Northeast Occupational Exchange, Inc. v. Bureau of Rehabilitation ( 1984 )

GLASSMAN, Justice.

This case comes to us on appeal from a judgment of the Superior Court, Penobscot County, granting the defendant’s motion to dismiss the plaintiff’s complaint. The plaintiff, Northeast Occupational Exchange (NOE),¹ argues that the Superior Court erred in ruling that the defendant Bureau of Rehabilitation’s (Bureau) decision to cease referring clients to NOE did not constitute “final agency action” pursuant to the Maine Administrative Procedure Act (APA), 5 M.R.S.A. § 11001(1) (1979 & Supp. 1982-1983). Agreeing with the Superior Court, we affirm the judgment.

In 1969, the Maine Legislature enacted the Rehabilitation Act, 22 M.R.S.A. ch. 713 (1980). The Rehabilitation Act authorized the creation of an administrative unit within the Department of Human Services to administer programs designed to rehabilitate handicapped and disadvantaged individuals. Id., §§ 3052-54. The Bureau of Rehabilitation, so created, is charged with administering several of these programs on behalf of the state, including a federal program of vocational rehabilitation designed to prepare handicapped persons for gainful employment, 29 U.S.C. §§ 720 et seq. (1976 & Supps.1977-1981). Under the federal program, a counselor screens an applicant to determine whether she or he meets eligibility criteria. If deemed capable of employment, the applicant is referred to a public or private rehabilitative facility for training. Although federal and state guidelines require a rehabilitative facility to meet certain criteria before becoming eligible to service program clients,² the Bureau of Rehabilitation is not required to utilize every facility which meets controlling standards.³

On January 8, 1980, the Bureau of Rehabilitation sent a letter to NOE officially authorizing it for the use of vocational rehabilitation program clients. The letter stipulated that continued authorization was conditioned upon NOE’s submission of a timetable to the Bureau within three months indicating compliance with Bureau standards.⁴ On July 17, 1980, the Bureau, in a letter signed by the Director of the Bureau of Rehabilitation, Owen Pollard, withdrew authorization of NOE. Although the letter charged that NOE did not share in case planning, did not issue progress reports, and did not comply with the conditions of the January 8,1980 letter, the trial court entered no findings in regard to the reason for the “de-authorization.” The trial court held the “de-authorization” did not amount to “final agency action” and was thus not reviewable under the APA,⁵ and therefore, did not entertain NOE’s contention that the action of the Bureau was arbitrary and capricious. The court explained that the defendant had not formally declared NOE ineligible, and could again refer clients to NOE in the future. The court found that the July 17, 1980 letter was “only a pronouncement of the defendant’s intention to cease working with the plaintiff until all differences were resolved.”

Pursuant to the Maine Administrative Procedure Act, the Superior Court is authorized to hear petitions for review filed by any person⁶ “aggrieved by final agency action,” and, in very limited circumstances, by non-final agency action.⁷ 5 M.R.S.A. § 11001(1).⁸ “Final agency action” is an agency decision “which affects the legal rights, duties or privileges of specific persons, which is dispositive of all issues, legal and factual, and for which no further recourse, appeal or review is provided within the agency.”⁹ 5 M.R.S.A. § 8002(4).

1. Agency action. Except where a statute provides for direct review or review of a pro forma judicial decree by the Supreme Judicial Court or where judicial review is specifically precluded or the issues therein limited by statute, any person who is aggrieved by final agency action shall be entitled to judicial review thereof in the Superior Court in the manner provided by this subchapter. Preliminary, procedural, intermediate or other non-final agency action shall be independently reviewable only if review of the final agency action would not provide an adequate remedy.

The statutory requirement that an agency action be final to be reviewable is entirely in accord with judicial doctrine, and imposes a realistic and important restraint upon the power of the courts. We have long recognized that, subject to certain exceptions, “where the law provides a remedy before an administrative agency, the plaintiff must exhaust that remedy before he can turn to the courts for relief.” Stanton v. Trustees of St. Josephs College, 233 A.2d 718, 723-24 (Me.1967). In Stanton, we explained that the exhaustion doctrine is “based upon a policy of avoiding interference with the functions of an agency created by the Legislature and a recognition of the advantages of leaving some preliminary determinations to agencies which are particularly competent to dispose of them.” Id. at 724. Moreover, as an Illinois Appellate Court noted, the rule is “primarily designed to allow administrative agencies to correct their own errors, clarify their policies, and reconcile conflicts before resorting to judicial relief.” Kenilworth Insurance Co. v. Mauck, 50 Ill.App.3d 823, 826, 8 Ill.Dec. 665, 667, 365 N.E.2d 1051, 1053 (1977). Additionally, requiring plaintiffs to exhaust administrative remedies facilitates judicial review. When an aggrieved individual goes through an adjudicatory or quasi-adjudicatory proceeding, it is more likely that a court will have a complete record to review. In Gashgai v. Board of Registration in Medicine, 390 A.2d 1080 (Me.1978), we stressed the importance of findings of fact to a reviewing court. We noted that factual findings below “facilitate judicial review, avoid judicial usurpation of administrative functions, assure more careful administrative consideration, help parties plan their cases for rehearings and judicial review, and keep agencies within their jurisdiction.” Id. at 1085.

In the ease at hand, the plaintiff failed to pursue an avenue of administrative appeal available to it. At trial, the plaintiff introduced into evidence a document entitled “A Procedure for Initiating VR Use of Rehabilitation Facility Services.” Owen Pollard, the Director of the Bureau, testified that this document contained standards the Bureau follows when considering whether to authorize a rehabilitative facility to provide services to Bureau clients. Step five of these procedures provides:

Step # 5 — Facility Use Approval

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B. The Manager of CRU [Community Resources Unit] will notify the facility representative and the appropriate BR [Bureau of Rehabilitation] Regional staff(s) of:

1. The facility’s services which have been approved for BR use.

2. The fee(s) which BR will pay for such services.

3. The conditions which the facility must meet in order for BR use of the facility’s services to continue.

C. In the event that the BR Regional Director or the facility representative disagree with the decisions made by the Manager of CRU in Step # 5.B, they may appeal to the Director of the Bureau of Rehabilitation for reconsideration.

The de-authorization of NOE was in large part due to a disagreement between the Bureau and NOE concerning two matters: the proper fee for NOE’s services, and NOE’s alleged noncompliance with Bureau standards. Pursuant to the above quoted Bureau standard, NOE had a right to appeal the Bureau’s determinations regarding these matters to the Director of the Bureau, a right which NOE failed to exercise. Therefore, the dismissal of NOE’s complaint was proper unless the de-authorization was the type of nonfinal agency action subject to review under the APA, or NOE’s failure to pursue an available remedy can otherwise be excused.

Nonfinal agency action is independently reviewable pursuant to the APA when “review of the final agency action would not provide an adequate remedy.” 5 M.R.S.A. § 11001(1). The commentary to section 11001(1) provides insight into the legislative intent behind this provision. The drafters of section 11001(1) cited to Isbrandtsen Co. v. United States, 211 F.2d 51 (D.C.Cir.), cert, denied, Federal Maritime Board v. United States, 347 U.S. 990, 74 S.Ct. 852, 98 L.Ed. 1124 (1954), when stating that nonfi-nal agency decisions are reviewable only when review of the final action would be ineffective. In Isbrandtsen, the D.C. Circuit Court of Appeals declared that the “ultimate test of reviewability is not to be found in an overrefined technique, but in the need of the review to protect from the irreparable injury threatened in the exceptional case by administrative rulings which attach legal consequences to action taken in advance of other hearings and adjudications that may follow.... ” Id. at 55 (quoting Columbia Broadcasting System v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 1204, 86 L.Ed. 1563 (1942)). More recently, the D.C. Circuit observed that review of nonfinal agency actions should be undertaken only when “the parties face the prospect of irreparable injury, with no practical means of procuring effective relief after the close of the proceedings.... ” Cities of Anaheim and Riverside v. Federal Energy Regulatory Commission, 692 F.2d 773, 779 (D.C.Cir.1982) (quoting Papago Tribal Utility Authority v. FERC, 628 F.2d 235, 239 (D.C.Cir.), cert. denied, 449 U.S. 1601, 101 S.Ct. 784, 66 L.Ed.2d 604 (1980)).

An appeal to the Director of the Bureau of Rehabilitation in the instant case might have provided NOE with the relief requested. Although the relationship between NOE and the Bureau was certainly strained, it does not necessarily follow the parties would have been unable to resolve their differences in regard to fees and NOE’s compliance with Bureau standards and thereby avoid judicial review. By insisting that NOE pursue an appeal to the Director of the Bureau, we are insuring that an administrative agency has every opportunity to resolve a matter in its area of special competence before its actions become subject to judicial review. See Cushing v. Smith, 457 A.2d 816, 821 (Me.1983) (doctrine of exhaustion recognizes advantages of leaving some determinations to agency which is particularly competent to adjudicate them).

We are mindful that the administrative remedy available to the plaintiff involved an appeal to the Director of the Bureau, and that the Director had been involved in the decision to de-authorize NOE. In rare instances, the patent futility of an appeal because of the direct involvement of the reviewing body in the very decision taken exception to might excuse a failure to exhaust that remedy. See Northwestern University v. City of Evanston, 74 Ill.2d 80, 88, 23 Ill.Dec. 93, 97-8, 383 N.E.2d 964, 968-69 (1978). It is not clear in this case, however, that an appeal to the Director of the Bureau would have been futile. As the Illinois Supreme Court has noted, “[t]he exhaustion requirement cannot be avoided simply because relief may be, or even probably will be, denied by the local authorities.” Id., 23 Ill.Dec. at 98, 383 N.E.2d at 969.

Additionally, we note that Pollard’s involvement in the de-authorization process raises a question concerning his ability to have acted as an impartial adjudicator had NOE pursued an appeal to him. We have previously intimated that prejudgment concerning the specific facts presented for adjudication might provide grounds for disqualifying an individual from serving as an adjudicator. New England Telephone and Telegraph Co. v. Public Utilities Commission, 448 A.2d 272, 280 (Me.1982); cf. Hortonville Joint School District No. 1 v. Hortonville Education Association, 426 U.S. 482, 493, 96 S.Ct. 2308, 2314, 49 L.Ed.2d 1 (1976) (fact that administrator took public position in relation to policy surrounding dispute presented is not grounds for disqualification); see also Frye v. Inhabitants of Town of Cumberland, 464 A.2d 195, 198-99 (Me.1983). Disqualification in such circumstances would be necessary to protect the due process right to an impartial hearing. See Sevigny v. City of Biddeford, 344 A.2d 34, 40-41 (Me.1975); see also New England Telephone, 448 A.2d at 280 (administrative hearing must be conducted in impartial manner). We do not, however, need to consider whether Pollard would, in fact, be disqualified from hearing NOE’s appeal. A tribunal should act despite the presence of reasons for disqualification when no competent alternate body is available to hear an appeal. See United States v. Will, 449 U.S. 200, 213-17, 101 S.Ct. 471, 480-82, 66 L.Ed.2d 392 (1980); Evans v. Gore, 253 U.S. 245, 247-48, 40 S.Ct. 550, 551, 64 L.Ed. 887 (1920), rev’d on unrelated grounds, O’Malley v. Woodrough, 307 U.S. 277, 59 S.Ct. 838, 83 L.Ed. 1289 (1939). This “rule of necessity” has been applied to state administrative officers. See, e.g., State v. Board of Medical Examiners, 135 Mont. 381, 339 P.2d 981 (1959); Borough of Fanwood v. Rocco, 33 N.J. 404, 165 A.2d 183 (1960). See generally 2 K. Davis, Administrative Law Treatise § 12.04 passim (1958 & Supp.1970) (discussing rule of necessity). Pursuant to Bureau of Rehabilitation standards, Pollard was the only agency official empowered to hear NOE’s appeal. Therefore, possible prejudgment or bias on the part of Pollard provides no excuse for the failure to pursue an appeal to him.¹⁰

Other exceptions to the rule requiring exhaustion of administrative remedies are similarly inapplicable. Judicial review may be undertaken despite a failure to exhaust all administrative remedies where the questions involved are ones only of law, Churchill v. S.A.D. # 49 Teachers Association, 380 A.2d 186, 190 (Me.1977); Stanton, 233 A.2d at 724, or where the administrative agency is not empowered to grant the relief requested and, therefore, completion of the appeal process would be futile. Churchill, 380 A.2d at 190. Because an appeal in this case would clarify issues of fact and the Director of the Bureau of Rehabilitation is able to grant the relief NOE requested, these exceptions are not pertinent.

The entry is:

Judgment affirmed.

McKUSICK, C.J., and ROBERTS and WATHEN, JJ., concurring.

1 . In the original complaint, Charles Tingley, Executive Director of NOE, was also a named plaintiff. Because Tingley has no interest in the suit separate from NOE, there is no basis for his joinder in the action. Accordingly, we have deleted Tingley as a party plaintiff.

2 . The federal guidelines are found at 29 U.S.C. § 720 et seq. (1976 & Supps.1977-1981). The regulations which the states must follow to be eligible for a federal vocational rehabilitative training grant are found at 34 C.F.R. § 361 et seq. (1983) (formerly codified at 45 C.F.R. §§ 1361 et seq. (1980)). The Maine regulations governing program standards are found in a document entitled, A Procedure for Initiating VR use of Rehabilitation Facility Services, Item 2000 (1979).

3 . Congress provided, however, for' maximum utilization of “public or other vocational or technical training facilities or other appropriate resources in the community.” 29 U.S.C. § 721(a)(12) (1976).

4 . The January 8, 1980 letter stated that the program at NOE was not in compliance with state requirements in several areas, including a lack of written procedures and policies for client intake, service needs, and discharge.

5 . NOE sought an order from the Superior Court to the Bureau mandating utilization of NOE as a rehabilitative facility. We intimate no opinion as to whether such relief would be appropriate.

6 . The APA defines “person” very broadly, and includes the petitioner. See 5 M.R.S.A. § 8002(8) (“person” includes any individual or entity other than agency conducting proceeding). In order to have standing to seek review of an agency action, a person must have suffered “particularized injury.” Heald v. School Admin. Dist. No. 74, 387 A.2d 1, 3 (Me.1978); In re Lappie, 377 A.2d 441, 442-43 (Me.1977).

7 . The APA precludes courts from entertaining review of an agency decision, however, where expressly prohibited by statute. 5 M.R.S.A. § 11001(1); see, e.g., McElroy v. State Employees Appeal Bd., 427 A.2d 958, 961 (Me.1981) (judicial review specifically precluded by governing statute). The statute governing the administration of rehabilitative services in Maine offers no such prohibition. See 22 M.R.S.A. ch. 713.

8 . 5 M.R.S.A. § 11001(1) provides;

9 .In Brown v. Department of Manpower Affairs, 426 A.2d 880 (Me.1981), we stated that despite the adjudicative flavor of the definition of final agency action, judicial review is not limited to strictly adjudicative agency decisions. Id. at 883; see L.D. 1768, commentary to § 8002(4) (108th Legis.1977) (definition of final action includes all decisions affecting one’s legal rights, duties or privileges, not just those made in adjudicatory proceedings). In Brown, we recognized all decisions of administrative agencies which are final are not necessarily reviewable, and observed that pursuant to the constitutional doctrine of separation of powers, the Legislature may not “confer on the judiciary a commission to roam at large reviewing any and all final actions of the executive branch.” Id. at 884. Moreover, as a matter of sound judicial policy, we will not undertake review of administrative decisions which are properly classified as ministerial, or which are not centrally related to the function for which the agency was created. For purposes of this appeal we note only that the Bureau of Rehabilitation administers a federal program of vocational rehabilitation designed to aid the handicapped, rather than to provide business for rehabilitation facilities. See 29 U.S.C. § 720(a) (1976) (purpose of vocational rehabilitation services program is to aid handicapped individuals prepare for and engage in gainful employment); see also supra note 5.

10 . Some courts have held, however, that in these circumstances the decision which results is to be given more exacting scrutiny by the court. E.g., Board of Education v. Shockley, 52 Del. 277, 156 A.2d 214 (1959); Wisconsin Tel. Co. v. Public Service Commission, 232 Wis. 274, 287 N.W. 122 (1939). We have no need to consider this issue for purposes of this appeal.