Lawsuit aims at Commerce Department's culture of secrecy

Timothy Vande Hey's lawsuit against his former employer, the state of Minnesota, features lurid allegations of sexual harassment by a deputy Commerce commissioner.

Yet that's not what Vande Hey considers his most serious issue. That involves being told to destroy public records in violation of state law, for the purpose of making the Department of Commerce look good, he said.

Vande Hey resigned as Minnesota's top insurance regulator last summer, after what he said was retaliation by the deputy commissioner and chief of staff, Anne O'Connor, and Commissioner Mike Rothman for his complaints.

"If I had found industry doing those type of destruction of records in order to avoid potential negative fallout from an action, I would start an enforcement action," Vande Hey said in an interview last week. "I would protect the consumer and we would not allow that to occur."

In a statement last month, Rothman described Vande Hey's allegations as "simply false," and said O'Connor "is an outstanding person." While acknowledging he did not know all the facts, DFL Gov. Mark Dayton accused state Rep. Peggy Scott of defaming O'Connor when the Republican lawmaker urged him to review state policies against sexual harassment.

But Legislative Auditor James Nobles said he will heed Scott's request for a special review of the Department of Commerce to determine whether it complies with the state's records law.

Commerce is not an agency that most citizens deal with on a daily basis. But it has a massive job: keeping banks, insurance companies, real estate agencies and other industries honest. It's supposed to protect consumers from renegade debt collectors, unscrupulous real estate professionals, unjustified insurance rate hikes and other transgressions.

Commerce has long been one of the most secretive and combative state agencies when it comes to giving up its records or requests for media interviews. O'Connor, when she was the department spokeswoman, demanded that reporters not name her in stories. She has since been promoted.

Vande Hey spent 14 years in insurance regulation in Wisconsin before being hired in Minnesota as assistant commissioner in 2012. He was promoted to deputy commissioner in 2013. He said he welcomes public scrutiny of his work.

"I've always felt that one of the most effective regulatory tools is transparency," he said. "That's what we have that creates our strongest defense for protecting the public."

But according to Vande Hey, he was in a meeting last year in which O'Connor suggested deleting e-mails that might later be subject to public record requests. "The idea being if somehow those were erased before the public records request, that the problem or issue would dissipate and go away," Vande Hey said.

Vande Hey told his staff to defy that guidance. He said he was also advised by Rothman and O'Connor to avoid using e-mail for any sensitive communication, which he objected to as inappropriate for public records.

"When the focus is on only releasing information that puts Commerce into a positive light, you've really defeated the purpose of what we're doing there," he said.

Vande Hey left the department last summer after he said it was clear that his complaints were going nowhere. He has opened a consulting company and plans to move back to Wisconsin.

In a statement Friday, the Commerce Department said Vande Hey's "unfounded" statements "merely rehash the personal grievances against the department that he has already made in his lawsuit. The legal process will demonstrate that they have absolutely no merit."

The department also said it's "committed to full compliance with the state's data practices requirements, both to ensure access to public information and to protect information that the law classifies as private or confidential. The department welcomes and will fully cooperate with any examination of the department's data practices procedures that the Legislative Auditor thinks is appropriate."

No matter how Vande Hey's case is resolved, that scrutiny is long overdue.

Contact James Eli Shiffer at james.shiffer@startribune.com or 612-673-4116.