STATE OF NORTH CAROLINA



STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF WAKE FILE NO. 07 OSP 1400

________________________________________________________________________

DENNIS E. HRYNKOW, )

)

Petitioner, )

) DECISION

v. )

)

N.C. DEPARTMENT OF INSURANCE, ) Respondent. )

)

Respondent. )

________________________________________________________________________

This contested case was heard before Shannon R. Joseph, Administrative Law Judge, in Raleigh, North Carolina, from 17 December 2007 through 19 December 2007. Petitioner challenges the termination of his employment with Respondent, contending that Respondent lacked just cause to terminate his employment and failed to follow its drug and alcohol policy.

APPEARANCES

FOR PETITIONER: Michael C. Byrne

Attorney for Petitioner

Brent Adams & Associates

2920 Highwoods Blvd., Suite 125

Raleigh, N.C. 27604-1669

FOR RESPONDENT: Daniel S. Johnson

Special Deputy Attorney General

Attorney for Respondent

N.C. Department of Justice

P. O. Box 629

Raleigh, NC 27602-0629

ISSUE

Was Respondent’s termination of Petitioner’s employment supported by just cause and consistent with Respondent’s Policy for an Alcohol and Drug Free Workplace?

EXHIBITS

Respondent’s exhibits 1, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12A, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 31, 32, 34, 35, 37, 38, 39A (illustrative), 39B (illustrative) were admitted into evidence. Petitioner adopted Respondent’s exhibits as Petitioner’s exhibits.

STIPULATIONS

1. This case is the re-filing of case 05 OSP 1576 which was voluntarily dismissed by Petitioner without prejudice.

2. All discovery from case 05 OSP 1576 may be used in this case to the same extent it could have been used in that case.

3. Petitioner was a career State employee before termination of his employment.

4. Petitioner’s employment with Respondent was terminated by letter dated 18 July 2005.

5. Petitioner does not contend that Respondent used improper procedure to terminate Petitioner’s employment, but Petitioner does contend that Respondent lacked just cause to terminate his employment, including a lack of just cause based on violation of Respondent’s drug and alcohol policy.

6. Petitioner exhausted the Department of Insurance grievance process available to him, and the termination of his employment was upheld by the Department of Insurance grievance panel.

7. Petitioner does not seek any relief based on the Americans with Disabilities Act or any relief based on Chapter 168A of the North Carolina General Statutes.

FINDINGS OF FACT

BASED ON careful consideration of the sworn testimony of the witnesses presented at the hearing, the documents and exhibits received and admitted into evidence, and the entire record in this proceeding, the Undersigned makes the following Findings of Fact.

In making these Findings of Fact, the Undersigned has weighed all the evidence and has assessed the credibility of the witnesses by taking into account the appropriate factors for judging credibility, including but not limited to the demeanor of the witness, any interest, bias, or prejudice the witness may have, the opportunity of the witness to see, hear, know or remember the facts or occurrences about which the witness testified, whether the testimony of the witness is reasonable, and whether the testimony is consistent with all other believable evidence in the case.

BASED ON the preponderance of evidence in the whole record, the Undersigned FINDS AS FACT:

1. The parties received notice of hearing by certified mail more than fifteen days prior to the hearing.

I. The Role of the Financial Evaluation Section and Performance of Audits

2. Petitioner worked for the Financial Examinations Section of Respondent’s Financial Evaluation Division. Petitioner was an “Examiner I” for the entirety of his employment with Respondent.

3. The purpose of the Financial Evaluation Division is to monitor the financial condition of insurers and other regulated entities to be sure they are solvent. The Financial Examination Section (“the Section”), where Petitioner was employed, is one unit within the Financial Evaluation Division

4. Insurance companies must file comprehensive financial statements with Respondent on an annual and quarterly basis. The financial statements include a balance sheet, an income statement, and other information.

5. An audit or examination verifies that the information reported by the insurer on the financial statements is accurate and complete. Indeed, the first page of Petitioner’s written job description makes clear the objective of audits: “The Section conducts varying types of examinations ranging from full scope examinations to examinations of very specific issues. The objective of these examinations is to ascertain that the regulated entity fairly presents in all material respects its financial position and results of operations in conformity with Statutory Accounting Principles, so that a determination can be made as to whether the entity maintains an adequate financial position.”

6. An audit is important to avoid the risk of an insurer being in an undiscovered hazardous financial condition. It is important to be sure that assets are not overstated and liabilities are not understated so that insurance consumers are protected.

7. The Section performs on-site audits. Thus, examiners travel to the location of the books and records of the insurance company as part of their work to obtain and review documents, even if the records are outside North Carolina. Travel for examiners includes overnight travel to perform examinations. By North Carolina law, insurers must permit the examiners access to their sites to examine their books. Examiners must have the skill and experience to verify the information that has been supplied by the company or to ask for more information, if necessary.

8. The National Association of Insurance Commissioners (NAIC) supports all insurance regulators across the country. Among other things, the NAIC sets accounting practices and procedures that have become standard for all insurance regulators. The NAIC also has established an accreditation program for regulators so that the work done by any insurance regulator can be relied on by any other regulator. Regulators outside North Carolina rely on North Carolina’s audits of companies incorporated and licensed in North Carolina.

9. The Department of Insurance’s Financial Evaluation Division is accredited by the NAIC, such that insurance regulators in other states will rely on its work instead of conducting their own audit. Likewise, the Department of Insurance relies on the work of other accredited auditors from other state regulators. This level of trust in the work of regulators is possible through NAIC accreditation.

10. The NAIC publishes a manual entitled: “Financial Condition Examiners Handbook.” Respondent follows the standards in the Handbook and provided a copy to Petitioner.

11. Audit teams consist of a minimum of three (3) team members and may have as many as seven (7) to ten (10) members depending on the size of the company and complexity of the financial statement. A team always has a staff examiner (Examiner I), an Examiner in Charge (Examiner II or “EIC”), and a supervising examiner (Examiner III). The EIC and supervising examiner supervise the Examiner I.

12. All audits are not the same. Each audited insurance company has a unique environment. For example, an automobile insurer has different risks than a medical malpractice insurer; the same is true for a life insurance company compared with an auto insurer. Likewise, some, but not all, companies are highly automated.

13. In an audit, auditors must examine what the company does (business operations), as well as looking at the reported financial numbers. The main issue being examined is risk. To determine risk, an auditor must understand the operations of the insurance company.

14. Audits generally consist of examinations of multiple topical areas, referred to as “cycles.” Some audit cycles are more complex than other cycles, such as the “losses and benefits” cycle. That cycle includes evaluation of claims payable or reserves. Reserves are a liability. It is necessary for the insurer to have accurate reserves and the assets to pay claims.

15. In contrast, a simple cycle is a lower risk cycle. Some of these simple cycles would include some components of the “investment” cycle, some components of the “other liabilities” cycle, and some components of the “other assets” cycle. Similarly, the “cash on hand and on deposit” cycle is considered a less complex cycle. Even a new Examiner I, the lowest ranking examiner, should be able to handle that cycle. The “cash” cycle is part of the “investment” cycle. Cash items include cash-on-hand and on deposit. Audit procedures for the cash cycle include verifying that the company in fact has the cash it claims to have. Confirming cash-on-hand with the bank or other financial institution using a standard form is the normal method of verifying balances. This type of confirmation is “third party verification” and is one of the best verification techniques. Third party verification increases the auditor’s confidence in the validity of the entry.

16. Reinsurance can have a significant impact on the finances of an insurer. In particular, reinsurance can have a significant impact on the finances of an insurer. When the insurer pays a claim, it then calls on the reinsurer to pay the insurance company.

17. Before each audit or exam, a time budget is prepared based on considerations specific to that particular audit. The time budget assigns a number of hours for each cycle.

II. Use of Technology to Improve Audit Accuracy and Efficiency

18. Years ago, the Section performed audits using only folders, pens, pencils, and paper. More recently, however, the Section implemented more extensive use of computers. In particular, since 2001, laptops loaded with TeamMate software, along with Microsoft Word, Excel, and Outlook, were furnished to all examiners. TeamMate is a software program that converts into electronic format the audit procedures specified by the NAIC examiner’s handbook.

19. TeamMate’s electronic audit folders track the paper audit folders. In this regard, the TeamMate folder set-up corresponds to the old paper folder set-up: the folders bear the same names and organization except for the change from hard copy to on-screen, electronic copy. These folders, also referred to as cycles, correspond to portions of an audit.

20. Using TeamMate offers has advantages over the old paper audit process. In paper audits, an auditor might have only one paper copy of the audit steps on which he or she was working. With paper audits, supervisors or team members could not know what stage of completion the auditor’s work had reached unless the supervisor actually took the work papers from the auditor for review. In contrast, using laptops and a password-protected portal to the network, each authorized member of the audit team can access the TeamMate exam documents. Using TeamMate, authorized audit team members can view the entire array of audit steps, even while the auditor continues to work on those audit steps. A supervisor can use TeamMate to get a picture of the entire audit process. That could enable a supervisor to view an audit in progress at a remote location from his office and to estimate when the job will be done. Unlike the paper process, TeamMate has the advantage of providing helpful references to accounting principles.

21. TeamMate has a feature called “coaching notes.” These coaching notes are typed in the appropriate area of TeamMate by the Examiner IIs and Examiner IIIs. Coaching notes are used to obtain completed staff work and for training purposes.

22. When TeamMate was first introduced, classes were given in the use of the program lasting over a period of two weeks. Additionally, Respondent designated some people in the department as “TeamMate Champions,” and those people learned the program in advance of its rollout so that they could answer questions during the rollout and initial phase of use of the program. Petitioner testified that he sometimes found these persons helpful. Notwithstanding, as discussed in greater detail below, Petitioner’s proficiency with TeamMate remained admittedly deficient at the time his employment was terminated, four (4) years later.

23. Along with all other Examiners, Petitioner was expected to use TeamMate daily in his audit work. Petitioner had access to both a laptop computer and to the TeamMate program for approximately four years before his employment was terminated.

III. Petitioner’s Job Responsibilities

24. Petitioner’s job duties are specified in the job description for an Insurance Company Examiner I (“ICE I”) implemented in June 1999. Petitioner’s job description includes the provisions below.

a. “An ICE I is responsible for the examination of the financial records and review of the business operations of all types of domestic insurance companies, including life and accident and health, property and casualty, health maintenance organizations, other miscellaneous insurance companies, and similar or related entities (collectively ‘regulated entities’) licensed or otherwise authorized to do business in the State of North Carolina (‘State’). This work requires travel throughout North Carolina and the United States.”

b. Continuous Improvement: “An ICE I is expected to actively participate in continuous improvement efforts and staff meetings, and to provide ideas with the objective of making positive changes and improvements to the functions and goals of the Section. An ICE I is responsible for proposing ways to improve to work performed on previous examinations.”

c. Technological Advances: “An ICE I is expected to become proficient in the use of various computer software programs and other available technology utilized in the conduct of examinations, including, but not limited to: Microsoft Word, Microsoft Excel, NAIC electronic documents, and Audit Command Language. An ICE I is expected to utilize the latest versions of software and automated forms issued by the Department.”

d. Administrative Requirements: “An ICE I is responsible for various examination related administrative duties, including, but not limited to:

* Provide the EIC or Supervising Examiner with completed staff work for review and approval. Completed staff work consists of work papers that stand on their own or are self-explanatory to the reviewer.

* Plan, organize and conduct work in a cost-effective and expedient manner, meeting the examination budget.

* Inform the EIC or Supervising Examiner of the progress or obstacles encountered in the performance of assigned duties. Propose alternate procedures when required.”

e. Supervision Received by Employee: “An EIC or a Supervising Examiner reviews the completed staff work of the ICE I and ascertains that conclusions are adequately supported and appropriately documented. This position receives direct supervision from the EIC and Supervising Examiner.”

f. Required Minimum Training: “The educational requirements for this position include a four-year college degree with twenty-four semester hours of accounting, and two years of experience in auditing insurance company operations; or, closely related accounting or auditing work; or, an equivalent combination of training and experience. An ICE I is required to be eligible to sit for the Uniform CPA examination.”

25. Completed staff work is among the most important aspects of what an Examiner I, such as Petitioner, does. Those work papers must document what was done so that someone reviewing them later can understand what was done. To effectively complete staff work papers, it is necessary to understand the principles of insurance, the accounting practices and procedures, the risks involved, the company’s unique environment, and how to properly document work papers.

26. If an examiner is only able to complete his work with the use of extensive TeamMate coaching notes, the efficiency of the exam could be impacted. If one person’s work requires repeated coaching notes, the coach or reviewer loses time for other tasks they must accomplish, including supervising and training other examiners.

III. Petitioner’s Job Performance

27. Petitioner’s interim and annual performance management reviews, as well as his end-of-job reviews, reflect longstanding deficiencies in his professional competence including judgment, completed staff work including failures to meet deadlines, and failure to use required information technology. As discussed above, these facets of job performance are essential to effective job performance by an Examiner I, such as Petitioner.

A. Petitioner’s Deficient Work Performance in 2002

28. Petitioner received an overall rating of “Below Good” for the July, 2001 to June, 2002 rating year. “Below Good” is defined as: “Performance may meet some of the job expectations but does not fully meet the remainder. The employee generally is doing the job at a minimal level and improvement is needed to fully meet the expectations. Performance is less than a good job. Lapses in performance are due to the employee’s lack of effort or skills.”

29. Petitioner received three (3) “Below Good” ratings related to specific responsibility areas on his 2001-02 annual review: Technical Competence, Communication, and Budget Awareness. One aspect of the Below Good rating with respect to Communication was an incident during an audit of Jefferson Pilot when Petitioner signed off that work had been completed when the work in fact had not been completed. When questioned, Petitioner stated that he was waiting for information from the company, but it was later determined that Petitioner had not requested the information from the company. The Jefferson Pilot exam exceeded the time budgeted for the exam. Petitioner’s supervisor testified that the primary reason for exceeding the time budgeted was Petitioner’s deficient and tardy work on the investment cycle of the audit.

30. Respondent provided Petitioner with further feedback on his “Below Good” performance through written comments expressed in the 2001-02 annual review, including: “[Petitioner] does not demonstrate an understanding of audit approach. He was not able to adequately perform the audit procedures consistent with the examination, DOI and NAIC objectives and standards.”

31. Petitioner received an even lower rating—Unsatisfactory—related to the specific responsibility area of Completed Staff Work. “Unsatisfactory” performance is defined as: “Performance generally fails to meet the defined expectations or requires frequent, close supervision and/or the redoing of work. The employee is not doing the job at the level expected for employees in this position. Unsuccessful job performance is due to the employees’ own lack of effort or skills.”

32. The explanation given for the Unsatisfactory rating of Petitioner’s Completed Staff Work was: “[Petitioner’s] workpapers require extensive modifications. [Petitioner’s] workpapers consistently must be redone to meet minimal NCDOI and NAIC standards. Much of [Petitioner’s] assigned work had been reassigned to other staff. His workpapers did not properly document the work performed. [Petitioner] is not performing at the level expected for a staff examiner. [Petitioner] requires close supervision. Significant improvement is needed in order for [Petitioner] to perform at the expected level.”

33. An improvement plan issued to Petitioner on 14 May 2002. The 2002 improvement plan required Petitioner to read and sign that he had read certain sections from the NAIC Financial Condition Examiners Handbook. The improvement plan required Petitioner to demonstrate that he could apply concepts from the NAIC Handbook to his completed staff work.

34. As early as May 2002, Respondent drew attention to Petitioner’s need to improve his computer skills with TeamMate. In particular, the May 2002 improvement plan required Petitioner to do his work in TeamMate, rather than using the old paper process, thus allowing the EIC and Supervisor to monitor his work through TeamMate. This requirement was carried forward into improvement plans issued in June 2004 and January 2005. Assistance was offered to Petitioner to improve his computer skills. At least three (3) people volunteered to help Petitioner with his computer skills, but Petitioner did not accept the offers to help him before work, after work, on Saturday, or during lunch. Also, although Petitioner could take his assigned laptop home to practice his computer skills, he either chose not to do so or that effort was not meaningful.

B. Petitioner’s Deficient Work Performance in 2003

35. In January 2003, Petitioner received an interim review rating of Below Good.

36. In June 2003, Petitioner received a year-end review rating of “Good.” Notwithstanding the overall rating, Petitioner received a Below Good rating for the categories of Completed Staff Work, Technical Competence, and Judgment.

37. For the Century Mutual Insurance Company audit in September and October 2003, Petitioner received an end-of-job review of marginal (Below Good). Petitioner received ratings of 1 (Unsatisfactory) for Judgment, Completed Staff Work, and Time Management. Comments on Petitioner’s performance included that he “lacks sound judgment and the ability to obtain and analyze facts and make sound decisions. He is often unclear as to the type of documentation he needs to obtain and review in order to satisfy assigned procedure.” Another observation was that Petitioner “takes an exorbitant amount of time to complete tasks and often other staff members will be required to complete his assignments. The work assigned on the Century job (losses and reinsurance) was to be completed in 80 hours. He used the entire time in the field and two additional days after returning to the office and was unable to complete the first assignment – losses – despite the fact that the EIC spent a considerable amount of time assisting him.” Petitioner read the review, but refused to sign it.

38. In November-December 2003, Petitioner participated in the GE Mortgage Insurance audit during which Petitioner was given responsibility for the least complex cycles so that he could succeed and provide value to the team. For that audit, Petitioner received an end-of-job overall rating of poor to marginal (Unsatisfactory to Below Good). Petitioner signed the review.

39. In the GE Mortgage audit, Petitioner received a rating of 1.5 in the Technical Competence area, which is between Unsatisfactory and Below Good. This rating included the explanation: “His work requires a high level of supervision. His work does not demonstrate sufficient technical skills expected of an Examiner I.” Petitioner’s Communication skills during the GE Mortgage audit were rated as a 2 (Below Good) and included the observation that “[h]is communications in TeamMate that document his work in the form of completed staff work is marginal.” Petitioner’s Time Management performance was given a rating of 1.5, which is between Unsatisfactory and Below Good, and included the explanation that “[Petitioner] was not able to complete exam procedures in a timely manner given his assignments. [Petitioner] needs constant, one-on-one supervision or he would have spent an inappropriate amount of time on his exam procedures. Due to time constraints and examination goals, [Petitioner’s] work had to be reassigned to other examiners.”

40. Although he expressed general disagreement with the assessment of his work performance, Petitioner has not demonstrated the inaccuracy of the evaluation of his work performance in 2003.

C. Petitioner’s Deficient Work Performance in 2004

41. On or about 7 January 2004, Petitioner received a written warning for unsatisfactory job performance. The written warning noted on the first page that his overall rating as of that date was Below Good. The written warning also noted Petitioner’s deficiencies in key responsibility areas of Technical Competency and Completed Staff Work, and further noted his lack of capability with computer technology.

42. The January 2004 written warning made clear actions that Petitioner needed to take to improve his performance, including:

• Substantially improve [ ] knowledge of general statutes, policies, guidelines, accounting principles and audit procedures in order [ ] to complete work papers thoroughly and accurately. Be able to execute the audit plan designed by the EIC or Supervisor.

• Present completed staff work to the Examiner in Charge that is clear, concise and completely documents the audit work performed and supports [ ]conclusions.

• [M]ust make more efficient use of Microsoft Word and Excel. [C]apabilities in the use of Word and Excel are inadequate and must improve. Additionally, [ ] must develop a working knowledge of both TeamMate and ACL.”

43. Petitioner responded in writing to the January 2004 written warning, disagreeing with the assessment generally but acknowledging the need to overcome procrastination and to increase proficiency in computer skills, including TeamMate.

44. Petitioner’s January 2004 interim review simply made reference to the 7 January 2004 written warning (containing a rating of Below Good.).

45. In June 2004, Petitioner received an overall rating of Unsatisfactory on his annual performance review for the 2003-04 review year. The annual review rated Petitioner as Unsatisfactory in the key responsibility areas of Completed Staff Work Budget Awareness, Technical Competence, and in the performance characteristic of Judgment.

46. In Petitioner’s written response to the June 2004 annual review, he disagreed with the overall Unsatisfactory rating. Petitioner, however, did admit the need to increase proficiency with computers, including TeamMate.

47. An improvement plan was issued to Petitioner on 23 June 2004. Like the previous improvement plan, the June 2004 plan focused on areas where Petitioner received either an Unsatisfactory or Below Good rating, including Technical Competence, Planning and Organizing, Communication Skills, Dependability, Time Management, Judgment, Flexibility, Completed Staff Work, Computer Skills and Instruction and Guidance. This plan, along with the other performance reviews, makes plain that Petitioner had not demonstrated proficiency in essential skill areas, including understanding the audit approach and proficiency with computer programs. Among other things, Petitioner still needed to review those sections of the Handbook that were mentioned in the 2002 improvement plan, and Petitioner again was instructed to do so in the June 2004 improvement plan.

48. Petitioner rejected this improvement plan. Under oath, Petitioner later stated that he did not accept the improvement plan and did not agree to comply with it.

49. In August-September 2004, Petitioner participated in the audit of CEC Self Insurance Fund. Petitioner receive an overall end-of-job rating of marginal (Below Good). Petitioner signed the review.

50. In August-September 2004, Petitioner participated in the audit of Key Risk Insurance Company. Petitioner’s end-of-job rating numerically averaged to poor to marginal, equating to Unsatisfactory to Below Good. Petitioner’s Technical Competency was rated 2 (Below Good) and his “Use of EDP hardware and software” was rated 1 (Unsatisfactory). With respect to his Technical Competence, it was observed that: “[Petitioner’s] technical competence does not appear to be at the expected level given the length of time he has been employed as an examiner. He has a difficult time understanding examination procedures and performing substantive testing on account balances. His computer/software skills are below the level required for performing assigned duties in the most efficient manner. His working knowledge of insurance accounting is marginal and he requires a great deal of supervision and coaching.” Petitioner signed the review.

51. Monique Smith, an Examiner III and Certified Public Accountant who worked on the Key Risk exam, further testified that Petitioner did not use good judgment in determining on what work he would focus: He spent time doing tasks that were not needed.

52. In August-October 2004, Petitioner participated in the audit of Carolina Roofing & Sheet Metal Contractors Self-Insurers Fund. Petitioner received an end-of-job rating that numerically averaged to marginal (Below Good). Petitioner received a Time Management rating of 1 (poor or Unsatisfactory), noting in part: “[Petitioner] does not work efficiently and productively. He took more than 200% of the time allocated to him on the investment cycle. This was in spite of having very good CPA workpapers.” Petitioner signed the review.

53. Although he expressed general disagreement with the assessment of his work performance, Petitioner has not demonstrated the inaccuracy of the evaluation of his work performance in 2004.

D. Petitioner’s Deficient Work Performance in 2005

54. In January 2005, Petitioner’s interim review rating was Unsatisfactory.

55. An improvement plan issued to Petitioner on 31 January 2005, and Petitioner signed the plan on 14 February 2005. The focus of the improvement plan to “to help [Petitioner] address the performance characteristics where he received either a Below Good [ ] or Unsatisfactory [ ] rating.” These areas included Technical Competence, Planning and Organizing, Communication, Budget Awareness, Judgment, Flexibility and Adaptability, Completed Staff Work, Computer Skills, and Instruction and Guidance. The improvement plan set forth specific action steps and goals with respect to each area and also listed resources available to Petitioner, including manuals, computer resources, and colleagues.

56. In January-March 2005, Petitioner participated in the audit of NC Retail Self-Insurers Fund. Petitioner received an end-of-job rating that numerically averaged as poor to marginal (Unsatisfactory to Below Good). Petitioner’s Completed Staff Work was rated as 1 (poor or Unsatisfactory), Time Management was rated as 1 (poor or Unsatisfactory). This job review was provided to Petitioner on 4 April 2005. Petitioner signed the review.

57. On 20 April 2005, Petitioner received a final written warning for unsatisfactory job performance. This final written warning specifically stated that Petitioner’s four end-of-job reviews from 2004-05 evidenced that Petitioner “continu[ed] to have the same problems that were outlined in the previous written warning.”

58. After his final written warning, Petitioner submitted a written response to the NC Retail Self-Insurers Fund exam review, expressing general disagreement with the assessments and asserting that he continued to “further [his] knowledge of software applications . . . .”

59. In May-June 2005, Petitioner participated in the audit of Atlantic Casualty Insurance Company. For that work, Petitioner received an end-of-job rating that numerically averaged to poor to marginal (Unsatisfactory to Below Good). His Technical Competency and Judgment were rated as 2 (marginal or Below Good), his “Use of EDP hardware and software” was rated “Below Good,” and his Time Management was noted to be lacking. The end-of-job review cited numerous examples of work deficiencies, including: “[Petitioner] does not possess the requisite skill set to complete the Cash and Short Term Investment Cycle” and “The ‘Write-Up’ of cash was incorrect”; and Petitioner’s work papers contained factual errors.” The review cited instances when supervisors had to explain basic audit concepts to Petitioner and when Petitioner incorrectly or inaccurately signed off on an audit step as complete.

50. Although Petitioner disagreed with the concerns and criticism of his work on the Atlantic Casualty audit in a written response submitted after the review, Petitioner has not demonstrated that the review comments were inaccurate or otherwise inappropriate.

51. During his annual review for the period ending 30 June 2005, Petitioner was rated “Unsatisfactory.”. The review form instructed Petitioner to follow the January, 2005 improvement plan.

52. Petitioner’s lack of proficiency had a negative effect on morale. On virtually every exam to which Petitioner was assigned, other team members would have to do a great deal of the work assigned to Petitioner to complete to ensure the accuracy and quality of the audit. In this regard, other audit team members completing work assigned to Petitioner in addition to their own assignments was necessary to prevent harm to policyholders and to prevent jeopardizing NAIC accreditation.

53. Although he expressed general disagreement with the assessment of his work performance, Petitioner has not demonstrated the inaccuracy of the evaluation of his work performance in 2005.

IV. Termination of Petitioner’s Employment

54. Following two (2) annual reviews where Petitioner received an “Unsatisfactory” rating, two (2) written warnings (January 2004 and April 2005), and issuance of three (3) improvement plans (May 2002, June 2004, and January 2005), by letter dated 11 July 2005, a 15 July 2005 pre-disciplinary conference was scheduled with Petitioner. The letter specified the deficiencies observed in Petitioner’s work. Petitioner was notified that Respondent was considering whether to “take additional disciplinary action against [Petitioner], up to and including dismissal.” Petitioner also was notified that he would have the opportunity to present information at the conference to show that disciplinary action was not warranted.

55. Petitioner prepared a written response dated 14 July 2005. Among other things, Petitioner argued that he had improved and was continuing to try to improve his work. Petitioner also asserted that his alcoholism (which is discussed separately below) “impacted his mental state at work, so that at times [his] work has been less efficient than [he] would desire, or than it would be in the absence of [his] disability.”

56. By letter dated 18 July 2005, Petitioner’s employment was terminated effective at the end of the day because of his “continued unsatisfactory job performance.”

V. Petitioner’s Self-Reporting and Treatment for Alcohol Dependency

57. In early 2004, after his written warning, Petitioner self-reported a problem with substance abuse, specifically alcohol, under the provisions of Respondent’s substance abuse policy.

58. Respondent’s substance abuse policy, entitled “Policy For An Alcohol and Drug Free Workplace,” issued in 1989. The Policy contains the provisions set forth below, among others.

a. “The Department of Insurance has a strong commitment to assist any employee who voluntarily asks for help.”

b. “The voluntary seeking of help by the employee will be viewed as responsible action on the part of the employee and will be supported to the extent possible, by management and by the employee’s supervisor.”

c. “Supervisors are expected to take action to address legitimate concerns about job performance problems, including unsatisfactory work performance and work habits cause by alcohol and drug abuse, and to make use of the EAP [Employee Assistance Program] when appropriate.”

d. “The responsibility of the supervisor is to see that operations within the Department are run safely and efficiently. The supervisor’s primary responsibility, therefore, is to concentrate on the job performance and fitness for duty of the employees supervised.”

59. The Policy generally encourages employees to seek assistance to treat the illness of substance abuse, indicates Respondent will support such efforts, but also makes clear that job performance problems must be addressed. The Policy does not prohibit discipline of employees in connection with work performance.

60. With Respondent’s assistance to locate appropriate help, Petitioner left the work place to go to a treatment facility. Petitioner used accumulated leave to conduct a 28-day treatment program.

61. When Petitioner returned to work, a letter from the Medical Director of the rehabilitation program stated that Petitioner was admitted on 7 March 2004 and was discharged on 2 April 2004. Further, the letter stated that Petitioner was able to return to work on 6 April 2004 “with no limitations on his activities.” Petitioner did not otherwise identify any limitations on his ability to perform his job responsibilities.

62. To support Petitioner’s rehabilitation efforts, despite the “no limitations” on his work, Respondent did not require Petitioner to take a full workload on his return to work. He was not required to travel. He was given a lighter workload, including less complex and low stress duties. The lighter duty also provided Petitioner with the time and opportunity to work on his computer skills and other skill improvement tasks. He freely attended Alcoholics Anonymous meetings during twice each work week for approximately two (2) hours each meeting.

63. Respondent did not violate the terms of its Policy for an Alcohol and Drug Free Workplace.

CONCLUSIONS OF LAW

1. All parties properly are before this Administrative Law Judge and jurisdiction and venue are proper. To the extent that the Findings of Fact contain Conclusions of Law, or that the Conclusions of Law contain Findings of Fact, they should be considered so without regard to the given labels.

2. Because Petitioner has alleged that Respondent lacked just cause for his termination, the Office of Administrative Hearings has jurisdiction to hear his appeal and issue a decision to the State Personnel Commission, which is authorized to make a final decision in this matter.

3. Under N. C. Gen. Stat. § 126-35(d), in an appeal of a disciplinary action, the employer has the burden of proving that “just cause” existed for the disciplinary action.

4. Under N. C. Gen. Stat. § 150B-29 (a), the party with the burden of proof in a contested case must establish the facts required by N. C. Gen. Stat. § 150B-23(a) by a preponderance of the evidence.

5. Pursuant to N. C. Gen. Stat. §§ 126-1.1 and 126-5, because Petitioner was continuously employed with the North Carolina Department of Insurance for more than twenty-four months at the time of his dismissal, he was a Career State Employee entitled to the protections of the just cause provision of N.C. Gen. Stat. §126-35.

6. All procedural requirements of the North Carolina General Statutes and North Carolina State Personnel Manual for terminating Petitioner’s employment were followed, and the parties so stipulated.

7. N. C. Gen. Stat. § 126-35(a) provides, in pertinent part, that “no career state employee subject to the State Personnel Act shall be discharged, suspended, or demoted for disciplinary reasons, except for just cause.”

8. Although the statute does not define “just cause,” the words are to be accorded their ordinary meaning. Amanini v. Dep’t Human Resources, 114 N.C. App. 668, 678, 443 S.E.2d 114, 120 (1994) (recognizing definition of “cause” as, among other things, “good or adequate reason” and definition of “just” as “‘reasonable’ or ‘having a basis in fact’”).

9. Under 25 NCAC 1J.0604, either unsatisfactory or grossly inefficient job

performance or unacceptable personal conduct can constitute just cause for discipline or dismissal.

10. Under 25 NCAC 1J.0614, unsatisfactory job performance is work-related

performance that fails to satisfactorily meet job requirements as specified in the relevant job description, work plan, or as directed by the management of the work unit or agency.

11. Reference to the State Personnel Manual further informs determination of just cause for termination. Amanini, 114 N.C. App. at 678-79, 443 S.E.2d at 120-21. Section 7 of the applicable State Personnel Manual includes as factors that should be considered in evaluating job performance: quality of work; quantity of work; timely performance of work; and accuracy of work.

12. Respondent had just cause to terminate Petitioner from employment based on unsatisfactory job performance.

13. Petitioner received ample notice, assistance, and opportunity to seriously apply himself to correct the serious and longstanding deficiencies in the performance of his job responsibilities and policies of his employer. Petitioner failed to correct his deficient job performance.

14. Use of TeamMate was necessary to adequately perform Petitioner’s job responsibilities and requiring Petitioner to achieve TeamMate proficiency was reasonable. Had Petitioner made reasonable effort to improve his proficiency in TeamMate, his skills would have improved. Petitioner’s lack of proficiency, along with the testimony reflecting the number of times Petitioner rebuffed offers to help him with TeamMate, demonstrates that he did not make reasonable efforts to improve his TeamMate skills.

15. Years after his deficiency of technology proficiency was expressed to Petitioner, Petitioner remained incompetent in his use of TeamMate. Indeed, Petitioner admitted that he was not able to use TeamMate effectively, and that his performance consequently suffered.

16. In addition to Petitioner’s lack of TeamMate proficiency, Petitioner’s deficient job performance (described throughout the Findings of Fact) constituted just cause for dismissal.

17. The evidence does not support Petitioner’s contention that Respondent’s Policy For An Alcohol and Drug Free Workplace required Respondent to accord Petitioner accommodations and strong support other than those provided and that, had Respondent complied with its policy in this regard, Petitioner’s work would have improved and his termination would have been avoided.

18. Respondent’s alcohol and substance abuse policy does not require Respondent to forestall in any way any actions necessary to ensure the satisfactory job performance of any individual. Moreover, Respondent appropriately supported Petitioner in his rehabilitative efforts. Respondent did not violate the Policy.

DECISION

NOW, THEREFORE, based on the foregoing Findings of Fact and Conclusions of Law, Respondent’s decision to terminate the employment of Dennis E. Hrynkow is UPHELD.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, 6714 Mail Services Center, Raleigh, NC 27699-6714, in accordance with NCGS §150b-36(a)

NOTICE

The agency making the final decision in this contested case shall adopt the Decision of the Administrative Law Judge unless the agency demonstrates that the Decision of the Administrative Law Judge is clearly contrary to the preponderance of the admissible evidence in the official record. The agency is required to give each party an opportunity to file exceptions to this Decision issued by the Undersigned

This the 2nd day of April, 2008.

_______________________________

Shannon R. Joseph

Administrative Law Judge

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