Coats v. N.C. Dep't of Health & Human Servs

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of A p p e l l a t e P r o c e d u r e . NO. COA13-275 NORTH CAROLINA COURT OF APPEALS Filed: 5 November 2013 ROBERT ANTHONY COATS, Petitioner, v. Wake County No. 09 CVS 17880 NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES, O BERRY NEURO-MEDICAL TREATMENT CENTER, Respondent. Appeal by respondent from order entered 5 July 2012 by Judge Abraham Penn Jones in Wake County Superior Court. Heard in the Court of Appeals 23 September 2013. Ryan McKaig, for petitioner-appellee. Roy Cooper, Attorney General, by Kathryn J. Thomas, Special Deputy Attorney General, and Joseph E. Elder, Assistant Attorney General, for the State. MARTIN, Chief Judge. Respondent North Carolina Department of Health and Human Services, O Berry Neuro-Medical Treatment Center appeals from an order of the superior court remanding this case to the Office of Administrative Hearings ( OAH ) for a new hearing and awarding -2attorney s fees and costs to petitioner Robert Anthony Coats as the prevailing party. For the reasons stated herein, we reverse. This case arises from proceedings before the OAH in which petitioner alleged that respondent violated State personnel vacant position posting requirements under N.C.G.S. § 126-7.1(a) and deprived him of an opportunity for promotion. Administrative Law Judge Shannon R. Joseph presided over the contested case hearing. Prior to rendering her decision, Judge Joseph resigned from her position as an Administrative Law Judge ( ALJ ) in order to accept appointment as a Special Superior Court judge. Pursuant to N.C.G.S. §§ 7A-757 and 150B-32(c), John B. Lewis, Jr. was then appointed as a temporary ALJ to the case, and the parties received notice of the appointment. Lewis reviewed hearing and the record developed his recommended rendered Personnel Commission ( SPC ). the SPC, Judge Lewis at the decision Judge contested to the case State In his recommended decision to concluded that petitioner failed to demonstrate by a preponderance of the evidence that respondent had violated State personnel vacant position posting requirements. Petitioner submitted exceptions to the to the findings of SPC fact, written objections and conclusions of law, and -3recommended decision made by Judge Lewis. Petitioner primarily took exception to the recommended decision on the grounds that it was rendered by an ALJ who did not preside over the contested case hearing and hear the live witness testimony. The SPC rejected petitioner s objections and entered a final decision adopting the recommended decision. Petitioner sought judicial review of the SPC s final decision in Wake County Superior Court pursuant to N.C.G.S. § 150B-43. issued Concluding that the OAH s appointment of an ALJ who the recommended decision from a cold record violated petitioner s due process rights as well as the North Carolina Administrative remanded the Procedure case to Act the ( APA ), OAH for the superior rehearing and court awarded petitioner attorney s fees and costs. _________________________ On appeal, respondent contends that the superior court erred by determining that petitioner s due process rights and the APA were violated because the ALJ rendered the recommended decision based upon a cold record. the court erroneously awarded Respondent also argues that petitioner attorney s fees and costs as the prevailing party. The APA, codified at Chapter 150B of the General Statutes, governs judicial review of the final decision of an -4administrative agency in a contested case. On judicial review of an administrative agency s final decision, the substantive nature of each review. assignment of error dictates the standard of N.C. Dep t of Env t & Natural Res. v. Carroll, 358 N.C. 649, 658, 599 S.E.2d 888, 894 (2004). Where it is alleged that an agency decision was made upon an unlawful procedure, de novo review Instruction is required. Licensure Richardson Section, 199 v. N.C. N.C. Dep t App. 219, of Pub. 223, 681 S.E.2d 479, 483, disc. review denied, 363 N.C. 745, 688 S.E.2d 649 (2009). Under the de novo standard of review, we consider the matter anew and may freely substitute our own judgment for that of the agency s judgment. Carroll, 358 N.C. at 660, 599 S.E.2d at 895. Procedural due process restricts governmental actions and decisions which deprive individuals of liberty or property interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment. Peace v. Emp t Sec. Comm n, 349 N.C. 315, 321, 507 S.E.2d 272, 277 (1998) (quoting Mathews v. Eldridge, 424 U.S. 319, 332, 47 L. Ed. 2d 18, 31 (1976)) (internal quotation marks omitted). Once a protected interest has been demonstrated, the Court must determine exactly what procedure or process is due. Id. at 322, 507 S.E.2d at 278. The North Carolina Supreme Court has held that a contested case -5hearing before the OAH affords a State employee the procedural protections required by due process. Hilliard v. N.C. Dep t of Corr., 173 N.C. App. 594, 599, 620 S.E.2d 14, 18 (2005) (citing Peace, 349 N.C. at 323 27, 507 S.E.2d at 278 80). Under the SPA, a State employee has an interest in the opportunity for promotion through the proper posting of notice of a vacant position. N.C. Gen. Stat. § 126-7.1(a) (2011). A State employee who alleges that he or she has been denied the opportunity for promotion because notice of a vacant position was not posted in accordance with the procedures set forth under the SPA may demand a formal evidentiary hearing by filing a petition for a contested case with the OAH. 2013 N.C. Sess. Laws 59, 65 66, ch. 382, § 6.1. Governed by the APA, a contested case hearing is presided over by an ALJ, and the parties are afforded the rights to present arguments and physical evidence and cross-examine witnesses during the hearing. 150B-25(c) (d),-32(a) (2011). Where an to examine and N.C. Gen. Stat. §§ ALJ can no longer preside over a hearing, the APA allows for a replacement ALJ to be appointed to the case unless it is shown that substantial prejudice to any party will result, in which event a new hearing shall be held or the case dismissed without prejudice. Gen. Stat. § 150B-32(c). Therefore, absent a showing N.C. of -6substantial prejudice, an ALJ who is later assigned to a case and hence did not preside over the hearing decide the case based upon the official record. may nonetheless See Crawford v. Wayne Cty. Bd. of Educ., 275 N.C. 354, 361, 168 S.E.2d 33, 37 38 (1969) ( [A]n administrative decision is not invalid merely because an officer who was not present when the evidence was taken made or participated in the decision, provided he considers and acts upon the evidence received in his absence. ). While recent amendments to the APA make the ALJ s decision the final decision,1 at the time this case commenced, the ALJ only had the authority to issue a recommended decision to the SPC. N.C. Gen. Stat. § 150B-34(a) (2007), amended by 2011 N.C. Sess. Laws 1678, 1686, ch. 398, § 18. Under the then-existing procedural scheme, the parties were given the opportunity to file exceptions to the ALJ s recommended decision and present written arguments to the SPC before the agency made a final decision. N.C. Gen. Stat. § 150B-36(a) (2007), repealed by 2011 N.C. Sess. Laws 1678, 1687, ch. 398, § 20. Upon review of the ALJ s recommended decision, the parties written arguments, and 1 In 2011, the General Assembly enacted several amendments to the APA that significantly alter the procedural scheme for making a final decision in contested cases. 2011 N.C. Sess. Laws 1678, 1685 97, ch. 398, §§ 15 55. These amendments became effective 1 January 2012 and apply to all contested cases commenced on or after that date. Id. at 1701, § 63. Because petitioner s contested case was filed on 16 April 2008, the amendments are inapplicable to this case. -7the official decision. record, the SPC then entered a final agency See N.C. Gen. Stat. § 150B-36(b), repealed by 2011 N.C. Sess. Laws 1678, 1687, ch. 398, § 20. In this case, the superior court determined that the OAH s appointment of Judge Lewis to issue a recommended decision from the record developed at the hearing before Judge Joseph violated petitioner s due process rights as well as the APA. We disagree. Petitioner s due process rights were satisfied by the opportunity to pursue a contested case hearing before the OAH as provided under the SPA and APA. 599, 620 S.E.2d at 18. See Hilliard, 173 N.C. App. at Petitioner fully participated in the hearing and was given the opportunity to present witnesses and cross-examine with both respondent s the APA and witness. SPA and in Conducted a in reasonable accordance manner, the contested case hearing afforded petitioner an opportunity to be heard as required by procedural due process protections. Furthermore, the recommended decision at issue in this case was not based upon unlawful procedure. Judge Lewis was appointed to the case pursuant to N.C.G.S. §§ 7A-757 and 150B32(c) after Judge Joseph s resignation, and the parties received notice of the appointment. The APA allows for a party to object to the appointment of a replacement ALJ by showing that the -8replacement would be substantially prejudicial to either party. N.C. Gen. Stat. § 150B-32(c). Petitioner, however, made no showing that Judge Lewis s appointment to continue with the case would be substantially prejudicial upon receiving notice of the appointment. Because the parties received notice of the appointment and there was no showing that substantial prejudice would result, the appointment of Judge Lewis to the case was lawful procedure as set forth under the APA. Lastly, we find no merit to petitioner s argument that he was denied due process because Judge Lewis issued his recommended decision from a cold record and without the benefit of live testimony. While the ALJ presiding over a hearing is in the best position to evaluate the credibility of witnesses and evidence hearing presented, require due only process that an and the concept administrative of officer a fair who was absent when the evidence was taken consider and appraise the evidence himself. Crawford, 275 N.C. at 360, 168 S.E.2d at 37. In his recommended decision, Judge Lewis made findings of fact and conclusions of law with citations to specific evidence and testimony in the transcript of the hearing, indicating that he considered and appraised the evidence himself. Due process requirements were therefore met, because Judge Lewis entered his recommended decision based upon his consideration of the -9evidence and testimony presented. Moreover, because the SPC made the final agency decision, it is of little importance that Judge recommended decision from a cold record. Lewis issued his At the time this case commenced, the ALJ s recommended decision [was] only advisory. Allen v. N.C. Dep t of Health & Human Servs., 155 N.C. App. 77, 82, 573 S.E.2d 565, 568 (2002), disc. review denied, 357 N.C. 163, 580 S.E.2d decision maker, 358 (2003). The SPC, as the final was vested with full authority to reject the ALJ s recommended decision. agency accept or See Davis v. N.C. Dep t of Human Res., 110 N.C. App. 730, 737, 432 S.E.2d 132, 136 (1993) ( Even though the administrative law judge had already made findings of fact and conclusions of law, the Personnel Commission had the ability to make its own findings of fact and conclusions of law if it chose to do so. ). Before the SPC entered a final decision, petitioner submitted to the agency written objections to the recommended decision arguing that it was prejudicial because it was issued by an ALJ who did not preside over the contested case hearing. The SPC s final decision stated that, upon full consideration of the matter, including the ALJ s recommended decision and a review of the whole record, the agency adopted as its own the findings of fact and conclusions of law made by the ALJ, as well -10as his recommended decision in favor of respondent. SPC had statutory authority to reject the ALJ s While the recommended decision and make its own findings of fact and conclusions of law, the agency chose to adopt the recommended decision. It can therefore be assumed that the SPC found that petitioner had not been prejudiced and that the decision in favor of respondent was proper. The superior appointment of a court erred replacement in ALJ finding to that render a the OAH s recommended decision from a cold record was unlawful procedure in violation of petitioner s due process rights and the APA. The contested case hearing before the OAH and final review by the SPC were conducted according to the prescribed statutory law and in a reasonable manner. reversed. Our The decision disposition of of the this superior issue court thus unnecessary our consideration of the remaining arguments. Reversed. Judges GEER and STROUD concur. Report per Rule 30(e). is renders

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