Whistleblower Investigation Report Department of Social and Health Services Published July 16, 2020 Report No. 1026615 Office of the Washington State Auditor Pat McCarthy July 16, 2020 Cheryl Strange, Secretary Department of Social and Health Services Report on Whistleblower Investigation Attached is the official report on Whistleblower Case No. WB 20-005 at the Department of Social and Health Services. The State Auditor’s Office received an assertion of improper governmental activity at the Department. This assertion was submitted to us under the provisions of Chapter 42.40 of the Revised Code of Washington, the Whistleblower Act. We have investigated the assertion independently and objectively through interviews and by reviewing relevant documents. This report contains the results of our investigation. If you are a member of the media and have questions about this report, please contact Director of Communications Kathleen Cooper at (564) 999-0800. Otherwise, please contact Assistant Director of State Audit Troy Niemeyer at (564) 999-0917. Sincerely, Pat McCarthy State Auditor Olympia, WA cc: Governor Jay Inslee Andrew Colvin, Discovery & Ethics Administrator Kate Reynolds, Executive Director, Executive Ethics Board Cheri Elliott, Investigator Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at (564) 999-0950, TDD Relay at (800) 833-6388, or email our webmaster at webmaster@sao.wa.gov. Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  (564) 999-0950  Pat.McCarthy@sao.wa.gov WHISTLEBLOWER INVESTIGATION REPORT Assertion and Results Our Office received a complaint that a Department of Social and Health Services (Department) assistant secretary (subject) hired three of her relatives. The subject reports directly to the Secretary of the Department. We found no reasonable cause to believe an improper governmental action occurred related to the hiring of her nephew. However, we found reasonable cause to believe an improper governmental action occurred related to the hiring of her daughter. Background The Secretary of the Department of Social and Health Services runs Washington’s largest public agency, which annually serves more than 1.9 million residents (roughly one-fourth the total population). More than 17,000 employees work in several service areas that help provide access to food, cash and medical benefits; aging and long-term care support for adults and people with developmental disabilities; behavioral health services in state-run hospitals; and other social services. The Department Secretary also manages the agency’s more than $13.8 billion two-year budget. The subject of this investigation is one of eight people in the Department’s leadership team and reports directly to the Department Secretary. The subject is the leader of a division comprising 13 leadership roles and nearly 1,000 employees. About the Investigation The complaint stated that the subject hired her son, daughter, and nephew. Because her son left the Department before the start of our one-year investigative period, we did not investigate the circumstances surrounding his hiring. We reviewed emails and hiring documents, and interviewed witnesses who participated in the hiring of her daughter. According to the Department human resources senior director, because her nephew was appointed to a non-permanent position, recruitment for the position was not required. Therefore, no interviews were conducted. Because the position filled by her daughter was a permanent position, an open recruitment occurred in which applications were accepted and applicants interviewed. Nephew In May 2018, the subject’s nephew was hired as a non-permanent employee, and in 2019, he was rehired as a non-permanent employee. According to the Department’s policy, the appointing authority approves or denies non-permanent appointments lasting up to 12 months. The appointing authority can request a longer appointment through human resources. An appointing authority is an employee who has been delegated authority to make personnel decisions such as hiring Office of the Washington State Auditor Page 1 employees. The subject’s nephew, who has a master’s degree in English, was hired for a 14-week position to review and write decision packages that could be easily understood by people unfamiliar with the topic — a skill, she said, the Department’s budget office lacked. The subject wanted someone who could write in a way the Legislature would understand. She said that she did not consider anyone else to do the job. She knew her nephew was proficient in writing and “grabbed” him to do the work. She said it is not unusual for the Department to “grab” someone for a non-permanent position. The subject said that she had a five-minute conversation with the Department Secretary, during which they read the Department’s policy on hiring and decided there was no prohibition on hiring her nephew. She said in retrospect they probably should have gone to the human resources department. However, the Department Secretary said she did not recall a conversation with anyone about hiring any nephew. She said her usual course of action related to personnel, is to refer to the human resources director. The hiring document listed someone other than the subject as the hiring manager. However, that person, who reports to the subject, stated he was not involved in the hiring process in 2018. In fact, his first day with the Department was the day the document was signed. However, he was involved in re-hiring the nephew in 2019 as a non-permanent employee for 14 weeks, based on the work done in 2018. A staff member who helped prepare the hiring documents said she knew about the relationship before the hiring was official because the subject told her of the relationship and said that the Department Secretary had given permission to hire the nephew. In May 2018, one of two previously designated employees who had signing authority on behalf of the subject, a process that is allowed during the normal course of business, was given the request-to-hire document to sign the day the subject began her leave. The designee told us he did not know the employee was the subject’s nephew until recently and that had he known of the relationship, he would not have signed without talking to someone first. According to the Department’s senior human resources director, the subject, as an appointing authority, has the authority to approve a non-permanent hire without consulting with anyone. The subject is required to file the proper documents with the HR department so it is aware of a new hire. The HR director said that in this situation there were no red flags to address because the subject did not disclose to HR her relationship with the nephew. State ethics laws do not specifically address the hiring of relatives, though they do require avoiding perceived or actual conflicts of interest and giving special privileges. Generally, agencies are meant to write policies that fit their particular line of work. In this case, a Department policy required disclosure of relatives when there is a relationship between an employee and their supervisor. However, the policy does not define a nephew as a relative so the decision whether to disclose the relationship was left to the subject’s discretion. Office of the Washington State Auditor Page 2 The hiring of the nephew, who was in the subject’s reporting structure, has the appearance of a potential conflict of interest and a special privilege. However, because the Department does not classify a nephew as a relative, the subject was not required to disclose her relationship. Further the Department allowed the subject to approve a non-permanent hire, including one she chose, with no requirement to involve anyone else in the decision process. Therefore, we determined the subject did not commit an improper governmental action. Daughter In November 2018, a management analyst 4 position opened within the subject’s division. The position’s responsibilities included evaluating complex management problems and forming recommendations, supporting performance management activities, assisting with operations management and deployment of special projects, and assisting and leading in developing and implementing employee-centered activities and trainings. The position had a salary range of $54,924 to $72,036. On November 20, the subject’s daughter submitted her application through the state’s hiring system. According to witnesses, after the initial review of the applications, a panel of six people decided which applicants to interview. A review of the hiring documents showed each panelist chose the subject’s daughter as one of five candidates to interview. Three of the candidates were chosen to move on to the next phase of interviewing, where they produced and presented a project created by one of the interview panelists. A new panel was chosen to evaluate the presentations. Witnesses said one of the candidates chose not to participate. The remaining two candidates made errors in their presentations, but only the daughter was able to find and correct the error. According to witnesses, this ultimately led to her hiring. Four of the panelists said they were aware of the relationship between the applicant and the subject. One of the two who was not aware of the relationship said that she did know that one of the finalists was related to someone within the hiring process, but did not know which candidate or which employee. All panelists said that the fact that the chosen candidate was the subject’s daughter had no bearing on why she was hired. The panelists said she was the best candidate, and that the subject did not interfere with the process. A review of the panel’s interview documents revealed nothing that indicated the daughter was not qualified or a top candidate. During our review of the subject’s emails, we found four emails related to the daughter’s hiring. One was an email sent by the subject to her assistant inquiring when the position would be ready to open, and three were sent to her by her daughter attaching different versions of her resume and cover letter. We found no emails from the subject in response, nor did we find that the subject forwarded the resumes to anyone. Office of the Washington State Auditor Page 3 Ultimately, the subject signed the letter appointing her daughter to the position, and her daughter was in the subject’s chain of command with one supervisor between them. The daughter’s start date was February 1, 2019. The Department’s senior human resources director said she did not find out about the relationship until one of her staff told her, which she thinks happened about a month after the daughter began work. The HR director then told the Department’s chief of staff. He said that he talked with the interview panel and was told the daughter scored the highest of the candidates. He said neither the subject nor her daughter had disclosed their relationship when she had applied and interviewed for the position. The chief of staff asked the HR director to redo the appointment letter for his signature, instead of the subject’s. He said he did this to ensure that if any personnel issues arose with the daughter, they would come to him to address. After about two weeks, he discussed the situation with the Department Secretary, who told him to “clean up” the situation. He moved the subject’s daughter to another division, effective May 13, 2019. Department policy requires disclosure of relationships but does not prohibit the employment of relatives. Although the subject violated Department policy when she failed to disclose the relationship, we found no evidence that she directly influenced her daughter’s hiring. However, her failure to disclose the relationship and the fact that her daughter was in her reporting structure created a situation that had the potential for a conflict of interest, which she failed to address and to mitigate before her daughter was hired. State ethics law (RCW 42.52.020) states: No state officer or state employee may have an interest, financial or otherwise, direct or indirect, or engage in a business or transaction or professional activity, or incur an obligation of any nature, that is in conflict with the proper discharge of the state officer's or state employee's official duties. We found reasonable cause to believe an improper governmental action occurred. Department’s Plan of Resolution Thank you for the opportunity to review and respond to the State Auditor’s Office (SAO) report on Whistleblower Case Number 20-005. The Department of Social and Health Services (department) appreciates the assistance of the SAO by providing the department with important facts from its investigation. The report states the SAO found there was no reasonable cause to believe an improper governmental action occurred related to the hiring of the subject’s nephew. The report goes on to Office of the Washington State Auditor Page 4 state the SAO found there was reasonable cause to believe an improper governmental action occurred related to the hiring of their daughter. According to the report the subject:  Failed to disclose a relationship of a family member as established in departmental policy.  Violated State Ethics Law (42.52.020) when the daughter remained in the reporting structure of the subject creating a situation that had the potential for a conflict of interest. The department recognizes the need for additional training surrounding our policies and revised language to clarify procedures in reporting. The department did take action once the relationship was discovered. The policy clearly defines the supervisor/subordinate relationship as a reporting relationship between a DSHS employee and his or her first-line supervisor, second-line supervisor, or immediate appointing authority. Although there was a layer of supervision between the employee and the Appointing Authority, there is a potential risk and non-compliance with the policy. The department did take action as outlined in the departmental policy once the Human Resource Director became aware of the relationship. These actions included:  Updated the appointment letter.  Per the department’s policy 18.17 policy point B: The reporting structure was updated.  Per the department’s policy 18.17 policy point C: Moved the subject’s daughter to another division as outlined in policy. Plan of Resolution The department will provide guidance to Appointing Authorities to ensure adequate compliance with department policy. This will be accomplished by providing training to Appointing Authorities in a format of micro-learning. It will outline examples to identify conflicts with the policy, and will also be incorporated in the Appointing Authority Academy that is currently under development by DSHS. State Auditor’s Office Concluding Remarks We thank Department officials and personnel for their assistance and cooperation during the investigation. Office of the Washington State Auditor Page 5 WHISTLEBLOWER INVESTIGATION CRITERIA We came to our determination in this investigation by evaluating the facts against the criteria below: RCW 42.52.020 Activities incompatible with public duties. No state officer or state employee may have an interest, financial or otherwise, direct or indirect, or engage in a business or transaction or professional activity, or incur an obligation of any nature, that is in conflict with the proper discharge of the state officer's or state employee's official duties. RCW 42.52.070 Special privileges. (1) Except as required to perform duties within the scope of employment, no state officer or state employee may use his or her position to secure special privileges or exemptions for himself or herself, or his or her spouse, child, parents, or other persons. 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