Fred Lustig v. Department of Health and Human Services

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
FRED LUSTIG, UNPUBLISHED
March 12, 2020
Plaintiff-Appellee,
v No. 346447
Ingham County Circuit Court
DEPARTMENT OF HEALTH AND HUMAN LC No. 17-000794-AA
SERVICES, and MICHIGAN CIVIL SERVICE
COMMISSION,
Defendants-Appellants.
Before: CAMERON, P.J., and SHAPIRO and LETICA, JJ.
PER CURIAM.
Defendants, the Department of Health and Human Services (DHHS) and the Michigan
Civil Service Commission (MCSC), appeal by leave granted1 the circuit court’s order reversing
the MCSC’s order upholding the DHHS’s dismissal of plaintiff, Fred Lustig, a DHHS employee.
We reverse the circuit court’s decision and reinstate the MCSC’s order upholding the hearing
officer’s determination that DHHS properly terminated plaintiff’s employment for just cause.
I. BACKGROUND
Plaintiff’s title at DHHS was an “Auditor Manager 13” in the Long Term Care Rate and
Reimbursement section and he had worked there since 1997. Plaintiff’s duties included reviewing
and approving approximately 40 to 80 audit plans from two auditors who reported to him and
completing audits on his own relating to long-term care providers in order to determine Medicaid-
eligibility and other funding issues.
Plaintiff’s first supervisor began to notice problems with his work performance sometime
in 2014. Plaintiff’s first and second supervisors issued a non-disciplinary “needs-improvement”
1
Lustig v Department of Health and Human Services, unpublished order of the Court of Appeals,
entered May 20, 2019 (Docket No. 346447).
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ratings for May 2014 and 2015, which included a performance review plan from May through
August 2015, with ten work objectives plaintiff was required to meet. His second supervisor
assessed that plaintiff failed to meet seven of the ten performance objectives. Plaintiff was then
issued his first “interim service rating” for the “unsatisfactory” review he received of his prior
performance for the period of September to December 2015. This rating also included ten
performance objectives.
In October 2015, plaintiff’s second supervisor issued plaintiff a non-disciplinary
written/formal counseling regarding his errors in and the untimeliness of his work product. In
November 2015, plaintiff’s second supervisor issued plaintiff a disciplinary written reprimand
because he violated a work rule by failing to carry out instructions, work assignments, and was
otherwise derelict in the performance of his duties.
Plaintiff was again issued an interim service rating from December 2015 to March 2016
for failing to meet the ten previous performance objectives, and he was assigned 11 objectives for
the period. In February and March of 2016, plaintiff’s second supervisor issued written reprimands
to plaintiff for violation of the same work rule and noted many of the same inaccuracies and
untimeliness issues in plaintiff’s work performance.
At the conclusion of his second interim ratings period, plaintiff’s second supervisor issued
plaintiff his final performance rating on March 29, 2016. It identified many of the issues that had
been previously highlighted and described how plaintiff had failed to meet the performance
objectives placed on him during his ratings period. In other words, it specified in detail the
untimeliness of plaintiff’s work, the backlog of his assignments, and the errors that had passed
through his review. That same day, DHHS dismissed plaintiff.
Plaintiff filed a grievance with the MCSC, which assigned plaintiff a hearing officer.
Before the hearing, the hearing officer issued three orders requesting certain documents from
DHHS regarding plaintiff’s work assignments and the work assignments and objectives of other
employees. DHHS did not comply with all of these document requests, claiming that it no longer
had access to the documents because they did not exist or were destroyed in the normal course of
business prior to the action or because plaintiff had other means to obtain the information he
sought. The hearing officer agreed and, thereafter, rejected plaintiff’s arguments that the
allegations against him could not be proven absent that information. Thus, the hearing officer
upheld DHHS’s decision to terminate plaintiff.
Plaintiff then appealed to the Employment Relations Board, which issues recommended
decisions for the MCSC. The Board rejected plaintiff’s arguments and recommended that the
MCSC issue a final decision upholding plaintiff’s dismissal, which it did.
Plaintiff next appealed to the circuit court. The circuit court reversed the MCSC’s final
decision, determining that DHHS’s failure to produce the requested documents amounted to a
procedural due process violation as the MCSC had deprived plaintiff of the ability to present an
adequate defense.
This appeal follows.
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II. ANALYSIS
Defendants first argue that the MCSC’s determination that the DHHS had just cause to
terminate plaintiff was supported by substantial evidence. Second, they argue that plaintiff’s due
process rights were not violated by DHHS’s failure to produce all of the requested documentation
because he had the opportunity to be heard and to defend himself by subpoenaing the testimony
of other employees to provide the information he sought. In response, plaintiff argues that he was
unable to present an adequate defense because he lacked requested documentation regarding his
work requirements and objectives in comparison to other similarly situated employees and thus he
was denied procedural due process. We agree with defendants.
A. STANDARD OF REVIEW AND LEGAL STANDARDS
The courts’ review of a final decision of the Civil Service Commission is governed by
Const 1963, art 6, § 28, Viculin v Dep’t of Civil Serv, 386 Mich. 375, 385; 192 NW2d 449 (1971),
which provides that:
All final decisions, findings, rulings and orders of any administrative officer or
agency existing under the constitution or by law, which are judicial or quasi-judicial
and affect private rights or licenses, shall be subject to direct review by the courts
as provided by law. This review shall include, as a minimum, the determination
whether such final decisions, findings, rulings and orders are authorized by law;
and, in cases in which a hearing is required, whether the same are supported by
competent, material and substantial evidence on the whole record[.]
“This language consists of two standards of review: ‘authorized by law,’ a minimum standard
applicable every time the constitutional provision applies, and ‘competent, material, and
substantial evidence on the whole record,’ applicable only in cases where a hearing is required.”
Henderson v Civil Serv Comm, 321 Mich. App. 25, 39; 913 NW2d 665 (2017). Thus, “when
reviewing a lower court’s review of agency action this Court must determine whether the lower
court applied correct legal principles and whether it misapprehended or grossly misapplied the
substantial evidence test to the agency’s factual findings. This latter standard is indistinguishable
from the clearly erroneous standard of review[.]” Boyd v Civil Serv Comm, 220 Mich. App. 226,
234-235; 559 NW2d 342 (1996). “[A] finding is clearly erroneous when, on review of the whole
record, this Court is left with the definite and firm conviction that a mistake has been made.” Id.
A decision is not authorized by law when: (1) it violates a statue or the Constitution; (2) it
exceeds statutory authority or the agency’s jurisdiction; (3) it is made upon unlawful procedures
that result in material prejudice; or (4) it is arbitrary and capricious. Wescott v Civil Serv Commn,
298 Mich. App. 158, 162; 825 NW22d 674 (2012). “This Court adopted this particular formulation
of the authorized-by-law standard, in part, because it focuses on the agency’s power and authority
to act rather than on the objective correctness of its decision.” Henderson, 321 Mich. App. at 44
(quotation marks omitted).
Under the substantial-evidence test, “it does not matter that the contrary position is
supported by more evidence, that is, which way the evidence preponderates, but only whether the
position adopted by the agency is supported by evidence from which legitimate and supportable
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inferences were drawn.” McBride v Pontiac Sch Dist, 218 Mich. App. 113, 123; 553 NW2d 646
(1996). “The substantial evidence test requires that a decision be supported by evidence that a
reasonable person would accept as sufficient.” Cogan v Board of Osteopathic Medicine &
Surgery, 200 Mich. App. 467, 469-470; 505 NW2d 1 (1993).
Procedural due process imposes “constraints on governmental decisions which deprive
individuals of liberty or property interests within the meaning of the Due Process Clause of the
Fifth or Fourteenth Amendment[.]” York v Civil Serv Comm, 263 Mich. App. 694, 702; 689 NW2d
533 (2004). Due process “requires the opportunity to be heard at a meaningful time and in a
meaningful manner.” Id. (quotation marks omitted). This includes the ability to have “the chance
to know and to respond to the evidence against him[.]” Id. (quotation marks omitted). “Under
Michigan law, civil service employees are guaranteed continued employment absent just cause for
dismissal. This property interest is sufficient to merit due process protections.” Id. at 703. “The
Civil Service Commission is a constitutional body possessing plenary power and may determine,
consistent with due process, the procedures by which a State Civil Service employee may review
his grievance.” Viculin, 386 Mich. at 393.
“Once it is determined that due process applies, the question remains what process is due.”
Morrissey v Brewer, 408 U.S. 471, 481; 92 S. Ct. 2593; 33 L. Ed. 2d 484 (1972). “The very nature of
due process negates any concept of inflexible procedures universally applicable to every
imaginable situation.” Cafeteria and Restaurant Workers Union, Local 473, AFL-CIO v McElroy,
367 U.S. 886, 895; 81 S. Ct. 1743; 6 L. Ed. 2d 1230 (1961). Rather, due process “calls for such
procedural protections as the particular situation demands.” Morrissey, 408 U.S. at 481. “[W]here
governmental action seriously injures an individual, and the reasonableness of the action depends
on fact findings, the evidence used to prove the Government’s case must be disclosed to the
individual so that he has an opportunity to show that it is untrue.” Goldberg v Kelly, 397 U.S. 254,
270; 90 S. Ct. 1011; 25 L. Ed. 2d 287 (1970) (internal quotation marks and citation omitted).
“[C]onsideration of what procedures due process may require under any given set of circumstances
must begin with a determination of the precise nature of the government function involved as well
as of the private interest that has been affected by governmental action.” McElroy, 367 U.S. at 895.
According to the Civil Service Rules and Regulations, a state agency may discipline an
employee for “just cause,” which is defined as actions, not limited to: (1) failing to carry out duties
and obligations imposed by an agency, a work rule, or the law; (2) conduct “unbecoming a state
employee”; or (3) unsatisfactory performance or service. Civ Serv R 2-6.1(a) and (b). Agencies
are to “use corrective measures and progressive discipline[,]” but have the “discretion to impose
any penalty, up to and including dismissal, provided the penalty is not arbitrary and capricious.”
Civ Serv R 2-6.1(d). An employee who is disciplined is entitled to appeal that discipline to the
MCSC and argue it was imposed without just cause. Civ Serv R 8-2.2(c). In those cases, where
an employee is alleging that discipline lacked just cause, the MCSC places the burden of proof on
the appointing authority to “prove by a preponderance of the evidence that it had just cause to
discipline the grievant.” Civ Serv Reg 8.01(4)(H)(3)(a). If the appointing authority meets that
burden, “a hearing officer can only alter the discipline imposed if the grievant proves by a
preponderance of the evidence that the particular discipline imposed (1) violated a [MCSC] rule
or regulation, (2) violated an agency work rule, or (3) was arbitrary and capricious.” Civ Serv Reg
8.01(4)(H)(3)(b).
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B. DISCUSSION
We first conclude that the circuit court erred in determining that plaintiff’s procedural due
process rights were violated by DHHS’s failure to produce the requested documentation regarding
his workload and other employees’ workloads. Defendants had procedural safeguards in place
that provided plaintiff with due process. Defendants provided plaintiff with the supporting
documentation for his disciplinary actions and gave him an opportunity to challenge the veracity
of that information and to examine and cross-examine that evidence during a hearing and an
appeal. The record overwhelmingly demonstrates that plaintiff was aware of the basis for DHHS’s
progressive discipline regarding his work performance and ultimate dismissal, and that he had
ample opportunity to confront and refute this evidence. Indeed, plaintiff admitted that the records
that DHHS produced were an accurate reflection of his work, and, therefore, production of
additional documents pertaining to plaintiff’s work and workload would not have impacted the
veracity of the documentation DHHS provided. Thus, plaintiff had a meaningful opportunity and
time to be heard as well as to examine and know the evidence against him. York, 263 Mich. App.
at 702. As this is all due process requires, the circuit court clearly erred when it imposed the
heightened requirement of mandating DHHS to produce all of the documentation that plaintiff had
requested, even those documents that the record demonstrates that, in part, DHHS did not have
access to. Id.; Boyd, 220 Mich. App. at 234-235.
Additionally, DHHS’s failure to produce documents relating to plaintiff’s coworkers did
not violate due process because, even absent such documents, plaintiff could present an adequate
defense. The agency determined, in part, that DHHS was not required to produce the documents
at issue because the information could be ascertained through other means. We find no reason to
disturb this finding. McBride, 218 Mich. App. at 123. There is no indication that plaintiff was not
permitted to subpoena any witness he wanted, including other auditor supervisors, to testify about
their workload or that his right to cross-examine on this issue was improperly limited. The Civil
Service Regulations provide a procedure for requesting and issuing such subpoenas and plaintiff
failed to fully utilize this procedure when mounting his defense. See Civ Serv Reg 8.01(4)(F).
Indeed, plaintiff elicited some evidence regarding his argument that his objectives were
disproportionate to others, and his argument was still rejected by the MCSC. Again, we have no
reason to disturb this factual finding. McBride, 218 Mich. App. at 123. Moreover, as the Board
and hearing officer’s decisions noted, plaintiff seems to misunderstand the difference between his
objectives and his work assignments. Thus, even if plaintiff was correct that the number of
objectives assigned to him during his review process were unreasonable, he did not refute the
evidence that his actual work assignments remained unchanged during the review process.
Plaintiff also had the ability to cross-examine his supervisor about how his supervisor’s workload
compared to plaintiff’s. Thus, the record and the MCSC’s rules and regulations belie plaintiff’s
contentions that he was not given the opportunity to present an adequate defense without receiving
all of the documentation that he had requested.
And, to the extent that it is at issue on appeal, we agree with the circuit court and the agency
that there is substantial evidence that DHHS demonstrated just cause for plaintiff’s termination by
a preponderance of the evidence. Even as the circuit court expressed concern that plaintiff was
not able to compare his workload to the workload of others similarly situated, which impacted his
ability to defend against DHHS’s allegations, it indicated that MCSC’s determination that just
cause had been demonstrated satisfied the substantial evidence test. We also conclude that the just
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cause determination was supported by substantial evidence. In fact, DHHS provided
overwhelming evidence that plaintiff failed to perform his work tasks accurately and timely despite
having multiple opportunities to correct his deficiencies. Civ Serv R 2-6.1(a), (b), and (d). Indeed,
as the hearing officer noted, plaintiff admitted that the information DHHS had compiled about his
work performance was accurate. And the annual plans and performance objectives of other
employees is simply not relevant to the issue of plaintiff’s documented failure to meet the
objectives set for him. Stated otherwise, plaintiff’s performance as compared to the work
performance of others similarly situated does not shed light on the pertinent just-cause
determination of whether plaintiff met the requirements set for him. There was substantial
evidence that DHHS met its initial burden of demonstrating just cause, and thus, the MCSC
properly shifted the burden to plaintiff to demonstrate that it should alter DHHS’s discipline
against him. Cogan, 200 Mich. App. at 469-470.
Simply put, the record belies plaintiff’s contention that he was not afforded a fair
opportunity to present an adequate defense without receiving all of the documentation that he had
requested. Applying the wrong legal standards, the circuit court erred when it determined
plaintiff’s due process rights were violated and reversed the MCSC’s final decision, which was
not contrary to the law and was supported by substantial evidence. Accordingly, we reverse the
circuit court’s order and reinstate the MCSC’s decision upholding the hearing officer’s
determination that DHHS had just cause to terminate plaintiff’s employment.
Reversed.
/s/ Thomas C. Cameron
/s/ Douglas B. Shapiro
/s/ Anica Letica
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