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State v. Questar Energy Services, Inc.

Supreme Court of North Dakota

October 17, 2017

State of North Dakota, by and through Workforce Safety and Insurance, Appellant
v.
Questar Energy Services, Inc., Appellee

         Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Frank L. Racek, Judge.

          Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, ND, for appellant.

          Sarah A. Herman (argued) and Claire L. Smith (on brief), Fargo, ND, for appellee.

          Jensen, Justice.

         [¶ 1] North Dakota Workforce Safety and Insurance ("WSI"), appealed from the judgment affirming a decision of an Administrative Law Judge ("ALJ") that had reversed WSI's administrative reclassification of Questar Energy Services, Inc.'s ("Questar") employees. We affirm.

         I

         [¶ 2] In July 2012, Questar applied for and received insurance coverage from WSI. Following an audit in 2014, WSI determined Questar's employees had been improperly classified and reclassified Questar's employees. The classification of employees directly impacts the insurance rate used to calculate Questar's premiums for the insurance received from WSI.

         [¶ 3] WSI issued a Notice of Decision to inform Questar of the audit results and the reclassification of Questar's employees. Questar filed with WSI a request for reconsideration of WSI's decision to reclassify Questar's employees. WSI issued an administrative order confirming its Notice of Decision and Questar responded by requesting a rehearing. The request for a rehearing triggered the administrative hearing process and the assignment of an ALJ.

         [¶ 4] Following an administrative hearing, the ALJ issued Findings of Fact, Conclusions of Law, and Final Order reversing WSI's administrative order. The ALJ applied a preponderance of the evidence standard for the review of WSI's employee classification determination. Applying that standard, the ALJ concluded the evidence provided during the hearing did not support WSI's reclassification but did support Questar's requested classification. WSI appealed the ALJ's decision to the district court, which concluded the ALJ applied the correct standard of review, properly excluded changes to the Rate Classification Manual made after WSI's determination, and properly determined Questar's requested classification was supported by a preponderance of the evidence.

         II

         [¶ 5] WSI appeals the judgment entered following the district court's review of the ALJ's determination. WSI contends the ALJ applied the wrong standard of review, improperly excluded from evidence the changes to the Rate Classification Manual, and erred in determining classification of Questar's employees was not supported by the record.

         [¶ 6] Appellate review of a final order of an administrative agency is governed by the Administrative Agencies Practice Act, N.D.C.C. ch. 28-32. Pursuant to the directives contained in N.D.C.C. §§ 28-32-46 and 28-32-49, the district court and this Court must affirm an administrative agency order unless:

1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its ...

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