Scott v. North Dakota Workers Compensation Bureau

• Decision Date: 22 December 1998
• Docket Number: No. 980188,980188
• Citation: 1998 ND 221,587 N.W.2d 153
• Parties: Glen SCOTT, Claimant and Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee, and Koch Pipeline Co., Respondent. Civil
• Court: North Dakota Supreme Court

Page 153

587 N.W.2d 153

1998 ND 221

Glen SCOTT, Claimant and Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee and Koch Pipeline Co., Respondent.

Civil No. 980188

Supreme Court of North Dakota.

Dec. 22, 1998.

Kathryn L. Dietz, of Dietz, Little & Haas, Bismarck, ND, for claimant and appellant.

Brent J. Edison, Special Assistant Attorney General, Bismarck, ND, for appellee.

NEUMANN, Justice.

¶1 Glen Scott appeals from a judgment affirming the order of the North Dakota Workers Compensation Bureau denying further benefits. We conclude the Bureau improperly allowed ex parte contacts between its outside counsel and the Bureau officer who issued the decision in this case, and accordingly we reverse and remand.

I

¶2 Scott suffered a work-related injury in March 1995 and sought workers compensation benefits. In May 1995, Scott and his wife purchased Knife River Trading Post, a combination convenience store, gas station, and restaurant. Scott has worked at the business since they purchased it.

¶3 On August 9, 1995, the Bureau accepted Scott's claim and awarded disability benefits. Scott's former employer advised the Bureau by letter dated August 15, 1995, that Scott had purchased the convenience store and had been operating his own meat processing and catering business for several years. The Bureau did not contact Scott, but hired a private investigator. The investigator confirmed Scott was working at the business.

¶4 From October 1995 to March 1996, the Bureau mailed "return to work" cards to Scott. Scott answered the questions on the cards, indicating he had not returned to work, and returned the cards to the Bureau. On April 19, 1996, the Bureau sent Scott a notice of intention to discontinue benefits, stating the Bureau had learned he was working and would terminate his benefits. An order terminating benefits was issued on June 7, 1996, finding Scott had made false statements regarding the claim.

¶5 Scott requested a rehearing. A hearing was held before an administrative law judge (ALJ) on March 13, 1997. The ALJ concluded Scott's statements were inadvertent, not willful, and recommended reversal of the Bureau order terminating benefits. The Bureau rejected the ALJ's recommendations and, on July 3, 1997, issued its own findings of fact, conclusions of law, and order terminating Scott's benefits.

¶6 Scott appealed to the district court. At the district court level, Scott challenged ex parte contacts between the Bureau's outside counsel and the Bureau's Director of Claims and Rehabilitation who had issued the July 3, 1997, final order. The record was supplemented with some documentation of these alleged contacts, but the Bureau refused to provide other requested documents. The district court eventually affirmed the Bureau's order.

II

¶7 On appeal to this Court, Scott challenges various findings of fact and conclusions of law, and asserts the Bureau violated N.D.C.C. §§ 28-32-12.1 and 28-32-17(4) by allowing improper ex parte contacts between its outside counsel and the Bureau officer who issued the decision in the case.

¶8 This case presents serious questions about an administrative agency's proper use of counsel after counsel has appeared at a hearing in a position adversarial to the claimant. The Bureau concedes that in this case, and as a matter of general practice, its outside counsel who appeared at the hearing would consult with the Bureau official who was to decide whether to accept or reject the ALJ's recommended decision. In this case, the record demonstrates the Bureau's outside counsel consulted with the Bureau's Director of Claims and Rehabilitation, advised the Director of Claims and Rehabilitation the ALJ's decision should be rejected, and drafted several versions of findings, conclusions, and orders for the Director of Claims and Rehabilitation to review. The final order of July 3, 1997, was drafted by the Bureau's outside counsel and signed by the Bureau's Director of Claims and Rehabilitation. All these contacts and communications were without the knowledge or participation of Scott or his attorney; Scott received no notice of or copies of the Bureau's outside counsel's proposed findings, conclusions, and orders prior to issuance of the final order on July 3, 1997.

¶9 Scott asserts these contacts, and the failure to document them in the record, violated the Administrative Agencies Practice Act, N.D.C.C. Ch. 28-32. At the time these contacts occurred, ¹ N.D.C.C. § 28-32-12.1 provided, in part:

3. Unless required for the disposition of ex parte matters specifically authorized by statute, no party to a contested case proceeding, no person who has a direct or indirect interest in the outcome of the proceeding, no person allowed to participate in the proceeding, and no person who presided at a previous stage in the proceeding may communicate directly or indirectly in connection with any issue in that proceeding, while the proceeding is pending, with any agency head or hearing officer in the proceeding without notice and opportunity for all parties to participate in the communication.

....

5. An agency head or hearing officer in a contested case proceeding who receives an ex parte communication in violation of this section shall place on the record of the pending matter all written communications received, all written responses to the communications, or a memorandum stating the substance of all oral communications received, all responses made, and the identity of each person from whom the person received an ex parte oral communication, and shall advise all parties, interested persons, and other persons allowed to participate that these matters have been placed on the record. Any person desiring to rebut the ex parte communication must be allowed to do so, upon requesting the opportunity for rebuttal. A request for rebuttal must be made within ten days after notice of the communication.

Section 28-32-17(4)(i) and (k), N.D.C.C., provides the record of the proceedings must include:

i. Any recommended or proposed order, recommended or proposed findings of fact and conclusions of law, final order, final findings of fact and conclusions of law, or findings of fact and conclusions of law or orders on reconsideration.

....

k. Matters placed on the record after an ex parte communication.

¶10 These statutes unambiguously prohibit the procedure used by the Bureau in this case. The Bureau's outside counsel was a "person allowed to participate in the proceeding," and he directly communicated with the Director of Claims and Rehabilitation ² about issues involved in the pending proceeding. In fact, the outside counsel admits he consulted with the Director of Claims and Rehabilitation about the ALJ's recommended decision, advised the Director of Claims and Rehabilitation to reject it, and then drafted the findings, conclusions, and order denying benefits signed by the Director of Claims and Rehabilitation on July 3, 1997. The clear intent of the statute is to prohibit ex parte contacts between the decision maker and persons who participated in the hearing or otherwise have an interest in the case. The Bureau's use of its outside counsel in this case clearly violated that statutory proscription.

¶11 The Bureau asserts its Director of Claims and Rehabilitation was allowed to consult with its outside counsel under N.D.C.C. § 28-32-12.1(2), which provided:

When more than one person is the hearing officer in a contested case 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.

The intent of this provision is to ensure staff assistance is available for the decision maker. We do not believe it was intended to supersede the protections afforded by the specific provisions of N.D.C.C. § 28-32-12.1 which prohibit ex parte communications from persons who participated in the hearing.

¶12 There are strong policy reasons for prohibiting ex parte communications between the attorney who represented the agency at an adversarial hearing and the agency decision maker. In Camero v. United States, 179 Ct.Cl. 520, 375 F.2d 777 (Ct.Cl.1967), the court held an agency decision was invalid where the attorney representing the agency communicated with the decision maker, advised him to reject the recommendation of a grievance committee, and participated in preparing the final decision. The court reasoned:

[O]ne 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.

Camero, 375 F.2d at 780-81 (citations omitted); see also, e.g., Sullivan v. Department of the Navy, 720 F.2d 1266, 1271 (Fed.Cir.1983); Koster v. United States, 231 Ct.Cl. 301, 685 F.2d 407, 412 (Ct.Cl.1982); Ryder v. United States, 218 Ct.Cl. 289, 585 F.2d 482, 487 (Ct.Cl.1978); New York State Inspection, Security and Law Enforcement Employees v. New York State Public Employment Relations Board, 629 F.Supp. 33, 44-45 (N.D.N.Y.1984); Louisiana Pacific Corp. v. Koons, 816 P.2d 1379, 1382 (Alaska 1991); 4 Jacob A. Stein et al., Administrative Law § 32.01[a][i] (1998).

¶13 The Bureau nevertheless asserts the ex parte communications in this case were not improper, citing N.D.C.C. § 65-01-16(8):

Rehearings must be conducted as hearings under chapter 28-32 to the extent the provisions of that chapter do not conflict with this section....