Payton v. Ohio Dept. of Ins. ( 2012 )

[Cite as Payton v. Ohio Dept. of Ins., 2012-Ohio-4826.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98330
ALBERTA PAYTON
PLAINTIFF-APPELLANT
vs.
OHIO DEPARTMENT OF INSURANCE
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Common Pleas Court
Case No. CV-765879
BEFORE: Boyle, P.J., Sweeney, J., and Rocco, J.
RELEASED AND JOURNALIZED: October 18, 2012
ATTORNEY FOR APPELLANT
Loren Gordon
850 Euclid Avenue
Suite 1013
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEE
Michael DeWine
Attorney General of Ohio
Scott Myers
Assistant Attorney General
Health & Human Services Section
30 East Broad Street, 26th Floor
Columbus, Ohio 43215
MARY J. BOYLE, P.J.:
{¶1} Plaintiff-appellant, Alberta Payton, appeals a common pleas court judgment
affirming an order of defendant-appellee, Ohio Department of Insurance (“Department”),
denying her application to be licensed as an insurance agent in the state of Ohio. Finding no
merit to her appeal, we affirm.
Procedural History
{¶2} In March 2011, Payton applied for a license with the Department to sell
insurance. In her application, she stated that she had been convicted of a felony offense.
As required, she attached certified copies of her conviction to her application, showing that
she had been convicted in 2004 of four counts of complicity in the commission of attempted
felonious assault.
{¶3} In a “Notice of Opportunity for Hearing,” the Department denied Payton’s
application, informing her that it had conducted an investigation and determined that she was
“not suitable to be a licensed insurance agent.” It notified Payton that it intended to “refuse
to issue her any license and/or take any other action * * * authorized pursuant to R.C.
3905.14(D) including civil penalties and/or administrative costs.” It further notified Payton
that the grounds for such action were:
COUNT ONE
On or about April 1, 2004, in the Cuyahoga County Court of Common Pleas,
Payton was convicted of four counts of Complicity in Commission of Attempt
[sic] Felonious Assault, each count being a felony of the third degree.
Pursuant to section 3905.14(B)(6) of the Revised Code, the Superintendent
may refuse to issue a license to a person convicted of a felony.
{¶4} Payton requested a hearing. Subsequent to the hearing, the hearing officer
issued his report and recommendation, finding (1) that Payton had “committed violations of
the laws and regulations” of the state of Ohio, and (2) that she was “not suitable to be
licensed as an insurance agent.”
{¶5} In his findings of fact, the hearing officer found that Payton had been
convicted in 2004 of four counts of complicity in the commission of attempted felonious
assault. She was sentenced to three years in prison. She appealed her sentence to this
court. See State v. Payton, 8th Dist. No. 84562, 2005-Ohio-3572. The Department
submitted several exhibits into the record, including certified copies of Payton’s conviction,
as well as this court’s decision of her appeal.
{¶6} In Payton, this court explained that Payton’s charges arose “in connection with
allegations that she had hired a hit man to harm various family members and others.” Id. at
¶ 2. A summary of the case follows.
[Payton] pled not guilty and was referred to the Court Psychiatric Clinic
for competency and sanity reports. In the July 29, 2003, Competency Report,
Dr. Otto Kausch informed the court that defendant was not capable of assisting
in her defense because she was suffering from paranoid schizophrenia. By
September 2003, Dr. Jonathan Sirkin informed the court that defendant was
suffering from paranoid schizophrenia, was preoccupied with paranoid
delusion, was noncompliant in taking her medication, but her symptoms
improved when she took prescribed medication. In October 2003, the court
was notified that defendant was restored to competency.
In a competency evaluation dated December 11, 2003, Dr. Michael
Arnoff of the Court Psychiatric Clinic advised the court that defendant had a
history of traits and behavior characteristic of a diagnosis of paranoid
personality disorder, and that it was possible that defendant’s problems with
the victims identified in the indictment were the result of her delusional beliefs.
He also opined that defendant could understand the court proceedings and
assist in her defense, however.
In a sanity report from the same week, Dr. Arnoff indicated that “the
core issue related to defendant’s mental state at the time of the acts involves
the determination of whether, due to a delusional process, Ms. Payton believed
that her life was endangered by the targeted victims and hired an individual to
harm them for purposes of self-protection, secondary to this potentially
delusional misperception.” Dr. Arnoff noted that defendant suffers from a
paranoid personality disorder, but it was “unclear as to whether these rise to a
psychotic level.” He concluded, however, that in connection with the alleged
offenses, but nonetheless knew the wrongfulness of her actions.
In a mitigation of penalty report, Dr. Arnoff stated:
“Given that she is diagnosed with a psychotic-spectrum mental illness,
Delusional Disorder, and is being treated with antipsychotic medication, if
granted probation by the Court, Ms. Payton would be appropriate for
supervision through the Mentally Disordered Offenders (MDO) Program.”
Finally, in January 2004, Dr. John Fabian opined that defendant suffers
from a delusional disorder, persecutory type, but knew the wrongfulness of her
actions. He also advised the court that the court’s Mentally Disordered
Offenders Program may be appropriate for her.
Id. at ¶ 2-7.
{¶7} This court explained that after Payton was restored to competency, she entered
her guilty plea. The trial court sentenced Payton to three years in prison, stating that it had
two options: “community control supervision by the court, or incarceration.” Id. at ¶ 21.
This court reversed Payton’s sentence, however, because we determined that the record was
“unclear” as to “whether the trial court considered other options [such as residential sanctions
set forth in R.C. 2929.16] for dealing with [a] defendant whose offenses appear to be the
result of her mental illness, and her failure to take her prescribed medication.” Id. at ¶ 27.
{¶8} Upon remand, the trial court sentenced Payton to three years of community
control sanctions. The hearing officer found that Payton violated the terms of her
community control four times, which extended the length of her supervision by ten months.
{ ¶ 9} The hearing officer noted that before the hearing, Payton had sent the
Department 31 pages of correspondence in “longhand” regarding her “contentions as to why
the Department should disregard her previous felony conviction in considering whether she
should be granted an Ohio insurance license.” The correspondence was entered into
evidence.
{¶10} The hearing officer found that Payton testified at length concerning her
criminal conviction. The hearing officer quoted several portions of the transcript where
Payton claimed that she was innocent of the 2004 charges. When asked why she pleaded
guilty, she blamed her brother, her mother, the system, the trial court judge, and her public
“pretender.” She testified that she pleaded guilty under duress. She further denied that she
had any mental health issues, claiming that she was only diagnosed with mental illness
because her brother told her psychologist that she was mentally ill so that he would not go to
prison. With regard to her appeal, Payton testified that “basically [she] was wrongfully
accused so they worked up an appeal and I was released.” When asked “so you were guilty
of the offense; you didn’t just go to jail, you served probation,” Payton replied, “[n]o, I was
not guilty and I was given probation.”
{¶11} The hearing officer noted that Payton had a bachelor’s degree in interior design
from Mount St. Joseph College in Cincinnati and was working toward a master’s degree in
social work during the time leading up to her conviction.
{¶12} Payton introduced a copy of a petition for a civil protection order that she filed
against her brother in 2001, where she alleged that her brother assaulted her by hitting her on
the head and pushing her. An attached police report indicated that Payton and her brother
got into another altercation that same year.
{¶13} The hearing officer concluded his findings of fact, stating “the evidence does
not support that [Payton] is of good reputation and character, is honest and trustworthy, and is
otherwise suitable to be licensed as an insurance agent in the State of Ohio.”
{¶14} In his conclusions of law, the hearing officer concluded that in March 2004,
Payton was convicted of four counts of complicity in the commission of attempted felonious
assault. The hearing officer concluded that under R.C. 3905.14(B)(6), the superintendent
“may refuse to issue a license to a person convicted of a felony.” The hearing officer
further concluded that based on R.C. 3905.06(A)(1)(h), an applicant for an Ohio insurance
license must “be of good character, [be] honest and trustworthy and otherwise suitable to be
licensed.” The hearing officer concluded that the evidence did not support that Payton met
the criteria under R.C. 3905.06(A)(1)(h). The hearing officer recommended that Payton’s
application be denied.
{¶15} Payton appealed the hearing officer’s report and recommendation to the
superintendent of insurance. The superintendent accepted the recommendation of the
hearing officer and ordered that Payton’s application to become a licensed insurance agent
be denied. Payton appealed the superintendent’s order to the common pleas court.
{¶16} The common pleas court found that the superintendent’s order was supported
by reliable, probative, and substantial evidence, and was in accordance with law. It is from
this judgment that Payton appeals, raising a sole assignment of error for our review, namely,
that “[t]he trial court erred when it affirmed the order of the Ohio Department of
Insurance[.]”
Standard of Review
{¶17} A common pleas court, in reviewing an order of an administrative agency
under R.C. 119.12, must consider the entire record to determine whether reliable, probative,
and substantial evidence supports the agency’s order and the order is in accordance with law.
Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108, 110-111, 407 N.E.2d 1265 (1980). The
common pleas court’s “review of the administrative record is neither a trial de novo nor an
appeal on questions of law only, but a hybrid review in which the court ‘must appraise all the
evidence as to the credibility of the witnesses, the probative character of the evidence, and the
weight thereof.’” Lies v. Veterinary Med. Bd., 2 Ohio App.3d 204, 207, 441 N.E.2d 584(1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St. 275, 280, 131
N.E.2d 390 (1955). The common pleas court must give due deference to the administrative
agency’s resolution of evidentiary conflicts, but “the findings of the agency are by no means
conclusive.” Conrad at 111. The common pleas court conducts a de novo review of
questions of law, exercising its independent judgment in determining whether the
administrative order is “in accordance with law.” Ohio Historical Soc. v. State Emp.
Relations Bd., 66 Ohio St.3d 466, 471, 613 N.E.2d 591 (1993).
{¶18} An appellate court’s review of an administrative decision is more limited than
that of a common pleas court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621, 614
N.E.2d 748 (1993). The appellate court is to determine only whether the common pleas
court abused its discretion. Id. Absent an abuse of discretion, a court of appeals may not
substitute its judgment for that of an administrative agency or the common pleas court. Pons
at 621. It is axiomatic, however, that an appellate court reviews purely legal questions de
novo. Big Bob’s, Inc. v. Ohio Liquor Control Comm., 151 Ohio App.3d 498, 2003-
Ohio-418, 784 N.E.2d 753, ¶ 15 (10th Dist.).
{¶19} Payton asserts that this appeal presents only questions of law. We disagree.
Accordingly, we review the trial court’s decision for abuse of discretion.
Due Process
{¶20} The only issue Payton raises in this appeal is whether the trial court abused its
discretion in affirming the Department’s denial of her insurance license “even though the
Department’s notice of a right to a hearing did not fully inform [her] of all the charges against
her, thereby depriving her of fair opportunity to defend herself at the hearing.” She claims
that the Department “based its decision on charges that it did not identify in the statutory
notice.”
{¶21} R.C. 119.07 provides that when an administrative agency takes action against a
party, it must give notice to the party. The rule prescribes how the notice must be given,
and states that it “shall include the charges or other reasons for the proposed action, the law
or rule directly involved, and a statement informing the party that the party is entitled to a
hearing if the party requests it within thirty days of the time of mailing the notice.” Id.{¶22} Payton cites to Pruneau v. Ohio Dept. of Commerce, 191 Ohio App.3d 588,
2010-Ohio-6043, 947 N.E.2d 900 (10th Dist.), in support of her argument. In Pruneau at ¶
31, the court explained:
“The fundamental requirement of procedural due process is notice and
hearing, that is, an opportunity to be heard.” Korn v. Ohio State Med. Bd., 61
Ohio App.3d 677, 684, 573 N.E.2d 1100 (1988), citing Luff v. State, 117 Ohio
St. 102, 157 N.E. 388 (1927). “An elementary and fundamental requirement
of due process in any proceeding which is to be accorded finality is notice
reasonably calculated, under all the circumstances, to apprise interested parties
of the pendency of the action and afford them an opportunity to present their
objections.” Althof v. Ohio State Bd. of Psychology, 10th Dist. No.
05AP-1169, 2007-Ohio-1010, ¶ 19, quoting Mullane v. Cent. Hanover Bank
& Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L. Ed. 865 (1950)
(internal quotation marks omitted). “‘The right to a hearing embraces not
only the right to present evidence, but also a reasonable opportunity to know
the claims of the opposing party and to meet them.’” Id., quoting Gonzales v.
United States, 348 U.S. 407, 414, fn. 5, 75 S.Ct. 409, 413, 99 L. Ed. 467(1955), quoting Morgan v. United States, 304 U.S. 1, 18, 58 S.Ct. 773, 776, 82
L. Ed. 1129 (1938).
{¶23} In Pruneau, the Ohio Department of Commerce (“Commerce Department”)
sent notice to American Glass Services, Inc. and Dorsey Construction Company (“Dorsey”)
informing them they were in violation of the Ohio’s Prevailing Wage Law, specifically R.C.
4115.13(H)(1). After a hearing, the hearing examiner issued a report finding that the
Commerce Department did not prove that Dorsey violated R.C. 4115.13(H)(1). But the
hearing examiner did find that the Department presented sufficient evidence to establish that
Dorsey violated R.C. 4115.13(H)(4).
{¶24} Dorsey appealed the decision, arguing that its due process rights were violated
because it was not given sufficient notice that it had violated R.C. 4115.13(H)(4). The trial
court affirmed the Commerce Department’s final orders against Dorsey because Dorsey’s
“notice letter included a general reference to R.C. Chapter 4115,” and thus, was not
prejudicial. Id. at ¶ 32.
{¶25} The Tenth District reversed the decision of the trial court. Id. at ¶ 43. It
pointed out that the Department’s notice letter did not allege a general violation of R.C.
Chapter 4115; it alleged a very specific violation of R.C. 4115.13(H)(1) and failed to
reference R.C. 4115.13(H)(4). Id. at ¶ 36. The Tenth District also noted that at the
beginning of the hearing, the parties stipulated that “the only charges” they were addressing
“was what [the Commerce Department] listed in [the notice] letter.” Id. at ¶ 37. The
court reasoned that
the parties’ stipulation confirms Dorsey’s expectation that it needed to defend
against only the specific allegation of an intentional violation under R.C.
4115.13(H)(1). Given the specificity of the notice letter and the stipulation
before the hearing examiner, Dorsey did not receive adequate notice that it
faced a potential violation of R.C. 4115.13(H)(4).
Id.
{¶26} The Tenth District concluded that Dorsey was prejudiced by the Commerce
Department’s failure to provide adequate notice. Id. at ¶ 41. The court explained that it
could not “ignore that had Dorsey known other potential charges were at issue, it may have
presented additional or different evidence, or even used a different defense strategy, in light
of the additional charge.” Id. at ¶ 40. Further, “[b]ecause of the undisputed assurance
given to Dorsey that only a violation of R.C. 4115.13(H)(1) was at issue,” the court was
“compelled to conclude [that] the notice to Dorsey was insufficient to alert Dorsey that
charges under R.C. 4115.13(H)(4) were at issue.” Id.
{¶27} We find Pruneau to be distinguishable on its facts. In Pruneau, 191 Ohio
App.3d 588, 2010-Ohio-6043, 947 N.E.2d 900, the hearing examiner found that the
Commerce Department did not prove that Dorsey had violated R.C. 4115.13(H)(1) — the
only subsection listed in the notice. Instead, the hearing examiner found that based upon the
evidence, Dorsey actually violated a separate subsection of Ohio’s Prevailing Wage Law,
namely, R.C. 4115.13(H)(4).
{¶28} In the present case, however, the hearing examiner found that Payton was
convicted of a felony. In Payton’s notice from the Department, this was the only allegation.
Thus, the Department proved its allegation at the hearing. Had the Department not proven
this fact, and the hearing examiner still recommended denying Payton’s license for a separate
reason, we would reach a different conclusion.
{¶29} Payton argues that under R.C. 3905.14(D)(8) and 3905.14(E), the Department
could have ordered corrective action “in lieu of” denying her a license, and could have
considered various mitigating factors rather than deny her a license. We agree that it could
have. But it is fully within the Department’s discretion not to do so. See R.C.
3905.14(D)(8) and 3905.14(E).
{¶30} Payton further argues that she was materially prejudiced because if she had
known that she was facing allegations that her reputation and character were at issue, she
could have presented more evidence that may have led to a different outcome. Although
that may be true in some cases, we disagree under the facts of this case. The hearing officer
found that Payton was not truthful because she would not acknowledge she was guilty of the
crimes that she pled to in 2004, nor would she acknowledge that she ever had any mental
health issues. She adamantly testified that she was the victim — over and over — and
claimed that she was innocent. She sent a 31-page correspondence to the Commerce
Department declaring that same thing. It is highly doubtful that had Payton been on notice
that her character might be at issue, she would have acknowledged her prior guilt and mental
illness.
{¶31} Accordingly, we conclude that the trial court did not abuse its discretion when
it affirmed the Commerce Department’s order denying Payton a license to sell insurance in
the state of Ohio. Payton’s sole assignment of error is overruled.
{¶32} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the
Rules of Appellate Procedure.
MARY J. BOYLE, PRESIDING JUDGE
JAMES J. SWEENEY, J., and
KENNETH A. ROCCO, J., CONCUR