In the Matter of the Surveillance and Integrity Review (SIRS) Appeals by Trinity Home Health Care Services and Etyane ...
Opinion text
STATE OF MINNESOTA
IN SUPREME COURT
A22-0183
Court of Appeals Thissen, J.
Dissenting, Chutich, J.
Took no part, Procaccini, J.
In the Matter of the Surveillance and
Integrity Review (SIRS) Appeals by Trinity
Home Health Care Services and Etyane Ayana.
Filed: October 11, 2023
Office of Appellate Courts
________________________
Matthew J. Schaap, Cassandra C. Wolfgram, Dougherty, Molenda, Solfest, Hills & Bauer
P.A., Apple Valley, Minnesota, for appellants.
Keith Ellison, Attorney General, Leonard J. Schweich, Assistant Attorney General, Saint
Paul, Minnesota, for respondent.
Keith Ellison, Attorney General, Rachel Bell-Munger, Assistant Attorney General, Saint
Paul, Minnesota, for amici curiae Commissioners of the Minnesota Departments of Health,
Labor and Industry, and Veterans Affairs.
Brianna Boone, Russell Squire, Southern Minnesota Regional Legal Services, Saint Paul,
Minnesota, for amicus curiae Southern Minnesota Regional Legal Services.
________________________
1
SYLLABUS
The Department of Human Services does not have the authority to remand a case to
an administrative law judge under Minn. Stat. § 14.62 (2022), or under any other source of
implied authority, after the administrative law judge issues a final recommendation.
Reversed.
OPINION
THISSEN, Justice.
The question in this case is whether the Department of Human Services (DHS)
appropriately remanded a case to an administrative law judge (ALJ) under the Minnesota
Administrative Procedure Act, Minn. Stat. § 14.62 (2022). We conclude that DHS did not
have the authority to remand the case to the ALJ. Accordingly, the ALJ’s September 21,
2019, Findings of Fact, Conclusions of Law, and Recommendation—the ALJ’s first
report—is the binding decision in this matter. Based on this resolution of the case, we do
not reach the questions of whether the DHS Commissioner’s final order issued after the
remand to the ALJ was arbitrary and capricious or whether the final order was supported
by substantial evidence.
FACTS
Appellant Etyane Ayana is the sole owner of appellant Trinity Home Health Care
Services (collectively, “Trinity”). Trinity provides nursing services, personal care assistant
(PCA) services, and homemaking services. It receives reimbursement from respondent
DHS for services that it provides to Medicaid-eligible persons with disabilities.
Minnesota’s Medicaid program is known as Medical Assistance. As part of its oversight
2
of the program, DHS has a Surveillance and Integrity Review Section (SIRS), which
conducts audits and investigations into suspected noncompliance with program
requirements.
Medicaid is a joint federal-state program. Federal law requires DHS to make sure
that providers comply with federal program requirements as a condition of receiving
federal funding. 42 U.S.C. § 1396c. SIRS’s responsibility includes “identifying and
investigating fraud, theft, abuse, or error by vendors or recipients of health services.”
Minn. R. 9505.2160 (2021). DHS can impose sanctions and fines—including termination
from the program—on Medical Assistance vendors who (among other things) commit
“fraud, theft, or abuse.” Minn. Stat. § 256B.064, subds. 1a and 1b (2022). DHS can also
“obtain monetary recovery from a vendor who has been improperly paid either as a result
of conduct [including fraud, theft, or abuse] or as a result of a vendor or department error,
regardless of whether the error was intentional.” Minn. Stat. § 256B.064, subd. 1c (2022).
This saga began nearly 8 years ago. SIRS’s first investigation of Trinity and Ayana
began in 2015 following complaints about Trinity’s services. As part of that investigation,
SIRS investigators conducted an onsite review of Trinity in March 2016. 1 The investigator
reviewed and scanned some Trinity records from the period between January 1, 2015, to
1
Under Minnesota Rule 9505.2185, subpart 2 (2021), a vendor “shall grant the
department access during the department’s normal business hours to examine health
service and financial records related to a health service billed to a program.” SIRS also
has the authority to “investigate vendors . . . to monitor compliance with program
requirements for the purposes of identifying fraud, theft, abuse, or error in the
administration of the programs,” Minn. R. 9505.2200, subp. 1 (2021), and this “authority
to investigate extends to the examination of any person, document, or thing which is likely
to lead to information relevant to the expenditure of funds,” id., subp. 3 (2021).
3
March 8, 2016. The investigator compared the documentation to billed claims and
determined that Trinity had been overpaid $640,641.12 for nursing services, $277,187.30
for PCA services, and $2,599 for homemaking services. 2 The investigator did not contact
Trinity regarding any problems that she found. In May 2016, DHS referred the matter to
2
Specifically, SIRS concluded that the overpayment included:
• $640,641.12 for nursing services. The investigator based her
calculation on evidence of missing or insufficient documentation;
Licensed Practicing Nurses (LPNs) billed as Registered Nurses
(RNs); overlapping shifts; and a failure to document time. The
investigator used the following standards in calculating this
overpayment: (1) a timesheet was not enough documentation to show
that services were provided to a patient; and (2) an overpayment
amount was calculated for the entire period of claimed time if there
were no progress notes for the claim billed.
• $277,187.30 for PCA services. State law requires that PCA agencies
maintain certain documentation including “time sheets for each
personal care assistant” and a personal care plan for each recipient of
care, which must be updated annually. Minn. Stat. § 256B.0659,
subds. 7, 28(a)(4) (2022). The statute requires that care plans include
“start and end date[s] of the care plan” and a plan for how the recipient
will use PCA services over the course of the year. Id., subd. 7. The
statute sets forth several requirements for the information that must be
in the time sheet. Minn. Stat. § 256B.0659, subd. 12(c) (2022). The
investigator found the following errors in Trinity’s records: no time
documented on a timesheet; missing timesheets; missing other
required components on the timesheet (signatures, provider number,
activities completed, fraud statement); submission of time by PCAs
who failed a background study; timesheets that had conflicting
information for the service dates, service recipient, and PCA;
photocopied timesheets; and claims for services on dates when
recipient was receiving inpatient care.
• $2,599 for homemaking services. The investigator found that
timesheets for the billed services were missing altogether or were
missing information about the time of service and other required
components on the timesheets (such as signatures). The investigator
also found examples in which Trinity billed for overlapping time
when the same individual provided PCA services and homemaking
services for the same recipient.
4
Minnesota’s Medicaid Fraud Control Unit. By January 2017, the case was closed without
action.
Almost a year and a half later, on May 2, 2018, SIRS pursued further investigation.
In July 2018, a new SIRS lead investigator conducted a second onsite review of Trinity for
service dates of March 1, 2017, to December 31, 2017. Following review of the records,
the SIRS investigator determined that, for the time period, Trinity had been overpaid
$52,660.10 for nursing services, $287,006.93 for PCA services, and $696.49 for
homemaker services. The reasons for SIRS finding an overpayment were similar to the
2016 investigation. DHS concluded that termination was the appropriate sanction and that
an immediate payment withhold was in order.
In February 2019, DHS sent Trinity and Ayana notices of termination from the
program, as well as notices demanding return of overpayments and payment-withholding.
Trinity and Ayana appealed.
The lead investigator changed again in April 2019. At that time, the investigator
reviewed SIRS’s overpayment spreadsheets. Based on her review of the documents for
Trinity’s nursing services, the investigator determined that the total overpayment for
nursing (from the 2016 and 2018 investigations) was higher than the first investigator
believed—$681,810.84—and calculated that the total overpayment for PCA services (from
the 2016 and 2018 investigations) was $614,982.05. DHS sent amended notices to Trinity
and Ayana.
The dispute between DHS, Trinity, and Ayana was submitted for a contested case
hearing under Minnesota Statutes chapter 14 (2022). DHS and Trinity participated in a
5
3-day evidentiary hearing before the administrative law judge. The ALJ admitted into
evidence the three amended notices and the associated spreadsheets. The spreadsheets
included columns for the name of the service recipient, the date of service, the units (time)
allowed, the units and money paid for the service, the amount of money that DHS
determined was overpaid, and the reason that DHS believed there was an overpayment.
The ALJ also admitted into evidence three additional exhibits—voluminous images of the
documents that the investigators scanned during the 2016 and 2018 onsite reviews. The
spreadsheets did not identify which documents were connected with each specific entry on
the spreadsheets.
On September 21, 2019, the ALJ issued his report (“First Report”), concluding that
DHS did not meet its burden to establish, by a preponderance of the evidence, that Trinity
committed abuse in obtaining funds from Medical Assistance for homemaking, nursing,
and PCA services provided to clients. See Minn. R. 1400.7300, subp. 5 (2021). The ALJ
found that all three DHS investigators testified credibly. The ALJ further found that
Ayana’s credibility was suspect and thus did not give Ayana’s testimony much weight
unless supported by corroborating evidence. The ALJ stated that if DHS had proven what
it alleged in the homemaking, nursing, and PCA notices, then Trinity’s behavior would
constitute abuse. But the ALJ concluded that because DHS only summarized its
spreadsheets and did not identify the “real evidence” upon which the spreadsheets were
based, he would not give the spreadsheets weight, so DHS failed to meet its burden of
6
proof. 3 Notably, the ALJ stated that “the real evidence is not specifically cited in the
spreadsheets, reports, or even in [DHS’s] summation of its case.” Moreover, DHS did not
present any witness who could point the ALJ to the documentation.
The ALJ found that DHS met its burden to show abuse occurred based on Trinity’s
failure to provide all records at the time of the two site visits. But the ALJ also concluded
that overpayments were not “the result of” this abuse, so continuing to withhold payments
was inappropriate. And the ALJ found that terminating Trinity’s participation in the
Minnesota Health Care Programs was an inappropriate sanction for failure to provide
records at the time of the site visits.
3
The ALJ provided several examples to show why he found the spreadsheets
unreliable. For example, the ALJ explained that Trinity billed 2 hours of homemaker
services on June 3, 2015. DHS’s spreadsheet states that Trinity billed 3 hours. The ALJ
explained that “there is no real evidence supporting what Trinity claimed for
reimbursement. . . . In other words, there is no proof that Trinity claimed an hour more
than it was owed for homemaker services on June 3, 2015, for the recipient.”
The ALJ explained that to recover for an overpayment, DHS must show that the
abuse resulted in an improper payment. Minn. Stat. § 256B.064, subd. 1c(a). The ALJ
found that DHS had only shown that the requested records were not timely provided at site
visits under Minn. R. 9505.2185 (2021). The ALJ determined, however, that this fact did
not prove that DHS made improper payments.
7
DHS timely filed its exceptions and Trinity and Ayana timely submitted a response
to DHS’s exceptions. 4 Ultimately, the record in the ALJ proceeding closed on
November 2, 2020. See Minn. Stat. § 14.61, subd. 2. 5
In this case, the ALJ’s report is a recommendation to the Commissioner of DHS;
the Commissioner has the final decision-making authority. See Minn. Stat. § 14.62,
subd 2a. Minnesota Statutes section 14.62, subdivision 1, of the Minnesota Administrative
Procedure Act, sets forth the steps the Commissioner must take following the issuance of
the ALJ’s report and recommendation:
Every decision and order rendered by an agency in a contested case shall be
in writing, shall be based on the record and shall include the agency’s
findings of fact and conclusions on all material issues. A decision or order
that rejects or modifies a finding of fact, conclusion, or recommendation
contained in the report of the administrative law judge . . . must include the
reasons for each rejection or modification.
Minn. Stat. § 14.62, subd. 1. Further, under Minn. Stat. § 14.62, the Commissioner has
90 days from the date the ALJ proceeding closed to issue a final order or the ALJ’s report
4
Under section 14.61, subdivision 1, of the Minnesota Administrative Procedure Act,
the agency decision-maker cannot make the final decision “until the report of the
administrative law judge . . . has been made available to parties to the proceeding for at
least ten days and an opportunity has been afforded to each party adversely affected to file
exceptions and present argument to a majority of the officials who are to render the
decision.” Minn. Stat. § 14.61, subd. 1. Here, DHS submitted its exceptions, arguing that
the record, the evidence, and the testimony at the administrative hearing showed that it is
entitled to monetary recovery. Trinity submitted a response to the exceptions and
contended that the ALJ’s First Report was correct.
5
Minnesota Statutes section 14.61, subdivision 2, states that when the agency makes
the final decision (like here), “the contested case record must close upon the filing of any
exceptions to the report and presentation of argument under subdivision 1 or upon
expiration of the deadline for doing so.” Minn. Stat. § 14.61, subd. 2.
8
and recommendation constitutes the final decision in the case. Minn. Stat. § 14.62,
subd. 2a (“Unless otherwise provided by law, the report or order of the administrative law
judge constitutes the final decision in the case unless the agency modifies or rejects it under
subdivision 1 within 90 days after the record of the proceeding closes under section 14.61.”
(emphasis added)).
The 90-day period for the Commissioner to make her decision ended on February 1,
2021. Just before the Commissioner’s final order was due, the Commissioner filed with
the Chief ALJ a motion for extension of the deadline to issue the agency’s decision. See
Minn. Stat. § 14.62, subd. 2a (authorizing an extension upon a showing of good cause).
The Chief ALJ granted DHS a 30-day extension on January 28, 2021, with a new deadline
of March 3, 2021.
On the March 3, 2021, deadline to issue the final order, the Commissioner issued an
order remanding the case to the ALJ for further proceedings. The Commissioner’s primary
concern was that the ALJ did not give proper weight to the spreadsheets (based on the
Commissioner’s interpretation of Minnesota Rule of Evidence 1006) and the evidence of
abuse reflected therein. In particular, the Commissioner contended that the ALJ failed to
apply or improperly applied Minnesota Rule of Evidence 1006 (voluminous evidence). 6
6
Minnesota Rule of Evidence 1006 states:
The contents of voluminous writings, recordings, or photographs which
cannot conveniently be examined in court may be presented in the form of a
chart, summary, or calculation. The originals, or duplicates, shall be made
available for examination or copying, or both, by other parties at a reasonable
time and place. The court may order that they be produced in court.
9
The Commissioner also submitted updated spreadsheets that provided more information
on which underlying documents supported each entry on the spreadsheets.
At the end of August 2021, the ALJ issued a second Findings of Fact, Conclusions
of Law, and Recommendation (“Second Report”). In the Second Report, the ALJ
concluded that the Commissioner had implied authority to remand the case to the ALJ and
that the remand was a rejection of the First Report. But the ALJ also renewed (with one
exception) his recommendation that DHS had not carried its burden of proof in showing
abuse sufficient to justify monetary recovery or the termination sanction. Again, the ALJ
explained that DHS did not meet its burden in verifying the spreadsheets and he would
therefore not rely on them.
The Commissioner issued a timely final order on January 10, 2022. 7 She accepted
the information set forth in the spreadsheets as accurate and sufficient to support DHS’s
claim of abuse. Accordingly, she modified the ALJ’s report and concluded that Trinity
had engaged in the abuse outlined in DHS’s notices and spreadsheets. The Commissioner
ordered repayment of $681,810.84 for nursing services, $614,982.05 for PCA services, and
$696.49 for homemaker services and terminated Trinity and Ayana.
Trinity and Ayana appealed the Commissioner’s final order to the court of appeals,
which affirmed. In re SIRS Appeals by Trinity Home Health Care Servs. & Etyane Ayana,
No. A22-0183, 2022 WL 6272045 (Minn. App. Oct. 10, 2022). We granted review on two
7
The contested case record for the Second Report closed on October 12, 2021, at
which point the 90-day deadline under section 14.62 started. The 90-day period expired
on January 10, 2022.
10
questions: (1) Did the Commissioner have power to remand the case to the ALJ after the
ALJ’s First Report? and (2) Was the Commissioner’s final order supported by substantial
evidence or was it arbitrary and capricious? 8
ANALYSIS
This case requires us to answer the following question: Did the Legislature in the
Minnesota Administrative Procedure Act (the Act) grant the Commissioner power to
remand the case to an ALJ after the ALJ has issued a report with recommendation to the
agency? We conclude that the Commissioner does not have the power to remand a case to
the ALJ in such circumstances. Therefore, the First Report of the ALJ is the final decision
in the case.
A.
“Whether an administrative agency has acted within its statutory authority is a
question of law that we review de novo.” In re Hubbard, 778 N.W.2d 313, 318
(Minn. 2010). To determine whether the Commissioner acted within her statutory
authority in remanding the case to the ALJ, we must interpret the Minnesota Administrative
Procedure Act. We review questions of statutory interpretation de novo. Matter of Midway
Pro Bowl Relocation Benefits Claims, 937 N.W.2d 423, 425 (Minn. 2020). The first
question we must answer is whether the Act plainly tells us that the Commissioner has—or
does not have—the power to remand a case to the ALJ after the ALJ has issued a report
8
Based on our disposition of the case, we need not reach the question of whether the
Commissioner’s final order was arbitrary and capricious or supported by substantial
evidence.
11
with recommendation. State v. Fugalli, 967 N.W.2d 74, 77 (Minn. 2021) (stating that
“[t]he first step in statutory interpretation” is to determine whether there is only one
reasonable way to read the text—in which case that reading controls—or more than one).
We start with section 14.62, subdivision 2a, which provides:
Unless otherwise provided by law, the report or order of the administrative
law judge constitutes the final decision in the case unless the agency modifies
or rejects it under subdivision 1 within 90 days after the record of the
proceeding closes under section 14.61. When the agency fails to act within
90 days on a licensing case, the agency must return the record of the
proceeding to the administrative law judge for consideration of disciplinary
action. . . . Upon a showing of good cause by a party or the agency, the chief
administrative law judge may order a reasonable extension of either of the
two 90-day deadlines specified in this subdivision.
(Emphasis added.) Section 14.62, subdivision 2a, is a limitations provision: it sets a
90-day deadline for the Commissioner to make a final decision after the ALJ issues a report
with recommendation and the record before the ALJ has closed. See Minn. Stat. §§ 14.50
(stating that it is the “duty of the [administrative law] judge to make a report on each
proposed agency action . . . stating findings of fact and conclusions and
recommendations”); 14.61, subd. 1 (prohibiting the agency from issuing a final decision
when a contested case proceeding is required until the parties adversely affected have been
afforded an opportunity to file exceptions); 14.61, subd. 2 (explaining “[c]losure of record”
before the ALJ).
One reasonable reading of section 14.62, subdivision 2a—the one urged by
Trinity—is that the Commissioner’s authority after receiving an ALJ’s report with
recommendation is limited to three options. First, she may accept the ALJ’s report with
recommendation as the Commissioner’s decision. Second, she may modify the ALJ’s
12
report with recommendation and provide reasons for her modifications. Third, she may
reject the ALJ’s report with recommendation and provide reasons for her rejection. The
statutory text does not give the Commissioner authority to pursue a fourth option—to
remand the case to the ALJ. We cannot add the word “remand” to the statute. See Reider
v. Anoka-Hennepin Sch. Dist. No. 11, 728 N.W.2d 246, 250 (Minn. 2007) (“[W]e cannot
add terms that the legislature has omitted.”).
DHS does not contest that the Commissioner’s authority after receiving an ALJ’s
report with recommendation is limited to one of three options. Rather, it argues that a
remand is not an unmentioned fourth option but rather a species of the third
option—rejection. Because chapter 14 does not define “rejects,” DHS turns to dictionary
definitions to make its case. It observes that commonly used dictionaries define “reject”
as “[t]o refuse to accept, submit to, believe, or make use of; [t]o refuse to consider or grant;
deny.” E.g., The American Heritage College Dictionary 1151 (3d ed. 2000). And that,
DHS asserts, is precisely what the Commissioner did when she refused to consider the
ALJ’s findings and recommendation and instead remanded the case to the ALJ to
reconsider its decision.
Of course, we may look to dictionaries to assist in understanding the meaning of a
statute. State v. Thonesavanh, 904 N.W.2d 432, 436 (Minn. 2017). But “the dictionary is
not foolproof or failsafe” and “[i]t is not unusual to set aside dictionary definitions when
context makes clear that dictionary definitions may not fit.” State v. Scovel, 916 N.W.2d
550, 555 (Minn. 2018); see Chiodo v. Bd. of Ed. of Special Sch. Dist. No. 1, 215 N.W.2d
806, 808 (Minn. 1974) (rejecting the dictionary definition of “instruction” when
13
interpreting Minn. Stat. § 125.17, subd. 1(a), because “words of a statute are to be viewed
in their setting, not isolated from their context”); City of Brainerd v. Brainerd Invs. P’ship,
827 N.W.2d 752, 760 (Minn. 2013) (Anderson, J., dissenting) (“[W]e must not look simply
at a dictionary definition. . . . Instead, we must assess whether applying the dictionary
definition makes sense in context.”).
We are not convinced by DHS’s argument. First, the definition DHS points to is
broad and multifaceted. Not all the meanings included in the dictionary definition support
DHS’s position. For instance, to remand (which means to “send back,” Remand, Black’s
Law Dictionary (11th ed. 2019)) is not a denial of the ALJ’s order, but instead a request
for reconsideration. 9 In such circumstances, the dictionary definitions, standing alone, are
less helpful in establishing ordinary meaning.
More fundamentally, the options available to the Commissioner—accept the ALJ’s
report with recommendation, modify the report, or reject the report—must be considered
against the contextual backdrop in which the statute authorizes the Commissioner to
exercise those options. Section 14.62, subdivision 2a, places a time limitation—90 days
after the record closes in the contested case before the ALJ—for the issuance of a final
decision by the agency. Accordingly, a decision by the Commissioner that accepts,
modifies, or rejects an ALJ’s report with recommendation is one that results in a final
9
It does not automatically follow that, as the dissent argues, sending a case back to
the ALJ means that the Commissioner rejected all the ALJ’s recommendations.
14
decision. 10 This conclusion is reinforced by the third sentence of section 14.62,
subdivision 2a, which provides that “[i]n all contested cases where the report or order of
the administrative law judge constitutes the final decision in the case, the administrative
law judge shall issue findings of fact, conclusions, and an order within 90 days after the
hearing record closes under section 14.61.” Minn. Stat. § 14.62, subd. 2a. 11 The
Legislature’s meaning in section 14.62 is clear: whether the agency accepts the ALJ’s
findings, conclusions and/or recommendations, or modifies or rejects the ALJ’s findings,
conclusions and/or recommendations, a final decision in a contested case hearing must be
10
It is also important to keep in mind that, unless the agency otherwise agrees, the
agency—and not the ALJ—has the final word on the disposition of a case. The agency
does not have to accept any of the ALJ’s findings, conclusions, or recommendations as
long as the agency sets forth reasonable justifications for its decision. Minn. Stat. § 14.62,
subd. 1; see In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d
264, 278 (Minn. 2001) (“When reviewing agency decisions we ‘adhere to the fundamental
concept that decisions of administrative agencies enjoy a presumption of correctness, and
deference should be shown by courts to the agencies’ expertise and their special knowledge
in the field of their technical training, education, and experience.’ ” (quoting Rsrv. Mining
Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977))). This case is a good example. After
the ALJ issued his Second Report, the Commissioner issued a final decision modifying
several of the ALJ’s findings of fact and conclusions and wholly rejecting the ALJ’s
dispositional recommendations—and it did so for the same reasons that it ordered the
remand in the first place. The Commissioner had authority to issue the same decision after
the First Report. The only differences are that on remand, the agency polished up its initial
spreadsheets by adding a column that connected the spreadsheet entries to documents in
the record, see Minn. Stat. § 14.60, subd. 2 (stating that “[n]o factual information or
evidence shall be considered in the determination of the case unless it is part of the record”),
and Trinity had to wait months more while the investigation hung over its head and had
payments withheld. Notably, the Commissioner at the same time suggests that the
amended spreadsheet does not constitute new evidence in the record.
11
Under Minn. Stat. § 14.57(a), “[u]pon initiation of a contested case proceeding, an
agency may, by order, provide that the report or order of the administrative law judge
constitutes the final decision in the case.”
15
issued by the agency within 90 days of the closure of the contested case proceedings before
the ALJ. 12 The broad interpretation of “rejects” offered by DHS, which allows it to send
the case back to the ALJ indefinitely, does not result in a final decision in the matter. See
Minn. Stat. § 14.62, subd. 1 (stating that an agency can only modify or reject in the context
of a “decision and order . . . [which] shall include the agency’s findings of fact and
conclusions on all material issues” (emphasis added)). The argument that the meaning of
the word “rejects” in section 14.62, subdivision 2a, includes the power to indefinitely
remand is not reasonable. 13
12
As shown in this case, the 90-day limitation on the issuance of a final decision may
be extended by the chief administrative law judge for good cause. Minn. Stat. § 14.62,
subd. 2a.
13
As the dissent, DHS, and some of the amici suggest, there may be good policy
reasons to allow a remand in contested case proceedings. For instance, it may be that there
are some kinds of remand that would be appropriate based on the ALJ’s role as a factfinder.
As amicus Southern Minnesota Regional Legal Services asserts, a remand from the
Commissioner to the ALJ could allow the record to reopen to allow parties to bring in new
facts or new information that emerged after the record closes. Cf. Minn. Stat. § 14.67
(allowing the court of appeals to order the agency to take additional material evidence
where there are “good reasons for failure to present it in the proceeding before the agency”).
A remand may also allow the record to reopen if there has been a mistake of law. In that
case, the facts would need to be reviewed because the ALJ and parties applied, for example,
the wrong statute, or a new case was issued following the ALJ report that interpreted the
law differently. In contrast, a remand (like the one here) where DHS does not provide new
evidence or new law, but instead contends that the ALJ wrongly interpreted the evidence,
may not align as well with the ALJ’s role as a fact-finder within contested case proceedings.
We cannot justify the dissent’s argument that a remand may be allowed in some
circumstances. The dissent offers no explanation, based on the statutory language, of why
one type of remand is a rejection and another type is not. In short, the policy arguments
for allowing remand are nuanced. Sorting out those policy arguments, especially where
the Legislature has not statutorily provided for any remand authority, is better left to the
Legislature, which has the power to amend the statute if it chooses to do so.
16
We therefore conclude that section 14.62, subdivision 2a, provides the agency with
three options after receiving the ALJ’s report with recommendation: to accept the ALJ’s
report as the agency’s final decision; to “modif[y]” the ALJ’s report; or to “reject” the
ALJ’s report. A remand is not a rejection. The option to remand is not permitted.
B.
DHS also argues that even if Minnesota Statutes section 14.62, subdivision 2a, does
not authorize the Commissioner to remand a closed contested case proceeding to the ALJ,
she nonetheless may do so. DHS makes two arguments. First, DHS contends that the
Commissioner has authority to remand a case because of the agency’s general authority to
administer and supervise Medicaid. Second, DHS argues that the Commissioner has
implied authority to remand a case to the ALJ under our case law.
1.
We do not agree that the Commissioner’s broad power to administer and supervise
all forms of public assistance provided for under state law and, specifically, to prevent
waste and protect taxpayer funds under Minnesota Statutes section 245.03, subd. 2(1)
(2022), includes the specific power to remand a closed contested case proceeding to the
ALJ to reconsider the ALJ’s report with recommendation. This case is about the
procedures for contested cases set forth in the Act. Those procedures are not specific to
DHS. Rather, the Act and its implementation are under the purview of the Office of
Administrative Procedure. Minn. Stat. § 14.51 (empowering the chief administrative law
judge to adopt rules to govern the procedural conduct of contested case hearings). DHS’s
assertion of broad authority to do whatever the agency deems necessary to administer and
17
supervise public assistance programs—even to override the limitations placed on agency
decision-making in the Act—proves too much. As one relevant example, taken to its
logical end point, DHS’s argument would allow it to ignore the contested case process
entirely. The rule that DHS urges us to accept would essentially create a special DHS
procedural rule for contested cases. We see no basis in the statute to support that result.
See Shefa v. Ellison, 968 N.W.2d 818, 835 (Minn. 2022) (stating that a more specific grant
of power prevails over a general grant of power).
2.
We also disagree with the claim by DHS that the Commissioner has implied
authority under our case law to remand a case to the ALJ. We start by observing that “[a]n
agency’s authority may be stated either expressly in statute or implied from the express
powers given to the [agency] by the Legislature.” Matter of Otter Tail Power Co.,
942 N.W.2d 175, 179 (Minn. 2020). “ ‘[A]ny enlargement of express powers by
implication must be fairly drawn and fairly evident from the agency objectives and powers
expressly given by the legislature.’ ” Id. (quoting Minnegasco v. Minn. Pub. Utils.
Comm’n, 549 N.W.2d 904, 907 (Minn. 1996)). The Act, and in particular, section 14.62,
limits the scope of what a state agency like DHS may do once an ALJ issues a report with
recommendation and the contested case proceeding before the ALJ is closed. The power
to remand a contested case to an ALJ may not be fairly implied from the powers granted
by statute; indeed, that power is expressly limited by statute.
DHS cites to two of our prior decisions and one court of appeals decision to support
its claim of implied authority: Anchor Casualty Co. v. Bongards Co-Operative Creamery
18
Ass’n, 91 N.W.2d 122, 126 (Minn. 1958), State ex rel. Turnbladh v. District Court,
107 N.W.2d 307, 312–13 (Minn. 1960), and Pfalzgraff v. Commissioner of Economic
Security, 350 N.W.2d 458, 460 (Minn. App. 1984). We disagree that the cases demonstrate
DHS has implied authority to remand a contested case report with recommendation to the
ALJ that issued it with instructions to reconsider the decision.
First, the Legislature did not enact section 14.62, subdivision 2a—the provision at
issue—until 2002. Each of the opinions upon which DHS relies were issued before 2002.
The Legislature enacted the first iteration of the Minnesota Administrative
Procedure Act in 1957 and did not set a timeline for agency actions in contested cases. Act
of Apr. 27, 1957, ch. 806, §§ 1–14, 1957 Minn. Laws 1100, 1100–05. In 1980, the
Legislature enacted predecessor language to the current section 14.62, subdivision 2a. Act
of Apr. 24, 1980, ch. 615, § 18, 1980 Minn. Laws 1542, 1551. The language provided:
Unless otherwise provided by law, if an agency fails to render a decision and
order in a contested case within 90 days after the submission of the final
hearing examiner report and subsequent exceptions and arguments under
section 14.61 if any, any party may petition the district court for an order
requiring the agency to render a decision and order on the contested case
within such time as the court determines to be appropriate. The order shall
be issued unless the agency shows that further delay is reasonable.
Minn. Stat. § 14.62, subd. 2 (1982). 14 Again, this statute did not mandate a deadline for
agency action.
14
In 1983, the Legislature changed section 14.62, subdivision 2, to require the party
to petition the court of appeals (not the district court) “for an order requiring the agency to
render a decision and order on the contested case within such time as the court determines
to be appropriate.” Act of June 1, 1983, ch. 247, § 8, 1983 Minn. Laws 852, 856.
19
In 2002, the Legislature amended section 14.62, subdivision 1, to add the current
language which includes the requirement that any “decision or order that rejects or modifies
a finding of fact, conclusion, or recommendation” of the ALJ must “include the reasons for
each rejection or modification.” Act of Mar. 21, 2002, ch. 251, § 4, 2002 Minn. Laws 234,
235. At the same time, the Legislature repealed section 14.62, subdivision 2, and adopted
subdivision 2a, which stated that the ALJ’s report would be final unless the agency
“modifies or rejects it” within 90 days. Id., ch. 251, §§ 5, 7, Minn. Laws at 235. In other
words, it was not until 2002 that the Legislature constrained agency authority in contested
case hearings with a specific 90-day deadline for the agency to issue a final decision and
the provision that the ALJ’s report with recommendation was the final agency decision if
the agency did not otherwise act to modify or reject the ALJ’s findings of fact, conclusions
and/or recommendations before the deadline. Of course, our decisions and the decision of
the court of appeals cited by DHS, all issued before 2002, could not have accounted for the
2002 limitations placed on agency authority in contested case hearings.
The cases are also procedurally and otherwise distinguishable. In Anchor Casualty,
we interpreted a provision of the Wholesale Produce Dealers Act. 91 N.W.2d at 125–26.
Under the law, all wholesale produce dealers had to obtain a surety bond. Id. at 123. The
specific provision at issue, Minn. Stat. § 27.06 (1953), required that the Commissioner of
Agriculture determine that a claim by a person seeking to recover under the bond fell within
the scope of the surety’s undertaking before the aggrieved person could sue to recover in
district court. Anchor Casualty, 91 N.W.2d at 125. Section 27.06 established the
procedures under which the Commissioner of Agriculture considered and made such a
20
determination. 15 Anchor Casualty, 91 N.W.2d at 124–26. The case unsurprisingly did not
address the Minnesota Administrative Procedure Act, the first rudimentary version of
which the Legislature enacted in 1957—a year after the agency decision at issue in Anchor
Casualty. See id. at 124.
The legal question we addressed in Anchor Casualty was whether an agency
commissioner had the power under section 27.06 to set aside his initial order and reopen
the proceedings for the purpose of reconsidering his decision and taking additional
evidence when the decision to set aside the initial order occurred before the rights of the
parties to the proceedings had been prejudiced. Anchor Casualty, 91 N.W.2d at 124. We
expressly observed that section 27.06 did “not specifically grant to the commissioner the
power to open and rehear matters, [but] neither [did] it deny that power to him.” Anchor
Casualty, 91 N.W.2d at 125. Under those circumstances, we held that because no party
was prejudiced by the decision to reopen the case, the commissioner had the authority to
15
The statute provided in relevant part:
27.06 COMPLAINTS FILED WITH COMMISSIONER. Any person
claiming himself to be damaged by any breach of the conditions of a bond
given by a licensee, as herein provided, may enter complaint thereof to the
commissioner, which complaint shall be a written statement of the facts
constituting the complaint. Upon filing the complaint in the manner herein
provided, the commissioner shall investigate the charges made and, at his
discretion, order a hearing before him, giving the party complained of notice
of the filing of the complaint and the time and place of the hearing. At the
conclusion of the hearing the commissioner shall report his findings and
render his conclusions, upon the matter complained of, to the complainant
and the respondent in each case, who shall have 15 days following in which
to make effective and satisfy the commissioner’s conclusions.
21
set aside the initial order and reopen the proceeding under section 27.06. Anchor Casualty,
91 N.W.2d at 126. We quoted approvingly a decision of the Supreme Court of New Jersey:
Barring statutory regulation, the power [to reopen a decision] may be
invoked by administrative agencies to serve the ends of essential justice and
the policy of the law. But there must be reasonable diligence. The denial to
such tribunals of the authority to correct error and injustice and to revise its
judgments for good and sufficient cause would run counter to the public
interest. The function cannot be denied except by legislative fiat; and there
is none such here.
Id. at 126 (quoting Handlon v. Town of Belleville, 71 A.2d 624, 627–28 (N.J. 1950))
(emphasis added).
Anchor Casualty is different from this case in two ways. First, Anchor Casualty is
procedurally different. There, we were addressing the power of an agency commissioner
to reconsider her own decision; here, we are addressing the power of an agency
commissioner to demand that an ALJ reconsider his decision. Second, as we have
discussed above, section 14.62 places explicit restrictions on the actions that an agency
may take once it receives an ALJ report with recommendation in a contested case where
the proceedings before the ALJ have closed. As we recognized in Anchor Casualty, the
agency is bound by such legislative directives. 91 N.W.2d at 126.
The decision in Turnbladh is also distinguishable from this case. That case arose
out of a complaint that a prison warden improperly requisitioned food from the prison
kitchen. 107 N.W.2d at 309. The Commissioner of Corrections met with the warden and
the two reached an informal agreement that the food withdrawals were not illegal or
dishonest but showed poor judgment and that discipline would be suspension with no pay
for 15 days and repayment of the value of food withdrawals. Id. Less than a month later,
22
the Department of Corrections opened a formal proceeding on the same matter. Id. The
warden, citing a provision of the Minnesota Administrative Procedure Act that allowed for
informal disposition of any contested case by stipulation or agreed settlement, sought an
injunction blocking the proceeding based on the prior informal agreement. Id. at 309–10.
We held that the case could proceed, reasoning that the “informal disposition”
provision of the Act did not apply because the meeting was not a hearing under the Act.
Turnbladh, 107 N.W.2d at 310–11. We further noted the power of a state agency to reopen,
rehear, and redetermine the matter even after a determination has been made. Id. at 312.
Turnbladh is distinguishable from this case because, like Anchor Casualty,
Turnbladh deals not with the power to force an ALJ or other independent referee to
reconsider his decision (as in this case) but rather with the power of an agency to reconsider
its own decision—in Turnbladh, an agency decision made before the contested case
process even started. Id. at 309. More critically, in neither Anchor Casualty nor Turnbladh
was the critical issue in this case at issue—the limitations on the time within which an
agency must make a final decision accepting, modifying, or rejecting an ALJ report with
recommendation. 16
Finally, Pfalzgraff is also inapposite. Pfalzgraff was a case about unemployment
benefits before the Department of Economic Security. 350 N.W.2d at 459. Pfalzgraff was
16
For instance, pertinent to this case, the parallel question would be whether an agency
could issue a decision modifying an ALJ report with recommendation 30 days after the
contested case proceeding before the ALJ closed and then issue an amended decision 30
days later but within the 90-day limitation period for issuing a final order. That question
is not before us.
23
not a case under the Act because the Department of Economic Security was not subject to
the Act. Minn. Stat. § 14.03, subd. 2 (1982) (“The contested case procedures of the
administrative procedure act provided in sections 14.57 to 14.70 do not apply to . . . (c) the
unemployment insurance program in the department of economic security.” (emphasis
added)). More fundamentally, the statute in place that applied to the Department of
Economic Security (which has since been repealed), expressly allowed for a remand. 17
Pfalzgraff, like Anchor Casualty and Turnbladh, has no bearing here.
* * *
Accordingly, we hold that DHS does not have the implied authority to remand a
contested case report with recommendation to the ALJ that issued it with instructions to
reconsider the decision. Section 14.62, subdivision 2a, instead controls, which does not
provide an option to “remand,” but only for the agency to accept, modify, or reject the
ALJ’s report.
17
Minn. Stat. § 268.10, subd. 5 (1982), stated in full:
Within 30 days . . . any such party may appeal from such decision and obtain
a review thereof by the commissioner or his duly authorized representative,
and the commissioner within the same period of time may on his own motion
order a review of any such decision. Upon review, the commissioner or his
duly authorized representative may affirm, modify, or set aside any finding
of fact or decision, or both, of the appeal tribunal on the basis of the evidence
previously submitted in such case, or remand such matter back to the appeal
tribunal for the taking of additional evidence and new findings and decision
based on all of the evidence before it.
(Emphasis added.)
24
CONCLUSION
For the foregoing reasons, we reverse the decision of the court of appeals.
Reversed.
PROCACCINI, J., not having been a member of this court at the time of submission,
took no part in the consideration or decision of this case.
25
DISSENT
CHUTICH, Justice (dissenting).
I respectfully dissent from the court’s holding that Minnesota Statutes section 14.62
(2022) clearly and unambiguously does not allow an agency in a contested case proceeding
to remand a report or order to the administrative law judge (ALJ) for further fact-finding
or development of the record. I disagree because I conclude that the word “rejects” in
section 14.62, subdivision 2a, has more than one reasonable interpretation, and the more
appropriate interpretation is that a rejection of the ALJ’s report encompasses a remand to
the ALJ. I further conclude that the final order of the Commissioner of the Minnesota
Department of Human Services (the Commissioner) was neither arbitrary nor capricious.
Accordingly, I would affirm the decision of the court of appeals upholding the
Commissioner’s final order.
I agree with the recitation of facts in the court’s opinion, but briefly highlight here
the Commissioner’s final order and the rationale supporting it. When the Commissioner
issued her final order, she rejected the ALJ’s conclusions of law and accepted, modified,
and rejected, respectively, various parts of the ALJ’s factual findings. The order concluded
that the Minnesota Department of Human Services proved by a preponderance of the
evidence that Trinity committed abuse.
The Commissioner explained that, unlike the ALJ, she gave probative value to the
spreadsheets that the Minnesota Department of Human Services submitted as evidence.
Notably, she stressed the seriousness of Trinity’s violations, explaining that some of the
violations were simply to “extract more money” from the Minnesota Health Care Plan.
D-1
These violations included “billing for overlapping services, billing for more units than what
was provided, billing when no services were provided, and billing for [Registered Nurse]
services when [Licensed Practicing Nurse] services were provided.”
The Commissioner further found that Trinity’s actions harmed its clients because it
took actual services away from the recipients. For example, the Commissioner found that
appellant Etyane Ayana, Trinity’s owner, personally billed for personal care assistance
services that were never provided to at least one client. The Commissioner explained that
patients “are allotted a number of service hours based on their disability,” and by billing
the patient but not providing the services needed, the patients ran low on the number of
service hours available to them. Accordingly, the patient received no personal care
assistance services and was “left alone” to care for herself. The Commissioner found that
Trinity’s harmful behavior was abuse and warranted termination from the Minnesota
Health Care Programs, and that the Minnesota Department of Human Services was entitled
to reimbursements of over $1.2 million for nursing, personal care assistant, and
homemaking services.
A.
1.
For the reasons set forth below, I conclude that the Commissioner had the authority
to remand the case to the ALJ under section 14.62. First, I believe that the initial sentence
of section 14.62, subdivision 2a, is ambiguous, that is, susceptible to more than one
reasonable meaning. See State v. Pakhnyuk, 926 N.W.2d 914, 920 (Minn. 2019). That
sentence states: “Unless otherwise provided by law, the report or order of the
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administrative law judge constitutes the final decision in the case unless the agency
modifies or rejects it under subdivision 1 within 90 days after the record of the proceeding
closes under section 14.61.” Minn. Stat. § 14.62, subd. 2a (emphasis added). The statutory
language expressly allows the agency to “modif[y] or reject[]” an ALJ’s recommendation;
the question before us is whether the agency may remand a case to the ALJ. Id.
I agree with the court that one reasonable reading of this opening sentence would
allow the Commissioner only three options—to accept, to modify, or to reject the ALJ’s
report. But I believe that another reasonable interpretation exists because, in this context,
“rejects” inherently includes a remand. The Commissioner’s remand here was part and
parcel of her rejection of the ALJ’s order and decision.
To be sure, the Commissioner’s order of remand does not explicitly say that she was
rejecting the ALJ’s first report, but the remand order implicitly rejected it. She made it
clear that she was remanding the matter for further factual findings. The Commissioner
stated that because the ALJ did not consider the summary spreadsheets and evidence that
the Minnesota Department of Human Services relied upon to make the summary
spreadsheets, the ALJ failed to make the appropriate factual findings about the reliability,
accuracy, and weight of the evidence. The Department of Human Service’s order to
remand stated:
Because it is the role of the [ALJ] to make the appropriate findings and
because it is not clear that the [ALJ] applied the correct standard under
Minnesota Rules of Evidence 1006, the Commissioner remands to the [ALJ]
to amend the findings and conclusions in accordance with the applicable
rules of law.
D-3
This interpretation of “rejects” that encompasses a remand is supported by
dictionary definitions that define the ordinary meaning of the term. 1 See Minn. Stat.
§ 645.08(1) (2022) (“[W]ords and phrases are construed according to rules of grammar and
according to their common and approved usage.”); Pakhnyuk, 926 N.W.2d at 920. Here,
“reject” has several meanings and, in this context, generally means to “refuse to accept” or
“to declare not to be true.” See, e.g., Webster’s New Explorer Thesaurus 503 (2005) (“[T]o
be unwilling to grant; to declare not to be true; to get rid of as useless or unwanted; to show
unwillingness to accept, do, engage in, or agree to”); The American Heritage Dictionary
of the English Language 1482 (5th ed. 2018) (“To refuse to accept, submit to, believe, or
make use of; [t]o refuse to consider or grant; deny.”); Webster’s Third New International
Dictionary 1915 (1976) (“To refuse to acknowledge, adopt, believe, acquiesce in, receive,
or submit to: decline to accept”).
In addition, the definition of “remand”—“[t]o send (a case or claim) back to the
court or tribunal from which it came for some further action”—fits well with the ordinary
meaning of reject; a case is only remanded under circumstances when a different reviewing
decisionmaker rejects some or all of the basis for the underlying decision. Remand, Black’s
Law Dictionary (11th ed. 2019).
These definitions show that the Commissioner rejected the ALJ’s findings when she
refused to adopt them and then remanded the matter. By refusing to accept the ALJ’s
1
Chapter 14 does not define the term “rejects,” so dictionary definitions may be
helpful to determine the term’s ordinary meaning. See Minn. Stat. § 645.08(1) (2022).
D-4
recommendation, the Commissioner’s actions fell within the definition of “rejects” under
section 14.62.
The court dismisses the interpretation that a rejection under section 14.62 can also
include a remand by disregarding dictionary definitions. It notes simply that the dictionary
definitions are not helpful in this context. But by doing so, the court needlessly gives the
word “rejects” an overly technical and “cramped reading,” and deprives agencies of an
important tool in contested case proceedings. See Peoples Nat. Gas Co. v. Minn. Pub.
Utils. Comm’n, 369 N.W.2d 530, 534 (Minn. 1985). As the amici agencies correctly
contend, the word rejects is broad and inherently contemplates a remand.
Moreover, the broader context of this case supports the reasonableness of this
interpretation. The Commissioner determined that because the ALJ misapplied the
Minnesota Rules of Evidence, he did not make the necessary factual findings about the
reliability, accuracy, and weight of the evidence. The Commissioner rejected the ALJ’s
report on that basis. Notably, the experienced ALJ understood that this remand “did reject”
his report. As the ALJ explained, if the Commissioner “rejects parts of [an ALJ’s] report,
she could simply leave those findings, conclusions, or recommendations behind, or she
could remand the matter to the [ALJ] for further proceedings.” (Emphasis added.) The
Commissioner chose to reject part of the ALJ’s report and remanded the matter for further
proceedings here. Accordingly, section 14.62 and the meaning of “rejects” are each subject
to two reasonable interpretations, and the term is therefore ambiguous.
D-5
2.
Because the term “rejects” in section 14.62 is subject to two reasonable
interpretations, tools of statutory construction are helpful to determine the Legislature’s
intent. See Minn. Stat. § 645.16 (2022). Applying these considerations—“the object to be
attained,” “the consequences of a particular interpretation,” and the “administrative
interpretations of the statute”—I conclude that the better interpretation of “rejects” in
section 14.62 includes a remand. See id. The court’s sweeping conclusion—that a
commissioner may never remand a case to an ALJ—is simply too broad and neglects the
nuanced realities that agencies face in contested case proceedings.
First the “object to be obtained” by the statute supports interpreting “rejects” to
permit a remand from the Commissioner to the ALJ. The court acknowledges that a
remand from the Commissioner to the ALJ allows the record to reopen to enable parties to
bring in new facts—a process that would save resources and improve efficiency—if a need
for a better record or more fact-finding exists. Ensuring that an adequate record in the
contested case proceeding exists at the administrative level is far more efficient than
requiring an appeal and waiting for an appellate court to order a remand.
Moreover, a remand to the ALJ might make an appeal unnecessary. Allowing the
Commissioner to remand a case in the first instance furthers the stated purpose of the
Minnesota Administrative Procedure Act: to “simplify the process of judicial review of
agency action as well as increase its ease and availability” and “to strike a fair balance
between [the stated] purposes and the need for efficient, economical, and effective
government administration.” Minn. Stat. § 14.001 (2022).
D-6
Here, the Commissioner remanded the case to the ALJ after concluding that the ALJ
made no findings of fact about the summary evidence because he may not have applied the
correct legal standard under the Minnesota Rules of Evidence. And the role of the ALJ is
to make factual findings. Minn. Stat. § 14.50 (2022). As the Commissioner argues, it is
more “efficient to allow the ALJ to first review the evidence under the correct standard.”
The court’s decision to never allow a commissioner to remand a case to the ALJ does not
provide agencies with the flexibility needed to make fully informed decisions, especially
when these decisions affect Minnesotans in their everyday lives.
For example, the ability to remand is equally crucial when a person procedurally
defaults before an ALJ but then appears in the case soon after the ALJ has lost jurisdiction.
In contested case hearings, a person may default by failing to appear or to respond when
the issue is before the ALJ at the Minnesota Office of Administrative Hearings. See Minn.
R. 1400.6000 (2021) (noting that a default occurs when a party fails to appear at a
prehearing conference, settlement conference, or hearing). And as amicus Southern
Minnesota Regional Legal Services explains, the contested case process can be difficult
for self-represented persons to manage, which leads to the possibility of procedural
defaults, even in meritorious cases. But once the ALJ issues the report, the ALJ loses
jurisdiction of the case. Without the power to remand a case to the ALJ, the agency is left
with little recourse. For instance, if the agency adopts the ALJ’s recommendation, the
defaulting party must either appeal to the court of appeals or accept the outcome. See
Minn. Stat. § 14.63 (2022). And if the agency tries to decide the case on the merits, it must
D-7
do so without having a fully developed hearing record. Neither option leads to a just
outcome for the self-represented person nor an efficient process for the agencies.
The court and appellants, however, note that allowing a remand could
inappropriately broaden the Commissioner’s power under section 14.62. But the
Legislature already has given the Commissioner the power under section 14.62 to reject or
modify any of the ALJ’s findings and recommendations, as long as the agency includes the
reasons for doing so. Minn. Stat. § 14.62, subd. 1. Permitting a remand to better develop
the factual record does not broaden the Commissioner’s powers; rather, it gives the parties
the ability to ensure that the record is established before it goes to the agency for the final
decision.
Moreover, no evidence suggests that the Commissioner could somehow abuse this
power by indefinitely remanding a case until getting the desired result from the agency.
Instead, the contested case hearing process takes agencies’ resources (time and cost);
ultimately, as amici commissioners point out, there is not an incentive for agencies to
needlessly prolong cases. Moreover, an agency must provide a written reason when it
rejects the ALJ’s findings. Minn. Stat. § 14.62, subd. 1. And most importantly, the
Commissioner cannot act arbitrarily or capriciously. Minn. Stat. § 14.69 (2022).
Accordingly, appellants’ concerns regarding endless remands are unfounded. These policy
arguments favor permitting a remand from the Commissioner to the ALJ.
Second, the Minnesota Office of Administrative Hearings’ rules provide further
guidance that a remand is permitted. Minn. Stat. § 645.16(8) (permitting reference to
“administrative interpretations” of an ambiguous statute). These rules “have the force and
D-8
effect of law,” and they make an express reference to a remand. Minn. Stat. § 14.38 (2022).
Rule 1400.7600 addresses the certification of legal questions from an administrative law
judge to an agency and states: “In deciding what motions should be certified, the judge
shall consider the following: . . . whether it is necessary to promote the development of the
full record and avoid remanding.” Minn. R. 1400.7600 (2021) (emphasis added). In other
words, Rule 1400.7600 states that the agency could “avoid remanding,” signifying that the
agency could remand a case to the ALJ (particularly to allow for “the development of the
full record,” which happened here).
Finally, the consequences provide additional support for interpreting section 14.62
to encompass a remand from the Commissioner to the ALJ. See Minn. Stat. § 645.16(6).
As amici agencies point out, agencies have remanded cases, even after the Legislature
amended section 14.62, subdivision 2a, to include “modifies or rejects.” See, e.g., In re
Application for a Route Permit for the Noble Flat Hill Windpark I,
No. 15-2500-20657-2PUC, 2010 WL 6748986, at *1 (Minn. Off. Admin. Hearings
Sept. 7, 2010) (remanding a case from the Minnesota Public Utilities Commission to the
Minnesota Office of Administrative Hearings to reopen and supplement the record); In re
SIRS Appeal of Grove Homes, Inc., No. 15-1800-15307-1, 2006 WL 1412824, at *2
(Minn. Off. Admin. Hearings May 1, 2006) (explaining that the commissioner of the
Minnesota Department of Human Services adopted the ALJ’s findings, conclusions,
recommendation, but remanded the recovery portion of the case to the agency); Lewis v.
City of Minneapolis, No. 69-3100-4213-2, 1990 WL 710328, at *1 (Minn. Off. Admin.
D-9
Hearings Dec. 1990) (noting that the Commissioner of the Minnesota Department of
Veterans Affairs remanded a case to the ALJ to determine damages).
These cases show that, in certain situations, a remand is appropriate and necessary.
The court’s conclusion that remands are never appropriate disrupts agency custom, and the
consequences could undermine the administrative law framework applicable to almost
every agency in the state. Accordingly, I conclude that the word “rejects” under section
14.62 is subject to two reasonable interpretations, and the better interpretation includes
permitting a “remand” from the Commissioner to the ALJ.
B.
Because I would find that the Commissioner had authority to remand the first report
to the ALJ, I would also reach the second issue of whether the Commissioner’s final
decision following the remand was arbitrary and capricious. The appellants argue that the
Commissioner’s final order was arbitrary or capricious because the Commissioner’s
actions, namely relying on the summary spreadsheets, showed that she was expressing her
will rather than her judgment. I agree with the court of appeals that the Commissioner did
not act arbitrarily or capriciously. See In re SIRS Appeals by Trinity Home Health Care
Servs. & Etyane Ayana, No. A22-0183, 2022 WL 6272045, at *9–10 (Minn. App. Oct. 10,
2022).
On review, a court “may reverse or modify the decision [of the Commissioner] if
the substantial rights of the petitioners may have been prejudiced because the
administrative finding, inferences, conclusion, or decisions are: . . . arbitrary or
capricious.” Minn. Stat. § 14.69; see In re Excess Surplus Status of Blue Cross & Blue
D-10
Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001). An agency ruling is arbitrary and
capricious if the agency:
(a) relied on factors not intended by the legislature; (b) entirely failed to
consider an important aspect of the problem; (c) offered an explanation that
runs counter to the evidence; or (d) the decision is so implausible that it could
not be explained as a difference in view or the result of the agency’s
expertise.
Citizens Advocating Responsible Dev. v. Kandiyohi Cnty. Bd. of Comm’rs, 713 N.W.2d
817, 832 (Minn. 2006). Notably, “[t]he standard of review is not heightened where the
final decision of the agency decision-maker differs from the recommendation of the ALJ”;
however, a “[r]ejection of the ALJ’s recommendations without explanation . . . may
suggest that the agency exercised its will rather than its judgment and was therefore
arbitrary and capricious.” In re Excess Surplus, 624 N.W.2d at 278 (emphasis added).
Here, the Commissioner’s thorough and accurate order explained each of her
departures from the ALJ’s final recommendation, and the record supports her findings. As
the court of appeals aptly explains, the “20-page, single-spaced final decision thoroughly
explains the commissioner’s decision-making and reflects that the final decision rejects the
ALJ’s findings and conclusions for the rational reason that the commissioner gave
probative value to the spreadsheets and the ALJ did not.” Trinity, 2022 WL 6272045, at
*9.
I also believe that the Commissioner’s directions to the ALJ in the remand order did
not tell the ALJ what he needed to find in the evidence; rather, it directed the ALJ to make
factual findings based on the spreadsheet. Because I conclude that the Commissioner
reasonably found that the summary spreadsheets were probative, and that she explained
D-11
why she rejected the ALJ’s recommendation, the Commissioner’s decision was neither
arbitrary nor capricious. 2
For the reasons given above, I respectfully dissent.
2
I do not address Trinity’s assertion that the Commissioner’s final order was not
supported by substantial evidence because Trinity failed to raise the issue in its petition for
review. Generally, we do “not address issues that were not raised in a petition for review.”
State v. Myhre, 875 N.W.2d 799, 806 (Minn. 2016) (quoting In re GlaxoSmithKline PLC,
699 N.W.2d 749, 757 (Minn. 2005)); see also In re Estate of Figliuzzi, 979 N.W.2d 225,
231 n.4 (Minn. 2022).