Puckett v. Cabinet for Health & Family Servs.

• Decision Date: 29 April 2021
• Docket Number: 2019-SC-0282-DG
• Parties: Perry PUCKETT, Appellant v. CABINET FOR HEALTH AND FAMILY SERVICES and Kentucky Personnel Board, Appellees
• Court: United States State Supreme Court — District of Kentucky

621 S.W.3d 402

Perry PUCKETT, Appellant

v.CABINET FOR HEALTH AND FAMILY SERVICES and Kentucky Personnel Board, Appellees

2019-SC-0282-DG

Supreme Court of Kentucky.

APRIL 29, 2021

COUNSEL FOR APPELLANT: David Lindsay Leightty, Alison Meredith Messex, Louisville, Priddy, Cutler, Naake & Meade, PLLC.

COUNSEL FOR APPELLEE, CABINET FOR HEALTH & FAMILY SERVICES: Wesley Warden Duke, Ashley Genevieve Kennedy, Catherine Elaine York, Office of Legal Counsel.

COUNSEL FOR APPELLEE, KENTUCKY PERSONNEL BOARD: Stafford Easterling, Mark Albert Sipek.

COUNSEL FOR AMICUS, KENTUCKY PERSONNEL CABINET: Catherine Marie Stevens.

OPINION OF THE COURT BY JUSTICE KELLER

Perry Puckett was terminated from his employment with the Commonwealth of Kentucky Cabinet for Health and Family Services (CHFS) in 2009 for excessive and inappropriate personal email usage. After protracted litigation through multiple levels of appeals, the Franklin Circuit Court reversed his termination. CHFS appealed to the Court of Appeals which reversed the circuit court. This Court granted discretionary review, and after a careful review of the record and pertinent authority, we affirm the Court of Appeals.

I. BACKGROUND

In 2009, Puckett was employed by CHFS as a Disability Adjudicator III – Trainer. He had been employed by CHFS for over a decade when he was terminated in 2009 for excessive and inappropriate email usage including sending emails that contained graphic sexual comments and photos, unprofessional language, and derogatory comments about coworkers and supervisors. Significantly, Puckett's termination letter was signed by Jay Klein, a Division Director in the Division of Employee Management at CHFS, purportedly on behalf of J.P. Hamm, CHFS's Human Resources Director. Klein signed Hamm's name, followed by a diagonal slash and his own initials (JK). Hamm had been appropriately delegated appointing authority by the Secretary of CHFS, but Klein had not.¹ Because the question before us does not involve the merits of Puckett's termination, we will not discuss the underlying facts in great detail. Instead, we will focus our discussion on the long procedural history of this case.

After receiving the termination letter, Puckett timely appealed his termination to the Kentucky Personnel Board (the Board). A hearing was held before a hearing officer at which several CHFS employees testified, including Klein. During CHFS's opening statement, counsel for CHFS stated that Klein made the final determination to terminate Puckett. Sean Estep, Human Resources Administrator for CHFS, testified at the hearing and twice referred to Klein as the appointing authority charged with making termination decisions. Klein himself testified that he was the appointing authority for disciplinary actions and that part of his job was to review final disciplinary actions and "sign off" on said actions. No witness was asked, and no witness testified as to, who actually signed Hamm's name on Puckett's termination letter. However, during his testimony, Klein acknowledged signing Hamm's name, followed by his own initials, on another document relating to a different employee, and this document was admitted into evidence, by stipulation, at the hearing.

After an evidentiary hearing, the hearing officer issued a recommended order finding that Puckett's punishment was disproportionately harsh and recommending that the termination be reduced to a 30-day suspension. CHFS filed exceptions to the hearing officer's recommended order, and Puckett did not. The Board rejected the hearing officer's recommended order and instead imposed Puckett's termination. Puckett then timely petitioned the Franklin Circuit Court for review of his termination.

While the case was pending in Franklin Circuit Court, Puckett's attorney learned, through discovery in a separate, unrelated case, that Klein had actually signed Hamm's name to Puckett's termination letter. Also while Puckett's case was pending, it became clear that Klein did not have the requisite appointing authority to terminate CHFS employees. Based on this new knowledge, Puckett moved to amend his complaint in circuit court to include a claim that Puckett's termination was null and void because the person who signed the termination document lacked appointing authority to terminate him. He further moved for a stay of the proceedings in circuit court so that the matter could be remanded to the Board for consideration of whether his termination was void. The circuit court granted both of these motions.

CHFS then filed both a petition for a writ of prohibition and an interlocutory appeal in the Court of Appeals. The writ petition asked the Court of Appeals to prohibit the circuit court from enforcing its order remanding the case back to the Board. The Court of Appeals denied the writ petition holding that the circuit court acted within its jurisdiction in remanding the case back to the Board. Ky. Cabinet for Health & Family Servs. v. Puckett , No. 2012-CA-002195-OA (Ky. App. June 10, 2013). In the interlocutory appeal, the Court of Appeals held that Puckett's "amended complaint properly asserts a claim for declaratory relief which is not barred by the doctrine of sovereign immunity." Cabinet for Health & Family Servs. v. Puckett , No. 2012-CA-002165-MR, 2014 WL 689094, at *1 (Ky. App. Feb. 21, 2014).

Following the Court of Appeals’ rulings, the Board took up the case on remand from the circuit court. A hearing officer held another evidentiary hearing and issued a recommended order. The hearing officer concluded that the Board had no authority to decide whether Puckett's termination was void due to Klein's lack of appointing authority because there was no evidence of fraud or misconduct on the part of CHFS and the issue had not been raised or preserved before the Board previously. Puckett filed exceptions to the hearing officer's recommended order; however, the Board adopted the hearing officer's recommended order in its entirety.

Puckett then moved the circuit court to re-activate the case and for leave to file another amended complaint to include review of the Board's most recent order. An agreed order was entered lifting the stay and allowing the amended complaint to be filed. After briefing and argument, the circuit court entered an opinion and order reversing the Board's original order terminating Puckett, finding that the Board lacked substantial evidence to terminate Puckett and that its decision was arbitrary. Interestingly, the circuit court never addressed the issue on which it remanded the case to the Board, whether Puckett's termination was void due to Klein's lack of appointing authority. CHFS appealed to the Court of Appeals.²

The Court of Appeals reversed the circuit court holding, in short, that the circuit court substituted its own judgment for that of the Board and that substantial evidence supported Puckett's termination. Relevant to this appeal, the Court of Appeals declined to address Puckett's argument that his termination was void because Puckett did not properly preserve that argument for appeal and CHFS did not commit fraud or misconduct.

Puckett filed a motion for discretionary review with this Court which we granted to determine, essentially, whether the circuit court's remand to the Board was proper.

II. STANDARD OF REVIEW

This case primarily involves the interpretation of Kentucky Revised Statute (KRS) 13B.150. "Because the construction and application of statutes is a question of law, it is subject to de novo review on appeal." Osborne v. Commonwealth , 185 S.W.3d 645, 648 (Ky. 2006).

III. ANALYSIS

1. Preservation

Because Puckett was a classified employee with status, he could only be dismissed with cause. KRS 18A.095(1). KRS 18A.095(7)(c) allowed Puckett to appeal his dismissal to the Board within sixty (60) days of the dismissal. He did so. An administrative hearing on his dismissal was then "conducted in accordance with KRS Chapter 13B." KRS 18A.095(17). As previously explained, the hearing officer found Puckett's termination to be unduly harsh and recommended only a 30-day suspension. Puckett did not file exceptions to anything in the hearing officer's recommended order, but CHFS did. After the Board entered an order in favor of CHFS, Puckett petitioned the Franklin Circuit Court for review of his termination in accordance with KRS 13B.140 which subjects all final orders of an agency to judicial review.

"It is well settled that failure to raise an issue before an administrative body precludes the assertion of that issue in an action for judicial review." Urella v. Kentucky Bd. of Med. Licensure , 939 S.W.2d 869, 873 (Ky. 1997) (citing Jackson v. State Auto. Mut. Ins. Co. , 837 S.W.2d 496, 498 (Ky. 1992) ; Personnel Bd. v. Heck , 725 S.W.2d 13, 17 (Ky. App. 1987) ). "Under Chapter 13B, the filing of exceptions provides the means for preserving and identifying issues for review by the agency head. In turn, filing exceptions is necessary to preserve issues for further judicial review." Rapier v. Philpot , 130 S.W.3d 560, 563 (Ky. 2004). By failing to file an exception regarding the appointing authority of Klein, Puckett failed to preserve this issue for judicial review. We have previously made clear that failure to follow this preservation rule "precludes judicial review of any part of the recommended order not excepted to and adopted in the final order." Id. at 563–64. We have further explained that "when a party fails to file exceptions, the issues the party can raise on judicial review under KRS 13B.140 are limited to those findings and conclusions contained in the agency head's final order that differ from those contained in the hearing officer's recommended order." Id. at 564. In this case, the Board's final order did not differ from the hearing officer's recommended order in regard to the authority of Klein to terminate Puckett, as this was never raised as an issue to either the hearing officer or the Board. Accordingly, Puckett could not...