November 8, 2010
Tuntland examines Gjovig.
Board member 2002-2008. Was on audit committee. Said that Long had emailed several emails to the board that he had directed to interim CEO Halvorson. Said he remembered Long had emailed his appeal packet before they received the hard copy. He remembered that boards member Grossbauer and Curl complained they did not have enough time to review Long's materials. Gjovig thought since Grossbauer was not on the board when the events took place, his opinion didn't matter. Plus Grossbauer had befriended Long. He expected Terry Curl would support Long because he supports labor and thought he would support someone who was losing his job. He decided this thing had dragged on long enough, there had been alot of press, and they needed to resolve it immediately. He noted that Curl and Grossbauer did not make a motion to ask for more time.
Tuntland: Under your Carver model of board governance, an employee with problems would go to their supervisor and then through the chain of command?
Tuntland: The chain ends with the CEO?
Tuntland: If you suspected the CEO of illegal activity, you are not authorized to go to the board?
Gjovig: That would be correct at that time, but he did it anyway, he was heard.
Tuntland: He was not allowed to speak, was he?
Gjovig said he was upset that Armstrong's journal taken and that played into his decision not to reinstate Long. He also cited his complaints regarding Peltz.
Gjovig acknowledged that the search of Mark Armstrong's office resulted in the search warrant for his journal, but in his opinion that didn't matter.
Tuntland: Did you read the journal?
Tuntland: If the journal said the CEO had been stealing thousands of dollars, wouldn't you care?
Gjovig: I'd care, but under the Carver model we trusted the CEO to run the business. The governance model said only reach in if it's something of danger to the business.
Tuntland: Regarding danger to the business, WSI was transforming it's software and Jim had concerns about the project being interrupted, didn't he?
Tuntland: This was an 8 million dollar project, correct?
Tuntland: Jim was concerned about bringing the project in on time and under budget?
Tuntland: He was fired for being concerned about bringing the project in on time and under budget?
Gjovig: No. No way. From the moment he did not get the CEO job, he went on a path of destruction. He ruined his chance of returning to the job. He went to the press and said we weren't handling claims properly. He never handled claims.
Tuntland: Do I have to have a background in handling claims to know that it's wrong for the insurance company to appoint the person who determines claims?
Tuntland: It worked pretty well for the employers.
Tuntland established that the board had 6 members favoring employers and 5 members favoring employees, but Gjovig said if you brought in all the board members everyone would say taking care of injured workers was a priority.
Tuntland: Employer premiums went down and denial rates went up, true.
Gjovig: Not sure, but that's not why he was suspended. He was suspended for job performance.
Tuntland: Are you aware Jim provided information to the BCI before he was suspended?
Gjovig said he could not remember the date and when asked if he could determine from the letter that suspended Jim why he was suspended, he coudn't remember. Tuntland then read from the letter, "Long's continued effectiveness was compromised." When Gjovig was asked why, he said he didn't know from reading this but he thought Jim knew. Tuntland pointed out the second part of the letter said WSI would implement a process to re-evaluated his role, but Gjovig could not recall whether there ever was such a re-evaluation. Gjovig said his comments to the media really hurt Long. Tuntland asked what public statements had Long made prior to receiving this letter which put him on suspension with pay. Gjovig did not know the timeline.
Gjovig also said regarding the taking of Armstrong's journal, that Jim had said in one place that he had taken in and at another place Grinsteinner had taken it, but he thought the whole incident was out of bounds. He was fine with the search, but it should have been done in broad daylight with Armstrong present. He thought that was justification for Long to be suspended. In addition, he thought his relationship with Peltz was enough to terminate him.
Tuntland: Were you aware that Long at the request of the Bureau of Criminal Investigations had talked to BCI?
Gjovig: I don't recall.
Tuntland: Did you know that happened less than a month before he was suspended?
Gjovig: I don't know, but it didn't matter.
Randy Bakke then began his re-direct of Gjovig.
Bakke established Gjovig had been a long term member of the audit committee. Gjovig said you needed to be on that committee for three years to understand the complexity of workers compensation, that there are some claims with a 21 years where that person could be on workers comp for 45 years.
Gjovig recalled a meeting with the Brady Martz accounting firm. He said Long was bantering with the accountant and Gjovig thought him to be unprofessional, "I thought this guy's an idiot." This occurred some time after Sandy Blunt had been put on paid leave.
Gjovig said that when Halvorson was appointed as interim CEO, he had to be talked into the job, but that Long had been lobbying to get the job. In Gjovig's opinion, there was no comparison between Halvorson and Long, that Halvorson was a walking bible regarding workers compensation.
Gjovig said that after Halvorson was appointed as CEO Long became disruptive to WSI. He began talking to the press saying claims were not properly handled. He said Long could not handle the pressure and there's no way he would work out. Bakke introduced minutes of a board meeting on Halvorson's job performance as interim CEO which said he had done an outstanding job under a difficult situation. Gjovig said when Long was on paid administrative leave he was making comments to the media. In light of that, he thought it would be devastating to WSI employees if Long were brought back.
Bakke also noted emails sent by Long to Bjornson regarding Halvorson where Long talked about misuse of public resources. Gjovig felt these were disrespectful to Halvorson. These emails were copied to the board. Bakke established this was not the typical chain of command to copy the board, that Long was to communicate with the CEO.
It was established that Governor Hoeven requested reports regarding the processes at WSI. One was called the Marsh report about claims handling where it was determined that injured workers were treated properly. The other was the Connolly report which evaluated internal administrative operations at WSI.
The Connolly report stated that Long's position as Director of Support Services was no longer needed and the position should be eliminated. The Connolly report also compared WSI to other workers compensation organizations and said WSI was well run and doing an excellent job. The report said that WSI had the lowest premium rates in the United States and that injured workers surveyed showed high satisfaction rates with employer services.
Questioning then turned to Kay Grinsteinner regarding her position as Internal Audit Manager. Bakke established the WSI audit committee had a set of bylaws which were signed by Grinsteinner, "Upon discovery of potential fraudulent issues, Internal Audit Manager will turn over to management or the board audit committee, will take the lead in fraud investigation." Bakke established Grinsteinner had not come to Gjovig as the internal audit chair to request permission to search Armstrong's office. Gjovig said he would not have given such permission because her task was to audit. If she thought she found fraud she was to take it to the audit committee. Gjovig said the Connolly report stated that Grinsteinner did not have authority to conduct that search. He also said Grinsteinner did not have authority to pass information on to Long.
Bakke then produced an email Grinsteinner had sent to the state auditor regarding her concern about the handling of medical claims. It was established that Grinsteinner did not work in the claims department. The email to the state auditor had been published outside the organization before the WSI board ever saw it. He said the Connolly report said that action was grossly inappropriate and that Grinsteinner needed to be terminated. Bakke then produced what he called Grinsteinner's dirty little secret email, where she said, "This is our dirty little secret. How we are really treating injured workers.", which had been sent to the state auditors stating that she had found indications WSI was denying claims with the hopes that claimants would not appeal. That there was a 7% drop in the number of claims accepted and that the attorney work product notes said they would have had a 10% chance of prevailing on legal appeals. Gjovig said Grinsteinner had attended just one meeting and took it out of context, that she may have been looking at the number of claims filed in North Dakota, perhaps 100,000, but there had been a concerted effort by industry to improve safety conditions. After this email and the search of Armstrong's office, Gjovig determined Grinsteinner need to be terminated.
The Connolly report also looked at the human resources department and stated that over the past 5 years that department was singularly unsuccessful in creating a climate of fairness and trust or respect and gendering confidence of the organization. It stated a quote from Peltz that she did not feel she could walk into the CEO's office and tell him how to do his job. Therefore, Gjovig felt Halvorson had cause to terminate Peltz.
Bakke then asked a question which would become familiar to the jury, "Was Long terminated for reporting illegality or suspected violation of the law?", to which Gjovig replied, no.
Long's attorney, Tom Tuntland then began his cross-examination of Gjovig.
Regarding Gjovig's comment that Long had bantered with Brady Martz, Tuntland asked whether those who banter are idiots? Gjovig said no, that it was just a one way conversation and that Jim was taking shots at the guy.
Tuntland: You testified Long went down a path of self destruction, but he started talking about WSI after his suspension by Halvorson, correct?
Tuntland: Wouldn't you think someone suspended with no reason would want to know why?
Gjovig: Most of his discussion was about claims not being paid. He had no knowledge.
Tuntland: Wasn't the basis of his claim that he had been suspended because he had filed a whistleblower complaint?
Gjovig: He was in trouble and filed the whistleblower complaint to protect himself.
Tuntland: Your opinion is that Jim Long went to Mike Quinn at BCI to protect his own butt?
Gjovig: Don't know.
Tuntland: Jim Long gave Quinn Armstrong's journal to protect his own butt?
Gjovig: That he participated in the search at all was bad.
Tuntland: He'd been kicked out of the building less than a month after he provided information about Sandy Blunt?
Gjovig: That's not why he was suspended.
Tuntland: Sandy Blunt wasn't kicked out of the building?
Gjovig: Sandy was suspended for political pressure and pressure from the media.
Tuntland: You said Grinsteinner was politically motivated in doing what she did. What politics motivated her?
Gjovig: Disrupting the organization to get changes made.
Tuntland: What political motivation did Long have?
Gjovig: Not getting the job of CEO.
Tuntland: What politically motivated Long to go to BCI?
Gjovig: No idea.
Tuntland: The board voted to support Blunt because they thought his prosecution was politically motivated? What politics motivated Richard Riha when he prosecuted Sandy Blunt?
Gjovig: It played well in the press.
Gjovig: He was not terminated for filing a whistleblower complaint.
Tuntland: Is it possible WSI dummied up a reason after 75 days to justify termination of Long?
Gjovig: No, there was plenty of fuel for the fire.
Gjovig stated that Long was undermining Halvorson regarding the ITTP project. Tuntland established that Long went to the board after talking to Halvorson and that the ITTP charter called for Long to take whatever action necessary to keep the project on time and under budget.
When asked if Gjovig had personally checked reports about complaint regarding Long's job performance, Gjovig said he wasn't lacking in that but that he couldn't work with the management team. He was not the same person after Halvorson got the CEO job.
Tuntland then turned to the Connolly report regarding human resources. "We believe WSI has installed workable HR systems over the last several years to establish fairness." and "Former CEO's judgment on selection of senior management has rendered HR ineffective in the eyes of employees."
Tuntland: It was CEO Blunt's selections that caused problems, wasn't it?
Gjovig: That depends.
Tuntland: He brought in two people from Ohio, didn't he?
Gjovig: More than that, three or four.
Tuntland: There was allegations of favoritism, weren't there?
Tuntland: There were perceptions of back pay increases?
Gjovig: Not by the board, we approved them.
Tuntland: Connolly didn't lay problems of HR at Peltz' feet. Connolly laid problems of HR at Blunt's feet.
Gjovig: Connolly said that Billie was not performing her job.
Tuntland: How is Peltz supposed to do her job when the CEO is undermining an entire organization?
Tuntland then turned to the Marsh report under the heading recommendations. The report stated WSI was achieving an 86% compliance score. Tuntland said there were 20,000 claims per year and that meant 2800 people had claims denied when they should have been approved. Gjovig said 14%, that doesn't mean that many were denied. Judge Goodman then interceded and asked, do you know what that means? Gjovig replied he was not sure what that meant.
There was discussion over relative claims payouts.
Tuntland: It is the stated goal of workers' compensation law that workers are guaranteed sure and certain relief. You're saying that if you're going to cut, you'll cut the amount paid to injured workers.
Gjovig: No. Injured workers come first.
Tuntland established that Kay Grinsteinner is a CPA and that she had explained to Gjovig that internal auditors had ethical standards to follow. He referred to the internal audit charter which read, auditors are governed by the internal audit act for highest professional standards, for accountability, and code of ethics.
Tuntland: So she told you she follows her code of ethics in what she did?
Gjovig: She told me that, but she did not have authority.
Tuntland: So you think the board can tell the attorneys at WSI they can ignore their code of ethics?
Gjovig: No. We're saying don't use your home email.
Tuntland: Grinsteinner told you she was searching for the way Armstrong was handling Freedom of Information Act requests. That was part of her job, right?
Gjovig: No, not searching desks.
Tuntland: You said WSI provided safety grants. Blunt gave $150,000 grant without even having an application in hand, correct?
Gjovig: I don't recall.
Tuntland: Grinsteinner, Peltz, and Jim Long were all fired on the same day, right?
Tuntland: They all filed whistleblower complaints?
Randy Bakke then began his re-direct of Gjovig. He referred back to the Marsh report which stated that claims denials met industry standards and that WSI was doing better then the entire industry. He also established that problems within human resources did go back to the Blunt administration and it was fair to say their was blame to go around, but also noted that Long was in charge of HR and the Connolly report stated that HR was the last place employees would go to for redress.
He established if Grinsteinner thought she did not wish to adhere to WSI's internal audit charter, she should not have signed it and that she never showed Gjovig her supposed ethics policy. Gjovig said they had a special audit committee meeting regarding her accusations and when they went through them line by line, she started to back down. Bakke then established that her reports to the state auditors did not report "violations of the law".
Tuntland then did his cross-examination. He established that Gjovig had not asked Grinsteinner to provide the ethical rules in question and that Grinsteinner had actually herself put the first bullet in the WSI's internal audit charter that she had to follow ethical rules.
Gjovig: But common sense is not going into a desk in the middle of the night.