Senate Law and Justice Committee Chair Mike Padden, R-Spokane.

Last year there was a furor when it appeared the staff of the Office of Insurance Commissioner leaned on a judge in order to obtain favorable decisions. This rather troubling situation was possible because the judge in question, Patricia Petersen, was employed by the Insurance Commissioner’s office. But here’s the part I think ought to chill everyone who is concerned about the fairness and impartiality of the quasi-judicial hearings that take place within state-government agencies: Since then nothing has been done.

In the Senate Law and Justice Committee last month Petersen told a story that might make anyone wonder if the insurance appeals process is a kangaroo court. She told us she had been called into the office of her supervisor after she had issued an adverse ruling on a high-profile case involving health care reform. “He told me the following: When you receive your cases from now on, go to the insurance commissioner personally, sit down with him and ask him how he wants to decide these cases, and decide your cases that way.”

The written record in this matter is rather clear – Petersen was threatened with a negative job evaluation if she didn’t issue rulings more to the commissioner’s liking. Petersen went public, and before she could file a lawsuit the OIC settled for $450,000. It was a particularly tangled case, but these are the details that are the most important. Except for one other I think should make us all sit up and take notice. It could happen again.

Petersen told us that the Insurance Commissioner’s office is now recruiting for her replacement, with a job description that makes it entirely possible the same pressures could be applied. “The situation I experienced in the agency can happen again,” she said. “The temptation of an elected government official to inappropriately inject him or herself into what must be an impartial hearing process is just too great. The problem will be here as long as the hearing process remains within the OIC.”

That much should be obvious to everyone – which is why I am working on a proposal to restore confidence in the hearing process. The problem is that when people wish to appeal the decision of a state agency, they really don’t have much choice – often they must make their arguments before a judge who works for that agency. Generally people also have the right to request an appeal before an independent agency, the Office of Administrative Hearings, but its judges have the ability to make final decisions only in some cases and not in others. Where insurance appeals are concerned, the decision is kicked back to the agency for final review, making the exercise pointless, so the option is seldom used.

I have sponsored a bill, SB 6019, allowing administrative law judges to issue final orders that cannot be overturned by agencies and can be challenged only in Superior Court. And for good measure, the bill makes it clear that state agencies are prohibited from punishing judges with negative job evaluations for decisions they don’t like.

It is astonishing that we have to pass a bill like this one in the first place. This matter would be even more disturbing if we were to let it go unaddressed. If we can’t guarantee that hearings will be fair, what is the point in holding a hearing in the first place? And we might also say that we in the Legislature are in the business of making laws, and we certainly ought to make sure the rule of law is respected.