BILL ANALYSIS Bill No: AB 2537 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION 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 SUBJECT State agencies: adjudications: presiding officers. DESCRIPTION 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 AB 2537 (Silva) continued Page 2 presiding officer for bias, prejudice, or interest in the proceeding. 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. AB 2537 (Silva) continued Page 3 BACKGROUND 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 agency. "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 AB 2537 (Silva) continued Page 4 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 fairness. 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 AB 2537 (Silva) continued Page 5 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 **********