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Creation of guidelines for disciplinary referral is not rulemaking subject to open meetings law, says Colorado high court

The Supreme Court of Colorado, in a November 12 decision, held that a set of guidelines developed by the state's Department of Public Health and Environment for referring physicians suspected of providing false diagnoses for medical marijuana patients were not formal rules and their creation was thus not subject to the state's Open Meetings Law or Administrative Procedure Act.

(Doe v. Colorado Department of Public Health and Environment)

The guidelines were created following a 2013 state audit which found that the Colorado department did not have adequate procedures in place to assure that individuals could not obtain medical marijuana prescriptions by means of diagnoses from unscrupulous doctors.

The new guidelines helped identify suspicious activity by physician licensees so that the Department could refer them to the board for investigation. The Department created the referral policy internally, without public input.

Using the guidelines, the Department proceeded to refer several physicians to the board for investigation. Those physicians then challenged the creation of the guidelines, filing open records requests and eventually a legal action claiming that the board violated the state’s Open Meetings Law and Administrative Procedure Act in designing the referral policy behind closed doors.

A state district court, while ultimately dismissing the claims on other grounds, nonetheless ruled that the Department had violated the two statutes. A state appellate court reversed that finding, holding, among other things, that the entirety of a state agency like the Department does not constitute a “public body” as that term in used in the state’s Open Meetings Law.

This meant that discussions among Department employees were not subject to state open meetings requirements, and that the referral guidelines constituted only interpretive rules and were not actually binding on the Department.

By its own terms, Colorado’s Open Meeting Law applies to “all meetings of two or more members of any state public body at which any public business is discussed or which any formal action may be taken. “State public body” is defined as “any board, committee, commission, or other advisory, policy-making, rulemaking, decision-making, or formally constituted board of any state agency.”

Under this definition the justices agreed that entire state agencies were not subject to the law. The plaintiff doctors could not assert that the Department is a “kind of advisory, policy-making, rule-making, decision-making, or formally constituted board of any state agency,” Justice Gabriel continued, “because for the [plaintiffs] to prevail on such an argument, we would have to conclude that the [Department], a state agency, is a body of itself, which would be an absurd result.”

The state bodies contemplated in the Open Meetings Law are fundamentally different in make-up from state agencies, in general, and the application of the law to everyday agency employees would be impossible, the court explained.

“Not every state employee has the right to participate in organizational decisions the way the members of a formally created board or commission do. And if every employee of a state agency is deemed to be a member, then an untold number of routine conversations among agency employees would be subject to the OML and would require notice of the meetings, as well as compliance with all of the OML’s remaining requirements,” the court said.

“The legislature could not have intended so absurd a result.”

Addressing whether the state Administrative Procedure Act’s formal procedures applied to the creation of the referral guidelines, the Court held that the guidelines were not formal legislative rules, but merely interpretive ones which do not bind an agency, and thus do not require an open process during their creation.

The referral policy, the justice explained, is intended only to guide Department employees in their interpretation of their statutory duty to refer physicians for investigation; the language of the policy is permissive and allows, but does not require, the Department to refer physicians which meet the policy’s thresholds for suspicious behavior.

Additionally, the Court disagreed with the physicians’ contention that their referrals for investigation were a formal, final agency action and thus subject to judicial review under the Act.

“It is not clear to us that the [Department’s] referral constituted ‘actions,’ as that term is defined in the APA,” wrote Justice Gabriel in affirming the lower court. “The referrals were not part of a rule, nor could they be construed as orders because, in making the referrals, the [Department] did not order anyone to do anything. And the referral did not constitute sanctions because the Board, not the [Department], is responsible for determining whether the Doctors’ conduct merits discipline . . . The referrals merely began the process by which the Board would review the Doctors’ conduct.”

“As the legislature has made clear, it is the Board’s determination that marks the end of the referral process, and that is the time for judicial review . . . Were we to adopt the position that the Doctors espouse in this case, the focus of the Board’s efforts would shift from carrying out its statutory duties of investigating and remedying substantive allegations of improper medical practice to investigating the referral source in every case before pursuing its statutory duties.”

“We see no basis for imposing such a requirement on the Board,” the court concluded.