The Journal Record October 16, 2018
OKLAHOMA CITY – About a year after the alleged financial misfeasance at the Oklahoma State Department of Health began to reveal itself, the state agency may soon be sued for wrongful termination.
The Oklahoma Public Employees Association announced its intent to file a lawsuit against the Health Department on behalf of 161 employees it laid off. The association’s argument is contingent on the findings of a grand jury investigation, which revealed that the department’s reasoning for the layoffs was misguided and not rooted in financial reality.
The organization’s executive director, Sterling Zearley, released a statement on the matter Tuesday.
“These employees were terminated or forced to retire because health department officials claimed they had a $30 million budget shortfall, but that claim was false,” the statement reads. “The premise used by the health department was wrong and their actions caused financial, mental and emotional hardship for those employees. We’ve tried to work with the health department administration to fix this but they don’t seem interested in correcting it.”
The story started a little more than year ago. Health Commissioner Terry Cline and his team were still in place. They announced Sept. 27 of last year that the agency was facing a $10 million shortfall, which they attributed to the statewide budget issue affecting all agencies at the time. They canceled contracts with child abuse prevention service providers and spiked a fund that helped community health centers offer low-cost care. At the end of that month, Cline resigned mysteriously.
Slowly, the other resignations piled up, and the public still didn’t know why. The executive team was replaced. Then-Secretary of Finance Preston Doerflinger became interim commissioner. He retained the agency’s chief financial officer, Mike Romero, who joined the agency only months before the issues became public. The agency’s chief operating officer, Deborah Nichols, resigned after Doerflinger’s appointment.
The three testified before a House investigative committee, saying that Cline and his deputy, Julie Cox-Kain, had been shifting money around accounts to hide a growing budget gap, which had grown into the tens of millions of dollars. They had warning signs for months, the officials said, but the executive team ignored those warnings and plunged ahead until Cline’s resignation.
Doerflinger told the Legislature in November that without an immediate $30 million cash influx, about 2,000 employees wouldn’t get their next paychecks. Lawmakers were already in special legislative session, so they approved the supplemental appropriation.
A month later, Doerflinger announced the department would lay off about 200 people to further repair the financial damage the previous health administration had created.
All the while, outside of the often tempestuous legislative hearings, officials were also testifying before a grand jury.
Romero, the financial officer, resigned during that time, alleging that some of the top officials involved in that grand jury investigation were behaving improperly. He accused Doerflinger and then-general counsel Julie Ezell of sharing information they received during confidential testimony. His resignation became public Feb. 1.
Less than two weeks later, online journalism outlet The Frontier released a story about police reports filed against Doerflinger that alleged he strangled his then-wife during an altercation, and he resigned.
There was a relative quiet for the next few months. The Board of Health appointed a new interim commissioner, Tom Bates. The noncontroversial official oversaw the Pinnacle Plan, a settlement agreement into which the Oklahoma Department of Human Services entered because of a human rights lawsuit. It was designed to improve child welfare oversight.
In May, Attorney General Mike Hunter and State Auditor and Inspector Gary Jones held a joint press conference to announce the grand jury’s findings, which predicated the lawsuit Zearley discussed Tuesday.
The report found that the tens of millions of dollars Doerflinger and team said were missing were not, in fact, missing. The money was simply hidden. State officials, including the Legislature, can’t claw money from funds holding federal money, so health executives put the federal title on the slush find to obscure it. That prevented, among other things, end-of-the-year raids from the Legislature, which became common for most other agencies during tough budget times.
By shuffling state and unrestricted federal money to funds that appeared restricted – but in reality were not – officials ended up confusing themselves about how much money they had on hand, investigators concluded. The 200 layoffs, $30 million bailout and other measures intended to address the insolvency were never needed.
