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The “Finality” of Recommended Orders

Administrative Law

    Recommended orders from administrative law judges (ALJs) are recommendations to an agency head on how a case should be decided. However, the constraints imposed by F.S. §120.57(1)(l)1 on an agency’s ability to disturb the findings of fact and conclusions of law contained within these recommended orders make them somewhat “final.” This article will discuss the two main parts of a recommended order that an agency will most often seek to change, as well as the statutory and case law limitations that impede an agency’s ability to make such changes.

    Findings of Fact
    The findings of fact are the result of an ALJ’s consideration of all the evidence that was presented at hearing, resolution of any conflicts within that evidence, judgment concerning the credibility of each side’s witnesses, and formulation of reasonable inferences based on the evidence presented.2 According to F.S. §120.57(1)(l), these findings may not be disturbed by an agency unless 1) there is no competent, substantial evidence from which the finding could reasonably be inferred; or 2) the proceedings on which the findings were based did not comply with the essential requirements of law. In addressing the first scenario, it is important to understand what the term “competent, substantial evidence” means. “Competent, substantial evidence” has been defined as “such evidence as will establish a substantial basis of fact from which the fact at issue can be reasonably inferred,” or evidence which “should be sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached.”3 In other words,

    The term “competent substantial evidence” does not relate to the quality, character, convincing power, probative value or weight of the evidence but refers to the existence of some evidence (quantity) as to each essential element and as to the legality and admissibility of that evidence. Competency of evidence refers to its admissibility under legal rules of evidence. “Substantial” requires that there be some (more than a mere iota or scintilla), real, material, pertinent, and relevant evidence (as distinguished from ethereal, metaphysical, speculative or merely theoretical evidence or hypothetical possibilities) having definite probative value (that is, “tending to prove”) as to each essential element of the offense charged.4

    If an ALJ’s finding of fact is based upon any competent substantial evidence, it cannot be disturbed by an agency.5 In the latter scenario, there is no concrete definition for what constitutes noncompliance with the essential requirements of law. Case law has indicated that the portion of F.S. §120.57(1)(l) that allows an agency to reject findings of fact when the proceedings on which the findings were based did not comply with essential requirements of law also “authorizes an agency to test the procedural regularity of the proceedings before the hearing officer.”6 A case in which an ALJ placed the burden of proof on the wrong party at hearing is one example of a proceeding that did not comply with the essential requirements of law.7
    The high standard of review requiring agencies to accept an ALJ’s findings of fact unless they are unsupported by competent, substantial record evidence has not always deterred agencies from disturbing such findings of fact without any legitimate basis to do so.

    Despite a multitude of cases repeatedly delineating the different responsibilities of hearing officers8 and agencies in deciding factual issues, we too often find ourselves reviewing final agency orders in which findings of fact made by a hearing officer are rejected because the agency’s view of the evidence differs from the hearing officer’s view, even though the record contains competent, substantial evidence to support the hearing officer’s findings.9

    Such unauthorized changes occur because it is oftentimes very hard for agencies to come to terms with the reality that they must adopt findings of fact which are contrary to their policies and contrary to the accumulated wisdom and experience attending their day-to-day administration of programs. Courts have sympathized with the dilemma that agencies sometimes face.

    We recognize the temptation for agencies, viewing the evidence as a whole, to change findings made by a hearing officer that the agency does not agree with. As an appellate court, we are sometimes faced with affirming lower tribunal rulings because they are supported by competent, substantial evidence even though, had we been the trier of fact, we might have reached an opposite conclusion. As we must, and do, resist this temptation because we are not the trier of fact, so too must an agency resist this temptation since it is not the trier of ordinary factual issues not requiring agency expertise.10

    It is not the function of an agency, however, to second guess an ALJ’s factual findings.

    If, as is often the case, the evidence presented supports two inconsistent findings, it is the hearing officer’s role to decide the issue one way or the other. The agency may not reject the hearing officer’s finding unless there is no competent, substantial evidence from which the finding may reasonably be inferred. The agency is not authorized to weigh the evidence presented, judge credibility of witnesses, or otherwise interpret the evidence to fit its desired ultimate conclusion.11

    Agencies have tried to circumvent the high standard for reversing or modifying findings of fact by characterizing them as conclusions of law, which have a different standard for reversal or modification.12 This situation is sometimes exacerbated when ALJs erroneously label findings of fact as conclusions of law and vice versa. It is the agency’s responsibility in reviewing a recommended order to discern whether a disputed portion is a finding of fact or conclusion of law and what standard of review should be applied to it.
    Courts have found that it is not necessarily the labeling of a particular section within a recommended order that determines its status as a finding of fact or conclusion of law.

    [W]e give no great weight to the labeling of the conflicting findings as “conclusions of law” rather than “findings of fact.” Though the hearing officer’s labeling informs us that he properly sensed the presence of policy and legal considerations in the task of weighing the evidence. . . we nevertheless give the hearing officer’s finding effect to the extent the issue was “simply the weight or credibility of testimony by witnesses,” or was determinable “by ordinary methods of proof,” “or was in a factual realm concerning which ‘the agency may not rightfully claim special insight.’” McDonald v. Dept. of Banking and Finance, 346 So. 2d 569, 579 (Fla. 1st DCA 1977). On the other hand, to the extent that “the ultimate facts are increasingly matters of opinion and opinions are increasingly infused by policy considerations for which the agency has special responsibility,” we shall honor the [agency’s] substituted findings.13

    The “ultimate facts” mentioned in the quote above “are those found in that vaguely definedarea lying between evidentiary facts on the one side and conclusions of law on the other and are the final resulting effects which are reached by the process of logical reasoning from the evidentiary facts.”14 These ultimate facts include an ALJ’s determination whether the facts as presented constitute a violation of a rule or statute and are often treated as findings of fact by reviewing courts.15 Because they lie in a “vaguely defined area” between findings of fact and conclusions of law, it is sometimes quite hard for an agency to discern what standard of review to apply to ultimate facts because they might be findings of fact, conclusions of law, or a mixture of both.
    When an agency has a legitimate basis for overturning a finding of fact, it must specifically assert this basis in the final order, either by stating with particularity that the finding was not based on competent substantial evidence or that the proceedings, on which the finding was based, did not comply with the essential requirements of law.16 While there is no clear-cut definition explaining what is meant by the phrase “state with particularity,” there are examples of what this phrase does not mean.
    When an agency merely states in its conclusion that the ALJ’s rejected findings are not supported by competent, substantial evidence, it violates the statutory requirement that it state valid reasons for rejecting the findings with particularity. Where an agency’s final order rejects the ALJ’s factual findings and simply accepts the factual findings set forth in exceptions to the recommended order, the order [also] fails to “state with particularity” those findings it rejected.17

    Courts have also found that the phrase “state with particularity” requires an agency to state in its final order which findings are rejected and why they are rejected.18 The 2006 version of F.S. §120.57(1)(k) appears to expound on this phrase by requiring agencies to “include an explicit ruling on each exception” in their final orders.
    The strict standard imposed by F.S. §120.57(1)(l) for overturning findings of fact is, in essence, a method of affording the assurance of neutrality to those who are substantially affected by agency action by placing the responsibility for fact-finding in the hands of a third party. The legislature has determined that agencies that are parties to a case should not be allowed to freely engage in their own fact-finding19 or be permitted to reweigh evidence presented at hearing because they have an interest in its outcome. Under this view, the integrity of the formal hearing process is maintained by prohibiting agencies from being able to disturb findings of fact at will, although sometimes to the agencies’ detriment.

    Conclusions of Law
    Conclusions of law are the result of an ALJ’s application of relevant statutes, rules, and case law to the findings of facts. F.S. §120.57(1)(l) allows an agency to reject or modify both the ALJ’s conclusions of law and the ALJ’s interpretations of administrative rules over which the agency has substantive jurisdiction. However, under F.S. §120.57(1)(l), an agency must state with particularity its reasons for rejecting or modifying the conclusion of law or interpretation of administrative rule, and must find that its substituted conclusion of law or interpretation of administrative rule is as reasonable or more reasonable than the one it rejects or modifies.20
    Prior to the 1996 amendments, agencies had the authority to disturb any conclusion of law. However, the 1996 and 1999 amendments to F.S. Ch. 120 restricted an agency’s authority to reverse or modify conclusions of law to those over which the agency had “substantive jurisdiction” and set forth the requirements for reversal or modification.21 The use of the term “jurisdiction” in the phrase “substantive jurisdiction” is somewhat misplaced. enacting these amendments to F.S. Ch. 120 “the [l]egislature clearly intended to restrict agency review of legal conclusions in a recommended order to those that concern matters within the agency’s field of expertise.”22 Thus, “[t]he phrase ‘administrative authority’ or ‘substantive expertise’ may provide a better definition of an administrative department’s now more limited scope of review.”23
    What constitutes a matter within an agency’s “field of expertise” is not, however, always readily apparent. The difficulties in determining which matters are within an agency’s expertise are illustrated by the court’s decision in Gross v. Department of Health, 819 So. 2d 997 (Fla. 5th DCA 2002). In that case, the Department of Health filed an administrative complaint against Dr. Gross, alleging that he violated the applicable standard of care by injecting air, rather than ionic dye, into a patient who was scheduled to receive a heart catheterization, thereby causing the patient’s death.24 Dr. Gross requested a formal hearing, and the case was transferred to the Division of Administrative Hearings. The ALJ who presided over the hearing found that “[t]he ‘standard of care’ does not require the physician to watch the loading of dye or the expulsion of air from the syringe in the loading process” and recommended that the department enter an order finding that Dr. Gross did not violate the relevant statute.25 The Board of Medicine did not agree with the ALJ’s finding and instead issued a final order that found that Dr. Gross’ actions violated F.S. §458.331(1)(t) because they were below the applicable standard of care, and imposed a commensurate penalty.26
    Dr. Gross appealed to the Fifth District Court of Appeal, which reversed the department’s final order. In doing so, the court stated that “an agency may not rely on its own expertise to reverse the administrative law judge’s finding that a particular statute was not violated.”27 The court also rejected the board’s argument that it was entitled to give less deference to the ALJ’s findings of fact because the issue of whether Dr. Gross had complied with the applicable standard of care was a matter “infused with overriding policy considerations.”28 Rather, the court found that the issue of whether Dr. Gross had violated the applicable standard of care was a factual one susceptible to ordinary methods of proof and not infused with policy considerations. The court reasoned that the ALJ’s determination was made based on a weighing of the testimony and credibility of both parties’ expert witnesses.29 The concurring opinion of Judge Orfinger in the Gross case demonstrated the effect of the court’s ruling: “Although it is clear that harm was done to Dr. Gross’ patient, I nevertheless must concur with the majority opinion because neither this court, nor the Board of Medicine, can disregard findings of fact made by the Administrative Law Judge (ALJ) that are supported by substantial competent evidence.”30
    After the Gross case was decided, the Board of Medicine and the Department of Health successfully lobbied for a statutory change that made the determination of whether a physician violated the standard of care a conclusion of law within the board’s determination, not a finding of fact.31
    The Gross case highlighted the conflict between the restrictions imposed on an agency’s ability to disturb findings of fact under F.S. §120.57(1)(l) and the application of the deference rule, which states: “Matters that are susceptible of ordinary methods of proof, such as determining the credibility of witnesses or the weight to accord evidence, are factual matters to be determined by the hearing officer. On the other hand, matters infused with overriding policy considerations are left to agency discretion.”32
    Whether Dr. Gross had violated the applicable standard of care was an issue that could be considered “infused with overriding policy considerations” because the Board of Medicine is responsible for determining the standards of care for physicians in Florida. Nevertheless, the ALJ found that Dr. Gross had violated the applicable standard of care by determining the credibility of witnesses and weighing the evidence presented by the parties, which are factual matters.
    As the Gross court opined:

    This is not a case where the [b]oard is required to exercise its broad discretionary powers in accordance with statutory criteria and it is not a case where the [b]oard is called upon to interpret or apply one of its own rules. Rather, the instant case involves the factual issue of whether Gross violated the applicable standard of care which is an issue readily determinable through the ordinary methods of proof such as the weighing of evidence and the credibility of witnesses. Hence it is not a case infused with policy issues and, therefore, the deference rule does not apply.33
    The court implied that the outcome might have been different if there had been an alleged violation of a particular rule, such as one governing the standards of practice for injections, rather than a general alleged violation of F.S. Ch. 458. The Gross case shows that, short of a specific statute otherwise, an agency may not even have the authority to consider matters over which it has expertise if the ALJ’s determination of those matters involved weighing evidence.34
    Although some boundaries of an agency’s substantive jurisdiction are rather difficult to discern, other boundaries of an agency’s substantive jurisdiction are more obvious. Matters involving general legal principles are considered to be outside an agency’s substantive jurisdiction. For example, an agency does not have substantive jurisdiction over an ALJ’s conclusions of law regarding the applicability of the doctrines of res judicata or collateral estoppel to a case because the “legal determination was not one that involved the department’s area of expertise but, rather, required applying a legal concept typically resolved by judicial or quasi-judicial officers.”35 An agency also does not have substantive jurisdiction to reverse or modify an ALJ’s conclusion of law on an evidentiary issue.36
    For the most part, determining an agency’s ability to disturb an ALJ’s conclusion of law is based on common sense. If the conclusion of law involves a legal issue that would normally be decided in a court of law, it is outside of an agency’s substantive jurisdiction. However, if a conclusion of law involves an interpretation of a statute or rule that governs the operations of an agency, then that conclusion of law may be within an agency’s substantive jurisdiction, provided that the ALJ did not reach that conclusion by weighing the evidence presented at hearing or determining the credibility of witnesses.

    Conclusion
    Recommended orders are not final by nature. However, the statutory and case law limitations on an agency’s ability to disturb the findings of fact, conclusions of law, and recommended penalties contained within these recommended orders render them somewhat “final.” An agency must be very careful in disturbing an ALJ’s findings, conclusions, and recommendations, and should always provide detailed explanations for doing so in its final orders. When confronted with an adverse recommended order that it is powerless to change, the only recourse available to an agency is to enter a final order that adopts the recommended order under protest and then appeal its own final order or pursue an interlocutory appeal of the recommended order prior to the entry of a final order.37 The strict standards imposed by F.S. §120.57(1)(l) and supporting case law are designed to promote and protect the due process rights of those substantially affected by agency action. The practical effect may be the issuance of final orders that are contrary to knowledge and understanding the agencies have gleaned through years of experience.

    1 All statutory references in this article shall be to the 2006 version of the Florida Statutes.
    2 Heifetz v. Dep’t of Bus. & Prof’l Regulation, 475 So. 2d 1277, 1281 (Fla. 1st D.C.A. 1985).
    3 De Groot v. Sheffield, 95 So. 2d 912, 916 (Fla. 1957).
    4 Lonergan v. Estate of Budahazi, 669 So. 2d 1062, 1064 (Fla. 5th D.C.A. 1996) (quoting Dunn v. State, 454 So. 2d 641, 649 n. 11 (Fla. 5th D.C.A. 1984)).
    5 See, e.g., Stinson v. Winn, 938 So. 2d 554 (Fla. 1st D.C.A. 2006) (finding that an ALJ is entitled to rely on the testimony of one witness even if that testimony conflicts with the testimony of several other witnesses).
    6 Brogan v. Carter, 671 So. 2d 822, 823 (Fla. 1st D.C.A. 1996).
    7 See Southeast Grove Mgmt., Inc. v. McKiness, 578 So. 2d 883 (Fla. 1st D.C.A. 1991). However, the case seems to suggest that the proper remedy for agencies confronted with findings of fact based on proceedings that did not comply with the essential requirements of law is to remand to the ALJ for further proceedings. See also Manasota 88, Inc. v. Tremor, 545 So. 2d 439 (Fla. 2d D.C.A. 1989).
    8 “In the past, the hearings were conducted by a ‘hearing officer.’ The term ‘hearing officer’ was changed to ‘administrative law judge’ in the 1996 revision of the Administrative Procedure Act. Ch. 96-159, §3, Laws of Fla. Accordingly, the case law discussing the treatment to be afforded a hearing officer’s findings is applicable to the findings of an administrative law judge.” Gross v. Dep’t of Health, 819 So. 2d 997, 1000 (Fla. 5th D.C.A. 2002).
    9 Heifetz at 1281. Please note that, when the Heifetz opinion was written, this practice was more commonplace than it is today.
    10 Smith v. Dep’t of HRS, 555 So. 2d 1254, 1255-1256 (Fla. 3d D.C.A. 1989); see also Heifetz at 1281.
    11 Heifetz at 1281.
    12 See, e.g., Dep’t of Labor & Employment Sec. v. Little, 588 So. 2d 281 (Fla. 1st D.C.A. 1991).
    13 Sch. Bd. of Leon County v. Hargis, 400 So. 2d 103 (Fla. 1st D.C.A. 1981).
    14 Feldman v. Dep’t of Transp., 389 So. 2d 692, 694 (Fla. 4th D.C.A. 1980).
    15 See, e.g., Goin v. Comm’n on Ethics, 658 So. 2d 1131, 1138 (Fla. 1st D.C.A. 1995); Gross, 819 So. 2d 997, 1003 (Fla. 5th D.C.A. 2002).
    16 See Fla. Stat. §120.57(1)(l); Gross, 819 So. 2d at 1001.
    17 Prysi v. Dep’t of Health, 823 So. 2d 823, 825 (Fla. 1st D.C.A. 2002) (citations omitted).
    18 See, e.g., Lewis v. Dep’t of Prof. Regulation, 410 So. 2d 593, 594 (Fla. 2d D.C.A. 1982).
    19 Agencies are permitted to engage in their own fact-finding if the ALJ’s findings of fact were not based on competent, substantial evidence. See Rogers v. Dep’t of Health, 920 So. 2d 27, 30 (Fla. 1st D.C.A. 2005).
    20 Fla. Stat. §120.57(1)(l).
    21 For a detailed discussion of this amendment to Fla. Stat. Ch. 120, see Barfield v. Dep’t of Health, 805 So. 2d 1008 (Fla. 1st D.C.A. 2002).
    22 G.E.L. Corp. v. Dep’t of Env’t Prot., 875 So. 2d 1257, 1264 (Fla. 5th D.C.A. 2004). But see Robert C. Downie, II, Agency Substantive Jurisdiction — The More Things Change…, 76 Fla. B.J. 79 (June 2002).
    23 Deep Lagoon Boat Club, Ltd. v. Sheridan, 784 So. 2d 1140, 1142 (Fla. 2d D.C.A. 2001).
    24 Gross, 819 So. 2d at 999.
    25 Id. at 1000.
    26 Id.
    27 Id. at 1001.
    28 Id. at 1002.
    29 Id. at 1004.
    30 Id.at 1006.
    31 See Fla. Stat. §456.073(5).
    32 Gross, 819 So. 2d at 1002.
    33 Id. at 1004 (citations omitted).
    34 See also Holmes v. Turlington, 480 So. 2d 150, 153 (Fla. 1st D.C.A. 1985) (holding that deviation from a standard of conduct is an ultimate finding of fact, clearly within the realm of the hearing officer’s fact-finding discretion); Wise v. Dep’t of Mgmt. Servs., Div. of Ret., 930 So. 2d 867, 872 (Fla. 2d D.C.A. 2006) (holding that the issue of whether a position in the contested period is temporary is a factual determination and not one infused with “agency expertise”).
    35 See Deep Lagoon Boat Club, Ltd. v. Sheridan, 784 So. 2d at 1142.
    36 See Barfield, 805 So. 2d 1008 (Fla. 1st D.C.A. 2002). Interestingly, in both the Deep Lagoon and Barfield cases, the agency had correctly ruled on the issue over which it was found by the court to lack substantive jurisdiction.
    37See Barfield, 805 So. 2d at 1013.

Richard J. Shoop is the agency clerk for the Agency for Health Care Administration. Mr. Shoop received his B.A. in history with general honors from the University of Miami in 1996 and his J.D. from the University of Miami School of Law in 1999. Mr. Shoop thanks Tracy Lee Cooper and William H. Roberts for their assistance in the preparation and revision of this article. Please note that the opinions expressed in this article are not necessarily those of the Agency for Health Care Administration.

This column is submitted on behalf of the Administrative Law Section, Patrick L. Imhof, chair, and Deborah K. Kearney, editor.

Administrative Law