Lawsuit claims harassment, retaliation by MN Commerce exec

Updated 4:55 p.m. | Posted 2:06 p.m.

A former top official at the Department of Commerce has sued the state in a case alleging sexual harassment, retaliation and other misconduct in the top ranks of the regulatory agency.

Timothy Vande Hey's lawsuit filed Thursday accuses the agency's No. 2 executive, Deputy Commissioner Anne O'Connor, of making unwanted advances over several years. It also contends O'Connor ordered that materials related to department operations get extra screening or be destroyed to circumvent state data disclosure laws.

It renews scrutiny on an agency criticized as overly secretive in its dealings with insurance companies marketing policies on the state's health insurance exchange. The department also drew recent attention for not moving quicker to cut off funding to a politically connected nonprofit found to have misspent heating assistance for the poor.

The lawsuit claims that Commerce Commissioner Mike Rothman had direct knowledge of Vande Hey's allegations and failed to act.

In an interview Friday with MPR News, Vande Hey said he had grown increasingly uncomfortable with what he saw as an "abuse of power" at Commerce. He said he was nervous about coming forward for fear it would wreck his career.

"I feel strongly that Commissioner Rothman has lost his way and that he should resign as a result of all this," Vande Hey said.

Commerce Department lawyers have 20 days to formally respond in their own court filing. But agency on Friday issued a statement from Rothman calling the claims meritless.

It referred questions to the office of Minnesota Attorney General Lori Swanson. A Swanson spokesperson later directed reporters back to the agency.

"My deputy commissioner is an outstanding person and these allegations are simply false," Rothman said in a written statement. "I am confident that the legal process will demonstrate that this suit has absolutely no merit."

Jaime Tincher, Gov. Mark Dayton's chief of staff, said the governor's office was aware of the allegations but "they are just that, allegations."

Vande Hey, who resigned his post last year and now runs a consulting business, is seeking monetary damages for lost income, for mental agony and for being a whistleblower. He said the department also reneged on an agreement to cover relocation expenses when he moved to Minnesota to take the Commerce job.

Vande Hey was recruited from Wisconsin's state government to run Minnesota's insurance division at the department. From 2012 through mid-2015, in a $123,000-a-year role, he oversaw the review of health insurance rates, including plans sold through MNsure. He resigned last summer in a move some agency observers regarded as abrupt and mysterious.

But according to Vande Hey's court filing, the separation played out over many months and was rooted in problems years old.

Vande Hey alleges that O'Connor began sending him sexually charged messages in late 2012 or early 2013. His lawsuit says the sexual jokes and innuendo continued even after he rebuffed the advances and she was told by an unidentified colleague her behavior was inappropriate.

Vande Hey said he eventually took his concerns to Rothman and the department's chief lawyer.

"He reported these to management and management did not take appropriate (action) and instead he feels like he was retaliated against by being treated adversely within his department," Vande Hey's attorney Marshall Tanick said in an interview Friday. Tanick added, "The lawsuit maintains that the commissioner was aware of both of those matters and failed to take timely and appropriate action."

The official accused of harassment isn't identified by name in the lawsuit, which traces her upward climb from assistant director of communications to deputy commissioner and chief of staff. Vande Hey confirmed it was O'Connor.

MPR News requested an interview with O'Connor but was denied.

She is also the one Vande Hey said was giving instructions to staff within his division to limit disclosure of certain documents. The order was given during a staff meeting, the court papers say. Vande Hey said he told his team to disobey the order.

"In my 20 years, I've never felt the need to bend, let alone break, the law to protect citizens," he said in the MPR interview. "I didn't agree with destruction of records. I told my people we're the good guys, we don't do that."

Vande Hey said he raised his concern to Rothman, who was said to be at the initial meeting where the order was given. But Vande Hey contends no actions were taken by the commissioner to address concerns.

The lawsuit alleges future reports compiled by his staff were subsequently "undermined" and hiring requests for the division were blocked, weakening its ability to function. Vande Hey took it as personal retaliation and threatened to resign. He said in the court pleading that Rothman initially refused to accept his resignation and promised a probe. Two weeks later, Rothman accepted the resignation.

An internal investigation was apparently initiated but it's unclear if one was ever completed or any discipline resulted, according to the lawsuit.

"He tried to work things out but things did not get any better," Tanick said. "But he did not get any assurances that the conditions as concerned to him would be alleviated and therefore he decided to move on."