from the District Court of Laramie County The Honorable
Thomas T.C. Campbell, Judge.
Representing Appellant: Mitchell E. Osborn, Attorney at Law,
Representing Appellee: Peter K. Michael, Wyoming Attorney
General; Daniel E. White, Deputy Attorney General; Elizabeth
C. Gagen, Senior Assistant Attorney General; Van E. Snow,
Attorney General. Argument by Ms. Gagen.
DAVIS, C.J., and BURKE [†] , FOX, KAUTZ, and
This appeal involves Lucy Lietz's nearly nine year effort
to challenge her termination by the Wyoming Department of
Family Services (DFS). DFS dismissed Ms. Lietz from her
position as a fraud investigator when it discovered that she
signed daycare logs for her grandchildren that resulted in
overpayment of DFS child care benefits to daycare providers
in the amount of $196.95. Ms. Lietz appealed, and the Office
of Administrative Hearings (OAH) reversed. DFS appealed, and
the district court found that the OAH erred as a matter of
law because it failed to apply the Life Care Centers of
America, Inc. v. Dexter, 2003 WY 38, 65 P.3d 385 (Wyo.
2003), good faith standard in evaluating whether DFS had
cause to terminate Ms. Lietz's employment. On remand, the
OAH again found in favor of Ms. Lietz. DFS appealed, and the
district court again reversed, finding that the OAH had
improperly substituted its judgment for that of DFS. Ms.
Lietz timely appeals from the district court's
determination. We reverse the district court and reinstate
the OAH decision.
Both parties present several issues, which we consolidate
into the following issue and sub-issues:
Was the OAH's determination that DFS lacked good cause
for dismissing Ms. Lietz supported by substantial evidence
and in accordance with the law?
A. Does the good faith standard require notice and an
opportunity to be heard beyond that which is contained in the
B. What is the role of the fact-finder in evaluating cause
under the good faith standard?
C. Was the OAH's determination that DFS lacked good cause
for dismissing Ms. Lietz supported by substantial evidence?
Lucy Lietz, a fraud investigator, worked for DFS for just
short of 25 years when it terminated her employment. The
series of events that led to her termination began in May of
2010, when Ms. Lietz learned that her pregnant daughter was
drunk and was driving with her three children from Fort
Collins, Colorado, toward Casper. Ms. Lietz called in a REDDI
report, and knowing that her daughter would be arrested,
headed south on I-25 from Casper so that she could meet up
with law enforcement and take her grandchildren if necessary.
As she anticipated, her daughter was arrested, and Ms. Lietz
began caring for her three grandchildren that night. The
children were 9 years, 6 years, and 18 months old at the
Ms. Lietz immediately sought daycare for the children.
Because daycare for a child under the age of two is
expensive, she applied for daycare benefits through DFS. In
addition, because one of the children had a hereditary
illness that required daily medication, Ms. Lietz applied for
Medicaid benefits. Ms. Lietz was also eligible for benefits
under the POWER program, which pays cash directly to family
members who care for children who would otherwise go to
foster care. Ms. Lietz testified that she did not apply for
POWER benefits because she did not need the money to pay for
the children's daily needs. That program would have paid
Ms. Lietz approximately $550 per month during the time she
had the children, for a total of over $3, 000.
In late 2010, DFS received a "complaint" asking how
Megan Juarez's (Ms. Lietz's daughter) children could
be receiving public assistance when she did not have the
children with her. Michelle Rossetti, Ms. Lietz's
supervisor, was assigned to investigate. Ms. Rossetti set out
to determine whether the children (and Ms. Lietz) were
eligible for benefits. Ms. Lietz was eligible for benefits,
including financial assistance for her grandchildren's
daycare during the time she was working or engaged in an
otherwise approved activity.
However, during her investigation, Ms. Rossetti discovered
that "there were days in which Ms. Lietz was not in an
approved activity and yet DFS had paid for daycare." On
eight days between June and October, Ms. Lietz was not
engaged in an approved activity (she had taken personal, sick
or vacation leave on those days rather than working) and
therefore she was not eligible for DFS assistance.
Nevertheless, she signed daycare time logs approving DFS
payment for daycare on those days, which resulted in an
overpayment of benefits actually due by DFS to the daycare
providers of $196.95. Ms. Rossetti concluded her
investigation without speaking with Ms. Lietz. Based upon her
findings, on January 4, 2011, DFS placed Ms. Lietz on
administrative leave, and on January 21, 2011, notified Ms.
Lietz of its intent to dismiss her from her employment
because she engaged in "an act of intent to fraud the
Child Care Program."
Ms. Lietz immediately repaid the $196.95 overpayment and
responded to the DFS intent-to-dismiss letter. In her
response, Ms. Lietz admitted that she made a mistake when she
signed the daycare logs without reviewing them, she explained
that she signed the logs without thinking because she was
under a lot of pressure caring for all three children and
with her daughter in jail, but "vehemently
disagree[d]" with DFS's allegations of fraud and
theft. On February 10, 2011, DFS dismissed Ms. Lietz.
Ms. Lietz requested a hearing before the OAH, and the OAH
hearing examiner reversed the dismissal. The State appealed
that decision, and the district court reversed, directing the
OAH to apply the good faith standard set forth in Life
Care Centers of America, Inc. v. Dexter, 2003 WY 38, 65
P.3d 385 (Wyo. 2003). On remand, the OAH again found in favor
of Ms. Lietz. The State appealed, and the district court
again reversed, finding that the OAH erred as a matter of law
when it concluded that DFS failed to follow procedural
requirements and because it substituted its own discretion
for that of DFS. The district court also found that DFS met
the Life Care good faith standard. Ms. Lietz timely
The Wyoming Administrative Procedure Act establishes the
scope of this Court's review:
(c) To the extent necessary to make a decision and when
presented, the reviewing court shall decide all relevant
questions of law, interpret constitutional and statutory
provisions, and determine the meaning or applicability of the
terms of an agency action. In making the following
determinations, the court shall review the whole record or
those parts of it cited by a party and due account shall be
taken of the rule of prejudicial error. The reviewing court
(i) Compel agency action unlawfully withheld or unreasonably
(ii) Hold unlawful and set aside agency action, findings and
conclusions found to be:
(A) Arbitrary, capricious, an abuse of discretion or
otherwise not in accordance with law;
(B) Contrary to constitutional right, power, privilege or
(C) In excess of statutory jurisdiction, authority or
limitations or lacking statutory right;
(D) Without observance of procedure required by law; or
(E) Unsupported by substantial evidence in a case reviewed on
the record of an agency hearing provided by statute.
Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2017).
When we consider an appeal from a district court's review
of an administrative agency's decision, we are not bound
by the conclusions of the district court. Reynolds v.
West Park Hosp. Dist., 2010 WY 69, ¶ 6, 231 P.3d
1275, 1277 (Wyo. 2010); Guier v. Teton Cty. Hosp.
Dist., 2011 WY 31, ¶¶ 12-13, 248 P.3d 623,
629-30 (Wyo. 2011). We consider the case "as if it came
to us directly from the agency." State ex rel.
Wyoming Workers' Comp. Div. v. Brewbaker, 972 P.2d
962, 964 (Wyo. 1999). We defer to the agency's findings
of fact, and we affirm those findings if they are supported
by substantial evidence. Dale v. S & S Builders,
LLC, 2008 WY 84, ¶ 22, 188 P.3d 554, 561 (Wyo.
2008); Dep't of Revenue & Taxation of State of
Wyo. v. Casper Legion Baseball Club, Inc., 767 P.2d 608
When we review a claim that an agency determination is not
"supported by substantial evidence, we determine if
there is 'such relevant evidence as reasonable minds
would accept as adequate to support a conclusion.'"
Employment Sec. Comm'n of Wyoming v. W. Gas
Processors, Ltd., 786 P.2d 866, 870-71 (Wyo. 1990)
(quoting Southwest Wyoming Rehab. Ctr. v. Emp. Sec.
Comm'n of Wyo., 781 P.2d 918, 921 (Wyo. 1989)).
"Findings of fact are supported by substantial evidence
if, from the evidence preserved in the record, we can discern
a rational premise for those findings." Coggins v.
State ex rel. Dept. of Workforce Serv., Workers' Comp.
Div., 2018 WY 77, ¶ 10, 421 P.3d 555, 559 (Wyo.
2018) (internal citations and quotation marks omitted). We
"review an agency's conclusions of law de
novo, and '[w]e will affirm an agency's legal
conclusion only if it is in accordance with the
law.'" Guier, ¶ 13, 248 P.3d at 630
(quoting DC Prod. Serv. v. Wyo. Dep't of
Employment, 2002 WY 142, ¶ 7, 54 P.3d 768, 771
Was the OAH's determination that DFS lacked good
cause for dismissing Ms. Lietz supported by substantial
evidence and in accordance with the law?
We begin our analysis with the employment contract. In
Wyoming, employment is presumed to be at-will. Ormsby v.
Dada Kepner Co. of Wyo., Inc., 997 P.2d 465, 469, 471
(Wyo. 2000) ("Even employment at-will rests upon a
unilateral contract in which the employer offers employment
and the employee accepts by performing the work.").
However, the "at-will presumption may be rebutted by a
showing that the parties entered into an express or implied
agreement which prohibited the employer from discharging the
employee without just cause." Boone v. Frontier
Refining, Inc., 987 P.2d 681, 685 (Wyo. 1999).
In the private employment context, an express or implied
agreement between the employer and employee may provide the
terms of the employment contract. Ormsby, 997 P.2d
at 471 ("we recognize a contract in every employment
situation"). We frequently examine language of employee
handbooks to determine the terms of the employment contract
and whether they provide that an employee may be discharged
only for cause. See, e.g., Ormsby, 997 P.2d at 471;
Brodie v. Gen. Chem. Corp., 934 P.2d 1263, 1266
(Wyo. 1997); Mobil Coal Producing, Inc. v. Parks,
704 P.2d 702, 707 (Wyo. 1985). In the public employment
context, personnel rules often form the terms of the
employment contract. See Abell v. Dewey, 870 P.2d
363, 369-71 (Wyo. 1994). We have also recognized that
specific statutes or departmental personnel manuals may set
forth terms of a public employment contract. See,
e.g., Hoff v. City of Casper-Natrona Cty. Health
Dep't, 2001 WY 97, ¶ 16, 33 P.3d 99, 103 (Wyo.
2001) (health department personnel manual and separate
disclaimer formed employment contract); Seyfang v. Bd. of
Trustees, Washakie Cty. Sch. Dist. No. 1, 563 P.2d 1376,
1381 (Wyo. 1977) (legislature created property interest in
continued employment for tenured teachers).
Here, DFS agrees that the employment contract in this case
consists of the State Personnel Rules. The relevant rules
Section 1. Reasons for Discipline.
(b) An agency head may discipline a permanent employee for
cause including, but not limited to ...