Two recent decisions from the circuit courts invite our attention. They will appear in Volume 38 of Hamilton Bryson's Circuit Court Opinions. Appeals from both have been filed, so a future newsletter will surely bring news of further developments.
Out of the Circuit Court of the City of Richmond, comes Wells Fargo Alarm Services, Inc. v. Virginia Employment Commission, 38 Va.Cir. 382 (1996). The commission had awarded unemployment benefits to Collier, a former salesman, and Wells Fargo objected, on the ground that he had been fired for misconduct. (Wells Fargo's showing of Collier's misconduct had prompted dismissal previously by the Department of Labor and Industry of a claim by Collier to unpaid wages.) The employer was able to persuade the Employment Commission that Collier had knowingly booked a certain transaction improperly, i.e., as a lease rather than as a sale, but the VEC nevertheless ruled for the former employee because Collier showed he had been directed to do so by his branch manager. Wells Fargo then appealed to the circuit court, on the grounds that, because Collier had concealed his misconduct while employed and had perjured himself later before the VEC, the commission erred in not reopening the case to admit new evidence of other misconduct by Collier and his former supervisor. The court was not persuaded, and affirmed the VEC's decision. In his opinion, Judge Hughes briefly reviewed the law of fraud as a basis for reopening a case and admitting new evidence. Referring to Jones v. Willard, 224 Va. 602, 607 (1983), Judge Hughes reminded that fraud may be intrinsic or extrinsic, and that the former includes "perjury, forged documents or other incidents of trial related to issues material to the judgment," while the latter is "conduct which prevents a fair submission of the controversy to the court." Wells Fargo accused Collier of intrinsic fraud by, among other things, failing to tell the VEC that he had lost at the Department of Labor and Industry on account of misconduct, and extrinsic fraud by concealing from Wells Fargo inculpatory documents only discovered after his discharge. Without going into detail, Judge Hughes concluded that Wells Fargo had not made out a case for intrinsic fraud, and that whether Collier committed extrinsic fraud depended on whether he was acting in cahoots with his supervisor. Judge Hughes noted that this issue had been considered at length in the VEC hearing.
Wells Fargo also argued that Collier's fraudulent concealment while employed of records proving other misconduct entitled the employer to submit new evidence under Section 60.2-622 and VR 300-01-8.3B of the Regulations and General Rules Affecting Unemployment Compensation. Judge Hughes noted that the commission need only accept new evidence which is material, non-cumulative, could not have been discovered by the exercise of due diligence, and is likely to change the result. Before the court, Wells Fargo admitted to a breakdown in corporate communications so that the right hand did not know what the left hand was doing in the aftermath of the internal audit which had uncovered the misconduct of Collier and his supervisor. Judge Hughes found this excuse without merit, unable to satisfy the legal standard of due diligence, and no more than confession of inadequate preparation by the employer to contest Collier's benefits before the VEC. Having based its appeal on one instance of Collier's cooking of the books, Wells Fargo could not, after VEC judgment, raise others made plain by the same company investigation.
From the Circuit Court of Loudon County, comes Allen v. Stern, 38 Va. Cir. 459 (1996), in which petitioner challenged a decision of the State Health Department that establishment of an outpatient surgical facility in Sterling would require a certificate of public need, and that the project must therefore undergo the review process required by Virginia's Medical Care Facilities Certificate of Public Need law, Va Code Sections 32.1-102.1 - 102.11. Before the court, Allen argued that when the statutory definition of "medical care facility" was changed in 1982 from "whether or not required to be licensed" to "whether licensed or required to be licensed," the change limited the definition and therefore the review process to only those medical facilities for which licenses were required. The Department argued to the contrary that limiting the reach of the review process in such a way had not been intended by the General Assembly, and that whether COPN review was required depended on the "functional use" of a facility rather than on licensing definitions. Debating the meaning of the statute, the parties also differed on the appropriate standard of review. Allen pointed to the criminal penalties present in the statute and argued for strict construction; the Department argued to the contrary that the statute was civil in nature, so that the court owed deference to the Department's interpretation. Sitting by designation, Judge Paul A. Sheridan of the Circuit Court of Arlington County agreed with the Department that the standard of review for interpretation of civil statutes was appropriate and then found that such a standard did not prevent a court from reaching a conclusion about the meaning of a statute or its constitutionality which differed from that of the Department.
The court then adopted petitioner's interpretation and found it too vague, both on its face and as applied, for the court to enforce. Allen v. Stern appears therefore to be a typical case of statutory interpretation in which a government department has had the first go at elucidating a statute assigned to it by the General Assembly for administration and enforcement. For the proposition that the court was free to read the Medical Care Facilities Certificate of Public Need statute differently than the Department of Health had read it, the court offered no Virginia case authority, and but one federal case, Thomas Jefferson University v. Shalala, 512 U.S. 504 (1994). The question of deference to an agency's interpretation of a statute put by the General Assembly in its particular care was addressed in Virginia Alcoholic Beverage Control Commission v. York Street Inn, Inc., 220 Va. 310 (1979), and the question of whether the deference owed by a reviewing court to an agency' s interpretation is attenuated by a claim of constitutional right in jeopardy was addressed in Turner v. Jackson, 14 Va. App. 423 (1992), so the slate of Virginia law was not exactly clean of precedent when Allen challenged the Department of Health.
If the case law of federal administrative procedure were apt for all questions of Virginia administrative procedure, then some mention of Chevron, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) might have been appropriate, Chevron being perhaps the most discussed judicial decision in American administrative law in two decades or more. In Chevron, the Supreme Court of the United States set out the circumstances in which a reviewing court is free to interpret for itself a federal regulatory statute and to disagree with the administrative agency to which the statute it has been assigned by Congress for implementation and enforcement. Neither the Supreme Court of Virginia nor the Court of Appeals has yet endorsed Chevron as the standard for a court reviewing an administrative agency's interpretation of a Virginia statute. The circuit court's opinion in Allen v. Stern is interesting therefore not because it omits any mention of Chevron, but because it relies exclusively on another U.S. Supreme Court decision. For support of the proposition that he need not agree with the Health Commissioner regarding the meaning of "medical care facility," Judge Sheridan relied on Thomas Jefferson University v. Shalala, 512 U.S. 504 (1994), a case involving Medicare reimbursement to the operator of a hospital associated with a medical school. Thomas Jefferson University, however, did not require a court to adopt or reject an administrative agency's interpretation of an amendment to a statute assigned for its enforcement. In that case, the court was called upon to adopt or reject an agency's interpretation of its own regulation. Thus, Thomas Jefferson University is not a Chevron sort of case at all. Moreover, the decision by the Supreme Court in that case, affirming both lower federal courts, was 6-3 in favor of the Secretary of Health and Human Services, so that it is hardly persuasive for legitimizing a court's rejection of an agency's interpretation of any sort. In its citation to Thomas Jefferson University, the opinion in Allen v. Stern does not refer to a specific page of the Supreme Court Reporter, merely to the first page on which the decision is reported, so it does not appear that what the Virginia court sought to draw from the federal case is a particular observation about judicial deference offered by the Supreme Court of the United States as generally true but inapplicable in the particular case before the Court. The specific statutory definition in dispute in Allen v. Stern has been substantially amended, so the substantive question is, for most of us, moot. What the court of appeals may say about the deference owed an agency's interpretation of a statute is of course of continuing interest to all of us. The appeal from the circuit court's decision in Allen v. Stern is docketed in the Court of Appeals as Gordon, State Health Commissioner v. Allen.