Evelyn C. Osterloh v. Virginia Department of Social Services ( 2018 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Chafin, Russell and Senior Judge Clements
Argued at Richmond, Virginia
UNPUBLISHED
EVELYN C. OSTERLOH
MEMORANDUM OPINION* BY
v. Record No. 0495-18-2 JUDGE TERESA M. CHAFIN
DECEMBER 18, 2018
VIRGINIA DEPARTMENT OF
SOCIAL SERVICES
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
T.J. Markow, Judge
David R. Simonsen, Jr., for appellant.
W. Ryan Waddell, Assistant Attorney General (Mark R. Herring,
Attorney General; Samuel T. Towell, Deputy Attorney General;
Gregory C. Fleming, Senior Assistant Attorney General, on brief),
for appellee.
Evelyn C. Osterloh was terminated from her employment with the Virginia Department
of Social Services (the Department). She appeals from an order of the Circuit Court of the City
of Richmond (“circuit court”) affirming the decisions of a hearing officer and the Department of
Employment Dispute Resolution (EDR)1 upholding that termination. For the following reasons,
we affirm.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
Effective on January 1, 2017, the Director of the Office of EDR assumed the
responsibility for administrative review of hearing officer decisions pursuant to Code
§ 2.2-3006(A). See Murphy v. Dep’t of State Police, 68 Va. App. 716, 813 S.E.2d 21 (2018).
I. BACKGROUND
Osterloh was employed as a manager by the Department. On June 29, 2016, Osterloh
was issued a “Notice of Improvement Needed” and was subsequently placed on a three-month
re-evaluation plan. See Department of Human Resource Management (“DHRM”) Policy 1.40.2
During the three-month period, Osterloh received plan updates focusing on areas in
which she still needed improvement. However, Osterloh did not complete some of the tasks that
were assigned, and she refused to sign several of the re-evaluation update documents.
2
DHRM Policy 1.40 states,
The re-evaluation process does not prevent the agency from taking
disciplinary action based on the employee’s poor performance or
other reasons stipulated in [DHRM] Policy 1.60, Standards of
Conduct, or issuing additional Improvement Needed/Substandard
Performance forms.
DHRM Policy 1.40 also states that
An employee whose performance during the re-evaluation period
is documented as not improving, may be demoted within the three
(3)-month period to a position in a lower Pay Band or reassigned to
another position in the same Pay Band that has lower level duties if
the agency identifies another position that is more suitable for the
employee’s performance level. A demotion or reassignment to
another position will end the re-evaluation period.
DHRM Policy 1.40 further states that
If the agency determines that there are no alternatives to demote,
reassign, or reduce the employee’s duties, termination based on the
unsatisfactory re-evaluation is the proper action. The employee
who receives an unsatisfactory re-evaluation will be terminated at
the end of the three (3)-month re-evaluation period.
‐ 2 -
On March 14, 2017, Osterloh was notified of the Department’s intent to issue formal
discipline under DHRM Policy 1.60.3 The Department issued a Group II Written Notice of
disciplinary action on March 16, 2017. Osterloh’s performance did not improve, and on March
24, 2017, she was again given notice that the Department intended to issue new formal
discipline. On March 30, 2017, the Department issued a second Group II Written Notice which
included the termination of Osterloh’s employment. The notice indicated that she was provided
an additional opportunity to provide the requested reporting through the March 16, 2017 Group
II Written Notice, but she “has not followed through with meeting deadlines and performing the
assigned tasks.”
Osterloh filed a grievance to dispute her termination on April 12, 2017. A hearing officer
heard argument on June 15, 2017. The DHRM supplied the hearing officer with an official
policy interpretation explaining the relationship between DHRM Policies 1.40 and 1.60. The
interpretation makes clear that an employee being in the re-evaluation process provided for in
Policy 1.40 does not prohibit an agency from simultaneously taking disciplinary action based on
the reasons stated in Policy 1.60.
The hearing officer entered his first written decision on July 5, 2017. Significantly, the
hearing officer found that Osterloh’s “supervisor testified consistently with the allegations in the
Written Notices” and that “his testimony credibly establishes” Osterloh’s alleged misconduct.
3
DHRM Policy 1.60 provides that Group II offenses
include acts of misconduct that are more serious and/or repeat
nature that require formal disciplinary action. This level is
appropriate for offenses that have a significant impact on business
operations and/or constitute neglect of duty, insubordination, the
abuse of state resources, violations of policies, procedures, or laws.
Failure to follow instructions and repeated instances of poor job performance are specifically
considered Group II offenses.
‐ 3 -
Nevertheless, the hearing officer reversed Osterloh’s termination based on his determination that
early termination under DHRM Policy 1.60 is “irreconcilable with the three-month re-evaluation
plan under [DHRM] Policy 1.40.” The hearing officer also found that the Department “acted
from an improper motivation.” His reasoning for this finding was that there was an “absence of
any other explanation for why the [Department] concurrently imposed its correction power
through two punitive processes, either one of which could have resulted in an orderly termination
(if supported by the evidence).” The hearing officer went on to state that “the reasonable
inference is that the [Department] improperly retaliated against [Osterloh] by its disciplinary
process imposed to end prematurely the re-evaluation period with termination.”
Osterloh and the Department requested an administrative review of the July 5, 2017
written decision. On review, DHRM’s Office of EDR determined that the hearing officer did not
properly apply the official policy interpretation of DHRM Policies 1.40 and 1.60 and remanded
the matter back to the hearing officer.
On September 5, 2017, the hearing officer issued a second written opinion. The hearing
officer again found that the evidence established Osterloh’s misconduct, noting that the
Department’s “assessment of [Osterloh’s] poor performance appears based on [Osterloh’s] actual
conduct and behavior, all of which was solely within the control of” Osterloh and that “[t]he
conduct as stated in the written notice occurred.” The hearing officer upheld the first Group II
Written Notice, but, despite his conclusion regarding Osterloh’s misconduct, rescinded the
second Group II Written Notice, finding that “[t]he [Department], by issuing two Group II
notices for continuing poor performance with early termination, applied Policies 1.40 and 1.60
inharmoniously.” The hearing officer further determined that Osterloh’s unimproved
performance warranted the “issuance of one Written Notice during the re-evaluation period,” but
‐ 4 -
that DHRM’s official policy interpretation did not “sanction multiple Written Notices during the
[three]-month re-evaluation.” He also determined that
There is nothing to suggest that the [Department’s] view of
[Osterloh’s] work performance was retaliatory beyond the
[Department’s] procedural actions to speed the termination via the
disciplinary process rather than the existing re-evaluation plan.
The Department again sought administrative review of the hearing officer’s decision,
contending that the decision was inconsistent with DHRM Policies 1.40 and 1.60. On October
17, 2017, EDR vacated the hearing officer’s second decision. Specifically, EDR concluded that
the hearing officer’s determination that “the agency’s disciplinary process was retaliatory in this
case is unsupported and must be reversed on remand.”
On remand, the hearing officer entered a third and final decision on October 19, 2017.
Given his prior findings of Osterloh’s misconduct and the fact that EDR’s most recent policy
ruling vitiated the sole stated basis of his prior findings of retaliation, the hearing officer was
compelled to conclude that Osterloh’s termination was “due to accumulation of disciplinary
action.” He upheld both Group II Written Notices and her resulting termination. Osterloh
appealed to the circuit court.
On January 22, 2018, the circuit court heard argument and dismissed Osterloh’s appeal.
Osterloh filed a motion for reconsideration. The circuit court granted the motion and again heard
argument on the appeal on February 27, 2018. The circuit court once more dismissed Osterloh’s
appeal, upholding her termination from her position with the Department.
Osterloh now appeals the circuit court’s decision to this Court. She argues that the circuit
court applied the wrong standard of review in the proceedings below. Additionally, she asserts
that the final order of the hearing officer “is contradictory to law because it is inconsistent with
and contradictory to the guiding principle of Virginia law that the [h]earing [o]fficer acts as the
‐ 5 -
finder of fact.” Finally, she contends that by reversing his own factual finding as to retaliation,
that the hearing officer’s final decision is not based on the hearing officer’s own factual finding.
II. ANALYSIS
As a preliminary matter, we address Osterloh’s contention that the circuit court erred in
failing to apply the proper standard of review.
“On appeal from a state employee grievance decision, courts are bound by the factual
findings of the hearing officer and may only reverse or modify the decision if it is ‘contradictory
to law.’” Osburn v. Va. Dep’t of Alcoholic Bev. Control, 295 Va. 10, 17 (2018) (quoting Va.
Polytechnic Inst. & State Univ. v. Quesenberry, 277 Va. 420, 429 (2009)).
“The appealing party must identify a constitutional provision,
statute, regulation or judicial decision which the hearing officer’s
decision contradicted.” [Quesenberry, 277 Va. at 429.] Questions
regarding whether a decision is contradictory to law, including the
meaning of any underlying statutes, are reviewed de novo. See id.;
REVI, LLC v. Chicago Title Ins. Co., 290 Va. 203, 208, 776
S.E.2d 808, 810 (2015).
Osburn, 295 Va. at 17 (internal quotation marks omitted).
Virginia’s employee grievance procedure confines the scope of review of each body that
reviews a grievance after it has exhausted an agency’s internal resolution steps. The General
Assembly has established a “tripartite review procedure” that sets forth the following roles:
(1) the hearing officer is the finder of fact and final authority on factfinding; (2) DHRM and
EDR determine whether the hearing officer’s ruling is in compliance with personnel policy and
grievance procedure (respectively); and (3) the circuit courts determine whether the grievance
determination is “contradictory to law.” Va. Dep’t of State Police v. Barton, 39 Va. App. 439,
445 (2002); see Code § 2.2-3006. The hearing officer’s factual findings, EDR’s administrative
determinations of compliance with grievance procedure, and DHRM’s determination of
compliance with personnel policy are not subject to judicial review. Id. Therefore, the circuit
‐ 6 -
courts are given an especially narrow scope of review, and any decision of the circuit court
“presents a pure question of law and is accordingly subject to de novo review.” Warrington v.
Commonwealth, 280 Va. 365, 370 (2010) (quoting Jones v. Commonwealth, 276 Va. 121, 124
(2008)).
In this case, the circuit court failed to utilize the standard of review that is mandated by
the tripartite review procedure. The role of the courts in this procedure is solely to determine
whether the grievance determination is “contradictory to law.” Barton, 39 Va. App. at 445. The
circuit court reviewed the record in order to determine whether there was sufficient evidence to
support the hearing officer’s decision to terminate Osterloh’s employment, thus employing an
improper standard of review.
Our de novo review of the circuit court’s decision . . . is
conceptually analogous to the circuit court’s review of the [hearing
officer’s] decision. The circuit court conducted no factfinding to
which we must defer. Nor were there any discretionary calls made
during the course of the circuit court’s proceedings.
Reston Hosp. Ctr., LLC v. Remley, 63 Va. App. 755, 771 n.9 (2014).  As this appeal presents a
question of pure law requiring a de novo review of the hearing officer’s final decision, it is
unnecessary to address the circuit court’s legal conclusions. Therefore, this Court will conduct
an independent review of the record to determine whether the hearing officer’s third and final
determination was contradictory to law.
Osterloh contends that the EDR’s “failure to accept the hearing officer’s factual finding
of unlawful retaliation as final and binding is a violation of [Code § 2.2-3005.1(C)(iii)].” Code
§ 2.2-3005.1(C)(iii) clearly states that “[t]he decision of the hearing officer shall . . . be final and
binding if consistent with law and policy.” “Pursuant to the state employee grievance procedure,
the General Assembly has vested review of policy issues involved in such cases in DHRM, and
‐ 7 -
not in the courts.” Passaro v. Va. Dep’t of State Police, 67 Va. App. 357, 370 (2017) (citing
Code § 2.2-3006).
Here, the hearing officer’s opinions make clear that the sole basis for his finding
retaliation was his conclusion that the Department’s concurrent use of the two disciplinary
processes was contrary to policy.4 EDR appropriately reviewed the policy determination
inherent in that finding and informed the hearing officer of his error. EDR stated in its October
17, 2017 written decision that
an agency does not “elect” to manage an employee’s performance
under either [DHRM] Policy 1.40 or [DHRM] Policy 1.60. Both
policies may be applied as appropriate and necessary to address
unsatisfactory or other misconduct, and the terms of both polices
are applicable to employees who have been placed on a
re-evaluation plan.
Because the factual finding of retaliation was not consistent with policy, it was not final or
binding. See Code § 2.2-3005.1(C)(iii).
With the sole reason for his finding of retaliation no longer viable, the hearing officer was
left to determine only whether Osterloh committed the alleged misconduct and whether such
misconduct supported the written notices and the ultimate sanction imposed. Given his repeated
findings that Osterloh had engaged in the alleged misconduct, the hearing officer upheld both the
written notices and the sanction of termination.
Ultimately, “the party appealing the hearing officer’s decision properly bears the burden
of identifying the law thereby contradicted.” Quesenberry, 277 Va. at 429. For the reasons
stated above, Osterloh has failed to demonstrate such an error. Accordingly, we hold that the
4
On appeal, Osterloh argues that there are other potential reasons to conclude that the
Department engaged in retaliation. The hearing officer, however, did not base his finding of
retaliation on anything other than an inference flowing from the alleged policy violation.
‐ 8 -
termination decision is consistent with law and policy as required by Code § 2.2-3005.1(C)(iii),
and thus, is final and binding. Accordingly, we affirm.
Affirmed.
‐ 9 -