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Bostic v. Alaska Child Support Enforcement Division (12/4/98), 968 P 2d 564


     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA
                                 

ROBERT J. BOSTIC,             )
                              )    Supreme Court No. S-8163
             Appellant,       )
                              )    Superior Court No.
     v.                       )    4FA-95-1917 CI
                              )
STATE OF ALASKA, DEPARTMENT   )    O P I N I O N
OF REVENUE, CHILD SUPPORT     )
ENFORCEMENT DIVISION,         )    [No. 5052 - December 4, 1998]
                              )
             Appellee.        )
______________________________)




          Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
                    Ralph R. Beistline, Judge.


          Appearances: Lynn E. Levengood, Downes,
MacDonald & Levengood, P.C., Fairbanks, for Appellant.  Scott
Davis, Assistant Attorney General, Fairbanks, and Bruce M. Botelho,
Attorney General, Juneau, for Appellee.


          Before:  Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.  


          FABE, Justice.


I.   INTRODUCTION
          Procedural due process demands that a party affected by
government action be given notice and an opportunity to be heard
before being deprived of a property interest.  In this case, the
Child Support Enforcement Division (CSED) failed to afford either
of these aspects of due process to Robert J. Bostic when deciding
the amount of his child support obligation.  Because Bostic was
deprived of his right to a full and fair opportunity to present
evidence of his actual income, we reverse and remand for such a
hearing.
II.  FACTS AND PROCEEDINGS
          While Robert J. Bostic was incarcerated at the Spring
Creek Correctional Center in Seward in 1991, CSED set his child
support obligation at fifty dollars per month.  In 1994, after he
had been released from Spring Creek, CSED initiated a three-year
review of its support order.  It sent Bostic a "Notice of Review of
Administrative Support Order and Notice of an Informal Conference,"
which required Bostic to produce a variety of income documents,
including tax returns, W-2 statements, and check stubs.  Because
Bostic had never found regular employment after his release from
prison, he did not have many of the requested documents.  But he
did complete the income affidavits enclosed with the CSED notice
and returned these to CSED within the required time period.
          Although CSED deemed Bostic's submission "non-responsive"
because he had failed to enclose all of the requested income
documents, it never informed him of the problem nor did it provide
any direction as to what alternative information would be
acceptable.  And although the notice that CSED sent to Bostic
indicated that an informal conference would be held on July 15,
1994, CSED never held such a conference; instead, on January 31,
1995, it conducted a "file review."  Due to its perception that
Bostic had failed to respond adequately to its notice and request
for income information, CSED imputed to Bostic the average yearly
wage of a fifty-year-old Alaskan male -- $40,536 --  to arrive at
his new monthly support obligation of $933 for four children.  At
no time preceding the file review did CSED inform Bostic that his
response was substantively lacking or that the date of the review
proceeding had been changed.
          Bostic filed a notice of appeal in February 1995.  Prior
to the formal hearing on the appeal, CSED notified Bostic that he
would be permitted to document his income by submitting a letter
from the IRS stating that he had not filed a tax return in previous
years.  Bostic submitted such a letter as well as additional income
documentation.
          At the formal hearing, held in April 1995, Hearing
Officer Diane Colvin remarked that Bostic had "established that
there wasn't specific notice"of the file review, and that the
purpose of the remainder of the hearing therefore would be to
"establish the facts about [Bostic's] income"in order to arrive at
the correct calculation of his support obligation.
          At the hearing Bostic testified that he had again been
incarcerated for two months in 1993 and three months in 1994.  He
stated that he submitted all income information available to him. 
He explained that he did not have a permanent job and earned money
doing odd jobs, such as fixing cars and shoveling snow.  Bostic
also told the hearing officer that some of his income was earned
under the name "Jimmie Dale,"the name by which he was raised.
          After the parties' closing arguments, but before the
hearing ended, the hearing officer asked Bostic whether he was
looking for work.  Bostic replied that he was seeking work but that
his criminal history made it difficult for him to find employment. 
When asked what kind of jobs he had held in the past, Bostic
responded, "Just labor jobs . . . you know, I'm a pretty good
mechanic and sometimes I can get some mechanic work.  Things have
been real slow up here."
          The hearing officer left the record open to allow CSED to
submit a recalculation of Bostic's support obligation, based solely
on the information adduced at the hearing.  When Bostic's attorney
asked the hearing officer whether CSED would be permitted to submit
additional evidence of Bostic's income, she reassured him that she
would be basing her decision "on the information that was presented
today by both parties and [CSED] is going to submit a recalculation
based on the Division's determination of what [Bostic's] income is,
using his affidavits and . . . the other information presented
today."
          But on May 1, 1995, Child Support Enforcement Officer
David Peltier filed a submission alleging that: (1) Bostic had used
up to seven aliases, three dates of birth and two Social Security
numbers; (2) Bostic was a licensed gold mine operator with
operations in Ruby; (3) Bostic was leasing a number of mining
claims; (4) Bostic had been operating a mining business for the
previous four years; and, (5) Bostic would not return from the
mining site until October 1995.  In response, Bostic filed an
affidavit stating that "[a]ll equipment used in the mining
operation is leased and/or not owned by me"and that there were
"negative profits from all mining activities such that the previous
income statements are accurate." 
          The hearing officer issued a final child support decision
on July 26, 1995.  Despite her statements at the hearing that
Bostic had received inadequate notice of the file review, the
hearing officer held that issuance of an informal conference
decision after the file review, without Bostic's participation, was
not unreasonable because Bostic "never made any affirmative attempt
to participate in the process."  The hearing officer then concluded
that the agency was justified under its regulations in imputing to
Bostic the average wage of a fifty-year-old Alaskan male.  In light
of CSED's newly submitted evidence, the hearing officer found that
Bostic was not a credible witness.  Finally, the hearing officer
resolved an issue that was not before her at the hearing -- she
found that Bostic was voluntarily underemployed: 
          Even if the income affidavits provided by the
Obligor are accepted as accurately reflecting the Obligor's income,
the conclusion remains that the Obligor in this appeal is
voluntarily underemployed.  Income is therefore imputed to him,
using the standard employed by the Division, the average wage for
a 50 year old male.  If the Obligor were fully utilizing his skills
as a mechanic, he would, with experience, be capable of earning
$40,536 per year . . . .  

On that basis, the hearing officer affirmed CSED's decision to
increase Bostic's monthly support obligation to $933.
          On appeal, the superior court rejected Bostic's due
process arguments and affirmed all of the hearing officer's
findings.  The superior court held open its final decision on the
proper amount of child support, remanding the case to CSED for
adjustment of its calculations to reflect the period of time during
which Bostic had been incarcerated.
          On remand from the superior court, CSED found that Bostic
had been placed in Northstar Center, a halfway house, during
portions of 1993 and 1994.  There, he was expected to perform
community service five days a week and continue to look for
employment.  Based on this information, CSED considered Bostic
never to have left the workforce, and it resubmitted the $933 a
month support calculation to the superior court.  Bostic challenged
this recalculation and submitted additional evidence and affidavits
outlining the dates he was at Northstar and his earnings during
that time period.  On April 18, 1997, the superior court issued a
final decision, adopting CSED's calculation of $933 per month for
child support.  Bostic appeals.
III. DISCUSSION
     A.   Standard of Review
          We will not defer to the decision of a superior court
acting as an intermediate court of appeal. [Fn. 1]  Instead, we
"independently review the merits of an administrative
determination."[Fn. 2]   
          We will substitute our judgment for that of the agency
where the case concerns "statutory interpretation or other analysis
of legal relationships about which courts have specialized
knowledge and experience."[Fn. 3]  We also exercise our
independent judgment when reviewing issues involving constitutional
interpretation. [Fn. 4]   Under this standard, we "adopt the rule
of law that is most persuasive in light of precedent, reason, and
policy."[Fn. 5] 
          We review an agency's factual determinations under the
"substantial evidence"test. [Fn. 6]  We have defined substantial
evidence to be 
          such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.  The [agency's]
decision need not be the only possible solution to the problem, for
it is not the function of the court to reweigh the evidence or
choose between competing inferences, but only to determine whether
such evidence exists.[ [Fn. 7]]

     B.   Bostic's Appeal Was Timely.
     
          Before addressing the merits of Bostic's appeal, we first
consider the State's contention that Bostic's appeal was not
timely.  On August 22, 1996, the superior court issued its first
opinion, affirming CSED's decision in part but remanding for a
recalculation reflective of Bostic's incarceration.  Although
Bostic filed a timely notice of appeal of this decision on
September 23, 1996, the appellate court clerk's office sent Bostic
a notice that his appeal was not ripe for review because the
superior court's order "d[id] not appear to be final."  Bostic then
waited for CSED to recalculate his support obligation and for the
superior court to reach its final decision on April 18, 1997,
before again appealing in a timely manner.
          The State argues that the clerk's refusal to docket
Bostic's first appeal of the superior court's August 1996 order was
error and that Bostic's failure to seek review of the appellate
clerk's decision should estop him from appealing the superior
court's later order.  The State also faults Bostic for failing to
file a petition for review of the superior court's August 1996
order.
          The State's arguments are meritless.  Although Bostic
could have sought further review of the clerk's order, he was not
obligated to do so.  Furthermore, Appellate Rule 402 does not
"require a litigant to petition for review of non-appealable
orders."[Fn. 8]  We agree with Bostic that in light of his filing
two timely notices of appeal, adopting the State's view would
result in "the ultimate injustice."
     C.   CSED Violated Bostic's Due Process Rights.
          Bostic argues that CSED's recalculation of his child
support obligation is invalid because he was denied due process of
law at every turn of the three-year review process.  The crux of
Bostic's argument is that CSED failed to provide him adequate
notice of the proceedings and did not allow him to meaningfully
participate in either an informal conference or the formal appeal. 
CSED has elected not to address the merits of Bostic's appeal,
choosing instead to make only the argument, discussed above, that
Bostic's appeal was untimely.  We agree with Bostic that CSED
failed to provide the constitutional safeguards required under the
Alaska Constitution. [Fn. 9]
          "Due process of law requires that before valuable
property rights can be taken directly or infringed upon by
governmental action, there must be notice and an opportunity to be
heard."[Fn. 10]   When a party raises a due process claim, we
first must determine "whether there is a 'deprivation of an
individual interest of sufficient importance to warrant
constitutional protection.'"[Fn. 11]  We conclude that when the
State seeks to increase child support, "a significant property
interest is often at stake."[Fn. 12]
          Due process is a flexible concept that requires
procedural protections as the particular situation demands. [Fn.
13]  We therefore evaluate the "entire set of safeguards"that were
provided by CSED in its file review and formal hearing process.
[Fn. 14]            1.   CSED denied Bostic adequate notice and an
opportunity to participate in the informal conference.
          
          The hearing officer's decision excused CSED's failure to
allow Bostic to appear in person at the informal conference based
on a finding that he was unresponsive to CSED's three-year review
notice and that he failed to make "any affirmative attempt to
participate in the process."  But this clearly was not the case. 
Bostic responded to the notice in a timely manner, and if CSED
considered his submissions to be deficient, it neither informed him
of the problem nor did it explain what documents could be
substituted for the tax returns or W-2s.  CSED never gave notice to
Bostic that it was planning to conduct a file review on January 31,
1995.
          Although CSED's regulations provide that an informal
conference may be "conducted in person, through correspondence, or
by telephone,"[Fn. 15] the proceeding must allow "the
administrative authority to examine both sides of the controversy"
in order to "protect the interests and rights of all who are
involved."[Fn. 16]   Where a proceeding is not conducted in
person, due process envisions an exchange of information, not
unilateral action by the government.  We have previously held that
"'fairness can rarely be obtained by secret, one-sided
determinations of facts decisive of rights.'"[Fn. 17]
          Additionally, we conclude that CSED failed to make
reasonable efforts, as required by its own regulations, [Fn. 18] to
obtain the information necessary to make a support calculation
before imputing income to Bostic.  CSED claimed that it sought the
missing income information through a computer database, but it
never  attempted to contact Bostic or inform him that it believed
his documentation was insufficient.  Given that Bostic was in the
best position to provide the information, we consider CSED's
failure to contact him at anytime between July 10, 1994 and January
31, 1995 to have been unreasonable.  We therefore conclude that
CSED's substitution of a "file review"for the informal conference
and its decision to impute income to Bostic without providing him
an opportunity to be heard violated Bostic's due process rights.
          2.   The formal hearing did not cure the constitutional
infirmities of the "file review"process.

          We have held that a failure to afford due process may
sometimes be cured by a subsequent hearing in which due process is
provided. [Fn. 19]   But here, we conclude that the hearing officer
once again violated Bostic's due process rights at the appeal
hearing by improperly basing her decision on evidence that was not
in the record at the close of the hearing.
          The purpose of the appeal of CSED's file review was for
Bostic to have an opportunity to prove that CSED's support
calculation was incorrect because his financial circumstances were
"not as the agency ha[d] determined."[Fn. 20]  At the hearing,
Bostic testified that he had submitted all the documents that he
possessed.  The hearing officer seemed to agree during the hearing
that "there wasn't actual notice"for the file review and that
Bostic's attorney had "established that [the file review decision]
was probably not correct."  The hearing officer stated that the
purpose of the remainder of the hearing was to "establish today
[Bostic's] income so that an accurate calculation can be made."  At
the conclusion of the hearing, Bostic's attorney asked whether new
information would be allowed into the record following the hearing. 
The hearing officer responded: 
          I will be basing my decision on the
information that was presented today by both parties and [CSED] is
going to submit a recalculation based on the Division's
determination of what [Bostic's] income is, using the affidavits
and, as I stated earlier, the other information presented today.

(Emphasis added.)  Thus, Bostic and his counsel were left with the
impression that the record was left open solely to allow CSED to
submit the amount of the obligation based on Bostic's testimony.
          But CSED supplemented the record on May 1, 1995 with a
letter alleging that Bostic had been operating gold mining claims
under a number of aliases.  Without reopening the hearing evidence
or giving Bostic a full and fair opportunity to rebut CSED's
allegations, the hearing officer used this information as the basis
of her decision to impute income to Bostic, holding that he had not
been forthcoming with all pertinent income information, and that
his earlier testimony was not credible.  Yet, Bostic volunteered in
his original income affidavits of July 1, 1994 that he earned
approximately $12,000 from piece work and gold mining activities in
1993.
          The hearing officer also failed to provide Bostic with
notice that voluntary underemployment [Fn. 21] would be an issue at
the hearing.  Yet, the hearing officer based her decision to impute
income to Bostic upon her conclusion that Bostic had the necessary
skills to be employed full-time as a mechanic.  Bostic was never
given an opportunity to respond to the issue of voluntary
underemployment.  And although Bostic testified at the hearing that
he was "a pretty good mechanic,"this evidence alone cannot support
the hearing officer's finding that Bostic had the skills or ability
to work as a full-time mechanic, that such jobs were available, or
that he could earn over $40,000 a year in such a position.
          We have previously held that a litigant had "ample
opportunity to be heard"where he was afforded an informal hearing,
a formal conference before a hearing examiner, an appeal to the
superior court, and an appeal to this court. [Fn. 22]  But in the
present case, CSED hindered Bostic's attempts to present his side
of the story, thus denying him due process of law.  We vacate
CSED's decision to increase Bostic's child support to $933 a month
and remand for a full hearing to determine Bostic's obligation.
IV.  CONCLUSION
          Because CSED denied Bostic due process of law at both the
initial file review and the formal hearing, we VACATE its
calculation of Bostic's support obligation and REMAND to permit
CSED to conduct a full hearing consistent with this opinion.


                            FOOTNOTES


Footnote 1:

     See Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
(Alaska 1992).


Footnote 2:

     Id.


Footnote 3:

     Kelly v. Zamarello, 486 P.2d 906, 916 (Alaska 1971).


Footnote 4:

     See City of North Pole v. Zabek, 934 P.2d 1292, 1297 n.5
(Alaska 1997).


Footnote 5:

     Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).


Footnote 6:

     Jager v. State, 537 P.2d 1100, 1107 (Alaska 1975).


Footnote 7:

     Interior Paint Co. v. Rodgers, 522 P.2d 164, 170 (Alaska 1974)
(footnotes and internal quotations omitted).


Footnote 8:

     In the Matter of the Estate of McCoy, 844 P.2d 1131, 1136 n.6
(Alaska 1993) (holding that appellee's waiver argument on this
ground was meritless); see also City of Juneau v. Thibodeau, 595
P.2d 626, 629 (Alaska 1979) (holding that when a superior court
reverses and remands an administrative decision, a party may invoke
this court's discretionary review jurisdiction under Appellate
Rules 23 and 24 (a) (currently Rule 402)).


Footnote 9:

     Alaska Const. art. I, sec. 7 provides:

          No person shall be deprived of life, liberty,
or property, without due process of law.  The right of all persons
to fair and just treatment in the course of legislative and
executive investigations shall not be infringed.


Footnote 10:

     Frontier Saloon, Inc. v. Alcoholic Beverage Control Bd., 524
P.2d 657, 659 (Alaska 1974) (citing Mullane v. Central Hanover Bank
& Trust Co., 339 U.S. 306, 313 (1950)).


Footnote 11:

     Herscher v. State, Dep't of Commerce, 568 P.2d 996, 1002
(Alaska 1977) (quoting Nichols v. Eckert, 504 P.2d 1359, 1362
(Alaska 1973)).


Footnote 12:

     In re Marriage of McLean, 937 P.2d 602, 607 (Wash. 1997); cf.
Moody v. Comm'r, Dep't of Human Servs., 661 A.2d 156, 158 (Me.
1995).


Footnote 13:

     See Superintendent, Mass. Correctional Inst. v. Hill, 472 U.S.
445, 454 (1985); Amerada Hess Pipeline Corp. v. Alaska Pub. Util.
Comm'n, 711 P.2d 1170, 1178 (Alaska 1986).


Footnote 14:

     Amerada Hess, 711 P.2d at 1178.


Footnote 15:

     15 Alaska Administrative Code (AAC) 05.020 (1998); see also 15
AAC 125.020(c) (1994).


Footnote 16:

     Zabek, 934 P.2d at 1298 (quoting Nichols v. Eckert, 504 P.2d
1359, 1365 (Alaska 1973)).


Footnote 17:

     City of Homer v. Campbell, 719 P.2d 683, 685 (Alaska 1986)
(quoting Fuentes v. Shevin, 407 U.S. 67, 81 (1972)).


Footnote 18:

     15 AAC 125.015 provides in relevant part:

          If the agency makes a reasonable but unsuccessful
effort to obtain necessary financial information from the obligor
. . . or if the obligor . . . provides false information to the
agency, the monthly support obligation will be determined in an
amount necessary to support the children.  
     


Footnote 19:

     See, e.g., McMillan v. Anchorage Community Hosp., 646 P.2d
866-67 (Alaska 1982).


Footnote 20:

     15 AAC 125.050(3).  


Footnote 21:

     Alaska Civil Rule 90.3 permits income imputation upon a
finding that an obligor has voluntarily reduced his or her income. 
The determination is based upon an evaluation of "the parent's work
history, qualifications and job opportunities."  Alaska R. Civ. P.
90.3 commentary III.C.


Footnote 22:

     Agen v. State, Dep't of Revenue, 945 P.2d 1215, 1219-20
(Alaska 1997).