Heller v. Department of Natural Resources

ADKINS, Judge. At the center of this employment dispute is Md.Code (1973, 2000 Repl.Vol., 2004 Cum.Supp.), section 5-908.1 of the Natural Resources Article (NR), which creates a Somers Cove Marina Improvement Fund in the Department [of Natural Resources], to be used for the operation, maintenance, development, and improvement of the Somers Cove marina facilities in Crisfield, Maryland. Any money obtained by the Department from Somers Cove Marina shall be credited to the Somers Cove Marina Improvement Fund. (Emphasis added.) Appellant James Heller sued the Department of Natural Resources (DNR), appellee, under the “Whistle Blower Law,” codified at Md.Code (1993, 2004 RepLVol.), § 5-305 of the State Personnel and Pensions Article (SPP).

He alleges that he was transferred and demoted from his position as the Somers Cove Marina manager because he complained that marina revenue was not being properly credited to this fund and that funds earmarked for the marina were being used improperly for the benefit of other DNR divisions. 1 ³⁰⁵ We shall hold that Heller made a protected disclosure within the purview of the Whistle Blower Law. We also conclude that Heller must be afforded an opportunity to present evidence in support of his claim that DNR removed him as marina manager in order to silence his persistent challenges to what he considered to be improper and illegal DNR fiscal practices, while citing a contrived sexual harassment complaint by a co-worker as pretext for that reprisal. We shall remand for further administrative proceedings on Heller’s Whistle Blower claim. FACTS AND LEGAL PROCEEDINGS Challenges To DNR’s Fiscal Practices From October 1998 until April 2001, James Heller worked for DNR as the manager of Somers Cove Marina (SCM) in Crisfield.

When he was hired, Heller was instructed to find out “why the marina was running a $197,000 deficit” and to “make the [m]arina profitable.” From the outset of his tenure, Heller’s review of DNR’s data, accounting, budgeting, and spending practices revealed what he believed were fiscal improprieties that included violations of NR section 5-908.1. Specifically, after talking with his predecessor and reviewing DNR’s monthly “green sheets” showing receipts and ex ³⁰⁶ penses, Heller suspected that there were three related problems contributing to SCM’s financial shortfall. First, Heller concluded that revenue generated by the marina (called “attainment”) was not being timely credited to the Fund as required by NR section 5-908.1. In turn, because the marina’s operating budget was predicated on attainment figures in a previous fiscal year, the marina’s budget was set far below what it should have been and what was reasonably necessary to operate the marina.

Among the problems Heller initially pointed to was that $80,000 in marina revenue had not been credited to the SCM Fund. When Heller brought this to the attention of three successive DNR supervisors and DNR budgeting officials, they pointed to prior management’s failure to submit requisite paperwork as the explanation for the discrepancy between the revenue taken in at the marina and the revenue reported in the budgeting process. The alleged lack of paperwork resulted in credit card revenue being held in escrow, which in turn resulted in the exclusion of that attainment from the year-end figures used to create SCM’s budget. Second, Heller asserted, funds that had been appropriated for the marina were being diverted to other uses, also in violation of section 5-908.1.

Among the expenses Heller initially brought to the attention of his DNR superiors were that $40,000 from the SCM Fund had been paid for operations at the Great Hope Golf Course in Somerset County, that a $24,000 truck supposedly purchased for SCM was being used by DNR Regional Director Joseph Ward at Jane’s Island State Park, and that other Fund moneys had been used for various projects and personnel outside SCM. DNR officials told Heller that there was a three-year contractual arrangement for the marina to purchase golf course passes for resale at the marina, but that few or none of the purchased passes had been resold. They also took the position that the truck, as well as SCM funds, could be transferred and used for the benefit of other DNR facilities and personnel. ³⁰⁷ Third, Heller complained that funds appropriated for SCM were being set aside (“encumbered”) for non-marina purchases and personnel, or for other purposes that were not included in the marina’s budget, in violation of section 5-908.1. As a result, money budgeted for the marina was not being spent on the marina.

Again, DNR officials explained to Heller that they considered some such encumbrances permissible. Heller concluded that DNR had a policy and routine practice of using SCM as a “cash cow” to fund DNR facilities, equipment, and personnel, outside SCM. From the outset, he expressed his strong belief that any diversion of SCM’s attainment; any use of the SCM Fund or money appropriated for SCM; and any encumbrances on SCM’s budget for purposes other than SCM facilities, programs, and personnel violated NR section 5-908.1. Heller objected that these practices caused the marina to be “shorted” in the amount budgeted, the amount credited, and the amount actually spent for the benefit of the marina.

He maintained that these were improper and illegal fiscal practices that lay at the root of deficits, inadequate budgets, marina price increases, and ultimately, diminished service to marina customers and the public. In 1998 and early 1999, Heller brought his observations and objections to the attention of Joseph Ward, his immediate DNR supervisor who also had direct management responsibility for Jane’s Island State Park, and Daryl DeCesare, DNR’s Regional Manager for the Eastern Shore division of the State Parks and Forest Service (SPFS). Both rejected Heller’s concerns that these practices violated section 5-908.1, for the reasons summarized above. Despite his supervisors’ explanations and assurances, Heller continued to complain about what he viewed as ongoing misuse of revenue generated by the marina and funds appropriated for the marina.

Heller’s concerns eventually became a matter of public discussion. One letter dated September 14, 2000, from a long term marina user to then-Governor Parris Glendening states that he had “been informed that some of ³⁰⁸ the money collected for the [m]arina has been siphoned into areas other than the Somers Cove Improvement Fund as outlined in Article 5-908.1” and “ask[s] the Attorney General Office to investigate this matter.” A November 2, 2000 letter from another marina user to DNR’s Assistant Superintendent for the SFPS inquires about the “actual amounts credited to the Somers Cove Improvement Fund” and the “yearly expenditures from the Somers Cove Improvement Fund ... attributable to the intended purpose of the fund as directed by Comar [sic] 5-908.1[.]” These and follow up letters were shared with “slipholders of Somers Cove Marina” as well as DNR managers, including Ward, DeCesare, and SFPS Superintendent Barton. In addition, copies were sent to political representatives, including U.S. Senator Barbara Mikulski, State Senator Lowell Stoltzfus, and State Delegate Charles McClenahan. By early 2001, the General Assembly had begun to audit DNR to determine, inter alia, whether the agency had corrected fiscal practices that had been disapproved in a 1999 audit report.

Among the previously disapproved practices was DNR’s use of legislatively earmarked funds for non-earmarked purposes, though no specific funds were identified in that report. Ward and DeCesare responded repeatedly to Heller’s concerns and complaints, rejecting each one and attempting to focus Heller on staying within the marina’s budget, regardless of its acknowledged flaws. But Heller remained unsatisfied and continued to object to what he viewed as the continuing misuse of marina revenue and appropriations. According to Heller, unable to silence him, Ward, DeCesare, and other senior DNR managers created an opportunity to remove him from his post at the marina.

Heller alleges that, as pretextual justification for a retaliatory transfer and demotion to a “gopher” position at a nearby park, DNR “cooked up” a harassment complaint by his disgruntled assistant, who was then rewarded for her role. ³⁰⁹ The EEO Claim Mary Taylor began working at the marina as office manager in January 1999. Although Taylor and Heller initially had a good working relationship, by the summer of 2000, Heller was dissatisfied with her performance. From Heller’s perspective, Taylor became difficult after he began a personal relationship with Becky Lowe, an area resident who did some contract work for the marina. In July 2000, after consulting with Ward and DeCesare, Heller attempted to reprimand Taylor for various job performance deficiencies.

Among the workplace problems, he felt, were inappropriate attempts to “romanticize” their strictly professional relationship. This session did not go well, ending with an upset Taylor leaving the marina. According to Heller, Taylor threatened to resign and he invited her to do so. According to Taylor, Heller demanded that she resign.

Taylor immediately contacted Ward and DeCesare, who intervened in the dispute. Taylor returned to work, with Ward and DeCesare assuming some of the supervisory responsibilities over her that Heller previously held. Tension between Heller and Taylor continued. In August 2000, Lowe lodged a complaint against Taylor, alleging that Taylor steered Lowe’s customers away from her.

The complaint was investigated; in early 2001, it was determined to be “unfounded.” Meanwhile, both Heller and Taylor continued to complain to Ward about the “hostile work environment” that each thought the other was creating. Heller went so far as to send an August 26, 2000 memo notifying Ward and DeCesare that Taylor appeared to be taking steps to “set up” the DNR for a “hostile environment” lawsuit. On April 11, 2001, Taylor followed up her oral conversations with Ward with a letter “to substantiate our conversation on May 9, 2001[sic] regarding my concerns at Somers Cove Marina.” Taylor stated that she felt “very uncomfortable working at Somers Cove Marina alone with Mr. Heller” ³¹⁰ because, “under the circumstances of the previous investigation brought about by Mr. Heller’s significant other, Ms. Becky Lowe, ... I am quite concerned of future persecution from either Mr. Heller or Ms. Lowe.” Asserting that “[w]orking alone with Mr. Heller makes [such persecution] inevitable[,]” Taylor claimed that “[t]he accusations from the investigation show that both individuals mentioned have misconceptions of my intentions as an employee of Somers Cove and in my opinion [border] on sexual harassment.” She pointed out that, “[i]f the accusations were true, I would think that Mr. Heller would be writing this letter to you to avoid working alone with me.

Instead, I am pleading for your immediate attention to my working conditions.” By memo dated April 13, DeCesare responded to Taylor’s letter by ordering Ward to “assume direct management of the marina” while “investigations are conducted[.]” The following day, Ward met with Heller to advise him of Taylor’s charges and to reassign him to a lesser position at Pocomoke River State Park, while Taylor remained at her marina post. According to Heller, Ward told him that he, rather than Taylor, was being removed from the marina “[b]ecause you’re the one the charges were made against.” Denying Taylor’s charges, Heller maintained that Taylor’s complaint was encouraged by Ward and DeCesare in an effort to create a pretext for removing him as marina manager, in order to silence his complaints about the misuse of marina funds. In support, Heller contends, inter alia, that, as an immediate result of his transfer and demotion, Taylor received an unusual five grade promotion and raise, retroactive for one year. Probable Cause Determination In a written decision dated May 30, 2001, DNR’s Equal Opportunity Employment Officer found “sufficient information and evidence against [Heller] to support a ‘Finding of Probable Cause,’ in that [Heller] did discriminate against [Mary Taylor] based on her gender.” On June 21, SFPS Superintendent Col.

Rick Barton issued a written reprimand to Heller ³¹¹ based on that investigation and finding. He made permanent the transfer to Pocomoke, demoted Heller’s employment grade, mandated that he submit to sexual harassment training, and barred him from having any contact with Taylor and from visiting Somers Cove Marina. Through counsel, Heller appealed the decision to DNR Secretary Sarah Taylor-Rogers on both substantive and procedural grounds. In a letter dated June 29, 2001, counsel asserted that “the disciplinary action undertaken against [Heller] was prompted by a disclosure of managerial and fiscal misconduct!.]” When the DNR Secretary found the action “appropriate” given “the seriousness of the findings of probable cause of sex discrimination,” Heller again appealed, while reserving his right to assert a Whistle Blower claim.

On August 22, 2001, Heller asserted a Whistle Blower claim to the Secretary of the Department of Management and Budget. The Director of Audit and Management Review investigated and found no merit to the claim. His report reviews only Heller’s early complaints about the Great Hope Golf Course, the pickup truck, and DNR’s delay in crediting all SCM receipts, and rejects each one as the result of Heller’s misunderstanding of DNR’s budget and financial practices. On February 12, 2002, Heller appealed the decision, asking for an administrative hearing before an administrative law judge appointed by the Office of Administrative Hearings.

A March 26, 2002 settlement thereafter resulted in the DNR removing the written reprimand from Heller’s record and upgrading his position at Pocomoke. Per agreement that “this Settlement Agreement does not affect any claims or defenses by either party in the Petitioner’s Whistleblower action appealed to the Office of Administrative Hearings on February 12, 2002,” Heller was free to pursue his claim under Maryland’s Whistle Blower Law. DNR acknowledged that “nothing in this Agreement shall prejudice [Heller’s] Whistle Blower Complaint or DNR’s ability to defend against same.” At the administrative hearing on Heller’s Whistle Blower claim, the SFPS Superintendent Col. Rick Barton testified ³¹² that the decision to remove Heller was his alone, and that it was based exclusively on the EEO Officer’s probable cause determination concerning Taylor’s sexual harassment claim.

The ALJ refused to allow Heller to ask Barton about the substance of. Taylor’s complaint or to challenge the probable cause determination, holding that Heller waived any right to do so when he settled for removal of the reprimand from his record. Heller was permitted, however, to offer testimony by State Senator Lowell Stoltzfus and former House Delegate Charles McClenahan. Both legislators commended Heller’s “excellent” work in improving the marina and were immediately concerned about the impact of his departure.

According to both, when Barton, Dunmyer, Taylor-Rogers, and DeCesare were asked why Heller had been removed, they received two different answers. Sen. Stolzfus testified that as soon as he heard about Heller’s transfer, he pressed DeCesare for “more information as to why you are releasing him,” because he “was aware of harassment charges which, ... I heard both sides of that story and wasn’t entirely satisfied that that was a reality.” When Stoltzfus “pushed him further,” saying “there’s got to be something else,” DeCesare “said, well, there’s been some financial mismanagement,” but “refused to detail me on it.” Del.

McClenahan, who was also a marina slipholder, testified that he called Jim Dunmyer, the Assistant Superintendent of SFPS, and also met with Sec. Taylor-Rogers, along with other Lower Shore representatives. Each told him he could not “discuss it with you because it’s an EEO claim and I can’t give you any information about that.” McClenahan then arranged a June 28th meeting on the issue for local government leaders and marina slip holders. The day before, DeCe-sare informed him by telephone “that Mr. Heller has been removed permanently from Somers Cove and the reason is for budget management.” At the meeting, however, Barton stated that “the reason was for an EEO claim.” McClenahan “spoke up,” saying: “Yesterday I was told by Mr. DeCesare ³¹³ that it was fiscal problems and now you’re telling me this. What is the truth?” At that point, “DeCesare interrupted” McClenahan to say, “I told you that in confidence.” McClena-han responded that he just “want[ed] to know what the claim is here.

So there were two sides of the story.” At the end of the meeting, based on what they were told, “we all left there with a feeling it was an EEO claim.” The ALJ issued a written decision denying Heller Whistle Blower relief for three reasons: (a) Heller “failed to show that he made a protected disclosure under the Whistle Blower statute;” (b) Heller “failed to show he was transferred in reprisal for his alleged disclosures;” and (c) Heller’s “allegations of fiscal impropriety were without merit.” Heller petitioned for judicial review. The Circuit Court for Somerset County affirmed the ALJ’s decision. Appeal Heller filed this timely appeal, raising three issues for our review, which we restate as follows: I. Did Heller make a “protected disclosure” within the purview of the Whistle Blower Law?

II

Did the ALJ err in restricting cross-examination and excluding evidence offered by Heller to establish that the EEO finding was used as a pretext for removing him as SCM manager in retaliation for his continuing disclosures regarding violations of NR section 5-908.1?

III

Did the ALJ err in requiring Heller to prove that his disclosures regarding fiscal wrongdoing were “well-founded” rather than merely “reasonably held”? We answer yes to the first and second questions. Because we must vacate the judgment and remand for further administrative proceedings on Heller’s Whistle Blower claim, we briefly address the standard of proof issue for guidance. ³¹⁴ DISCUSSION Maryland’s Whistle Blower Law The General Assembly has made it clear that, to ensure that ‘“government operates in accordance with the law and in avoidance of mismanagement, monetary waste, abuse of authority, and danger to public health and safety[,] .... it is essential that classified State employees be free to disclose impropriety in [the] exercise of their constitutional right of free speech.’ ” Montgomery v. Eastern Corr. Institution, 377 Md. 615, 626 , 835 A.2d 169 (2003) (citation omitted).

In that respect, “ ‘employees who make [protected] disclosures ... serve the public interest by assisting in the elimination of fraud, waste, abuse, and unnecessary Government expenditures.’ ” Id. at 632 , 835 A.2d 169 (quoting legislation enacting analogous federal statute). “Maryland’s Whistle Blower Law ... prohibits a reprisal against a State employee who makes a protected disclosure” of information that he or she reasonably perceives as evidence of a serious abuse of governmental authority, including inter alia “gross mismanagement” of public funds and violations of law. See id. at 625 , 835 A.2d 169 . The statute “is designed to protect employees who risk their own personal job security for the benefit of the public.” Willis v. Dep’t of Agriculture, 141 F.3d 1139, 1143 (Fed.Cir.1998). In language similar to its federal counterpart, see Montgomery, 377 Md. at 625 , 835 A.2d 169 , Maryland’s statute provides: [A] supervisor, appointing authority, or the head of a principal unit may not take ... any personnel action as a reprisal against an employee who: (1) discloses information that the employee reasonably believes evidences: (i) an abuse of authority, gross mismanagement, or gross waste of money; ... [or] (iii) a violation of law[.] SPP § 5-305 (emphasis added). “ ‘The purpose of this subtitle is to prohibit any State appointing authority from using a personnel action as a retal ³¹⁵ iatory measure against an employee ... who has made a disclosure of illegality or impropriety.’ ” Montgomery, 377 Md. at 626 , 835 A.2d 169 (quoting preamble to House Bill 616).

Thus, whistle blowers must show both a protected disclosure and an impermissible reprisal for that disclosure. 2 See id. Standard Of Review Our narrow role in reviewing an administrative adjudication “ ‘is limited to determining if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and to determine if the administrative decision is premised upon an erroneous conclusion of law.” Id. at 625 , 835 A.2d 169 (citation omitted). With respect to the agency’s interpretation and application of a statute that it administers, we give some deference to the agency’s position since it is presumed to draw on its own expertise in the field of its endeavor. See id. at 626 , 835 A.2d 169 .

But we need not ³¹⁶ give such weight to an agency’s interpretation of a statute when that legislation concerns matters outside its area of expertise. See Haigley v. Dep’t of Health & Mental Hygiene, 128 Md.App. 194, 216 , 786 A.2d 1185 (1999). I. Heller Made A Protected Disclosure A. Identifying What Is Protected “[M]aking a disclosure protected by the [Whistle Blower Law] fundamentally is different from a government employee complaining about, or grieving, how he or she is treated by his or her supervisor.” Montgomery, 377 Md. at 633 , 835 A.2d 169 . This law is not designed to protect an employee who complains about discriminatory, harassing, or other objectionable workplace behavior by supervisors and officials, because there are other administrative and judicial remedies in such circumstances.

See, e.g., id. at 629-42, 835 A.2d 169 (employee grievance complaining that supervisor’s “derogatory demeanor and belittling comments” created hostile work environment was not a protected disclosure). To determine whether a particular disclosure falls within the purview of the statutory protection for revelations of “gross mismanagement,” “abuse of authority,” and “violations of law,” the Court of Appeals has relied on federal law construing the analogous, federal statute, the Whistleblower Protection Act (WPA). See id. at 640-41 , 835 A.2d 169 ; 5 U.S.C. § 2302 (b)(8). In Montgomery , the Court of Appeals described the types of improprieties the disclosure of which may be redressed under the Whistle Blower Law. • “Gross mismanagement” means “ ‘a management action or inaction that creates a substantial risk of significant adverse impact upon the [government] agency’s ability to accomplish its mission.’ ” Id. at 640 , 835 A.2d 169 (citation omitted).

One example might be a government physician’s public complaint about “delays in setting in ³¹⁷ dustry standards [for preventive medicine] which imperiled millions of workers, but benefited industry.” Montgomery, 377 Md. at 626 n. 7, 835 A.2d 169 . • “Abuse of authority” is “ ‘the arbitrary or capricious exercise of power by a [government] official or employee that adversely affects the rights of any person or that results in personal gain or advantage to himself or to preferred other persons.’ ” Id. (citation omitted). Examples include “misuse of government equipment or knowing approval of falsified time sheets.” Id. • Finally, a disclosure regarding an alleged “violation of law” requires not only an identification of lawbreaking conduct, but also that the reporting employee is “moved by a concern for the public well-being” and has “a reasonable belief that he or she is disclosing such a violation.” Id. The “reasonable belief’ test is an objective one.

See id. Thus, a common theme for all protected disclosures is that they must relate to a perceived illegality or impropriety “of the public sort.” See id. at 641 , 835 A.2d 169 . B. Heller’s Protected Disclosures Heller argues that the circuit court and ALJ erred in ruling that he did not make a protected disclosure. According to Heller, he made many protected disclosures, both written and oral.

He asserts that, even though the ALJ did not find Heller’s allegations regarding his oral statements to be credible, she committed clear error in finding that none of the documents he offered qualified as a disclosure that he “reasonably believed” would “evidence” “violations of law.” First and foremost, Heller points to a January 13, 2000 memorandum that he and Taylor wrote to Joseph Ward, and copied to DNR’s Regional Director, Daryl DeCesare. This memo responded to a December 16, 1999 memo from Ward concerning the marina budget and possible cutbacks that might be necessary to stay within it. In his memo, Heller ³¹⁸ claimed to repeat prior complaints about the deleterious effects of what he viewed as DNR’s continuing policy and practice of treating SCM as a “cash cow” to fund other DNR facilities, equipment, and personnel: We now appreciate why our customers were so vocal when we came onboard with their outcry, “A MARINA IS NOT A PARK!” It is very obvious that there is little understanding of what it takes to run Somers Cove Marina. We appear to be chastised on most levels for performance that gave DNR a 180 turn around in one year.

We feel that we are being told to turn our backs on the progress we have made and let it regress to its former state. Your point is well taken that the present Marina Budget can not support the proper operation of the Marina, especially when we are used as a “CASH COW”. Your balancing [of] the budget — Fiscal Year 2000 Somers Cove Marina revised on 12/6/99 Memo is a superb piece of work that shows at least $158,000.00 has been removed from the Somers Cove Fund. Today you informed us that an additional $100,000 was taken out of 01.

We all know that the FY 1999 attainment should have given the Marina a $623K budget, not the $405K budget that was given us. Look at the figures: You found 158K From 01 add 100K (Add someone’s Non-Compliance with the Associated Code of MD Article 5-908.1 Somers Cove Marina Improvement Fund 623K — 405K =) 218K This brings us to a total of at least 476K which we have been shorted. For the past SIX MONTHS we have been telling DNR that a person or persons have been in violation of Article 5-908.1 and we have been told not to pursue this matter. The abuse has not been corrected and in fact has escalated.

Please do not expect to hold us accountable for this if it is found in an audit and we are questioned as to why ³¹⁹ we did not “Blow The Whistle”. Does this not remind you of past Marina Management practices? Since January 2, 2000, our attainment has been $60,357.00 and our YTD attainment is $361,359.00. Our projected attainment is $720,000.00____We will of course comply with your memo and provide the very best service when we are here....

We are deeply concerned about the impact this will have on the Marina’s performance and reputation due to the Office Hours, Office Closures, Guard Coverage and the unavailability of Fuel Service.... (Emphasis added.) Heller argues this qualifies as a protected disclosure because it reports violations of NR section 5-908.1’s restrictions on the use of funds generated by the marina and on the use of funds appropriated for the marina budget. In his view, the memo satisfies all “elements of a protected disclosure under Section 5-305.” The January 13, 2000 memo alleges that DNR is engaging in prohibited fiscal practices that collectively harm the public interest by misusing money the legislature has earmarked for the marina. It complains about $258,000 in appropriated funds “removed from the Somers Cove Fund,” and an additional $218,000 in marina revenue (attainment) that allegedly was not timely credited to the Fund.

It explicitly invokes NR section 5-908.1 and discusses a need to “blow the whistle” on such practices. Finally, it decries the harm to public services provided by the marina, and that “the abuse has not been corrected and in fact has escalated.” In her written decision, the ALJ acknowledged that this memo “contains an[ ] allegation ... that Somers Cove funds are being used improperly!?]” She nonetheless concluded that this memo does not qualify as a protected disclosure because it does not contain any specific information as to where funds were allegedly improperly diverted. In addition, it does not identify to whom the Complainant allegedly made such disclosures during the last six months.... ³²⁰ An additional problem with the ... alleged disclosures is that they all appear to be made to Mr. Ward and Mr. DeCesare.... [I]f [Heller] is accusing someone, or more than one person, who works at DNR headquarters in Annapolis of improperly diverting funds, then reporting this to his immediate supervisor and his supervisor does not constitute blowing the whistle. The Complainant would have to make such disclosures to someone