Opinion
No. 750.
Argued October 5, 1970. —
Decided November 3, 1970.
APPEAL from a judgment of the circuit court for Dane county: W. L. JACKMAN, Circuit Judge. Affirmed.
For the appellants there was a brief by Robert W. Warren, attorney general, and David G. McMillan, assistant attorney general; the cause was argued by Warren M. Schmidt, assistant attorney general.
For the respondent there was a brief by Schloemer, Schlaefer, Gordon Alderson of West Bend, and oral argument by William F. Alderson.
This appeal is from a judgment of the circuit court which reversed a denial of disability benefits by the Wisconsin State Teachers Retirement Board (hereinafter "Board"). The judgment remanded the record to the Board for further proceedings in accordance with the decision of the circuit court.
The respondent, Gladys Ruhmer, has been employed as a grade school teacher in the state of Wisconsin for about thirty-five years. On November 7, 1966, the respondent suffered a cerebral thrombosis and was hospitalized for almost three months. She did not return to her teaching duties until September, 1967; and in December, 1967, she resigned from her teaching position because of the effects of the cerebral thrombosis which she suffered in November, 1966.
Subsequently, on January 9, 1968, the respondent applied to the Board for a disability retirement annuity.
The disability determination unit (hereinafter "unit") is the agency which makes the determination as to whether or not an applicant is sufficiently disabled to qualify for the disability annuity from the state of Wisconsin (hereinafter the "Wisconsin annuity").
On January 23, 1968, Mr. A. R. Meier, senior supervisor of the unit, wrote to the respondent, advising her of what information the unit needed in order to make its disability determination. The following is an excerpt from his letter:
"You might wish to ask that a report be submitted by the physician who is most likely to have all pertinent reports available in his own records. The kinds of information which may be needed for evaluation of your application include the history of your condition, and a summary of the pertinent physical examination findings, laboratory studies, diagnosis, treatment, and indication as to how the condition limits useful activities. The dates of examination findings, and of any important changes in your condition, should be included. Your doctor might provide a narrative report, or copies of previously-prepared reports, but you could shown [sic] him this letter as an outline of the kinds of information desired. For his convenience, a reply envelope addressed to our office Attention: Mr. R. C. Bauernfeind is enclosed. Please note that any fee for provision of the evidence in support of an application is the responsibility of the applicant. We will await receipt of medical information before proceeding with your claim."
The next relevant document in the record is a letter from Dr. R. D. Gibson, who examined the respondent. Excerpted here is a summary of his findings which he wrote at the conclusion of his letter:
"Summary: The patient has suffered a cerebral thrombosis. She has a residual right hemiparesis which is enough to hinder her in teaching. The patient has a residual speech impairment which originally, at the time of the stroke, was a complete aphasia. The patient has recently increasing depression which is secondary to her cerebral disease.
"It is my opinion that this patient's cerebral thrombosis and subsequent developments have been severe enough so she will no longer be able to be gainfully employed as a teacher, which has been her profession during her entire life."
In addition to Dr. Gibson's letter, the respondent filled out a form entitled "Application for Total Disability Annuity."
On the basis of these two documents (the Gibson letter and the respondent's application), the unit, on April 18, 1968, issued a disability determination which concluded that "the applicant is not under disability." The following quote is the concluding paragraph of that finding:
"Review of all evidence substantiates that applicant experienced a stroke, but indicates that she has recovered to the extent that her present ability to function is impaired to only a mild degree. She is able to speak relatively well although some difficulty has been noted when she becomes emotionally excited. She is able to walk well, at least for the distances involved in activities about her household and apparently could tolerate all but prolonged walking. Although some restriction of fine-movement control of the right hand is reported, brief periods of writing apparently can be performed, and there is sufficient use of the hand for such manipulations as are involved in cooking and light housework. Although applicant has experienced some reduction in her physical and emotional stamina, this is not indicated to be of marked degree. We conclude that the described functional limitations do not impair the applicant so severely as to preclude her from engaging in a substantial gainful activity. We determine therefore that the applicant is not under disability."
On April 22, 1968, the respondent was notified by letter that she had been found ineligible for the Wisconsin annuity. The respondent wrote back the next day asking "what I can do further regarding disability claims." On April 26, the Board replied to the respondent's query in these words:
"My dear Miss Ruhmer:
"In reply to your recent letter, we are very sorry to have to report that we know of nothing further than can be done in regard to your application for a total disability annuity. This office merely submits your application to the Disability Determination Unit of the Vocational and Adult Education Board for action and their determination is final.
"We are enclosing a pamphlet which explains the requirement of the law in re disability annuities under the Formula Plan. You will note that it is not just a disability from teaching but the member must be unable to engage in any substantial gainful activity, etc."
Dr. Gibson's letter did not say that the respondent was so disabled as to preclude any gainful employment, but only that "she will no longer be able to be gainfully employed as a teacher." (Emphasis supplied.)
On May 1, 1968, respondent submitted to the Board a second medical letter. This one was from Drs. Wm. A. Nielsen and James F. Baumgartner of West Bend, Wisconsin, the respondent's hometown.
Except for noting that respondent had had a coronary in 1961, this second letter cited no new medical facts beyond those listed by Dr. Gibson in his original letter in support of respondent's claim for the Wisconsin annuity. However, there was a significant difference between the conclusion of Drs. Nielsen and Baumgartner and that of Dr. Gibson. Drs. Nielsen and Baumgartner concluded that:
"There is no doubt in our mind that she is totally and permanently disabled for any gainful employment.
/s/ James F. Baumgartner, M.D. /s/ Wm. A. Nielsen, M.D." (Emphasis supplied.)The Board passed this letter on to the unit, and, on July 18, 1968, the unit issued a "Disability Determination Addendum." This document stated that "This determination addendum revises, but affirms, the determination made on 4/17/68." The concluding paragraph of this addendum reads as follows:
"Upon reviewing all of the evidence that was available in the previous determination, together with the report from Doctors Baumgartner and Nielsen, we note that the medical findings are essentially the same, except that a history of a coronary attack in July 1961 has been added. There is no indication of any heart symptoms or any significant limitations of activity, or any medical examination findings relating to a heart impairment after 1961 or at the present time. Emotional factors had been reported and considered in the determination previously made. Although applicant has experienced some reduction in her physical and emotional stamina, and restriction of fine movement control of the right hand, and some difficulty with speech, when she becomes excited, we conclude that the described functional limitations do not impair her to such a severe degree as to preclude her from engaging in all substantial gainful activity. We determine therefore that the applicant is not under disability. This affirms the previous decision dated 4/17/68."
The determinations of the unit were in each case returned to the Board. Under the provisions of sec. 42.245 (3) (c), Stats., the Board is bound by a determination of the unit that a member is ineligible for disability retirement benefits; and the respondent was, therefore, denied the disability annuity by the Board.
The basic issue on this appeal is whether the procedure set forth in the statute for the application and determination of eligibility for the disability annuity, under the Wisconsin State Teachers Retirement Law, as followed in the instant case, deprived the respondent of due process of law.
Ch. 227, Stats., governs administrative procedure and review in Wisconsin. Sec. 227.07 provides as follows:
"Prior to the final disposition of any contested case, all parties shall be afforded opportunity for full, fair, public hearing after reasonable notice, but this shall not preclude the informal disposition of controversies by stipulation, agreed settlement, consent orders, or default."
The phrase "contested case" mentioned in sec. 227.07, Stats., is defined in sec. 227.01 (2):
"`Contested case' means a proceeding before an agency in which, after hearing required by law, the legal rights, duties or privileges of any party to such proceeding are determined or directly affected by a decision or order in such proceeding and in which the assertion by one party of any such right, duty or privilege is denied or controverted by another party to such proceeding."
We think that the initial determination which, in effect, if it is considered binding upon the Board, creates a contested case within the above definition. The decision denies the private right of the respondent to benefits to which she claims she was entitled.
In Nick v. State Highway Comm. (1963), 21 Wis.2d 489, 495, 124 N.W.2d 574, this court, in referring to sec. 227.01 (2), Stats., stated:
". . . In the latter statute, the reference to a `hearing required by law' presupposes either (1) a hearing expressly provided for by the regulating statute or administrative rule, or (2) a hearing necessitated constitutionally by the requirements of due process."
There is no provision in sec. 42.245, Stats., for a hearing. Therefore, a hearing was necessary in the case only if it was required by the general concept of procedural due process applicable to administrative proceedings.
The determination of whether respondent was eligible for disability benefits is, in the hands of an administrative agency, a quasi-judicial determination of fact. State ex rel. Milwaukee Medical College v. Chittenden (1906), 127 Wis. 468, 107 N.W. 500.
In State ex rel. La Crosse v. Rothwell (1964), 25 Wis.2d 228, 238, 130 N.W.2d 806, 131 N.W.2d 699, this court stated:
". . . True, when an administrative agency acts in a quasi-judicial capacity it must base its decision on findings upon evidence or information obtained at a formal or court-type hearing upon valid notice. . . ."
". . . The essentials of due process are notice and an opportunity to be heard before a tribunal having jurisdiction of the cause. . . ." Ocean Accident Guarantee Corp. v. Poulsen (1943), 244 Wis. 286, 295, 12 N.W.2d 129.
Here the administrative agency has made a determination based on two documents consisting of conflicting medical opinions, submitted. by the respondent, together with a form application.
The statute, sec. 42.245, makes no provision for any procedural steps except to provide in sec. 42.245 (3) (a) that the formula group member shall furnish due proof of the required state of disability. Then, in sec. 42.245 (3) (c) it provides that:
"Each initial determination of disability under this subsection shall be made by the state agency designated to make determinations of disability by agreement with and for the secretary of health, education and welfare under the federal social security laws. An initial determination of ineligibility shall be binding upon the board. An initial determination of eligibility may be accepted or rejected by the board. . . ."
We think the statute itself denies a right of hearing, where no provision is made for any hearing before anyone one with respect to determination of eligibility; and the statute provides that "An initial determination of ineligibility shall be binding upon the board." Sec. 42.245 (3) (c), Stats.
The appellants contend that respondent never requested that a hearing be held thereon, and thus no hearing was ever denied to her.
We find no merit to this contention in view of the agency letter of April 26, 1968, informing respondent that nothing further could be done with regard to her application for total disability. Furthermore, since the statute did not provide for a hearing, it is obvious the agency would not have granted a hearing.
The "rudiments of fair play" should require, after an initial determination unfavorable to the respondent, that she have a hearing on reasonable notice and an opportunity to present all evidence, testimony and argumentation to the finder of fact.
Appellants contend that the decision of the circuit court remanding the matter to the Board would have the effect of requiring the Board to make its own findings and conclusions as to the applicant's physical condition without regard to the decision of the unit. This is an erroneous conclusion. The decision of the circuit court requires, in conformance with the demands of due process, that at some stage of the proceedings a full and complete public hearing be held at which time an applicant has a right to be present, to be represented by counsel, and to offer testimony in evidence.
We think that the scheduling of a hearing to satisfy the requirements of due process is a determination to be made by the Board.
We agree with the conclusion reached by the trial court that until notice is given and hearing is had by the agency and proper findings are made by the agency, respondent is not foreclosed of her right to the benefits she claims. The sentence of sec. 42.245 (3) (c), Stats., — "An initial determination of ineligibility shall be binding upon the board" — has the effect of depriving respondent of due process of law and is invalid.
By the Court. — Judgment affirmed.