Two insurers involved in a case that suddenly ground to a halt after intrigue and the precipitous removal of the judge handling it are demanding that the case start over from scratch.
In a motion filed Wednesday, Premera Blue Cross argued that the “extraordinary set of circumstances” surrounding the removal of Chief Presiding Officer Patricia Petersen, the administrative-law judge for the Office of the Insurance Commissioner, means that she was not impartial and all her decisions should be set aside.
BridgeSpan Health Company, another insurer, joined in Premera’s motion.
The two are opposing Seattle Children’s hospital, which is arguing that the insurance office should declare that the insurers’ networks are inadequate because they do not include the hospital.
Petersen, in a notice filed in the case last month, said she had been pressured by her supervisor at the insurance office to decide cases in ways that would reflect the policies of the office. She said he threatened her employment if she did not comply.
After the Seattle Children’s lawyer said he had received a longer version of her notice — a whistleblower complaint filed with the State Auditor’s Office — by anonymous email, Petersen was removed from jurisdiction over the case and placed on paid leave.
Later, she admitted she had arranged to have the email sent to the lawyer — a breach of legal ethics — but said it was inadvertent. She was looking for a lawyer to represent her in what appeared to be a looming employment dispute, she said.
Since late last fall, Petersen has made numerous decisions in the hotly disputed case as it moved forward. “Here, there is no legitimate question that Judge Petersen’s impartiality must be questioned,” Premera’s attorney, Gwendolyn Payton, wrote in the motion.
“Regardless of the merits of her accusation, her own words leave no question that Judge Petersen’s decision-making and her ability to remain impartial were compromised prior to issuing rulings in this case. Her prior orders and rulings are tainted as a matter of law, and cannot stand.”
The insurance office has contracted with George Finkle, a former King Count Superior Court judge, to take over cases.
State Sen. Mike Padden, who chairs the Senate Law and Justice Committee, said he plans to include discussion about the independence of administrative-law judges in a work session on June 16.
Padden plans to discuss three proposals, including:
- Allowing an insurance department administrative judge to enter final orders in a case without having it sent back to the Insurance Commissioner, who is currently able to reject it and enter a final order binding parties.
- Moving all insurance disputes to the Office of Administrative Hearings, a separate department.
- Making “ex parte” communication from the insurance department to its administrative judge about a decision a gross misdemeanor, and prohibiting the department from basing the judge’s employment evaluation on rulings in a case.
Petersen plans to testify at the work session, said her lawyer. The session will be held in the Senate Hearing room 1 of the J.A. Cherberg Building in Olympia from 1 to 3 p.m.