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SEC Employee Didn't Show Refusal to Submit Records Was in ‘Good Faith,' Court Affirms

Monday, March 10, 2014

By Jay-Anne B. Casuga  

March 7 --A former Securities and Exchange Commission employee can't proceed with a claim the agency failed to accommodate his request for a flexible work schedule so he could receive cardiac rehabilitation because the worker refused to provide medical records and testimony to an investigator for a private contractor, the U.S. Court of Appeals for the District of Columbia Circuit ruled March 7 (Koch v. White, D.C. Cir., No. 12-5139, 3/7/14).

Affirming summary judgment to the SEC, the D.C. Circuit found that Randolph Koch failed to exhaust his administrative remedies, as required by the Rehabilitation Act, by not providing sufficient information to allow the agency to investigate his failure-to-accommodate claim.

The appeals court rejected Koch's argument that his failure to exhaust should be excused because he withheld his cooperation in the investigation in “good faith” out of privacy concerns regarding the release of his records to the contractor.

The court said Koch didn't explain how his concern over the disclosure of his medical records justified his refusal to provide testimony to the investigator or how the “extensive privacy protections” in the agreement between the SEC and its contractor were insufficient.

Judge A. Raymond Randolph wrote the opinion, joined by Judges David S. Tatel and Sri Srinivasan.

Sought Flexible Schedule as Accommodation

Koch took an exercise stress test in 2007, and his doctor recommended that he participate in a cardiac rehabilitation program. He submitted an accommodation request to the SEC for a flexible work schedule so he could attend the program without having to use leave.

The agency did not act on Koch's request for more than a year, and he informally consulted a counselor in the SEC's Office of Equal Employment Opportunity. He submitted medical records to the counselor and later filed a formal failure-to-accommodate complaint.

According to lower court filings, the SEC contracted with a private firm--Delaney, Siegel, Zorn and Associates--to handle EEO investigations. The agency informed Koch that it had assigned contract investigator Daniel Jewell to his case, and explained to Koch that he was “obligated to cooperate.”

Koch felt “uneasy” about releasing his medical records to the private firm, the appeals court said. At the time, he believed that the contract between the SEC and DSZA lacked clauses triggering the protections of the Privacy Act, and that there were no limitations on what Jewell could do with Koch's records. In fact, the Privacy Act clauses were incorporated by reference into the contract.

Koch stopped participating in the investigation and refused to provide testimony to Jewell. In response, the SEC dismissed his complaint because of his failure to cooperate.

After his appeal to the Equal Employment Opportunity Commission was unsuccessful, Koch sued the SEC in the U.S. District Court for the District of Columbia, alleging that the agency, among other things, violated the Rehabilitation Act by failing to engage in an interactive process to find a reasonable accommodation.


“Because Koch failed to explain both how his concern over the disclosure of his medical records justified his failure to provide his testimony … and how the extensive privacy protections for his medical records … were insufficient, Koch's refusal to cooperate was clearly unjustified,” the D.C. Circuit said.  

 


The district court granted summary judgment to the SEC on that issue in April 2011 because Koch failed to exhaust his administrative remedies.

Employee Didn't Exhaust Administrative Remedies

Affirming on appeal, the D.C. Circuit explained that a federal employee's Rehabilitation Act suit must be barred for failure to exhaust administrative remedies if he “forces an agency to dismiss or cancel the complaint by failing to provide sufficient information to enable the agency to investigate the claim.”

Koch failed to provide medical records and testimony to the SEC's investigator, despite the agency making it clear that the investigation would require such submissions at a minimum, the court said.

Although Koch provided medical records during informal counseling, the court said that was not sufficient to allow the agency's formal investigation to proceed.

“Koch 'neither complied with [the Agency's] requests nor provided any information beyond his initial submission,' ” the court said. “[H]e provided insufficient information to the agency and thus failed to exhaust his administrative remedies.”

Failure to Exhaust Not Excused

Koch argued that his failure to exhaust should be excused because he stopped participating in the investigation in “good faith” based on his “reasonable and sincere” privacy concerns.

The D.C. Circuit acknowledged that it and other appeals courts have held that a good-faith effort to cooperate with an agency investigation justifies a failure to exhaust administrative remedies.

However, the court said Koch's contention is based on a good-faith effort “not to cooperate,” which he failed to prove.

“Because Koch failed to explain both how his concern over the disclosure of his medical records justified his failure to provide his testimony to Jewell and how the extensive privacy protections for his medical records included in the contract between Jewell and the Commission were insufficient, Koch's refusal to cooperate was clearly unjustified,” the court concluded. “Koch should have complied with agency procedures before challenging those aspects to which he objected.”

Kelly B. McClanahan of National Security Counselors in Arlington, Va., represented Koch. Peter R. Maier, Ronald C. Machen Jr. and R. Craig Lawrence of the U.S. Attorney's Office in Washington represented the SEC.

 

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com


Text of the opinion is available at http://www.bloomberglaw.com/public/document/Randolph_Koch_v_Mary_Jo_White_et_al_Docket_No_1205139_DC_Cir_Apr_.

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