Schultz v. North Dakota Dept. of Human Services, 10903

• Citation: 372 N.W.2d 888
• Decision Date: 15 August 1985
• Docket Number: No. 10903,10903
• Parties: Medicare&Medicaid Guide P 34,860 Rosa SCHULTZ, Appellant, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, John A. Graham, Appellee. Civ.
• Court: United States State Supreme Court of North Dakota

Page 888

372 N.W.2d 888

Medicare&Medicaid Guide P 34,860

Rosa SCHULTZ, Appellant, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, John A. Graham, Appellee.

Civ. No. 10903.

Supreme Court of North Dakota.

Aug. 15, 1985.

Mills & Moore, Bismarck, for appellant; argued by William R. Mills, bismarck.

Blaine L. Nordwall, Asst. Atty. Gen., Dept. of Human Services, State Capitol, Bismarck, for appellee.

LEVINE, Justice.

Rosa Schultz appeals from a decision of the Executive Director of the North Dakota Department of Human Services [Executive Director] denying her application for medical assistance because of a disqualifying transfer of property. ¹ We affirm.

On August 18, 1983, Schultz transferred 27.32 acres of land to her daughters, Irene Radspinner and Cleo Mork, and her stepdaughter, Emma Sanders, in allocations identical to the devises contained in a will executed by Schultz in 1972. At the time of the transfer, Radspinner, Mork, and Sanders itemized expenses in the amount of $49,875.00 which they had incurred for the benefit of Schultz before the transfer.

On February 14, 1984, Radspinner applied to the Burleigh County Social Service Board for medical assistance benefits on behalf of Schultz. The County Social Service Board denied her application because it concluded that the 1983 transfer was a disqualifying transfer of property. Schultz appealed the County Social Service Board's denial to the Department of Human Services.

A hearing was held before a hearing officer for the Department of Human Services, and he recommended that Schultz's application for medical assistance benefits be granted. After receiving the hearing officer's recommendation, the Executive Director denied Schultz's claim on July 17, 1984, on the basis of a disqualifying transfer of property. The Executive Director concluded that Schultz had not presented evidence to rebut the presumption that the transfer was made for the purpose of rendering Schultz eligible for medical assistance or the presumption that services rendered by a child to a parent are gratuitous. Schultz's request for a rehearing was denied, and she appealed to district court. The district court affirmed the Executive Director's decision, and Schultz appealed to this Court.

When an administrative agency decision is appealed to a district court and then to this Court, we review the decision of the agency and look to the record compiled before the agency. Garner Public School District No. 10 v. Golden Valley County Committee, 334 N.W.2d 665 (N.D.1983). Our review is governed by Section 28-32-19, N.D.C.C., which provides as follows:

"28-32-19. Scope of Review and procedure on appeal from determination of administrative agency. The court shall try and hear an appeal from the determination of an administrative agency without a jury and the evidence considered by the court shall be confined to the record filed with the court. If additional testimony is taken by the administrative agency or if additional findings of fact, conclusions of law, or a new decision shall be filed pursuant to section 28-32-18, such evidence, findings, conclusions, and decision shall constitute a part of the record filed with the court. After such hearing, the court shall affirm the decision of the agency unless it shall find that any of the following are present:

1. The decision or determination is not in accordance with the law.

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

3. 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 and decision of the agency are not supported by its findings of fact.

"If the decision of the agency is not affirmed by the court, it shall be modified or reversed, and the case shall be remanded to the agency for disposition in accordance with the decision of the court."

We determine only whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record. Power Fuels, Inc. v. Elkin, 283 N.W.2d 214 (N.D.1979). In addition to reviewing the factual basis for the agency's decision, we also consider whether the decision violates the appellant's constitutional rights and is in accordance with the law. Garner Public School District No. 10, supra.

Schultz contends that the Executive Director's decision was not based on the law because it was based on the provisions of a Department of Human Services Manual and not on a rule promulgated under Chapter 28-32, N.D.C.C. Schultz contends that the language of the manual that "Service or assistance furnished by a family member to an individual shall not be treated as consideration" ² is not an officially promulgated rule and therefore is not the law. The Department of Human Services contends that the Manual contains a distillation of federal and state statutes, rules, and cases which may affect a determination of eligibility for Medical Assistance benefits and that the provision in question is a correct statement of applicable caselaw and has the force of law.

In North Dakota there is a well-established presumption that services rendered by a child to parents are gratuitous, unless there is an express contract or the character of the services are peculiar and the circumstances are exceptional so as to imply a contract. Matter of Estate of Raketti, 340 N.W.2d 894 (N.D.1983); In Re Estate of Thompson, 191 N.W.2d 578 (N.D.1971); Gange v. Gange, 79 N.D. 372, 56 N.W.2d 688 (1953); Brady v. Brady's Estate, 50 N.D. 114, 194 N.W. 938 (1923); Krapp v. Krapp, 47 N.D. 308, 181 N.W. 950 (1921); Bergerson v. Mattern, 41 N.D. 404, 170 N.W. 877 (1918). This presumption has the force and effect of law in North Dakota, and the Executive Director did not err in applying this principle of law in reaching his decision.

Schultz contends that the Executive Director did not properly review all of the evidence before rejecting the recommendation of the hearing examiner and, therefore, the decision was not supported by the evidence. Schultz asserts that the director could not have examined the testimony of the hearing because he was not present at the hearing and, at the time of his decision, a transcript of the hearing had not been prepared. Therefore she contends that she was denied a fair hearing and due process.

An electronic recording of the hearing was available for review by the Executive Director. The Executive Director stated in his findings, conclusions, and decision that "the evidence of record in this proceeding has been considered and appraised. The recommended findings of fact and conclusion of law submitted by the hearing officer have been thoughtfully and carefully examined and are not adopted in this instance." Other than this statement, the record does not reflect the extent of the Executive Director's review.

In Hammond v. North Dakota State Personnel Board, 345 N.W.2d 359 (N.D.1984), the State Personnel Board's decision to uphold Hammond's dismissal was based solely upon a report and recommendation by a hearing officer. The record reflected that the Board had not reviewed the evidence, testimony, and exhibits presented before the hearing officer. We concluded that the Board had a duty to determine whether or not there was just cause for Hammond's dismissal based upon the evidence submitted by the parties and that the failure of the Board members to review the record violated Hammond's right to a decision by the Board based upon a review of the record. However, nothing in our decision in Hammond requires each member of an administrative agency to read each word of the record and examine each exhibit introduced before disposing of the issues before the agency. See Hammond v. North Dakota State Personnel Board, supra (VandeWalle, Justice, concurring; Pederson, Justice, concurring in part, dissenting in part).

The administrative officer deciding a case need not actually hear the witnesses testify or hear oral argument, but the officer deciding the case must consider and appraise the evidence before reaching a decision. Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936); 3 Davis, Administrative Law, Sec. 17:2 (2d Ed. 1980). Although a hearing examiner has the advantage of hearing and seeing witnesses testify, an agency may reject the examiner's decision even on a question involving the credibility of contradictory witnesses. 3 Davis, Administrative Law, Sec. 17:16. A court's review of an agency decision does not include probing an agency decisionmaker's mental process if a hearing was given as required by law. Morgan v. United States, 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 (1938); 3 Davis, Administrative Law, Sec. 17:16; Annot., 18 A.L.R.2d 606, 623 (1951).

The record reflects that a hearing...