Detroit Base Coalition for Human Rights of Handicapped v. Department of Social Services

• Decision Date: 23 August 1988
• Docket Number: Docket No. 80661
• Citation: 428 N.W.2d 335,431 Mich. 172,88 A.L.R.4th 1075
• Parties: DETROIT BASE COALITION FOR the HUMAN RIGHTS OF THE HANDICAPPED, an Unincorporated Association, Michigan Association of Retarded Citizens, a Michigan Nonprofit Corporation, Social Services for the Hearing Impaired, a Michigan Nonprofit Corporation, Washtenaw County Association for Retarded Citizens, a Michigan Nonprofit Corporation, Justice in Mental Health, an Unincorporated Association, Westside Mothers, an Unincorporated Association, Michigan Welfare Rights Organization, a Michigan Nonprofit Corporation, Intermediate Welfare Rights Organization, a Michigan Nonprofit Corporation, United Welfare Rights Organization, an Unincorporated Association, Lansing Welfare Rights Organization, a Michigan Nonprofit Corporation, Michelle Koren and Gladys Thompson, Individuals, Plaintiffs-Appellants, v. DEPARTMENT OF SOCIAL SERVICES, and Director, Michigan Department of Social Services, Defendants-Appellees. 431 Mich. 172, 428 N.W.2d 335, 88 A.L.R.4th 1075
• Court: Michigan Supreme Court

Page 335

428 N.W.2d 335

DETROIT BASE COALITION FOR the HUMAN RIGHTS OF THE HANDICAPPED, an Unincorporated Association, Michigan Association of Retarded Citizens, a Michigan Nonprofit Corporation, Social Services for the Hearing Impaired, a Michigan Nonprofit Corporation, Washtenaw County Association for Retarded Citizens, a Michigan Nonprofit Corporation Justice in Mental Health, an Unincorporated Association Westside Mothers, an Unincorporated Association, Michigan Welfare Rights Organization, a Michigan Nonprofit Corporation, Intermediate Welfare Rights Organization, a Michigan Nonprofit Corporation, United Welfare Rights Organization, an Unincorporated Association, Lansing Welfare Rights Organization, a Michigan Nonprofit Corporation Michelle Koren and Gladys Thompson, Individuals Plaintiffs-Appellants, v. DEPARTMENT OF SOCIAL SERVICES, and Director, Michigan Department of Social Services, Defendants-Appellees.

Docket No. 80661.

431 Mich. 172, 428 N.W.2d 335, 88 A.L.R.4th 1075

Supreme Court of Michigan.

Argued April 5, 1988.

Decided Aug. 23, 1988.

M. Ann Miller, Legal Aid of Central Michigan, Lansing, for plaintiff-appellant Lansing Welfare Rights Organization.

Susan K. McParland, Michigan Legal Services, Detroit, for plaintiffs-appellants Westside Mothers Michigan Welfare Rights Organization.

Dolores M. Coulter, Michigan Protection & Advocacy Service, Lansing, for plaintiffs-appellants Michigan Ass'n of Retarded Citizens, Detroit Base Coalition for the Human Rights of the Handicapped, Social Services for the Hearing Impaired, Washtenaw County Ass'n of Retarded Citizens, Justice in Mental Health.

Deborah A. Johnson, Legal Services of Southeastern Michigan, Ann Arbor, for plaintiff-appellant Gladys Thompson.

Terrie J. Hartman, Legal Services of Western MI, Grand Rapids, for plaintiff-appellant Michelle Koren.

Terri L. Stangl, Legal Services of Eastern MI, Saginaw, for plaintiffs-appellants Intermediate Welfare Rights Organization, United Welfare Rights Organization.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., Erica W. Marsden, Asst. Atty. Gen., Lansing, for defendants-appellees.

Before the Entire Bench.

BOYLE, Justice.

This Court granted leave to appeal to resolve two questions. We are asked to determine, first, whether the telephone hearing procedures are inconsistent with existing rules promulgated by the Department of Social Services. Second, we must determine whether the telephone hearing policy of the Department of Social Services violates the rule-making provisions of the Administrative Procedures Act. We hold that the telephone hearing procedures of the Department of Social Services are inconsistent with promulgated rules. We further hold that the telephone hearing policy of the Department of Social Services violates the rule-making provisions of the Administrative Procedures Act. Therefore, the decision of the Court of Appeals is reversed.

I

The plaintiffs consist of two groups. The first is the recipients of benefits (clients) under programs administered by the Michigan Department of Social Services, and the second is the advocacy organizations which represent them.

Pursuant to statute, administrative hearings are provided to clients whose benefits have been denied, reduced, or terminated. M.C.L. Secs. 400.8-400.9; M.S.A. Sec. 16.408-16.409. Since 1980, the welfare recipient or applicant has had a choice of an in-person hearing or a telephone hearing. In 1984, the DSS issued a policy bulletin stating that effective October 1, 1984, telephone hearings would be routinely conducted in cases involving applicants for or recipients of public assistance who are challenging the denial or reduction of public assistance.

On September 18, 1984, before this policy could be effected, three of the plaintiffs filed an original action for mandamus in the Court of Appeals and obtained a stay prohibiting implementation of this policy. This stay was lifted in Goode v. Dep't of Social Services, 143 Mich.App. 756, 373 N.W.2d 210 (1985), lv. den., 424 Mich. 882 (1986), with the Court holding that the policy did not violate the Open Meetings Act, M.C.L. Sec. 15.261 et seq.; M.S.A. Sec. 4.1800(11) et seq.

On September 26, 1984, this case was commenced in the Ingham Circuit Court. The plaintiffs are seeking injunctive or declaratory relief, or, in the alternative, a writ of mandamus or superintending control to prevent the defendants from implementing the policy. The plaintiffs contend that the policy is in contravention of promulgated rules of the DSS and violates the rule-making process of the Administrative Procedures Act, 1969 P.A. 306, ch. 3, Secs. 31-64, M.C.L. Secs. 24.231-24.264; M.S.A. Secs. 3.560(131)-3.560(164). The plaintiffs were granted an ex parte temporary restraining order prohibiting the implementation of the policy until further order of the circuit court. Both the defendants and the plaintiffs filed motions for summary disposition, and oral arguments on the instant parties' motions were heard by the circuit court on July 30, 1985. The plaintiffs did not assert that the DSS's policy violated any clients' due process or other constitutional rights. The trial court held that so long as telephone hearings were constitutionally fair, they violated no requirement of law. The court determined that the policy change did not constitute a change in or a violation of DSS rules and concluded that the DSS did not need to promulgate a rule under the APA to implement the policy. Accordingly, the trial court granted summary disposition on behalf of the defendants and dissolved the temporary restraining order. The plaintiffs appealed.

The Court of Appeals affirmed the trial court's decision. 158 Mich.App. 613, 405 N.W.2d 136 (1987).

II

The DSS is required to conduct administrative hearings for individuals who contest the denial or reduction of public assistance. M.C.L. Secs. 400.8-400.9; M.S.A. Secs. 16.408-16.409. Michigan law also requires the DSS to promulgate rules which must provide adequate procedures by which to conduct the hearings. M.C.L. Sec. 400.9(1); M.S.A. Sec. 16.409(1):

"[T]he director shall promulgate rules for the conduct of hearings within the state department. The rules shall provide adequate procedure for a fair hearing of appeals and complaints, when requested in writing by an applicant for or recipient of assistance or service, financed in whole or in part by federal funds." (Emphasis added.)

Since the adoption of a rule by an agency has the force and effect of law and may have serious consequences of law for many people, the Legislature has proscribed an elaborate procedure for rule promulgation. As set forth in the APA, 1969 P.A. 306, ch. 3, Secs. 31-64, M.C.L. Secs. 24.231-24.264; M.S.A. Secs. 3.560(131)-3.560(164), that process requires public hearings, public participation, notice, approval by the joint committee on administrative rules, and preparation of statements, with intervals between each process.

This action was taken because, in recent years, legislative bodies have delegated to administrative agencies increasing authority to make public policy and, consequently, have recognized a need to "ensure that none of the essential functions of the legislative process are lost in the course of the performance by agencies of many law-making functions once performed by our legislatures." Bonfield, State Administrative Rule Making, Sec. 1.1.1, p 4. Thus, the question whether the policy may be adopted without compliance with the APA is more than a question of notice and hearing requirements. It is a question of the allocation of decision-making authority.

The rules promulgated by the DSS for the conduct of hearings are found in 1979 AC, R 400.901-400.922. Two rules are applicable here. 1979 AC, R 400.907 provides that hearings be held at "a reasonable time, date, and place which normally shall be in the county where a claimant resides." Second, 1979 AC, R 400.912 provides that a party to a DSS hearing is guaranteed six specific rights for prehearing and hearing procedures.

Prior to 1980, administrative hearings for clients whose benefits had been denied, reduced, or terminated were conducted before a hearing officer at the DSS office of a client's county of residence. Between 1980 and 1984, an applicant for or recipient of benefits had the option ¹ of appearing in-person at a hearing at a local DSS office or permitting a hearing referee to hear the case by telephone. In an in-person hearing, the hearing referee traveled to the local office and had an opportunity to view all the witnesses and evidence. In a telephone hearing, the claimant, any witnesses, and the local DSS worker were in the local office, and the hearing referee was in either the department's Lansing or Detroit office. The hearing was conducted by speakerphones in each office.

In 1984, the DSS issued the policy bulletin which presents the issue in this case, Program Policy Bulletin No. 84-16, to provide for a telephone hearing using the same procedure in effect since 1980 or for a modified face-to-face hearing on written request. Program Policy Bulletin No. 84-16; Assistance Payments Manual, Item 630, p 6. Under the "modified in-person hearing" a claimant could travel to one of four hearing sites (Detroit, Escanaba, Grayling, or Lansing) and be present in the same room with the hearing referee, and the department representative would remain in the local office and participate by speakerphone. The case file would remain in the local office. The policy provides that, upon request, the department could schedule an in-person hearing in the county where the client lives if the client has an impairment which is in issue or which makes travel to one of the four sites impossible or impractical.

III

The plaintiffs maintain that Program Policy Bulletin No. 84-16 is inconsistent with and alters the existing rules. Specifically, plaintiffs contend that the policy conflicts with Rule 400.907 which...