Iowa Health Systems Agency, Inc. v. Wade

• Decision Date: 22 December 1982
• Docket Number: No. 66884,66884
• Citation: 327 N.W.2d 732
• Parties: IOWA HEALTH SYSTEMS AGENCY, INC., and Iowa State Department of Health, Appellants, v. James A. WADE and Byron Orton, Appellees, and Northwest Community Hospital, Intervenor-Appellee.
• Court: Iowa Supreme Court

Page 732

327 N.W.2d 732

IOWA HEALTH SYSTEMS AGENCY, INC., and Iowa State Department of Health, Appellants, v. James A. WADE and Byron Orton, Appellees and Northwest Community Hospital, Intervenor-Appellee.

No. 66884.

Supreme Court of Iowa.

Dec. 22, 1982.

Thomas J. Miller, Atty. Gen., Jeanine Freeman, Asst. Atty. Gen., and Robert F. Holz, of Davis, Hockenberg, Wine, Brown & Kuehn, Des Moines, for appellants.

Robert J. Baudino, Jr. of Neiman, Neiman, Stone & Spellman, P.C., Des Moines, for intervenor-appellee.

Considered by LeGRAND, P.J., and UHLENHOPP, McCORMICK, LARSON, and SCHULTZ, JJ.

LARSON, Justice.

The Northwest Community Hospital of Des Moines proposed to build a new facility in West Des Moines. Under a federal reimbursement procedure, it sought reimbursement in the amount of approximately $21,000,000 for interest and depreciation expenses incident to the project. Under federal law, detailed studies of need and cost are required at the state level before the reimbursement request will be acted upon. In Iowa, the Department of Public Health is the agency responsible for conducting the necessary feasibility study at the state level. The feasibility study involves a complex system, including a federal-state contract outlining the procedures to be followed, and a maze of studies, polls, hearings and review hearings. In this case it was determined by a review hearing officer that an earlier recommendation disapproving Northwest's proposed move had been affected by bias and prejudice and a remand to the study committee was ordered. After remand the study committee recommended the reimbursement. The Commissioner of Public Health, however, rejected that recommendation and disapproved the application for reimbursement. The commissioner's decision was appealed to a hearing officer, who reversed on the ground the commissioner's ruling was not supported by substantial evidence. The Iowa State Department of Public Health and the Iowa Health Systems Agency, Inc., study committee for the department, sought judicial review. The Northwest Community Hospital intervened to support the rulings of the review officers. The district court affirmed, and the petitioners appealed. We reverse.

On appeal, the Department of Health and the Health Systems Agency contend that (1) the original committee recommendation of disapproval should not have been overturned by the hearing officer on the ground it was affected by the alleged bias and prejudice of one of its advisory committees, and (2) that the disapproval by the commissioner of health was supported by substantial evidence. Because we hold there was sufficient evidence to support the commissioner's order of disapproval, we do not reach the issue of whether the earlier reversal of the committee recommendation of disapproval was proper.

It is not necessary for us to recite all of the relevant evidence, which is voluminous, nor to outline all of the procedures contemplated by the state and federal statutes and administrative rules to implement the reimbursement procedure. The Iowa State Department of Health is a state agency, subject to the Iowa Administrative Procedure Act, Iowa Code chapter 17A, and the decision of its commissioner is binding here unless, as the review-hearing officer concluded, his decision was not supported by the record. All parties concede this.

The rules for review of agency action are well-established. Our review is at law, not de novo, Ward v. Iowa Department of Transportation, 304 N.W.2d 236, 237 (Iowa 1981); City of Davenport v. Public Employment Relations Board, 264 N.W.2d 307, 311 (Iowa 1978); Hoffman v. Iowa Department of Transportation, 257 N.W.2d 22, 25 (Iowa 1977). A petitioner may obtain relief from an administrative action if it is "unsupported by substantial evidence in the record made before the agency when that record is viewed as a whole," Iowa Code section 17A.19(8)(f). While our review of an agency determination must be distinguished from review of a verdict in that we consider all of the evidence, that which preponderates against the decision as well as that which supports it, City of Davenport, 264 N.W.2d at 312, we must accord proper respect for the expertise of the administrative agency. Id. "Substantial evidence" under this standard is that which a reasonable mind would accept as adequate to reach a given conclusion. Id. at 311.

Under this rule, one commentator has said that

[s]ubstantial evidence is such evidence as might lead a reasonable person to make a finding. The evidence in support of a fact-finding is substantial when from it an inference of existence of the fact may be drawn reasonably. In such a case, the reviewing court must uphold the finding, even if it would have drawn a contrary inference from the evidence. "Choice lies with the Board and its finding is supported by the evidence and is conclusive where others might reasonably make the same choice."

B. Schwartz, Administrative Law § 210, at 595 (1976) (footnotes omitted).

With these principles in mind, we have examined the record made before the agency to assess the support, or lack of it, for the commissioner's ruling. To say the record is voluminous is an understatement. These proceedings have extended over a period of several...