Maryland State Board of Pharmacy v. Spencer

GREENE, Judge. Maryland State Board of Pharmacy (Board), appellant, seeks review of the August 31, 2001 Order of the Circuit Court for Baltimore City reversing appellant’s earlier decision that Pharmacist Linda Ann Spencer, appellee, practiced pharmacy without a license and failed to keep records of required continuing education credits. Appellant raises the following questions for our review: I. Is there substantial evidence in the record to support appellant’s decision to discipline Ms. Spencer for practicing pharmacy after her license had expired and for failing to retain documentation of continuing education credits required for license renewal?

II

By renewing appellee’s license prior to completing its investigatory and disciplinary process regarding her alleged violations of the Pharmacy Act occurring prior to renewal, did the Board waive its right to discipline her for those violations?

III

In the absence of any showing of actual bias by appellant’s members against appellee, did arguments at the hearing between her attorney and two of appellant’s members regarding the attorney’s statements during the hearing deprive her of due process. 1 ¹⁴² We hold that appellant did not waive its right, as a matter of law, to discipline appellee for violations of the Pharmacy Act by renewing her license during the pendency of its investigation of possible wrongdoing. We also hold that appellant deprived áppellee of her right to be treated in a fair and unbiased manner as required by the Administrative Procedure Act and the Maryland Constitution; and, therefore, the case must be remanded in order that appellee may receive a fair hearing of the disputed charges against her. Finally, in light of our answer to the last question, we refrain from addressing whether the record contains substantial evidence to support appellant’s decision to discipline appellee. FACTS AND PROCEEDINGS On July 1, 1999, appellee’s pharmacist license expired.

She continued to practice pharmacy without a license until August 16, 1999. On August 30, 1999, appellee submitted a renewal application to appellant, along with documentation that she had completed the continuing education requirements. On September 14, 1999, appellant issued a renewal license to appellee. Appellant issued charges against appellee on February 16, 2000, alleging that she had practiced pharmacy without a license for a period of six weeks and that she had failed to maintain records of required continuing education credits.

Appellant scheduled a case resolution conference (CRC) to attempt to resolve the matter without the necessity of a hearing. Mr. Stanton Ades and Ms. Laura Schneider, two members of the Board, represented appellant at the CRC. The settlement negotiations were unsuccessful. Both Mr. Ades and Ms. Schneider sat on the panel of Board members who eventually heard this contested case.

On many occasions, beginning in July, 2000, appellee sent letters to counsel for appellant, seeking to have the matter referred to the Office of Administrative Hearings (OAH). Appellee believed appellant incapable of giving her a fair and impartial hearing because appellant had been intimately involved in settlement negotiations with appellee and may have prejudged the case. Appel ¹⁴³ lant repeatedly denied appellee’s requests to move the case to OAH, stating that appellant’s knowledge of settlement negotiations did not disqualify it from hearing evidence. In further justification for refusing to move the case, appellant stated that appellee “failed to assign any specific facts indicating the Board would not be an impartial arbiter,” and also noted that the Board “ha[d] never delegated a matter to the Office of Administrative Hearings.” Finally, on August 14, 2000, appellee filed a motion to refer the case to the Office of Administrative Hearings or, in the alternative, to recuse members of the Board.

Appellant denied that motion on September 15, 2000. Appellant held a hearing on the matter on September 20, 2000, and resumed the hearing on January 8, 2001. Counsel for appellant had given books containing exhibits to the members of the Board on the morning of the hearing. When counsel for appellee arrived for the hearing, he noticed that at least one member of the Board was reviewing evidence before the start of the hearing.

Counsel for appellee complained about the member reviewing documents that were not in evidence, and asked that member to recuse himself. This request was denied. He then renewed the motion to move the case to OAH and appellant denied that motion also. Finally, counsel for appellee asked that the two members who were involved in settlement negotiations recuse themselves, and that request was also denied.

Appellee did not dispute that she had practiced pharmacy without a license for a period of six weeks. Her counsel argued, however, that her practice of pharmacy without a license was authorized under Md.Code (1984, 1999 RephVol.), § 10-226(b) of the State Government Article, 2 because she had ¹⁴⁴ submitted a timely renewal application. Appellee did not present any evidence, other than her testimony, that she had filed a renewal application prior to the expiration of her license on July 1,1999. Appellant’s records did not reveal any application, check, or money order from appellee prior to July 1, 1999.

Appellant determined that appellee’s testimony on the matter lacked credibility and found that she had not filed a timely renewal application. During the hearing, counsel for appellee accused members of the Board of prejudging the case, of sleeping during the hearing, and of not paying attention to testimony. After the accusation about sleeping, the hearing deteriorated to the point where several members of the Board engaged in a heated conversation with counsel for appellee involving demands for apologies and chastisements about finger pointing from counsel and members of the Board. 3 Finally, one of the ¹⁴⁵ Board members asked counsel for appellee to leave the room, but he remained and continued arguing. Eventually, counsel was asked if he would act appropriately, and he said he would, so the hearing continued.

Later, counsel for appellee objected to the entry of a mail log, and argued that it “does not go to [appellee’s] credibility.” Ms. Hawkins, one of the Board members, stated “sure it does.” When counsel then said to the Board, “Ms. Hawkins already said out loud it went to credibility,” Ms. Hawkins denied saying it and then added, “I did not [say that], and you’re a bold-faced liar.” Counsel for appellee objected to being called a liar during the proceeding and attempted to have Ms. Hawkins removed from hearing the case, but that request was denied. On February 21, 2001, appellant issued its Final Decision and Order, finding that appellee had violated Md.Code (1981, 2000 RepLVoL), §§ 12-301, 12-701, 12-707(e), and 12-313(b)(24) of the Health Occupations Article. 4 Appellant ¹⁴⁶ placed appellee on probation, imposed a fine, and reprimanded her. Appellee filed a Petition for Judicial Review in the Circuit Court for Baltimore City on March 21, 2001. On August 28, 2001, the court held a hearing on the Petition for Judicial Review and on August 31, 2001, entered its Order, reversing the decision of appellant and vacating appellant’s Final Decision and Order.

The court’s reasons for reversing and vacating appellant’s decision are located in the oral opinion of the court. The court stated: Let me come to the issue that is of real concern to this Court. .It is that the trier of fact, the Board if you will, must maintain an appearance that is fair and just. And that under the circumstances to let all persons know that the hearing before it will be fairly reviewed and interpreted. * * * * What is clear [is that] there was unnecessary, inappropriate accusations going on within the hearing. It is true, in review of the ease itself, is [sic] that the court needs only to determine whether there was substantial evidence of a, [sic] from the record on the whole to support the decision.

But that is really only half of the concern.... [T]he other is whether or not ... there was a violation of due process and the law in which the determination was made. If we go to the latter discussion then on[e] would say how the evidence was determined is effected by how the law is respected during the course of the hearing. * * * * This court’s interpretation of the record is ... that the Board’s actions and reactions individually ... raises serious questions as to whether or not it was effected [sic] in its determination in this case. In addition, the circuit court judge determined that the record lacked substantial evidence to support appellant’s find ¹⁴⁷ ings and thus reversed the Board. Appellant timely noted this appeal on September 27, 2001.

DISCUSSION The final decision of an administrative agency in a contested case is subject to review under the Administrative Procedure Act (APA), Md.Code Ann., State Gov. Art. § 10-222. Section 10-222(h) provides that the reviewing court may: (1) remand the case for further proceedings; (2) affirm the final decision; or (3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision: (i) is unconstitutional; (ii) exceeds the statutory authority or jurisdiction of the final decision maker; (iii) results from an unlawful procedure; (iv) is affected by any other error of law; (v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or (vi) is arbitrary or capricious. As this Court noted in Montgomery County Dep’t of Health & Human Services v. P.F., 137 Md.App. 243, 264-65 , 768 A.2d 112 (2001): Appeals from the [ALJ] to the circuit court, and from the circuit court to the appellate courts, are governed by the same standards of review____ The test for determining whether the ... findings of fact are supported by substantial evidence is whether reasoning minds could reach the same conclusion from the facts relied upon by the [agency]....

When an agency’s decision is based on an erroneous legal conclusion, however, we will substitute our own judgment for that of the agency. (Internal citations omitted.) It is well settled that a reviewing court may not substitute its judgment for that of the administrative agency ¹⁴⁸ or make its own findings of fact when reviewing the decision of an ALJ. Charlotte Marsheck v. Board of Trustees of the Fire & Police Employees’ Ret. System of the City of Baltimore, 358 Md. 393, 402 , 749 A.2d 774 (2000).

Where an agency’s decision is based on an erroneous conclusion of law, however, this deference does not apply. Mayor of Ocean City v. Purnell-Jarvis, Ltd., 86 Md.App. 390, 402 , 586 A.2d 816 (1991)(citing Supervisor of Assessments of Montgomery County v. Asbury Methodist Home, 313 Md. 614 , 547 A.2d 190 (1988)). In such a case, we “must substitute [our] judgment for that of the agency if our interpretation of the applicable legal principles is different.” Perini Services, Inc. v. Maryland Health Resources Planning Comm’n., 67 Md.App. 189, 201 , 506 A.2d 1207 (1986)(citing Ramsay, Scarlett & Co., Inc. v. Comptroller of the Treasury, 302 Md. 825 , 490 A.2d 1296 (1985)). A reviewing court can and should review whether an agency has acted within its statutory powers or has otherwise made an error of law.

Brzowski v. Maryland Home Imp. Comm’n, 114 Md.App. 615 , 691 A.2d 699 (1997), cert. denied, 346 Md. 238 , 695 A.2d 1227 (1997). As a preliminary matter, we hold that appellant did not waive its right to discipline appellee by renewing her license to practice pharmacy during the pendency of its investigation of her. Appellee places great emphasis on the relationship between section 10-226(b) 5 of the State Government Article and section 12-310(a) of the Health Occupations Article. 6 We interpret the code sections to require the Board to issue a license to a person who meets the stated requirements and that the license does not expire if a. timely renewal application has been filed.

Those sections do not, however, ¹⁴⁹ deprive the Board of the power to sanction appellee if it finds, after a fair hearing, that she did not file a timely renewal application and that, therefore, she practiced pharmacy for a period of time without a license. See Md.Code (1981, 2000 Repl.Vol.), §§ 12-701, 12-707(e)(l), and 12-313(b)(24) of the Health Occupations Article. 7 The fact that the Board chose to renew a license upon receipt of an untimely renewal application does not deprive the Board of the authority to sanction for prior violations of the applicable statutes. With regard to appellee’s due process concerns, we note that Section 10-201 of the State Government Article states: The purpose of this subtitle is to: (1) ensure the right of all persons to be treated in a fair and unbiased manner in their efforts to resolve disputes in administrative proceedings governed by this subtitle; and (2) promote prompt, effective, and efficient government. In addition, Article 24 of the Maryland Declaration of 'Rights states: That no man ought to be taken or imprisoned or disseized of his freehold, liberties or privileges, or outlawed, or exiled, or, in any manner, destroyed, or deprived of his life, liberty or property, but by the judgment of his peers, or by the law of the land.

Procedural due process guaranteed to persons in this State by Article 24 requires “that administrative agencies performing adjudicatory or quasi-judicial functions observe the basic principles of fairness as to parties appearing before them.” Maryland State Police v. Zeigler, 330 Md. 540, 559 , 625 A.2d 914 (1993). This doctrine of fairness is “ ‘specifically applicable’ to issues of disqualification, although ‘disqualification will not be permitted to destroy the only tribunal with power in the premises.’ ” Regan v. Chiropractic Examiners, 355 Md. 397, 408-09 , 735 A.2d 991 (1999)(quoting Board of ¹⁵⁰ Medical Examiners v. Steward, 203 Md. 574, 582 , 102 A.2d 248 (1954)). As previously mentioned, two of the members of the Board that heard this case also participated in settlement discussions with appellee before the hearing. The record in this case reflects that appellant considered those settlement negotiations and perhaps relied on their knowledge of those negotiations in rendering the Final Decision and Order. 8 In our view it was unnecessary to note in the Final Decision and Order that “[ajlthough Respondent agreed to a proposal at the conference, she later rejected it,” unless the Board considered that fact in their deliberations.

More significantly, appellant denied appellee’s right to be treated in a fair and unbiased manner when a member of the Board displayed blatant hostility toward appellee’s counsel during the hearing, causing an appearance of impropriety. 9 Unfortunately, the actions and statements of some of the members who presided over the hearings held on September 20, 2000, and January 8, 2001, lead this Court to conclude that appellee was denied a fair and unbiased resolution of her dispute with appellant, in violation of section 10-201 of the State Government Article and Article 24 of the Maryland Declaration of Rights. ¹⁵¹ Because the decision of appellant was unconstitutional and resulted from an unlawful procedure, this Court will affirm, in part; vacate, in part; and remand the case for further proceedings. 10 Md.Code (1984, 1999 Repl.Vol.), §§ 10-222(h)(3)(i) and 10-222(h)(3)(iii). There are no definitions in the Administrative Procedure Act for the relevant terms (fair, unbiased, unlawful procedure) found in sections 10-201 and 10-222(h). See Md.Code (1984, 1999 Repl.Vol.), § 10-202 of the State Government Article. Appropriate analogies can be drawn, however, from the Maryland Rules and case law.

See Regan v. Chiropractic Examiners, 355 Md. 397 at 410 , 735 A.2d 991 (1999) (noting in a case involving the Maryland Board of Chiropractic Examiners that “the ‘appearance of impropriety’ standard set forth in our cases involving judges and some others is applicable generally to the participation of members of Maryland administrative agencies performing quasi-judicial or adjudicatory functions”). Md. Rule 16-813, Canon 3(C), provides in pertinent part: RECUSAL. (1) A judge should not participate in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances where: (a) the judge has a personal