The Origin of the Administrative Hearing Commission
Eugene G. Bushmann1
The Administrative Hearing Commission was created by statute in 1965. This article discusses how the legal procedures that we in place at the time led to certain events that, in turn, were the impetus for the reform legislation.
The Missouri Administrative Hearing Commission,2 commonly referred to as the “AHC,” was 40 years old in 2005. Today there is general acceptance, if not insistence, of an independent and unbiased tribunal to resolve disputes involving state agencies, particularly those concerning the issuance or denial of professional and occupation licenses. This was not true until 1965, when the enactment of Senate Committee Substitute for Senate Bill 2843 brought the AHC into existence.
This major reform in administrative law and procedure was not an accidental happening. There were several factors leading to its creation. The procedures prevalent at the time allowed licensing agencies to rule upon their own evidence when suspending or denying a license.4 In 1964, when a state licensing board abused its power by unlawfully denying a license to a doctor, the procedures followed by licensing agencies were re-examined. Thomas F. Eagleton (then attorney general and later lieutenant governor and U.S. senator), in collaboration with members of the bar, drafted and lobbied for the passage of Senate Bill 284.
Prior to the enactment of the AHC, all of the licensing boards, such as those that licensed doctors, dentists, real estate agents and others, were represented by an assistant attorney general who basically served as general counsel to the board. The assistant attorney general drafted formal complaints, presented the evidence to the board and then drafted the findings of fact and conclusions of law which supported the decision of the board.5 Although the procedures were governed by the Missouri Administrative Procedure Act in place at the time (requiring competent and substantial evidence upon the whole record), the principal legal concern was only whether the board had enough predetermined evidence to support its final decision, not whether sufficient evidence was produced at the hearing. This was not a comfortable position for the attorneys.
The licensing board had an even greater problem of conflicting roles, since it acted as prosecutor, judge and jury without any legal training. This three-in-one position inherently meant that the board gave more credence to evidence that supported its previously formed opinion. Quite often, the evidence the board submitted to its members was evidence the board itself had generated and which the board thought sufficient to prompt the hearing in the first place. Applicants for licenses, as well as complaints against licensees, were generally referred to the board’s investigators, who reported to the agency. As stated so clearly in Fair Treatment for Licensed Professionals:
After the investigator reported back to the agency, the members of the board would meet, evaluate the report, and then, based on that evidence, decide if formal action were necessary. If the board decided in the negative, that naturally, would close the matter. Concern would arise only when the board decided to proceed, and the licensee decided to contest the action. Although the members of the board had already decided (with the advice of counsel) that the evidence supported the allegations of illegal conduct, at the hearing they would, figuratively, don black robes, sit as judge and jury, and re-evaluate the same evidence. In addition, the leading witness for the agency was often the board’s own employee-investigator. Thus, even if the licensee had controverting evidence, the board was usually predisposed to decide against him, because (1) it had already decided against the licensee in filing the complaint; and (2) from a practical standpoint, it would tend to give weight to the testimony of its own employee.6
There were other defects in this three-in-one system. There were no statutory requirements for the formal adoption and publication of rules by these agencies, as presently required by the current Missouri Administrative Procedure and Review Act.
7 There was no uniformity between agencies as to the rules of procedure, no specificity requirements of the complaint or sufficient notice of hearing. Most boards held informal discussions with applicants and licensees, and difficulty always arose as to when a contested case was occurring and, therefore, the record required to be made. More importantly, there were problems as to what comprised the record. The parties were often compelled to arrive at stipulated facts.
8It was the system, and not the board members, that needed change. The conditions surrounding the practice before licensing agencies in 1964 created the strong possibility that, regardless of the good intentions of licensing boards, an unfair hearing could result in a deprivation of due process and eventually someone would take the matter to court. That was exactly what occurred in the case of Harold Lischner v. State Bd. of Registration for the Healing Arts of Mo.,9 which was filed in the circuit court of Cole County, Case No. 22261, in 1964.
The facts of the case were generally described by the findings of the circuit court and were published in the press.10 Dr. Harold Lischner was a doctor of medicine and was licensed to practice in Pennsylvania and California. He had previously been a professor of pediatrics at the University of Missouri and at the time of the hearing was serving as professor of pediatrics at the University of Pennsylvania at Philadelphia. He was a diplomat of the American Board of Pediatrics. He had graduated from the University of Chicago School of Medicine.
While at the University of Missouri, he applied for a Missouri license in 1959. He was not granted a hearing before the Healing Arts Board until November 1963. The board voted in March to deny the license but did not make a final decision until April 1964. The basis for denial was that Dr. Lischner was not of good moral character because he was a conscientious objector to war and military service.11
The board presented no witnesses and offered no evidence of Dr. Lischner’s moral character. It based its opinion on the answers of Dr. Lischner to the questions the board members asked him during the hearing. Dr. Lischner offered testimony of 17 witnesses as to his good moral character. Letters testifying to his medical qualifications and moral character were submitted to the board from every member of the pediatrics departments, except one who could not be reached, of the Universities of California, Pennsylvania and Missouri. Dr. Lischner testified that he believed that “war was wrong and that involuntary service in connection therewith was also wrong” because of “parental indoctrination, religious belief and matters of deep conscience.”12
Before the Healing Arts Board issued its final ruling, Attorney General Eagleton wrote to the board advising them that there was no legal basis for denying Dr. Lischner a license, and if it proceeded in its decision it needed to employ outside counsel.13 Governor John M. Dalton was ending his term as governor in 1964 and sided with the board. He assured it of any funds needed to defend its position if it should result in a legal challenge.14
Many Missouri newspapers gave publicity to the controversy. The St. Louis Post-Dispatch editorialized strongly (criticizing the action of the board) during the summer and fall of 1964. The editorial cartoons of the Post were particularly hard-hitting. The matter came to a conclusion in November 1964, when Judge Sam Blair of the Cole County Circuit Court entered judgment finding that the board “acted arbitrarily, unreasonably and capriciously and in excess of its powers and beyond the powers granted it by law.”15 The judgment found that the Healing Arts Board “grossly abused its discretion and discriminated against [Dr. Lischner] and denied him the equal protection of the law and due process of law,” resulting in a violation of both the federal and Missouri constitutions.16 The court further ruled that the board’s decision “was not based upon competent and substantial evidence, upon the whole record of the case and . . . was unauthorized by law, arbitrary, unreasonable and capricious.”17
The board never appealed the circuit court decision, but Eagleton did not consider the matter closed. Earlier, in 1963, he had testified before the Missouri Reorganization Commission (Little Hoover Commission) advocating the creation of an independent hearing examiner.18 After Lischner, he proposed legislation to accomplish this end and got the support of the Administrative Law Committee of The Missouri Bar.19 He met with Governor-Elect Warren E. Hearnes, who then announced that he favored the impartial hearing examiner system.20
The legislation was sponsored and introduced in the Senate by Senator John Downs of St. Joseph, and in the House by State Representatives Ronald Reed of St. Joseph and Jack Schramm of St. Louis County.21 Eagleton personally lobbied for passage of the bill and testified in its favor before the Senate Judiciary Committee.22 The bill was supported by the administrative law committees of the St. Louis, Kansas City and Missouri bars.23 Several licensing boards urged passage of the bill, as well as the Little Hoover Commission and the president of the Healing Arts Board.24
Originally, the legislation sought to give the hearing commission the power to order the agencies to grant or deny licenses, as well as the authority to impose punishment. That was changed during the legislative process to have the AHC only issue Findings of Fact and Conclusions of Law and make recommendation of enforcement. The punishment power and the authority to suspend or deny a license was to remain the responsibility of the licensing agency. The prevailing opinion was that the various agencies had the expertise and professional background to make the appropriate discipline decision and the degree or duration of any punishment. What they lacked was the legal training to rule upon the admissibility of evidence and to be impartial. This compromise was critical to the passage of the bill.25
The Division of Insurance (now a state department) was added to the bill during legislative debate and required AHC hearings in relation to the licensing of insurance agents and brokers. The inclusion of the Division of Insurance created opposition to the bill while debated in the House and required the bill to be finally resolved in a conference committee of both houses. On June 30, 1965, the legislature approved the conference committee report and voted the bill “do pass.”26 The final vote in the Senate was 30 “yeas” and one “no.” In the House, the bill passed 97 to 44.27
After the bill was finally passed by the legislature, the insurance industry continued to express opposition and lobbied Governor Hearnes to veto the bill.28 The superintendent of the Division of Insurance and the general counsel of the agency, both Hearnes appointees, asked the governor to veto the bill.29 The lobbying was intense and Hearnes delayed a final decision for several weeks in order to meet with his appointees.30 Eagleton continued his discussions with Governor Hearnes, and finally the governor signed the bill on August 24, 1965.
As might be expected, the St. Louis Post-Dispatch editorialized favorably when this reform measure became law. It described the entire episode as a story where injustice results in justice. It said that “Gov. Hearnes deserves credit for signing the bill[] . . . Lt. Gov. Eagleton deserves credit for initiating the reform,” but the congratulatory list should not “omit the name of a stubborn young physician, Harold Lischner.”31
The AHC began with relatively humble beginnings. Originally there was one commissioner and one secretary in two small rooms. At first, the hearing officer held hearings throughout the state and operated the equipment that recorded the hearings. The secretary transcribed the record and typed the Findings of Fact and Conclusions of Law. The jurisdiction of the AHC was limited to conducting hearings relating to the suspension or revocation of, or refusal to grant, licenses issued by 14 licensing boards and the Division of Insurance.
In addition to granting a hearing before an impartial tribunal, two major changes occurred immediately with the creation of the AHC. First, the new AHC drafted and publicized rules of procedure before the commission. The Missouri Bar published these rules in the The Missouri Bar Journal32 and they were filed with the secretary of state for general publication. For the first time, there was uniformity in the procedures and conduct of hearings throughout this area of administrative law.
Second, the new law specially allowed hearings for those applicants who were not permitted to be examined as to their qualifications for a license, for those applicants who claimed to be possessed of qualifications without examination, and for those applicants who were refused renewal of their licenses.33 These areas were always gray and murky under the old procedure and were now statutorily identified.
Over the years the AHC has developed credibility and acceptance with the bar, the appellate courts and the legislature. There has been a slow but steady accretion to its jurisdiction. Today there are three commissioners and a staff of 13, three of whom are lawyers. The commission operates in a courtroom-like setting with court reporters transcribing and developing an accurate record of the proceedings. Over the last three years the AHC has averaged a case load of more than 2,000 new cases filed each year.34
The jurisdiction of the AHC has greatly expanded. Today it conducts hearings concerning disputes involving virtually every state department and the office of secretary of state. More than 100 state agencies are potential parties to cases before the AHC. Through the process of “memorandum of understandings,” the AHC conducts hearings for the Missouri Commission on Human Rights and the Missouri Consolidated Health Care Plan, agencies that are not specifically included within its statutory jurisdiction.35
Since its enactment in 1965, the Administrative Hearing Commission has brought needed, and yet expanding, legal reform in Missouri by providing an unbiased judge of the facts and law in administrative hearings. As stated earlier, the impetus of this improvement was a defective legal system that created an opportunity for the deprivation of procedural and substantive due process. The demand for a change to the existing order of things was dramatized by the persistence of Dr. Harold Lischner. The actual solution came from the leadership of Thomas F. Eagleton and members of The Missouri Bar.
Footnotes
1 Mr. Bushmann received his law degree from the University of Missouri. He was an assistant attorney general from 1960 to 1965 and the first Administrative Hearing Commissioner from 1965 to 1968. He practices with the firm of Carson & Coil in Jefferson City.
2 Chapter 621, RSMo.
3 1965 Mo. Laws 277.
4 John S. Sandberg, Fair Treatment For The Licensed Professional: The Missouri Administrative Hearing Commission, 37 Mo. L. Rev. 410, 437-444 (1972).
5 Id. at 438.
6 Id.
7 Sections 536.010-536.053, RSMo Supp. 2004.
8 Sandberg at 439.
9 Harold Lischner v. State Board of Registration For the Healing Arts in Missouri, Circuit Court of Cole County, Case No. 22261 (1964), Plaintiff’s Requested Findings of Fact and Conclusions of Law, Accepted by the Court, November 16, 1964.
10 Ronald D. Willnow, Doctor Denied State License Because of His Pacifist Views, St. Louis Post-Dispatch, April 2, 1964, at A 1 and A 6.
11 Lischner, Plaintiff’s Requested Findings of Fact, No. 19.
12 Lischner, Plaintiff’s Requested Findings of Fact, No. 12.
13 Willnow, St. Louis Post-Dispatch, April 2, 1964, at A 1.
14 Id.
15 Lischner, Plaintiff’s Requested Findings of Fact, No. 20.
16 Id.
17 Lischner, Plaintiff’s Requested Conclusions of Law 2D.
18 Ronald D. Willnow, Missouri Bar Group Favors Examiners in License Cases, St. Louis Post-Dispatch, November 24, 1964, at A 1 and A 5.
19 Id.
20 Fred W. Lindecke, Hearnes Favors Examiner Plan For License Revocations, St. Louis Post-Dispatch, November 22, 1964, at A 1.
21 Sandberg at 443.
22 Eagleton Backs Bill to Set Up Hearing Office, St. Louis Globe-Democrat, March 24, 1965; Eagleton Seeks to End Trial By State Licensing Boards, St. Louis Post-Dispatch, March 25, 1965 (both articles on file with author).
23 Sandberg at 443, Note 217.
24 Healing Arts Chief Supports Examiner Plan, St. Louis Post-Dispatch, November 29, 1964, at A 1 and A 28.
25 Id.
26 Journal of the House, 73rd Gen. Assem. (1965) p. 1821.
27 Id.
28 Examiner Bill Termed “Fatal,” B.G. Gregory, Insurance Groups Urge Hearnes to Veto Measure, St. Louis Globe-Democrat, July 21, 1965, at B 4.
29 Eagleton Asks Hearnes to O.K. Examiner Bill, St. Louis Globe-Democrat, July 15, 1965, at A 15.
30 Edward H. Thornton, Hearnes Staff Still Studying Bill On License Hearing System, Governor to Decide on Signing Measure for Commissioner Next Month, St. Louis Post-Dispatch, July 25, 1965, at A 3.
31 Editorial, St. Louis Post-Dispatch, August 26, 1965 at B2.
32 Eugene G. Bushmann, Rules Governing Practice and Procedure Before the Missouri Administrative Hearing Commission, 22 J. Mo. Bar 66 (1966).
33 Lewis A. Dysart, Missouri’s New Commission, 21 J. Mo. Bar 446 (1965).
34 Letter from Karen Winn, Commissioner of the Administrative Hearing Commission, to author (Dec. 12, 2005) (on file with author).
35 Id.