On eve of legislative hearing, insurance commissioner Kreidler defends agency actions to suspend, investigate his hearings judge

Staff writerJune 12, 2014 

State Insurance Commissioner Mike Kreidler

FILE PHOTO

Washington insurance commissioner Mike Kreidler launched an investigation last month into actions by the administrative judge who handles legal challenges to decisions by his office. At issue is whether she acted improperly by contacting one party in an ongoing health-insurance dispute in mid-May.

But now the way Kreidler’s agency is handling its concerns about the judge, Patricia Petersen, is causing a backlash. A legislative committee is looking into ways it might take away Democrat Kreidler’s power to supervise his in-house hearings judges.

Republican Sen. Mike Padden of Spokane Valley plans to air a couple of ideas during a Senate Law and Justice Committee work session Monday that he thinks can protect the independence of hearings judges. Petersen contends Kreidler’s top deputy, Jim Odiorne, had tried to influence her decisions by tying her employment evaluation to how well her decisions lined up with agency goals.

One idea Padden is mulling would send cases to hearings judges at the independent Office of Administrative Hearings, and another would let the judge’s decision be final. Yet another would make it a misdemeanor crime for an agency supervisor to try to influence a hearings judge’s rulings.

"The bills we will be discussing at the work session are by no means a finished product,” Padden said in a statement this week, adding: “but it is important that we begin taking steps to maintain the independence of our administrative judges, and restore the public’s confidence in the resolution process."

Kreidler sees no reason at this point to change the process. In an interview this week, he defended the Office of Insurance Commissioner and said the decision to suspend and investigate the judge came only after he learned that she likely had improper contact with a party in a contentious case before her that dealt with Seattle Children’s Hospital. He said the investigation also will look at actions his agency took and that it was not motivated by a whistle blower complaint Petersen filed with the state Auditor’s Office on May 13 (which the auditor later rejected).

He said an independent investigator he hired is looking into Petersen’s actions, as well as his own agency’s.

At issue in the OIC’s internal investigation is Petersen’s apparent contact with Michael Madden, one of the team of lawyers in the Seattle Children’s Hospital case that deals with the adequacy of medical networks that OIC approved as part of implementing the Affordable Care Act. She sent Madden a copy of the whistle blower complaint.

Judicial rules forbid contacting just one party in an ongoing case, and in a May 27 letter to Kreidler, Petersen admitted she did just that.

"It was a mistake,” Seattle lawyer Phil Talmadge said this week on Petersen’s behalf. “She sent that to Mike (Madden) not realizing he was one of the many lawyers in the Children’s case. ... She was flustered at the time that the deputy commissioner was talking about a job action against her, removing her from cases."

He said all of Petersen’s questioned actions came after Odiorne issued a mid-year job evaluation that found fault with her decisions.

The evaluation said, “I find that your orders do not consistently evidence an understanding of [the] commissioner’s policy and program goals.” It went on to say that in one case involving an insurance license “you have allowed the felon to get or maintain a producer license, potentially exposing consumers to personal or financial danger. Exposing consumers to increased potential for harm is contrary to Commissioner’s policy and program goals.’’

Petersen is expected to attend the 1 p.m. work session with Talmadge, who is a former Supreme Court justice and state senator. Talmadge said Petersen was invited by the committee.

In his interview, Kreidler said the law lets him decide cases personally, but he has chosen to delegate them to a hearings judge. He also said that parties appealing agency rulings or rules have a right to ask that a judge from the Office of Administrative hearings take the case, if they don’t trust his judge’s rulings.

Kreidler, a fourth-term commissioner who also served in the Legislature and Congress, is a longtime advocate of health reform that covers more people. He said the situation with hearings judges has changed since the Affordable Care Act took effect. Before that there were mostly routine cases dealing with license suspensions or changes in insurance company ownership, but now there are more complex issues.

"What really changed was the Affordable Care Act; that brought in the nuances of federal law and state law,” he said. "At that point it started to become clear to me that we were in a position that we needed to make sure at least that the hearings officer was aware of what the agency had an interest in doing."

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