Fraud found at agency


OHIO NEWS

Staff & Wire Reports



FILE - In this July 18, 2016 file photo, former Speaker of the Ohio House Larry Householder speaks during the opening day of the Republican National Convention in Cleveland.  The state watchdog is alleging widespread fraud within the Ohio agency that provides prison jobs for inmates, including furniture building and vehicle repair. A report released Thursday, Dec. 20, 2018,  by Inspector General Randall Meyer accuses top employees of Ohio Penal Industries of using their positions for personal gain, such as discounts on personal car repairs by inmates. The IG report says Householder was provided an office table and chair set at no cost.  (AP Photo/Mark J. Terrill)

FILE - In this July 18, 2016 file photo, former Speaker of the Ohio House Larry Householder speaks during the opening day of the Republican National Convention in Cleveland. The state watchdog is alleging widespread fraud within the Ohio agency that provides prison jobs for inmates, including furniture building and vehicle repair. A report released Thursday, Dec. 20, 2018, by Inspector General Randall Meyer accuses top employees of Ohio Penal Industries of using their positions for personal gain, such as discounts on personal car repairs by inmates. The IG report says Householder was provided an office table and chair set at no cost. (AP Photo/Mark J. Terrill)


Report: Widespread fraud in agency that provides inmate jobs

By ANDREW WELSH-HUGGINS

Associated Press

Thursday, December 20

COLUMBUS, Ohio (AP) — Fraud was widespread at the Ohio agency that provides prison jobs for inmates, including granting employees improper freebies and discounts on prisoner work and building an illegal shack for smoke breaks, the state watchdog said in a report issued Thursday.

In addition, Ohio Penal Industries improperly gave Republican state Rep. Larry Householder an office table and chair set made by the inmates and valued by the agency at more than $9,300, according to the report by Inspector General Randall Meyer.

Two employees at the agency have been fired and a third resigned since the investigation began. A spokeswoman for the agency said it was reviewing the report but had already made policy and personnel changes.

Householder said in a statement he was told there was no cost to him or the Ohio House because the furniture was a “display set” and owned by the penal industries agency.

He said he agreed to display the table at the state office building “to promote the good work that the inmates at OPI do.”

When he learned the agency acted improperly, “my office asked that OPI pick up the table immediately, which they did.”

Householder is a former House speaker who has returned to the Legislature and is once again considered a candidate for the speakership.

The official he dealt with at the agency, Dan Kinsel, resigned immediately last year when he learned an investigation had begun, according to the report.

Kinsel told The Associated Press on Thursday that he hadn’t seen the report and declined to comment.

Problems came from the Ohio prison system’s “top-down approach,” Meyer said.

Top brass at the prison industries agency called themselves “the Lancaster mafia,” referring to the small southeastern Ohio city where many were from, he said.

“It just doesn’t make a lot of sense that that much control was given to a small group of people, and they can hand pick who they want to be their seconds and their thirds,” Meyer said.

In the course of the investigation, the state fired agency chief Sheri Duffey and assistant chief Todd Cordial. Neither returned messages seeking comment. Their attorney, Mike Moses, declined comment.

The prisons agency is reviewing the report, said spokeswoman JoEllen Smith.

“Aggressive actions have already been taken to improve overall operations, including leadership and personnel changes within the Ohio Penal Industries and significant changes in policy and procedures,” she said.

Among the allegations in the report:

— Duffey and Cordial had inmates perform work on their vehicles “at no or significantly reduced cost.”

— Ohio Penal Industries built two large barbecue grills that didn’t fit any training program for inmates, and later had to sell them at a loss of $5,200 to taxpayers.

— Duffey authorized the construction of a “smoke shack” at the agency’s Columbus headquarters where employees were allowed to smoke, in violation of state law.

— Three employees wrongly accepted free hotel rooms and meals from a vendor during a trip to Iowa meant for training on tractor equipment. After an hour of training, the employees spent most of their time touring a factory, visiting a museum, and taking a riverboat cruise.

— The prison system failed to adequately supervise inmates driving prison vehicles outside prison walls on “multiple occasions.”

The report also faulted the Department of Rehabilitation and Correction for not finding an alternate use for barns when the state shuttered two dairy farms at prisons in Madison County that it had built at a cost of $13 million through the sale of state bonds. The state sold off its prison dairy cows two years ago.

The buildings “continue to sit idle, remain unusable for their intended purpose, and to date have yet to be repurposed for an alternative use,” the report found.

OHIO INSPECTOR GENERAL INVESTIGATION FINDS RAMPANT FRAUD, WASTE, AND ABUSE IN OHIO PENAL INDUSTRIES

Columbus, Ohio, December 20, 2018

The Ohio Inspector General issued a report of investigation today after investigating a complaint alleging that Ohio Department of Rehabilitation and Correction (ODRC) employees assigned to work at the Ohio Penal Industries (OPI) were using their positions for personal gain. The complaint also cited concerns that OPI equipment had been improperly disposed of and possibly stolen.

The Inspector General conducted a joint investigation with the ODRC Chief Inspector’s Office into the activities at OPI. OPI operates 33 shops at 13 correctional facilities and is responsible for a training program designed to provide vocational skills and a meaningful work experience for inmates.

The investigation encompassed a multitude of issues including, but not limited to: millions of taxpayers’ dollars spent on the enhancement of two dairy facilities that were never used; mismanagement and lack of oversight of OPI’s vehicle service center; discounts or free services provided to select state of Ohio employees for repairs of their personal vehicles; vendor-paid trips provided to OPI employees; use of inmates for personal tasks; and several instances of furniture provided at no charge.

The report of investigation details 26 instances of wrongdoing or impropriety by specific employees or are attributed to the management of OPI or ODRC. The report of investigation has been sent to the Franklin County Prosecutor’s Office, the City of Columbus Prosecuting Attorney, and the Ohio Ethics Commission for consideration.

Ohio Inspector General Report of Investigation file number 2017-CA00024 is now available at:

http://watchdog.ohio.gov/investigations/2018investigations.aspx

Ohio News Media Association

12/21/2018

Ohio Supreme Court ruling will have huge impact on libel and defamation cases

By David Marburger

Libel suits are about to become far less risky and far less common for the press in Ohio. The Ohio Supreme Court ruled 6-1 on Dec. 7 that Ohio’s tort reform laws apply to libel, a decision that dramatically reduces the incentive for seasoned lawyers to take on libel cases representing people who claim they have been defamed.

A tort is a civil wrong. Negligence in a car accident is a tort. Medical malpractice is a tort. Libel is a tort. During the 1990s, led by Republicans and insurance companies, a wave of criticism of big jury verdicts against companies and hospitals in injury suits led to “tort reform.”

Ohio’s legislature adopted laws that limit how much a jury can award for an injured person’s pain and suffering, called noneconomic damages, limit how much a jury can award against a company or hospital in punitive damages, and erect obstacles to sustaining large jury awards for pain and suffering and punitive damages on appeal.

In 1999, the Ohio Supreme Court ruled that the newly-adopted tort reform laws violated Ohio’s constitution. Five years later, in 2004, the legislature adopted modified versions, and those laws have withstood constitutional challenges so far.

Since 2004, the tort reform laws routinely applied to cases where a defendant’s negligence or medical malpractice caused physical injury to the person suing—the plaintiff.

The Ohio Supreme Court’s Dec. 7 decision applied the laws to libel for the first time. In that case, nurse Ann Wayt sued Affinity Medical Center near Canton for defamation. The medical center had fired her, and Wayt said that she was fired because she had been active in organizing a nurses’ union at the center. The center said in a report to a state agency that it fired Wayt for neglecting patients.

After Wayt could not land another full-time nursing job, she sued the medical center for libel. At trial, the jury awarded her $800,000 in damages for injury to her reputation and humiliation, and $750,000 in punitive damages.

The medical center then demanded that the trial court apply the tort reform laws to limit the jury’s award. The trial court ruled that the tort reform laws did not apply to libel, and the court of appeals agreed.

But, in an opinion by Justice Patrick Fisher, the state’s highest court reversed, holding that the tort reform laws apply to libel. The court addressed only the statutory cap on compensatory damages—injury to reputation and humiliation—not the statutory cap on punitive damages. That was because the medical center did not properly present the punitive damage issue to the court.

The crux of the tort reform laws as they apply to libel:

Caps on damages for injury to reputation, humiliation: The maximum award for injury to reputation and humiliation—called noneconomic loss—is $350,000, but only if the defamed person also proves damages for actual economic loss. Examples of actual economic loss: where the libel caused the defamed person to lose employment or lose business customers. If the defamed person has no actual economic loss, the maximum awardable for injury to reputation and humiliation is $250,000.

Caps on punitive damages: The maximum allowed for punitive damages is 2 x the award of compensatory damages. Compensatory damages would be the damages for injury to reputation, humiliation, and any actual economic damages, such as lost business customers or lost employment. A defendant business that employs fewer than 100 full-time employees enjoys an added limit on punitive damages.

With or without tort reform, juries are allowed to award an amount covering the defamed person’s attorneys’ fees as punitive damages. Under tort reform, an award of attorneys’ fees is not included when applying statutory maximum for punitive damages.

No automatic employer liability for punitive damage liability for egregious conduct of a reporter or editor:

Even under the First Amendment, the norm has been that, if a reporter or editor published with the particularly egregious conduct—publishing a known falsehood, for example—the news organization was responsible for that conduct automatically by virtue of its role as the employer. So, the news organization was automatically liable for punitive damages if the employee’s bad conduct warranted punitive damages.

Under tort reform, the news organization is no longer automatically liable for the conduct of a journalist that warrants punitive damages. The news organization is liable for the journalist’s punitive-damage liability only if the plaintiff proves that the news organization knowingly okayed the journalist’s bad-faith conduct, participated in it, or endorsed it afterward.

Hiding information from the jury: The tort reform laws bar the court, witnesses, litigants, and counsel from letting the jury know that there is any limit on the amount of punitive damages that the jury may award.

2-stage trial: The trial court must divide a trial into two stages if a litigant asks for a two-stage trial. Defendants typically want a two-stage trial, because it tends to make it easier to guard against large overall damage awards.

In the first stage, the jury would decide whether the defendant is liable for libel, and therefore liable for compensatory damages. If the jury decides that the defendant is liable, and awards compensatory damages, then the trial would go to its second stage—whether the defendant is liable for punitive damages.

Easier to challenge award for injury to reputation on appeal: Without tort reform, an appellate court usually must defer to the amount that the jury chose to award a defamed person for injury to reputation and humiliation. Under tort reform, the appellate court is not supposed to defer to the jury’s judgment about how much money to award for those noneconomic damages.

Applying tort reform to libel will drive away seasoned lawyers from taking on libel suits against the press. Without tort reform, good lawyers have had to overcome a formidable defense motion for summary judgment—where the defense argues that the trial court should decide the case without trial because First Amendment or common law protections of speech prevent the plaintiff from winning. But good lawyers knew that they had a reasonable chance of scoring a multimillion-dollar verdict if they could get the case to a jury by beating a defense motion for summary judgment. Juries in libel cases tend to punish publishers for what they tend to see as an intentional wrong: That damaging story did not appear in the paper by accident.

Although First Amendment and common law protections of speech would make it hard to sustain a multimillion-dollar libel verdict on appeal, a big verdict puts lots of pressure on the publisher and its insurer to settle for big dollars. That’s how plaintiffs’ lawyers got compensated for their services. They’d get 40% of that settlement. A $2 million settlement yields $800,000 for the lawyer.

Most plaintiffs in libel suits don’t have actual economic damages. Most seek only noneconomic damages for injury to reputation and humiliation plus punitive damages. Under tort reform, even if plaintiffs’ counsel can overcome the inevitable defense motions for summary judgment, the most they can hope for at trial is $750,000 in most cases. At 40%, a $300,000 paycheck sounds great, but it’s not attractive to seasoned lawyers. They would not receive that paycheck until after performing several years of comprehensive legal services for nothing, and they want a bigger payoff assuming the risk of losing altogether after years of work.

Plus, after the defense appeals, the actual payout in a settlement will be less than $750,000, which drops the lawyer’s best-chance compensation to below $300,000. Again, that sounds like a lot, but to seasoned lawyers that best-case scenario is too little compensation for too much risk and too much intense legal work spread over years of effort.

So, the press can expect that the Ohio Supreme Court’s decision in the Wayt case will cause libel suits by experienced lawyers to dry up.

Publishers may wonder why, during the last 14 years of tort reform in Ohio, their high-priced legal talent didn’t tell them, or the courts, that those laws applied to libel. In fact, media lawyers studied the tort reform laws when the legislature passed them, and concluded for good reason that they didn’t apply to libel.

For centuries, the courts in England and America held that reputation was a form of property, and that libel was a trespass upon the plaintiff’s property. The tort reform laws apply to a loss of property, but they define “property” in a way that excludes injury to reputation.

That left only injury to the “person,” which courts have viewed for centuries as only bodily injury. Because injury to reputation is not a physical injury, there appeared to be no principled way to apply the tort reform laws to libel. Chief Justice Maureen O’Connor elaborates on that analysis in her dissent in the Wayt case.

The majority in the Wayt decision, however, ruled that injury to reputation is indeed injury to the “person,” and so tort reform applies to libel.

David Marburger is the founding general counsel of the Ohio Coalition for Open Government, a retired partner at Baker Hostetler in Cleveland and a nationally recognized expert in media law. He now practices at Marburger Law LLC. To contact him, send email to david@marburger-law.com.

State Medical Board confirms complaint records on OSU doctor

By KANTELE FRANKO

Associated Press

Tuesday, December 18

COLUMBUS, Ohio (AP) — The State Medical Board has acknowledged for the first time that it has confidential records about the investigation of a complaint involving former Ohio State University team doctor Richard Strauss who is accused of widespread sexual misconduct against students decades ago.

The documents can’t be viewed by the law firm investigating allegations that Strauss abused scores of male student-athletes in the 1980s and 1990s, but still might help guide its inquiry.

It’s unclear what the documents say about Strauss.

The board and university won’t share any details about the documents provided to Ohio State’s lawyers earlier this month involving the now-deceased physician. Board communications obtained by The Associated Press indicate that the school sought the records after its outside investigators learned that Ohio State had reported Strauss to the medical board.

The records were handed over to the university and its lawyers on the condition that they not be made public or shared with any third party, including the investigators from Seattle-based Perkins Coie. However, Ohio State’s lawyers can ask the medical board for permission to share background tidbits with the investigators that could help direct them to relevant information.

The board has said it never disciplined Strauss, and it hadn’t previously disclosed whether it had record of any complaints related to him. That disclosure was made in the communications obtained by the AP and confirmed Tuesday by board spokeswoman Tessie Pollock.

State law allows the board to share such confidential records with government agencies if they’re investigating possible violations of the law or administrative rules.

The law firm is investigating the allegations against Strauss and whether Ohio State responded properly to concerns raised about him during his two decades there.

Strauss killed himself in 2005. His family has expressed shock at the allegations about him but hasn’t responded to subsequent requests for comment.

A lawyer for Ohio State told the medical board that Strauss’ family is cooperating with the investigation and didn’t oppose the board’s records being shared with the school.

Because the information was provided under a limited legal exception, Ohio State and its lawyers aren’t commenting on it, spokesman Ben Johnson said.

At least 150 ex-students have alleged sexual misconduct by Strauss between 1979 and 1997, with some saying publicly that they were unnecessarily groped during exams or ogled in locker rooms. The allegations involve Ohio State male athletes from at least 16 sports, as well as Strauss’ off-campus medical office and work at the student health center.

No one has publicly defended Strauss since the investigation began in April after a former wrestler raised allegations of abuse.

Employment records released by the university reflect no major concerns about Strauss. But alumni say they complained about him as far back as the late 1970s, and Ohio State has at least one documented complaint from 1995.

The claims have spurred federal lawsuits and an investigation by the U.S. Department of Education Office for Civil Rights.

Ohio State has urged anyone with relevant information to contact Perkins Coie. The firm isn’t proactively contacting possible victims, citing concern for potentially re-traumatizing them.

Some Strauss accusers suing the university have questioned the independence of that investigation, noting that lawyers for OSU hired the firm.

Ohio State insists that it’s committed to uncovering the truth and will publicly share results.

Strauss’ personnel file indicates he previously did research, taught or practiced medicine at Harvard University, Rutgers University, the University of Pennsylvania, the University of Washington and the University of Hawaii. Most of those have said they have little record of Strauss, and none has said any concerns were raised about him.

The oversight or licensing agencies in most of those states told the AP they found no records of complaints or discipline against Strauss. The Massachusetts Board of Registration in Medicine said it found no remaining record of him being licensed there and noted it’s possible such old records were destroyed once the required period for preserving them passed.

Associated Press reporter Collin Binkley in Boston contributed to this report.

Follow Franko on Twitter at http://www.twitter.com/kantele10 .

Have a tip? Contact the author securely at https://www.ap.org/tips

FILE – In this July 18, 2016 file photo, former Speaker of the Ohio House Larry Householder speaks during the opening day of the Republican National Convention in Cleveland. The state watchdog is alleging widespread fraud within the Ohio agency that provides prison jobs for inmates, including furniture building and vehicle repair. A report released Thursday, Dec. 20, 2018, by Inspector General Randall Meyer accuses top employees of Ohio Penal Industries of using their positions for personal gain, such as discounts on personal car repairs by inmates. The IG report says Householder was provided an office table and chair set at no cost. (AP Photo/Mark J. Terrill)
https://www.sunburynews.com/wp-content/uploads/sites/48/2018/12/web1_122003061-e2a27a99a83142e4869689559bf68eb7.jpgFILE – In this July 18, 2016 file photo, former Speaker of the Ohio House Larry Householder speaks during the opening day of the Republican National Convention in Cleveland. The state watchdog is alleging widespread fraud within the Ohio agency that provides prison jobs for inmates, including furniture building and vehicle repair. A report released Thursday, Dec. 20, 2018, by Inspector General Randall Meyer accuses top employees of Ohio Penal Industries of using their positions for personal gain, such as discounts on personal car repairs by inmates. The IG report says Householder was provided an office table and chair set at no cost. (AP Photo/Mark J. Terrill)
OHIO NEWS

Staff & Wire Reports