Judge Corrects "judge's" Student Loan Decision

ALJ's Errors Win Lawyer a New Hearing on Student Loan Repayment
The New York Law Journal by Joel Stashenko  -  April 25, 2012

A lawyer has won her bid for a new student loan repayment hearing after a state judge determined that her initial proceeding was rife with errors made by an administrative law judge.  Manhattan Supreme Court Justice Alice Schlesinger found that the ALJ appeared to lose control of the 2009 hearing and made the "shocking" pronouncement that the attorney, Marisa Rieue, owed $108,376, including principal and interest, in unpaid loans in the absence of concrete evidence to support that conclusion.  "A review of the hearing transcript reveals that it would be a waste of judicial resources and improper to transfer this case to the Appellate Division based on substantial evidence because the record is barely comprehensible and defective in countless ways," Schlesinger wrote in Rieue v. New York State Higher Educ. Servs. Corp., 107745/09.  She added, "While the rules of evidence are not strictly applied in administrative proceedings, the hearing must be conducted in an orderly fashion so that it is fundamentally fair, and all exhibits offered into evidence must be appropriately authenticated and explained by a proper party, with evidentiary foundations established where appropriate."  Rieue, who once worked in the litigation bureau of the state Department of Law, has an unpublished phone number and could not be reached for comment.  Schlesinger found that the administrative law judge, Richard Di Stefano, allowed the counsel for the Higher Education Service Corp. (HESC) to introduce a "pile of documents" and then let the counsel attest to the significance of the materials without corroborating evidence or testimony about their veracity.  "Counsel for HESC did not call a single witness to explain the agency's practices and procedures with respect to the purchasing and collection of student loans," Justice Schlesinger wrote. "Records were not marked individually as exhibits or explained in a detailed fashion. Instead, counsel referred to the exhibits as this document and that without giving a description for the record that might permit reasonable cross-examination by the petitioner or judicial review by this Court or the Appellate Division."  At the heart of the contention by Rieue is that she made a $65,000 payment to the Hemar Insurance Corporation of America in 2003 in satisfaction of the student loan that she initially secured from the federal lender Sallie Mae.  According to Justice Schlesinger's ruling, the attorney for Higher Education Service acknowledged the apparent authenticity of the $65,000 check written by Rieue at the 2009 hearing. But the agency argued that it never authorized Hemar to act on its behalf to collect the loan before Higher Education Service purchased the obligation in 1996 and that it has no internal verification that Rieue, in fact, had paid the money, the judge ruled.  Schlesinger said it appeared that Rieue had produced "numerous" documents indicating that she had paid her student loan obligation in "full satisfaction…some years ago."  The judge said the record indicates a confused proceeding in which neither Rieue, who represented herself, nor Higher Education Service were able to coherently argue their cases.  "The transcripts read as a back and forth colloquy, with one person repeatedly interrupting the other with an ever increasing tone of frustration," Justice Schlesinger wrote. "The ALJ made only limited, and highly unsuccessful, efforts to create order or develop a clear record for review."  The hearing concluded, Schlesinger noted, with the agency attorney saying he had not known about the $65,000 payment or the canceled check until he got to the proceeding before Di Stefano.  "This is a whole other spin on the entire situation that I've only just learned about," the lawyer said, according to the ruling. He promised to look into the situation.  But Schlesinger said Di Stefano made the "shocking statement" a month after the May 14, 2009, hearing in a ruling that contained what the judge said was a "total disconnect" from what she read in the record.  Higher Education Service "has established for the record" that Rieue "owes $108,376.39 with a fixed interest rate of 9.00" percent, Di Stefano wrote. "Appellant has never contended that her indebtedness is incorrect."  Schlesinger said that conclusion flew in the face of what was said at the hearing.  "Contrary to this conclusion, Ms. Rieue had vigorously disputed the claimed indebtedness at the hearing, insisting that she had paid the amount in full and producing a copy of a cancelled check to confirm her assertion," the judge wrote. "HESC's counsel at the hearing promised to investigate the payment and the ALJ agreed that such action was appropriate. Yet the ALJ made no mention at all of this discussion in his decision."  Schlesinger noted that Rieue has secured pro bono counsel and said a new hearing should proceed "in accordance with proper procedures."  Di Stefano, of Di Stefano & Di Stefano in Albany, did not return a call for comment. HESC did not return a call.  Joel Stashenko can be contacted at jstashenko@alm.com.