In re Houston

In re Houston (2005-175); 180 Vt. 535; 904 A.2d 1174

 2006 VT 59

[Filed 28-Jun-2006]

                                 ENTRY ORDER

                                 2006 VT 59

                      SUPREME COURT DOCKET NO. 2005-175

                             DECEMBER TERM, 2005

  In re Appeal of Kenneth Houston      }         APPEALED FROM:
                                       }
                                       }
                                       }         Human Services Board
                                       }  
                                       }
                                       }         DOCKET NO. 19,287

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Claimant Kenneth Houston appeals from the Human Services
  Board's dismissal, without prejudice, of his appeal of a decision by the
  Department for Children and Families (DCF) to terminate his Long-Term-Care
  Medicaid benefits.  DCF sent claimant notice that his benefits would be
  terminated as a result of the sale of his home and the transfer of the
  proceeds for less than fair market value.  Claimant appealed to the Human
  Services Board, and DCF began requesting information for discovery
  purposes.  Claimant opposed DCF's discovery requests on relevance grounds. 
  Claimant also filed a motion to dismiss the action, alleging DCF's notice
  failed to state a valid basis for terminating his benefits.  The hearing
  officer assigned to the appeal denied claimant's motion to dismiss and
  ordered him to provide the documents requested by DCF.  When claimant
  refused to comply with this order, the hearing officer recommended that the
  Board dismiss his appeal.  The Board dismissed claimant's appeal without
  prejudice.  The Secretary of the Agency of Human Services approved the
  dismissal, and this appeal followed.  Claimant contends the Board erred by: 
  (1) improperly dismissing claimant's appeal; (2) failing to rule on
  claimant's motion to dismiss termination of his benefits; and (3) failing
  to decide claimant's appeal on the merits.  We hold that the Board was not
  required to consider claimant's motion to dismiss, but that it prematurely
  dismissed claimant's appeal, so we do not reach the issue of whether the
  Board was required to hold a hearing on the merits of claimant's appeal. 
  We reverse in part and remand to the Board for further proceedings.

       ¶  2.  Claimant receives long-term care at the Woodridge Nursing
  Home in Barre, Vermont.  Medicaid pays most of the cost of his nursing
  care.  Under Medicaid, claimant's eligibility and his "patient share"-the
  share of nursing costs he must pay out of pocket-are determined by the
  amount of his financial resources.  Medicaid Manual § M430, 5 Code of
  Vermont Rules 13 170 008-191.  To prevent Vermont recipients of Medicaid
  benefits from hiding assets that would alter or eliminate their eligibility
  for benefits, DCF administers regulations prohibiting transfers of patient
  resources, with certain exceptions.  Medicaid Manual § M440.2 & 3, 5 Code
  of Vermont Rules 13 170 008-201 & 202/204.  Medicaid recipients DCF finds
  have improperly transferred resources are subject to having their benefits
  terminated for penalty periods defined by the regulations.  Medicaid Manual
  § M440, 5 Code of Vermont Rules 13 170 008-201.
   
       ¶  3.  Claimant began receiving long-term-care benefits in November
  2003, at which point, DCF set claimant's patient share at $1,515.59 per
  month, to be paid out of claimant's income.  Between November 2003 and
  August 2004, claimant failed to pay his patient share to Woodridge.  In
  August 2004, claimant sold his home.  Claimant provided notice of the sale
  to DCF, and informed DCF that the net proceeds, $64,550, had been disposed
  of through several transactions and should not affect his Medicaid
  eligibility.  According to this notice, claimant used some of the proceeds
  of the sale to pay his overdue patient share, and he transferred additional
  funds to a revocable trust.  Under the trust agreement, claimant's son and
  daughter were named trustees and claimant was the trust's beneficiary. 
  Claimant's daughter, as trustee, loaned herself the entire amount of the
  trust principal, with her own home as security, in exchange for a
  promissory note, which required repayment over the course of seven years
  and seven months, primarily through a payment of $26,432.61 at the end of
  this period.  DCF responded to claimant's notice on September 1, 2004, with
  a Notice of Decision reading:

    Long-Term Care Medicaid eligibility for Kenneth W. Houston ends
    09-13-04 because of resource transfers of $11,242.24 for patient
    share payment to Woodridge and $26,432.61 for promissory note
    beyond life expectancy.  The penalty period resulting from these
    two resource transfers begins 08-01-04 and ends 03-02-05.  (M440,
    M440.4)

       ¶  4.  Claimant appealed DCF's decision through its fair hearing
  process, and he requested that his benefits continue during the process,
  which they did.  In preparation for claimant's fair hearing, DCF sent a
  letter requesting documents containing information pertaining to the
  proceeds of the sale of claimant's home, and it subpoenaed claimant's bank
  records. (FN1)  Claimant refused to turn over certain of the requested
  documents and filed an objection with the hearing officer to DCF's request
  for information, arguing that the information sought by DCF was not
  relevant to his appeal.  Claimant also filed a motion to dismiss DCF's
  termination of his benefits, arguing that as a matter of law, DCF's Notice
  of Decision did not contain sufficient grounds to merit termination.
        
       ¶  5.  On February 2, 2005, the hearing officer (FN2) issued an order: 
  (1) granting DCF's requests to produce and ordering claimant to turn over
  the requested documents by February 11, 2005, warning claimant that
  "[f]ailure to provide this information will result in a recommendation that
  [DCF's] decision be affirmed based on [claimant's] failure to provide
  reasonable verification of his financial status"; (2) requiring DCF to
  "furnish [claimant] and the Board with a concise written explanation of all
  the factual and legal bases of the action it is taking" by February 18,
  2005; (3) denying claimant's motion to dismiss; and (4) stating that a
  hearing would be held on the merits without further delay.  DCF responded
  with a "Statement of Law and Facts" dated February 17, 2005, reiterating
  its view of the transfers leading to its decision to terminate claimant's
  benefits.  Claimant did not respond to the February 2 order.  Instead, he
  submitted a letter requesting appointment of a new hearing officer, citing
  the officer's lack of impartiality due to a pending action in federal
  district court.                                            

       ¶  6.   On March 10, 2005, the hearing officer submitted a
  recommended decision to the Board, detailing the procedural history of the
  appeal and recommending that the Board dismiss the appeal based on
  claimant's refusal to comply with the February 2 discovery order.  The
  Board, following oral argument regarding the hearing officer's recommended
  decision, issued a final decision on March 23, 2005, dismissing claimant's
  appeal without prejudice for failure to comply with the hearing officer's
  discovery order.  The Board determined that while the hearing officer's
  order was subject to review, claimant was required to move for review of
  the order prior to February 11, instead of ignoring the order and
  challenging the relevance of the documents following the hearing officer's
  recommendation of dismissal.  The Board noted that at oral argument,
  claimant based his objection to the hearing officer's discovery order on
  the same relevance arguments rejected by the hearing officer, and stated
  that "the Board also rejects those arguments."  The Board's order stated
  that if claimant "is willing to follow the directives of the hearing
  officer consistent with the Board's rules, he is free to refile his appeal
  in this matter.  However, he shall not be entitled to continuing benefits
  pending any further consideration of this matter by the Board or its
  hearing officers."  Claimant appealed the Board's decision to the Secretary
  of the Agency of Human Services.  The Secretary approved the Board's
  decision, and this appeal followed. 

       ¶  7.  Claimant contends the Board committed numerous errors in
  dismissing his appeal.  In essence, he argues that the Board erred by:  (1)
  dismissing his appeal as a sanction for discovery violations; (2) failing
  to rule on his motion to dismiss; and (3) failing to decide his appeal on
  the merits.  While we presume the validity of certain agency actions,
  "adjudicatory functions of an administrative body are reviewed with special
  vigilance."  In re Vt. Verde Antique Int'l., Inc., 174 Vt. 208, 211, 811 A.2d 181, 183-84 (2002).  We disagree with claimant's argument that the
  Board was required to rule on his motion to dismiss, but we agree with
  claimant that the Board improperly dismissed his appeal, so we need not
  reach his third argument regarding his entitlement to a hearing on the
  merits notwithstanding any procedural violations he may have committed.

       ¶  8.  Claimant's first several claims of error relate to the
  Board's dismissal of his appeal for discovery violations.  Claimant argues
  that the Board lacked authority, under both its authorizing statute and its
  own regulations, to dismiss his appeal for any discovery violation, no
  matter how egregious.  He also argues that even if the Board was authorized
  to dismiss his appeal for violating a discovery order, it was premature for
  the Board to dismiss his appeal under these circumstances because the
  hearing officer's order was not final.  We agree with claimant that the
  Board's dismissal was improper, but only under the particular circumstances
  in this case.  The Board possessed discretionary authority to use dismissal
  as a discovery sanction, but it abused its discretion by dismissing
  claimant's appeal in the absence of conduct demonstrating bad faith or
  willful disregard of a discovery order.  The dismissal must therefore be
  reversed.  See Hall v. Dep't of Soc. Welfare, 153 Vt. 479, 484, 572 A.2d 1342, 1345 (1990) (stating that an agency's discretionary decision should
  be overturned when it is an abuse of discretion resulting in prejudice to a
  party).  
   
       ¶  9.  We disagree with claimant that the Board lacked statutory or
  regulatory authority to compel discovery or punish discovery violations. 
  An administrative body "has only such powers as are expressly conferred
  upon it by the Legislature, together with such incidental powers expressly
  granted or necessarily implied as are necessary to the full exercise of
  those granted."  Perry v. Med. Practice Bd., 169 Vt. 399, 403, 737 A.2d 900, 903 (1999) (quotations omitted).  The Legislature granted the Board or
  "a hearing officer appointed by the board" power to conduct fair hearings,
  and enabled the Board to "adopt rules with reference to appeals, which
  shall not be inconsistent with this chapter" and which "shall provide for
  reasonable notice to parties, and an opportunity to be heard and
  represented with counsel."  3 V.S.A. § 3091(b).  The Board's explicitly
  delegated authority to conduct fair hearings would be meaningless without
  the incidental power to compel parties to provide relevant evidence.

       ¶  10.  Claimant argues that a fair hearing need not involve the
  collection of evidence because it is a "review de novo," which may be
  conducted based only on the evidence in DCF's possession at the time of its
  initial decision, and not a full evidentiary "hearing de novo."  See State
  v. Madison, 163 Vt. 360, 370, 658 A.2d 536, 543 (1995) (stating that "the
  term 'review de novo' contemplates a nondeferential review that generally
  relies on, but is not restricted to, the record," while a "hearing de novo"
  contemplates "an entire trial") (quotations omitted); In re Bushey-Combs,
  160 Vt. 326, 329, 628 A.2d 541, 543 (1993) (describing Board hearing as
  "review de novo").  This conclusion relies on a misinterpretation of the
  case law surrounding fair hearings.  We have sometimes referred to fair
  hearings using the term "review de novo," but we have also explicitly
  stated that we used that expression "to describe a de novo hearing," and
  not "as a term of art."  Madison, 163 Vt. at 369, 658 A.2d  at 542
  (explaining passing use of term "review de novo" in In re Bushey-Combs and
  describing Board fair hearings as "evidentiary").  The Board has the
  authority to conduct fair hearings based on evidence, and this necessarily
  implies the authority to compel the production of evidence.

       ¶  11.  The Board's regulatory authority to compel discovery is found
  in its fair hearing rules:

    Upon request a party shall promptly furnish an adverse party with
    copies of all documents and records that are relevant to the
    issues raised by the appeal.  Disputes on the question of
    relevancy shall be resolved by the hearing officer in the first
    instance, subject to the board's review on the motion of either
    party.

  Vermont Human Services Board, Fair Hearing Rule 11 (1995).  There is no
  provision in either the statute or the fair hearing rules for dismissal of
  an appeal for failure to comply with an order following resolution of a
  relevance dispute.  As the Board noted, however, Vermont Rule of Civil
  Procedure 37 allows dismissal when a party fails to comply with a discovery
  order. V.R.C.P. 37(b)(2)(C).  While the rules of civil procedure are not
  applicable to administrative hearings, it was logical for the Board to
  consult Rule 37 in fashioning an appropriate sanction for a discovery
  violation in the absence of statutory or regulatory guidance, and it was
  reasonable for the Board to conclude from its examination of Rule 37 that
  it could use dismissal as a sanction.  The Board could not reasonably have
  concluded, however, that dismissal is appropriate for every failure to
  comply with a discovery order.  When a trial court invokes the sanction of
  dismissal under Rule 37, it must "indicate by findings of fact that there
  has been bad faith or deliberate and willful disregard for the court's
  orders, and further, that the party seeking the sanction has been
  prejudiced thereby."  John v. Med. Ctr. Hosp. of Vt., Inc., 136 Vt. 517,
  519, 394 A.2d 1134, 1135 (1978); see also Manosh v. First Mountain Vt.,
  L.P., 2004 VT 122, ¶ 10, 177 Vt. 616, 869 A.2d 79 (mem.) (reversing default
  judgment issued as discovery sanction in the absence of findings showing
  bad faith, consideration of lesser sanction, and prejudice to opposing
  party); C.C. Miller Corp. v. Ag Asset, Inc., 151 Vt. 604, 606, 563 A.2d 626, 627 (1989) (relying on John to reverse default judgment despite
  party's failure to respond to discovery request for approximately two
  years).  In John, we held that absent such findings, "a less drastic
  sanction should be used," noting that "dismissal of an action because of a
  genuine inability to comply with a pretrial production order raises due
  process issues" under the federal Constitution.  Id. at 519-20, 394 A.2d  at
  1135.  While Rule 37's specific provisions are inapplicable in the context
  of a hearing before the Board, John stands for the principle that in the
  interest of avoiding due process violations, dismissal is inappropriate
  absent bad faith.  This principle is just as applicable to administrative
  proceedings as it is to civil trials.    

       ¶  12.  The conduct the Board's order describes did not merit
  dismissal of claimant's appeal.  Following the hearing officer's February 2
  order, there is little question claimant should have either turned over the
  documents at issue prior to the February 11 deadline, or else objected to
  the hearing officer's determination of the documents' relevance prior to
  that deadline.  Instead, claimant waited until the hearing officer
  recommended a decision to the Board to challenge the hearing officer's
  resolution of the question of relevance.  Although, as claimant points out,
  neither the hearing officer's February 2 order nor the Board's fair hearing
  rules specify that motions for review of a hearing officer's finding of
  relevance must be made prior to the hearing officer's recommended decision,
  the Board may be correct that the objection was untimely.  Nevertheless,
  claimant committed only a minor transgression by objecting after the
  hearing officer's recommended decision instead of after his initial
  discovery order.
        
       ¶  13.  The Board had ample opportunity to review the hearing
  officer's decision despite the timing of claimant's objection.  After the
  hearing officer issued his recommended decision, claimant objected in
  writing, and the Board heard oral argument regarding the hearing officer's
  discovery order.  According to the order dismissing claimant's appeal,
  during oral argument, claimant "essentially reiterated the same 'relevancy'
  arguments previously submitted and implicitly rejected by the hearing
  officer in his February 2 rulings."  Upon hearing these arguments, the
  Board may well have been justified in finding that the challenged documents
  were relevant and rejecting claimant's objection.  The Board's order,
  however, fails to establish the relevance of the documents requested by
  DCF, or even to list the requested documents.  The order characterizes
  claimant's untimely objection to the hearing officer's order as a choice to
  ignore it, and it relies on this choice to justify dismissing claimant's
  appeal.  The Board is statutorily required to "issue written findings of
  fact" or adopt the hearing officer's written findings only after a hearing
  on the merits of an appeal.  3 V.S.A. § 3091(c).  Here, however, prior to
  dismissing claimant's appeal, the Board should have made written findings
  establishing either the relevance of the challenged documents or claimant's
  bad faith and willful disregard of the hearing officer's order.  Without
  such findings, the Board's order gives the appearance that the Board
  dismissed claimant's appeal solely on the basis of his untimely objection
  to the hearing officer's discovery order.  This was not a sufficient reason
  to deny claimant a fair hearing on the merits of the termination of his
  benefits.  See John, 136 Vt. at 519, 394 A.2d  at 1135 ("The imposition of
  the dismissal sanction cannot be imposed merely as punishment for failure
  to comply with the court's order.").  

       ¶  14.  If claimant had objected prior to the hearing officer's
  February 11 deadline, the Board would have heard his objection and made a
  decision regarding relevance.  If claimant then continued to withhold the
  documents,  the Board might then have been justified in dismissing the
  appeal.  Even in that instance, dismissal would be only one of several
  available sanctions, see V.R.C.P. 37(b)(2)(A)-(D) (listing potential
  sanctions, including adverse inference regarding the subject matter of the
  discovery order, refusal to allow "designated claims or defenses," striking
  out of specific pleadings, and contempt), and depending on the nature of
  claimant's continued refusal, a "less drastic sanction" may have been more
  appropriate.  John, 136 Vt. at 520, 394 A.2d  at 1135.  The only difference
  between that scenario and the facts of this case is that claimant arguably
  filed his objection late.  If the Board saw claimant's untimely objection,
  or some other conduct, as evidence of bad faith and willful disregard, it
  should have expressed that view in its order, and if it insisted on
  dismissal as a sanction for that bad faith, it should have explained why a
  lesser sanction was inappropriate.  See Manosh, 2004 VT 122, ¶ 10 (taking
  into account whether the court considered discovery sanctions other than
  dismissal or default judgment).  It was an abuse of discretion for the
  Board to dismiss claimant's appeal without establishing the relevance of
  the challenged documents or explaining its choice of sanction.  We must
  therefore reverse the dismissal and remand claimant's appeal to the Board
  for further proceedings.

       ¶  15.  Our dissenting colleagues disagree that additional findings
  were necessary prior to dismissal of claimant's appeal, relying primarily
  on two assertions: (1) that John is inapplicable because the Board's
  dismissal was without prejudice; and (2) that the Board did not need to
  make additional findings under John because the key factual issues are
  undisputed.  There is little significance to the distinction between a
  dismissal without prejudice and a dismissal with prejudice under these
  circumstances.  The effect of the Board's dismissal was to terminate
  payment of claimant's benefits pending appeal, putting him at some risk of
  eviction from his nursing facility. Moreover, if claimant were somehow
  unable to produce the documents in question, the dismissal would be
  indistinguishable from a dismissal with prejudice.  Whatever the actual
  consequences, the potential consequences for claimant were severe enough to
  merit requiring the Board to make findings of bad faith or willful
  disregard.

       ¶  16.  We acknowledge that claimant's conduct would likely have
  supported such findings.  The history of claimant's appeal gives the
  impression that claimant was uncooperative and confrontational in every
  aspect of the process, and his failure to timely respond to the hearing
  officer's determination that the requested documents were relevant is only
  one example of his intransigence.  It also seems likely that a sanction
  short of dismissal may have been insufficient.  This is immaterial,
  however, because the Board failed to include findings to this effect in its
  order.  Any conclusions distinguishing claimant's conduct from ordinary,
  good faith pursuit of an objection-albeit an untimely objection-are absent,
  and can be found only by reviewing the broader record on appeal.  
        
       ¶  17.  The purpose of the findings required by John is to protect
  against arbitrary dismissals that may violate principles of due process. 
  Such requirements can always be characterized as time-consuming and
  burdensome, especially when the litigant alleging a procedural violation
  does not seem particularly deserving of protection.  The John rule strikes
  a balance between efficiency and procedural fairness by allowing
  dismissals, but requiring them to be supported by findings of bad faith or
  willful disregard.  The rule does not contain an exception covering
  "self-evident" bad faith or willful disregard, and we will not create one
  here.       

       ¶  18.  As a final matter, claimant contends the Board erred by
  failing to rule on his motion to dismiss DCF's termination of his benefits. 
  The Board's fair hearing rules state in relevant part: "Motions to dismiss
  . . . may be submitted for the board's consideration prior to the time the
  case in chief is submitted.  The board shall dispose of outstanding motions
  before proceeding to rule on the merits."  Fair Hearing Rule 9.  Claimant's
  "motion to dismiss" challenged DCF's basis for terminating his benefits as
  a matter of law.  The only disposition made with respect to this motion was
  a single line in the hearing officer's February 2 order stating that
  claimant's motion was denied.  While the fair hearing rules allow only the
  Board, and not its hearing officers, to consider motions to dismiss,
  claimant's motion was not a conventional motion to dismiss.  Instead, it
  essentially asked for summary reversal of DCF's initial determination.  The
  Board was within its discretion to ignore claimant's motion and consider
  his substantive legal arguments along with the merits of the appeal.

       Reversed and remanded to the Human Services Board for further
  proceedings consistent with the views expressed herein.

------------------------------------------------------------------------------
                                 Dissenting


       ¶  19.  BURGESS, J., concurring in part, dissenting in part.  After
  claimant's wilful and unjustified refusal to produce discovery as ordered,
  it was no abuse of discretion for the Board to dismiss his appeal without
  prejudice, allowing claimant to proceed on the condition that he comply
  with discovery.  Accordingly, I  respectfully dissent from the remand and
  the majority's reasons for it.  As the majority concludes, ante, ¶ 9, the
  Board was authorized to compel discovery of relevant evidence through its
  hearing officer, and had the incidental power necessary to enforce its
  authority.  Claimant did not contest the discovery order, but ignored it
  without any offered or apparent excuse.  The Board responded appropriately
  by imposing the relatively mild sanction of dismissal with leave to refile
  if claimant produced the information sought.

       ¶  20.  That claimant disagreed with the ordered discovery of certain
  financial information is undisputed.  Claimant complained to the Department
  in October 2004 that, while willing to disclose some of the information
  requested, he would not produce documentation about the value of his
  daughter's home put up as her mortgage collateral for the borrowed trust
  fund, because he deemed it irrelevant.  On October 25, 2004, claimant moved
  in superior court to quash the State's subpoena for the information, but
  his motion was denied upon the court's finding that the information sought
  appeared discoverable and relevant.  Claimant's similar objection was
  rejected by the Board's hearing officer when the February 2, 2005,
  discovery order was issued requiring claimant to disclose the information
  to the Department by February 11, three weeks in advance of the hearing set
  for March 4. 
             
       ¶  21.  Having failed to persuade the superior court and the hearing
  officer that the information was irrelevant, claimant then unilaterally
  elected not to comply with the discovery order.  This is not disputed. 
  Claimant made no motion for Board review of the order as provided by the
  Board's Fair Hearing Rule 11.  See ante, ¶ 11.  The due date passed without
  disclosure and ten days later, on February 22, the Department filed a
  "Statement" with the Board that claimant failed to disclose the material as
  directed.  Claimant did not dispute this either, or offer any response at
  all to the Board before the scheduled hearing date.  Instead, in a letter
  dated February 28, four days before the scheduled hearing, claimant moved
  to disqualify the hearing officer, not on any grounds of bias or conflict
  of interest, but merely because claimant named the hearing officer as a
  defendant in an Amended Complaint and Motion for Temporary Restraining
  Order against enforcement of the discovery order, filed by claimant in
  federal court three weeks earlier.  This motion was baseless on its face.
  (FN3)   Claimant's request for the temporary restraining order, his third
  challenge to the requested discovery, was denied by the federal court. 
  Nevertheless, claimant continued in his refusal to comply with the
  discovery order.
       
       ¶  22.  On March 2, 2005, the Board cancelled the merits hearing, and
  on March 10, the hearing officer submitted a recommendation that claimant's
  appeal be dismissed for failure to comply with discovery.  This did prompt
  a response from claimant, but not to the issue of his discovery
  noncompliance.  Claimant protested that he had disclosed some information
  earlier in October, and that some of the other information originally
  withheld was later supplied pursuant to the earlier subpoena; all beside
  the point of the discovery order to produce information that had not yet
  been disclosed.  As to the remaining undisclosed information about prior
  encumbrances on the daughter's realty used as security for the mortgage
  loan of the trust money, claimant offered, apparently for the first time,
  that all such encumbrances were a matter of public record and available at
  the local town offices; again beside the point that claimant was ordered to
  produce the material to opposing counsel three weeks before the hearing. 
  The Board answered this recalcitrance with the simple expedient of
  dismissing claimant's appeal, but without prejudice, until such time as he
  chose to comply with his discovery obligation. 
        
       ¶  23.  The majority mistakenly balks at the Board's dismissal
  because of the Board's omission to make "findings of . . . bad faith or
  deliberate and willful disregard for the court's orders, and . . . that the
  party seeking the sanction has been prejudiced thereby," see ante, ¶ 11
  (quotations omitted), as necessary to invoke the "ultimate sanction" in
  response to analogous discovery violations in civil litigation; all as
  prescribed in John v. Medical Center Hospital of Vermont, Inc.,136 Vt. 517,
  519, 394 A.2d 1134, 1135 (1978); Manosh v. First Mountain Vermont, L.P.,
  2004 VT 122, ¶ 10, 177 Vt. 616, 869 A.2d 79 (mem.); and C.C. Miller Corp.
  v. Ag Asset, Inc., 151 Vt. 604, 606, 563 A.2d 626, 627 (1989).  In each of
  those cases, we reversed the imposition of an "ultimate" sanction
  (dismissal with prejudice in John, and default judgments in Manosh and C.C.
  Miller Corp.) and remanded for such findings necessary to justify such a
  punitive final judgment against the noncompliant party.  In each of those
  cases we also cautioned that, absent the prescribed findings, "less
  drastic" sanctions should be used.  John, 136 Vt. at 520, 394 A.2d  at 1135;
  Manosh, 2004 VT 122 ¶ 10; and C.C. Miller Corp., 151 Vt. at 607, 563 A.2d 
  at 627. 

       ¶  24.  The rule of these cases, then, is readily distinguishable
  from and inapposite to the Board's ruling in the instant case.  The Board's
  dismissal here, without prejudice, imposed no "ultimate sanction."  In
  stark contrast to the final judgments entered against the noncompliant
  parties in John, Manosh, and C.C. Miller Corp., the Board's dismissal order
  left claimant free to renew his appeal if he complied with the discovery
  order.  The Board's dismissal without prejudice was the "less drastic
  sanction" prescribed in John, Manosh, and C.C. Miller Corp., designed for
  no other evident purpose than to insure compliance with the discovery order
  as a precondition to claimant choosing to pursue his appeal. 

       ¶  25.  Although the majority is dissatisfied with the Board's lack
  of findings to establish claimant's bad faith or willful disregard of the
  discovery order, ante, ¶¶ 11-14, it is undisputed that his
  noncompliance with the order was willful.  Claimant never suggested that
  production was beyond his means.  In his written response to the hearing
  officer's dismissal recommendation, claimant acknowledged the order and
  identified the documents required, but not produced.  In his brief before
  this Court, claimant concedes awareness of the order and argues, without
  authority, that his unsuccessful effort to enjoin the order was somehow a
  substitute for filing an objection with the Board.  Claimant's disdain for
  the order did not justify its violation.  It is beyond cavil that
  claimant's noncompliance was deliberate and unexcused.  To the extent any
  finding of bad faith is necessary to warrant the Board's less than
  "ultimate sanction," which required only that claimant abide by an
  unchallenged discovery order before proceeding with his appeal, claimant's
  bad faith is self-evident from his admitted refusal to follow the order,
  absent injunction, justification, or even a timely objection; all frosted
  by his patently unfounded recusal motion.
        
       ¶  26.  The majority also faults the Board for not fully explaining
  why the undisclosed information was relevant, ante, ¶ 13, but such a
  finding was unnecessary to the Board's order of dismissal without
  prejudice. (FN4)  Claimant offered no challenge to the discovery order
  until the hearing officer's dismissal recommendation.  Having declined to
  make any timely objection to the Board before discovery was due, claimant's
  relevancy argument did not have to be resolved by the Board for discovery
  purposes.         

       ¶  27.  In any event, the relevance of prior encumbrances upon the
  daughter's collateral was manifest.  As noted by the Board, termination of
  claimant's benefits was premised on the Department's contention that he
  transferred $37,000 in resources for less than fair market value.  As
  recited by the majority, this transfer involved claimant moving his assets
  into a trust fund which the daughter then borrowed, in return for a
  mortgage secured by her home.  It is commonly understood that encumbrances
  on realty affect equity and are thus obviously relevant, without the need
  for particular findings, to the issue of fair mortgage value of the home
  exchanged by the daughter for the trust's funds. 

       ¶  28.  The majority accurately observes that the Board had ample
  opportunity to address claimant's arguments after the discovery date and
  after the hearing date, ante, ¶ 13, but there will always be unlimited
  opportunities to entertain such belated challenges if parties can delay
  trial by ignoring discovery deadlines, filing unfounded recusal motions and
  merely seeking, but not obtaining, injunctive relief from other forums. 
  The Board, however, like any trial court, had a docket to administer
  according to its rules that claimant chose to ignore, resulting in this
  typically vexing discovery dispute that wastes time and unnecessarily
  distracts from the actual adjudication of cases. While the majority is
  generous to tolerate claimant's noncompliance, nothing in the record
  appears to make his flouting of the discovery order any more precious than
  the Board's interest in proceeding to merits.  The Board's dismissal order,
  permitting claimant to pursue his appeal should he comply with discovery,
  was quite proportionate to the problem and worked no ultimate prejudice to
  claimant's interests in his appeal. 

       ¶  29.  I would, however, reverse the part of the Board's dismissal
  order foreclosing continued benefits after claimant refiles his appeal
  since that part of the order appears primarily punitive and unnecessary to
  effectuate progress on the case.

       ¶  30.  I am authorized to state that Judge Cook joins in this
  dissent.  


                                         BY THE COURT:
  Dissenting:


  __________________________________     ______________________________________
  Brian L. Burgess, Associate Justice    Paul L. Reiber, Chief Justice

  __________________________________     ______________________________________
  Alan W. Cook, District Judge (Ret.),   John A. Dooley, Associate Justice
  Specially Assigned
                                         ______________________________________
                                         Denise R. Johnson, Associate Justice
    
     


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                                  Footnotes


FN1.  Claimant filed an unsuccessful action in superior court to quash the
  subpoena of his bank records; that action is not at issue in this appeal. 
  Claimant also filed an action in federal district court challenging DCF's
  life expectancy calculation.  In this Court, claimant filed a motion to
  supplement the record on appeal with a memorandum from DCF in which it
  alters its position regarding claimant's life expectancy.  This motion is
  denied.  As the appeal can be decided on the record before us, we need not
  consider supplemental evidence.  State v. Koveos, 169 Vt. 62, 72 n.4, 732 A.2d 722, 729 n.4 (1999).

FN2.  A new hearing officer, Daniel Jerman, was assigned to the appeal during
  the course of the proceedings, replacing the original hearing officer,
  Shelley Simpson Jerman.

FN3.  n support of his request, claimant cited Fair Hearing Rule 3, which
  requires the hearing officer to be "not involved in any way with the action
  in question," but the "action in question" before the Board was the
  Department's termination of benefits.  Claimant alleged no involvement in
  that action by the hearing officer.  Nowhere in the motion, or in its
  referenced federal court complaint, is there any claim of bias or prejudice
  necessary to overcome a judge's presumed impartiality.  Ball v. Mesur
  Corp., 161 Vt. 35, 39-40, 633 A.2d 705, 710 (1993).  It is settled that
  litigants cannot recuse judges just by naming them in lawsuits.  In re
  Hunter, 167 Vt. 219, 223, 704 A.2d 1154, 1156 (1997).  Otherwise, parties
  would be free to employ collateral litigation to manipulate the courts and
  judge shop, In re Illuzzi, 164 Vt. 623, 624, 670 A.2d 1264, 1265 (1995)
  (mem.), just as claimant attempted here.

FN4.  The majority's concern seems to pass by the Board's explanation that
  claimant's irrelevancy argument was rejected for stated reasons
  specifically emphasizing "the limited information" initially provided by
  claimant about the transfer of resources to his daughter and the resulting
  rights and obligation of the Department to obtain proof of financial
  eligibility under sections  M102, M126, and M131 of the Medicaid
  regulations.  Medicaid Manual §§ M102, M126, & M131, 5 Code of Vermont
  Rules 13 170 008-8.1, -30, & -34.  These rules require claimant to "give
  necessary facts about their (or their family's) situation for the
  eligibility tests, Medicaid Manual § M102, 5 Code of Vermont Rules 13 170
  008-8.1, and to supply "[v]erification . . . [of] [a]ll resources,"
  Medicaid Manual § M126, 5 Code of Vermont Rules 13 170 008-30.  The rules
  also direct the Department to investigate and review claimant's continuing
  eligibility after reporting a "change in his situation that is related to
  the Medicaid eligibility tests., Medicaid Manual § M131, 5 Code of Vermont
  Rules 13 170 008-34, such as a reported transfer of assets to a trust fund
  borrowed by a daughter in return for a low interest, low payment mortgage
  secured by real estate equity of undisclosed value.