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Originally published Wednesday, May 21, 2014 at 9:19 PM

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Insurance Office whistle-blower now faces own probe

A whistle-blowing insurance administrative-law judge who says she was improperly pressured on cases finds herself investigated, and a search is on: Who sent the anonymous email to a Seattle Children’s lawyer in the middle of a case?


Seattle Times health reporter

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The state Auditor’s Office has declined to investigate a whistle-blower complaint in which an administrative-law judge in the Office of the Insurance Commissioner (OIC) alleges she was improperly contacted and pressured on cases before her by that office’s chief deputy.

Now, the OIC says it will investigate the judge, Chief Presiding Officer Patricia Petersen, for “alleged misconduct.” In a statement, the insurance office said it seeks to discover whether Petersen herself improperly sent an anonymous copy of her complaint to a lawyer for Seattle Children’s hospital, one of the parties in a contested case that was before her.

In a statement Wednesday, the insurance office said it will hire an outside reviewer to investigate that issue and also whether Petersen’s allegations of improper contact by Chief Deputy Jim Odiorne are correct “or if she misrepresented what occurred.”

Such contact by a judge or lawyers with only one party to a legal case, called “ex parte” communication, could result in sanctions or derail an ongoing case.

In the high-stakes case before Petersen, Seattle Children’s is arguing that the OIC must require insurers to include the hospital in its provider networks; two insurers are contesting that position.

In a prehearing conference May 14, the hospital’s lawyer said he had been emailed anonymously from an Olympia Office Depot a copy of Petersen’s whistle-blower complaint, which he shared with the other lawyers. The lawyers then discussed the possibility they would have to ask Petersen to remove herself from the case.

Petersen’s job is to rule independently and without bias on contested insurance cases. In the papers she filed, she said she has never received any improper contact or pressure directly from Insurance Commissioner Mike Kreidler.

And until she began hearing from Odiorne last fall on a similar network-adequacy case, Petersen wrote, she had never been pressured by anyone in the OIC to decide cases in a certain way.

The pressure by Odiorne, she wrote, began three days after she ruled against Kreidler in the earlier network case, and allowed the insurers that did not include Seattle Children’s to sell plans in the Washington Healthplanfinder online marketplace created under the Affordable Care Act.

Soon afterward, Kreidler began work on new rules to tighten requirements on insurers, saying so-called narrow networks could leave consumers without access to covered services.

The OIC says Odiorne has not been directly involved in the cases, and as her supervisor, is allowed to talk with Petersen without violating ex parte communication rules.

In an interim evaluation Odiorne conducted of Petersen earlier this month, he criticized her orders in several cases. “Those orders must as clearly and obviously support Commissioner’s policy and program goals as the[y] support the law,” he said in the evaluation. “Since your orders are legally the acts of the Commissioner, they must be orders that he supports.”

In a nine-page response, Petersen strongly objected, noting that the orders he objected to “are all those in which the Commissioner has not prevailed.”

She cannot simply ask the commissioner his preferences “and use them to guide the outcome of my decisions in these cases,” she wrote. “If that were considered to be legal and ethical, then there would be no due process rights given to parties which appeal the Commissioner’s acts and there would be no due process for a hearing.”

She said she had never before had her work evaluated on “the outcome of my decisions.”

Petersen was removed from her duties last week, a day after she filed the whistle-blower complaint and a similar notice in the current Seattle Children’s case.

The OIC, in its statement, said Petersen’s “home assignment” and its investigation into her conduct were unrelated to her complaint to the state Auditor’s Office or her claims about improper discussions with Odiorne.

Questions about Petersen’s husband, Dr. Dana Mark Petersen, an Olympia pediatrician, also have surfaced. Dr. Petersen, who completed his residency at Seattle Children’s, is a consulting member of the hospital staff, said Children’s spokeswoman Stacey Dinuzzo, but has no formal relationship with the hospital.

In March, AnnaLisa Gellermann, deputy insurance commissioner for legal affairs, investigated a possible conflict of interest and concluded the connection was minimal. She said she saw no financial or economic interests that could be affected by the outcome of the Seattle Children’s case, and that there was no reason for Judge Petersen to be disqualified from hearing it.

The lawyer for one of the insurers in the case, BridgeSpan Health, has issued a subpoena and will conduct a deposition of the general manager of the Office Depot in Olympia next week in an attempt to discover who sent the anonymous email.

It is not clear what the next step will be for Judge Petersen.

In a letter to her, the auditor’s whistle-blower manager, Jim Brownell, said there are other avenues for Petersen to address her assertion, and that since the office has declined to investigate the complaint, the anonymity conferred on her as a whistle-blower is removed. Therefore, it said, her “identity and assertions are not confidential” and will be publicly released.

Petersen, 61, has been conducting hearings and deciding cases before the Office of the Insurance Commissioner for 28 years, the past 19 as chief presiding officer, and was reappointed by Kreidler 10 years ago.

Carol M. Ostrom: costrom@seattletimes.com or 206-464-2249. On Twitter @costrom



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