Nnanta Felix Ngari VS Office of Group Benefits
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NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2012 CA 1096 r J1 I NNANTA FELIX NGARI VERSUS OFFICE OF GROUP BENEFITS On Appeal from a Decision of the State Civil Service Commission Docket No 5 17010 Honorable David Duplantier Chairman John McLure Vice Chairman C Pete Fremin G Lee GrifFn D Scott Hughes Kenneth Polite and Sidney Tobias Members Andre R Belanger Manasseh Gill Knipe Belanger C L P Baton Rouge LA William A Norfolk Taylor Porter Brooks Baton Rouge LA Phillips P L Attorney for Appellant Plaintiff Nnanta Felix Ngari Attorney for Appellee Defendant State of Louisiana OfFce of Group Benefits BEFORE PARRO WELCH AND KLINE JJ udgment rendered MAY 3 1 2013 udge William F Kline rretired is serving as judge ad hoc by special appointment of the Louisiana Supreme Court PARRO 7 Nnanta Felix Ngari appeals a final decision of the Louisiana Civil Service Commission the Commission denying his appeal and upholding the disciplinary action taken by the Office of Group Benefits OGB to terminate his employment for failure to disclose a potential conflict of interest Based on our review of the record we affirm FACTUAL AND PROCEDURAL BACKGROUND Ngari was hired by OGB on December 19 2008 as an Auditor 3 in its internal audit division Before accepting this position he had been the owner president and director of Unique Medical Solution Inc Unique a provider of power wheelchairs to Medicare recipients Unique had contracts with OGB dating back to April 2005 According to Ngari Unique went out of business in December 2007 However the record shows that Ngari acting as president of Unique and on its behalf had signed and submitted a contract to provide wheelchairs to OGB for the period of July 1 2007 through June 30 2009 When he was hired Ngari was given a copy of OGB Permanent P No 28 s licy which had the purpose of ensuring integrity in our operations and to implement the objectives and policies of the Louisiana Code of Gove Ethics Policy No 28 nmental defined Conflicts of Interest as situations in which financial or other personal considerations may compromise involve the potential for compromising or may have the appearance of compromising an elected official or public employee s objectivity in meeting duties or responsibilities It further stated OGB requires its employees to disclose immediately on discovery and to resolve any actual or possible conflicts of interest arising from activities in which they engage Failure to report a conflict of interest constitutes a violation of employment responsibilities and could result in disciplinary action According to OGB Permanent Policy No 28 a conflict of interest issue may arise when s an employee is inancially Finterested in or in any manner connected with any contract or bid for furnishing supplies material services and equipment of any kind to the Program z Louisiana Revised Statutes 42 comprise the Louisiana Code of Governmental Ethics 1170 1101 2 Ngari listed Unique as his prior place of employment when he applied for the position with OGB but did not show that he was the owner of Unique He also director did not disclose Unique past contractual relationship with OGB or the existence of the s July 1 2007 through June 30 2009 contract OGB employees were required to certify on an annual basis that they met the conflict of interest requirements of Policy No 28 On June 26 2009 Ngari signed a disclosure certificate stating that he had no position of influence as owner manager or board member in any business with which OGB had transactions during the period July 1 2008 to the present and also that he had not bid on or entered into or had any interest in any contract with OGB that would result in a violation of LSA 42 SA R 1113 On or about July 16 2010 Ngari was confronted at the OGB offices by federal law enforcement agents in connection with their investigation into irregularities in Medicare billing by Unique They served Ngari with a summons outlining federal indictments on multiple counts of conspiracy to commit health care fraud against the Medicare program in his capacity as owner and operator of Unique That same day OGB advised Ngari that he was being suspended with pay pending an investigation After discovering Ngari former position with s Unique and s Unique contractual agreements with OGB OGB informed him in a letter dated August 20 2010 that disciplinary action against him was being considered up to and including termination of his employment for his failure to report a potential conflict of interest s Ngari attorney responded advising that Unique had ceased operations at the end of 2007 or beginning of 2008 and that Ngari was not engaged in business activities or deriving any business revenues from Unique when he applied for employment or when he completed the disclosure certificate In a letter to Ngari on September 13 2010 OGB said it had considered the information provided by his attorney but was terminating his employment effective September 21 2010 for his failure to report a potential conflict 3 The applicable version of Louisiana Revised Statute 42 stated in pertinent part 1113 A 1 No public servant or legal entity in which he has a controlling interest shall bid on or enter into any contract subcontract or other transaction that is under the supervision or jurisdiction of the agency of such public servant 3 of interest Ngari appealed to the Commission which appointed a referee to hear the appeal and an evidentiary hearing was held on December 19 2011 The referee issued his findings and decision on February 17 2012 denying the appeal s Ngari application for review by the Commission was denied thereby making the decision of the referee the final decision of the Commission Ngari then appealed that decision to this court pursuant to LSA Art X Const 12 LAW AND ANALYSIS Article X of the Louisiana Constitution of 1974 establishes the State Civil Service and the State Civil Service Commission Article X A 12 places exclusive original jurisdiction to adjudicate removal and disciplinary cases in the Commission with the attendant power to appoint referees to hear and decide cases Section 12 allows the classified employee the right to an administrative appeal from the referee decision to s the Commission itself with the right to judicial review in the court of appeal where the Commission is located Article X 8 prohibits disciplinary action against classified employees except for cause prohibits discrimination against a classified employee grants employees the right to bring an appeal concerning such actions to the Commission and sets out the burden of proof for each type of action Louisiana Deo t of Agric Forestry v Sumrall 98 La 3 728 So 1254 1256 1587 99 2 2d 57 In Bannister v De of Streets 95 La 1 666 So 641 artment 0404 96 16 2d the Louisiana Supreme Court described the standard of review in civil service disciplinary cases as follows In civil service disciplinary cases an appellate court is presented with a multifaceted review function First as in other civil matters deference will be given to the factual conclusions of the Commission Hence in deciding whether to affirm the Commission factual findings a s reviewing court should apply the clearly wrong or manifest error rule prescribed generally for appellate review Second in evaluating the Commission determination s as to whether the disciplinary action is both based on legal cause and commensurate with the infraction the court should not modify the sorder unless it is arbitrary capricious or characterized by Commission abuse of discretion Arbitrary or capricious means the absence of a rational basis for the action taken 4 Employees with permanent status in the classified civil service may be disciplined only for cause expressed in writing Cause for the dismissal of such a person includes conduct prejudicial to the public service involved or detrimental to its efficient operation Stated differently disciplinary action against a civil service employee will be deemed arbitrary and capricious unless there is a real and substantial relationship between the improper conduct and the efFicient operation of the public service Citations omitted Bannister 666 So at 647 Wopara v State Em Group Benefits Program 02 2d lovees 2641 La App lst Cir 7 859 So 67 69 03 2 2d 70 s Ngari appeal to this court states that the referee and the Commission erred in finding that he had a potential conflict of interest that he failed to disclose when he accepted employment with OGB and further erred in allowing his employment to be terminated as a result He contends that because Unique had ceased operations before he was hired by OGB he had no duty to disclose its past or present contractual arrangements with OGB as an actual or potentiai conflict of interest He argues that s OGB position is based on the contract Unique submitted to provide services to OGB from July 1 2007 to June 30 2009 and is based on four assumptions all of which are flawed The first assumption is that Unique was an operating business when Ngari sought employment second that the contract with OGB was executed and binding on the parties third that OGB was unaware that Ngari was associated with Unique and fourth that Ngari position with Unique would conflict with his position at OGB s In actuality however OGB did not base its decision on those four assumptions The evidence presented to the referee demonstrates that OGB decision was based on s the language of Policy No 28 the reasons underlying that policy and the significance of Ngari position as an OGB auditor whose job duties included investigating and s reporting on the precise kind of actual or potential conflict that he failed to disclose At the evidentiary hearing Belynda Gauthier the Human Resources Director for OGB testified that when Ngari was employed he was advised about the conflict of interest policies of OGB and signed a form showing his receipt of a copy of Policy No 28 Despite the fact that the policy required immediate disclosure of any potential conflict Ngari did not disclose his interest in Unique or its contractual relationship with OGB when he was employed or when he signed the disclosure certificate in June 2009 5 Gauthier also discussed Ngari job description as an Auditor 3 which showed that s approximately 78 of his time would be spent performing audits to verify compliance with laws and regulations and to verify the efficacy of internal controls of operations and functions Ngari job description also included reviewing potential fraud situations s and reporting any such findings to the audit director and if necessary to the legal division for further action Gauthier testified that the Unique contract for the period from July 1 2007 to June 30 2009 had been executed on behalf of OGB and was on file at the OGB offices However the issue for OGB was not whether that contract had been executed by OGB but the fact that it had been submitted by Ngari on behalf of a company in which he had a controlling interest She explained that OGB investigation s of him did not follow the procedures it would normally use when an employee self disclosed a potential or actual conflict of interest because Ngari had not self disclosed but had lied on his disclosure certificate by not reporting the existence of the contract Stan Hurder Deputy General Counsel for OGB also testified at the hearing Hurder was the supervisor of the OGB fraud unit After the federal officers had confronted Ngari OGB decided it needed to look closely to see if there were any contractual or financial involvements between Ngari business interests and OGB s When Hurder learned of the existence of the Unique contract and Ngari relationship to s that company he was greatly alarmed He said the fraud unit was responsible for investigating unusual situations that might relate to fraud or an appearance of some great impropriety such as Ngari situation Hurder also said that like an attorney an s internal auditor is held to a high duty to make certain that there is no impropriety and no appearance of impropriety in OGB handling of public funds OGB had a fiduciary s duty to closely guard its funds and the 250 social security numbers addresses and 000 names in its records Hurder said the existence of the contract with Unique created the potential for conflict because a claim could have been submitted by Unique for providing a wheelchair to an eligible employee or retiree and OGB would have paid that claim or would have paid the portion of the claim that was not covered by Medicare He said it was essential for OGB to know that one of its employees a high ranking 6 auditor had a business that had a contract with OGB under a corporate name side that did not use his name Roslyn Johnson an Audit Director 2 for OGB testified that she was the head of the internal audit division That division was responsible for auditing all of the business functions of OGB as it related to compliance performance and transactions Johnson stated that the internal audit division could not authorize or terminate a contract but if the auditors found a problem with a contract those findings were reported in writing to management which then made whatever decision was appropriate The internal audit division also conducted an annual review of related party transactions and conflicts of interest Most of that annual review was done by Johnson and her administrative assistant with some assistance from other auditors when requested Although Ngari was one of only three staff auditors working in the internal audit division he had not handled anything relating to the disclosure review during the time he worked under her Johnson said her only involvement with the investigation of Ngari was retrieving the annual disclosure certificates he had signed and providing them to the legal division Because of the circumstances of Ngari indictment on federal fraud charges relating to s Medicare the investigation of Ngari was conducted by the fraud unit of the legal division and was not handled by Johnson under OGB usual procedures when an s employee self a potential conflict disclosed Ngari testified that Unique was not in operation during any part of 2008 when he was hired The last year he filed an annual report for Unique with the Secretary of State was 2007 this was also the last year he filed a tax return for Unique Ngari stated that the last time Unique had a signed completed contract with OGB was for the period ending in March 2007 The new contract that he had signed and submitted for the period July 1 2007 through June 2009 was completed by him and mailed to OGB without the proper insurance documentation because Unique policy had expired and s had not been renewed The OGB contract stated that it would not be approved unless every requirement was met so he did not believe it had been approved by OGB due to 4 Despite his assertions about the lack of insurance coverage Ngari introduced into evidence an insurance policy covering Unique for the period of September 7 2007 to September 7 2008 He did not explain why such a policy was needed for a business that was closed in early 2008 7 the lack of current insurance documentation Ngari said he closed the business in 2008 and had no intention of conducting any outside business while employed by OGB as an auditor Therefore he said he felt no need to disclose anything about Unique s contracts or his ownership interest in the company The referee swritten decision states the following The evidence adduced at the hearing shows that Mr Ngari failed to disclose to OGB that he was the Director of Unique and that he on behalf of Unique had entered into a contract with OGB for the provision of wheelchairs The contract sterm was from July 1 2007 through June 30 2009 Mr Ngari began working for OGB on December 9 2008 while the contract was still in effect Not only did Mr Ngari fail to immediately disclose his interest in Unique when he began his employment with OGB he also failed to disclose his interest in the company on the Office of Group Benefits Related Party Disclosures and Compliance with the Code of Governmental Ethics form he executed on June 26 2009 OGB did not learn of the potential conflict of interest until it was notified by state and federal law enforcement agents that Mr Ngari was being investigated for alleged irregularities with Medicare billing Mr Ngari failed to report a potential conflict of interest to OGB when he failed to report his connection to Unique both when he was initially employed and when he executed the June 26 2009 Office of Group Benefits Related Party Disclosures and Compliance with the Code of Governmental Ethics form Mr Ngari was an Auditor 3 Part of his job duties was to audit contracts and report the results to OGB management who made decisions based on the audits Mr Ngari having a personal s interest in an OGB contract while possibly auditing his competitors contracts is clearly a potential conflict of interest His failure to report this potential conflict of interest was detrimental to the state service as it created the appearance of impropriety OGB has thus proved cause for discipline against Mr Ngari There is evidence in the record supporting the factual findings and conclusions of the referee and the record as a whole does not indicate that those findings were manifestly erroneous See Stobart v State through Dep of Transo and Dev 617 t 2d So 880 882 La 1993 Moreover stating an untruth in answering a material and important Department of Civil Service query even if only negligently done bears a real and substantial relation to an employee qualifications for public work requiring s reliability and trustworthiness Board of Trustees State Emoloyees Group Benefits Proaram v Moncrieffe 93 La App lst Cir 10 644 So 679 681 citin 1393 94 7 2d Cottingham v Department of Revenue 232 La 546 94 So 662 1957 2d The position of internal auditor requires the highest degree of reliability and trustworthiness 8 because an OGB auditor is responsible for examining the transactions of persons and entities who contract with the agency to ensure that all internal controls and procedures are being followed and that public funds are being responsibly expended An appearance of impropriety for someone in that crucial position would undermine public confidence in the functioning of the agency Had Ngari disclosed his interest in Unique and its former or current contractual relationship with OGB when he was hired or when he completed the annual disclosure certificate his situation would have been investigated by his superiors and he would then have had the opportunity to make his arguments concerning the fact that Unique was no longer in operation However his concealment of the relationship and its ultimate exposure as a result of the federal indictments resulted in a completely untenable situation for the OGB We conclude that there was a real and substantial relationship between Ngari failure to disclose his s ownership interest in Unique and OGB ability to function effectively in the public s interest Therefore OGB established that it had legal cause to terminate his services its disciplinary action was commensurate with the infraction and was not arbitrary and capricious CONCLUSION For the above reasons the disciplinary decision of the Commission is affirmed All costs of this appeal are assessed to Ngari AFFIRMED 9
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