Harline v. Drug Enforcement Administration , 148 F.3d 1199 ( 1998 )

UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk
July 30, 1998
TO: ALL RECIPIENTS OF THE OPINION
RE: 97-4052, Hairline v. Drug Enforcement Admin.
Filed on July 22, 1998
The opinion filed on July 22, 1998, contains a clerical error on page one of the
slip opinion. The section that lists the attorneys for the Defendants-Appellees should
appear as follows:
E. Roy Hawkens, Attorney, Appellate Staff, Civil Division, United States
Department of Justice, Washington, D.C. (Scott M. Matheson, Jr., United
States Attorney, and Bill Ryan, Assistant United States Attorney, Salt Lake
City, Utah, on the brief) for Defendants-Appellees.
A corrected copy of page one of the opinion is attached for your convenience.
Very truly yours,
Patrick Fisher, Clerk
Keith Nelson
Deputy Clerk
encl.
F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUL 22 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
TENTH CIRCUIT Clerk
WESLEY G. HARLINE, M.D., a
licensed physician,
Plaintiff - Appellant, No. 97-4052
v.
DRUG ENFORCEMENT
ADMINISTRATION, an agency of the
United States Government; THOMAS
A. CONSTANTINE, Administrator,
Drug Enforcement Administration;
GENE R. HAISLIP, Deputy Assistant
Administrator, Drug Enforcement
Administration; MARY ELLEN
BITTNER, Administrative Law Judge,
Drug Enforcement Administration,
Defendants - Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
(D.C. No. 96-CV-56-S)
J. Bruce Reading (Wesley D. Hutchins with him on the brief), Scalley & Reading,
P.C., Salt Lake City, Utah, for Plaintiff-Appellant.
E. Roy Hawkens, Attorney, Appellate Staff, Civil Division, United States
Department of Justice, Washington, D.C. ( Scott M. Matheson, Jr., United States
Attorney, and Bill Ryan, Assistant United States Attorney, Salt Lake City, Utah,
on the brief) for Defendants-Appellees.
Before SEYMOUR , Chief Judge, EBEL and KELLY , Circuit Judges.
KELLY , Circuit Judge.
Plaintiff-Appellant Wesley G. Harline, M.D., challenged the
constitutionality of administrative proceedings to revoke his registration to
prescribe controlled substances. He appeals from the dismissal of his procedural
due process claims and from the denial of preliminary injunctive relief. We have
jurisdiction pursuant to 28 U.S.C. § 1291 and vacate the judgment and remand
with instructions to dismiss all claims without prejudice for lack of subject-
matter jurisdiction.
Background
The Controlled Substances Act, see 21 U.S.C. §§ 801-904, established a
comprehensive regulatory framework to prevent the criminal diversion of drugs
with legitimate medical purposes but high potentials for abuse. The Act requires
practitioners who dispense controlled substances to register with the Attorney
General. See 21 U.S.C. § 822. Concomitantly, the Act authorizes the Attorney
General to suspend or revoke a registration after issuing an order to show cause
and holding a hearing in accordance with the Administrative Procedure Act. See
21 U.S.C. § 824(a), (c). The Attorney General has delegated this authority to
Defendant-Appellee Drug Enforcement Administration (DEA).
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Dr. Harline is a licensed physician registered by the DEA to prescribe
controlled substances. In October 1995, the DEA served him with an order to
show cause why his registration should not be suspended or revoked as
inconsistent with the public interest. See 21 U.S.C. § 824(a)(4). The order to
show cause alleged, among other things, that Dr. Harline (1) failed to provide the
DEA required information on controlled substance prescriptions; (2) prescribed
controlled substances for no legitimate medical reason, not in the ususal course
of his practice, and in violation of state law; and (3) is the subject of state
administrative proceedings to revoke, suspend, or otherwise restrict his medical
license for controlled substance prescription abuses.
Dr. Harline exercised his right under the Act and DEA implementing
regulations to a hearing before an Administrative Law Judge (ALJ), and ALJ
Mary Ellen Bittner (the ALJ) was assigned to preside. Before his hearing date,
Dr. Harline filed a motion for the ALJ to disqualify herself based on her alleged
actual or potential bias stemming from her employment by the DEA. The ALJ
denied the motion, deeming it “wholly without merit.” Aplt. App. at 109.
Dr. Harline brought suit in federal district court, claiming the DEA’s use
of an ALJ in its employ violated his procedural due process rights to a fair and
impartial tribunal. He sought injunctive relief against continuing administrative
proceedings presided over by a DEA ALJ, and a declaration that the statutes and
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regulations allowing a DEA ALJ to preside are unconstitutional. The DEA
moved for dismissal for lack of subject-matter jurisdiction and failure to state a
claim. The district court concluded it had jurisdiction, but then dismissed all
claims under Rule 12(b)(6), and denied preliminary injunctive relief for failure to
demonstrate a likelihood of success on the merits.
Discussion
We review de novo the denial of a motion to dismiss for lack of subject-
matter jurisdiction. See Brumark Corp. v. Samson Resources Corp. , 57 F.3d 941,
944 (10th Cir. 1995) . If the district court lacked jurisdiction, “we have
jurisdiction on appeal, not of the merits but merely for the purpose of correcting
the error of the lower court in entertaining the suit.” United States v. Corrick ,
298 U.S. 435, 440 (1936); see Steel Co. v. Citizens for a Better Env’t , 118 S. Ct.
1003, 1012-13 (1998) (holding assumption of jurisdiction to address merits
violates separation of powers).
A. The Exhaustion Requirement
The DEA argues the district court erred in denying its motion to dismiss
for lack of subject-matter jurisdiction due to Dr. Harline’s failure to exhaust
administrative remedies. See Weinberger v. Salfi , 422 U.S. 749, 764 (1975)
(stating finality of agency decision is “central to the requisite grant of subject-
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matter jurisdiction.”). Dr. Harline does not dispute that he has fallen short in this
regard, but argues instead that the exhaustion requirement should be waived. We
disagree.
Exhaustion is waivable by an agency, as when the agency itself
acknowledges further administrative proceedings would not serve its purposes.
See Salfi , 422 U.S. at 764-67; Bowen v. City of New York , 476 U.S. 467, 484
(1986). The DEA obviously has not waived exhaustion here. Nevertheless,
agency waiver may be, in the courts’ discretion, deemed improperly withheld
where the plaintiff’s interest in prompt resolution is so great that deference to the
agency’s judgment on the utility of exhaustion is inappropriate. See Mathews v.
Eldridge , 424 U.S. 312, 330 (1976); Thunder Basin Coal Co. v. Reich , 510 U.S.
200, 215 (1994) (explaining court waiver is not mandatory). This is so where (1)
the plaintiff asserts a colorable constitutional claim that is collateral to the
substantive issues of the administrative proceedings, (2) exhaustion would result
in irreparable harm, and (3) exhaustion would be futile. See Eldridge , 424 U.S.
at 330-32; Koerpel v. Heckler , 797 F.2d 858, 862-63 (10th Cir. 1986). The
plaintiff bears the burden of establishing these elements. See Koerpel , 797 F.2d
at 863.
B. The Requirement of a Colorable Claim
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We need not address the other elements of court waiver because we agree
with the DEA that, even if we were to exercise our discretion to waive
exhaustion, Dr. Harline has not satisfied the essential element that his
constitutional claim be colorable. The requirement that a constitutional claim be
colorable to invoke federal court jurisdiction during pending administrative
proceedings is well justified. The exhaustion requirement generally prevents
premature interference with agency processes, allowing agencies an opportunity
to (1) correct their own errors, (2) afford the parties before them and reviewing
courts the benefit of their experience and expertise, and (3) compile a record
which is adequate for judicial review. See Salfi , 422 U.S. at 765. If the mere
allegation of a denial of due process could suffice to establish subject-matter
jurisdiction, then every act of an agency would be immediately judicially
reviewable, undermining a statutory scheme which limits judicial review to
further the above policies. Holloway v. Schweiker , 724 F.2d 1102, 1105 (4th
Cir.), cert. denied , 467 U.S. 1217 (1984). Furthermore, encouraging parties to
circumvent agency procedures would diminish agency effectiveness by making
enforcement efforts far more complicated and expensive. See McKart v. United
States , 395 U.S. 185, 193-95 (1969).
To determine whether a claim is colorable, it is necessary to examine its
merits. See Koerpel , 797 F.2d at 863. A determination that a claim lacks merit,
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however, does not necessarily mean it is so lacking as to fail the colorable test.
See id. (citing Boettcher v. Secretary of Health and Human Servs. , 759 F.2d 719,
722 (9th Cir. 1985)). A constitutional claim in this context is not colorable if it
is “immaterial and made solely for the purpose of obtaining jurisdiction or . . . is
wholly insubstantial or frivolous.” Id. (alteration in original) (quoting Boettcher ,
759 F.2d at 722 (quoting Bell v. Hood , 327 U.S. 678, 682-83 (1946))). It has
also been observed that “[d]ismissal for lack of subject matter jurisdiction
because of the inadequacy of [a] federal claim is proper only when the claim is
‘so insubstantial, implausible, foreclosed by prior decisions of this Court, or
otherwise completely devoid of merit as not to involve a federal controversy.’”
Steel , 118 S. Ct. at 1010 (quoting Oneida Indian Nation v. County of Oneida , 414
U.S. 661, 666 (1974)).
Dr. Harline’s verified complaint alleges the statutes and regulations that
allow the ALJ to preside over his registration matter violate his procedural due
process rights because the ALJ is employed by the DEA. The basic intuition
underlying this claim is certainly not novel in human affairs. The Continental
Congress listed among the usurpations of King George III that justified
independence: “He has made Judges dependent on his Will alone, for the tenure
of their offices, and the amount and payment of their salaries.” The Declaration
of Independence para. 11 (U.S. 1776). Partially in reaction to these abuses, the
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Due Process Clause of the Fifth Amendment guarantees a hearing concerning the
deprivation of life or a recognized property or liberty interest before a fair and
impartial tribunal. See U.S. Const., amend. V; Withrow v. Larkin , 421 U.S. 35,
46 (1975) . This guarantee applies to administrative adjudications as well as
those in the courts. See Withrow , 421 U.S. at 46-47. Dr. Harline enjoys this
guarantee as the DEA does not dispute his property interest in his registration and
his liberty interest in practicing medicine.
Not only is an actually biased decisionmaker a due process violation, but
“‘our system of law has always endeavored to prevent even the probability of
unfairness.’” Id. at 47 (quoting In re Murchison , 349 U.S. 133, 136 (1955)). To
state a due process claim for such probable unfairness, a plaintiff must
sufficiently allege facts supporting a conclusion that the “risk of unfairness is
intolerably high” under the circumstances of the particular case. Id. at 58 . In
applying this standard, an administrative law judge enjoys a presumption of
honesty and integrity, see id. at 47, which is only rebutted by a showing of “some
substantial countervailing reason to conclude that a decisionmaker is actually
biased with respect to factual issues being adjudicated.” See Mangels v. Pena ,
789 F.2d 836, 838 (10th Cir. 1986) (applying Withrow ). In the absence of such a
showing, ALJs must be presumed to be persons “‘of conscience and intellectual
discipline, capable of judging a particular controversy fairly on the basis of its
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own circumstances.’” Withrow , 421 U.S. at 55 (quoting United States v.
Morgan , 313 U.S. 409, 421 (1941)).
In only one paragraph of Dr. Harline’s complaint did he strive to allege
facts supporting his claims. He alleged that the ALJ “is an employee of the DEA,
is paid by the DEA, has an office provided by and located within the DEA, is
subject to job performance standards established by the DEA, and is subject to
threats of removal, reprimand, deprivation of staff and/or equipment, or other
reprisal if performance standards are not met, and in addition, is improperly
allied or affiliated with the DEA in numerous other respects.” Aplt. App. at 7,
¶ 26. Dr. Harline alleges no facts whatsoever specific to the ALJ that would
show a countervailing reason to conclude she is actually biased respecting factual
issues in his registration matter. His charge against her employment relationship
would apply to all ALJs, and is therefore essentially a structural challenge. For
the reasons set forth below, this one-paragraph allegation that the structure of
agency employment of ALJs is a countervailing reason to conclude ALJs are
actually biased is so inadequate as to fail to state a colorable procedural due
process claim .
Dr. Harline’s argument that the structural safeguards of ALJ impartiality
are inadequate was foreclosed by the Supreme Court in Butz v. Economou , 438
U.S. 478, 512-14 (1978). There, the Court considered the argument that suits for
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damages should be allowed against participants in administrative adjudications to
deter unconstitutional conduct. The Court responded, however, that the APA
“contains a number of provisions designed to guarantee the independence of
hearing examiners.” Id. at 514. “[T]he process of agency adjudication is
currently structured so as to assure that the hearing examiner exercises his
independent judgment on the evidence before him, free from pressures by the
parties or other officials within the agency.” Id. at 513; see 21 C.F.R. §§
1301.41(a), 1316.41 (providing DEA adjudications be conducted, except where
more specifically directed by DEA regulations, according to the APA).
In its analysis, the Court enumerated features of judicial adjudications that
promote fairness: judges are insulated from political pressure, proceedings are
adversarial in nature, resolution of issues is based on precedent, and any errors
are correctable on appeal. See Butz , 438 U.S. at 512. The Court then reasoned
that administrative adjudications share enough of these features that the risk of
unconstitutional conduct by ALJs is insufficiently high to justify suits against
them for damages. See id. at 512-13. No doubt the Court was aware the ALJs of
which it spoke are employees of their administrative agencies. See 5 U.S.C.
§ 3105 (directing agencies to appoint ALJs to carry out Sections 556 and 557).
The Court justified its additional holding that agency officials are absolutely
immune in their decision to prosecute with the observation that “[t]he respondent
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may present his evidence to an impartial trier of fact and obtain an independent
judgment as to whether the prosecution is justified.” Butz , 438 U.S. at 516.
Likewise, administrative adjudications share enough of the features of judicial
adjudications that the ALJ’s employment with the DEA alone cannot constitute a
substantial countervailing reason to conclude she is actually biased respecting
factual issues in Dr. Harline’s registration matter.
The Supreme Court has held that circumstances presenting a greater risk of
bias than agency employment of ALJs do not violate due process. In Withrow ,
the Court held there was no violation where adjudicators presided over hearings
on charges they themselves investigated. See Withrow , 421 U.S. at 54-55. In
Richardson v. Perales , 402 U.S. 389, 408-09 (1971), the plaintiff argued an
ALJ’s gathering of evidence did not satisfy the appearance of fairness and that a
more independent ALJ should be provided. The Court rejected this argument,
noting the integrity and fundamental fairness of the administrative adjudicatory
system, and that the plaintiff’s “advocate-judge-multiple-hat suggestion . . .
would bring down too many procedures designed, and working well, for a
governmental structure of great and growing complexity.” Id. at 410 (addressing
Social Security Act, but noting procedures do not vary under APA).
In Ramspeck v. Federal Trial Examiners Conference , 345 U.S. 128 (1953),
the respondent raised many of the issues of ALJ bias raised by Dr. Harline
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relating to multiple pay grades for ALJs, the filling of ALJ vacancies, and
removal through reductions in force. See Ramspeck , 345 U.S. at 129-30. In
similar fashion, Dr. Harline contends that the minimal powers the APA leaves
agencies allow them to control ALJs through compensation changes, removals,
and promotions, in violation of due process. Ramspeck rejected the respondent’s
attack, explaining that the APA created a “special class of semi-independent
subordinate hearing officers,” in part by placing much of the regulatory power
over their compensation, promotion, and tenure in the predecessor of the Merit
Systems Protection Board (MSPB). Id. at 132. The Court went on to approve of
each agency power at issue, concluding that it must be assumed the predecessor
of the MSPB would prevent any abuses by agencies, given the right of ALJs to
bring any abuses to that body’s attention through appeal. See id. at 134-43.
To the extent Dr. Harline’s claim rests on an argument that the numerous
statutory and regulatory protections of ALJ decisional independence inadequately
separate the investigative and prosecutorial functions from adjudicative
functions, his claim is also foreclosed. It is generally conceded the APA
provides even greater separation in this regard than the Constitution requires.
See 2 Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise ,
§ 9.9, at 98 (3d ed. 1994). The Supreme Court has never held any adjudicatory
regime unconstitutional on this basis. See, e.g. , Perales , 402 U.S. at 410;
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Marcello v. Bonds , 349 U.S. 302, 311 (1955); Shaughnessy v. United States ex
rel. Accardi , 349 U.S. 280, 283-84 (1955); Withrow , 421 U.S. at 54-55; 2 Davis
& Pierce, supra , § 9.9, at 98.
Various circuit court precedents confirm our conclusion that Dr. Harline’s
claim is not colorable. We have observed that the Butz Court “stressed that
federal agency adjudication is characterized by the same degree of procedural
integrity and independence as the judicial process, and ‘[] these features of the
judicial process tend to enhance the reliability of information and the impartiality
of the decisionmaking process . . . .’” Ramirez v. Oklahoma Dep’t of Mental
Health , 41 F.3d 584, 589 (10th Cir. 1994) (quoting Butz , 438 U.S. at 512)). The
Eleventh Circuit rejected a procedural due process challenge involving a hearing
where an ALJ presided, declaring that ALJs are “independent adjudicator[s].”
Sheldon v. SEC , 45 F.3d 1515, 1519 (11th Cir. 1995) (citing 2 Davis & Pierce,
supra , § 9.9, at 97, which notes safeguards to ensure ALJ independence). The
Second Circuit addressed a challenge like Dr. Harline’s, based on the appearance
of unfairness stemming from agency employment of ALJs. The court recognized
that the appearance standard cannot apply to ALJs, or “ALJs would be forced to
recuse themselves in every case.” Greenberg v. Board of Governors of the
Federal Reserve Sys. , 968 F.2d 164, 167 (2d Cir. 1992). The Ninth Circuit heard
a procedural due process challenge alleging an ALJ was biased but refused to
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recuse himself and wrongfully denied a hearing. See Hoye v. Sullivan , 985 F.2d
990, 992 (9th Cir. 1993). The court held the plaintiff failed to state even a
colorable constitutional claim and dismissed for lack of subject matter
jurisdiction, noting that the plaintiff may appeal such refusals within the agency,
and later seek judicial review. See id.Dr. Harline cites a number of cases involving ALJ discipline in support of
his argument that agencies improperly control ALJs. See Aplt. Brief at 20
(suspending ALJ for tardiness and improper use of government credit card); id. at
23 n.14 (removing ALJ for high rate of substantive errors, and another for
insubordination, disruption, and unprofessional actions). Dr. Harline also
complains that ALJs may be reprimanded without MSPB involvement for
“violation of agency policies and procedures, incompetence, dereliction of duty,
low productivity, insubordination, and misuse of agency resources.” Aplt. Brief
at 17. We do not perceive in these matters the unconstitutionality Dr. Harline
urges.
The independence of decisionmakers is often in tension with the other
components of fundamental fairness--promptness and consistency of decision.
See United States v. Seluk , 873 F.2d 15, 17 (1st Cir. 1989) (rejecting due process
challenge to Sentencing Guidelines because curtailment of discretion is necessary
to avoid unfairness of disparate sentences); 2 Davis & Pierce, supra , § 9.10, at
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103. Without some agency powers over ALJs to supervise delays and the
application of the same substantive standards to similarly situated parties, Dr.
Harline might very well be before us claiming due process violations on these
grounds. Congress has struck a balance among these values in the APA which
we are not prepared to upset. Dr. Harline’s additional arguments are similarly
without merit, such as that agency appointment of ALJs, after prior approval of
OPM, creates an improper feeling of allegiance toward the employing agency,
and that the sharing of physical facilities with DEA personnel presents a
constitutionally intolerable risk of unfairness.
We realize the structural protections of ALJ independence are not perfect,
and may not function as designed in every case. Still, a plaintiff must
specifically allege the system’s failure with respect to the ALJ in question to
justify waiver of the well justified requirement that administrative remedies be
exhausted. Otherwise, the elaborate system designed to ensure ALJ
independence will withstand a purely structural constitutional challenge like Dr.
Harline’s. Dr. Harline’s argument that legislation has been frequently proposed
to form an independent corps of ALJs only indicates that some see room for
structural improvement; it does not mean the Due Process Clause requires it.
While Congress has not, and may not, agree with these proponents, Dr. Harline’s
charges of structural shortcoming are nevertheless more appropriately presented
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to that body than the federal courts. Given our disposition based on Dr. Harline’s
failure to state a colorable constitutional claim, the parties’ remaining arguments
are moot.
VACATED and REMANDED with instructions to dismiss all claims
without prejudice.
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