Tough Luck for Dismissed North Dakota Workers’ Comp Employees

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Former employees of North Dakota’s Workforce Safety and Insurance agency have struggled to pursue claims that they were illegally fired for spotlighting questionable activities at the agency.

A judge has thrown out most of the case filed by James Long, the agency’s former chief of support services, concluding that Long may sue WSI but not a group of executives and board members he claims plotted to fire him. Long’s lawsuit against the agency itself is continuing.

Kay Grinsteinner, the agency’s former internal auditor, and Todd Flanagan, a one-time WSI fraud investigator, both recently settled their lawsuits for $10,000 each, records show. The state has spent almost $56,000 defending the three cases, including the two $10,000 payments.

Tag Anderson, the director of North Dakota’s risk management division, said the settlements did not concede any wrongdoing. He described them as “very low offers” that Grinsteinner and Flanagan decided to accept.

Anderson said it would have cost much more to take the lawsuits to trial. “It was purely a financial decision,” he said.

The North Dakota Senate has rejected legislation sponsored by Sen. Tracy Potter, D-Bismarck, to give the state auditor authority to investigate whistleblower claims by state agency workers. The bill also would have allowed North Dakota’s labor commissioner to order the reinstatement of wronged employees with up to two years’ back pay and benefits.

North Dakota laws now prohibit public and private employers from retaliating against workers who report possible illegal activities. For public employees, the protection extends to reports of misuse of public resources. But officials say employees who believe they have been wronged have few options other than hiring attorneys to enforce their rights.

The dismissals of Long, Grinsteinner, Flanagan and Billi Peltz, WSI’s former human resources director have exposed North Dakota’s whistleblower protection law as worthless, said Long’s attorney, Tom Tuntland, of Mandan.

Tuntland said the existing state law would be better described as a “whistleblower persecution act.”

“The law is worse than a sham. It’s a trap,” Tuntland said. “It leads employees to believe they have protection when they have absolutely no protection …. Any public employee who blows the whistle on public wrongdoing is a fool.”

Peltz has not filed a lawsuit over her March 2008 dismissal. She filed a damages claim last May with the state’s risk management division, which evaluates allegations of negligence or wrongdoing by North Dakota agencies. It was denied. She did not respond last week to requests for comment.

Long, Grinsteinner, Flanagan and Peltz had requested protection after Sandy Blunt, WSI’s former chief executive, returned in October 2007 from a six-month leave of absence. Blunt had been put on leave after Burleigh County prosecutors filed three felony charges against him.

Blunt was convicted of one felony, for misspending more than $10,000 of the agency’s money. He was sentenced last week to two years’ probation and 1,000 hours of community service, and ordered to pay a $2,000 fine and $775 in fees and court costs.

The risk management division hired a Bismarck law firm, Smith Bakke Porsberg & Schweigert, to defend the lawsuits by Long, Flanagan and Grinsteinner. Attorney General Wayne Stenehjem said the firm was hired because Anderson, who is a former assistant attorney general, was named as a defendant in Long’s lawsuit.

“It was determined that it would be most efficient and logical for outside counsel to handle all three lawsuits,” Stenehjem said in an e-mailed response to questions about the litigation.

North Dakota has two separate laws designed to protect workers against job reprisals for reporting wrongdoing. One covers all employees, and says workers who believe they are wronged have the right to sue for damages. The second, which focuses on the rights of government workers, does not provide the option of suing.

Retired state district judge Ronald Goodman, who is handling Long’s lawsuit, ruled in January that Long’s claims could go forward against WSI based on the more expansive whistleblower law. Goodman ruled that Long could not sue under the law intended to protect public employees.

“Just because the statutes prohibit this conduct does not mean that the statutes provide a damages remedy for the conduct,” Goodman wrote. Even if damages are appropriate, he wrote, “it is the duty of the Legislature, not the judiciary, to create the remedy.”