Attorney Phil Talmadge and Patricia Peterson, judge at the Office of the Insurance Commissioner Credit: Photo: John Stang
State agency executives frequently overrule administrative-law officers on questions about agency policies, creating questions about independence and fairness, says Phillip Talmadge, a former Washington Supreme Court justice.
Talmadge is the attorney for suspended administrative-law judge Patricia Petersen, and sat with her Monday as both testified to the Washington Senate Law & Justice Committee on whether the independence of hearing officers should be improved.
The committee held a work session Monday to ponder questions about the authority of hearing officers and administrative-law judges, who handle numerous appeals by individuals, groups and companies of decisions by state agencies. The committee discusion grew out of a high-profile clash between Petersen and her bosses at the Office of Insurance Commissioner.
A few weeks ago, Petersen complained that Insurance Commissioner Chief Deputy Jim Odiorne improperly pressured her on a high-profile case involving Seattle Children’s Hospital. The health care provider wants the Office of the Insurance Commissioner to force Premera Blue Cross and BridgeSpan Health to include Children’s in their provider networks, which the office has approved without Children's. Insurance Commissioner Mike Kreidler suspended Petersen for allegedly having improper contact on the issue with one of the attorneys in that case. An independent investigation into the Peterson matter is expected to be done by the end of June. She has been an administrative judge for 28 years.
Talmadge told the committee that the Insurance Commissioner's office tried to make Petersen sign a gag order regarding her paid suspension and the Children's Hospital case. She refused. But she and Talmadge decided that she would not discuss the specifics of her case with the Senate committee as a precaution, and would talk only about overarching issues about future legislation on the topic.
Talmadge said many hearing officers have their rulings overturned legally by the executives in charge of state agencies because of policy issues. After Monday's testimony, Talmadge said this practice is widespread. "It is not unique. It more typical than people suspect," he said.
Talmadge pushed the Senate committee for legislation to make all hearing officers independent of the agencies that they handle. Currently, the independent Office of Administrative Hearings handles many matters, but state agencies use their own hearing officers on many other disputes. The head officer of an agency — and those officially representing him — can overrule a hearing officer's decision.
"If someone can influence an independent hearing officer behind the scenes, it is not due process. It's like a decision of the Washington Supreme Court being subject to the review of the chief of staff of the governor," Talmadge contended.
Petersen said that if an agency official can legally pressure an administrative-law judge, "then a central pillar of democratic society is corroded."
"There's a problem there — not just with the OIC," said Sen. Mike Padden, R-Spokane Valley and chairman of the Senate Law & Justice Committee, referring to the Office of the Commissioner. Padden is considering introducing legislation to improve the independence of all administrative-law judges and hearing officers. A bill cannot be introduced until December for the 2015 legislative session.
A few experts testified on the haziness of the boundaries between hearing officers and their parent agencies. The hodgepodge of situations facing hearing officers can make questions of propriety and pressure murky, the experts said.
Padden asked AnnaLisa Gellermann, the OIC's deputy commissioner for legal affairs: "Is there a line where you cannot go over?"
Gellermann replied: "There is. But unfortunately, that is a gray area."
Sen. Adam Kline, D-Seattle and ranking Democrat on the committee, said that the independence of hearing officers is a legitimate issue, but he alleged that the Petersen matter is being used for political reasons to try to embarrass Kreidler. Kreidler is a Democrat who is unpopular with much of the health insurance industry, but the public has elected him four times to his post.
Last legislative session, Republican senators unsuccessfully tried to replace the elected insurances commissioner's post with a board to be appointed by the four legislative caucuses. That bill was drastically changed to keep the insurance commissioner, but to also require him to run new health insurance regulations by a pair of legislative committees.
“This is being used as a cudgel against Mike Kreidler," Kline said.