In Haas v. County of San Bernardino, 2002 WL 850250, the California Supreme Court concluded that local governments cannot select temporary administrative hearing officers in a way that creates the risk that favorable decisions will be rewarded with future work.
Facts
The County’s Board of Supervisors revoked Haas’s business license and he appealed. When the Board set his appeal for hearing, the County hired a local attorney to serve as the administrative hearing officer, pursuant to county procedures at Government Code § 27724. Haas objected. He argued that the hearing officer had an impermissible financial interest in the outcome of the case, since any future work she might receive from the County as a hearing officer could depend on her decision in his case. The County’s Deputy General Counsel acknowledged that the hearing officer was hired for only one hearing, but that he anticipated hiring her for future hearings on an as-needed basis. This was the County’s customary practice.
The hearing officer refused to disqualify herself. She conducted the hearing and decided that Haas’s business license was properly revoked. When the Board affirmed her decision, Haas appealed to the courts.
Supreme Court Decision
The Supreme Court observed that due process requires that judges and administrative hearing officers be fair and impartial. While a judge’s impartiality is generally presumed, there is no such presumption when his or her financial interest is involved. In addition, while rules governing administrative hearing officers are sometimes more relaxed than those governing judges, they are never relaxed on questions of financial interest. This meant that Haas did not need to argue or prove that the hearing officer was actually biased in the County’s favor; he had only to prove she had a financial interest in the outcome of the case, e.g., future selection as a hearing officer.
The Court observed that the County’s “rational self interest” meant that it would be more inclined to hire the hearing officer in the future if she rendered a decision in its favor. Therefore, the hearing officer had a financial interest in the outcome of the case. Just as it did not matter whether she was actually biased, it also did not matter how little the County paid her. The expectation of “cash in hand,” no matter how “slight,” created the due process problem; only where any possible financial advantage was “remote, indirect, and uncertain” could it be discounted.
The Court was unswayed by the County’s argument that requiring it to use another method to select hearing officers would be burdensome and expensive, saying that a “cost-benefit analysis” was irrelevant in such a fundamental matter. The Court observed that the County had alternatives, such as establishing a permanent hearing examiner or contracting with the State for the periodic use of an administrative law judge. (See Government Code §§ 27720 and 27727.) “To satisfy due process, all a county need do is exercise [its authority] in a manner that does not create the risk that hearing officers will be rewarded with future remunerative employment for decisions favorable to the county.”
Note: Public entities other than counties can also use state administrative law judges, appoint their own permanent hearing officer(s) or create a list of hearing officers and an automatic selection process pursuant to a set of fixed rules.