Court Opinion

ID: 4317108
Source: CourtListenerOpinion
Date Created: 2018-10-01 15:22:33.11777+00
Date Added: 2024-06-11T14:45:03.003699
License: Public Domain

FILED
                                                                            Oct 01 2018, 9:12 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

      ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEES
      Peter J. Sacopulos                                         Curtis T. Hill, Jr.
      Sacopulos, Johnson & Sacopulos                             Attorney General of Indiana
      Terre Haute, Indiana                                       Patricia C. McMath
                                                                 Deputy Attorney General
                                                                 Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Joseph Baliga, DVM,                                        October 1, 2018
      Appellant-Petitioner,                                      Court of Appeals Case No.
                                                                 17A-MI-3009
              v.                                                 Appeal from the Madison Circuit
                                                                 Court
      Indiana Horse Racing                                       The Honorable Mark Dudley,
      Commission, Indiana Horse                                  Judge
      Racing Commission Staff,                                   Trial Court Cause No.
      Appellees-Respondents                                      48C06-1704-MI-307

      Vaidik, Chief Judge.

                                            Case Summary
[1]   Veterinarian Joseph Baliga was accused of giving a banned substance to a

      racehorse. He denies the accusation, but in a disciplinary proceeding before the

      Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018                           Page 1 of 14
      Indiana Horse Racing Commission (IHRC), IHRC staff moved to have him

      found in default and disciplined without a hearing on the merits. Dr. Baliga

      opposed the motion, but an administrative law judge granted it, and the IHRC

      affirmed.

[2]   Dr. Baliga then filed a petition for judicial review challenging the entry of

      default. The IHRC filed a motion to dismiss, arguing that its entry of default is

      not subject to judicial review. The trial court granted the IHRC’s motion, and

      Dr. Baliga appeals. We hold that the IHRC’s entry of default (1) can be

      reviewed and (2) was an abuse of discretion. We therefore direct the trial court

      to grant Dr. Baliga’s petition for judicial review and to remand this matter to

      the IHRC for a hearing on the merits.

                             Facts and Procedural History
[3]   Dr. Baliga specializes in the care and treatment of racehorses. He is licensed

      generally by the Indiana Board of Veterinary Medical Examiners and separately

      by the IHRC. In the fall of 2016, Dr. Baliga was working at the track at

      Hoosier Park in Anderson. On September 30, a security officer reported that he

      had seen Dr. Baliga give a banned substance to a horse. Under the IHRC’s

      regulations, found in Title 71 of the Indiana Administrative Code, this

      accusation exposed Dr. Baliga to two forms of disciplinary proceedings: (1)

      proceedings by IHRC judges at the track, who can impose a penalty of up to

      $5000 and a license suspension of up to one year, see 71 Ind. Admin. Code 10-2,

      and (2) proceedings by the IHRC itself, which can impose more serious

      Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018       Page 2 of 14
      sanctions—a penalty of up to $5000 per day or occurrence and a license

      suspension of more than one year (or a license revocation), see 71 I.A.C. 10-

      3. Both types of proceedings were initiated against Dr. Baliga.

[4]   First, on October 1, the IHRC judges at Hoosier Park imposed a “summary

      suspension” of Dr. Baliga’s IHRC license—a temporary suspension pending a

      disciplinary hearing before the judges. 71 I.A.C. 10-2-3; see also Ind. Code § 4-

      31-12-15; Ind. Code § 4-31-13-2. At Dr. Baliga’s request, the judges held a

      hearing on the summary suspension on October 31. Dr. Baliga was in

      attendance with his attorney. At the beginning of the hearing, an attorney for

      the IHRC explained:

              As a reminder, today’s hearing is not about the merits of the
              underlying case. The only question is whether Dr. Baliga should
              remain summarily suspended pending a final disciplinary hearing
              and a ruling.

                                             *       *        *        *

              Today’s hearing is not on the merits of the IHRC’s case against
              Baliga.

              Rather, it is only to consider whether it is appropriate for [Dr.
              Baliga] to remain suspended pending the hearing on any
              underlying charges.

              The merits hearing will come later. To that end it is
              inappropriate for the Judges to consider eyewitness testimony or
              evidence relating to any complaints that might later be filed.

      Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018         Page 3 of 14
Appellant’s App. Vol. II pp. 70-71. The executive director of the IHRC was

present at the hearing and was called as a witness by the IHRC attorney. He

testified that the IHRC was still evaluating whether to take “further action”

against Dr. Baliga and that the summary suspension should continue in the

meantime:

        Attorney:         And you understand that the reason we are here
                          today is to determine if it is appropriate for Dr.
                          Baliga to remain suspended, pending the final
                          hearing on the merits of the underlying case?

        Exec. Dir.: Yes, I do.

        Attorney:         Is the Commission continuing to consider the
                          underlying merits of this case?

        Exec. Dir.: Yes.

                                       *       *        *        *

        Attorney:         You indicated the Commission is continuing to
                          investigate and consider this matter. Once that is
                          complete, do you expect Commission Staff will
                          proceed with further action against Dr. Baliga?

        Exec. Dir.: We’ll evaluate everything at the end of the
                    investigation and make our decision from there.

        Attorney:         Do you believe it is appropriate for Dr. Baliga to
                          remain suspended pending the outcome of a hearing
                          on the merits of the case?

Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018            Page 4 of 14
              Exec. Dir.: Yes, I do.

      Id. at 75-76. Then, when Dr. Baliga attempted to testify about what happened

      on September 30, the IHRC’s attorney objected, again explaining that the

      hearing “is only about whether or not the Summary Suspension should stand”

      and that “[t]his is not the time to hash out the merits of the case” and “[n]ot the

      appropriate time to have this conversation.” Id. at 80, 87. In her closing

      argument, the IHRC’s attorney said, “Commission Staff respectfully requests

      that Dr. Baliga’s license remain suspended, pending a final disciplinary hearing

      and ruling.” Id. at 92. At the end of the hearing, the judges voted to continue

      the summary suspension “until the merits of the case are heard.” Id. at 94. The

      presiding judge added, “[W]e should hurry along. We should do what we can

      to get this case heard on the merits.” Id. The IHRC’s attorney responded,

      “Understood.” Id. The judges did not set any future hearings or deadlines, and

      that was the end of their involvement in this matter.

[5]   On November 10, ten days after that summary-suspension hearing at Hoosier

      Park, the executive director of the IHRC initiated the second disciplinary

      proceeding against Dr. Baliga. Specifically, he filed an “Administrative

      Complaint” with the IHRC pursuant to 71 I.A.C. 10-3-20. The executive

      director alleged a variety of rule violations and recommended a penalty,

      including a suspension of Dr. Baliga’s IHRC license and a substantial fine. The

      complaint also stated that Dr. Baliga had twenty days to make a written request

      for a hearing, pursuant to 71 I.A.C. 10-3-20(d) (“Not later than the twentieth

      day after the date on which the executive director delivers or sends the
      Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018        Page 5 of 14
      administrative complaint, the person charged may make a written request for a

      hearing or may remit the amount of the administrative penalty to the

      commission.”).

[6]   Shortly after receiving the administrative complaint, on November 14, Dr.

      Baliga filed an appeal of his summary suspension with the IHRC. However, he

      did not make a separate request for a hearing on the administrative complaint.

      On December 6—six days after Dr. Baliga’s deadline for making such a

      request—an IHRC attorney filed a Motion for Default against him in the

      administrative-complaint matter.1 The motion relied on 71 I.A.C. 10-3-20(d),

      which, in addition to requiring a written request for a hearing within twenty

      days, provides that failure to make such a request “results in a waiver of a right

      to a hearing on the administrative penalty as well as any right to judicial

      review.” Later the same day, the administrative law judge (ALJ) who had been

      appointed in the administrative-complaint proceeding sent the parties a

      proposed default order.

[7]   On December 12, Dr. Baliga filed a motion opposing the proposed default. In

      the motion, Dr. Baliga’s attorney took the blame for the failure to file a request

      for hearing, explaining that (1) he did not realize that the administrative-

      complaint proceeding was separate from the summary-suspension proceeding

      and (2) because Dr. Baliga was actively challenging the allegation in the

      1
       Dr. Baliga’s appeal of the summary suspension remained pending for two months but was dismissed after
      he was found in default in the administrative-complaint matter.

      Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018                         Page 6 of 14
       summary-suspension proceeding and had already been told that there would be

       a hearing on the merits, he believed that a further request for a hearing was

       unnecessary. The ALJ was not persuaded and, on December 16, issued an

       order recommending that Dr. Baliga be found in default. At Dr. Baliga’s

       request, the IHRC reviewed the matter. It affirmed and adopted the ALJ’s

       order in full, including the penalty sought by the executive director: a five-year

       suspension of Dr. Baliga’s IHRC license, a $20,000 fine, and a permanent ban

       from administering Lasix (a diuretic commonly given to racehorses) at Indiana

       race tracks.

[8]    Dr. Baliga then filed a petition for judicial review of the IHRC’s ruling. He

       asked the trial court to reverse the IHRC’s finding of default and to remand the

       matter to the agency for a hearing on the merits. The IHRC filed a motion to

       dismiss, arguing that the trial court could not review its entry of default. The

       trial court granted the IHRC’s motion and dismissed Dr. Baliga’s petition.

[9]    Dr. Baliga now appeals.

                                   Discussion and Decision
[10]   Dr. Baliga contends that the ALJ and the IHRC should not have found him in

       default and that the trial court erred by dismissing his petition for judicial

       review. The IHRC defends the dismissal, but on a different ground than the

       one it advanced in its motion to dismiss. In its motion to dismiss, the IHRC

       argued that Dr. Baliga had failed to exhaust his administrative remedies and

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018         Page 7 of 14
       that the trial court therefore lacked subject-matter jurisdiction. Appellant’s

       App. Vol. IV pp. 24-39. On appeal, however, the IHRC says nothing about

       jurisdiction or the exhaustion of administrative remedies. Instead, it asserts that

       the Administrative Orders and Procedures Act (AOPA), Ind. Code article 4-

       21.5, which governs agency adjudicative proceedings and judicial review of

       those proceedings, “does not give the reviewing court discretion to excuse a

       party’s default.” Appellees’ Br. p. 17. Insofar as the IHRC means that its entry

       of default cannot be challenged, we disagree.

[11]   The IHRC cites Indiana Code section 4-21.5-5-4(b)(2), which provides that “[a]

       person who . . . is in default under this article . . . has waived the person’s right

       to judicial review under this chapter.” To be sure, this statute bars judicial

       review of agency actions taken before or after an entry of default, at least where

       the entry of default goes unchallenged or is found to be proper. But the IHRC

       apparently reads this provision to mean that a person who is found in default at

       the agency level is barred from seeking judicial review of any of the agency’s

       actions, including the finding of default itself. In other words, the IHRC

       seems to take the position that an agency’s finding of default is non-reviewable.

       The IHRC does not cite any authority in support of this novel proposition, and

       we think it is incorrect. A court on judicial review is authorized to grant relief

               if it determines that a person seeking judicial relief has been
               prejudiced by an agency action that is: (1) arbitrary, capricious,
               an abuse of discretion, or otherwise not in accordance with law;
               (2) contrary to constitutional right, power, privilege, or
               immunity; (3) in excess of statutory jurisdiction, authority, or
               limitations, or short of statutory right; (4) without observance of
       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018           Page 8 of 14
               procedure required by law; or (5) unsupported by substantial
               evidence.

       Ind. Code § 4-21.5-5-14(d). An agency’s entry of default is certainly an “agency

       action,” and we see no reason why such an action should be immune from

       judicial review.

[12]   The IHRC also relies heavily on its own regulation, 71 I.A.C. 10-3-20(d), which

       provides in part that a person’s failure to request a hearing within twenty days

       of being served with an administrative complaint “results in a waiver of a right

       to a hearing on the administrative penalty as well as any right to judicial

       review.” (Emphasis added). In dismissing Dr. Baliga’s petition, the trial court

       concluded that this provision “is in accord with” Indiana Code section 4-21.5-3-

       24, the statute that governs the entry of default in agency proceedings.

       Appellant’s App. Vol. II p. 10. Again, we disagree.

[13]   Section 4-21.5-3-24 provides that if a party in an agency proceeding fails to “file

       a responsive pleading required by statute or rule” (as Dr. Baliga did here), the

       ALJ “may serve upon all parties written notice of a proposed default or

       dismissal order, including a statement of the grounds.” Ind. Code § 4-21.5-3-

       24(a). If the ALJ chooses to do so (as the ALJ in this case did), the party

       against whom the proposed default was issued may, within seven days, “file a

       written motion requesting that the proposed default order not be imposed and

       stating the grounds relied upon.” Id. at (b). If the party files such a motion (as

       Dr. Baliga did here), the ALJ “may either enter the order or refuse to enter the

       order.” Id. at (c). In short, Section 4-21.5-3-24 provides that a person who fails
       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018        Page 9 of 14
       to file a responsive pleading may, in the discretion of the ALJ, be found in

       default. 71 I.A.C. 10-3-20(d), on the other hand, goes further and requires a

       finding of default when a party fails to file a responsive pleading. In this

       respect, the regulation is invalid. “An agency may not by its rules and

       regulations add to or detract from the law as enacted, nor may it by rule extend

       its powers beyond those conferred upon it by law. Any regulation that conflicts

       with statutory law is wholly invalid.” Leone v. Comm’r, Ind. Bureau of Motor

       Vehicles, 933 N.E.2d 1244, 1250 (Ind. 2010) (quoting Lee Alan Bryant Health Care

       Facilities, Inc. v. Hamilton, 788 N.E.2d 495, 500 (Ind. Ct. App. 2003), aff’d on

       reh’g, 793 N.E.2d 229).

[14]   Having concluded that the IHRC’s entry of default is subject to judicial review,

       we now proceed with that review. To the extent that the trial court found the

       entry of default to be proper, we owe no deference to that determination.

       Instead, we “stand in the trial court’s shoes.” Ind. State Ethics Comm’n v.

       Sanchez, 18 N.E.3d 988, 991 (Ind. 2014); see also Filter Specialists, Inc. v. Brooks,

       906 N.E.2d 835, 844 (Ind. 2009) (“Appellate courts stand in the same position

       as that of the trial court when reviewing a decision of an administrative

       agency.”).

[15]   As set forth above, a court can set aside an agency action if it is

               (1) arbitrary, capricious, an abuse of discretion, or otherwise not
               in accordance with law; (2) contrary to constitutional right,
               power, privilege, or immunity; (3) in excess of statutory
               jurisdiction, authority, or limitations, or short of statutory right;

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018          Page 10 of 14
               (4) without observance of procedure required by law; or (5)
               unsupported by substantial evidence.

       I.C. § 4-21.5-5-14(d). In his brief, Dr. Baliga cites the “contrary to

       constitutional right, power, privilege, or immunity” provision, Appellant’s Br.

       p. 24, but he also emphasizes that the decision of the ALJ and the IHRC to find

       him in default was a discretionary one and argues that they abused that

       discretion, see, e.g., id. at 36; Reply Br. p. 13. A decision constitutes an abuse of

       discretion if it is clearly against the logic and effect of the facts and

       circumstances or the reasonable, probable, and actual deductions to be drawn

       therefrom. State v. Collier, 61 N.E.3d 265, 268 (Ind. 2016). We do not reach

       Dr. Baliga’s constitutional arguments, because, for several reasons, we agree

       with him that the entry of default in this matter was an abuse of discretion.

[16]   First, while it is true that Dr. Baliga did not file a direct response to the

       administrative complaint, it is also true that the IHRC was well aware that Dr.

       Baliga denied the accusation underlying the complaint. The same accusation

       formed the basis for the summary suspension by the Hoosier Park judges, and

       Dr. Baliga, with the knowledge of the IHRC and its executive director, was

       actively challenging that suspension both before and after the initiation of the

       administrative-complaint matter. Second, an IHRC attorney told Dr. Baliga at

       the October 31 hearing that “[t]he merits hearing will come later” and objected

       when Dr. Baliga tried to give his side of the story. And third, there is no

       evidence that the IHRC would have suffered any prejudice if the ALJ had

       declined to find Dr. Baliga in default. IHRC staff filed their motion for default

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018         Page 11 of 14
       only six days after the deadline for Dr. Baliga to request a hearing, and all the

       relevant events transpired over the course of just thirty-six days—from the filing

       of the administrative complaint on November 10 through the ALJ’s entry of

       default on December 16. All along, the IHRC was on notice that Dr. Baliga

       denied the accusation against him.

[17]   All of this leads to a more fundamental reason why the ALJ and the IHRC

       should have allowed this matter to proceed to a hearing on the merits. 71

       I.A.C. 10-2, titled “Proceedings by Judges,” envisions a disciplinary proceeding

       initiated by and conducted by on-site judges, without the involvement of the

       IHRC itself or its executive director. See 71 I.A.C. 10-2-2(a) (“On their own

       motion or on receipt of a complaint from an official or other person regarding

       the actions of a licensee, the judges may conduct an inquiry and disciplinary

       hearing regarding a licensee’s actions.”). 71 I.A.C. 10-3, titled “Proceedings by

       the Commission,” envisions a separate disciplinary proceeding initiated by the

       IHRC or its executive director. See 71 I.A.C. 10-3-1(b); 71 I.A.C. 10-3-20. In

       this case, however, the seemingly clear line between these two types of

       proceedings was significantly blurred from the very beginning.

[18]   In their October 1 ruling imposing the summary suspension, the Hoosier Park

       judges, instead of setting a date for a disciplinary hearing under 71 I.A.C. 10-2,

       stated that the matter “will be referred to the Executive Director of the Indiana

       Horse Racing Commission for further action.” Appellant’s App. Vol. II p. 23.

       The ruling did not say whether this “further action” would occur in the Hoosier

       Park proceeding under 71 I.A.C. 10-2—regulations that do not contemplate a

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018      Page 12 of 14
       role for the executive director—or in a separate IHRC proceeding under 71

       I.A.C. 10-3. This is where the confusion started. Then, when the Hoosier Park

       judges held a hearing on the summary suspension, the IHRC’s attorney called

       the IHRC’s executive director as a witness and asked him how the IHRC was

       planning to proceed. The executive director testified that the IHRC was still

       investigating and considering whether to take further action. Of course, under

       71 I.A.C. 10-2, on-site judges can take disciplinary action regardless of whether

       the IHRC itself takes action, so this testimony served only to confuse matters

       further. Finally, at the end of the hearing, the Hoosier Park judges did not

       schedule a hearing on the merits of the accusation against Dr. Baliga. Rather,

       the chief judge said that “we should hurry along” and “[w]e should do what we

       can to get this case heard on the merits,” and the IHRC’s attorney said that she

       “[u]nderstood.” In other words, the judges left the ball in the IHRC’s court.

[19]   Taken together, these events created the distinct impression that the Hoosier

       Park disciplinary proceeding and any IHRC disciplinary proceeding would, for

       all intents and purposes, be consolidated. Certainly, better practice would have

       been for Dr. Baliga and his attorney to submit a written request for a hearing

       after receiving the administrative complaint, even if they thought doing so

       would be redundant. But they had already been told that “[t]he merits hearing

       will come later,” and they were told that at a hearing where IHRC action was

       talked about as if it would simply be a continuation of the Hoosier Park

       proceeding. As such, they should not be faulted—or defaulted—for thinking

       that another hearing request was unnecessary.

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018    Page 13 of 14
[20]   Under these circumstances, we readily conclude that the ALJ and the IHRC

       abused their discretion by finding Dr. Baliga in default. Therefore, we reverse

       the dismissal of Dr. Baliga’s petition for judicial review and direct the trial court

       to grant the petition and to remand this matter to the IHRC for a hearing on the

       merits.

[21]   Reversed and remanded.

       Pyle, J., and Barnes, Sr. J., concur.

       Court of Appeals of Indiana | Opinion 17A-MI-3009 | October 1, 2018       Page 14 of 14