Legislature(2003 - 2004)

02/25/2004 08:00 AM Senate JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             SB 333-IF UNREAS. AGENCY DELAY, COURT DECIDES                                                                  
   CHAIR SEEKINS announced that Version  A of SB 333  was before the                                                            
   SENATOR GENE  THERRIAULT, sponsor  of SB 333,  told members  this                                                            
   legislation  is  the  third  piece  of  a  package  of  bills  he                                                            
   introduced   that   makes   changes   to   the   regulatory   and                                                            
   administrative hearings  process.  SB  203 reforms  the  internal                                                            
   administrative process  with  a  central  panel concept;  SB  287                                                            
   provides for legislative input  into the regulatory  process; and                                                            
   SB 333 allows a person to take an administrative  hearing case to                                                            
   the superior court if he or she feels caught in an endless loop.                                                             
   SENATOR THERRIAULT explained that SB 333 provides  a safety valve                                                            
   in the administrative  process. Under current  law, a  person has                                                            
   no access to the court  system until he or she  has exhausted the                                                            
   administrative process.  However,  it is  possible  that a  final                                                            
   decision may never be reached  in that process. People  caught in                                                            
   that process often feel that  delays are an attempt  to wear them                                                            
   down. SB 333  establishes an  extraction option  by allowing  the                                                            
   court to  intervene. It  will provide  an  incentive to  finalize                                                            
   administrative  hearings   and  leave   the   integrity  of   the                                                            
   administrative process intact;  however, it changes  the dynamics                                                            
   by putting hearing officers on notice.                                                                                       
   MR.  DAVE  STANCLIFF,  staff  to  the  Administrative  Regulation                                                            
   Review Committee  (ARRC), informed  members that  this reform  is                                                            
   based in part  on testimony  heard on  SB 203.  People said  they                                                            
   have  been  stuck  in  the  administrative  hearing  process  for                                                            
   growing  periods  of  time  while  costs  accrue  to  both  state                                                            
   government and the  private sector. The  principle behind  SB 333                                                            
   is similar to the  120-day legislative session limit  so applying                                                            
   a time limit on the  executive branch does not chart  new ground.                                                            
   In addition,  the  judicial  review  process under  AS  44.62.300                                                            
   allows a petitioner to find that a regulation  is invalid. SB 333                                                            
   gives the court wide discretion  to determine whether or  not the                                                            
   petitioner is making a  valid argument that  he or she  no longer                                                            
   has the financial  resources  and will be  damaged without  quick                                                            
   finality to a decision.                                                                                                      
   MR.  STANCLIFF  said  he  worked  with  one   of  Senator  Ogan's                                                            
   constituents who came  to Senator  Ogan saying  he needed  to get                                                            
   his case into  court. He  said people often  feel they  are being                                                            
   denied  due  process  because   of  the  expense  and   time  the                                                            
   administrative hearing process  takes. SB  333 will provide  some                                                            
   assurance for  people with  fewer  resources. He  noted that  the                                                            
   cost to  the  private  sector  is  3  times  the  cost  to  state                                                            
   government so SB 333 will provide a  stable, predictable business                                                            
   8:40 a.m.                                                                                                                    
   SENATOR OGAN asked if  SB 333 could  act as a "stand  alone" bill                                                            
   even though it is part of a package.                                                                                         
   MR. STANCLIFF said  SB 333 could  have been incorporated  into SB
   203 but  the sponsor  and those  involved  with the  negotiations                                                            
   felt this matter should stand independently.                                                                                 
   SENATOR THERRIAULT clarified that  the language on page  2, lines                                                            
   5-12, contains  the conditions  that must be  satisfied before  a                                                            
   person can ask for  court intervention. SB  333 does not  allow a                                                            
   shortcut; the  petitioner  must  have  satisfied  all  procedural                                                            
   requirements and  show that  further delay  will cause  financial                                                            
   harm.  The  court  must  then  determine  that   the  agency  has                                                            
   unreasonably delayed the process.                                                                                            
   SENATOR OGAN expressed concern  that "unreasonably delayed"  is a                                                            
   subjective term.                                                                                                             
   SENATOR FRENCH asked  how long  a typical administrative  hearing                                                            
   MR. STANCLIFF  said  the length  of  time  varies a  great  deal,                                                            
   depending on the complexity  of the matter, the agency  and which                                                            
   rules apply  under the  Administrative Procedures  Act (APA).  He                                                            
   thought that a sufficient track record has  been established from                                                            
   which the court  can make a  determination. He also  thought that                                                            
   the timelines that will come into play with SB  203 will help the                                                            
   court decide  whether an  agency has  been timely.  He noted  the                                                            
   court could  establish  a  time  certain for  resolution  by  the                                                            
   agency or decide to take it  up. He said a number  of people have                                                            
   been stuck  in the  administrative  hearing process  for over  10                                                            
   years, and a  fair number over  5 years, according  to statistics                                                            
   gathered by the  ARRC. Nothing  requires an  agency to  resolve a                                                            
   matter in  finality within  a certain  timeframe.  The number  of                                                            
   times an  agency can  ask for  information is  unlimited, and  an                                                            
   agency  can  continually   remand  decisions   within  areas   of                                                            
   expertise. He said  if a  person has expert  legal advice,  he or                                                            
   she will  not approach  the  court without  a  solid history  and                                                            
   track record of the case.                                                                                                    
   SENATOR FRENCH  said he  heard two  answers: that  the court  can                                                            
   look at a track record and that there is no  way to tell. He said                                                            
   if a  track  record exists,  he  would like  to  see  a copy.  He                                                            
   pointed out that  a court  does not  do research  on its own;  it                                                            
   asks for evidence and whoever brings the  best evidence wins. The                                                            
   petitioner will have to convince  the court that an  agency delay                                                            
   is unreasonable so  it will fall  on the petitioner  to determine                                                            
   the average  length of cases.  He sees  that as  onerous for  the                                                            
   petitioner and asked  Mr. Stancliff if  he has done  any research                                                            
   in that area that would give the court some guidelines.                                                                      
   MR. STANCLIFF said he asked the senior law  judge of Colorado the                                                            
   longest  amount  of  time   a  person  should  be  held   in  the                                                            
   administrative hearing process. He said 180 days.                                                                            
   CHAIR SEEKINS  maintained that  the courts  interpret words  like                                                            
   "egregious" or  "frivolous" regularly  so he  does not believe  a                                                            
   judge  would   have   difficulty  determining   an   unreasonable                                                            
   timeframe. He said he believes  SB 333 will provide  an incentive                                                            
   to agencies to make sure their practices  are defensible in front                                                            
   of a judge.                                                                                                                  
   SENATOR OGAN said  the Regulatory Commission  of Alaska  (RCA) is                                                            
   one  of  the  more  controversial  agencies  with  administrative                                                            
   hearing powers, especially in  regard to the  telephone industry.                                                            
   That  industry  is  one   of  the  fastest   changing,  regarding                                                            
   technology and services.                                                                                                     
   TAPE 04-8, SIDE B                                                                                                          
   He said by  the time the  telephone companies  get a  ruling, the                                                            
   industry has morphed to  a whole new  dynamic and the  ruling may                                                            
   be a moot  point. He  asked if SB  333 affects  the RCA  and will                                                            
   motivate it to issue decisions in a timelier manner.                                                                         
   MR. STANDCLIFF indicated SB  333 touches the RCA and  every other                                                            
   regulatory body in the state.  He said SB 333 can  save the state                                                            
   and private sector an incalculable  amount of money but  its main                                                            
   purpose is  to provide  a better  way  for the  government to  do                                                            
   business and to  balance the power  of the executive  branch with                                                            
   the legislative and judicial branches.                                                                                       
   SENATOR FRENCH asked if the administrative  hearing process would                                                            
   continue while the court  makes its determination or  whether the                                                            
   proceeding would  be automatically  stayed upon  an action  being                                                            
   filed in court.                                                                                                              
   MR. STANCLIFF said  SB 333 is  silent on that  issue. He  said he                                                            
   believes the agency would be  able to continue and  that it might                                                            
   entice the  agency  to wrap  a  case up  rapidly  to avoid  court                                                            
   SENATOR THERRIAULT said he would want  the administrative process                                                            
   to continue. He stated:                                                                                                      
        ...The fact  that  you  are  availing yourself  of  the                                                                 
        ability to  go to  court may  [indisc.]  the agency  to                                                                 
        wrap things  up. They  may realize  that their  actions                                                                 
        have  been  egregious   and  rather  than   suffer  the                                                                 
        embarrassment of  going  to court  and  being told  so,                                                                 
        they'll wrap  things up.  What we're trying  to get  to                                                                 
        here is  the final  decision  so I  wouldn't want  this                                                                 
        process  to  prevent  you  from  getting   to  a  final                                                                 
        decision. It's not  like a court  case, I  don't think,                                                                 
        where  you   feel   something   has   been   determined                                                                 
        incorrectly and  you  want to  stay  the whole  process                                                                 
        while you  get that  question  answered necessarily  on                                                                 
        appeal. So, unless  Senator French  has some reason  to                                                                 
        do otherwise, I  think letting  the process forward  is                                                                 
        probably the correct thing to do.                                                                                       
   SENATOR FRENCH referred to  the language on page 2,  lines 24-28,                                                            
   and said it implies that the administrative  proceeding is stayed                                                            
   because it  says  if  the court  decides  that  a person  is  not                                                            
   eligible for  judicial  relief,  the  agency shall  continue  the                                                            
   proceeding. He argued that direction would be  unnecessary if the                                                            
   proceeding was allowed to continue simultaneously.                                                                           
   SENATOR  THERRIAULT   thought   that   language   needs   further                                                            
   clarification and  said  he  does  not  want a  court  filing  to                                                            
   automatically stop the administrative proceeding.                                                                            
   SENATOR OGAN  asked if the  court could  remand the  case to  the                                                            
   MR. STANCLIFF explained  that the language  on page 2,  lines 15-                                                            
   22, gives  the  court  wide discretionary  authority.  The  court                                                            
   could enjoin  the administrative  proceeding,  which suggests  to                                                            
   him  that  until  it  does  so,  the   proceeding  continues.  He                                                            
   suggested getting an interpretation from the legal drafter.                                                                  
   CHAIR SEEKINS agreed.                                                                                                        
   SENATOR FRENCH asked if the  bill contains a limit  on the number                                                            
   of  times  a  person  can   go  to  court  and   claim  that  the                                                            
   administrative proceeding is taking too long.                                                                                
   MR. STANCLIFF said it does not.                                                                                              
   CHAIR  SEEKINS  announced   the  committee   would  take   public                                                            
   MR. DOUG WOOLIVER, Administrative Attorney,  Alaska Court System,                                                            
   said as is the court's typical practice, it  takes no position on                                                            
   SB  333.  He   said  the   Alaska  Court   System  submitted   an                                                            
   indeterminate fiscal note because  it does not have a  good sense                                                            
   of how many cases  will be filed.  He explained that in  order to                                                            
   move out of the  administrative setting into the  superior court,                                                            
   the petitioner must  allege the  agency is unreasonably  delaying                                                            
   the process and the delay is causing  significant and irreparable                                                            
   harm. The  petitioner would  file  a petition  but  the court  is                                                            
   unlikely to rule  without considering  the agency's rebuttal  and                                                            
   holding a hearing  to decide whether  the delay  is unreasonable.                                                            
   He said it  is entirely  likely that the  court system  will only                                                            
   see a  handful  of cases,  particularly  in  light of  the  other                                                            
   proposed reforms. He  added that  if the administrative  hearings                                                            
   were not stayed when a  motion is filed, SB 333  would spur quick                                                            
   agency action. He  noted, however, that  a significant  number of                                                            
   people within the  administrative process  will feel  the process                                                            
   is unreasonably delayed.  He said many  hundreds of cases  may be                                                            
   pending before the  regulatory agencies and  only a  small number                                                            
   of those could have a  big impact on the court  system. The court                                                            
   system does not have a clear idea of whether  this option will be                                                            
   used judiciously. He said  he is putting the  court's uncertainty                                                            
   on the record in case it is necessary to  request relief from the                                                            
   legislature next year.                                                                                                       
   CHAIR  SEEKINS   asked   how  the   court   would  determine   an                                                            
   "unreasonable" delay.                                                                                                        
   MR. WOOLIVER said that  determination would be  fact-specific and                                                            
   made on a  case-by-case basis.  It may depend  on how  many times                                                            
   the agency asks  for information, whether  the issue  is seasonal                                                            
   and could vary by industry.                                                                                                  
   CHAIR SEEKINS  asked how  long it  might  take for  the court  to                                                            
   create guidelines for future cases.                                                                                          
   MR. WOOLIVER said  that is possible  to some extent  but superior                                                            
   court cases are not precedent  setting. He said attorneys  who do                                                            
   a lot  of  work in  this  area  would start  to  get  a sense  of                                                            
   timeliness  but  attorneys  will  not   necessarily  present  the                                                            
   SENATOR THERRIAULT  believed  the expense  of  taking  a case  to                                                            
   court would keep a lot  of cases without merit from  being filed.                                                            
   He then  said  the purpose  behind  the central  hearing  officer                                                            
   panel is to create a more efficient system.                                                                                  
   SENATOR FRENCH asked Mr. Wooliver if he sees  any right of appeal                                                            
   from a superior court's determination to the supreme court.                                                                  
   MR. WOOLIVER said a person always has one right  of appeal to the                                                            
   supreme court, except criminal cases or an appellate case.                                                                   
   CHAIR SEEKINS asked  if the regulatory  agency is more  likely to                                                            
   appeal a decision.                                                                                                           
   MR. WOOLIVER said he believes so.                                                                                            
   SENATOR THERRIAULT  asked  Mr.  Wooliver  to comment  on  Senator                                                            
   French's question about the  number of times a person  could file                                                            
   a petition  and whether  he believes  the bill  should contain  a                                                            
   MR. WOOLIVER said that is  the legislature's call. He  imagined a                                                            
   first appeal might not be meritorious but a  second one could be.                                                            
   He noted the  court has  rules to  deal with frequent  litigants.                                                            
   The court can  require a  person to  jump through specific  hoops                                                            
   before filing another claim.  He said the  court tends to  have a                                                            
   high tolerance at first but then shuts the door.                                                                             
   The committee took a 5-minute recess.                                                                                        
   MR.  DAN  HOUGHTON,   Alaska  Regional  Hospital,   recounted  an                                                            
   administrative hearing  procedure the  hospital was involved  in.                                                            
   The  hospital  appealed  its  1991  [Medicaid]  rate  setting.  A                                                            
   hearing officer heard the  appeal in March  of 1997 and  issued a                                                            
   favorable decision on  May 26, 2000.  The decision  was submitted                                                            
   to Commissioner Livey, who issued his final  decision in April of                                                            
   2001, which reversed the  hearing officer's decision.  The Alaska                                                            
   Regional Hospital then  appealed to  superior court,  which ruled                                                            
   favorably.  However,  that   decision  was   then  sent   to  the                                                            
   commissioner's office, and the  hospital awaits an  oral argument                                                            
   with a hearing officer.   He stated  support for SB 333  and said                                                            
   had the  Alaska Regional  Hospital had  the ability  to take  its                                                            
   case to  superior  court  earlier,  the agency  would  have  been                                                            
   motivated to move  the case forward  and both parties  would have                                                            
   saved time and effort.                                                                                                       
   CHAIR SEEKINS announced that with no further  testimony, he would                                                            
   hold SB 333 in committee.                                                                                                    

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