Title: IN THE MATTER OF THE WORKER'S COMPENSATION CLAIM OF: NEWMAN

State: wyoming

Issuer: Wyoming Supreme Court

Document:

IN THE MATTER OF THE WORKER'S COMPENSATION CLAIM OF: NEWMAN2002 WY 9149 P.3d 163Case Number: 01-191Decided: 06/19/2002

APRIL TERM, A.D. 2002

                                                                                                            

IN THE 
MATTER OF THE WORKER'S

COMPENSATION 
CLAIM OF:

BERI 
NEWMAN, 

Appellant(Petitioner),

v.

STATE OF 
WYOMING ex rel. WYOMING

WORKERS' 
SAFETY AND

COMPENSATION 
DIVISION, 

Appellee(Respondent).

Appeal 
from the District Court of Natrona County

The 
Honorable W. Thomas Sullins, Judge

Representing 
Appellant:

            
Steven R. Helling, Casper, Wyoming   

Representing 
Appellee:

Hoke 
MacMillan, Attorney General; John W. Renneisen, Deputy Attorney General; Gerald 
L. Laska, Senior Assistant Attorney General; and David L. Delicath, Assistant 
Attorney General  

  

Before 
LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.

            
KITE, Justice. 

[¶1]      Beri Newman 
injured her neck and back while working at a restaurant in March of 1998 and 
received worker's compensation benefits for chiropractic treatments from March 
to November 1998.  In July 1999, she 
again sought chiropractic care, this time for headaches and double vision.  The Wyoming Workers' Safety and 
Compensation Division (division) and the Office of Administrative Hearings (OAH) 
concluded these symptoms did not result from the original accident and, 
therefore, were not work related.  
The district court affirmed the administrative decision.  We affirm and clarify the appropriate 
standard of review.

[¶2]      We rephrase the 
issues as follows:

1.  What 
is the proper standard of review when both the claimant and the division present 
evidence at a contested case hearing?

2.  Does 
the record support the hearing examiner's determination that Ms. Newman's 
testimony lacked credibility and she failed to prove her July 1999 physical 
complaints/symptoms were caused by her March 1998 work-related 
accident?

3.  In 
denying benefits, did the hearing examiner err in applying Wyo. Stat. Ann. § 
27-14-603(a) (LexisNexis 2001), which pertains to injury occurring over a 
substantial time period?

FACTS

[¶3]      Ms. Newman was 
injured on March 13, 1998, while working at JB's Restaurant in Casper.  She sought chiropractic care from H. R. 
Graber, D.C.  In the written office 
questionnaire, Ms. Newman stated she had sprained her back while carrying "tray 
after tray" of dishes and had felt pain in her lower back immediately after the 
accident.  In answer to the form's 
fill-in-the-blank questions, she indicated she never had headaches or vision 
problems but presently had low back problems, pain between her shoulders, neck 
problems, sore and weak muscles, and walking problems.  In another form entitled Confidential 
Patient Case History, she indicated she had an occasional headache and had been 
previously treated by Dr. Graber in 1994 for neck problems.  The insurance claim forms Dr. Graber 
submitted to the division indicated Ms. Newman received treatment from March 
through November of 1998 for low back pain and a lumbosacral sprain, and the 
division paid benefits for this treatment. Dr. Graber released Ms. Newman from 
his care on November 18, 1998, recording in his Daily Notes Report that her 
condition was progressing as anticipated and she had made satisfactory progress 
and was ready for discharge. 

[¶4]      In July of 
1999, Ms. Newman returned to Dr. Graber for care.  On or about July 14, 1999, he wrote a 
letter to the division stating he had previously treated Ms. Newman for a 
work-related injury for low back pain, lumbosacral subluxation, multiple 
cervical subluxations, cervicobrachial syndrome, lumbosacral sprain/strain, 
sacral/coccyx subluxation, and cervical neck pain.  He further stated that Ms. Newman 
returned to his office on July 7, 1999, with symptoms similar to her March 1998 
complaints and was continuing with treatment resulting from her original 
work-related accident.  Dr. Graber did not mention in this letter 
that Ms. Newman had returned complaining of severe intermittent headaches and 
double vision, which were symptoms she had not experienced during the period of 
her prior treatment.  
The division denied benefits for several chiropractic bills stating 
variously that the services were not related to the original worker's 
compensation injury of March 13, 1998, "to the back" or "to the back and 
neck."  The 
division based its denial of benefits in large part on an August 19, 1999, 
medical review panel recommendation.  The three chiropractors who participated on 
the panel questioned the relationship between the new problems and the initial 
injury and opined the most recent symptoms were not a continuation of the 
previous injury.

[¶5]      Ms. Newman appealed 
the denials.  
The OAH held a contested case hearing on January 20, 2000, which was 
continued to April 13, 2000, for completion.  It issued its Order Denying Benefits on June 
16, 2000, concluding Ms. Newman had failed to prove by a preponderance of the 
evidence that her headaches and double vision were an injury as that term is 
defined in Wyo. Stat. Ann. § 27-14-102(a)(xi) (LexisNexis 2001) and an injury 
which occurred over a substantial period of time pursuant to § 
27-14-603(a).  
In reaching this determination, the hearing examiner found Ms. Newman's 
testimony lacked credibility because it was inconsistent with her March 1998 
injury reports.  
Similarly, she concluded the reports of Dr. Graber and Don Thai, M.D., an 
independent medical examiner, were of little evidentiary value because they were 
based on Ms. Newman's version of the events.

  

[¶6]      Ms. Newman filed a 
petition for review pursuant to W.R.A.P. 12.01.  On July 27, 2001, the district court issued a 
detailed decision letter and Order Affirming Agency Decision.  It held the hearing 
examiner's decision was supported by substantial evidence and was not arbitrary, 
capricious, an abuse of discretion, or otherwise not in accordance with the 
law.  Ms. 
Newman appeals from this order. 

STANDARD OF REVIEW

[¶7]      "When considering an 
appeal from a district court's review of agency action, we accord no special 
deference to the district court's conclusions.  Instead, we review the case as if it had come 
directly to us from the administrative agency."  French v. Amax Coal 
West, 960 P.2d 1023, 1027 (Wyo. 1998) (citation omitted).

[¶8]      In appeals of agency 
decisions, both the court and the parties have historically treated the 
applicable standard of review in an imprecise and, consequently, often 
inconsistent manner.  
Specifically, with regard to worker's compensation cases appealed 
pursuant to the Wyoming Administrative Procedure Act (WAPA), Wyo. Stat. Ann. § 
16-3-114 (LexisNexis 2001), it 
appears there has been an unintentional and incremental muddling of the 
arbitrary or capricious standard and the substantial evidence test when agency 
decisions are reviewed.  The blurring of these concepts has led to the 
citation of every possible administrative review standard in a scattergun effort 
to hit the target.  
This particular case is no exception. 

[¶9]      Section 16-3-114(c) 
(emphasis added) provides:

(c)  To the extent necessary to make a decision 
and when presented, the reviewing court shall decide all relevant questions of 
law, interpret constitutional and statutory provisions, and determine the 
meaning or applicability of the terms of an agency action.  In making the 
following determinations, the court shall review the whole record or those parts 
of it cited by a party and due account shall be taken of the rule of prejudicial 
error.  The 
reviewing court shall:

(i)  Compel agency action unlawfully withheld or 
unreasonably delayed; and

(ii)  Hold unlawful and set aside agency action, 
findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or otherwise 
not in accordance with law;

(B) Contrary to constitutional right, power, privilege or 
immunity;

(C) In excess of statutory jurisdiction, authority or 
limitations or lacking statutory right;

(D) Without observance of procedure required by law; or

(E) Unsupported by substantial evidence in a case reviewed on 
the record of an agency hearing provided by statute. 

Despite being separately expressed in the statute, these 
two tests have come to be used  interchangeably by courts and litigants alike 
so as to hardly have independent meanings, a result we conclude was not intended 
by the legislature.  
"In interpreting a statute, every word, clause and sentence must be 
considered so that no part will be rendered inoperative or superfluous.  Each element must 
be given meaning."  
State ex rel. Wyoming Worker's Compensation Division v. 
Mahoney, 798 P.2d 836, 838 (Wyo. 1990) (citation omitted); see also 
 Merkison v. State, 996 P.2d 1138, 1142 (Wyo. 2000).

[¶10]   In what can be viewed as a first step 
in the direction of addressing the problem we hope to cure today, this court 
noted "[t]he relationship between the substantial evidence rule as it 
pertains in administrative proceedings and the [arbitrary or capricious] rule 
that is used when the agency concludes that there has been a failure of proof 
has produced some consternation."  Helm v. State ex rel. 
Wyoming Workers' Safety and Compensation Division, 982 P.2d 1236, 1240 (Wyo. 
1999).  We 
attempt, in this opinion, to provide further clarification of these rules for the benefit of litigants, 
counsel, administrative agencies, hearing examiners, and the district 
courts.

[¶11]   We are not the only jurisdiction 
grappling with this conundrum:

            
There has been confusion under the Federal Administrative Procedure Act 
in distinguishing the substantial evidence test from the arbitrary and 
capricious standard. Thus, one federal court has noted "an emerging consensus of 
the Courts of Appeals" that the distinction between the two is "largely 
semantic." Pacific Legal Foundation v. Department of 
Transportation, 593 F.2d 1338, 1343, n.35 (D.C. Cir.), cert denied, 444 U.S. 830, 100 S. Ct. 57, 62 L. Ed. 2d 38 
(1979). We conclude that under the APA . . . the sole determination by 
the reviewing court as to issues of fact before the agency is whether there was 
substantial evidence in the agency record to support the agency decision.

State Board of Health of Commonwealth of Virginia v. 
Godfrey, 290 S.E.2d 875, 881 (Va. 1982).  Likewise, the 
District of Columbia Circuit Court noted the tests were all but 
indistinguishable when used to assess the factual support of a 
decision:

[¶12]   In this jurisdiction, we have described 
the substantial evidence test in cases where factual findings are challenged as 
follows: 

In reviewing findings of fact, we examine the entire record 
to determine whether there is substantial evidence to support an agency's 
findings.  If 
the agency's decision is supported by substantial evidence, we cannot properly 
substitute our judgment for that of the agency and must uphold the findings on 
appeal.  
Substantial evidence is relevant evidence which a reasonable mind might 
accept in support of the agency's conclusions.  It is more than a scintilla of evidence.

State ex rel. Wyoming Workers' Safety and Compensation 
Division v. Jensen, 2001 WY 51, ¶10, 24 P.3d 1133, ¶10 (Wyo. 2001) (citations 
omitted).  
However, in cases where the agency concludes the party with the burden of 
proof has failed to prove its case, we have applied the arbitrary or capricious 
standard:

            
A claimant for worker's compensation benefits has the burden of proving 
all the essential elements of the claim by a preponderance of the evidence in 
the contested case hearing.  When an agency decides that the party charged 
with the burden of proof has failed to meet that burden, the case is reviewed 
under the "[a]rbitrary, capricious, an abuse of discretion or otherwise not in 
accordance with law" language of Wyo. Stat. § 16-3-114(c)(ii) (1990).  

Pederson v. State ex rel. Wyoming Workers' Compensation 
Division, 939 P.2d 740, 742 (Wyo. 1997) (citation omitted).

[¶13]   This court began utilizing the arbitrary 
or capricious test long before the passage of the WAPA to review the broad 
exercise of discretionary powers by administrative entities. 

In ordinary cases the board is vested with a wide discretion 
in the matter of renewing leases.  That discretion is doubtless to be exercised 
reasonably rather than arbitrarily, and with a due regard to the rights of the 
lessee as well as the interest of the state, taking into consideration all the 
statutory regulations relating to the leasing of state lands.  It is probable, 
however, that the discretion is such that, except in case of fraud or grave 
abuse resulting in manifest wrong and injustice, the courts would not feel 
warranted in interfering with its exercise.

Cooper v. McCormick, 10 Wyo. 379, 69 P. 301, 303 (1902) (citation omitted); see also Baker v. Brown, 12 
Wyo. 198, 74 P. 94, 96 (1903).  These early cases apparently did not involve a 
formal administrative hearing or thorough records.  See Bunten v. Rock Springs 
Grazing Ass'n, 29 Wyo. 461, 215 P. 244, 250 (1923) (holding the taxpayer is 
entitled to the assessor's and the board of equalization's honest judgments in 
fixing the value of property; they will not be permitted to do so in an 
arbitrary, capricious, and fraudulent manner, and courts will restrain them from 
becoming despotic); Chicago, B. & Q. R. Co. v. Byron 
School Dist. No. 1, 37 Wyo. 259, 260 P. 537, 539 (1927) ("Where 
. . . the action of the trustees or of the county superintendent 
is clearly shown to be so unreasonable and unjust to those complaining as to 
amount to oppression and a wanton disregard of their rights and interests, then 
a court of equity will interfere to set aside such unjust and oppressive 
decision and grant such other relief as may be necessary and proper.'"  Quoting Fisher v. Birkey, 132 N.E. 498, 500 (Ill. 1921)).  This is consistent 
with authority that "[i]nformal agency action is reviewed utilizing [the 
arbitrary or capricious] standard."  Thomas Brooks Chartered 
v. Burnett, 920 F.2d 634, 643 (10th Cir. 
1990); see also 2 Am. Jur. 2d Administrative Law § 529 at 518 (1994) ("The law is also 
reasonably clear that the arbitrary or capricious standard governs review of 
agency action in instances where no hearing or formal findings on a record are 
required, and there is no statutory requirement of a different test").

[¶14]   In Banzhaf v. 
Swan Co., 60 Wyo. 201, 148 P.2d 225, 228 (1944), involving state land lease 
renewals, this court interpreted a provision of the applicable statutes 
providing for de novo judicial review of 
administrative action as follows:

[T]he trial "de novo" as mentioned in Section 91-306, 
W.R.S.1931, is simply limited to a determination on the part of the District 
Court whether on the facts proven there was "an illegal exercise" of the Board's 
discretion, a case of fraud, or a "grave abuse of such discretion[."]  Unless one of these 
three elements should appear the action of the Board should not be 
disturbed.

See also Rayburne v. Queen, 78 Wyo. 359, 
326 P.2d 1108, 1111 (1958). 

[¶15]   By the late 1950s and early 1960s, the 
burden of proving arbitrary or capricious action was clarified:

            
The burden of proof to show the refusal to be arbitrary or capricious is 
on the applicant.  
Halpern v. Andrews, D.C.Pa., 21 F.2d 969.  In Application of Haim, 195 Misc. 612, 88 N.Y.S.2d 840, 
842, the court stated:

It is settled by abundant authority that, in the absence of 
clear and convincing proof that an administrative body or public official has 
acted arbitrarily, unreasonably or capriciously, their action and determination 
will be sustained.  
Citation of authority is unnecessary; the rule has become elementary.

Whitesides v. Council of City of Cheyenne, 78 Wyo. 80, 319 P.2d 520, 526 (1957).

We have repeatedly said the courts are warranted in setting 
aside action of an administrative agency only where its action is arbitrary or 
fraudulent or where there is an illegal exercise of discretion; and the burden 
of proving arbitrary, illegal or fraudulent action is on the complainant.  

Marathon Oil Company v. Welch, 379 P.2d 832, 836 (Wyo. 1963).  Also in the 1960s, 
this court began to establish standards regarding sufficient information to 
support an administrative  decision:

This court, in the Fremont County 
case [School District No. 9, in County of Fremont  v. District Boundary 
Board in and for Fremont County, 351 P.2d 106, 111 (Wyo. 1960)] made it 
clear that a district boundary board must have before it sufficient information 
upon which it may properly find that a change is to the best interests of all 
the people concerned.  
The decision of the board must not only be based upon substantial 
evidence but also the evidence must relate to both the annexed and the annexing 
areas.  
Otherwise . . . the procedure tends to be "of an arbitrary 
nature."

Clear Creek Cattle Co. v. Davis, 384 P.2d 719, 720 (Wyo. 1963); see 
also Monahan v. Board of Trustees of Elementary 
School District No. 9, County of Fremont, 486 P.2d 235, 237 (Wyo. 1971). 

[¶16]   After the WAPA statutory standards of 
review became effective in 1966, we applied those more explicit review standards 
as seen from the following worker's compensation case:

            
We have held it essential to surviving judicial review that the record of 
a contested agency action contain such factual findings as would permit a court 
to follow the agency's reasoning from the evidentiary facts on record to its 
eventual legal conclusions.  Larsen v. Oil and Gas 
Conservation Comm'n, 569 P.2d 87, 90-91 (Wyo. 1977); Powell v. Board of Trustees, Crook County School District 
No. 1, 550 P.2d 1112, 1120 (Wyo. 1976).  Similarly, we have held that a contested case 
hearing must provide, and the record of that proceeding must document, 
information sufficient to the making of a reasonable decision.  Absent such 
information, the agency decision must be set aside as arbitrary.  Western Radio Communications, Inc. v. Two-Way Radio Service, 
Inc., 718 P.2d 15, 20 (Wyo. 1986); Monahan v. Board 
of Trustees, Elementary School District No. 9, 486 P.2d 235, 237 (Wyo. 
1971).  The need 
for such strict compliance with statutory provisions relating to the content of 
the agency record derives largely from a need to ascertain whether contested 
case hearings actually provide statutorily mandated procedural protections.  To assure the due 
process protections inherent in the WAPA's statutory scheme will be given 
effect, this court requires strict compliance with those procedural 
provisions.

Jackson v. State ex rel. Wyoming Workers' Compensation 
Division, 786 P.2d 874, 878 (Wyo. 1990); see 
also Mekss v. Wyoming Girls' School, State of Wyoming, 813 P.2d 185, 201-02 
(Wyo. 1991).      

[¶17]   In 1995, in the case City of Casper v. Utech, 895 P.2d 449, 452 (Wyo. 1995), 
we first definitively held the arbitrary or capricious test should apply 
exclusively in circumstances where a claimant is found to have failed to carry 
his burden of proof : 

[W]e are satisfied such cases come within the argument 
. . . with respect to . . . the sufficiency of the 
evidence, and the case must be considered under the arbitrary, capricious, and 
contrary to law language of Wyo. Stat. § 16-3-114(c)(ii) 
(1990). . . . An agency's decision totally contrary to the 
evidence in the record is subject to such a test.  We would have no 
equivocation in reversing and remanding such a decision.

This standard of review was applied in Pederson, 939 P.2d  at 742, and consistently thereafter 
in worker's compensation cases where the claimant failed to carry the burden of 
proof.  See Bruns v. TW Services, Inc., 2001 WY 127, ¶14, 36 P.3d 608, ¶14 (Wyo. 2001); Rice v. State ex rel. Wyoming 
Workers' Safety and Compensation Division, 2001 WY 21, ¶¶10-11, 19 P.3d 508, 
¶¶10-11 (Wyo. 2001); Sheth v. State ex rel. Wyoming Workers' Compensation 
Division, 11 P.3d 375, 378 (Wyo. 2000); Brees v. Gulley 
Enterprises, Inc., 6 P.3d 128, 132 (Wyo. 2000); Beitel v. State ex rel. Wyoming Workers' Compensation 
Division, 991 P.2d 1242, 1244-45 (Wyo. 1999); Clark 
v. State ex rel. Wyoming Workers' Safety and Compensation Division, 934 P.2d 1269, 1270-71 (Wyo. 1997).

[¶18]   Neither the division nor litigants have 
been consistent in following these precedents which leads to the appellants 
attacking and the appellees defending the factual basis for an agency decision 
relying upon different standards of review. Thus, it is important that we 
resolve whether these tests as applied to factual findings are substantively 
distinct or, as other jurisdictions have concluded, whether the difference is in 
name only.  We 
must also revisit our holdings which may have implied that the standard of 
review is dependent on whether a party below was found to have failed to carry 
its burden of proof.

[¶19]   Both tests require review of the entire 
record.  The 
statute specifically provides review of the whole record with regard to the 
substantial evidence test.  The arbitrary or capricious test requires the 
reviewing court to determine whether the agency reasonably could have made its 
finding and order based upon all the evidence before 
it.  

[¶20]   The substantial evidence test seems to 
require more of an agency than does the arbitrary or capricious standard.

In Abbott Laboratories, Inc. v. 
Gardner, 387 U.S. 136, 143 (1967), the Court said that the substantial 
evidence test provided "a considerably more generous judicial review than the 
arbitrary and capricious' test." . . . Four Justices emphasized the 
more demanding nature of the substantial evidence test in Industrial Union Department v. American Petroleum 
Institute, 448 U.S. 607, 705 (1980):  "Careful performance of this task is 
especially important when Congress has imposed the comparatively rigorous 
substantial evidence' standard."  Finally, a unanimous Court characterized the 
arbitrary and capricious test as "more lenient" than the substantial evidence 
test in American Paper Institute v. American Electric 
Power Service Corp., 461 U.S. 402, 412 n.7 (1983). 

Unfortunately, while the Court consistently characterizes 
the arbitrary and capricious test as less demanding than the substantial 
evidence test, the Court has never explained the difference between the 
two.  Since the 
substantial evidence test is extremely deferential, circuit courts have 
experienced difficulty applying the distinction the Court continues to 
draw.  Circuit 
courts frequently treat the two tests as identical, referring to their "tendency 
to converge" and to the distinction between the two as "largely semantic."

2 Richard J. Pierce, Jr., Administrative Law Treatise § 11.4 
at 807 (4th ed. 2002); see 
also 5 Jacob A. Stein et al., Administrative Law § 51.02 at 51-60 to 51-89, 
§ 51.03 (1995).  
It can be argued that the substantial evidence test demands more of the 
agency because it requires evidence in the record to support the decision.  It also suggests the 
corollary that the arbitrary or capricious standard is more lenient and 
deferential to the agency than the substantial evidence test because it requires 
only that there be a rational basis for the agency's decision.    See Howe v. Health Facilities 
Appeals Board, 481 N.E.2d 510, 513 (Mass. App. Ct. 1985) (holding that, 
under the substantial evidence test, the agency decision must rest on such 
evidence a reasonable mind might accept as adequate to support a conclusion, 
but, under the arguably more lenient arbitrary or capricious test, there needs 
to be only a rational basis for the decision); Adam Smith 
Enterprises, Inc. v. State Department of Environmental Regulation, 553 So. 2d 1260, 1273 (Fla. Dist. Ct. App. 1989) (holding that, "under this arbitrary 
and capricious standard, . . . an agency is to be subjected only 
to the most rudimentary command of rationality").

[¶21]   When the soundness of a factual finding 
is challenged, it is unclear what rational purpose supports the different levels 
of scrutiny of an administrative action.  In practice, the application of the standards 
has the appearance, if not the effect, of treating an appealing agency and an 
appealing claimant disparately to no definable end.  A plausible 
explanation is found in Russell v. Workmen's Compensation 
Appeal Board (Volkswagen of America), 550 A.2d 1364, 1365 (Pa. Commw. Ct. 
1988), where the substantial evidence test was held to apply to all reviews of 
administrative findings of fact.  The Pennsylvania court recognized an 
exception, 

where the burdened party is the only party to present 
evidence and does not prevail before the agency, the "substantial evidence" test 
falters.  If no 
evidence was presented to support the prevailing party, there is no evidence 
upon which to apply the "substantial evidence" test: i.e., it is impossible to find substantial evidence to 
support a position for which no evidence was introduced.  In such cases, 
therefore, the appropriate scope of review . . . is whether the agency 
erred as a matter of law or capriciously disregarded competent 
evidence. . . .

. . . At the very least the findings and 
conclusions of the fact-finder must have a rational basis in the evidence of 
record and demonstrate an appreciation and correct application of underlying 
principles of substantive law to that evidence. . . .

. . . In all matters, however, where both 
parties present evidence, the agency's determination will be reviewed under the 
"substantial evidence" test . . . .

Russell, 550 A.2d  at 1365-66 (quoting Jasper 
v. Workmen's Compensation Appeal Board, 445 A.2d 1212, 1213 (Pa. 
1982)).  The 
opinion also cites examples of holdings reflecting arbitrary or capricious 
agency action when only the burdened party presented evidence and did not 
prevail including situations where an agency willfully disregarded otherwise 
credible evidence or entered internally inconsistent findings of fact and 
conclusions of law.  

[¶22]   The distinction made by the Pennsylvania 
court is logical.  
When both parties present evidence and one seeks review of the factual 
basis for the agency decision, there is no identifiable justification to subject 
them to different standards of review.  However, when only the burdened party presents 
evidence and does not prevail, the question becomes whether the agency decision 
was rational and was arrived at properly because it clearly cannot be based on 
the evidence presented.  On this reasoning, we hold the substantial 
evidence test is the appropriate standard of review in appeals from  WAPA contested case 
proceedings when factual findings are involved and both parties submit 
evidence.  We 
further hold, when only the party with the burden of proof submits evidence in 
the contested case proceeding and that party does not ultimately prevail, the 
arbitrary or capricious standard governs the judicial review of that agency 
decision. 

[¶23]   Despite this holding, even if the 
factual findings are found to be supported by substantial evidence, the ultimate 
agency decision could still be found to be arbitrary or capricious for other 
reasons.  The 
arbitrary or capricious standard works as a "safety net" to catch agency action 
which prejudices a party's substantial rights or which may be contrary to the 
other WAPA review standards yet 
is not easily categorized or fit to any one particular standard.1  Section 16-3-114(c)(ii); Community Savings and Loan Association of College Station, 
Texas v. Vandygriff, 630 S.W.2d 457, 459 n.3 (Tex. App. 1982).  For example, the 
administrative record may be replete with evidence supporting the decision, and 
yet the agency may have willfully discounted credible evidence, refused to admit 
certain testimony or documentary exhibits, or failed to provide findings of fact 
or conclusions of law.  
This listing is demonstrative and not intended, by any means, as an 
inclusive catalog of all possible circumstances.  However, when both parties present evidence, 
the substantial evidence test should be utilized to review the soundness of the 
agency's factual findings. 

[¶24]   We also take this opportunity to make an 
additional clarification.  In the past, occasionally, but not 
consistently, we have recited the following substantial evidence standard:

"If, after 
examining the entire record, we find substantial evidence to support the 
agency's finding, we will not substitute our own judgment for that of the 
agency.  
Instead, we will uphold the agency's 
finding. . . . In addition, we examine only the evidence which favors the prevailing 
party, allowing every favorable inference, while omitting consideration of any 
conflicting evidence.  Matter of Injury to 
Carpenter, 736 P.2d 311, 312 (Wyo. 1987)."

            
To the same effect are Jaqua v. State ex rel. 
Wyoming Workers' Compensation Div., 873 P.2d 1219, 1220-21 (Wyo. 1994); Bearden v. State ex rel. Wyoming Workers' Compensation 
Div., 868 P.2d 268, 269 (Wyo. 1994) . . . .

[¶26]   When factual findings are challenged, we 
will affirm those findings if they are supported by substantial evidence.  

In contested cases conducted before administrative agencies, 
the deference that normally is accorded the findings of fact by a trial court is 
extended to the administrative agency, and we do not adjust the decision of the 
agency unless it is clearly contrary to the overwhelming weight of the evidence 
on record.  Mekss [v. Wyoming Girls' School, 
State of Wyoming, 813 P.2d 185 (Wyo. 1991)]; State ex 
rel. Wyoming Workers' Compensation Div. v. Brown, 805 P.2d 830 (Wyo. 
1991).  This is 
so because, in such an instance, the administrative body is the trier of fact 
and has the duty to weigh the evidence and determine the credibility of 
witnesses.  Gilmore v. Oil and Gas Conservation Comm'n, 642 P.2d 773 
(Wyo. 1982).

CONCLUSION

[¶36]   Affirmed.

FOOTNOTES

  
1(1) 
Constitutional right, power, privilege, or immunity; (2) in excess of statutory 
jurisdiction, authority, or limitations or lacking statutory right; (3) without 
observance of procedure required by law; or (4) unsupported by substantial 
evidence.  
Section 16-3-114(c)(ii). 

2

            
(c)  The Court's review pursuant to the provisions of this Section 
shall be limited to a determination whether or not: (1) The agency acted without 
or in excess of its powers; (2) the decision or other agency action was procured 
by fraud; (3) the decision or other agency action is in conformity with law; (4) 
the findings of facts in issue in a contested case are supported by substantial 
evidence; and (5) the decision or other agency action is arbitrary, capricious 
or characterized by abuse of discretion.  

1965 Wyo. Sess. Laws ch. 108, § 14(c).

  3Footnote 
one reads as follows:

Section 9-4-114(c), W.S.1977, 1979 Cum.Supp., 
provides:

(c) To the extent necessary to make a decision and 
when presented, the reviewing court shall decide all relevant questions of law, 
interpret constitutional and statutory provisions, and determine the meaning or 
applicability of the terms of an agency action.  In making the following determinations, the 
court shall review the whole record or those parts of it cited by a party and 
due account shall be taken of the rule of prejudicial error.  The reviewing court 
shall:

(i) Compel agency action unlawfully withheld or 
unreasonably delayed; and

(ii) Hold unlawful and set aside agency action, 
findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or 
otherwise not in accordance with law;

(B) Contrary to constitutional right, power, 
privilege or immunity;

(C) In excess of statutory jurisdiction, authority or 
limitations, or lacking statutory right;

(D) Without observance of procedure required by law; 
or

(E) Unsupported by substantial evidence in a case 
reviewed on the record of an agency hearing provided by statute.

Board 
of Trustees of School District No. 4, Big Horn County v. 
Colwell, 611 P.2d 427, 429 n.1 (Wyo. 1980)

4The notes were dated March 
17, 1998, through April 24, 1998, and May 13, 1998, through September 1, 
1998.