The Rollback of Agency Deference

Article by Nathan Smith Featured Author

Posted April 2021

In its 2018 decision, King v. Miss. Military Dept.,² the Mississippi Supreme Court, in one fell swoop, announced “we abandon the old standard of review giving deference to agency interpretations of statutes.” ³ The Court, overruling Miss. Methodist Hosp. v. Miss. Div. of Medicaid, ⁴ defined this “old standard” as a duty of deference, which derives from the realization that the everyday experience of the administrative agency gives the agency familiarity with the “particularities and nuances” of the problems committed to its care which no court could hope to replicate. (emphasis mine).

There’s a lot to process in this announcement. The overruled case, Miss. Methodist Hosp., speaks to the decision of an administrative agency. This decision is reached by an application of law (typically statutory) to facts by the agency. Agencies’ interpretations of statutes are reflected in several ways, including written regulations, technical bulletins, informal oral advice, letter ruling requests, and both published and unpublished opinions on internal appeals. According to the King court, agency interpretations of statutes are entitled to no deference, and are essentially reviewed de novo anytime an appeal is made beyond the agency. However, the nuts and bolts of how this plays out are less clear. For example, does King apply only to the agency’s interpretation of a statute in reaching its decision? Or does King non-deference (to coin a phrase) also apply to written regulations which the agency has promulgated in order to interpret statutes? Let us dig a little deeper into the Court’s reasoning.

King’s plaintiff was dismissed from her employment at the Mississippi Military Department because, in the opinion of the Adjutant General, she used her supervisory position for personal gain. Aggrieved, she appealed to the Mississippi Employee Appeals Board, claiming that she was a state-service employee. The Department argued, and the Board agreed, that the Board did not have jurisdiction to hear the appeal. The appeal made its way through circuit court, where it was again affirmed in favor of the Adjutant General, and finally was appealed to the Mississippi Supreme Court.

At issue was the interpretation of potentially “conflicting” statutes. King claimed that Miss. Code Ann. § 25–9-107(b) did not specifically exclude her position from state service, and if she was a state service employee, she was entitled to review by the Board. The Department, on the other hand, argued that Miss. Code Ann. § 33–3-11(a) specifically provides that the Adjutant General may remove any employee of his department “at his discretion.” The court found, correctly, that “the terms of a specific statute control the terms of a general statute.” Thus, Miss. Code Ann. § 33–3-11(a) trumps the inference in Ms. King’s favor under Miss. Code Ann. § 25–9-107(b), and the Adjutant General may terminate her employment at his discretion and without review.

Since the Supreme Court agreed with the Board’s decision that it lacked jurisdiction, and agreed with the circuit court’s affirmation of the Board’s decision, it wasn’t necessary for the court to “abandon” a standard of review to reach its conclusion. Nevertheless, it did, and it began by noting that it will only review an agency decision to determine whether it is supported by substantial evidence. The analysis could have stopped here, but the court took the opportunity to separate agency decisions with respect to statutory construction, and any other aspect of the agency’s decision, such as fact-finding. As stated above, the court noted that it has traditionally afforded “great deference to agency interpretations of statutes,” but that it will now cease to do so. The court found that “only statutes are at issue in the case sub judice,” further narrowing the scope of its announcement. The court then gave two reasons for its announcement: first, that its previous standard of review of agency decisions was confusing and vague, and second, that deference to an agency interpretation of statute would violate the principal of separation of powers found in Article 1 of the Mississippi Constitution, sections 1 and 2.

While the Court was united in issuing the announcement in King, it splintered when it issued a decision on a Medicaid reimbursement agency appeal in Central Miss. Medical Center v. Miss. Div. of Medicaid. ⁵ The plaintiff hospital in Central Miss. was assessed a $1.226 million bill for overpayment of Medicaid funds. Finding no relief in the internal Medicaid appeals process, the hospital appealed to chancery court, where the court found that the decision of the agency was supported by substantial evidence. On appeal to the Supreme Court, the five-Justice majority began by reciting the familiar, and some might say “old standard,” for reviewing an agency decision: whether “the order of the agency 1) was supported by substantial evidence, 2) was arbitrary or capricious, 3) was beyond the power of the agency to make, or 4) violated some statutory or constitutional right of the complaining party.” The court then reverted to previous caselaw, stating “an agency’s interpretation of a rule governing the agency’s operation is a matter of law that is reviewed de novo, but with great deference to the agency’s interpretation.” Going further, the court stated “[o]ur courts are not permitted to make administrative decisions and perform the functions of an administrative agency. Administrative agencies must perform the functions required of them by law.” Finally, the majority capped off the standard of review by giving a hat tip to King, stating, “This deference is not to be confused with the lack of deference accorded to an agency in the interpretation of a statute, which is properly reserved to the courts of this State.” With the standard thus articulated, the Court deferred to the Department of Medicaid’s decision, finding that “the DOM’s actions were neither arbitrary nor capricious, nor did the DOM exceed its authority or violate CMMC’s constitutional rights.” ⁶

Two Justices concurred in result, but opined that no judicial deference should be extended to “an executive agency’s interpretation of its rules and regulations.” Two dissents were also issued, each of which were joined by various of the remaining Justices. Justice Coleman opined, or rather lamented, that “inconsistency and self-contradiction mark the history of deference by courts to executive-branch agency regulatory interpretation.”

Thus, it appears that under King, no deference is given to an agency’s interpretation of statutes. However, under Central Miss., an agency’s interpretation of its own regulations which interpret a statute is given “great deference.” But we are not completely finished yet.

Several months after Central Miss., the Mississippi Supreme Court issued a decision in HWCC-Tunica, Inc. v. Miss. Dep’t. of Revenue. ⁷ The appellant in HWCC-Tunica argued that Miss. Code Ann. Section 27–77-7(5), which statutorily imposed a standard of review, was unconstitutional. In question was that portion of the statute which provides “[a]t trial of any action brought under this section, the chancery court shall give no deference to the decision of the Board of Tax Appeals, the Board of Review or the Department of Revenue, but shall give deference to the department’s interpretation and application of the statutes as reflected in duly enacted regulations and other officially adopted publications.” The court found “no difference between this case and King.” The court held that “the deferential standard prescribed in Code Section 27–77-7(5) is unconstitutional because it violates the separation of powers doctrine of our state constitution.”

But what about Central Miss.? Central Miss. found that deference to an agency’s interpretation of its regulations is given deference. How is that different from an agency’s “interpretation and application of the statutes ‘ as reflected in duly enacted regulations?’” The court in HWCC, even absent its finding that 27–77-7(5) was unconstitutional, opined that “giving a de novo but deferential review is a contradiction.” ⁸ The court did afford, however, that none of its decisions prevent or prohibit “Mississippi courts from looking to regulations for information and guidance.” ⁹ In any case, the holdings appear to confirm that there is no deference given to an agency’s interpretation of a statute ( King); most likely no deference is given to an agency’s written interpretation of a statute ( King and HWCC); and great deference will possibly be given to an agency’s interpretation of its written interpretation of a statute ( Central Miss. majority).

What about workers’ compensation? Does the rollback of agency deference have any bearing on Professor Larson’s historical bargain between employer and employee? Interestingly enough, the Court conducted a de novo review of a Workers’ Compensation Commission decision in Total Transp., Inc. of Miss. v. Shores¹⁰ back in 2007. In that case the Court reviewed both law and fact in reversing a decision of the Commission. More recently though, in Seals v. Pearl River Resort¹¹ the Supreme Court overruled the Court of Appeals in fully deferring to the findings of the Commission. The Court found (this will look familiar) that 1. in worker’s compensation cases this Court reviews the decision of the Commission ¹², 2. the Commission’s decision will be affirmed unless it “lacks the support of substantial evidence, is arbitrary or capricious, is beyond the commission’s scope or its power, or violates constitutional or statutory rights,” and 3. if a decision is supported by substantial evidence, it will almost necessarily not be arbitrary or capricious. This is consistent with years of caselaw that has given deference to findings of the Commission.

Even more recently the Mississippi Court of Appeals almost verbatim repeated the deferential standard of review for decisions of the Mississippi Workers’ Compensation Commission in Cooper Tire & Rubber Co. v. Loveless¹³. In that case, the Commission awarded benefits to a claimant for the loss of use of her foot. The claimant’s expert opined that her repetitive activity at work was the “possible” cause of her injury. The carrier argued on appeal that the claimant hadn’t carried her burden of proving a sufficient connection between the injury and her work. ¹⁴ The Court of Appeals dismissed this argument, stating that it will affirm the Commission’s decision, if it is supported by “substantial evidence.” The Court reiterated that substantial evidence is a lower burden than preponderance of the evidence. In doing so, the court deferred to a Commission decision which, at least in one commentator’s mind, almost rose to the level of reversing the long-standing and statutorily-buttressed burden of proof on a claimant to show that an injury arises out of and in the course and scope of employment. ¹⁵ For our purposes, the point is that the court could have used this case as an opportunity for examining a question of law, but instead adopted a traditional and highly deferential standard of review.

One explanation for the deferential treatment of appeals from the Workers’ Compensation Commission is simply that statutory law in the realm of Workers’ Compensation, with a few notable exceptions, is not fluid. The statutory framework was fought over and affirmed in previous years, and absent an overhaul, questions of law are less likely to be presented. The Board of Tax Appeals, on the other hand, wasn’t created until 2008, and the appeal process from assessments of the Mississippi Department of Revenue has been in flux since then. Also, with a portion of Section 27–7-7(5) being invalidated, it remains to be seen how the Court will treat appeals from the Board of Tax Appeals.

If there is one thing we can glean from this line of cases, it is that the Mississippi Supreme Court intends to afford little to no deference to an agency’s interpretation of a statute. Practitioners whose clients who are aggrieved by the decision of an agency should consider the extent to which the agency’s decision relies on statutory analysis, as this could potentially serve as grounds for relief. Another potentiality is that the one-two-three punch of King, Central Miss., and HWCC could open the floodgates to appeals from agency decisions. But ultimately, after laying out the reasoning of these cases, I have struggled to find a reliable conclusion. There can be no doubt that a change has occurred in appellate review of agency decisions, but Justice Coleman’s concerns regarding inconsistency of review appear to still be present.

1. Nathan is a licensed attorney and the Director of Advancement at Mississippi College School of Law.
2. 245 So.3d 404 (Miss. 2018). The Court reasoned that it previously had applied a double-standard to agency review, “[i]n addition to the contradiction inherent in de novo but deferential review, writing on the one hand that we give great deference to agency interpretations of statutes and, then, with the next strike of the computer keyboard, writing that no deference will be given if the agency’s interpretation contradicts the best reading of the statute, creates a confusing and vague standard. The same can be said of claiming to give deference while simultaneously claiming that the Court bears the ultimate responsibility to interpret statutes.”
3. The court specifically stated “we announce today” when referring to the new standard of review, leaving no doubt that an affirmative change was made.
4. 21 So.3d 600 (Miss. 2009).
5. 294 So.3d 1121 (Miss. 2020).
6. Language which closely tracks the court’s historic deference to agency decisions.
7. 296 So.3d 668 (Miss. 2020).
8. Which, somewhat ironically, contradicts the holding in Central Miss. that agency interpretation of its regulations is reviewed de novo, but with great deference.
9. “Deference,” according to the Oxford Dictionary, means humble submission and respect. Perhaps “guidance” is simply meant to be a degree lower than deference.
10. 968 So.2d 400 (Miss. 2007). I remember this case from my time clerking at the Mississippi Court of Appeals. The facts are remarkable, so much so that the case should probably be viewed as an anomaly.
11. 301 So.3d 585 (Miss. 2020).
12. As opposed to the findings of the administrative judge, although the Commission can adopt the findings of the AJ as its own.
13. 2021 Miss. App. LEXIS 75 (Feb. 23, 2021).
14. Despite the nebulous mandate that workers’ compensation laws be construed liberally in favor of the employee, Miss. Code Ann. § 71-3-1(1) states that “this chapter shall not be presumed to favor one party over another and shall not be liberally construed in order to fulfill any beneficent purposes.” Mississippi case law has consistently held that the initial burden, however light, is on the employee to make a prima facie case of compensability.
15. Thomas Robinson, J.D., noted assistant to Professor Larson, describes this as potentially moving the burden of proof from being on the employee to being more of an equilibrium between employee and employer. However, given the historic favor given toward compensability, he ultimately opines that this was probably the correct result. But see the discussion in footnote 14, above.