IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Transcription

1 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Sharese Lynch, : Appellant : : v. : No C.D : SUBMITTED: July 26, 2013 City of Philadelphia, Civil Service : Commission : BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE LEADBETTER FILED: March 14, 2014 Appellant, Sharese Lynch, appeals from the order of the Court of Common Pleas of Philadelphia County (common pleas) affirming the decision of the City of Philadelphia Civil Service Commission (Commission), which determined that Appellant was properly terminated from her position as an administrative services supervisor for the City of Philadelphia, Department of Licenses and Inspections (the Department) as a result of job-related misconduct. We reverse. In response to a 2009 grand jury report detailing rampant fraud committed by Department employees, the City of Philadelphia Office of Inspector General (OIG) initiated an investigation into possible fraud committed by

2 Department employees in relation to the Low Income Home Energy Assistance Program (LIHEAP) and the Crisis Program. 1 The OIG investigated applications for benefits submitted by Appellant on behalf of her son, Tyrese Lynch, who resided at 6976 E. Wister Street in Philadelphia. Appellant s husband owned that premises and at times, depending on the state of her marriage, Appellant occasionally lived at this location. The utilities were in Appellant s name and she wrote the checks to pay the utility companies. The OIG concluded that Appellant had fraudulently applied for and received LIHEAP and Crisis benefits. The OIG determined that Appellant had been residing at Wister Street, was responsible for the payment of utility bills, and had failed to include her own income on the applications. The OIG reviewed the PECO and Philadelphia Gas Works (PGW) billing history for 6976 E. Wister Street, Appellant s personnel file and W-2 records, the LIHEAP and Crisis Program applications, Tyrese Lynch s employment records and Crisis Program computer logs. Upon receiving the OIG s report, the Department interviewed Appellant and held an administrative hearing on June 18, The Department found that Appellant was aware that Tyrese s income was greater than the amount she represented on the LIHEAP application. The Department also found that Appellant submitted a falsified support documentation form stating that Tyrese received $200 a month in support from a Charmaine Lynch who lived at 6977 E. Wister Street, an address which does not exist. The Department also found that 1 LIHEAP is a cash grant that is sent directly to a utility company to pay the heating bills of qualified low income households. LIHEAP is a federal program administered by the Commonwealth of Pennsylvania at the county level. The Crisis Program provides emergency cash grants to households whose utilities have been shut off or require emergency replacement or repair of their heating systems. The Crisis Program is a federal program which was administered by the Department in conjunction with the Commonwealth. 2

3 Appellant altered the two middle digits of Tyrese s social security number on two of the seven applications submitted, resulting in Tyrese receiving double payments in those months. These actions were consistent with the wider fraud detailed in the grand jury report. The Department determined that she could not properly account for the receipt of benefits because she earned too much money to qualify for the program. Concluding that Appellant had violated departmental and civil service regulations, the Department terminated her employment effective August 19, Appellant appealed the termination to the Commission, which conducted hearings on April 27, and July 13, Nicole Harrington, special investigator for the OIG testified on behalf of the Department. Harrington replaced Kristina Crosby as the investigator assigned to OIG investigation following issuance of the OIG s report. Appellant repeatedly objected to Harrington s testimony regarding the OIG report on the basis that she did not conduct the investigation and did not have personal knowledge of the investigation. Notes of Testimony (N.T.) at 20, 22-26, 29, 31, 35, 74; Supplemental Reproduced Record (S.R.R.) at 46b, 48b-52b, 55b, 57b, 61b, 100b. Appellant also objected to testimony regarding the documents referenced in the OIG report such as the LIHEAP and Crisis applications on the basis that such documents had not been authenticated as business records. N.T. at 22-24; S.R.R. at 48b-50b. The Department argued that the OIG report was admissible as a business record. N.T. at 20; S.R.R. at 46b. Harrington testified that Crosby had personal knowledge of the acts and events in the report, the OIG report was prepared in the normal course of business and that she was qualified to testify regarding the OIG report. N.T. at 25; S.R.R. at 51b. 3

4 On cross-examination, Harrington admitted that she did not personally obtain evidence that Appellant processed Tyrese s Crisis application. N.T. at 54; S.R.R. 80b. Harrington also admitted that she did not provide any evidence to the Commission that Appellant processed the Crisis application. Id.; S.R.R. at 80b. Harrington further admitted that Crisis Program employees knew Appellant s login pass code. N.T. at 54-55; S.R.R. at 80b-81b. Harrington testified that the OIG was only able to obtain the March 3, 2006 application, which was the only application in evidence. 2 N.T. at 55; 67, S.R.R. at 81b, 93b. Harrington also testified that the OIG obtained Tyrese s earning statements from July and August of 2005, but did not provide to the Commission earnings statements from March N.T. 56, S.R.R. 82b. Harrington further admitted that the cancelled checks drawn from Appellant s account were from May and June of N.T. at 57; S.R.R. at 83b. Finally, Harrington admitted that she did not conduct the investigation, she did not have personal knowledge of the facts, and she did not generate any of the documents or send out subpoenas. N.T. at 65-66; S.R.R. at 91b-92b. Kirk McClarren, administrative services director for the Department, testified about the Department s response to the OIG s report and the reason for Appellant s termination. Appellant testified on her own behalf. Appellant testified that she moved out of the Wister Street residence in the fall of 2004, moved back to Wister Street in summer of 2005 and left again in late 2005 before residing permanently at Wister Street from July She stated that she put the utilities at 2 It is unclear whether the application was for LIHEAP funds or Crisis funds. The application is addressed to the Philadelphia County Assistance Office at 4601 Market Street, Philadelphia, Pa. and Crisis is handwritten on the application. LIHEAP applications were processed at the 4601 Market Street by Commonwealth employees. Department employees processed Crisis applications at a different location. 4

5 Wister Street in her name in 2003 when she and her husband relocated to a residence on East Barringer Street. The utilities remained in her name in 2005 and 2006 because Tyrese was approximately 19 years old. Appellant testified that at the time she filled out the LIHEAP application she was not residing at Wister Street. Appellant also testified that Tyrese was responsible for paying the utility bill and that he would repay her if she paid a bill for him. N.T. at 135; S.R.R. at 161b. Appellant stated that she relied upon pay stubs that Tyrese provided to her and his statement that he was laid off from his construction job during the winter when she filled out the application. Appellant denied filling out a Crisis application and stated that utility companies were able to refer accounts to the Crisis office. N.T. at 130; 138, S.R.R. at 156b, 164b. Appellant also denied knowingly providing a false social security number. N.T. at 140; S.R.R. at 166b. The Commission found that there was substantial evidence to conclude that Appellant submitted applications for benefits in her son s name, but she was the actual recipient of the benefits. The Commission did not credit Appellant s testimony that she lived at Wister Street only intermittently and that her son was responsible for the utility bills. Further, the Commission did not credit her testimony that the provision of the wrong social security number on two applications was accidental. The Commission concluded that the Department properly terminated Appellant for misconduct. Appellant appealed to common pleas asserting that the Commission s decision was not supported by substantial evidence and that the Commission committed an error of law by admitting and relying upon hearsay. Specifically, Appellant argued that Harrington s testimony was not based on personal knowledge of the OIG investigation, and consequently she was not qualified to 5

6 testify. Common pleas concluded that the Department had laid the proper foundation for admission of the OIG report through Harrington s testimony, and that Harrington s testimony established that the OIG report and the supporting documents were business records created in the normal course of business. Common pleas held that the OIG report and supporting documents were admissible as exceptions to the hearsay rule pursuant to Pennsylvania Rule of Evidence 803(6), Pa. R.E. 803(6). This appeal followed. Appellant argues that the Commission erred in admitting the OIG report as a business record. Appellant asserts that the OIG report and all exhibits attached thereto were either hearsay or double hearsay due to Harrington s lack of personal knowledge. We agree. Hearsay evidence, properly objected to, is not competent to support a finding in an agency determination. Walker v. Unemployment Comp. Bd. of Review, 367 A.2d 366, 370 (Pa. Cmwlth. 1976). 3 Under the business records exception, it is not necessary to produce the preparer of the record if a qualifying witness can provide sufficient information relating to the preparation and maintenance of the records to justify the presumption of trustworthiness for the business records exception. In re Estate of Indyk, 488 Pa. 567, 573, 413 A.2d 371, 373 (1979); First Ward Republican Club v. Pa. Liquor Control Bd., 11 A.3d 38, (Pa. Cmwlth. 2010); Guthrie v. Workers Comp. Appeal Bd. (Travelers Club, Inc.), 854 A.2d 653, 658 (Pa. Cmwlth. 2004). Double hearsay is an out-of- 3 Whether a document should be accepted under the business records exception to the hearsay rule is within the trial court s discretion and may only be reversed on appeal if an error of law was committed or there was a clear abuse of discretion. Toth v. Workers Comp. Appeal Bd. (USX Corp.), 737 A.2d 838, 841 (Pa. Cmwlth. 1999). 6

7 court declaration containing another out-of-court declaration. Commonwealth v. Laich, 566 Pa. 19, 25, 777 A.2d 1057, 1060 (2001). In order for double hearsay to be admissible, each statement must come within an exception to the hearsay rule. Guthrie, 854 A.2d at 660 (Pa. Cmwlth. 2004). In Bolivar v. Unemployment Compensation Board of Review, 522 A.2d 688 (Pa. Cmwlth. 1987), this Court considered whether an investigatory report compiled by an employee s supervisor and other documents contained within a personnel file were inadmissible hearsay. The reports offered into evidence were based on interviews with persons not present at the unemployment compensation hearing. The employer offered the testimony of the custodian of the personnel file in order to lay a proper foundation as a business record. This Court held that the investigative reports were not admissible as business records because mere maintenance of hearsay documents in a personnel file does not overcome the inherent reliability problem with the evidence. Id. at 691. See also Jones Appeal, 449 Pa. 543, 297 A.2d 117 (1972) (holding that [w]ithout evidence of the sources of information and the time and manner of preparation, the business records exception does not apply ). Moreover, the Uniform Business Records as Evidence Act provides: (b) General rule. A record of an act, condition or event shall, insofar as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business at or near the time of the act, condition or event, and if, in the opinion of the tribunal, the sources of information, method and time of preparation were such as to justify its admission. (c) Definition. As used in this section business includes every kind of business, profession, 7

8 occupation, calling or operation of institutions whether carried on for profit or not. 42 Pa. C.S. 6108(b) and (c). In addition, Pennsylvania Rule of Evidence 803(6) provides the following exception to the hearsay rule regardless of whether the declarant is available, allowing admission of: (6) Records of a Regularly Conducted Activity. A record (which includes a memorandum, report, or data compilation in any form) of an act, event or condition if, (A) the record was made at or near the time by or from information transmitted by someone with knowledge; (B) the record was kept in the course of a regularly conducted activity of a business, which term includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit; (C) making the record was a regular practice of that activity; (D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and (E) neither the source of information nor other circumstances indicate a lack of trustworthiness. Regardless of the other requirements, it is obvious that the OIG report does not qualify under either the above quoted Act or Rule of Evidence because it was not a contemporaneous recording of events at or near the time they occurred, but was instead a history of events over a substantial period of time, compiled well after the fact. Moreover, although Crosby, who prepared the report may have had 8

9 personal knowledge of some of the events she described, many of the factual statements related to events of which she could not have had personal knowledge, but were in fact her recitation of information she obtained or reviewed. It is a summary of evidence obtained in an investigation and a statement of the conclusions to be drawn from this evidence. It may well be that it was prepared in the regular course of OIG business, it may even be trustworthy, but it does not qualify for the business record exception to the hearsay rule. The Commission nonetheless argues that its findings are supported by the underlying documents admitted as attachments to the OIG report. The underlying documents themselves were described by Harrington, but she did not produce evidence sufficient to support a finding that the item is what the proponent claims it is. Pa. R.E There is no evidence of record as to how or from whom the OIG obtained any of the underlying documents such as the LIHEAP application, Appellant s personnel records, Tyrese s earnings statements, or the PECO and PGW records, nor that Harrington had any basis other than hearsay to identify them. In sum, while it would appear that the OIG developed ample information, the City did not make a serious attempt to present its case with admissible evidence. This record, without the OIG report and unauthenticated underlying documents, simply does not contain substantial evidence to support a finding that Appellant engaged in misconduct warranting dismissal. Accordingly, we reverse. BONNIE BRIGANCE LEADBETTER, Judge 9

10 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Sharese Lynch, : Appellant : : v. : No C.D : City of Philadelphia, Civil Service : Commission : O R D E R AND NOW, this 14th day of March, 2014, the order of the Court of Common Pleas of Philadelphia County in the above captioned matter is hereby REVERSED. BONNIE BRIGANCE LEADBETTER, Judge