Spencer v. Maryland State Board of Pharmacy

RAKER, J. This case arises out of a decision by the Maryland State Board of Pharmacy, an administrative agency. The decision was reviewed first by the Circuit Court for Baltimore City and then by the Court of Special Appeals, 150 Md.App. 138 , 819 A.2d 383 (2003). Petitioner sought review of the decision by the Court of Special Appeals because the remedy that court fashioned, she contends, exceeded its authority and violated the Maryland Constitution and Administrative Procedure Act, Md.Code (1984, 1999 Repl.Vol., 2003 Cum.Supp.) §§ 10-101 to 10-305 of the State Government Article [hereinafter APA]. 1 Whether a court has exceeded its statutory and judicial authority over an administrative agency is a question that involves the constitutional balance of power between the judiciary and executive administrative agencies. That balance of power is governed by an established area of administrative law dealing with the scope of judicial review over the various types of administrative agency decisions.

In this case, we consider whether the Court of Special Appeals exercised the proper standard of judicial review over an administrative agency decision in a matter that is committed, ultimately, to the agency’s discretion. I. Linda Ann Spencer, a pharmacist, continued to practice pharmacy after her license expired on July 1, 1999. On ⁵¹⁹ August 16, 1999, Spencer’s supervisor, having confirmed with the Maryland State Board of Pharmacy (“the Board”) the expiration and non-renewal of Spencer’s pharmacy license, instructed Spencer to cease practicing pharmacy, which she did. Spencer then contacted the Board to inquire why her license had not been renewed, asserting that she had timely submitted the required renewal application.

An internal review of the Board’s office records, however, indicated that no application or accompanying fee was received. Spencer surmised that her application had been lost in the mail and therefore submitted a renewal application to the Board on August 30, 1999. Although her application included certification that she had acquired the requisite number of continuing education credits, the majority of those credits were obtained after her license had expired in June. Nevertheless, the Board granted Spencer’s renewal application on September 14, 1999, after which Spencer resumed her practice of pharmacy.

The Court of Special Appeals described the remaining events that led to this appeal as follows (referring to the Board as “appellant” and to Spencer as “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. Appellant repeatedly denied appellee’s ⁵²⁰ 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 casé 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 Repl.Vol.), § 10-226(b) of the State Government Article, because she had 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 ⁵²¹ 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. Finally, one of the 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 Repl.Vol.), §§ 12-301, 12-701, 12-707(e), and 12-313(b)(24) of the Health Occupations Article. Appellant placed appellee on probation, imposed a fine, and reprimanded her.” 150 Md.App. at 142-46 , 819 A.2d at 385-87 (footnotes omitted).

Spencer then filed a Petition for Judicial Review in the Circuit Court for Baltimore City, alleging, inter alia, that she had been deprived of procedural due process because Mr. Ades and Ms. Schneider participated both as representatives of the Board in settlement negotiations and as members of the panel adjudicating her case. Agreeing with Spencer’s argu ⁵²² ments, the Circuit Court vacated and reversed the Board’s Final Decision and Order. The Circuit Court ruled that there was not substantial evidence in the record to support the Board’s decision; that the Board’s renewal of Spencer’s license pending the outcome of the investigation operated as a waiver of the violations subsequently found by the Board; and that Spencer had been deprived of due process as a result of the arguments that took place at the Board hearing between her attorney and two Board members. The Board appealed the Circuit Court’s ruling to the Court of Special Appeals.

The Court of Special Appeals agreed with the Circuit Court that Spencer was denied her right to a fair and unbiased hearing, focusing on Ms. Hawkins’ accusation that Spencer’s counsel was a “bold-faced liar.” The intermediate appellate court reversed the Circuit Court’s ruling that the Board’s renewal of Spencer’s license had foreclosed the Board from taking disciplinary action against her. Consequently, it remanded the case to the Circuit Court “with instructions to remand the case to the Board, directing [the Board] to delegate the authority to conduct the contested case hearing and to issue the final administrative decision in this case to the OAH.” 150 Md.App. at 155 , 819 A.2d at 393 . Spencer then filed a petition for writ of certiorari in this Court. 376 Md. 49 , 827 A.2d 112 (2003). Although petitioner has phrased the first question for our review as whether the Court of Special Appeals, by its order to the administrative agency to refer the case to the OAH, violated Article 8 of the Declaration of Rights and § 10-205 of the APA, a more accurate way of formulating the question, as we explain infra, is whether the Court of Special Appeals afforded the administrative agency the proper level of deference in a matter committed to the agency’s discretion.

Petitioner’s second question is whether the order to remand the matter to the OAH contravened either res judicata or double jeopardy principles as applied to administrative proceedings. Petitioner argues that the Court of Special Appeals exceeded its judicial authority when it fashioned a remedy that ⁵²³ interfered with the Board’s discretion to determine whether her case should be remanded to the OAH. She contends that the Court of Special Appeals violated Article 8 of the Declaration of Rights in ordering the Board to send the case to the OAH, because in so doing, that court performed a “nonjudicial function,” violating the constitutional mandate that the power of the three branches of government in Maryland “be forever separate and distinct.” See Dep’t of Nat. Res. v. Linchester Sand & Gravel Corp., 274 Md. 211 , 334 A.2d 514 (1975).

Petitioner also argues that because § 10-205 of the APA does not explicitly authorize the courts to delegate matters to the OAH, the Court of Special Appeals did not have authority to do so. Although the Board, as respondent, initially opposed these arguments in its Answer to Petition for Writ of Certiorari, in its brief, respondent reversed course and now agrees with petitioner that the Court of Special Appeals performed a non-judicial function in violation of Article 8. This Court, of course, is not bound by the concessions made by the parties on issues of law, which we may independently review. See In re Heather B., 369 Md. 257 , 266 n. 9, 799 A.2d 397 , 402 n. 9 (2002).

But we agree with both parties that the Court of Special Appeals exceeded its authority when it compelled the Board to exercise discretion the Legislature explicitly granted to the administrative agency. We therefore will reverse in part the intermediate appellate court’s judgment and remand the matter to the Board. 2 EL We address first the procedural and analytical posture of this case as it comes before this Court. When this Court sits in review of an administrative agency decision, we reevalu ⁵²⁴ ate the decision of the agency under the same statutory standards as would the circuit court; we do not employ those standards to reevaluate the decision of the circuit or intermediate appellate court. See Division of Labor v. Triangle General Contractors, Inc., 366 Md. 407, 416 , 784 A.2d 534, 539 (2001); Dept. of Health v. Campbell, 364 Md. 108, 123 , 771 A.2d 1051, 1060 (2001) (noting that it is the final decision at the administrative level, not the decision of the reviewing court, which is the focus of each level of judicial review).

Thus, as to the merits of such a matter, ordinarily and primarily, the inquiry is not whether the Court of Special Appeals erred, but whether the administrative agency erred. In the present case, in what way might the Board have erred? The answer to this question lies with the two disputed administrative actions taken by the Board that were reversed by the Court of Special Appeals. Petitioner’s original motion to the Board requested either (a) that her case be referred to the Office of Administrative Hearings or, in the alternative, (b) that the Board members who participated in the settlement negotiations recuse themselves.

Petitioner asked the Circuit Court to review both the denial of the recusal motion and the denial of the motion to remove to the OAH. These two denials by the Board constitute the two administrative decisions which petitioner asked the Circuit Court and the Court of Special Appeals to review. The Court of Special Appeals, disagreeing with the Board’s denial of both of those requests, held as follows: “In light of the actions by the Board that caused an appearance of impropriety in the proceedings in this case before the Board, this Court holds that the circuit court did not err by finding that appellee was denied due process in that hearing. Consequently, we remand this case to the Circuit Court for Baltimore City with instructions to remand the case to the Board, directing appellant to delegate the authority to conduct the contested case hearing and to issue the final administrative decision in this case to the OAH.” ⁵²⁵ 150 Md.App. at 155 , 819 A.2d at 393 .

Critical to understanding this case is the observation that the intermediate appellate court’s analysis amounted to a simultaneous review of two separate administrative actions: (1) the Board’s failure to recuse certain members of the panel and (2) the Board’s failure to refer the case to the OAH. Although the Court of Special Appeals apparently considered the agency’s failure to recuse the biased panel members to go hand-in-hand with the failure to refer the case to the OAH, we think it clear that the determination that “the actions of the Board members created an appearance of impropriety and unfairness” is separate and distinct from the determination that “the case must be retried before [the OAH].” For even if the Board was required to recuse the biased members from the adjudicating panel, it was not logically bound to refer the case to the OAH. The Board could have easily complied with the court’s judgment by replacing the biased members, yet persisted in its decision to forgo the OAH. Thus, those determinations were two distinct decisions by the agency, both of which were reviewed by the Court of Special Appeals.

With respect to the agency decision denying the recusal motion, the Court of Special Appeals held that “the actions by the Board that caused an appearance of impropriety in the proceedings in this case before the Board ... denied [petitioner] due process in that hearing.” Id.; cf. Maryland State Police v. Zeigler, 330 Md. 540, 559 , 625 A.2d 914, 923 (1993) (stating that “[procedural due process, guaranteed to persons in this State by Article 24 of the Maryland Declaration of Rights, requires that administrative agencies performing adjudicatory or quasi-judicial functions observe basic principles of fairness as to parties appearing before them”). Petitioner, of course, is satisfied with that ruling and did not raise that issue in the petition for certiorari, and neither did respondent cross-petition on that issue. Accordingly, we do not review that ruling by the Court of Special Appeals. See Mehrling v. Nationwide, 371 Md. 40 , 44 n. 3, 806 A.2d 662 , 665 n. 3 (2002) (noting that the Court of Appeals will not normally address a question not presented in petition for certiorari), and upon ⁵²⁶ remand, the Board must adhere to the court’s ruling as it bears on the defects in procedural due process at petitioner’s hearing.

It is the second administrative decision taken by the Board, and its review by the Court of Special Appeals, that concerns us in the case sub judice. By this we mean the Court of Special Appeals’s holding “directing [the Board] to delegate the authority to conduct the contested case hearing and to issue the final administrative decision in this case to the OAH.” The key point here is that the Court of Special Appeals judicially reviewed the Board’s decision to deny the motion to refer the case to the OAH, and it found that decision to be wanting. The court’s reasoning behind its determination is made in a footnote to its opinion: “We recognize that ‘under the APA, the delegation of matters to the OAH is not a mandatory function but a function within the discretion of the administrative agency.’ [Regan v. Board of Chiropractic, 120 Md.App. 494, 513 , 707 A.2d 891, 900 (1998).] In light of the facts of this particular case, however, it would not be appropriate to remand the case to the same tribunal that heard the case originally. * * * In this case, we have held that the actions of the Board members created an appearance of impropriety and unfairness, and for that reason, the case must be retried before a different tribunal.” 150 Md.App. at 156 n.14, 819 A.2d at 393 n.14. We do not think it so obvious that this case “must” be retried before the OAH, and the Court of Special Appeals did not discuss the appropriate standard of judicial review of the Board’s decision not to refer.

Because the Court of Special Appeals did not consider the appropriate standard of judicial review and whether, under that standard, the agency’s decision must be overturned, that task is now before this Court, as we sit in review of the agency’s action and not so much the decision by the intermediate appellate court. Therefore, this case requires us (1) to determine the proper standard of review to apply to the Board’s decision not to refer the case to the OAH ⁵²⁷ and (2) applying that standard, to determine whether the Board’s decision should be upheld.

III

Whether the administrative agency’s refusal to delegate to the OAH was improper requires us to determine the standard of review for such an agency decision. The standard of review for an agency decision, in turn, will depend upon the level of discretion delegated to the administrative agency with respect to such decisions. See MTA v. King, 369 Md. 274, 293-94 , 799 A.2d 1246, 1257 (2002) (Wilner, J., concurring); Hecht v. Crook, 184 Md. 271, 280-81 , 40 A.2d 673, 677 (1945); see generally A. Rochvarg, Maryland Administrative Law, §§ 4.29-4.38 (2001); E. Tomlinson, The Maryland Administrative Procedure Act, 56 Md. L.Rev. 196 (1997). To discover the proper standard of judicial review, we begin with the APA.

Because this case involves an agency acting in a “quasi-judicial” capacity, adjudicating the personal rights of petitioner, judicial review is governed by § 10-222, which is applicable to final decisions in contested cases. See § 10-222(a). Were we reviewing the agency acting in its policy-making or “quasi-legislative” capacity, a wholly different analysis governs