imagine a more serious incursion on fairness than to permit the representative of one of the parties to privately communicate his recommendations to the decision makers. To allow such activity would be to render the hearing virtually meaningless.”

Id. at ¶ 16 (quoting Camero v. United States, 179 Ct.Cl. 520, 375 F.2d 777, 780-81 (1967)).

[¶ 24] The crux of this case is that a letter from Dopson commenting on and supplementing the evidence was provided to the decision-maker without providing Miller notice and an opportunity to be heard by the decision-maker. We do not believe that N.D.C.C. § 28-32-37(2), which provides: “An agency head or hearing officer may communicate with or receive aid from staff assistants if the assistants do not furnish, augment, diminish, or modify the evidence in the record,” exonerates the communication of Dopson’s letter to the decision-maker from the prohibition of ex parte communications.

[¶ 25] We do not dispute that inside counsel, Wahlin, can confer with the decision-maker, Jolliffe, ex parte. However, when Wahlin furnished Jolliffe with a letter he received from outside litigation counsel without the knowledge of the claimant or his counsel, it was an improper communication and notice should have immediately been given to Miller either by Wahlin or Jolliffe. In addition, the letter sent to Wahlin goes beyond the evidence in the record of the case. At the hearing on remand, Dopson testified that his statements in his letter to Wahlin about a physician for Miller were not in evidence. He further testified that it is not typical to communicate to the decision-maker something outside the record. In this case, the letter from Dopson provided by Wahlin to Jolliffe “augmented” or supplemented the evidence in the record. That augmentation is plainly prohibited by N.D.C.C. § 28-32-37(2).

[¶ 26] We review an agency decision in the same manner as the district court under N.D.C.C. § 28-32-46. The ALJ’s order is not in accordance with the law and the procedures of the agency have not afforded the claimant, Miller, a fair hearing. Outside counsel can communicate with the agency head while an adjudicative proceeding is pending only if notice and opportunity to be heard is provided to the claimant.

[¶27] On remand, Jolliffe must be disqualified from participation in WSI’s decision. Section 28-32-37(7), N.D.C.C., provides:

If necessary to eliminate the effect of an ex parte communication received in violation of this section, an agency head or hearing officer in an adjudicative proceeding who receives the communication may be disqualified, upon good cause being shown in writing to the hearing officer or to the agency. The portions of the record pertaining to the communication may be sealed by protective order issued by the agency.

Dopson’s statements in his letter to Wah-lin, transmitted to Jolliffe, about a physician of Miller were not in evidence and were highly prejudicial against Miller’s position. As a result, we do not believe Jolliffe can participate in further proceedings in this matter.

Ill

[¶ 28] Because Miller was never provided with notice that the Dopson letter was provided to the decision-maker, Jolliffe, and considered by him in reversing the ALJ’s recommended findings of fact, conclusions of law, and order for judgment, we reverse WSI’s order and the district court judgment affirming WSI’s order and remand with direction for a rehearing on the merits with the agency head, Jolliffe, disqualified from participation.

[¶ 29]DALE V. SANDSTROM BURT L. RISKEDAHL LAURIE A. FONTAINE. [¶ 30] The Honorable BURT L. RISKEDAHL, D.J., and the Honorable LAURIE A. FONTAINE, D.J., sitting in place of KAPSNER, J., and CROTHERS, J., disqualified.