BILL ANALYSIS                                                                                                                                                                                                    

                                                       Bill No:  AB  
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis

          AB 2537  Author:  Silva
          As Amended:  April 14, 2010
          Hearing Date:  June 9, 2010
          Consultant:  Chris Lindstrom


               State agencies: adjudications: presiding officers.

          AB 2537 requires agencies conducting adjudicative  
          proceedings with a presiding officer who is an  
          administrative law judge (ALJ) to develop regulations to  
          allow a peremptory challenge (PC) of that presiding  
          officer, as specified.

          Specifically, the bill:

          1)Requires an agency that conducts an adjudicative  
            proceeding to provide by regulation for PC of a presiding  
            officer who is an ALJ.

          2)Exempts agencies with five or fewer ALJs from developing  
            PC regulations if the agency has an internal review  
            system for ALJ disqualification requests in which the  
            determination is made by the agency itself.

                                   EXISTING LAW

           Existing law provides for the conduct of administrative  
          adjudication proceedings of state agencies through the  
          Administrative Procedure Act.

          Existing law provides for the disqualification of a  


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          presiding officer for bias, prejudice, or interest in the  

          Existing law authorizes an agency that conducts an  
          adjudicative proceeding to provide by regulation for PC of  
          the presiding officer.

          Existing law provides for PC of a judge, court  
          commissioner, or referee in superior court. 


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           Purpose of the bill  .  According to the author's office,  
          "Parties in administrative law proceedings have a  
          substantial stake in the outcome of that proceeding, and  
          should have the same right to have their matters heard by a  
          fair and impartial trier of fact as parties in a court  
          proceeding.  Many state agencies, including the largest,  
          the Office of Administrative Hearings (OAH) under the  
          Department of General Services, provide for PCs of ALJs  
          believed to be biased, prejudiced, or interested in the  
          matter, similar to that provided to civil litigants under  
          Code of Civil Procedure [Section] 170.6. 

          "Other agencies, however, do not permit PCs of ALJs - and  
          may not even provide an effective internal appeals process.  
           At best this means that a party whose request for  
          disqualification has been denied by an ALJ must prepare  
          detailed and costly declarations, typically including  
          extensive hearing transcript documentation, to appeal the  
          denial of disqualification.  At worst, in cases where the  
          agency in question does not have an effective appeals  
          process - or even places appeals in the hands of the same  
          ALJ who denied the initial request for his or her  
          disqualification - it means that the party must seek relief  
          in court, unnecessarily delaying a decision on the merits  
          of the case at great expense to both the party and the  

          "AB 2537 will rectify this inconsistent and unequal unfair  
          situation by providing that all agencies must permit  
          parties the opportunity to excuse administrative law judges  
          on PC.  By doing so, the bill will increase fairness, and  
          should reduce costs for both the administrative litigants  
          and the agencies themselves."

           Background  .  A PC is disqualification without cause.  In  
          the case of this bill, PCs are presented as a motion by a  
          party to an administrative proceeding to remove the trier  
          of fact without giving a reason.  

          Presently, state agencies conducting adjudicative  
          proceedings are permitted to develop regulations governing  
          PCs for their presiding officers, whether ALJs or not.   
          Some agencies, such as OAH, which provides ALJs for 1,400  


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          local and state government agencies, do allow PCs for ALJs  
          in certain circumstances.  Other agencies, such as the  
          Department of Motor Vehicles and the Air Resources Board,  
          do not.  This creates an inconsistent administrative  
          adjudication structure in the state.   

          Existing law provides that adjudicative officers are  
          subject to disqualification for bias, prejudice, or  
          interest in the proceeding.  However, the methods of  
          determining disqualification vary widely between agencies,  
          and some agencies even permit the officer in question to  
          determine his or her own level of bias.  Permitting a PC  
          would streamline this process and create a greater sense of  

          A party to a civil or criminal matter in superior court may  
          issue one PC against a judge, court commissioner, or  
          referee.  ALJs hear no less important cases than those in  
          superior court:  disciplinary matters, terms of employment,  
          tax concerns, health care and business regulations fall in  
          the purview of administrative proceedings.  The author of  
          this bill argues that these parties should have the same  
          ability to remove a trier of fact they feel is biased as  
          those in a superior court.  However, this bill creates an  
          exemption for agencies having five or fewer available ALJs,  
          if that agency has an internal appellate review system for  
          ALJ disqualification requests in which the determination is  
          made by the agency itself.  This was borne out of a concern  
          from some agencies that their limited staff resources would  
          make the automatic removal unduly burdensome.

          This bill does not require agencies to develop PC  
          regulations for non-ALJ presiding officers, however; this  
          option is still permissive.  The author's office states  
          that there have been no demonstrated problems with non-ALJ  
          presiding officers.

           Sutter Medical Center Sacramento (SMCS) v. Shewry  .  The  
          case of  Sutter Medical Center Sacramento (SMCS) v. Shewry,   
          2007, arguably illustrates the current problem in law.  In  
          this administrative proceeding before the Department of  
          Health Care Services' Office of Administrative Hearings  
          (OAHA), SMCS filed a voluminous request for  
          disqualification of an ALJ, with detailed declarations and  
          extensive pages of evidentiary support from transcripts.   
          The challenged ALJ responded to this detailed request for  


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          disqualification with a brief order that did not address  
          any of the specific grounds raised, and denied his own  
          disqualification with a conclusory finding of no bias, no  
          prejudice, and no interest in the proceeding.  SMCS sought  
          reconsideration before the OAHA Chief ALJ, who ruled that  
          no administrative review of an ALJ's finding against  
          disqualification was available.  SMCS then had to proceed  
          to superior court, at significant time and expense, to  
          litigate and obtain an order requiring disqualification of  
          the ALJ.  This not only caused significant expense, but the  
          administrative delays related to implementing the court's  
          writ were significant, further delaying a decision on the  
          merits of the case.  

                            PRIOR/RELATED LEGISLATION
           SB 523 (Kopp), Chapter 938, Statutes of 1995  .  Adds the  
          administrative adjudicatory provisions of the  
          Administrative Procedures Act.

           SUPPORT:   As of June 4, 2010:

          Conference of California Bar Associations (Sponsor)

           OPPOSE:   None on file as of June 4, 2010.

           FISCAL COMMITTEE:   Senate Appropriations Committee