Carlson v. Workforce Safety & Ins.

• Decision Date: 18 May 2009
• Docket Number: No. 20080250.,20080250.
• Citation: 765 N.W.2d 691,2009 ND 87
• Parties: Merwin CARLSON, Claimant and Appellant v. WORKFORCE SAFETY & INSURANCE, Appellee and GMR Transportation, Inc., Respondent and Appellee.
• Court: North Dakota Supreme Court

765 N.W.2d 691

2009 ND 87

Merwin CARLSON, Claimant and Appellant v. WORKFORCE SAFETY & INSURANCE, Appellee and GMR Transportation, Inc., Respondent and Appellee.

No. 20080250.

Supreme Court of North Dakota.

May 18, 2009.

Bruce A. Schoenwald, Stefanson, Plambeck & Foss, Moorhead, MN, for claimant and appellant.

Jacqueline Sue Anderson, Special Assistant Attorney General, Fargo, N.D., for appellee.

Timothy G. Richard (argued), Serkland Law Firm, Fargo, N.D., and Richard A. Plewacki (on brief), Roetzel & Andress, L.P.A., Cleveland, OH, for respondent and appellee.

SANDSTROM, Justice.

[¶ 1] Merwin Carlson appeals from a district court judgment affirming a decision by Workforce Safety & Insurance ("WSI"), which reconsidered its earlier decision granting Carlson workers' compensation benefits and subsequently denied him benefits after WSI determined he was an independent contractor and was not an employee of GMR Transportation, Inc. Carlson argues WSI's decision is void, because GMR's attorneys were not authorized to practice law in North Dakota during WSI's reconsideration of his claim. Carlson also argues WSI's procedure for terminating his benefits violated his due process right to ongoing disability benefits and WSI erred in deciding he was an independent contractor. We hold WSI's decision is void, because GMR's attorneys were not authorized to practice law in North Dakota during the reconsideration of Carlson's claim. We reverse and remand for proceedings consistent with this opinion.

I

[¶ 2] On July 8, 2005, Carlson was injured in a traffic accident while hauling freight as an over-the-road trucker under a contractual agreement with GMR. On July 5, 2006, Carlson filed a claim for workers' compensation benefits with WSI, identifying GMR as his employer. GMR thereafter submitted "employer" information to WSI on a form provided by WSI, stating Carlson was an independent contractor and not a GMR employee. On October 3, 2006, WSI issued a notice of decision finding Carlson was a GMR employee when the accident occurred. WSI awarded Carlson benefits based on its finding that his average weekly wage was $252.

[¶ 3] On October 13, 2006, GMR's president notified WSI that Richard Plewacki and Adrienne Stemen of Roetzel & Andress, LPA, in Cleveland, Ohio, would serve as GMR's "special counsel" for Carlson's claim. Plewacki and Stemen are attorneys licensed to practice law in Ohio, and they are not licensed to practice law in North Dakota and were not then admitted pro hac vice ("for this one particular occasion") for Carlson's claim under Admission to Practice R. 3. On October 26, 2006, Stemen, on behalf of GMR, requested reconsideration of WSI's October 3, 2006, decision and also requested until November 17, 2006, to provide documentation to support the request for reconsideration. WSI granted GMR's request for an extension of time to submit supporting documentation. On November 10, 2006, Stemen advised WSI that, on behalf of Roetzel & Andress, she was GMR's authorized legal representative for Carlson's claim. On November 16, 2006, GMR, through Stemen and Plewacki, submitted a legal brief and additional information on GMR's request for reconsideration, arguing Carlson was an independent contractor for purposes of receiving workers' compensation benefits.

[¶ 4] On January 4, 2007, on the basis of additional information submitted by GMR, WSI issued a notice of decision, reversing its October 3, 2006, decision and denying Carlson benefits. WSI concluded Carlson was an independent contractor and ordered him to refund benefits already paid. Carlson requested reconsideration, arguing he was a GMR employee and seeking copies of the additional information submitted by GMR. Carlson thereafter claimed WSI improperly accepted GMR's request for reconsideration, because the request and supporting documents were submitted on behalf of a corporate entity by attorneys not licensed to practice law in North Dakota. Carlson also claimed WSI's pretermination procedures deprived him of due process and WSI's January 4, 2007, decision failed to comply with the 60-day limitation of N.D.C.C. § 65-01-16(5) for reversing the October 3, 2006, decision.

[¶ 5] On February 20, 2007, WSI issued an order finding Carlson was an independent contractor and requiring him to repay previously paid disability and medical benefits. WSI concluded GMR had established Carlson was an independent contractor under N.D. Admin. Code § 92-01-02-49, and Carlson was not entitled to workers' compensation benefits.

[¶ 6] Carlson requested a rehearing under N.D.C.C. § 65-01-16(7). In April 2007, an attorney licensed to practice law in North Dakota filed a notice of appearance on behalf of GMR with the office of administrative hearings and filed motions for pro hac vice admission for Plewacki and Stemen under Admission to Practice R. 3. Carlson resisted the motions for pro hac vice admission. On May 16, 2007, an administrative law judge ("ALJ") granted the motions for pro hac vice admission of Plewacki and Stemen for Carlson's claim.

[¶ 7] On September 17, 2007, the ALJ issued a decision on several prehearing motions. The ALJ rejected Carlson's objection to GMR's request for reconsideration by attorneys not licensed to practice law in North Dakota, stating the initial request for reconsideration was timely and was a service that could be performed by a non-lawyer under N.D.R. Prof. Conduct 5.5(b)(5). The ALJ stated the November 16, 2006, letter brief "clearly required the application of legal knowledge and technique, and may have constituted the practice of law." The ALJ said assuming the letter brief constituted the unauthorized practice of law, "the consequence on the underlying informal proceeding before WSI and the impact on the current adjudicative proceeding before the ALJ is not obvious." The ALJ explained:

It is not clear whether a corporation must have representation by counsel during preliminary, informal proceedings before an administrative agency. If so required, at worst one would deem the assumed foul, the submission of the letter brief, as void. In any event, WSI still had an obligation to review GMR's timely and sufficient request for reconsideration. Furthermore, WSI has the authority to, at any time, review any award. N.D.C.C. § 65-05-04. To what extent WSI relied on the letter brief of Mr. Plewacki and Ms. Stemen, as opposed to the fact documents supplied in support of the request for review, such as the independent contractor service agreement, custom transaction detail report, safety training materials, payment records, and the like, is pure speculation. WSI issued a decision, and later an order, it had the obligation and authority to issue notwithstanding the submission of the letter brief by Mr. Plewacki and Ms. Stemen. Mr. Carlson has subsequently triggered the formal review process.

In sum, notwithstanding that Mr. Plewacki, et al., may have engaged in the unauthorized practice of law, it does not follow that the order by WSI denying the claim is faulty. It appears appropriate for the issue of whether Mr. Carlson is an employee or independent contractor to proceed to hearing and be addressed on the merits.

The ALJ also rejected Carlson's claim that he was not provided adequate pretermination notice for the termination of his benefits in January 2007 and further explained that reinstatement of benefits for a violation of the 60-day limit in N.D.C.C. § 65-01-16(5) was not appropriate because mandamus was the appropriate remedy.

[¶ 8] After an evidentiary hearing on the merits of Carlson's claim, the ALJ recommended finding that Carlson was an independent contractor and was not entitled to workers' compensation benefits as an employee of GMR. WSI adopted the ALJ's recommendation, and the district court affirmed WSI's decision.

[¶ 9] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. §§ 27-05-06, 28-32-42, and 65-10-01. Carlson's appeal is timely under N.D.R.App.P. 4(a) and N.D.C.C. § 28-32-49. This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28-32-49.

II

[¶ 10] Courts exercise a limited review in appeals from administrative agencies under the Administrative Agencies Practice Act, N.D.C.C. ch. 28-32. Tverberg v. Workforce Safety and Ins., 2006 ND 229, ¶ 7, 723 N.W.2d 676. Under N.D.C.C. § 28-32-46, a district court must affirm an administrative agency order unless:

1. The order is not in accordance with the law.

2. The order is in violation of the constitutional rights of the appellant.

3. The provisions of this chapter have not been complied with in the proceedings before the agency.

4. The rules or procedure of the agency have not afforded the appellant a fair hearing.

5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

6. The conclusions of law and order of the agency are not supported by its findings of fact.

7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.

8. The conclusions of law and order of the agency do not sufficiently explain the agency's rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

On appeal to this Court from a district court's decision in an administrative appeal, we review the agency order in the same manner. N.D.C.C. § 28-32-49.

[¶ 11] We exercise restraint in deciding whether an agency's findings of fact are supported by a preponderance of the evidence, and we do not make independent findings or substitute our judgment for that of the agency. Reopelle v. Workforce Safety and Ins., 2008 ND 98, ¶ 9, 748 N.W.2d 722; Power Fuels, Inc. v. Elkin, 283 N.W.2d 214, 220 (N.D.1979). In reviewing an agency's findings of fact, we determine only whether a reasoning mind reasonably could have concluded that the agency's factual conclusions were proved by the weight of the...