RENDERED: September 10, 1999; 10:00 a.m.

NOT TO BE PUBLISHED

C o m m o n w e a l t h O f K e n t u c k y

C o u r t O f A pp e a l s

NO. 1998-CA-000934-MR

PATRICIA A. HILL APPELLANT

APPEAL FROM FAYETTE CIRCUIT COURT v. HONORABLE GARY D. PAYNE, JUDGE

ACTION NO. 95-CI-03893

KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION and BOARD OF TRUSTEES OF THE UNIVERSITY OF KENTUCKY a/k/a UNIVERSITY OF KENTUCKY a/k/a U.K. MEDICAL CENTER APPELLEES

OPINION AFFIRMING ** ** ** ** **

BEFORE: BUCKINGHAM, COMBS, and McANULTY, Judges.

COMBS, JUDGE: The appellant, Patricia A. Hill, appeals from the judgment of the Fayette Circuit Court, affirming the order of the Kentucky Unemployment Insurance Commission (the Commission) which set aside the decision of the appeals referee and denied her claim for unemployment benefits. Hill argues on appeal that the Commission's order is not supported by substantial evidence and that, therefore, the circuit court erred by not reversing it and reinstating the referee's decision. We disagree and affirm the judgment of the circuit court.

Hill was employed by the University of Kentucky Medical Center (University) as a nurse from November 1, 1988, to May 22, 1995, when her employment was terminated. William K. Massie, the University's Chief Operating Officer, sent Hill a letter dated May 22, 1995, terminating her employment with the University -- effective immediately -- on grounds of misconduct and inadequate job performance. As the basis for her termination, the letter set forth five separate incidents which occurred between October 1994 and April 1995, alleging that Hill had acted improperly or had failed to perform her duties adequately as a nurse. Massie recapitulated that Hill had been placed on disciplinary probation effective January 23, 1995, for a period of ninety days, which should have expired April 22, 1995. However, the probationary period was extended for thirty more days in order to allow her supervisor time to investigate a sixth incident that occurred on April 5, 1995. A complaint had been made against Hill that she had improperly discharged a patient on April 5, 1995. After investigating the complaint, the University found that Hill had failed to render appropriate nursing care, and based upon this incident as well as the other five, it terminated her employment.

Hill, however, maintains that shortly after she was subpoenaed as a witness for the plaintiffs in a sexual discrimination case brought against the University, her supervisors began in October 1992 a pattern of criticizing her job performance. She contends that prior to that time, she had always received excellent job performance evaluations. 

Hill's action against the University was still pending at the time she filed this appeal.

Subsequently, in July 1993, Hill filed a sexual harassment and retaliation claim action against the University.1

On May 23, 1995, Hill filed a claim for unemployment benefits, which the University challenged. It contended that since she was terminated for misconduct, she was disqualified from receiving unemployment benefits. Hill's claim was initially denied, and she appealed to an unemployment insurance appeals referee. After conducting a hearing on September 9, 1995, the referee found that the University had not met its burden of establishing that Hill had committed work-connected misconduct and that, therefore, she was not disqualified from receiving unemployment benefits.

The University appealed the referee's decision to the Commission. After reviewing the record, the Commission entered an order on November 17, 1995, setting aside the referee's decision. The Commission found that the evidence established "repeated instances of inappropriate patient care and inappropriate actions by [Hill] in dealing with peers" and that she was discharged for reasons which constituted misconduct. Thus, the Commission concluded that Hill was disqualified from receiving unemployment benefits.

Hill appealed the Commission's order to the Fayette Circuit Court. On March 4, 1998, the circuit court entered its order and opinion affirming the order of the Commission. The court held that the Commission's findings were supported by substantial evidence and that they were thus binding upon the court. This appeal followed.

Hill argues on appeal that the Commission's findings were not supported by substantial evidence of probative value. Hill contends that the evidence introduced by the University constituted hearsay and that as such it was inadmissible. Therefore, she maintains that the University failed to introduce any evidence of a probative nature to support its claim that she was discharged for misconduct.

Pursuant to KRS 341.370(1)(b), a claimant is disqualified from receiving unemployment benefits if he or she has been discharged for misconduct. Misconduct has been defined as:

[A]n act of wanton or willful disregard for the employer's interest, a deliberate violation of the employer's rules, a disregard of standards of behavior which the employer has a right to expect of his employee. . . (Emphasis added).

Unemployment Insurance Commission v. Dye, Ky. App., 731 S.W.2d 826, 828 (1987), quoting 76 Am.Jur.2d Unemployment Compensation $ 52 (1975). An employer bears the burden of proving employee misconduct. Shamrock Coal Company, Inc. v. Taylor, Ky. App., 697 S.W.2d 952 (1985). In cases involving the issue of misconduct, the facts of each case must be examined in light of reasonable employment relationship. Douthitt v. Kentucky Unemployment Insurance Commission, Ky., App., 676 S.W.2d 472 91984).

Our standard of review of the Commission's actions focuses on the question of arbitrariness. Burch v. Taylor Drug Store, Inc., Ky. App., 965 S.W.2d 830 (1998). The Commission's findings of fact must be accepted as binding by the reviewing court if they are supported by substantial evidence of probative value; the court cannot substitute its opinion for that of the Commission. Id. Substantial evidence is evidence which, taken alone or in light of all the evidence, has sufficient probative value to induce conviction in the minds of reasonable people. Wade v. Commonwealth, Ky. App., 840 S.W.2d 215 (1992).

Furthermore, "hearsay evidence is admissible in an administrative proceeding, provided it is relevant and material." Wade v. Department of Treasury, Ky. App., 840 S.W.2d 215 (1992). In Board of Education of Covington v. Gray, Ky. App., 806 S.W.2d 400, 402-403 (1991), we explained:

Kentucky's unemployment compensation system is set up to expeditiously award temporary, monetary benefits to a worker after loss of his or her job. In order to receive such benefits, the worker must prove (or the employer, conversely, disprove) that he or she was involuntarily separated from employment without good cause on the employer's part. KRS 341.3790. The system's sole function is to determine whether or not the affected employee meets the statutory criteria to qualify for benefits, not to inquire or make any judgments regarding the reasons behind the employee's termination. . .

Second, we do not believe that the procedures utilized in the unemployment system either grant any party a full, true opportunity to litigate issues, or even encourage any meaningful participation in the process. As we stated, the unemployment system is set up to quickly determine benefit eligibility status. Hearings are generally informal and expeditious. The rules of evidence are relaxed. This, of course, often leads to the inclusion of evidence which might otherwise be inadmissible in a court of law. McClanahan v. Remington Freight Lines, 517 N.E.2d 390, 395 (Ind. 1988). (Emphasis added).

However, KRS 13B.090(1) provides:

In an administrative hearing, findings of fact shall be based exclusively on the evidence on the record . . . . Hearsay evidence maybe admissible, if it is the type of evidence that reasonable and prudent persons would rely on in their daily affairs, but is shall not be sufficient in itself to support an agency's findings of facts unless it would be admissible over objections in civil actions.

We agree with appellant that our task is to review the evidence for trustworthiness in light of this standard.

In the case before us, the Commission's finding that Hill's discharge for misconduct was supported by substantial evidence. The University offered evidence that Hill was terminated for six separate incidents of misconduct which were documented in her personnel file. Jayne Douglass, the clinical nurse manager for the University's Outpatient Surgery Department and Hill's supervisor, testified that it was her job to investigate the complaints of misconduct made against Hill. Through her testimony, the University introduced the complaints filed against Hill, the memorandum detailing Douglass's investigation into the incidents, the letters notifying Hill of the incidents, and the disciplinary actions to be taken. These documents were compiled by Douglass and placed in Hill's personnel file.

We find that this evidence falls within the business records exception set forth in KRE 803(6). Pursuant to KRE 803(6), the following is not excluded from evidence by the hearsay rules:

Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupations, and calling of every kin, whether or not conducted for profit.

In this case, the University introduced foundation testimony from a "custodian or other qualified witness" who was under a business duty to make or compile the record as well as testimony that that record was made at or near the time of the recorded events. Jayne Douglas testified that as Hill's supervisor, it was her duty to investigate and document the complaints made against Hill. The dates on the documents in Hill's personnel file accurately correlate with the dates on which the complaints were lodged against her.

We do not agree that this evidence should have been excluded on the ground that "the source of information or the method or circumstances of preparation indicate lack of trustworthiness." KRE 803(6). The evidence shows (and Hill does not dispute) that she was allowed to review and respond to documents placed in her personnel file. However, she refused to sign or respond to the written warnings and letters concerning the incidents of misconduct. Hill did not utilize the University's grievance procedure to challenge or to dispute the complaints made against her.

In summary, we find that the Commission's findings were supported by substantial evidence. The University established through competent evidence that Hill was discharged for misconduct based upon six separate incidents. The circuit court correctly concluded that the Commission's findings were supported by substantial evidence and, therefore, that they were binding. We affirm the judgment of the Fayette Circuit Court.

ALL CONCUR.

BRIEF AND ORAL ARGUMENT FOR APPELLANT:

William C. Jacobs Lexington, KY

BRIEF FOR APPELLEE UNIVERSITY OF KENTUCKY:

Robert L. Roark Jan L. Gawthrop Lexington, KY

Richard E. Plymale Lexington, KY

Gay M. Elste Lexington, KY

ORAL ARGUMENT FOR APPELLEE UNIVERSITY OF KENTUCKY:

Robert L. Roark Lexington, KY

BRIEF AND ORAL ARGUMENT FOR APPELLEE KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION:

Timothy A. Sturgill Frankfort, KY