Starkey v. Civil Service Commission of State of Ill.

• Decision Date: 16 April 1982
• Docket Number: No. 80-2351,80-2351
• Citation: 435 N.E.2d 176,105 Ill.App.3d 904
• Parties: , 61 Ill.Dec. 687 Josie STARKEY, Plaintiff-Appellant, v. CIVIL SERVICE COMMISSION OF the STATE OF ILLINOIS; Department of Labor of the State of Illinois; William Boys; William Bowling; Ann Lousin; Roy E. Pechous; and John L. Gilbert, Defendants- Appellees.
• Court: United States Appellate Court of Illinois

Page 176

435 N.E.2d 176

105 Ill.App.3d 904, 61 Ill.Dec. 687

Josie STARKEY, Plaintiff-Appellant, v. CIVIL SERVICE COMMISSION OF the STATE OF ILLINOIS Department of Labor of the State of Illinois William Boys; William Bowling; Ann Lousin; Roy E. Pechous; and John L. Gilbert Defendants- Appellees.

No. 80-2351.

Appellate Court of Illinois, First District, Fifth Division.

April 16, 1982.

Gerald A. Goldman, Gerald A. Goldman, Chartered, Chicago, for plaintiff-appellant; Benjamin P. Hyink, Chicago, of counsel.

Tyrone C. Fahner, Atty. Gen., Chicago, for defendants-appellees; Karen Konieczny, Asst. Atty. Gen., Chicago, of counsel.

LORENZ, Justice:

Plaintiff Josie Starkey appeals from a circuit court order which affirmed a Illinois Civil Service Commission decision to discharge her from employment with the State. (Personnel Code, § 11a, Ill.Rev.Stat.1979, ch. 127, par. 63b111a.) We reverse because the Commission's decision is against the manifest weight of the evidence. The following facts are material to our decision.

Starkey was employed as the claims manager of the Waukegan branch of the Illinois Department of Labor, Bureau of Employment Security (BES). In July of 1979 she was notified that she was being discharged based on the allegation that she processed a claim for unemployment benefits on behalf of her mother, Lillian McCoy, with knowledge that McCoy's claim was fraudulent. Starkey requested a hearing on the charges and the Civil Service Commission appointed a hearing officer. (Personnel Code, § 11, Ill.Rev.Stat.1979, ch. 127, par. 63b111.) The evidence presented to the hearing officer shows that Lillian McCoy went to the Waukegan BES office on September 10, 1976, to apply for unemployment benefits under the Supplemental Unemployment Assistance (SUA) program. Starkey testified that, although it was not a regular part of her duties, she partially filled out a claims application for her mother and put this form in the pile of SUA applications. She told her mother to wait for a claims taker to call her so that the application could be completed and her eligibility evaluated. Without this shortcut, her mother would have had to wait in one line only to be told that she had to go to a line for SUA claimants at the other side of the building. After putting the partially completed application in the SUA pile, Starkey went back to her office. Starkey further testified that she did not know that McCoy was not eligible for the $2,028 in benefits she eventually received.

Although McCoy's application was processed without being completely filled out, Starkey's supervisor, Miles Paris, testified that in September of 1976 it was not unusual for uncompleted applications to be processed. The SUA program was new at the time, and as the hearing officer found, "(I)n 1976, things were in a state of chaos at the Waukegan B.E.S. office."

In 1977, the Illinois Department of Law Enforcement (DLE) began an investigation of the Waukegan BES office, focusing on an employee named Marilyn Blye. Blye was Starkey's principal accuser at the hearing which resulted in this appeal. However, Blye was under indictment by the time the charges against Starkey were heard, and she did not testify against Starkey. Instead, Blye's unsworn and un-cross-examined "testimony" was given through two DLE agents who testified that during the course of their investigation they interviewed Blye at the Waukegan police station and at the office of the State's Attorney. According to one of the agents.

" * * * I asked Marilyn Blye if there were any other employees in the local office in Waukegan who were involved in filing false claims. Blye replied that Josie Starkey had filed a false claim for her mother. She said that Josie Starkey brought the claim to her while she was at a computer terminal. She said she thought that Miss Starkey stated that her mother had not been working as listed in the claim.

"Blye stated she thought, Blye thought, Starkey told her at that time that her mother had not been working as listed in the complaint." (Emphasis added.)

Despite the fact that the agent initially testified that Blye merely reported what she "thought" was Starkey's knowledge of a fraudulent claim, the agent later gave a much more damaging version of Blye's statements. According to this second version of the agent's recollection, Blye said that Starkey admitted to Blye that McCoy's claim was fraudulent. The agent further testified that Blye said that Starkey showed her how to enter a fraudulent claim in the BES computer.

The testimony of the second agent was similar to the more damaging version of the first agent's testimony. However, the second agent also testified that Starkey had helped in the investigation of Blye, and that Blye believed that Starkey was responsible for Blye's own discharge.

At the close of the hearing, the hearing officer found that McCoy had not been entitled to the SUA benefits she received. "It is clear that a false claim was entered on behalf of claimant McCoy. It is not clear, however, that respondent Starkey participated in any way, except to a very small degree, in the processing of that claim." The "ultimate issue," as the hearing officer viewed the case, was whether Starkey knowingly participated in a scheme to defraud the State. Having had an opportunity to observe Starkey's demeanor while she testified, the hearing officer found that her testimony was truthful. Specifically, the hearing officer expressly found that, "Starkey's testimony is credible," and "Her word is good." Moreover, the hearing officer found that: (1) Blye processed McCoy's partially completed application in an "attemp(t) to please her supervisor (Starkey) by 'taking care of' her relatives"; and (2) that Blye's statements to the DLE agents were motivated by her strong resentment toward Starkey.

Based upon his detailed 38 page report of findings and conclusions, the hearing officer concluded that the charges against Starkey had not been proved, and that she should be retained in her job.

After reviewing the record, but without having had an opportunity to observe the demeanor of the witnesses, the Civil Service Commission stated that "We cannot accept the proposition that Respondent, an experienced employee, could have by happenstance processed a fraudulent claim for her mother. Respondent's defense is not credible." (Emphasis added.) The Commission further concluded that the charges had been proved.

On appeal, Starkey contends (1) that the Commission lacked authority to discharge her because the charges were amended without being re-approved by the Director of the Department of Personnel, and (2) that the evidence is not sufficient to support the Commission's decision. The second issue is dispositive.

I.

A. Standard of Review

Starkey argues that the Commission's findings are "against the manifest weight of the evidence." The Commission counters by arguing that there is "substantial evidence" to support the finding that Starkey acted with knowledge that her mother was ineligible for the requested benefits.

Our first task is to determine the appropriate standard of review. Section 11 of the Administrative Review Act states that "The findings and conclusions of the administrative agency on questions of fact shall be held to be prima facie true and correct." (Ill.Rev.Stat.1979, ch. 110, par. 274.) But, despite this presumption that the fact findings of administrative agencies are true and correct, it has been well-settled Illinois law that the findings of fact reached by administrative agencies must be based upon "substantial evidence." Gibbs v. Orlandi (1963), 27 Ill.2d 368, 371, 189 N.E.2d 233; Bruce v. Department of Registration and Education (1963), 26 Ill.2d 612, 622, 187 N.E.2d 711.

"On administrative review the issue is not whether the court approves the action taken by the administrative body but whether there was substantial evidence to support the decision." (Heft v. Zoning Board of Appeals (1964), 31 Ill.2d 266, 270-71, 201 N.E.2d 364.) The Supreme Court explained, in Menning v. Department of Registration and Education (1958), 14 Ill.2d 553, 558, 153 N.E.2d 52, that judicial review of administrative fact finding, under the Administrative Review Act, is comparable to the procedure used in determining whether there is "substantial evidence" to support the judgment of a lower court. See also McCormick on Evidence (2d Ed. 1972) § 352 at 847.

The "substantial evidence" rule is the standard used for judicial review of administrative fact-finding in the federal and in most state courts. (4 Davis, Administrative Law Treatise (1958), § 29.11 at 186.) Nevertheless, despite the line of Illinois cases which invoked the "substantial evidence" standard, the Supreme Court, in 1974, expressly rejected use of the " 'substantial evidence' standard as used in the Federal System for review of administrative matters." Basketfield v. Police Board of Chicago (1974), 56 Ill.2d 351, 358, 307 N.E.2d 371, appeal after remand, 71 Ill.App.3d 877, 28 Ill.Dec. 325, 390 N.E.2d 492.

Without mentioning or overruling the Illinois cases which have used the "substantial evidence" standard, the court held that "Under the Administrative Review Act the permissible scope of judicial inquiry concerning factual determinations by administrative agencies has been limited to ascertaining if the agency decision was contrary to the manifest weight of the evidence. (Davern v. Civil Service Commission of the City of Chicago (1970), 47 Ill.2d 469, 471-2, 269 N.E.2d 713, cert. denied, 403 U.S. 918, 91 S.Ct. 2229, 29 L.Ed.2d 695.)" (Basketfield, supra, 56 Ill.2d at 358-59, 307 N.E.2d 371.) However, despite the fact that Davern is cited in support of the proposition that the sole test to be used in Illinois is the "manifest weight" standard, the court held in Davern that courts "are limited to a determination whether the final decision of the administrative agency is just and...