After years, administrative law reform clears Statehouse

The idea of revamping the state’s administrative law system has been floating around the Statehouse for years, but during the 2019 session, the reform effort finally gained broad support that has resulted in a new law proponents say will bring independence and transparency to the proceedings.

Senate Enrolled Act 1223 focuses on administrative law judges and establishes new oversight for the ALJs serving in most state agencies. The measure passed both chambers with no opposition and was signed by Gov. Eric Holcomb in early May.

Steuerwald

“I really like this bill,” said the legislation’s author, Rep. Greg Steuerwald. “I think it’s just good policy.”

Once the law takes effect July 1, 2020, the ALJs from a majority of the state agencies will be placed under the supervision of the Office of Administrative Law Proceedings. The new office will not only be charged with assigning the judges to handle cases as needed, but it will also have the duty to hire and train ALJs, as well as develop and enforce a code of judicial conduct.

Currently, administrative law judges are hired and paid by the agencies for which they work. That has led to the perception that the judges are not neutral adjudicators, even though, Steuerwald said, by and large the ALJs are well-qualified and making good decisions. Lawyers have told the Avon Republican they have a hard time explaining to their clients that the hearing will be fair when the judge is employed by the agency at the center of the dispute.

The bill’s supporters say the change to a central authority will help alleviate the concerns about bias. These judges will be put into a central pool that is outside the control of the state agencies, so, supporters say, the parties who appear in an administrative proceeding will have confidence they were given a fair hearing and the judicial officer was impartial.

As more and more disputes are being sent to an administrative proceeding rather than a courtroom, Paje Felts, legislative counsel at the Indiana State Bar Association, said the need for knowledgeable and well-trained ALJs is increasing.

SEA 1223 will ensure a good administrative law system because it specifically mandates that the ALJs receive training and education, Felts continued. The state agencies will save money by being able to pull a qualified judge without having to expend resources and time bringing that person up to speed on the subject matter. Also, she noted, the proceedings will have the predictability that lawyers want, which gives a sense of fairness.

“This is going to professionalize and make the process better for the citizens of Indiana,” Felts said, praising Steuerwald’s hard work in drafting the law. “This is a good piece of legislation.”

A hard look needed

Former Sen. Brent Steele jump-started the ALJ reform effort when he introduced a bill in 2016 that called for centralizing the administrative law judges and rotating them onto panels to hear appeals of decisions from various state agencies. The 100-plus page opus was slimmed down to a 4-page measure that established an Administrative Law Study Commission, which was tasked with determining whether the individual judges should be replaced by an administrative court.

Steele told the Indiana Lawyer the state needed to take a hard look at its administrative law system.

“Number one, a lot of times, the ALJ is not a lawyer, and number two, a lot of times, they’re hired by the agency and they think their job is to back the agency,” the Bedford Republican said.

Attorney Bryce Bennett Jr., who has served as an ALJ for the Indiana Secretary of State’s Securities Division for almost four years, agreed there is a perception the judges are not objective.

However, Bennett pointed out, a key factor in any ruling is the skill of the attorneys, and the counsel representing the Securities Division often have a deep knowledge of that area of the law and a heightened ability to persuade a trier of fact. Instead of judicial prejudice, the respondents might not be successful at the administrative law hearing because their counsel did not have the expertise to effectively counter the arguments from the state’s legal team.

Bennett, an attorney with Riley Bennett Egloff LLP in Indianapolis, brings 35 years of experience to the ALJ position and a desire to make good decisions that are ultimately upheld if appealed. He approaches the job by being respectful to the parties, acting judiciously and staying neutral so he can reach a fair result.

“These are challenging cases,” he said. “You want to get (the decision) right.”

Connor

Emily Connor, shareholder at Littler Mendelson P.C. in Indianapolis, questioned whether the judges pulled from the central office will have the experience and expertise needed to rule on the specialized matters for the different agencies.

Connor has represented clients in administrative proceedings before the Department of Workforce Development, the Indiana Civil Rights Commission and the Indiana Occupational Safety and Health Administration. Sometimes clients will raise concerns about the impartiality of the ALJ but, she said, the administrative law system is less formal, quicker and not as costly. Plus, any unfavorable ruling can eventually go before a trial court.

Bennett and Catherine Gibbs, environmental law judge for the Indiana Office of Environmental Adjudication, both believe the training and code of conduct coming with the new system will benefit the ALJs.

Gibbs said the judges must have experience, as well as a knowledge of the regulations and the law, because the matters that come before them can be legally and technically complex. Echoing Bennett, she added, the ALJs also need to be “able to listen and hear all sides of the argument.”

Limited pool

Eleven agencies are exempted from the law and will retain control of their administrative law judges.

Steuerwald explained the process for determining which ALJs were in and out of the centralized pool. The first step was to identify those judges who were making findings of fact and conclusions of law. Then, the second step was to tag those agencies who could not be put into the pool because their ALJ systems were governed by a separate statute, making them an independent adjudicative body at risk of falling out of compliance with federal law and regulations.

In describing the process to craft the bill, Steuerwald called the Holcomb administration an “integral and essential” partner. The governor’s office helped evaluate how each agency was using its ALJs and assisted in determining which agencies would be covered by the new law.

“We’ve got a lot of good ALJs,” Steuerwald said, adding the law was designed to provide judicial independence and not meant to be critical of the current judges. “These are good people.”

Holcomb will soon appoint the director of the new Office of Administrative Law Proceedings, who will then have about a year to establish and organize the operation for centralizing ALJs.

Brown

The new office will be housed in the State Personnel Department but will be independent of the department, according to Matthew Brown, deputy director of the SPD. Also, no judge will lose his or her job as a result of this transition, and all will remain in their offices at their current agencies.

Brown believes the new administrative law director will first do a “holistic evaluation” of the system, looking at the ALJs’ skill sets, caseloads, equipment use and schedules. Then, an organizational structure will be created so all the judges are not turning to the director every time they have a question.

The deputy director is confident that centralizing the ALJs will bring improvements to the administrative law system.

“This is a very big deal, and this will make government better,” Brown said. “A lot of citizens looking to the office are going to see better decisions and more efficiencies.”•