Did Maryland's 1989 law creating administrative law judges require the state auto insurance fund (MAIF) to use them for its own hearings?

Plain-English summary

The Maryland Automobile Insurance Fund's executive director asked the Attorney General, in 1989, whether a brand-new state law creating a centralized Office of Administrative Hearings required MAIF's own contested-case hearings, appeals of insurance rejections and producer-authority denials, to be handed off to an administrative law judge from that new office. The Attorney General concluded that MAIF was not automatically exempt from the statute the way certain other named agencies were, but that it did not need to transfer its hearings anyway, because the law only reached agencies that "employed or engaged" separate hearing officers, and MAIF's hearings were instead conducted directly by its own board of trustees or a designated board member, who exercised the board's own authority rather than acting as an engaged hearing officer.

Currency note

This opinion was issued in August 1989 and interpreted a brand-new statute, Chapter 788 (Senate Bill 658) of the Laws of Maryland 1989, in the months before that law's general effective date of January 1, 1990. Statutes governing Maryland's Office of Administrative Hearings, MAIF's own governance structure, and the underlying Article 48A insurance provisions discussed here may have been amended, renumbered, or reorganized in the thirty-plus years since this opinion issued (Maryland's insurance code, for instance, was later recodified from Article 48A into the Insurance Article). This page is a historical record of how the Attorney General read the 1989 statute's scope at the time it took effect. It describes what the opinion concluded then and is not a statement of current Maryland law governing MAIF hearings or the Office of Administrative Hearings. Verify the current statutes directly before relying on anything here.

Common questions

Did Maryland's 1989 Office of Administrative Hearings law name MAIF as an exempt agency? No. The opinion found that SG §9-1601(a) listed specific exempt agencies, including the Governor, the Comptroller, the Public Service Commission, and the Workers' Compensation Commission, among others, and MAIF was not on that list, so it was not automatically exempt.

If MAIF wasn't exempt, why didn't it have to use administrative law judges for its hearings? The opinion concluded that the statute only applied to an agency that "employs or engages" hearing officers to adjudicate contested cases, and MAIF's two types of hearings, insurance-rejection appeals before a special board of trustees and the insurance commissioner's designee, and producer-authority denials before a board of trustees member, were conducted by the board (or a board member exercising the board's own authority) rather than by a separately engaged hearing officer, so the statute's transfer requirement did not reach them.

Background and statutory framework

Chapter 788 created a new, independent Office of Administrative Hearings staffed by administrative law judges appointed by a Chief Administrative Law Judge, and required agencies subject to the statute to transfer their existing hearing-officer positions to that office by January 1, 1990. SG §9-1601(a) listed the agencies automatically exempt from the requirement by name; SG §9-1601(c) separately let the Governor grant temporary exemptions to other agencies through July 1, 1994. Because MAIF appeared on neither exemption list, the opinion first concluded it was not per se exempt.

The opinion then turned to whether MAIF actually "employed or engaged" a hearing officer within the statute's operative language. MAIF conducted contested cases in two settings: appeals from executive director decisions rejecting or cancelling insurance coverage under Article 48A, §243D(b), heard by a special board of two trustees plus the Insurance Commissioner or a designee; and denials of producer authority under Article 48A, §243B(g)(2) as amended by Chapter 503 of the Laws of Maryland 1989, heard by a single member of the board of trustees. The opinion reasoned that neither the multi-member special board nor the individual board member functioned as a hearing officer "engaged" by MAIF, since Section 2(c) of Chapter 788 expressly preserved a board's own power to conduct its contested cases without a hearing officer, and a single board member designated to hear a case exercises the board's own authority rather than acting as its employee, citing Howard County Metro. Comm'n v. Westphal for the proposition that a board member acting in that capacity is not merely an employee of the board. The opinion also noted that the legislative task force report behind Chapter 788 had described the reform as reaching existing "hearing officers" generally, without specifically flagging MAIF's board-based hearing structure as within its scope, and that the Attorney General's Office had given similar oral advice earlier in the 1989 Session regarding Property Tax Assessment Appeals Board members.

Citations and references

Statutes:

• SG §9-1601(a), the list of agencies automatically exempt from the Office of Administrative Hearings law
• SG §9-1601(b), the operative provision applying the law to agencies that "employ or engage" hearing officers
• SG §9-1601(c), authorizing temporary gubernatorial exemptions through July 1, 1994
• SG §10-201(c), the Administrative Procedure Act's definition of "contested case" incorporated by reference
• Article 48A, §243D(b), governing appeals of MAIF insurance rejection or cancellation decisions
• Article 48A, §243B(g)(2), governing denials of producer authority, as amended by Chapter 503 of the Laws of Maryland 1989
• Chapter 503 of the Laws of Maryland 1989, amending the producer-authority hearing procedure
• Chapter 788 (Senate Bill 658) of the Laws of Maryland 1989, creating the Office of Administrative Hearings

Cases:

• Howard County Metro. Comm'n v. Westphal, 232 Md. 334, 340, 193 A.2d 56 (1963), cited for the principle that a board member acting in that capacity exercises the board's own authority rather than acting as its employee

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1989/Volume74_1989.pdf (this opinion appears at printed pages 38-41 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

ADMINISTRATIVE LAW

Hearings - Maryland Automobile Insurance Fund - MAIF Contested Cases Need Not Be Conducted By Administrative Law Judges In Office of Administrative Hearings

August 11, 1989

Ms. Martha C. Roach, Executive Director
Maryland Automobile Insurance Fund

You have requested our opinion on the applicability of Chapter 788 (Senate Bill 658) of the Laws of Maryland 1989, "Office of Administrative Hearings," to certain hearings of the Maryland Automobile Insurance Fund ("MAIF"). Specifically, you have asked whether this new law, which becomes generally effective on January 1, 1990, requires these proceedings to be conducted by an administrative law judge ("AU") in the Office of Administrative Hearings.

For the reasons stated below, we conclude that, although MAIF is not exempt from Chapter 788, it does not "emplo[y] or engag[e] one or more hearing officers" within the meaning of the statute. Thus, MAIF contested cases are not subject to the requirements of the new law.

I

Chapter 788

Chapter 788 establishes an independent Office of Administrative Hearings, consisting of AUs appointed by a Chief Administrative Law Judge to conduct contested cases in proceedings before certain administrative agencies. The legislation adds a new Subtitle 16 to Title 9 of the State Government Article ("SG" Article). SG §9-1601(a) expressly exempts certain enumerated agencies from the statute.1

In addition, SG §9-1601(c) authorizes the Governor to temporarily exempt other agencies until July 1, 1994. Otherwise, however, the new statute applies to "each agency that employs or engages one or more hearing officers to adjudicate contested cases ...." SG §9- 1601(b). The term "contested case," although not defined in the new law itself, evidently has the same meaning as in the Administrative Procedure Act. See SG §10-201(c).

Section 2(a) of the legislation provides that by January 1, 1990, an agency subject to the statute "that employs one or more hearing officers to adjudicate contested cases shall transfer the positions" to the new office. Section 2(c) prohibits agencies from appointing or authorizing a hearing officer to hear contested cases without the approval of the Chief Administrative Law Judge, but also states that:

This subtitle shall not ... prevent a board, commission or agency head authorized to conduct a contested case hearing from doing so without the use of a hearing officer or administrative law judge.

II

Applicability to MAIF

In our view, SG §9-1601(a) specifies all of the agencies automatically exempt from the legislation.2 Because MAIF is not expressly mentioned as exempt under this subsection, it is not per se

1
Specifically, SG §9-1601(a) states that the law "does not apply to": the Governor, the Comptroller, the Inmate Grievance Commission, Inmate Adjustment Hearing Officers, the Public Service Commission, the Workers' Compensation Commission, the Parole Commission, the Health Services Cost Review Commission, and the Health Resources Planning Commission.

2
Of course, an agency may seek the Governor's approval to be exempted temporarily from the statute.

exempt from the statute.3 Nevertheless, if MAIF does not "employ or engage" hearing officers, it would not be subject to the statute for this reason.

You have indicated that MAIF conducts contested cases in two instances: appeals of executive director decisions regarding the rejection or certain cancellation of insurance under Article 48A, §243D(b); and denials of authority to producers under Article 48A, §243B(g)(2), as amended by Chapter 503 of the Laws of Maryland 1989. In the first instance, hearings are conducted before "a special board composed of two members of the board of trustees and the Commissioner of Insurance or his designee." In the latter case, as a result of the 1989 legislation, hearings will be conducted before "a member of the board of trustees".4

In neither situation is the adjudicatory authority a hearing officer "engage[d] or employe[d]" by MAIF. Section 2(c) of Chapter 788 specifically preserves a board's power to hear its own cases.5 We believe the same would be true of a single member of a board designated by law to hear cases. Such a board member exercises the authority of the board. Cf. Howard County Metro. Comm'n v. Westphal, 232 Md. 334, 340, 193 A.2d 56 (1963). Moreover, he or she could not be considered an employee of the board subject to

3 As introduced, Senate Bill 658 reflected the recommendations of the Governor's Task Force on Administrative Hearing Officers. The Final Report of the Task Force, dated June 28, 1988, noted that "all presently existing hearing officers, with the exception of highly unique agencies such as the Workmen's Compensation Commission, the Public Service Commission, and the Inmate Grievance Hearing Examiners within the Division of Correction ... shall be organized into one independent office within the Executive Department." Report at 24. Although MAIF may be a "highly unique agency", unlike the above agencies it was not expressly exempted from the operation of the legislation.
4
Chapter 503 of the Laws of Maryland 1989 supersedes MAIF rules specifying that such hearings are to be conducted before a hearing officer. COMAR 14.07.03.05A.
5
In addition to the express language of Section 2(c), the history of the statute indicates that it was not intended to apply to hearings conducted by boards themselves. During the 1989 Session, the Attorney General's Office gave oral advice that Property Tax Assessment Appeals Board members were not subject to the legislation because board members hear their own cases without resort to a hearing officer.

"transfer" to the new Office of Administrative Hearings pursuant to Section 2(a) of Chapter 788.

Ill

Conclusion

In summary, it is our opinion that MAIF does not employ or engage hearing officers within the meaning of Chapter 788 and, thus, its hearings are not required to be conducted by AUs under the new statute.

J. Joseph Curran, Jr.
Attorney General

Robert A. Zarnoch
Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice