Opinion ID: 786733
Heading Depth: 3
Heading Rank: 1

Heading: The Right to an In-Person Hearing

Text: 17 The starting point is the Administrative Procedure Act (APA), which establishes a detailed set of procedures for formal agency adjudications. These procedures mirror the elements of a judicial trial and establish the proper method of conducting an oral evidentiary hearing. See 5 U.S.C. §§ 554(a), 556(d), 557. Agencies need only employ this set of formal adjudication procedures if there is an adjudication required by statute to be determined on the record after opportunity for an agency hearing. 5 U.S.C. § 554(a). Lower courts have explicitly held that a formal adjudication featuring an oral evidentiary hearing is required by the APA only when a statute explicitly calls for a hearing on the record. Chem. Waste Mgmt., Inc. v. EPA, 873 F.2d 1477, 1481-82 (D.C.Cir.1989); 1 Richard J. Pierce, Administrative Law § 8.2, at 536-39 (collecting cases) (4th ed.2002). The Supreme Court has also implied that formal adjudication procedures are only necessary when a statute uses the magic words on the record. Cf. United States v. Fla. E. Coast Ry., 410 U.S. 224, 237-38, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973) (holding that formal rulemaking procedures prescribed by 5 U.S.C. §§ 556, 557 are required only when a statute mandates that rules be made on the record); Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 548, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978) (ruling that courts cannot require an agency to use more formal rulemaking procedures than those required by statute); PBGC v. LTV Corp., 496 U.S. 633, 654-55, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990) (upholding an informal agency adjudication without an oral hearing when the statute did not require a hearing to be on the record). 18 The statute authorizing the imposition of penalties on skilled nursing facilities, such as Crestview, requires CMS to hold a hearing on the record. If skilled nursing facilities fail to meet an applicable requirement, the HHS Secretary may impose a civil money penalty in an amount not to exceed $10,000 for each day of noncompliance. 42 U.S.C. § 1395i-3(h)(2)(B)(ii). The provisions of section 1320a-7a of this title (other than subsections (a) and (b)) shall apply to a [penalty] ... in the same manner as such provisions apply to a penalty or proceeding under section 1320a-7a(a) of this title. Id. The referent section provides, 19 The Secretary shall not make a determination adverse to any person under subsection (a) or (b) of this section until the person has been given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is entitled to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person. 20 42 U.S.C. § 1320a-7a(c)(2) (emphasis added). The statute clearly includes the magic words that invoke the panoply of procedures described by the formal-adjudication provisions of the APA. 21 In conjunction with the use of the statutory language on the record, the regulations regarding CMS hearings strongly imply that an in-person, oral evidentiary hearing is generally required. Under the statutory authority to publish rules and regulations, see 42 U.S.C. § 1302(a), HHS has promulgated regulations concerning administrative hearings. The regulations establish procedures for reviewing initial determinations that CMS makes. 42 C.F.R. § 498.3(a)(1). [I]nitial determinations encompass: (1) a finding of noncompliance that results in the imposition of a remedy specified in § 488.406 of this chapter, id. at § 498.3(b)(13), and (2) [t]he level of noncompliance found by CMS in a [skilled nursing facility] or [nursing facility], but only if a successful challenge on this issue would affect ... the range of [penalty] amounts that CMS could collect. Id. at § 498.3(b)(14)(i); see also id. at § 488.406 (granting CMS authority to levy penalties). The regulations further state, Under the circumstances specified in § 431.153(g) and (h) of this chapter, [a nursing facility] has a right to a hearing before an ALJ, to request Board review of the hearing decision, and to seek judicial review of the Board's decision. Id. at § 498.5(k); see also id. at § 488.330(e)(3)(ii) (stating that the provisions of part 498 ... apply when the following providers, including skilled nursing facilities, request a hearing on ... certification of noncompliance leading to an enforcement remedy). 22 Subpart D of part 498 establishes the regulations for CMS hearings and strongly suggests that oral hearings are required. Only one regulation in this subpart actually uses the term oral hearing, but the statutory requirement that hearings be on the record implies that the term hearing, as used throughout this subpart of the regulations, refers to a formal adjudicatory hearing, which includes an in-person component. Section 498.66 states, If the affected party waives the right to appear and present evidence, the ALJ need not conduct an oral hearing, except during certain circumstances that are inapplicable here. Id. at § 498.66(b). This provision powerfully implies that if the affected party does not waive the right to present evidence, the ALJ must conduct an oral hearing. Other regulations lead to the same conclusion. They fix a time and place for the hearing and a method for changing the time and place. Id. at §§ 498.52, 498.53. They describe the conduct of the hearing. Id. at §§ 498.60(a) (The hearing is open to the parties and their representatives....); 498.60(b)(1) (The ALJ ... receives in evidence the testimony of witnesses and any documents that are relevant and material.); 498.60(b)(3) (The ALJ decides the order in which the evidence and the arguments of the parties are presented and the conduct of the hearing.). The regulations also contain procedures for the receipt of evidence, id. at § 498.61, and rules governing witness testimony. Id. at § 498.62. 23 HHS has created an internal procedure that provides an alternative to in-person, oral hearings. The HHS procedure reads, 24 An in-person hearing (i.e., a hearing at which witnesses are called and testify) is not the only vehicle for the [ALJ] to hear and decide the case. If, after giving the parties the opportunity to present their views, the judge determines that there are no genuine issues of material fact, the judge might decide the case based on the undisputed facts and the applicable law. If there are genuine issues of material fact which can be decided on the basis of documentary evidence, the judge might proceed without an in-person hearing. 25 Dep't of Health & Human Servs., Dep't Appeals Bd., Civil Remedies Div., Procedures, at 1, available at http:// www.hhs.gov/dab/civil/procedurescms.html (last visited Feb. 3, 2004). This rule constitutes an interpretive rule that is issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers. Shalala v. Guernsey Mem'l Hosp., 514 U.S. 87, 99, 115 S.Ct. 1232, 131 L.Ed.2d 106 (1995) (quotation omitted). Interpretive rules do not require notice and comment[;] ... they also do not have the force and effect of law and are not accorded that weight in the adjudicatory process. Id. We generally give substantial deference to an agency's interpretations of its own regulations. St. Francis Health Care Ctr. v. Shalala, 205 F.3d 937, 943 (6th Cir.2000). However, this deference is limited when an interpretation is plainly erroneous or inconsistent with the [published] regulation. Id. at 944 (quoting Harris County Hosp. Dist. v. Shalala, 64 F.3d 220, 221 (5th Cir.1995)). The reason for this limited deference is to prevent agencies from gaming the rulemaking provisions of the APA, see 5 U.S.C. § 553, by creating interpretive regulations that undercut regulations passed through notice-and-comment rulemaking. 26 Our deference to the HHS's interpretive rule, which is akin to the summary judgment standard contained in Federal Rule of Civil Procedure 56, depends on whether the interpretive rule can be reconciled with the CMS regulations that carry the force of law. On its face, the internal procedure appears inconsistent with the statutory and regulatory provisions because the procedure offers an alternative to an in-person hearing, yet the plain meaning of on the record in the statute and the implications of the regulations suggest that there is only one vehicle for an ALJ to decide a case: an oral evidentiary hearing. 27 Nonetheless, it would seem strange if disputes could not be decided without an oral hearing when there are no genuine issues of material fact. Given that federal district courts can decide cases as a matter of law without an oral hearing when it is clear there are no genuine material disputes to be resolved in a trial, it would be bizarre if administrative agencies, which are in many respects modeled after the federal courts and which indeed often have more informal proceedings than federal courts, could not follow a similar rule. See Fed.R.Civ.P. 56; 1 Richard J. Pierce, Administrative Law § 8.3, at 542 (Even when an agency is required by statute or by the Constitution to provide an oral evidentiary hearing, it need do so only if there exists a dispute concerning a material fact.). It may make as good, if not more, policy sense to have a standard for summary judgment in HHS administrative proceedings as it does to have one in federal court proceedings. See Puerto Rico Aqueduct & Sewer Auth. v. EPA, 35 F.3d 600, 605-07 (1st Cir.1994) (describing the structure and validity of administrative summary judgment and stating, summary judgment often makes especially good sense in an administrative forum, for, given the volume of matters coursing through an agency's hallways, efficiency is perhaps more central to an agency than to a court). Furthermore, the Supreme Court has upheld the use of summary procedures in other administrative contexts, although only when a party fails to convince an agency at the threshold that the agency should waive a rule or regulation that would otherwise prevent the party from adjudicating its claim. Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 621, 93 S.Ct. 2469, 37 L.Ed.2d 207 (1973); Fed. Power Comm'n v. Texaco, Inc., 377 U.S. 33, 39-45, 84 S.Ct. 1105, 12 L.Ed.2d 112 (1964). Therefore, HHS's interpretive rule allowing ALJs to grant summary judgment without an in-person hearing is valid. 28