The action taken and discretion exercised by public administrative agencies or bodies that are obliged to investigate or ascertain facts and draw conclusions from them as the foundation for official actions.
As a general rule, only courts of law have the authority to decide controversies that affect individual rights. One major exception to this general rule is the power of an administrative agency to make decisions concerning the rights of parties. An administrative agency is a body of government created by a legislature and charged with supervision and regulation of a particular area of governmental concern. Part of the regulatory power given to an administrative agency is the power of adjudication. Under the Administrative Procedure Act (60 Stat. 237 [5 U.S.C.A. § 551 et seq.]), an agency engages in adjudication when it follows a process for the formulation of an order. With the exception of rule making, any decision by an agency that has a legal effect is a quasi-judicial action.
Complaints against administrative agencies often arise when an agent denies benefits or places restrictions on an individual. For example, a homeowner who seeks to build another structure on her property must obtain approval from a number of administrative agencies. If the local conservation agency refuses to issue a permit for the building of a new structure, the homeowner may appeal this decision in a hearing before the agency's administrative board. The board may hear testimony and examine evidence at the hearing, and then it will decide whether to issue the permit or uphold the agency's refusal.
Quasi-judicial activity is limited to the issues that concern the particular administrative agency. For example, the social security administration may resolve disputes on issues concerning social security contributions and benefits, but it may not decide any other issues, even those related to Social Security benefits such as tax, estate, and probate questions.
An administrative agency must hold a formal hearing only when required by statute. A formal hearing is a complete hearing with the presentation of testimony, evidence, and arguments. An informal hearing usually is a simple meeting and discussion between an agent of the agency and the individual affected by the agency's actions. As a general rule, the scope of a hearing depends on the importance of the right at issue. If the internal revenue service attempts to take away a person's homestead, for example, a full hearing would be required. By contrast, when an agent of the Department of Safety issues a small fine for illegal parking, the agency needs to provide only a brief, one-to-one meeting with a hearing officer regarding the issuance of the fine.
Quasi-judicial action by an administrative agency may be appealed to a court of law. With a few exceptions, a plaintiff generally must exhaust all remedies available through an agency before appealing the agency's decision in a case. One notable exception is that a person may appeal directly to a court of law and bypass the quasi-judicial activity of an administrative agency if the agency's remedies would be inadequate. For instance, if the creditors of a failed bank are suing the Federal Savings and Loan Insurance Corporation, they need not go through the agency's hearings before filing suit in a court of law because the agency has adverse interests to the creditors (Coit Indep. Joint Venture v. FSLIC, 489 U.S. 561, 109 S. Ct. 1361, 103 L. Ed. 2d 602 ).