Board of Education v. Secretary of Personnel

ELDRIDGE, Judge. This case arises from a dispute between two State agencies, the Board of Education for Prince George’s County 1 and the Maryland Department of Personnel, Division of Social Security. The Board sought mandamus relief in the Circuit Court for Prince George’s County. The court granted in part and denied in part the requested relief.

Because we conclude that the Board was entitled to no mandamus relief, we affirm in part and reverse in part the judgment of the court below. The State of Maryland makes payments to the Contribution Fund established by Maryland Code (1957, 1988 Repl. Vol.) Art. 73B, § 40, for the purpose of providing Social Security coverage and retirement benefits to certain government employees, including public school teachers. Pursuant to its authority under Art. 73B, § 39, the Department of Personnel, Division of Social Security, performed audits of payments made by the State, on behalf of Board employees, between 1976 and fiscal year 1984.

The audits determined that the State had made payments on behalf of Board employees who were ineligible for State payment of employer costs of Social Security. The audits also revealed that certain payments made by the State for the employer costs duplicated payments made by the State through Maryland Department of Transportation funding separately provided to the Board. As a result of these audits, the Department of Personnel issued assessments against the Board in the amount of $876,399.78. On July 8, 1985, the Board notified the Department of Personnel that it was appealing the audit findings and requested a hearing, citing as the “applicable regulatory authority” COMAR § 17.02.03.01 et seq.

The regulations in ³⁷ this chapter specifically deal with contested case hearings conducted by the Maryland Department of Budget and Fiscal Planning pursuant to the Administrative Procedure Act, Code (1984), §§ 10-101 through 10-405 of the State Government Article. Subsequently, the Department of Budget and Fiscal Planning informed the Board that it had scheduled a pre-hearing conference and a hearing on the Board’s appeal “in accordance with Article 78B, Section 39, Annotated Code of Maryland.” The statute referred to provides in subsection (e), among other things, that “(2)(i) If an audit of the records of a school system, public library, or educational institution reveals that the system, library, or institution owes money to the Contribution Fund, any delinquent payment may not be collected until: 1. The school system, public library, or educational institution has an opportunity to appeal the decision to a hearing examiner who shall be appointed by the Secretary of the Department of Budget and Fiscal Planning and 2. The hearing examiner finds that the funds are owed to the Contribution Fund.

(ii) If the hearing examiner determines that moneys are owed to the Contribution Fund, the moneys shall be deducted from any State funds that would otherwise be paid to the school system, public library, or educational institution. (iii) An appeal taken pursuant to this paragraph is not a contested case, for the purposes of the Administrative Procedure Act.” (Emphasis added). A pre-hearing conference was held on May 29, 1986, with a hearing scheduled for June 5, 1986. At the pre-hearing conference, the Board requested that the hearing be a “contested case” hearing under the Maryland Administrative Procedure Act, with a reporter present.

The hearing examiner denied this request. On June 4, 1986, the day before the scheduled hearing, the Board, pursuant to subtitle 3 of the Administrative ³⁸ Procedure Act, §§ 10-301 through 10-305 of the State Government Article, presented the Secretary of Personnel with a petition for a declaratory ruling. 2 The petition sought a ruling on a number of matters including the authority of the Department of Personnel to determine which positions are ineligible for State payment of employer costs of Social Security, whether the scheduled hearing was the Board’s sole recourse for challenging the audits, and whether the Board was entitled to a review of the audit and assessment under the contested case provisions of the Administrative Procedure Act, § 10-201 et seq. of the State Government Article. 3 ³⁹ On the same day, June 4, 1986, the Secretary of Personnel declined to issue a declaratory ruling, stating that it would be “inappropriate ... to issue a Declaratory Ruling on a matter that is to be heard and decided tomorrow.” The next day, June 5, 1986, at the hearing, the Board requested that the hearing be held in abeyance pending the determination of the issues raised in the petition for declaratory ruling. The hearing examiner denied the request to hold the hearing in abeyance. The Board’s counsel then refused to participate, insisted that the hearing be held in abeyance, and left the hearing.

The hearing examiner thereupon adjourned the proceeding. On June 10, 1986, the Board again requested that the Secretary of Personnel rule on the issues raised in the petition for declaratory ruling. On July 8, 1986, the hearing examiner ordered that the Board’s appeal be dismissed, with prejudice, for lack of prosecution. On July 9, 1986, the Secretary of Personnel again declined to issue a declaratory ruling.

On August 7, 1986, the Board instituted the present action by filing a complaint for a writ of mandamus in the Circuit Court for Prince George’s County. Named as defendants were the Secretary of Personnel, the Director of the Division of Social Security in the Department of Personnel, the Secretary of Budget and Fiscal Planning, and an administrative officer in the Department of Budget and Fiscal Planning who had served as the hearing examiner. The Board alleged that the defendants had acted arbitrarily, capriciously, and unreasonably in not granting the ⁴⁰ Board’s request for a contested case hearing, in refusing to issue a declaratory ruling in response to the Board’s petition, and in refusing to hold the hearing in abeyance pending the issuance of a declaratory ruling. The complaint requested a writ of mandamus compelling the defendants to convene a contested case hearing and compelling the Secretary of Personnel to issue a declaratory ruling in response to the Board’s petition. 4 The defendants filed a motion to dismiss.

After a hearing, the circuit court issued a writ of mandamus compelling the Secretary of Personnel to render a declaratory ruling as to whether the Board “is entitled to a contested case hearing under § 39(e) of the Article 73B.” The court denied the Board’s request for mandamus relief in all other respects. The Board appealed from this order, alleging that the circuit court improperly denied the other requested relief. The defendants cross-appealed from the issuance of the writ of mandamus compelling the Secretary of Personnel to render a declaratory ruling. Prior to any proceedings in the Court of Special Appeals, this Court issued a writ of certiorari.

(1) We shall first address the Board’s appeal from the circuit court’s refusal to compel the defendants to convene a contested case hearing regarding the audit findings. The defendants contend that the appeal and hearing provided for in Art. 73B, § 39(e), is the exclusive remedy available for the Board to challenge the audits. Since that provision specifically states that the appeal “is not a contested case, for the purposes of the Administrative Procedure Act,” the defendants conclude that the Board has no right to a contested case hearing and that the Department of Budget and Fiscal Planning has no duty to conduct one. Thus, in ⁴¹ the defendants’ view, the court below properly denied the Board’s request for a writ of mandamus compelling the agency officials to conduct a contested case hearing.

The Board, on the other hand, asserts that the hearing called for in § 39(e) is not its sole remedy. The Board stresses the underscored portion of this Court’s language in Agrarian, Inc. v. Zoning Inspector, 262 Md. 329, 332 , 277 A.2d 591, 592 (1971), wherein the Court stated (emphasis added): “It is well established that a claimant ordinarily must seek to redress the wrong of which he complains by using the statutory procedure the legislature has established for that kind of case, if it is adequate and available and that if he is unsuccessful and wishes aid from the courts, he must take judicial appeals in the manner the legislature has specified rather than by seeking to invoke the ordinary general jurisdiction of the courts.” In the Board’s view a hearing pursuant to § 39(e) is inadequate and inapplicable to an adjudication of its appeal because a § 39(e) hearing serves the limited purpose of “deciding whether the Board ... ‘owes money’ to the State and whether the State is due the ‘delinquent payments.’ ” (Board’s Brief, p. 17). Thus, presumably, the Board views the § 39(e) hearing as restricted to considering the accuracy of the audit’s calculations. The Board asserts that its appeal raises legal issues beyond the scope of the audit’s accuracy.

Specifically, the Board broadly challenges the Department of Personnel’s authority to determine which employees are eligible for State payment of employer costs, to determine that State payments duplicated prior State payments, and to recapture past State payments. Furthermore, the Board claims that a hearing examiner appointed by the Department of Budget and Fiscal Planning would lack the knowledge and expertise to determine these matters. In our view, the circuit court properly denied the Board’s request for a writ of mandamus compelling the Department of Budget and Fiscal Planning to conduct a contested case ⁴² hearing. A claimant seeking to challenge an audit must use the procedure established by Art. 73B, § 39(e).

And, under the plain language of that statute, the administrative proceeding “is not a contested case.” We are unpersuaded by the Board’s assertion that § 39(e) is inapplicable to its claim that the Department of Personnel lacked authority to make various determinations which affected the outcome of the audit. Nothing in the language or legislative history of the statute supports the Board’s view that an appeal under § 39(e) was not intended to encompass claims of the type which the Board raises. On the contrary, the language of § 39(e) gives a hearing examiner broad power to determine whether “funds are owed to the Contribution Fund.” The statutory language does not limit the grounds on which a hearing examiner could conclude that the moneys at issue are not owed to the Contribution Fund. The fact that Art. 73B, § 39(e), places the hearing under the control of the Department of Budget and Fiscal Planning, rather than the Department of Personnel, makes it entirely reasonable for the hearing examiner to consider questions concerning the scope and exercise of the Department of Personnel’s authority.

In sum, the Administrative proceeding under § 39(e) covers the Board’s challenge to the audit. Moreover, the Board has cited no other statutory provision, and we are aware of no other provision, which would encompass the Board’s challenge to the audit. “Ordinarily, where a statutory administrative remedy is provided, it will be deemed to be exclusive.” Sec., Dep’t of Human Res. v. Wilson, 286 Md. 639, 643-644 , 409 A.2d 713, 716 (1979). As we stated in Oxtoby v. McGowan, 294 Md. 83, 91 , 447 A.2d 860, 865 (1982): ⁴³ See also, e.g., Muhl v. Magan, 313 Md. 462, 480-481 , 545 A.2d 1321, 1330-1331 (1988); Quesenberry v. WSSC, 311 Md. 417, 424 , 535 A.2d 481, 484 (1988); Md.-Nat’l Cap. P. & P. Comm’n v. Crawford, 307 Md. 1, 13 , 511 A.2d 1079, 1085 (1986); Bd. of Ed. For Dorchester Co. v. Hubbard, 305 Md. 774, 786-787 , 506 A.2d 625, 630-631 (1986); White v. Prince George’s Co., 282 Md. 641, 649 , 387 A.2d 260, 265 (1978); Agrarian, Inc. v. Zoning Inspector, supra, 262 Md. at 332 , 277 A.2d at 592 .

Applying this settled principle to the instant case leads to the conclusion that the administrative remedy provided by § 39(e) is the Board’s exclusive remedy and should have been followed by the Board. ⁴² “Where the General Assembly has provided a special form of remedy and has established a statutory procedure before an administrative agency for a special kind of case, a litigant must ordinarily pursue that form of remedy and not bypass the administrative official.” ⁴³ The underlying concern on the part of the Board seems to be that, absent a contested case hearing at the administrative level, the Board will not be entitled to judicial review of the administrative decision concerning the audits and the moneys due the Contribution Fund. The Administrative Procedure Act, § 10-215(a) of the State Government Article, provides that “[a] party who is aggrieved by the final decision in a contested case is entitled to judicial review of the decision____” (Emphasis added). The General Assembly specified that the administrative proceeding under Art. 73B, § 39(e), “is not a contested case, for purposes of the Administrative Procedure Act.” Consequently, the General Assembly obviously intended that there be no judicial review of the § 39(e) administrative decision. The Board seeks a contested case administrative proceeding, instead of proceeding under § 39(e), so that it will be entitled to judicial review.

It argues that it is constitutionally entitled to a hearing which will be subject to judicial review, relying on Criminal Inj. Comp. Bd. v. Gould, 273 Md. 486, 500-502 , 331 A.2d 55 (1975). Specifically, the Board quotes the following from the