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STEPHEN M. SACKS v. COMMONWEALTH PENNSYLVANIA (09/23/83)

decided: September 23, 1983.

STEPHEN M. SACKS, APPELLANT,
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, APPELLEE



No. 81-3-468, Appeal from the Order of the Commonwealth Court at No. 2378 C.D. 1979, Affirming the Order of the Pennsylvania Civil Service Commission, 59 Pa. Commwlth Ct. 30, Roberts, C.j., and Nix, Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Larsen, J., concurs in the result.

Author: Flaherty

[ 502 Pa. Page 204]

OPINION OF THE COURT

This case presents the question of under what circumstances a government employee may be disciplined because of his public statements which are critical of the government agency for which he works. The Supreme Court of the United States, addressing this problem, has stated:

In Pickering v. Board of Education, 391 U.S. 563 [88 S.Ct. 1731, 20 L.Ed.2d 811] (1968), we stated that a public employee does not relinquish First Amendment rights to comment on matters of public interest by virtue of

[ 502 Pa. Page 205]

    government employment. We also recognized that the State's interests as an employer in regulating the speech of its employees "differ significantly from those it possesses in connection with regulation of the speech of the citizenry in general." Id., at 568 [88 S.Ct. at 1734]. The problem, we thought, was arriving "at a balance between the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees." Ibid.

Connick v. Myers, U.S. , 103 S.Ct. 1684, 75 L.Ed.2d 708 (1983). Because in the present case appellant Sacks was speaking on a matter of public importance and did not impair the functioning of his agency beyond incurring the displeasure of his superiors, we reverse the Commonwealth Court and direct the Department of Public Welfare to reinstate Sacks with full pay and benefits for the period of suspension.

I. FACTUAL SETTING OF THE CASE

This case began when Sacks, an employee of the Department of Public Welfare, gave a public address during the evening of October 4, 1978 to the Health Systems Agency of Southeastern Pennsylvania (HSA). HSA plans health care facilities in Southeastern Pennsylvania and establishes guidelines for health care costs. Membership of HSA consists of representatives of many, if not all, major health care delivery agencies in the region. On the evening of October 4, 1978 Sacks appeared at a public hearing conducted by HSA on a proposed plan for improving the quality of health care and reducing its cost. His comments, in pertinent part, are as follows:

Good evening. I am Steve Sacks. Professionally, I am a public administrator and an applied behavioral scientist. I am employed by the Commonwealth of Pennsylvania, and I am currently with the Department of Public Welfare. Suffice to say, I have been actively involved during the past ten years in Pennsylvania's efforts to modernize our health care system. During that time I have worked

[ 502 Pa. Page 206]

    with our highest public level as well as many representatives of our community agencies. So I need to point out that my remarks tonight are my own consumer's view, and parenthetically, I would like to point out that I am testifying as an individual tonight; I am expressing my own personal views.

Later on I will be disclosing some information not heretofore made public, and I want to point out that the information was obtained from sources outside the Department of Public Welfare, and especially outside the Southeastern Region.

It is the topics of cost and availability of third-party payments to which the rest of my comments tonight apply.

Medical Assistance and the HSA. Tonight I recommend that the Health Systems Agency of Southeastern Pennsylvania along with its counterparts throughout the state take the lead in promoting the local communities and state government to collectively clean up the Medical Assostance [sic] Program.

In Southeastern Pennsylvania numerous medical assistance frauds and financial abuses have arisen, which include payments for goods and services for drugs, physicians' fees, orthopedic shoes, pain machines, and nursing home care. In addition, it has been recently announced that the Department of Public Welfare will be unable to pay Medical Assistance bills after April 30, 1979, due to lack of budget.

There are many dedicated and highly competent employees in the Department of Public Welfare. In my opinion, however, some of the problems are beyond Medical Assistance management. For instance, there was a futile effort to establish a cost limitation program for hospital costs. An attempt was made to place a twelve percent cost increase limitation, and it was apparently ruled to be illegal because Title XIV of the Social Security Act provides for the payment of reasonable cost. What

[ 502 Pa. Page 207]

    needs to be done is probably to prescribe in detail those expense components which constitute reasonable cost and to establish objective criteria for the individual expense items. As an example, interest expenses on bonds for construction might be limited if alternative funding sources were developed, as I recommended earlier.

In another Medical Assistance area, one provider of services was apparently paid over three quarters of a million dollars in profits for supposedly non-profit work. Since July 1974 to the present time the Philadelphia Health Management Corporation has been the Medical Assistance contractor for providing child health screening. The service is called the Early Periodic, Screening, Diagnostic, and Treatment Program, EPSDT, and as of December 31, 1977, the Philadelphia Health Management Corporation, a non-profit corporation, has made an apparent profit of $768,000 solely from the child screening program.

I got this information from data obtained outside the Department of Welfare. The profits are clearly shown in the corporation's annual audited financial statements, and the amounts are earmarked as from the child screening program.

The $768,000 profit is of questionable propriety; in other words, an apparent ripoff. The funds should probably be repaid to Medical Assistance.

It should also be noted that eleven people were simultaneously members, both past and present, of the governing boards of the Philadelphia Health Management Corporation and the Health Systems Agency, or the Plan Development Committee. Also, at least two people were simultaneously connected with both the Department of Public Welfare and the Philadelphia Health Management Corporation.

The bottom line of the preceding is that the Health Systems Agency is in a strategic position to mobilize community support to collectively clean up the Medical Assistance Program. The HSA should assert itself in the Medical Assistance arena for Medicaid financial problems affect the ultimate outcome of the proposed plan.

[ 502 Pa. Page 208]

On November 8, 1978 Sacks was informed by letter that he was suspended for ten days because of insubordination, reckless disregard for truth in public statements, failure to conduct himself in a manner that would bring credit to the agency, and acting in a manner which caused unfavorable publicity for the agency.*fn1 All of these charges were made as a result of Sacks' statements at the HSA meeting referred to above. The matter was then appealed to the Pennsylvania Civil ...


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