Warzon v. Drew

• Decision Date: 19 July 1995
• Docket Number: No. 94-2687,94-2687
• Citation: 60 F.3d 1234
• Parties: 10 IER Cases 1444 Maureen A. WARZON, Plaintiff-Appellant, v. William R. DREW and Milwaukee County, Defendants-Appellees, and Tommy Thompson, James R. Klauser, and Darryl Enriquez, Intervenors-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1234

60 F.3d 1234

10 IER Cases 1444

Maureen A. WARZON, Plaintiff-Appellant, v. William R. DREW and Milwaukee County, Defendants-Appellees, and Tommy Thompson, James R. Klauser, and Darryl Enriquez,

Intervenors-Appellees.

No. 94-2687.

United States Court of Appeals,

Seventh Circuit.

Argued Jan. 17, 1995.

Decided July 19, 1995.

Walter Kelly (argued), Milwaukee, WI, for plaintiff-appellant.

Mark A. Grady (argued) and Robert E. Andrews, Office of the Corp. Counsel, Milwaukee, WI, for defendants-appellees.

Michael J. Losse, Office of the Atty. Gen., Wisconsin Department of Justice, Madison, WI, and John R. Dawson, and James L. Huston (argued), Foley & Lardner, Milwaukee, WI, for intervenors-appellees.

Before POSNER, Chief Judge, and BAUER and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Maureen Warzon was appointed to the position of Controller with the Milwaukee County Department of Administration on September 29, 1991. Among Warzon's duties as Controller was the financial management and administration of the Milwaukee County Health Care Plan. The Health Care Plan furnishes medical, psychiatric and dental care to needy citizens throughout Milwaukee county. The cost of the Health Care Plan in 1992 was in the neighborhood of $50 million, and in that same year the county projected an $11 million deficit for the Health Care Plan. Approximately 60% of the bill for the Health Care Plan is funded from local property taxes, while the remainder is paid by the State of Wisconsin. Warzon alleges that because of these financial woes, Milwaukee County Executive F. Thomas Ament directed Warzon to concentrate her efforts on solving the crisis in the administration of the Health Care Plan. Pursuant to county ordinance, Warzon submitted monthly status reports to the Finance Committee of the Board of Supervisors, and she reported to William R. Drew, the Director of the Milwaukee County Department of Administration, and to Earl Hawkins, the County Fiscal and Budget Director.

In early 1992, Warzon hired a consultant, Health Care Management Consultants, Inc. (HCMC), to analyze the Health Care Plan and to suggest how to improve it. By late summer, the consultants were of the opinion that the greatest maladies in the Plan were "in eligibility and enrollment, as well as strong indications of excessive health care services, inappropriate billings, and a nearly complete absence of cost containment." On October 15, 1992, the consultant issued a final report, recommending a comprehensive Cost Containment Plan (CCP). Warzon believed that, by following the CCP, the Plan could save $7 million in the first year, with even greater savings in the future.

As is often true of major changes in government services, not everyone was enamored with the CCP. Warzon alleges that, because of the lobbying efforts of the County Hospitals, who provided many of the services covered by the Health Care Plan, the County Board of Supervisors and Ament, who initially were receptive to the consultant's ideas, reversed their support. Instead, the Board called for a Task Force to investigate the Health Care Plan. Neither Warzon nor HCMC were named to this Task Force.

Nevertheless, believing the Board's position on the Health Care Plan to be wrong, Warzon included the CCP as a part of her 1993 proposed budget for the Health Care Plan. On October 27, 1992, the Board again declined to adopt the CCP, approving a Health Care Plan budget stripped of these recommendations. Standing steadfast in her belief that the Health Care Plan needed to be overhauled, "[a]fter the 1993 budget was adopted, Warzon wrote a letter urging the County Executive to veto the Plan budget, restore the funding cuts, and implement her Plan recommendations." County Executive Ament declined. In an inter-office memorandum dated November 20, 1992, Warzon warned Drew "that insufficient funding for the Corrective Action Plan [the CCP] ... places funding for general relief medical expenditures at risk. We ask you to strongly consider the actions taken by the Finance Committee and urge the County Executive to restore the 1993 Health Care Plan budget."

On November 27, Warzon "met with State officials to describe the problems in the Plan and seek assistance with the 1993 Cost Containment Plan." Warzon alleges that the State officials were initially receptive to her concerns. Two weeks later, in a letter to Ann Haney, the Administrator of the Wisconsin Department of Health & Social Services, Warzon continued her advocacy of the CCP.

On December 14, 1992, the Milwaukee Journal ran a story on the Health Care Plan's growing deficit. Warzon was quoted describing the growing deficit. In the article, County Finance Chairman Richard Nyklewicz questioned the accuracy of Warzon's projections and stated "Frankly, I have little confidence in the controller's handling of this matter to date. I remain skeptical and think the deficit number is actually lower." The next day, Warzon wrote to Drew and Hawkins, expressing her displeasure with Nyklewicz' comments. She also stated that she remained committed to the CCP.

In early 1993, the Task Force submitted a draft of its audit of the Health Care Plan. At Hawkins' request, Warzon submitted to him, on January 29, 1993, a response to the audit. Warzon disagreed with most of the audit's conclusions and expressed her continued support for the CCP. In an inter-office memorandum dated the same day, Drew withdrew from Warzon the authority for the Health Care Plan, effective February 1.

On February 2, Drew accused Warzon of misusing public funds by authorizing the payment of HCMC's fees for work done after Drew had instructed Warzon to cease using the consultant. The same day, Warzon wrote to Drew and Hawkins to respond to the allegation and to urge them to reinstate her authority over the Health Care Plan. Because the letter is significant, we quote it in full.

I have invested an extraordinary amount of time and energy, consistent with my duties and responsibilities as Controller, to resolve serious fiscal problems in the Milwaukee County Health Care Plan. I have been uncomfortable being put in the position of making unjustifiable payments to County-owned hospitals for excessive and unmanaged health care services provided to general relief recipients and uninsured County residents. During the past year I have informed the County Executive and the County Board of Supervisors of the terrible problems in the Health Care Plan and provided recommendations to remedy the situation. I have been resoundingly ignored.

I have repeatedly issued reports to the Finance Committee alerting them to a significant deficit in the Health Care Plan for 1992. My reports were received and placed on file with little or no discussion. I submitted a 1993 budget for the Health Care Plan that incorporated fundamental changes in the program resulting in a $7 million reduction in expenditures. The Finance Committee stripped the initiatives out of the budget. As Controller, no one has allowed me to engage my authority to control health care costs. When I submitted new policies and procedures to reduce health care costs, I was told they could not be implemented unless the County-owned hospitals approved.

I implemented stricter controls to verify eligibility for the program and the Medical Complex over-rode the directive. When I disallowed bills to the Health Care Plan that were inappropriate, I was told that I could not deny payments to County-owned hospitals. I was forced to stand-by and watch while budget analysts who have no understanding of Health Care Plan issues prepared alternatives for Task force deliberations.

Everything that has transpired over the past year has left me exhausted and disheartened. But now the events of the past two days have me reeling. On Monday morning I was involuntarily relieved of my responsibility for the Health Care Plan. Today you accuse me of misuse of public funds for authorizing payments on the Health Care Management Consultant's Inc. (HCMC) contract. Misuse of public funds is a blatant falsehood that was fabricated to discredit me.

In your letter to HCMC dated October 27, 1992 your direction to them was to assist the Department of Audit. They were to be paid for services which they rendered. The contract states that HCMC must receive 30 days written notice of termination. You gave them no such notice nor was I directed to given them notice. HCMC was directed by the auditors to provide documentation that required restructuring the entire operational study of the Health Care Plan. This required significant time and effort on their part and they were paid for it.

When will you stop? Ever? I have steadfastly remained committed to Milwaukee County and the Health Care Plan. I have never had a greater responsibility nor been more seriously committed to a job. Please allow me to meet my responsibilities. (Emphasis in original).

Two days later, this letter found its way into the hands of the Milwaukee Journal, which reported on the situation. The same day, February 4, 1993, Drew informed Warzon that she was dismissed for cause from the position of Controller, effective that day.

Warzon filed this civil rights action, 42 U.S.C. Sec. 1983, claiming that her dismissal violated her right to due process under the Fourteenth Amendment and was done in retaliation against her speaking out on the issue of the Health Care Plan, which violated her First Amendment rights. Warzon appeals from the lower court's dismissal of her case under Federal Rule of Civil Procedure 12(c). As the district court noted, although the defendants purported to file a Rule 12(b)(6) motion for dismissal, they had already filed their answer to Warzon's complaint. Because of the procedural posture, such a motion is construed as a motion for judgment on the pleadings pursuant to Rule 12(c). See Republic Steel Corp. v. Pennsylvania Eng'g Corp., 785 F.2d 174, 182 (7th Cir.1986). We, like the...