The North Carolina Court of Appeals for the first time has examined how much power courts have to review North Carolina regulatory agency decisions in certain circumstances under a law the General Assembly adopted in 2000. In upholding a lower court ruling, the appeals court held that courts have wide latitude to act when an agency does not adopt the ruling of an administrative law judge.
The case for the Court of Appeals involves state licensure of ambulance providers. Cape Medical Transport operates a nonemergency ambulance service in the Wilmington area. The company was accused by the N.C. Department of Health and Human Services’ Division of Facilities Services of operating an ambulance without the required crew on several occasions in 2000. North Carolina law requires that each ambulance have at least two certified personnel when transporting a patient. Cape Medical contested the charges.
The case went before an administrative law judge in 2001,who determined that on two occasions Cape Medical had transported patients with only one certified crewmember. The ALJ stayed revocation of Cape Medical’s license in Brunswick County for five years on condition that Cape Medical not violate the staffing requirement in the future. He also suspended Cape Medical’s operations in New Hanover County until it obtained a franchise from that county.
Despite the ALJ’s ruling, the Division of Facilities Services on March 6, 2002 revoked Cape Medical license. The company appealed the agency’s ruling.
Superior Court Judge W. Allen Cobb, Jr. heard the case. Cobb conducted a broad review of the agency’s decision. Despite neither party having objected to the existing findings of fact in the case, the judge reviewed the entire record anew and made additional factual determinations. The judge also concluded that the agency had not in the past revoked the license of other ambulance services that had committed the same transgression as Cape Medical. He overturned the agency’s decision to revoke the company’s license and instead reimposed the penalties adopted by the ALJ.
The Division of Facilities Services in turn challenged Cobb’s ruling before the N.C. Court of Appeals. The agency contended that the Superior Court judge’s review in the case was too sweeping, that he should not have made additional factual determinations, and reached the wrong conclusion in rejecting the agency’s determination.
Cobb’s review was based upon N.C. General Statue § 150B-51(c), which became effective Jan. 1, 2001. It provides that:
“In reviewing a final decision in a contested case in which an administrative law judge made a decision . . . and the agency does not adopt the administrative law judge’s decision, the court shall review the official record, de novo, and shall make findings of fact and conclusions of law. In reviewing the case, the court shall not give deference to any prior decision made in the case and shall not be bound by the findings of fact or the conclusions of law contained in the agency’s final decision. The court shall determine whether the petitioner is entitled to the relief sought in the petition, based upon its review of the official record. The court reviewing a final decision under this subsection may adopt the administrative law judge’s decision; may adopt, reverse, or modify the agency’s decision; may remand the case to the agency for further explanations… or reverse or modify the final decision for the agency’s failure to provide the explanations; and may take any other action allowed by law.”
The appeals court was not persuaded by the agency’s arguments that the lower court went too far in its review. “The plain language of the section permits the trial court to review the official record and make its own findings of fact and conclusions of law, without giving deference to any prior agency or ALJ decision,” Judge Bryant wrote.
The Court of Appeals affirmed the lower court’s findings in their entirety.
The case is Cape Med. Transp., Inc. v. N.C. Dep’t of Health & Human Servs., (02-1742)
Michael Lowrey is associate editor of Carolina Journal.