Court Opinion

ID: 9854233
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:03:42.306857+00
Date Added: 2024-06-11T09:22:59.374519
License: Public Domain

JON E WILCOX, J.
¶ 116. {dissenting). I do not join the majority opinion because I disagree that the residuum rule is applicable to this case. The majority's *162application of the residuum rule is erroneous for several reasons. First, under the clear holding of Richardson v. Perales, 402 U.S. 389 (1971), the residuum rule — which posits that an administrative agency cannot base factual findings on uncorroborated hearsay — does not apply to reliable, probative, documentary evidence (particularly standard medical reports) in administrative proceedings. Further, applying the residuum rule to prohibit agencies from considering uncorroborated documentary evidence regardless of its reliability and probative value conflicts with the relaxed evidentiary standards in administrative proceedings and this court's deferential standard of review. Finally, applying the residuum rule in such a fashion will be harmful to claimants in future cases and is inconsistent with the reality of administrative proceedings.
¶ 117. The pertinent question before the court is whether uncorroborated hearsay in the form of medical reports that are contradicted by live testimony at an administrative hearing can ever constitute substantial evidence supporting an agency's factual findings. The substantial evidence rule is set ■ forth in Wis. Stat. § 227.57(6) (2001-02),1 which prescribes the standard to be used when reviewing agency decisions: "The court shall ... set aside agency action or remand the case to the agency if it finds that the agency's action depends upon any finding of fact that is not supported by substantial evidence."
¶ 118. Our case law has defined substantial evidence as "such relevant evidence as a reasonable mind would accept as adequate to support a conclusion." Sea View Estates Beach Club, Inc. v. DOR, 223 Wis. 2d 138, *163148, 588 N.W.2d 667 (Ct. App. 1998) (citing Sterlingworth Condo. Ass'n, Inc. v. DNR, 205 Wis. 2d 710, 727, 556 N.W.2d 791 (Ct. App. 1996)).2 This definition of substantial evidence is consistent with that employed in Perales: "Substantial evidence" is " 'more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Perales, 402 U.S. at 401 (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).3 It is noteworthy that the definition of substantial evidence focuses on the relevancy of the evidence and how a reasonable mind might view its probative value.
¶ 119. The majority unnecessarily adds to this definition, applying the legal residuum rule that was set forth by this court in Folding Furniture Works, Inc. v. Wisconsin Labor Relations Bd., 232 Wis. 170, 188-89, 285 N.W 851 (1939). Majority op., ¶¶ 53-54, 81. As the majority correctly notes, id., ¶ 54, the court in Folding Furniture, 232 Wis. at 189, adopted the legal residuum rule, which provides that uncorroborated hearsay cannot constitute substantial evidence, from the United States Supreme Court's decision in Consolidated Edison, 305 U.S. at 235.
¶ 120. However, the United States Supreme Court subsequently repudiated this interpretation of Consolidated Edison in Perales, concluding:
The contrast the Chief Justice was drawing [in Consolidated Edison], at the very page cited, was not with material that would be deemed formally inadmissible in *164judicial proceedings but with material "without a basis in evidence having rational probative force." This was not a blanket rejection by the Court of administrative reliance on hearsay irrespective of reliability and probative value. The opposite was the case.
Perales, 402 U.S. at 407-08 (emphasis added). Thus, Perales held that uncorroborated hearsay could constitute substantial evidence in administrative proceedings if the evidence possessed sufficient indicia of reliability and probative value. Id. at 402. "The Supreme Court has explained that hearsay has not been rejected for consideration at administrative hearings, but only hearsay without a basis in evidence having rational probative value." Leitman v. McAusland, 934 F.2d 46, 51 (4th Cir. 1991).
¶ 121. Yet, the majority misconstrues Perales, arguing that the holding in Perales was unique to the context of the Social Security Administration, majority op., ¶¶ 62, 65-66, and that Perales is distinguishable from the present case because there supposedly was an expert that corroborated the medical reports at issue in Perales. Id., ¶ 67. The majority is simply wrong on both counts.
¶ 122. The issue in Perales was "whether physicians' written reports of medical examinations they have made of a disability claimant may constitute 'substantial evidence' supportive of a finding of nondis-ability . . . when the claimant objects to the admissibility of those reports and when the only live testimony is presented by his side and is contrary to the reports." Perales, 402 U.S. at 390 (emphasis added). As the Perales court stated: "The issue revolves, however, around a system which produces a mass of medical evidence in report form. May material of that kind ever be 'substantial evidence' when it stands alone and is *165opposed by live medical evidence and the client's own contrary personal testimony." Id. at 399 (emphasis added).
¶ 123. While the hearing examiner in Perales, 402 U.S. at 396 did call an independent medical advisor as a witness, this witness merely reviewed the medical reports at issue and summarized their contents, testifying that "the consensus of the various medical reports was that Perales had a mild low-back syndrome of musculo-ligamentous origin." There is nothing in the Perales opinion to suggest, as the majority does, that the independent medical advisor rendered a separate opinion agreeing with the substance of the medical reports. Quite the contrary, the Court twice referred to the medical reports as standing alone and being contradicted by the live testimony. Id. at 390, 399. Indeed, the precise holding of Perales was as follows:
[A] written report by a licensed physician who has examined the claimant and who sets forth in his report his medical findings in his areas of competence may be received as evidence in a disability hearing and, despite its hearsay character and an absence of cross-examination, and despite the presence of opposing direct medical testimony and testimony by the claimant himself, may constitute substantial evidence supportive of a finding by the hearing examiner adverse to the claimant, when the claimant has not exercised his right to subpoena the reporting physician and thereby provide himself with the opportunity for cross-examination of the physician.
Id. at 402.
¶ 124. In addition, contrary to the majority's argument, the rationale oí Perales focused on the fact that the medical reports at issue were reliable and probative because they were standard reports that were routinely *166utilized in administrative proceedings and the physicians who authored the reports had personally examined the claimant. Id. at 402-06. Therefore, the express language of Perales and its rationale refute the majority's attempts to sidestep the importance of that decision.
¶ 125. Rather than being a decision peculiar to the social security context, Perales has been recognized by other courts as "the leading recent case dealing with the question of 'substantial evidence' in administrative decisionmaking[.]" Unemployment Comp. Bd. of Review v. Ceja, 427 A.2d 631, 639 (Pa. 1981) (emphasis added).4 Numerous other courts have applied the Perales holding beyond the context of social security hearings to an assortment of administrative proceedings. See, e.g., Leitman, 934 F.2d at 48, 51 (decision of Defense Logistics Agency that debarred plaintiff from purchasing government property under the Federal Acquisition Regulations); Bell Helicopter Int'l, Inc. v. Jacobs, 746 F.2d 1342, 1343-44 (8th Cir. 1984) (decision of Benefits Review Board under the Longshoremen's and Harbor Workers' Compensation Act); Calhoun v. Bailar, 626 F.2d 145, 146-47, 149 (9th Cir. 1980) (discharge of postal employee); Johnson v. United States, 628 F.2d 187, 188, 190 (D.C. Cir. 1980) (decision of the United States Civil Service Commission removing plaintiff from his position as a special agent in the Bureau of Alcohol, Tobacco, and Firearms); Sch. Bd. of Broward Co. v. Dep't of Health, Educ. and Welfare, 525 F.2d 900, *167903-04, 906 (5th Cir. 1976) (decision of Commissioner of Education that school board was not eligible for federal aid).
¶ 126. These decisions appropriately recognize that in the Perales decision:
the Supreme Court ... sanctioned the use of written reports of licensed physicians in administrative hearings, despite the hearsay character of the reports and the absence of opportunity for cross-examination.... Such hearsay evidence alone may therefore support an agency determination.
Bell Helicopter, 746 F.2d at 1344 (citations omitted). Thus, properly interpreted, Perales represents a landmark decision that altered the standards as to what constitutes substantial evidence in administrative proceedings:
It is undisputed that an adjudicative official at an administrative hearing can consider hearsay. It is also clear that hearsay alone may not be sufficient as a substantial basis for a decision. The Supreme Court has explained that hearsay has not been rejected for consideration at administrative hearings, but only hearsay without a basis in evidence having rational probative value.
Leitman, 934 F.2d at 51 (citations omitted).
¶ 127. Therefore, the significance of Perales lies not in anything unique to the Social Security Administration, but rather in its recognition that "it is not the hearsay nature per se of the proffered evidence that is significant, it is its probative value, reliability and the fairness of its use that are determinative." Calhoun, 626 F.2d at 148. In other words, Perales "rejected a rigid rule and held that the proffered hearsay evidence could constitute substantial evidence. In doing so, the Court *168explained that there could be no blanket rejection of administrative reliance on hearsay evidence irrespective of reliability and probative value." Id. at 149. In essence, Perales appropriately recognized that reasonable fact-finders could rely on uncorroborated hearsay that is sufficiently reliable and probative when making factual findings.
¶ 128. As such, contrary to the majority's assertion, majority op., ¶ 64, Perales did more than simply cast doubt on the legitimacy of the residuum rule. Courts applying the substantial evidence rule in light of Perales have recognized that "[a] residuum of corroborating evidence of the type admissible in a jury trial is no longer required." Bell Helicopter, 746 F.2d at 1344. In the aftermath oí Perales, "[the residuum] rule no longer controls. We have rejected a per se approach that brands evidence as insubstantial solely because it bears the hearsay label." Johnson, 628 F.2d at 190.
¶ 129. In light of the explicit language of Perales and its subsequent application by other courts, I would conclude that the holding of Perales is applicable to the case at bar.5 The holding of Perales, which focuses on the reliability and probative force of hearsay evidence, is much more congruent with Wisconsin's statutory framework for administrative proceedings than the residuum rule that the majority applies.
*169¶ 130. Wisconsin Stat. § 227.45(1), governing administrative procedure, provides:
Except as provided in ss. 19.52(3) and 901.05, an agency or hearing examiner shall not be bound by common law or statutory rules of evidence. The agency or hearing examiner shall admit all testimony having reasonable probative value, but shall exclude immaterial, irrelevant or unduly repetitious testimony or evidence that is admissible under s. 901.05.... Basic principles of relevancy, materiality and probative force shall govern the proof of all questions of fact.
(Emphasis added).
¶ 131. Importantly, the statute provides that an agency shall not be bound by formal rules of evidence and that the proof of facts is governed by basic principles of relevancy and probative force. This statute represents a legislative determination to relax the rules of evidence in administrative proceedings. Wal-Mart Stores, Inc. v. LIRC, 2000 WI App 272, ¶ 20 n.8, 240 Wis. 2d 209, 621 N.W.2d 633; Pieper Elec., Inc. v. LIRC, 118 Wis. 2d 92, 97, 346 N.W.2d 464 (Ct. App. 1984). In addition, Wis. Admin. Code § ETF 11.06(1) (Jan., 2004), which sets forth the evidentiary rules to be used at administrative hearings, provides: "Rules of privilege recognized by law shall be given effect. However, common law or statutory rules of evidence do not apply. The hearing examiner shall admit all testimony having a reasonable probative value. The hearing examiner shall exclude from the record irrelevant, immaterial, or unduly repetitious testimony." Contrary to the residuum rule, Perales is consistent with Wis. Stat. § 227.45(1) and Wis. Admin. Code § ETF 11.06(1) because it recognizes that reliable and probative uncorroborated hearsay may constitute substantial evidence supporting an agency's factual finding.
*170¶ 132. The residuum rule is incongruent with § 227.45(1) for several reasons. First, by prohibiting an agency from considering uncorroborated hearsay, the residuum rule forces an agency to follow formal rules of evidence. An administrative agency operating under the residuum rule must make two determinations: 1) whether the evidence is hearsay and 2) whether the evidence is corroborated. The first of these inquiries is very problematic in light of the statutory framework. "Hearsay" is defined by the rules of evidence as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Wis. Stat. § 908.01(3).
¶ 133. Thus, at the outset, when operating under the residuum rule, it is necessary to turn to the rules of evidence to determine whether a particular piece of evidence constitutes hearsay. "Evidence is ’hearsay’ only if all elements of the definition are satisfied." 7 Daniel D. Blinka, Wisconsin Practice: Wisconsin Evidence § 801.1, at 521 (2d ed. 2001) (emphasis added). That is, to constitute hearsay under the statutory definition, there must be: 1) a declarant; 2) who offers a statement; 3) that is made out of court; and 4) is offered for the truth of the matter asserted. If a piece of evidence fails to meet any one element, then it is not hearsay. Id., § 801.1, at 522. Specifically, ”[o]ut of court statements may be offered to prove innumerable relevant propositions apart from the truth of the matter (explicitly) asserted." Id., § 801.3, at 536. This recognition is extremely important because ”[i]f the statement is being offered to prove anything other than the truth of the matter asserted, it is not 'hearsay.'" Id., § 801.3, at 534.
¶ 134. In addition to having to consider this technical definition of hearsay, an agency operating under *171the residuum rule will have to contend with the fact that Wis. Stat. § 908.01(4) sets forth two categorical exemptions from the hearsay rule. Section 908.01(4) provides that prior statements of witnesses and admissions by party opponents are not hearsay. Each of these exemptions, in turn, has numerous technical elements that must be satisfied.6 Therefore, an agency operating under the residuum rule must necessarily violate both the express language of § 227.45(1) and the spirit of relaxed evidentiary standards in administrative proceedings because it must make technical evidentiary determinations in order to decide whether an item of evidence is hearsay.
¶ 135. Furthermore, the residuum rule is inconsistent with that part of § 227.45(1) which provides that "[b]asic principles of relevancy, materiality and probative force shall govern the proof of all questions of fact" because it fails to take into account that some uncorroborated hearsay is relevant and probative. The residuum rule represents a classic case of evaluating form over substance. The residuum rule fallaciously assumes *172that all hearsay, including all documentary evidence, is inherently unreliable and applies a categorical bar to the consideration of uncorroborated hearsay, rather than allowing for a case-by-case analysis of the actual reliability and probative value of individual pieces of evidence. The residuum rule fails to recognize that corroboration does not equal reliability and that some forms of hearsay may be reliable and probative despite their lack of corroboration.
¶ 136. In sum, the inherent problem with the residuum rule is as follows:
[It] fails to distinguish between reliable and unreliable hearsay, thus hampering the administrative decision-making process; while it equally fails to thoroughly protect due process rights, because unobjected to hearsay, no matter how unreliable, if corroborated, no matter how slight the legal evidence, may provide the substantial evidence needed to support an administrative finding. Corroboration in and of itself is not dis-positive of the issue of reliability. If available, corroboration may be a factor in determining reliability, but corroboration or the lack thereof neither ensures nor precludes reliability. The standard is, therefore, at the same time too rigid and too indefinite.
Ceja, 427 A.2d at 638.
¶ 137. It is simply inconsistent with § 227.45(1) to argue that all uncorroborated hearsay, no matter what its relevance or probative value, is categorically insufficient to allow a reasonable mind to base a factual conclusion upon it. "Any evidence, whether corroborated or not, if relevant and reliable, should be capable of supporting a factual finding." Ceja, 427 A.2d at 643.7
*173¶ 138. The Perales decision allows uncorroborated hearsay to constitute substantial evidence if it bears sufficient indicia to "assure underlying reliability and probative value." Perales, 402 U.S. at 402. This standard for substantial evidence, contrary to the residuum rule, comports with the prescription in § 227.45(1) that "[b]asic principles of relevancy, materi*174ality and probative force shall govern the proof of all questions of fact" in administrative proceedings.
¶ 139. While the majority argues that without corroboration, hearsay is categorically not probative, majority op., ¶¶ 89-91, it also recognizes that hearsay is admissible in administrative proceedings. Id., ¶¶ 49-51, 86. These two conclusions represent a misunderstanding of the requirements of admissibility in Wisconsin and the relation between probative value and relevance. Wisconsin Stat. § 904.02 provides that "[a]ll relevant evidence is admissible .... Evidence which is not relevant is not admissible." Wisconsin Stat. § 904.01, in turn, defines "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." "Relevance under the Wisconsin rules, then, conflates the probative value of the evidence (the link between the evidence and the proposition to be proven) and the question whether the substantive law regards this proposition as one "of consequence[.]" 7 Daniel D. Blinka, Wisconsin Practice: Wisconsin Evidence § 401.1, at 81 (2d ed. 2001).8 "Only where the evidence lacks any probative value should it be excluded as 'irrelevant.1" Id., § 401.102, at 87. "[T]he probative value of the evidence ... is a function of its relevance under § 904.01." Id., § 403.1, at 113. "Probative value, then, is the product of relevance and an assessment of what the evidence adds to the case." Id., § 403.1, at 114.
*175¶ 140. As such, evidence must have some probative value to be admitted in the first instance. This is explicitly recognized in § 227.45(1), which provides that "[t]he agency or hearing examiner shall admit all testimony having reasonable probative value . .. ." Once evidence is properly admitted, it necessarily contains some probative value. Thus, it is entirely incorrect to posit that uncorroborated hearsay, as a category, lacks any probative value once properly admitted.
¶ 141. However, this does not mean that simply because evidence has sufficient probative value to be admitted, it automatically constitutes "substantial evidence." See Calhoun, 626 F.2d at 150 ("[H]earsay admitted without objection is ordinarily given its normal probative effect."). Rather, the definition of substantial evidence requires an evaluation of how much probative value a given piece of evidence possesses. See Johnson, 628 F.2d at 190-91 (noting that the Perales rule calls for an evaluation of "the weight each item of hearsay should receive according to the item's truthfulness, reasonableness, and credibility"). In other words, a given piece of evidence constitutes substantial evidence if it possesses a degree of probative value sufficient to allow "a reasonable mind [to] accept [it] as adequate to support a conclusion." Sea View Estates Beach Club, 223 Wis. 2d at 148. See also Gray v. Adduci, 532 N.E.2d 1268, 1269 (N.Y. 1988) ("The quantum of evidence before the Administrative Law Judge was substantial since a reasonable mind could accept the report as 'adequate to support a conclusion or ultimate fact.'") (quoted source omitted); Black's Law Dictionary 1442 (7th ed. 1999) (The "substantial-evidence rule" is "[t]he principle that a reviewing court should uphold an administrative body's ruling if it is supported by evidence on which the administrative body could reason*176ably base its decision."). Under the residuum rule, an agency is never allowed to consider and weigh the probative value or reliability of a given piece of uncorroborated hearsay.
¶ 142. In addition, the notion that all forms of hearsay are intrinsically unreliable is flawed because it fails to account for the fact that hearsay subject to a recognized exception is inherently reliable. While the majority states that "[hjearsay that is subject to an exception is still hearsay," majority op., ¶ 89, this observation misses the point. Each hearsay exception under the rules of evidence "represents a determination of categorical reliability; that is, hearsay falling within any one of the rules carries with it guarantees of trustworthiness and reliability comparable to in-court testimony." 7 Daniel D. Blinka, Wisconsin Practice: Wisconsin Evidence § 801.1, at 523 (2d ed. 2001). See also Ceja, 427 A.2d at 640-41 ("Once evidence is admitted under a recognized exception.. . the evidence is given full probative weight."). By placing an absolute bar on the consideration of uncorroborated hearsay, the majority ignores the fact that certain types of hearsay are categorically considered reliable and trustworthy, despite lack of corroboration.
¶ 143. In addition, the Perales, rule, "which requires administrative consideration of probative value and reliability in the first instance comports with.. . the limited review of administrative actions." Calhoun, 626 F.2d at 149-50. Regarding agency factual findings, the legislature has provided that "the court shall not substitute its judgment for that of the agency as to the weight of the evidence on any disputed finding of fact." Wis. Stat. § 227.57(6). By focusing on whether an item of evidence is sufficiently reliable and probative for a reasonable fact-finder to form a conclusion based on the *177evidence, the Perales decision is in harmony with this deferential standard of review for factual findings that the legislature has provided.9 In contrast, the majority has essentially substituted its judgment for all agencies by concluding that uncorroborated hearsay, no matter how reliable or probative, can never support a factual finding.
¶ 144. In addition to being inconsistent with the statutory framework for administrative hearings, application of the residuum rule to reliable, probative, documentary evidence is substantially unfair to claimants in administrative proceedings. Because the residuum rule requires corroboration of hearsay in all cases, regardless of the probative value or reliability of a given piece of evidence, "the effect of the residuum rule is to create an evidentiary standard actually stricter than that adhered to in jury trials." Ceja, 427 A.2d at 636. In contrast, the Perales decision allows for "the full development of the record." Calhoun, 626 F.2d at 150.
¶ 145. As the residuum rule imposes an eviden-tiary standard stricter than in jury trials, it does not afford "protection for the parties[,]" majority op., ¶ 90, in administrative proceedings. Quite the contrary, the residuum rule makes it more difficult for parties, particularly claimants, to prove their case before an administrative body. The majority recognizes that many claimants in administrative proceedings are unrepre*178sented. Majority op., ¶ 51. Yet, by subjecting these unrepresented claimants to the requirements of the residuum rule, the majority forces them to operate under the intricacies of the hearsay rule and its exemptions. The majority also recognizes that many claimants cannot afford expert witnesses and need to be able to present their position as simply and inexpensively as possible at a hearing. Majority op., ¶¶ 102-03. However, it fails to recognize that the residuum rule cuts both ways and applies to all parties in administrative proceedings.
¶ 146. The majority implies that the residuum rule may not be applicable if harmful to a claimant by stating that "[c]orroboration of hearsay is not always required in administrative proceedings." Majority op., ¶ 104. However, the majority offers absolutely no authority for this inexplicable conclusion, which flies in the face of the remainder of the opinion. The majority theorizes that parties may stipulate to the facts or agree that an agency may base its findings of fact on uncorroborated hearsay. Id. One has to wonder why a defendant in an administrative proceeding, which usually will possess greater resources and the ability to call experts, would ever stipulate to facts if the claimant is unable to produce live testimony.
¶ 147. In addition, the majority's suggestion that the parties can somehow agree that an agency can base its findings on hearsay runs contrary to the agency's own rule, which purportedly prohibits the agency from basing factual findings upon hearsay. Wis. Stat. § ETF 11.12(2)(b) (Jan., 2004). The majority has cited no case or principle of law that stands for the proposition that parties can agree to have an agency violate its own rules in rendering decisions. In sum, while the majority's comments in ¶¶ 103-04 imply that the residuum rule *179does not apply when its operation would be adverse to claimants, the reality is that no case stands for this proposition and that the residuum rule will apply equally to all claimants and defendants.
¶ 148. Furthermore, the rule the majority applies today extends well beyond claims for income continuation insurance benefits and imposes an artificially high evidentiary bar in a variety of administrative proceedings. While the result of the majority's decision may be beneficial to the claimant in the present case, the rule the majority adopts will harm countless claimants in this and other contexts because it imposes an eviden-tiary standard stricter than that in jury trials. To add insult to injury, the majority imposes a standard of corroboration that is stricter than that which is required during criminal trials. Id., ¶¶ 92-101.
¶ 149. If the majority were truly concerned with "fairness," id., ¶ 82, it would recognize that the residuum rule, which requires an understanding of the technicalities and nuances of evidence law, is inherently unfair to unrepresented claimants. In contrast, the Perales decision, which allows parties to submit all of the evidence they consider relevant to the fact-finder for consideration, and then requires the fact-finder to evaluate each piece of evidence individually for reliability and probative value, is both consistent with principles of equity and the relaxed evidentiary standards that are, by statute, supposed to govern administrative proceedings.
¶ 150. Finally, the majority's application of the residuum rule to standard medical reports ignores the reality of administrative proceedings. The majority implies that medical reports prepared in connection with potential litigation are unreliable. Majority op., ¶¶ 69-71, 86. However, the reports at issue in Perales, *180402 U.S. at 402-04, were also prepared by experts retained by the government in connection with litigation. In determining that the medical reports before it constituted substantial evidence, the Supreme Court in Perales examined numerous factors, 402 U.S. at 402-06, several of which are applicable in the present case, stressing that "[t]hese are routine, standard, and unbiased medical reports by physician specialists concerning a subject whom they had seen." Perales, 402 U.S at 404. Thus, Perales "laid great stress on the fact that the reports were independent medical reports routinely prepared and submitted in disability cases." Calhoun, 626 F.2d at 149.
¶ 151. As such, Perales recognized the reality that administrative agencies routinely rely on reports prepared by experts who have examined claimants, and that such reports are probative and reliable. The Per-ales court "specially noted, first, that the fact that the government calls in and remunerates consultative physicians does not undermine the independence of those physicians' opinions or indicate bias in favor of the [agency] . . . ." Allen v. Heckler, 749 F.2d 577, 580 (9th Cir. 1984).
¶ 152. Perales correctly recognized that documentary evidence, especially medical reports, are routinely utilized in administrative proceedings. Indeed, the Wisconsin Legislature has acknowledged the importance of such evidence in the context of the Workers' Compensation Law by providing that certified reports of medical institutions and practitioners who have examined a patient constitute prima facie evidence as to the matters contained in the reports. Wis. Stat. § 102.17(l)(d). Administrative proceedings are designed to allow for the efficient and fair resolution of claims without the formalities and intricate rules of a full judicial proceed*181ing before a court. By requiring live testimony in every case and preventing agencies from considering evidence that is commonly utilized by parties, the majority ignores this reality and frustrates the purpose of administrative hearings.
¶ 153. For the aforementioned reasons, I respectfully dissent.
¶ 154. I am authorized to state that Justice DAVID T. PROSSER, JR. joins this opinion.

 All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

 See also ABKA Ltd. P'ship v. DNR, 2001 WI App 223, ¶ 18, 247 Wis. 2d 793, 635 N.W.2d 168 (accord).

 See also American Grain Trimmers, Inc. v. Office of Workers' Comp., 181 F.3d 810, 817 (7th Cir. 1999); Leitman v. McAusland, 934 F.2d 46, 51 (4th Cir. 1991); Johnson v. United States, 628 F.2d 187, 189 (D.C. Cir. 1980).

 The lead opinion in Unemployment Comp. Bd. of Review v. Ceja, 427 A.2d 631 (Pa. 1981), is cited throughout this dissent for the persuasiveness of its analysis of the residuum rule, not the weight of its authority.

 Other state courts follow a similar rule, focusing on the reliability and probative value of the evidence, rather than whether it falls under the technical definition of hearsay. See, e.g., Covell v. Dep't Soc. Servs., 791 N.E.2d 877, 892 (Mass. 2003) ("Substantial evidence may be based on hearsay alone if that hearsay has 'indicia of reliability'") (quoted source omitted). Gray v. Adduci, 532 N.E.2d 1268, 1269 (N.Y. 1988) (hearsay can support an administrative determination if it possesses sufficient reliability and probative value).

 Several published administrative decisions indicate that administrative agencies must routinely grapple with these technical evidentiary distinctions in proceedings that by statute are supposedly subject to relaxed evidentiary standards. See, e.g., Wicke v. Merrill Area Pub. Sch., No. 2002-014249 (May 7, 2004) (available at http://www.dwd.state.wi.us/lirc/wcdecsns/ 812.htm) (applying party opponent and prior inconsistent statement hearsay exemptions); Hunter v. Racine Unified Sch. Dist., No. 01605072RC (Oct. 3, 2001) (available at http://www.dwd .state.wi.us/lirc/ucdecsns/1204.htm) (applying hearsay definition and business records exception to hearsay rule); Albrecht v. Life Style Staffing of Appleton, No. 98401933AP (Oct. 5, 1998) (available at http://www.dwd.state.wi.us/lirc/ucdecsns/811.htm) (applying hearsay definition and determining whether evidence at issue fell within business records exception to hearsay rule).

 Likewise, I would conclude that Wis. Admin. Code § ETF 11.12(2)(a)(Jan., 2004) is invalid because it conflicts with Wis. *173Stat. § 227.45(1). Section ETF 11.12(2) sets forth the standards an agency must utilize when drafting final decisions. Regarding findings of fact, § ETF 11.12(2)(b) provides, in pertinent part: "No finding of fact may be based upon hearsay." Generally, an administrative rule that conflicts with an unambiguous statute is invalid. Wis. Citizens Concerned for Cranes and Doves v. DNR, 2004 WI 40, ¶ 14, 270 Wis. 2d 318, 677 N.W.2d 612. "In those cases in which a conflict arises between a statute and an administrative rule, the statute prevails." Seider v. O'Connell, 2000 WI 76, ¶ 72, 236 Wis. 2d 211, 612 N.W.2d 659.
The administrative rule conflicts with the statute in two ways. First, as described above, it requires the agency to resort to the rules of evidence in order to determine whether an item of evidence is hearsay, contrary to the statement in § 227.45(1) that an administrative agency is not bound by the formal rules of evidence. Second, the rule on its face prohibits reliance on all hearsay, not simply uncorroborated hearsay. Because the rule fails to account for the fact that some hearsay, especially hearsay that is corroborated or that falls within a recognized exception, may be relevant and probative, it is inconsistent with that part of § 227.45(1) which provides that "[b]asic principles of relevancy, materiality and probative force shall govern the proof of all questions of fact." Wis. Stat. § 227.45(1).
Notably, the majority fails to discuss this rule at length, despite the fact that on its face, it is broader than the residuum rule. The residuum rule prohibits factual findings based on uncorroborated hearsay. Section ETF 11.12(2)(b) goes one step further by requiring that "[n]o finding of fact may be based upon hearsay."

 Thus, evidence is probative if it "tends to prove or disprove a point in issue." Black's Law Dictionary 579 (7th ed. 1999).

 The majority states that the "legal residuum rule is supported by the notion that courts should act as a check on the agencies by reviewing the decisions for fundamental fairness." Majority op., ¶ 59. However, under the standard of review prescribed by the legislature, a court may review an agency decision for fairness only in relation to the procedures utilized by the agency. Wis. Stat. § 227.57(4).