September 7, 1988
Subject:
Administrative Procedure Act, Chapter 150B of the General Statutes; G.S. 150B-29; G.S. .150B37; Contested Cases; Evidence; Official Record
Requested By:
John B. DeLuca Assistant Director Office of Legal Affairs
Dept. of Human Resources
Question:
Must the tapes of a contested case which have not been transcribed be included in the official record prepared by the Office of Administrative Hearings pursuant to G.S. 150B-37(a)(3) and forwarded to the final agency decision maker pursuant to G.S. 150B-37(c)?
Conclusion:
Yes.
The Department of Human Resources (DHR) has requested that the Office of Administrative Hearings (OAH) forward to the agency the tapes of testimony given during the course of four separate contested case hearings in which DHR is the final agency decision maker. The tapes were recorded by OAH pursuant to O.S. 150B-37(b). No transcripts were requested by the parties, so none were prepared. DHR contends that, since there are no transcripts, the tapes must be forwarded by OAH to DHR as part of the official records of the cases. OAH has refused to do so, contending that the tapes are not part of the official records pursuant to G.S. 150B-37(a)(3), and therefore need not be forwarded to the agency.
G.S. 150B-37(a) provides that in a contested case OAH "shall prepare an official record of the case which includes: …(3) Evidence presented; …". OAH takes the position that the term "evidence presented" refers "only to real evidence, including records and documents, as described in G.S. 150B-29(b)" and that "the General Assembly quite deliberately distinguished between real evidence and testimony with regard to the official record." Letter to John B. DeLuca from Robert A. Melott, Chief Administrative Law Judge, dated August 3, 1988.
Typically the evidence presented at a hearing includes both the testimony of witnesses, i.e. oral evidence, and documents, i.e. records and demonstrative evidence. Oral evidence is always recorded, although it is not transcribed unless one of the parties requests a transcript. G.S. 150B37(b). If a transcript is made, the subsection specifically provides that it must be added to the official record. OAH is correct in stating that the subsection does not specifically provide for the inclusion in the official record of oral evidence preserved by any other method. Likewise, OAH is correct in stating that G.S. 150B-29(b) contains no such requirement. The portion of that subsection upon which OAH relies provides: "Evidence in a contested case, including records and documents, shall be offered and made a part of the record."
The specific inclusion in the record of documentary evidence and transcripts is not, however, dispositive of the question of whether the tapes of oral evidence should be included in the record. "The term ‘includes’ is ordinarily a word of enlargement and not of limitation. (Citations). The statutory definition of a thing as ‘including’ certain things does not necessarily place thereon a meaning limited to the inclusions." Turnpike Authority v. Pine Island, 265 N.C. 109, 120, 143 S.E.2d 319 (1965). Thus, the language of G.S. 150B-29(b) and G.S. 150B-37(b) does not support the OAH position.
The language of G.S. 150B-37(a)(3) likewise does not support that position. It is a fundamental rule of construction that a statute must be construed as it is written. 12 N.C. Index 3d, Statutes
5.5. The requirement in G.S. 150B-37(a)(3) that the official record of a contested case hearing will include the "evidence presented" seems clearly to refer to all of the evidence introduced at the hearing, both oral and documentary. Since, in the circumstances described by DHR, the tapes are the only method by which the oral evidence has been preserved, the tapes must be included in the official record.
It is also a rule of statutory construction that "[t]he courts will not adopt a construction that results in palpable in- justice when the language of the statute is susceptible to another reasonable construction which is just and is con- sonant with the purpose and intent of the act." 12 N.C. Index 3d, Statutes 5.9. G.S. 150B-29(b) provides: "Factual information or evidence not made a part of the record shall not be considered in the determination of the case, except was permitted under G.S. 150B-30." (G.S. 150B-30 relates to facts of which judicial notice may be taken. It is not relevant to this inquiry.) Consequently, if OAH is correct in its interpretation, unless a transcript is made, the testimony at a hearing is not a part of the record of the proceeding and cannot be considered by the agency in deciding the case. As a further consequence, any findings of fact by the agency which are based on the testimony will not be supported by any evidence in the record.
A decision by the agency based on unsupported findings of fact is subject to challenge upon a petition for judicial review, where the court must apply the "whole record" test. G.S. 150B51(b)(5). In applying the whole record test, the judge reviewing an administrative decision must examine all of the competent evidence in the record (which will not include the tapes if they were not before the agency [G.S. 150B-47]) to determine if there is substantial evidence in the record to support the agency’s decision. Community Sav. & Loan Ass’n v. North Carolina Sav. & Loan Comm’n, 43 N.C. App. 493, 259 S.E.2d 373 (1979). The court must "consider the complete testimony of all the witnesses." [Emphasis is original]. In re Appeal from Environmental Management Comm., 53 N.C. App. 135, 146, 280 S.E.2d 520 (1981). If there is no evidence in the record which supports the decision, the court must reverse or modify the decision. G.S. 150B-51(b).
Thus, the OAH interpretation will result in agency decisions which will not stand up under the "whole record" standard of review. This is obviously unfair to the parties and contrary to the purpose of the Administrative Procedure Act. No such injustice results in G.S. 150B-37(a)(3) is interpreted to include the tapes of testimony in the record. Since this is both a reasonable and a logical interpretation, which is consonant with the purpose of the APA, we conclude that it is thecorrect interpretation.
This conclusion is supported by case law in this State. Our courts have held that a final agency decision maker must have a record before it which presents "the complete testimony of all the witnesses. " In re Appeal from Environmental Management Comm., supra, at p. 146. (Emphasis is original) In Little v. N.C. State Board of Dental Examiners, 64 N.C. App. 67, 306 S.E.2d 534 (1983), the Court of Appeals stated:
In an administrative proceeding, it is the prerogative and duty of that administrative body, once all the evidence has been presented and considered, "to determine the weight and sufficiency of the evidence and the credibility of the witnesses, to draw inferences from the facts, and to appraise conflicting and circumstantial evidence. [Citations omitted] The credibility of witnesses and the probative value of particular testimony are for the administrative body to determine, and it may accept or reject in whole or part the testimony of any witness." Commr.. of Insurance v. Rate Bureau, 300 N.C. 381, 406,269 S.E.2d 547 (1980).
Ibid, 68-69.
Chief Justice Exum’s reasoning in In re Rogers, 297 N.C. 48, 56, 253 S.E.2d 912 (1979), suggests this same conclusion. When facts are in dispute, the agency "must serve as the adjudicator of the facts in dispute and must ultimately find with regard to them what it believes the truth to be." This is true even though an administrative law judge, and not the agency, actually conducts the hearing, since it is the agency and not the administrative law judge which must find the facts of each case. G.S. 150B-33; G.S. 150B-36(b).
In summary, under the Administrative Procedure Act, DHR’s hearings are conducted by OAH, and not by DHR. On the other hand, it is DHR and not OAH that finds the facts and makes the final decision in each case. Since by law the agency may not consider any factual information or evidence which is not part of the official record, the tapes of any testimony given at the hearing must be part of the record if they have not been transcribed so the agency can discharge its duty to determine the sufficiency and credibility of all the evidence before it makes its decision. We therefore conclude that the tapes of testimony given during the course of the four hearings are part of the official record, a copy of which OAH must forward to DHR pursuant to G.S. 150B37(c).
Lacy H. Thornburg Attorney General
Ann Reed Senior Deputy Attorney General