Opinion
Record No. 1054-93-2
Decided: July 12, 1994
FROM THE CIRCUIT COURT OF ORANGE COUNTY, Lloyd C. Sullenberger, Judge
Affirmed in part, reversed in part, and remanded.
C. Waverly Parker, for appellant.
John M. McCarthy, Senior Assistant Attorney General (Stephen D. Rosenthal, Attorney General, on brief), for appellees.
Present: Judges Benton, Koontz, and Elder
Pursuant to Code Sec. 17-116.010 this opinion is not designated for publication.
Anthony M. Rizzo, Jr., was denied disability benefits from the Virginia Retirement System (VRS) after he was terminated from his employment by Fairfax County Public Schools. Upon his appeal to the circuit court from VRS's denial of benefits, the trial judge remanded the case to the VRS for a new hearing and further administrative proceedings. Rizzo appeals from the trial judge's decision and contends that the trial judge erred on the following eight issues: (1) in ruling that VRS promptly decided his case, (2) in failing to rule that VRS did not ascertain its own fact basis and that VRS by not making explicit findings of fact did not inform him of the factual basis for its decision, (3) in failing to rule that VRS did not give due deference to the findings of the hearing officer, (4) in affirming the VRS conclusions that his evidence was not "objective" and that he could prevail only on the basis of "objective" evidence, (5) in allowing the VRS Board of Trustees to reach a decision contrary to that of the VRS hearing officer, (6) in not ruling that VRS administrative procedures were inadequate, (7) in remanding the case to VRS after sustaining his assignments of errors, and (8) in not allowing costs and counsel fees to him. We affirm the trial judge's remand of the case to the VRS for reconsideration, and we affirm the trial judge's refusal to rule that VRS failed to issue a prompt decision. We reverse, however, the trial judge's refusal to award attorney's fees and costs. Because we hold that the trial judge properly remanded the case to the VRS, we do not address the remainder of Rizzo's assignments of error.
I.
In 1964, Rizzo was employed by the Fairfax County Public Schools as a spanish language teacher. He became an assistant principal in 1970 and the principal of a high school in 1986. In March 1989, the school board terminated Rizzo's employment because of his improper conduct, sexual harassment of female employees, unprofessional behavior, and employee discrimination. The school board concluded that Rizzo used his position of authority to approach, intimidate, coerce, and harass female employees in an attempt to initiate sexual relations with them.
During the proceedings that preceded his dismissal, Rizzo became depressed and sought the aid of his physician, Dr. Marvin Q. Sanner. Dr. Sanner concluded that Rizzo was disabled for work because of severe illness. On November 14, 1988, Rizzo applied to VRS for disability retirement benefits. Rizzo claimed that his emotional and psychological conditions precluded him from performing his job which involved evaluating teachers, disciplining students, supervising instruction, and meeting with parents. VRS informed Rizzo that because VRS retirement disability benefits are, in certain circumstances, contingent upon receipt of social security benefits, Rizzo must first apply to the Social Security Administration for benefits. Rizzo then applied to the Social Security Administration for disability benefits. Dr. Robert S. Brown, Jr. examined Rizzo in connection with that application and concluded that Rizzo was not eligible for social security disability benefits.
On March 29, 1989, VRS's medical board denied Rizzo's application for disability retirement. Rizzo then engaged legal counsel, who appealed the medical board's denial of Rizzo's claim. Rizzo's counsel retained Dr. Brown to examine Rizzo after Rizzo had been denied social security benefits. In a "plenary forensic report" dated September 6, 1989, Dr. Brown concluded that Rizzo had two psychiatric disorders: atypical personality disorder with narcissistic features and a psychosexual disorder which consists of fantasies and acts designed to coerce non-consenting adult females into having sexual relations with him. Dr. Brown further concluded that Rizzo was incapable of returning to his former duties as a school administrator or being in any position where he has employment authority over women.
On February 20, 1990, Rizzo's counsel sent Dr. Brown's report to the medical board. At VRS's request, Dr. Merritt Foster, a psychiatrist, examined Rizzo on July 3, 1990 and reported to VRS that Rizzo's personality is "probably borderline and . . . of life-long duration." Dr. Foster noted, however, that a personality disorder is not per se a mental illness and, in Rizzo's case, was not a cause for permanent and total disability. On July 27, 1990, VRS again denied Rizzo's application for disability retirement benefits.
Rizzo did not receive a copy of VRS's denial letter until September 7, 1990 because VRS sent the notification to his old address, notwithstanding a June 27, 1990 letter from Rizzo apprising VRS of his address change. Rizzo's counsel contacted VRS and demanded a hearing under the Administrative Process Act. On September 20, 1990, VRS apologized to Rizzo for its mailing error and agreed to provide Rizzo a hearing. On September 25, 1990, the matter was referred to a hearing officer.
On October 2, 1990, the hearing officer wrote Rizzo to schedule a hearing and included a copy of the case record, including a copy of Dr. Foster's July 11, 1990 report. The hearing examiner scheduled a hearing for October 31, 1990. However, on October 10, 1990, VRS recalled the matter for reconsideration because it claimed not to have Dr. Brown's reports regarding Rizzo. A letter in the record from VRS to Rizzo indicates, however, that VRS received Dr. Brown's report on February 26, 1990. On February 9, 1991, Rizzo asked the hearing officer to set a new hearing date because VRS had not acted.
An informal hearing was conducted on March 28, 1991. Dr. Brown's testimony was consistent with his written report. In addition, however, he testified that the psychosexual disorder he described in his report is not recognized as a separate category of disorder by the American Psychiatric Association. It is one of several sexual disorders that may be designated "not otherwise specified." Dr. Brown also testified that although the psychosexual disorder could be treated with a drug that reduced testosterone production in men, the side effects might create health problems for Rizzo. He further testified that in light of Rizzo's narcissism disorder, he did not think Rizzo could effectively self administer the drug, and even if he did, Dr. Brown did not think it would be advisable for Rizzo to ever again be in a position to exercise authority over women. The entire administrative record, including the reports of Dr. Sanner, Dr. Brown, and Dr. Foster, was made a part of the informal hearing record.
On May 13, 1991, the hearing examiner issued his report. Relying in particular on Dr. Brown's academic and professional credentials, as well as his "sincere and truthful" appearance during his testimony, the hearing examiner accorded great evidentiary value to Dr. Brown's report and testimony. Based on Dr. Brown's analysis, the hearing examiner found that Rizzo's personality disorders made it "impossible" for him to serve as a high school principal. He concluded that Rizzo qualified for disability retirement benefits.
On July 8, 1991, Rizzo's counsel wrote to VRS asking that the decision of the hearing officer be implemented. On July 15, 1991, VRS responded that VRS "desire[d] to review [Rizzo's] case in more detail with [its] legal counsel and Medical Board." Unbeknownst to Rizzo until later, on August 26, 1991, the medical board affirmed its earlier decision that Rizzo was not disabled. On August 28, 1991, when the matter was still pending at VRS, Rizzo served upon the VRS a petition for a writ of mandamus with notice that the petition would be presented to the Circuit Court of the City of Richmond on September 18, 1991. VRS responded to Rizzo's petition for mandamus on September 18, 1991.
The next day, VRS issued a final decision regarding Rizzo's application for benefits. Its decision stated that "objective medical evidence" did not exist to "support a claim of permanent and total disability" and, therefore, VRS would award no benefits to Rizzo. Although VRS issued a final decision on September 19, 1991, the mandamus case apparently remained pending in the circuit court and the court imposed sanctions against VRS legal counsel for an improper sworn denial of facts. During the mandamus proceeding, the administrative record was subpoenaed, and it contained a second report from Dr. Foster dated August 8, 1991, four months after the informal hearing. In this report Dr. Foster took issue with several of Dr. Brown's conclusions and elaborated on his own view of Rizzo's condition.
Rizzo noticed his appeal from the VRS decision and filed a petition for appeal with the circuit court. Following VRS's response and a hearing on the pleadings, the trial judge ruled that VRS had erred in failing to give notice to Rizzo of the medical board's August 26, 1991 denial of benefits and in failing to give notice of Dr. Foster's second report. The trial judge also found that the language contained in the September 19, 1991 VRS denial letter did not convey whether VRS applied the proper standard for determining disability. The trial judge set aside the case decision, remanded the case to VRS for a new informal hearing based on the appropriate standard for retirement disability, and refused to award Rizzo attorney's fees.
II.
Rizzo correctly argues that Code Sec. 9-6.14:11, then in effect, required a "prompt decision of any application for a license, benefit, or renewal thereof." He also correctly notes that the time that elapsed from his application for benefits in 1988 until the trial judge's final order in 1993 was lengthy. Code Sec. 9-6.14:11, however, described the rights that parties had in conjunction with informal administrative fact finding. The statute did not describe the rights of parties as they relate to administrative proceedings in general. Rizzo's informal hearing was in March 1991. The hearing officer issued his report in May of that year, and four months later, the VRS denied Rizzo's claim. We cannot say that six months, under the facts of this case, was so long a delay that Rizzo is now entitled to an award as a matter of law. Accordingly, the trial judge did not err in refusing to enter judgment for Rizzo because the VRS failed to give Rizzo a prompt decision in this matter.
We also affirm the trial judge's decision to remand the case to VRS for a new hearing and redetermination. The trial judge determined that VRS may have applied an incorrect standard for determining disability and properly remanded the case for findings consistent with a correct application of the law. See, e.g., Weizenbaum v. Weizenbaum, 12 Va. App. 899, 904-05, 407 S.E.2d 37, 40 (1991).
We note that in 1993 the General Assembly enacted specific time limits by which an agency must decide an application after the matter has been heard by a hearing officer. See Code § 9-6.14:11(D) — (F). Were the amendments applicable to this case, a different result might obtain.
The several issues raised by Rizzo (whether VRS ascertained an appropriate fact basis for its decision, or properly informed Rizzo of the factual basis for its decision, or made explicit findings of fact, or improperly relied upon only "objective" evidence, or improperly disregarded the findings of the hearing officer, or adhered to inadequate administrative procedures) are all moot in light of the trial judge's remand of the case. The trial judge ordered VRS to conduct a new informal hearing at which VRS must apply the correct substantive law and, we hold, must adhere to adequate and lawful procedures. See Code Sec. 8.01-681 (permitting appellate court to remand on specific issues). If, during those proceedings on remand, VRS fails in its statutory obligations, Rizzo may object then and preserve the issue for appeal. However, we decline to render an advisory opinion regarding the adequacy of administrative proceedings which are no longer binding on either of the parties. See Blue Cross Blue Shield v. St. Mary's Hospital, 245 Va. 24, 35-36, 426 S.E.2d 117, 123-24 (1993) (discussing problems with advisory opinions); Weizenbaum, 12 Va. App. at 904, 407 S.E.2d at 40 (refusing to reach issues of "how the award was determined" in order to avoid rendering an advisory opinion).
III.
We conclude, however, that the trial judge's decision not to award Rizzo reasonable costs and attorney fees was error.
In any civil case brought under Article 4 (Sec. 9-6.14:15 et seq.) of this chapter and Sec. 9-6.14:4.1, in which any person contests any agency action, as defined in Sec. 9-6.14:4.4, such person shall be entitled to recover from that agency . . . reasonable costs and attorney fees if such person substantially prevails on the merits of the case and the agency is found to have acted unreasonably, unless special circumstances would make an award unjust.
Code Sec. 9-6.14:21(A).
We conclude that Rizzo substantially prevailed in his appeal to the circuit court. The trial judge found that VRS's decision did not clearly indicate whether VRS applied the correct standard for determining disability; therefore, the trial judge remanded the case for a new hearing and further proceedings. The trial judge also held that VRS's failure to advise Rizzo of Dr. Foster's second report, after the fact finding hearing by the hearing officer, was not harmless error.
We believe the circumstances of this case are analogous to Saulsbury v. Williams, 205 Va. 727, 139 S.E.2d 816 (1965). In Saulsbury, the appellant challenged a trial judge's ruling that appellant's co-defendant in a negligence case was not liable as a matter of law. The Virginia Supreme Court reversed and remanded for a jury determination regarding the co-defendant's liability and awarded appellant his costs because he had "substantially prevailed" on appeal, notwithstanding the fact that the co-defendant's ultimate liability remained an open question. Id. at 733, 139 S.E.2d at 820. In this case, Rizzo was successful in overturning the VRS decision because of its misapplication of the law. Accordingly, we conclude that he substantially prevailed on the questions before the reviewing court.
We also hold that VRS acted unreasonably. Code Sec. 9-6.14:11(A) (iii) provides that parties have a right to "have notice of any contrary fact basis or information in the possession of the agency which can be relied upon in making an adverse decision." The statute's meaning is plain on its face. We have little difficulty in concluding that a blatant violation of the statute is unreasonable. VRS's violation is unreasonable in light of several facts: (1) VRS informed Rizzo that Dr. Foster had submitted a second report only after VRS rendered a final decision and only in response to a subpoena stemming from Rizzo's separate petition for mandamus; (2) though VRS claimed that it was delaying a final decision in the case so that its legal counsel and medical board could review the case, at least part of the delay was attributable to Dr. Foster's preparation of his second report; (3) VRS failed to acknowledge in its final decision that it had sought or relied upon additional factual evidence; and (4) VRS could not have reasonably believed that, without notice to Rizzo, introduction of Dr. Foster's second report, which spoke to the heart of Rizzo's claim for benefits, would not be unfairly prejudicial.
We, therefore, remand the case to the circuit court for an award of reasonable costs and attorney fees before it remands the case to the VRS for proceedings consistent with the circuit court's opinion.
Affirmed in part, reversed in part, and remanded.