In mid-2012, Bill Diener was appointed as Chairman of the Indiana Horse Racing Commission (IHRC) to replace the allegedly retiring Sarah McNaught to finish out her term which was to expire on September 1, 2014. On October 1, 2014, instead of reappointing Mr. Diener to a full term of his own, Governor Mike Pence choose to go in a different direction by appointing Susie Lightle to serve a four-year term through September 1, 2018. At the same time, current IHRC Commissioner Tom Weatherwax was tapped to become the next Chairman of the IHRC. (We are still waiting for the IHRC's press release on these changes.) While not being reappointed may have come as a surprise to Mr. Diener, his comments at the June 26, 2014 IHRC meeting regarding the thoroughbred breed development program were a cause for concern for many. With that backdrop, the following is our open letter to new IHRC Chairman Tom Weatherwax.
Chairman Weatherwax,
At the end of the June 26th IHRC meeting, former Chairman Diener made some remarks about the thoroughbred breed development program. While Mr. Diener considered his remarks as needing to "unwind a little bit personally", his lack of overall knowledge of the thoroughbred racing and breeding program was evident. As neither a horse owner, a horse breeder, or even considering himself being a horse racing fan, while Mr. Diener characterized his remarks as not speaking on behalf of the commission, IBOP's concern is that Mr. Diener's remarks will influence the current composition of the commission, especially considering each commissioner's limited tenure in their position. Frankly, Mr. Diener's views of the thoroughbred program demonstrated to every horseman in the room that his opinions were formed by misinformation, inaccurate information, and delivered with a general lack of a historical perspective on the program. Mr. Diener also suggested that he wasn't speaking for the commission staff either; however, the influence of the attitudes of Executive Director Gorajec were very evident in his comments.
Mr. Diener's comments were correct in that national thoroughbred foal crops having declined over the last few years. According to The Jockey Club, the national foal crops have dropped from 37,835 in 2005 to what is an estimated 21,725 for the 2012 foal crop which are the racing two-year olds of 2014. What Mr. Diener failed to mention is that Indiana foal crops over that timeframe have increased significantly. According to The Jockey Club, the Indiana-bred foal crops of racing age, ages 2 through 5 (foals born in 2009 through 2014), is 2,834 thoroughbreds which comprises 2.6% of the entire North American foal crop. Immediately preceding the slot-era, the four foal crops, ages 2 through 5, was just 1,525 which was 1% of the North American foal crop.
Considering the decline in the North American foal crops and the increase in available Indiana-breds, the impact to the average field size in Indiana thoroughbred races has been somewhat minimal. In 2008, Indiana held 1,028 thoroughbred races with an average field size of 8.9 per race. In 2013, Indiana held 1,088 races with an average field size of 8.6 per race. The national average in 2013 was 8 starters per race. The average field size for a race restricted to Indiana-breds was in excess of 10 per race. Studies have proven that field size is one of the most important factors in wagering volume.
Mr. Diener seemed to express his concerns regarding short fields in 2014 and wagering interest, "So my concerns, and as an old lawyer my glass is always half empty so I have to apologize to you. Are we going to see a bunch of short fields even some cancelled race dates this summer? If we will, that doesn't do much for patron interest in racing or even simulcast patrons going to wager on Indiana races." Yet, the IHRC's '2013 Annual Report' downplays the importance of both patrons and wagering with, "Fifty years ago, track attendance and pari-mutuel handle were the primary metrics followed by the horse racing industry." The report goes on to explain why daily track attendance is not even considered today and suggested that wagering (pari-mutuel handle), and associated revenues from wagering aren't that important by saying:
"Pari-mutuel handle in states with racinos, like Indiana, have ceded its importance to adjusted gross receipts (AGR) of slot play. Most of Indiana track’s revenue and purses are now derived from slot machines. Comparing pari-mutuel handle between states yield little by the way of competitive status or the underlying health of a state’s racing industry."
Wagering on Indiana racing is at an all-time low point and the 2013 Annual Report almost seems apologetic for those poor results.
While some of Mr. Diener's concerns are warranted, he fails to recognize the effect of the so-called 'Quality of Racing Program' that was initiated by Mr. Gorajec and approved by the commissioners in mid-2010. This ill-conceived program forces certain types of races to be carded in the thoroughbred program. In other words, this program is the equivalent of the commission playing racing secretary as opposed to the racing secretary having the freedom to card races based upon the supply and demand of available horses. No other commission in the country hand-cuffs a racing secretary in such a way. As IHRC Chair, this is now your policy, and therefore, you should be familiar with it. Following this link will lead you to the Final version of the program: http://freepdfhosting.com/09bf391e76.pdf.
The effect of forcing the carding of a certain percentage of supposedly higher quality open races actually works to decrease field size and wagering. Other than days like the Indiana Derby, these higher-purse races usually have the shortest fields in Indiana thoroughbred racing with the poorest wagering. Many times the fields on these races are so short, the full compliment of wagers aren't available. This hardly ever happens with an Indiana-bred race. A complete review of the effectiveness, or the lack thereof, of the "Quality of Racing Program" should be a priority for your commission. This is especially true considering that each year the commission has granted exceptions to the funding formula in this program because the program DOES NOT WORK by shackling both the racing secretary and the Thoroughbred Breed Development Advisory Committee. This is something that Mr. Diener did not recognize.
Mr. Diener also didn't recognize improvements in the quality of the thoroughbreds being bred in Indiana. As a novice at best, he has no basis for his statements, "And then my nagging second question is quality of the thoroughbreds racing. We know that Indiana breds represented only about seven percent of horses starting in open races last year. Contrast this with our Standardbred program where about half of the Standardbred starters are Indiana breds. Indiana bred Thoroughbreds are improving quality wise but only slightly, only slightly. Well behind bloodstock for Standardbreds." Given his lack of knowledge on the subject, Mr. Diener failed to consider the significant differences between standardbred breeding and racing and thoroughbred breeding and racing to what was a painful degree for those horsemen in attendance.
Stating that only 7% of Indiana-bred thoroughbreds start in open races is quoting another failed metric proposed by Mr. Gorajec and approved by the commissioners. Solely using this metric to determine quality demonstrates a significant lack of understanding of horse racing. Frist, all standardbred races, other than their stakes program, are Indiana preferred which means upon the taking of entries an Indiana horse can prevent horses bred in other states from making the field. As long as one horse from out-of-state gets into the field, the race is considered to be an open race. In essence, an open race in standardbred racing can consist of nine Indiana horses and one out-of-state horse. This preference system does not exist in thoroughbred racing and it shouldn't. Secondly, Mr. Diener fails to recognize what it means for a thoroughbred to 'run through their conditions' or to 'lose a condition.' A large part of the rate of return POTENTIAL in the thoroughbred program is to run through your Indiana restricted conditions prior to running in open conditions.
The biggest fallacy of basing quality on the percentage of Indiana-breds running in open company in Indiana is that this metric fails to consider Indiana-breds running and winning at tracks outside of Indiana. Through October 7, 2014, Indiana-breds have won at levels that would normally qualify them for a breeder award had they race in Indiana at the following race tracks around the US and in Europe:
Aqueduct, Arapahoe Park, Arlington Park, Belterra, Beulah Park, Calder Race Course, Camarero, Canterbury Park, Churchill Downs, Delaware Park, Ellis Park, Evangeline, Fair Grounds, Fair Meadows, Fairmount Park, Fort Erie, Goodwood (ENG), Gulfstream Park, Hawthorne, Los Alamitos, Louisiana Downs, Lyon (FR), Monmouth, Mountaineer, Parx, Presque Isle, Rillito, Santa Cruz, Tampa Bay Downs, Thirsk (ENG), Thistledown, Turfway Park, and Will Rogers.
At these tracks, Indiana-breds have won a total of 81 overnight races and two stakes! There have also been five other times Indiana-breds have place in stakes races outsider of Indiana. One of the out-of-state stakes winners, an Indiana-sired horse that won a $100,000 stakes race in Colorado, could only muster a third place finish when recently competing in an Indiana-sired stakes losing by five lengths.
A list of these Indiana-breds can be found at the following link: http://freepdfhosting.com/3822906bac.pdf. The total of 83 out-of-state race wins towers over the 70 races Indiana-breds won out-of-state in the entire year of 2013. In 2012, the number of out-of-state winners was in the high 30's. In 2013, according to The Jockey Club, Indiana-breds won only 82.96% of their earnings in Indiana which is down from the mid-90 percent just a few years ago. The idea that Indiana-breds running in open company in Indiana is a measure of quality is actually quite ridicules. But, that type of misinformation has become the norm being provided to the commission and the public by Mr. Gorajec. Here's another example regarding the attempts to sell his so-called 'Quality of Racing Program':
After the Indiana Downs meet in 2010, the quality of the Indiana thoroughbreds was a topic within a July 31st article in 'Thoroughbred Times.' Authors Jeff Lowe and Frank Angst somehow came to a conclusion after interviewing IHRC Executive Director Gorajec that, “The commission decided to raise the bar as revenue from slot machines began to boost purses in 2007.” Interestingly the authors believed, somehow, that slot machines provided increases in purses a full year before the machines were opened in July of 2008. That's misinformation. In the article they went on to say, "....and as analysis showed that increases in the amount of money available through the state’s Thoroughbred Breed Development program had not resulted in a significant improvement in the quality of the Indiana-bred Thoroughbreds.” This thought is propaganda. At that time in 2010, the first crop of the slot-era thoroughbreds were yearlings and not eligible to run any where in the country. No one on the IHRC's staff at that time or since then has the expertise to judge the quality of a crop of thoroughbreds prior to their racing careers beginning. Yet, based upon that type of thinking, significant changes to the thoroughbred program were made. Not a single commissioner at the time could see through this.
Mr. Gorajec's statements to the commission at the January 29, 2010 IHRC meeting should have been questioned as well when he said, "What I am saying is there is a structural flaw in the program whereby horses aren't encouraged to be bred to face horses any better than the ones they will face that were bred in Indiana. So in the Indiana-bred program you're not competing against horses that were foaled or bred in Kentucky or in Pennsylvania or in Ohio or Iowa or Louisiana. You are competing against horses that were bred in the county next door."
Every breed development program is really an economic development program plain and simple. The goal should be to maximize the economic impact of breeding and racing in a state. What Mr. Gorajec should have said was that we need a program that provides the incentives for horses that would have been foaled in Kentucky or would have been foaled in Pennsylvania or would have been foaled in Illinois or Iowa or Louisiana were moved to Indiana.
Just 17 days after Mr. Gorajec's above-mentioned statement was directed at the Indiana thoroughbred breed development program, a colt was born in Indiana that became a Grade 2 winner at age two and became the first Indiana-bred to participate in the Breeders’ Cup World Championship race. The mare of this colt was owned by a Kentucky resident who wanted to participate in the Indiana program based upon the incentives to do so. Mr. Gorajec's statement was also disrespectful to those who choose, and choose is the correct word, to participate in the Indiana program. This is especially true for those Indiana residents that have increased the quality of their breeding stock. Mr. Gorajec's statement was so absent of logic that calling it ‘extremely short-sighted’ is an understatement. However, this statement was a catalyst to set in motion the 'Quality of Racing Program' restrictions and the elimination of what made the Indiana thoroughbred program fairly unique, an owner award.
Mr. Gorajec's influence can be seen in Mr. Diener's statement that, "I still personally feel we need to start directing more and more breed development funds to purse supplements and less to breeder awards, if that's in the best long-term interest of Indiana's Thoroughbred industry. Couple years ago the average purses per race for Thoroughbreds in Indiana was about 12,000. It's doubled, running about a little over 24 and $25,000 a race each time. What's happened to the quality of races? Not much."
We can unequivocally say is that directing more breed development funds away from breeder awards is not in the long-term interest of the Indiana thoroughbred industry. After the passage of the slot legislation, the thoroughbred industry thrived in Indiana. The mission of the Indiana Thoroughbred Breed Development Advisory Committee, which is copied below, was working.
”The mission of the Thoroughbred Development Advisory Committee is to provide incentives and awards to three important elements of the Indiana Thoroughbred industry: the owner, the breeder and the stallion owner. The intent of these incentives and awards is to promote investment of capital into the Indiana economy (via Thoroughbred breeding, racing and related agri-business) and maximize the positive impact to the state’s economy. Winning on the racetrack is rewarded through these incentives.”
With increased revenues and incentives available, breeders from outside of the state brought mares to Indiana in record numbers. Those Indiana residents already participating in the program stepped up as well. One of the best metrics when considering economic activity of the thoroughbred program is registered mares as the manufacturing plant of a foal crop. The foals of 2009, which were bred in 2008, constitutes the first crop in the slot era. According to information provide by IHRC staff at the October 29, 2013 IHRC meeting, 1094 mares were registered in Indiana resulting in a 646 foal crop. Registered mares in the prior year totaled 715 which was increased from 520 in 2007 on the speculation that slot funds to racing would be a reality.
The number of registered mares continued to increase with 1,204 in 2010 to a record 1,239 in 2011. Since that time, the number of registered thoroughbred mares have been in significant decline. As of July 29, 2014, at the conclusion of this year's breeding season, the IHRC is reporting only 611 registered thoroughbred mares. (http://www.in.gov/hrc/files/TB_MARES_2014.pdf. Registered mares have dropped over 50% from the high point in 2011 and to below levels before the slot machines even began producing revenues to horse racing! Also, mares being bred to Indiana-base stallions has fallen dramatically. At the high point in 2010, 1,154 mares were bred to Indiana stallions with the number dropping to 639 in 2013 which is the lowest number since 2006. The program is actually in decline and in decline due to the commission's actions regarding the breed development program at the encouragement of Mr. Gorajec.
Mr. Diener continued, "Now, I have to say a caveat. Indiana horsemen are making money. And they're making good money, particularly racing in restricted races, but there has been little improvement in bloodstock. And I personally, Centaur and Indiana Grand, I hope you are going to consider, if you can, cutting back on race dates yet this year. Otherwise, I suspect the patrons at the track or even the patrons at a simulcast facility are going to be seeing a mediocre racing product as this summer goes along with short fields or cancelled races."
Again, his beliefs regarding the quality of the Indiana-bred thoroughbreds is well off from reality and lacking in any expertise. Chairman Weatherwax, the sheer fact that Mr. Diener assumes that Indiana horsemen "are making good money" was another glaring example of his lack of understanding of horse racing and breeding economics and what is happening to the program. Ask yourself, if the Indiana thoroughbred program is that lucrative, why have registered mares receded to pre-slot era levels? However, his sentiment about cutting back on race dates and a mediocre racing product are spot on, but not for this year or maybe the next two. Given the significant drop off in registered mares, and without a reversal, Indiana's thoroughbred program is in trouble. Today, large crops of Indiana-bred horses have been able to negate the drop off in the North American foal crops. Without changes in the thoroughbred breed development program, Mr. Diener's words will be prophetic.
One aspect of the 'Quality of Racing Program' that has significantly impacted Indiana's thoroughbred development program is the removal of the owner awards, which were paid to a winning owner at an Indiana track outside of the purse structure. This provided a significant incentive to own and to race an Indiana-bred in Indiana by enhancing an owner's rate of return. It was also a unique feature that differentiated Indiana's program from others. What the owner award also did was align a horse owner's interests with that of the breeder; running in Indiana. Indiana-breds winning out-of-state either generate a very small breeder award when compared to a win in Indiana or none at all. Thirty-four of the 81 Indiana-breds winning out-of-state so far this year generated no award to their breeders at all.
With the normal drop off from registered mares to foals, you should expect a foal crop of less than 400, the lowest since 2007, when these foals are ready to race in 2016. There's nothing in the thoroughbred breed development program, which is forced to comply with the 'Quality of Racing Program,' that will reverse this trend. Providing appropriate incentives for more breeding of thoroughbreds in Indiana and a greater incentive for running an Indiana-bred in Indiana is a must. You've inherited a problem, but that can be reversed, assuming you listen to the right people.
As Mr. Diener said to close the June 26th IHRC meeting, "We stand adjourned. Thank you." And, so are we. Thank you.
Friday, October 17, 2014
Sunday, October 12, 2014
'It Happened Again' (Which Should Never Happen) and Other Random Thoughts
There's definitely a lack of respect for horse owners at the Indiana Horse Racing Commission (IHRC). Here's a few examples:
It Happened Again (Which Should Never Happen)
For additional background on this subject, please see the following Blood-Horse article from July 31st: http://www.bloodhorse.com/horse-racing/articles/86487/horse-returned-but-entry-clerk-out-of-a-job
A horse owner who plays the claiming game as well as owner Maggi Moss knows that her horses entered in claiming races get some extra attention from other owners and trainers. This season at Indiana Grand, she has had nine horses claimed from her barn all of which were with trainer Tom Amoss. However, if you check the claim register through October 14th, you'll only see eight horses being claimed. The ninth horse was eight-year old gelding It Happened Again, a graded stakes winner of almost $700,000, who was claimed for a $25,000 tag in an allowance optional claiming race on July 15th. For reasons we'll explain, this claim has been completely removed from the Indiana Grand claim register.
According to Ms. Moss, this race was supposed to be It Happened Again's last race before retirement. She said she just knew it "was time" and figured that a $25,000 tag in Indiana would discourage anyone from making a claim. However, It Happened Again was claimed by trainer Alex Clarkson for owner Larry Carter who won a two way shake. While most owners would be satisfied with a $25,000 exit strategy on an eight-year old gelding, Maggi Moss's goal was to retrain It Happened Again for her own personal riding horse. She loved this horse and made several calls that night to the Indiana Grand racing office to verify the legitimacy of the claim. She also contacted It Happened Again's new owner attempting to buy him back, but to no avail. Mr. Carter's plan was to continue to race It Happened Again in the barn of Tom Albertrani during the Saratoga (NY) meet.
If you check the Equibase race chart, there is no mention of a claim in race 9 on July 15th: http://www.equibase.com/premium/eqbPDFChartPlus.cfm?BORP=P&STYLE=EQB&DAY=D&tid=IND&dt=07/15/2014&ctry=USA&race=9. The original chart, however, did indicate a claim of It Happened Again. Our original version of this chart was a Brisnet chart: http://freepdfhosting.com/6138cfc914.pdf.
During the following week, we received information that the claim of It Happened Again should have been invalidated yet was not. So, we reached out to Ms. Moss who asked us to continue to look into the matter. Generally, IBOP uses public records requests submitted to the IHRC to either confirm or deny the information that we receive. The two claim tickets that we received as a result of our public records request proves that claim never should have happened! Follow this link to view the claim tickets http://freepdfhosting.com/9967a23465.pdf. What should jump out at anyone, even racing officials, is that Alex Clarkson submitted two claims for It Happened Again. This is a clear violation of 71 IAC 6.5-1-4(f) which only allows for owners using the same trainer to claim different horses from a race. What we later found out was that Larry Carter and Susan Hebenton, the two owners attempting to claim It Happened Again, are also husband and wife.
According to two sources within the Indiana Grand racing office, one who had been fired and another who was still employed in a position of authority, the stewards knew that the claim was invalid and told those in the racing office to do nothing about. Given that what we were hearing seemed to be credible, we also started to inform the thoroughbred racing press of the Indiana stewards inaction with this claim. On the morning of July 25th, the stewards were informed (we can't say how) that the thoroughbred media was asking questions about this claim.
On July 25th, at 9:52 AM, shortly after Senior State Steward Stan Bowker was notified that the industry press was interested in the story of the invalid claim of It Happened Again, he emailed IHRC Executive Director Joe Gorajec the following, "Joe-- We have a problem we need to discuss. Stan" with a subject line of "Please Call." A copy of this email was provided to us as part of our public records request. This email can be seen at the following link: http://freepdfhosting.com/6d4bdd2c22.pdf. So, only after the potential of this story going public did the stewards take any action which is an unbelievably cowardly way to go about their responsibilities. Within an hour of this email, 10 days after the claim of It Happened Again, trainer Tom Amoss received the news that there was a problem with the claim and that the stewards would be ordering that the horse be returned.
The stewards, per their own ruling, supposedly had a hearing about the claim on July 25th, informed Joe Gorajec of their proposed ruling on July 26th, and issued their ruling on July 29th which can be seen at: http://freepdfhosting.com/3fd2230258.pdf. Their ruling indicates that in addition to filing multiple claims, Mr. Clarkson also did not complete a license application or pay for an Authorized Agent license. So, there were two issues that should have prevented the claim of It Happened Again, yet nothing was done until pressure of exposure was applied. Of course, the ruling on this matter indicates no fine or suspension to Mr. Clarkson. Any fine and/or suspension should have been issued to the stewards for their inept handling of what should have been an easy call.
While we hope that a situation like this doesn't ever happen again, until stewards are held accountable for their actions, or in this case their inaction, covering up mistakes will continue to be the norm. If you read the Blood-Horse article about this claim, IHRC Executive Director Joe Gorajec was characterized as considering what happened as a "routine matter." That gives plenty of insight into just how little respect he has for horse owners, and that lack of respect filters down to our stewards as well. Luckily, a few people with a conscience were willing to speak out.
On July 26th, It Happened Again was returned to the barn of Tom Amoss at Churchill Downs. His Jockey Club papers were returned to Ms. Moss which were signed by Tom Albertrani as a $25,000 private sale taking place on July 29th:http://freepdfhosting.com/825431953d.pdf.
According to Maggi Moss, It Happened Again is happy, healthy and taking to his new career training as a hunter jumper.
Cobalt Testing Communication Another Lack of Respect
Earlier in the 2014 race meets, the IHRC conducted a study over 23 race days of cobalt levels in 354 horse across the three racing breeds in Indiana. The samples were considered to be "dead samples" which means samples that had already been cleared by the primary lab. IHRC staff's report on cobalt can be found at: http://www.in.gov/hrc/files/Cobalt_Staff_Report_-_final_final_W_Attachments.pdf. Cobalt is a naturally occurring mineral in all animals. The concern with elevated levels of cobalt is performance enhancement with an EPO-like effect by producing more red blood cells. High levels of cobalt can also be toxic to a horse.
Immediately upon the IHRC staff report being issued, IBOP emailed both then-Chairman Bill Diener and Executive Director Joe Gorajec. One of our questions was whether the owners of the horses testing very high will be notified. We never received a response, and neither was our question considered when the IHRC discussed the establishment of a 25 parts per billion threshold for cobalt. You would think that a discussion of potentially toxic levels would have triggered such a though with one the commissioners.
If you look at the definition of 'foreign substance' in the IHRC's authorizing statute and in their rulebook, that term "means all substances except those that exist naturally in an untreated horse at normal physiological concentration." With cobalt existing naturally in a horse, any horse deemed to have a cobalt level above a "normal physiological concentration" is actually violating Indiana's foreign substance rule. If you read the staff report, you'll find that there were 16 horses that tested more than two times the threshold the IHRC established. Six horses tested for levels exceeding six time the threshold of 25 part per billion with one thoroughbred testing at 45 times.
The staff report actually indicates that many race horses competing in Indiana did so with cobalt levels well beyond a "normal physiological concentration" which constituted an "unfair competitive advantage" per the commission staff. Some did so at potentially toxic levels which one commissioner believed was purposefully done to enhance performance. Given this backdrop, IBOP filed a public records requests for the names of those horses testing beyond 25 parts per billion and the dates on which the samples were taken. We also asked for:
"3) Copies of the correspondence notifying the owners of their horse(s) included in the staff report testing beyond 25 parts per billion for cobalt.
4) Copies of the correspondence notifying the trainers of their trainee(s) included in the staff report testing beyond 25 parts per billion for cobalt."
The response we received from IHRC General Counsel Lea Ellingwood was as follows, "The Commission has no documents responsive to Items 3 or 4 of your request below." So, on one hand, the IHRC is concerned with cobalt being performance enhancing and potentially toxic to a horse; however, they are not concerned enough to notify the owners of those horses. In our view, an owner should always be kept apprised of the condition of their horse(s), especially when the IHRC has information that indicates that potentially dangerous levels of cobalt are being administered to their horse.
IHRC Rules for Notification of a Positive Test
The IHRC's lack of respect to a horse's owner is actually written directly into their administrative rules. Using the flat racing rulebook, '71 IAC 8.5-3-3(a)' governs communications of a positive test of a primary sample. While an owner CAN be notified, and should be notified in writing of a positive primary test, what you'll see is that the IHRC has such no requirement.
71 IAC 8.5-3-3 Administrative procedures prior to split sample testing
Authority: IC 4-31-3-9
Affected: IC 4-31-12
Sec. 3. (a) The results of all tests performed by the primary laboratory or laboratories are confidential and shall only be
communicated to the commission, commission staff, stewards, owner, and trainer. Notice of a positive test result may be
communicated verbally to the trainer. The trainer shall be responsible for promptly notifying the owner of a horse of a positive test as reported by the primary laboratory.
The IHRC delegates that responsibility to the trainer and the notification to the trainer doesn't even have to be in writing. In today's racing world, where ARCI penalties apply to both trainers and owners (and the horse) for multiple violations, the IHRC assumes that the trainer's and owner's interests are always the same. In some cases, that is not true. The IHRC also doesn't have an established time frame in which a primary positive test has to be communicated to anyone. Without a specific notification requirement, Indiana has an Executive Director that can, and will, accumulate positive tests purposefully not providing notification which can endanger the horse, their riders, anyone else coming in contact with the horse at the track, and the owner's ability to run their horse. The IHRC's notification rule for a split sample is quite different.
71 IAC 8.5-3-4 Administrative procedures subsequent to split sample testing
Authority: IC 4-31-3-9
Affected: IC 4-31-12
Sec. 4. (a) The split sample laboratory shall send a confidential written report on the result of its tests to the commission staff
which in turn shall send a confidential report to the trainer and owner forthwith.
With a split sample result, the IHRC requires itself to send a written report "to the trainer and owner forthwith." Definitions for 'forthwith' are "immediately" and "without delay." The Indiana HBPA and the Indiana Thoroughbred Owners and Breeders Association should push to have the split sample notification language incorporated into the notification requirements of a positive primary test. No one (Gorajec) should be able to sit back and create a serial medication offender on purpose and endanger horses and people in the process.
IHRC Complaint Policy - A Lack of Respect For the Law
While this may not be common knowledge, the IHRC has a complaint policy which was forced upon them by the Indiana legislature in 2013. Having a complaint policy was a recommendation of the Indiana Inspector General's report from two years earlier that the IHRC failed to act upon. So, the legislature took action with the IC 4-31-3-8(6) and (7) which went into effect on July 1, 2013:
"(6) develop internal procedures for accepting, recording, investigating, and resolving complaints from licensees and the
general public; and
(7) annually post the following information on the commission's Internet web site:
(A) A summary of the disciplinary actions taken by the commission in the preceding calendar year.
(B) A summary of the complaints received and resolved in the preceding calendar year."
You would think that if the law went into effect on July 1, 2013, the IHRC would have established their complaint procedures by that date. Of course, they didn't. So, on October 27, 2013, IBOP sent the following email to IHRC General Counsel Lea Ellingwood with a copy to then-Chairman Bill Diener who, earlier in 2013, had outlined a procedure to us for the purposes of filing a complaint regarding the IHRC's use of Administrative Law Judge who had been arrested multiple times for DUI:
"Lea, from reading the transcript of the September 17th commission meeting, I get the impression that IHRC staff has concluded that all necessary administrative rules changes or promulgation of new administrative rules as required by SB 609 have been completed. If I'm making an assumption, I'll apologize in advance. I do have a question regarding IC 4-31-3-8(6) which states that the IHRC shall "develop internal procedures for accepting, recording, investigating, and resolving complaints from licensees and the general public." While I recognize that "internal procedures" differ from administrative rules, the complaint procedures Chairman Diener outlined in his February 21st email were described as "informal" and more of a suggested course of action at the time.
Obviously, the email below was written prior to SB 609 becoming law which appears to require a more formalized approach. Chairman Diener correctly points out that there are administrative rules that cover certain types of specific complaints, yet perhaps not a broader spectrum of possible complaints, especially from the general public. My question is, has there been a more formal complaint procedure established as required by law? And if so, would you please forward me a copy? The general public should be informed as to how to file a complaint, should that become necessary, and understand the procedure involved once a complaint has been filed."
The IHRC had so much respect for their requirements under Indiana law, they waited until December 10, 2013 to established their complaint procedures. What the IHRC calls it's "Complaint Policy" can be http://www.in.gov/hrc/files/IHRC_Complaint_Policy_-_Approved_12-10-13.pdf. In addition, their "Complaint Form" can be found at the following link: http://www.in.gov/hrc/files/Complaint_Form.pdf. The form actually says to "Use this form to submit a written complaint about any alleged violations of the Commission's enabling statute or administrative rules." The problem with that statement, and the IHRC's complaint policy, is that the IHRC put limits on what someone can consider a complaint with "enabling statute or administrative." There are many other aspects of Indiana law that the IHRC is required to follow. Maybe a complaint should be filed about the IHRC's complaint policy.
Deceiving IHRC's Commissioners
While we've provided a few examples of how little respect the IHRC has for owners and for their responsibilities under the law, here's an example of how little respect the IHRC staff has for the commissioners themselves. With a commission consisting of five individuals with no racing or breeding experience, their lack of knowledge on racing issues is always very evident. Where they should be able to actually supervise is with administrative issues. Assuming they care enough to do so.
Over the years, IBOP has pointed out a number of rulemaking violations and rulemaking malfunctions perpetrated by the IHRC staff. What we're about to describe is plain illegal, but demonstrates just how easily a commissioner who is not in tune with their responsibilities can be fooled.
In early 2010, the IHRC established a trainer continuing education requirement for flat racing trainers that would go into effect beginning. (71 IAC 5.5-3-1 Eligibility, Subsection h) Due to the lack of trainers actually completing the requirement, the requirement was waived for 2012, then changed again for 2013, then waived again in 2013. In mid-2013, the IHRC got serious about making sure that flat racing trainers had their continuing education completed for 2014. So, at their June 11, 2014 meeting, the IHRC approved a new version of the trainer continuing education requirement. The IHRC was so serious, the new requirement dropped the number of hours required to three from four and created a number of categories of trainers who would be exempt from the requirement.
Since this was an emergency rule (sarcasm included), the IHRC staff filed this emergency with Legislative Services Agency (LSA) over two months later on August 20, 2013. You can see this filing as LSA Document 13-404(E): http://www.in.gov/legislative/iac/irdin.pdf?din=20130821-IR-071130404ERA. Using the emergency rulemaking process, administrative rules are effective upon being filed with LSA.
The next month, the IHRC was considering a revision of '71 IAC 5.5-3-1 Eligibility,' but not the trainer continuing education portion of the rule. The change added a new subsection which was inserted as subsection (g). This now made the trainer continuing education requirement subsection (i). The handout from the meeting package that the commissioners used for this change can be found here: http://freepdfhosting.com/2d1bf08991.pdf. What you'll see is that there is no reference in (i) to 'Beginning in 2014' or the categories of trainer exempt from the requirement from the rule filed on August 20th. The commissioners unanimously approved this change which actually reversed the trainer continuation portion of the rule to what was in effect as of March 8, 2012! Sharp eyes would have caught this error, but no one on the IHRC staff or commissioner did. Under Indiana law, a majority vote by the commissioner at a publicly held meeting is considered to be an approval of the content of the rule as presented to them.
Since this was another emergency rule (sarcasm included again), the IHRC staff filed this version of the trainer continuing education rule over three months later on December 23, 2013. If you want to see how the trainer continuing education rule was submitted to LSA, with line strikes through the exempt trainer categories, you can view 71 IAC 5.5-3-1(i) at this link to LSA's site: http://www.in.gov/legislative/iac/irdin.pdf?din=20140108-IR-071130567ERA.
On December 10, 2013, the IHRC had their last meeting of the year and, thankfully, didn't attempt to change the flat racing trainer continuing education rule. With their first meeting of 2014 scheduled for March 5, 2014, we were a bit surprised to see the IHRC staff file an emergency rule with LSA on February 25, 2014. On the agenda for the March 5th IHRC meeting was once again a waiver of the trainer continuing education requirement. We figured in preparation for that meeting someone noticed that the commissioners approved an incorrect version of the rule back in September, 2013 and tried to cover-up their error. Irrespective of the rationale, administrative rules carry the rule of law in Indiana, and there's no authority to arbitrarily change that "law" without any action by the commission at a publicly held meeting. Here's exactly what the IHRC staff submitted to LSA on February 25, 2014:
http://freepdfhosting.com/1f6133b74a.pdf.
Over the last few years, the abuses and the mistakes within the rulemaking process at the Indiana Horse Racing Commission have been well documented by our organization, but this example is the most egregious to date. Given the number of eyes preparing what you see at a meeting, and taking into consideration that there is an inherent responsibility with each commissioner to understand what is actually being approved, errors like this should never happen. And, when they do happen, correcting them within the boundaries of Indiana law is a must. But, the IHRC staff would rather hide their mistakes hoping no one would notice. We did. The IHRC is one of two agencies in the state that have the ability to create emergency administrative rules that never have to then go through the regular rulemaking process. This instance is another example of the abuse of that power.
The lack of meaningful oversight of the IHRC staff is evident in this scenario. No commissioner that we've seen ever 'inspects what they expect' to happen. All activities of the submission of administrative rules submitted to LSA are public record and easily accessed through the LSA website.
Or Simply Lie To Them
When discussing the timing of an administrative rule by using the emergency rulemaking process at the April 30, 2014 IHRC meeting, Executive Director Joe Gorajec had this to say:
JOE GORAJEC: The rules the Commission adopts are effective when our office files them with the Secretary of State. When we file them with the Secretary of State varies. It's usually within a couple, three days. Sometimes it's the next day. Sometimes it might be a week later, but we get to it pretty quickly. (Official Transcript: Page 32, Line 21 through Page 33, Line 2)
His statement regarding the timing of the submission of rules is laughable. (They also go to the Legislative Services Agency and not the Secretary of State, Mr. Gorajec.) Getting "to it pretty quickly" is hardly ever the norm and easy to prove by going to the LSA site. We've illustrated the trainer continuing education 'changes' being filed over two months and three months after approval by the commission. The longest we've found between an approval of an emergency rule by the IHRC and its filing with LSA to become effective is over 15 months! That rule just happened to regarding protecting the flat racing breed's purse account which was only filed after it was discovered that $800,000 was missing from the purse accounts at Indiana Downs.
The shortest timeframe we know of was hours between administrative rules being approved on the morning of April 5, 2013 then filed later that afternoon to be effective. In that case, IBOP had pointed out that the IHRC had allowed the standardbred anti-ulcer medication rules to expire at the end of 2012 without reestablishing a new rule. This became our Administrative Rule of the Month for April, 2013: http://ibopindy.blogspot.com/2013/04/administrative-rule-of-month-71-iac-8-1.html. At that same meeting, IBOP petitioned for a new business item to modify the thoroughbred out-of-state breeder award that was not updated to reflect the one-track, one-breed changes in 2013: http://ibopindy.blogspot.com/2013/04/thoroughbred-out-of-state-breeders.html.
The only other set of approved administrative rules that were filed within a week was for the new threshold medication rules. The IHRC approval these rules on April 30, 2014 and they were filed on May 7, 2014. http://www.in.gov/legislative/iac/20140514-IR-071140143ERA.xml.html
All other approved administrative rules we took a look at were filed with LSA weeks after there approval. Left to their own devices, the IHRC staff gets to filing rules whenever they "get to it." Any engaged commissioner would have easily seen through Mr. Gorajec's comments on the timely filing of approved rules, but too bad we don't have any that are engaged in their responsibilities.
It Happened Again (Which Should Never Happen)
For additional background on this subject, please see the following Blood-Horse article from July 31st: http://www.bloodhorse.com/horse-racing/articles/86487/horse-returned-but-entry-clerk-out-of-a-job
A horse owner who plays the claiming game as well as owner Maggi Moss knows that her horses entered in claiming races get some extra attention from other owners and trainers. This season at Indiana Grand, she has had nine horses claimed from her barn all of which were with trainer Tom Amoss. However, if you check the claim register through October 14th, you'll only see eight horses being claimed. The ninth horse was eight-year old gelding It Happened Again, a graded stakes winner of almost $700,000, who was claimed for a $25,000 tag in an allowance optional claiming race on July 15th. For reasons we'll explain, this claim has been completely removed from the Indiana Grand claim register.
According to Ms. Moss, this race was supposed to be It Happened Again's last race before retirement. She said she just knew it "was time" and figured that a $25,000 tag in Indiana would discourage anyone from making a claim. However, It Happened Again was claimed by trainer Alex Clarkson for owner Larry Carter who won a two way shake. While most owners would be satisfied with a $25,000 exit strategy on an eight-year old gelding, Maggi Moss's goal was to retrain It Happened Again for her own personal riding horse. She loved this horse and made several calls that night to the Indiana Grand racing office to verify the legitimacy of the claim. She also contacted It Happened Again's new owner attempting to buy him back, but to no avail. Mr. Carter's plan was to continue to race It Happened Again in the barn of Tom Albertrani during the Saratoga (NY) meet.
If you check the Equibase race chart, there is no mention of a claim in race 9 on July 15th: http://www.equibase.com/premium/eqbPDFChartPlus.cfm?BORP=P&STYLE=EQB&DAY=D&tid=IND&dt=07/15/2014&ctry=USA&race=9. The original chart, however, did indicate a claim of It Happened Again. Our original version of this chart was a Brisnet chart: http://freepdfhosting.com/6138cfc914.pdf.
During the following week, we received information that the claim of It Happened Again should have been invalidated yet was not. So, we reached out to Ms. Moss who asked us to continue to look into the matter. Generally, IBOP uses public records requests submitted to the IHRC to either confirm or deny the information that we receive. The two claim tickets that we received as a result of our public records request proves that claim never should have happened! Follow this link to view the claim tickets http://freepdfhosting.com/9967a23465.pdf. What should jump out at anyone, even racing officials, is that Alex Clarkson submitted two claims for It Happened Again. This is a clear violation of 71 IAC 6.5-1-4(f) which only allows for owners using the same trainer to claim different horses from a race. What we later found out was that Larry Carter and Susan Hebenton, the two owners attempting to claim It Happened Again, are also husband and wife.
According to two sources within the Indiana Grand racing office, one who had been fired and another who was still employed in a position of authority, the stewards knew that the claim was invalid and told those in the racing office to do nothing about. Given that what we were hearing seemed to be credible, we also started to inform the thoroughbred racing press of the Indiana stewards inaction with this claim. On the morning of July 25th, the stewards were informed (we can't say how) that the thoroughbred media was asking questions about this claim.
On July 25th, at 9:52 AM, shortly after Senior State Steward Stan Bowker was notified that the industry press was interested in the story of the invalid claim of It Happened Again, he emailed IHRC Executive Director Joe Gorajec the following, "Joe-- We have a problem we need to discuss. Stan" with a subject line of "Please Call." A copy of this email was provided to us as part of our public records request. This email can be seen at the following link: http://freepdfhosting.com/6d4bdd2c22.pdf. So, only after the potential of this story going public did the stewards take any action which is an unbelievably cowardly way to go about their responsibilities. Within an hour of this email, 10 days after the claim of It Happened Again, trainer Tom Amoss received the news that there was a problem with the claim and that the stewards would be ordering that the horse be returned.
The stewards, per their own ruling, supposedly had a hearing about the claim on July 25th, informed Joe Gorajec of their proposed ruling on July 26th, and issued their ruling on July 29th which can be seen at: http://freepdfhosting.com/3fd2230258.pdf. Their ruling indicates that in addition to filing multiple claims, Mr. Clarkson also did not complete a license application or pay for an Authorized Agent license. So, there were two issues that should have prevented the claim of It Happened Again, yet nothing was done until pressure of exposure was applied. Of course, the ruling on this matter indicates no fine or suspension to Mr. Clarkson. Any fine and/or suspension should have been issued to the stewards for their inept handling of what should have been an easy call.
While we hope that a situation like this doesn't ever happen again, until stewards are held accountable for their actions, or in this case their inaction, covering up mistakes will continue to be the norm. If you read the Blood-Horse article about this claim, IHRC Executive Director Joe Gorajec was characterized as considering what happened as a "routine matter." That gives plenty of insight into just how little respect he has for horse owners, and that lack of respect filters down to our stewards as well. Luckily, a few people with a conscience were willing to speak out.
On July 26th, It Happened Again was returned to the barn of Tom Amoss at Churchill Downs. His Jockey Club papers were returned to Ms. Moss which were signed by Tom Albertrani as a $25,000 private sale taking place on July 29th:http://freepdfhosting.com/825431953d.pdf.
According to Maggi Moss, It Happened Again is happy, healthy and taking to his new career training as a hunter jumper.
Cobalt Testing Communication Another Lack of Respect
Earlier in the 2014 race meets, the IHRC conducted a study over 23 race days of cobalt levels in 354 horse across the three racing breeds in Indiana. The samples were considered to be "dead samples" which means samples that had already been cleared by the primary lab. IHRC staff's report on cobalt can be found at: http://www.in.gov/hrc/files/Cobalt_Staff_Report_-_final_final_W_Attachments.pdf. Cobalt is a naturally occurring mineral in all animals. The concern with elevated levels of cobalt is performance enhancement with an EPO-like effect by producing more red blood cells. High levels of cobalt can also be toxic to a horse.
Immediately upon the IHRC staff report being issued, IBOP emailed both then-Chairman Bill Diener and Executive Director Joe Gorajec. One of our questions was whether the owners of the horses testing very high will be notified. We never received a response, and neither was our question considered when the IHRC discussed the establishment of a 25 parts per billion threshold for cobalt. You would think that a discussion of potentially toxic levels would have triggered such a though with one the commissioners.
If you look at the definition of 'foreign substance' in the IHRC's authorizing statute and in their rulebook, that term "means all substances except those that exist naturally in an untreated horse at normal physiological concentration." With cobalt existing naturally in a horse, any horse deemed to have a cobalt level above a "normal physiological concentration" is actually violating Indiana's foreign substance rule. If you read the staff report, you'll find that there were 16 horses that tested more than two times the threshold the IHRC established. Six horses tested for levels exceeding six time the threshold of 25 part per billion with one thoroughbred testing at 45 times.
The staff report actually indicates that many race horses competing in Indiana did so with cobalt levels well beyond a "normal physiological concentration" which constituted an "unfair competitive advantage" per the commission staff. Some did so at potentially toxic levels which one commissioner believed was purposefully done to enhance performance. Given this backdrop, IBOP filed a public records requests for the names of those horses testing beyond 25 parts per billion and the dates on which the samples were taken. We also asked for:
"3) Copies of the correspondence notifying the owners of their horse(s) included in the staff report testing beyond 25 parts per billion for cobalt.
4) Copies of the correspondence notifying the trainers of their trainee(s) included in the staff report testing beyond 25 parts per billion for cobalt."
The response we received from IHRC General Counsel Lea Ellingwood was as follows, "The Commission has no documents responsive to Items 3 or 4 of your request below." So, on one hand, the IHRC is concerned with cobalt being performance enhancing and potentially toxic to a horse; however, they are not concerned enough to notify the owners of those horses. In our view, an owner should always be kept apprised of the condition of their horse(s), especially when the IHRC has information that indicates that potentially dangerous levels of cobalt are being administered to their horse.
IHRC Rules for Notification of a Positive Test
The IHRC's lack of respect to a horse's owner is actually written directly into their administrative rules. Using the flat racing rulebook, '71 IAC 8.5-3-3(a)' governs communications of a positive test of a primary sample. While an owner CAN be notified, and should be notified in writing of a positive primary test, what you'll see is that the IHRC has such no requirement.
71 IAC 8.5-3-3 Administrative procedures prior to split sample testing
Authority: IC 4-31-3-9
Affected: IC 4-31-12
Sec. 3. (a) The results of all tests performed by the primary laboratory or laboratories are confidential and shall only be
communicated to the commission, commission staff, stewards, owner, and trainer. Notice of a positive test result may be
communicated verbally to the trainer. The trainer shall be responsible for promptly notifying the owner of a horse of a positive test as reported by the primary laboratory.
The IHRC delegates that responsibility to the trainer and the notification to the trainer doesn't even have to be in writing. In today's racing world, where ARCI penalties apply to both trainers and owners (and the horse) for multiple violations, the IHRC assumes that the trainer's and owner's interests are always the same. In some cases, that is not true. The IHRC also doesn't have an established time frame in which a primary positive test has to be communicated to anyone. Without a specific notification requirement, Indiana has an Executive Director that can, and will, accumulate positive tests purposefully not providing notification which can endanger the horse, their riders, anyone else coming in contact with the horse at the track, and the owner's ability to run their horse. The IHRC's notification rule for a split sample is quite different.
71 IAC 8.5-3-4 Administrative procedures subsequent to split sample testing
Authority: IC 4-31-3-9
Affected: IC 4-31-12
Sec. 4. (a) The split sample laboratory shall send a confidential written report on the result of its tests to the commission staff
which in turn shall send a confidential report to the trainer and owner forthwith.
With a split sample result, the IHRC requires itself to send a written report "to the trainer and owner forthwith." Definitions for 'forthwith' are "immediately" and "without delay." The Indiana HBPA and the Indiana Thoroughbred Owners and Breeders Association should push to have the split sample notification language incorporated into the notification requirements of a positive primary test. No one (Gorajec) should be able to sit back and create a serial medication offender on purpose and endanger horses and people in the process.
IHRC Complaint Policy - A Lack of Respect For the Law
While this may not be common knowledge, the IHRC has a complaint policy which was forced upon them by the Indiana legislature in 2013. Having a complaint policy was a recommendation of the Indiana Inspector General's report from two years earlier that the IHRC failed to act upon. So, the legislature took action with the IC 4-31-3-8(6) and (7) which went into effect on July 1, 2013:
"(6) develop internal procedures for accepting, recording, investigating, and resolving complaints from licensees and the
general public; and
(7) annually post the following information on the commission's Internet web site:
(A) A summary of the disciplinary actions taken by the commission in the preceding calendar year.
(B) A summary of the complaints received and resolved in the preceding calendar year."
You would think that if the law went into effect on July 1, 2013, the IHRC would have established their complaint procedures by that date. Of course, they didn't. So, on October 27, 2013, IBOP sent the following email to IHRC General Counsel Lea Ellingwood with a copy to then-Chairman Bill Diener who, earlier in 2013, had outlined a procedure to us for the purposes of filing a complaint regarding the IHRC's use of Administrative Law Judge who had been arrested multiple times for DUI:
"Lea, from reading the transcript of the September 17th commission meeting, I get the impression that IHRC staff has concluded that all necessary administrative rules changes or promulgation of new administrative rules as required by SB 609 have been completed. If I'm making an assumption, I'll apologize in advance. I do have a question regarding IC 4-31-3-8(6) which states that the IHRC shall "develop internal procedures for accepting, recording, investigating, and resolving complaints from licensees and the general public." While I recognize that "internal procedures" differ from administrative rules, the complaint procedures Chairman Diener outlined in his February 21st email were described as "informal" and more of a suggested course of action at the time.
Obviously, the email below was written prior to SB 609 becoming law which appears to require a more formalized approach. Chairman Diener correctly points out that there are administrative rules that cover certain types of specific complaints, yet perhaps not a broader spectrum of possible complaints, especially from the general public. My question is, has there been a more formal complaint procedure established as required by law? And if so, would you please forward me a copy? The general public should be informed as to how to file a complaint, should that become necessary, and understand the procedure involved once a complaint has been filed."
The IHRC had so much respect for their requirements under Indiana law, they waited until December 10, 2013 to established their complaint procedures. What the IHRC calls it's "Complaint Policy" can be http://www.in.gov/hrc/files/IHRC_Complaint_Policy_-_Approved_12-10-13.pdf. In addition, their "Complaint Form" can be found at the following link: http://www.in.gov/hrc/files/Complaint_Form.pdf. The form actually says to "Use this form to submit a written complaint about any alleged violations of the Commission's enabling statute or administrative rules." The problem with that statement, and the IHRC's complaint policy, is that the IHRC put limits on what someone can consider a complaint with "enabling statute or administrative." There are many other aspects of Indiana law that the IHRC is required to follow. Maybe a complaint should be filed about the IHRC's complaint policy.
Deceiving IHRC's Commissioners
While we've provided a few examples of how little respect the IHRC has for owners and for their responsibilities under the law, here's an example of how little respect the IHRC staff has for the commissioners themselves. With a commission consisting of five individuals with no racing or breeding experience, their lack of knowledge on racing issues is always very evident. Where they should be able to actually supervise is with administrative issues. Assuming they care enough to do so.
Over the years, IBOP has pointed out a number of rulemaking violations and rulemaking malfunctions perpetrated by the IHRC staff. What we're about to describe is plain illegal, but demonstrates just how easily a commissioner who is not in tune with their responsibilities can be fooled.
In early 2010, the IHRC established a trainer continuing education requirement for flat racing trainers that would go into effect beginning. (71 IAC 5.5-3-1 Eligibility, Subsection h) Due to the lack of trainers actually completing the requirement, the requirement was waived for 2012, then changed again for 2013, then waived again in 2013. In mid-2013, the IHRC got serious about making sure that flat racing trainers had their continuing education completed for 2014. So, at their June 11, 2014 meeting, the IHRC approved a new version of the trainer continuing education requirement. The IHRC was so serious, the new requirement dropped the number of hours required to three from four and created a number of categories of trainers who would be exempt from the requirement.
Since this was an emergency rule (sarcasm included), the IHRC staff filed this emergency with Legislative Services Agency (LSA) over two months later on August 20, 2013. You can see this filing as LSA Document 13-404(E): http://www.in.gov/legislative/iac/irdin.pdf?din=20130821-IR-071130404ERA. Using the emergency rulemaking process, administrative rules are effective upon being filed with LSA.
The next month, the IHRC was considering a revision of '71 IAC 5.5-3-1 Eligibility,' but not the trainer continuing education portion of the rule. The change added a new subsection which was inserted as subsection (g). This now made the trainer continuing education requirement subsection (i). The handout from the meeting package that the commissioners used for this change can be found here: http://freepdfhosting.com/2d1bf08991.pdf. What you'll see is that there is no reference in (i) to 'Beginning in 2014' or the categories of trainer exempt from the requirement from the rule filed on August 20th. The commissioners unanimously approved this change which actually reversed the trainer continuation portion of the rule to what was in effect as of March 8, 2012! Sharp eyes would have caught this error, but no one on the IHRC staff or commissioner did. Under Indiana law, a majority vote by the commissioner at a publicly held meeting is considered to be an approval of the content of the rule as presented to them.
Since this was another emergency rule (sarcasm included again), the IHRC staff filed this version of the trainer continuing education rule over three months later on December 23, 2013. If you want to see how the trainer continuing education rule was submitted to LSA, with line strikes through the exempt trainer categories, you can view 71 IAC 5.5-3-1(i) at this link to LSA's site: http://www.in.gov/legislative/iac/irdin.pdf?din=20140108-IR-071130567ERA.
On December 10, 2013, the IHRC had their last meeting of the year and, thankfully, didn't attempt to change the flat racing trainer continuing education rule. With their first meeting of 2014 scheduled for March 5, 2014, we were a bit surprised to see the IHRC staff file an emergency rule with LSA on February 25, 2014. On the agenda for the March 5th IHRC meeting was once again a waiver of the trainer continuing education requirement. We figured in preparation for that meeting someone noticed that the commissioners approved an incorrect version of the rule back in September, 2013 and tried to cover-up their error. Irrespective of the rationale, administrative rules carry the rule of law in Indiana, and there's no authority to arbitrarily change that "law" without any action by the commission at a publicly held meeting. Here's exactly what the IHRC staff submitted to LSA on February 25, 2014:
http://freepdfhosting.com/1f6133b74a.pdf.
Over the last few years, the abuses and the mistakes within the rulemaking process at the Indiana Horse Racing Commission have been well documented by our organization, but this example is the most egregious to date. Given the number of eyes preparing what you see at a meeting, and taking into consideration that there is an inherent responsibility with each commissioner to understand what is actually being approved, errors like this should never happen. And, when they do happen, correcting them within the boundaries of Indiana law is a must. But, the IHRC staff would rather hide their mistakes hoping no one would notice. We did. The IHRC is one of two agencies in the state that have the ability to create emergency administrative rules that never have to then go through the regular rulemaking process. This instance is another example of the abuse of that power.
The lack of meaningful oversight of the IHRC staff is evident in this scenario. No commissioner that we've seen ever 'inspects what they expect' to happen. All activities of the submission of administrative rules submitted to LSA are public record and easily accessed through the LSA website.
Or Simply Lie To Them
When discussing the timing of an administrative rule by using the emergency rulemaking process at the April 30, 2014 IHRC meeting, Executive Director Joe Gorajec had this to say:
JOE GORAJEC: The rules the Commission adopts are effective when our office files them with the Secretary of State. When we file them with the Secretary of State varies. It's usually within a couple, three days. Sometimes it's the next day. Sometimes it might be a week later, but we get to it pretty quickly. (Official Transcript: Page 32, Line 21 through Page 33, Line 2)
His statement regarding the timing of the submission of rules is laughable. (They also go to the Legislative Services Agency and not the Secretary of State, Mr. Gorajec.) Getting "to it pretty quickly" is hardly ever the norm and easy to prove by going to the LSA site. We've illustrated the trainer continuing education 'changes' being filed over two months and three months after approval by the commission. The longest we've found between an approval of an emergency rule by the IHRC and its filing with LSA to become effective is over 15 months! That rule just happened to regarding protecting the flat racing breed's purse account which was only filed after it was discovered that $800,000 was missing from the purse accounts at Indiana Downs.
The shortest timeframe we know of was hours between administrative rules being approved on the morning of April 5, 2013 then filed later that afternoon to be effective. In that case, IBOP had pointed out that the IHRC had allowed the standardbred anti-ulcer medication rules to expire at the end of 2012 without reestablishing a new rule. This became our Administrative Rule of the Month for April, 2013: http://ibopindy.blogspot.com/2013/04/administrative-rule-of-month-71-iac-8-1.html. At that same meeting, IBOP petitioned for a new business item to modify the thoroughbred out-of-state breeder award that was not updated to reflect the one-track, one-breed changes in 2013: http://ibopindy.blogspot.com/2013/04/thoroughbred-out-of-state-breeders.html.
The only other set of approved administrative rules that were filed within a week was for the new threshold medication rules. The IHRC approval these rules on April 30, 2014 and they were filed on May 7, 2014. http://www.in.gov/legislative/iac/20140514-IR-071140143ERA.xml.html
All other approved administrative rules we took a look at were filed with LSA weeks after there approval. Left to their own devices, the IHRC staff gets to filing rules whenever they "get to it." Any engaged commissioner would have easily seen through Mr. Gorajec's comments on the timely filing of approved rules, but too bad we don't have any that are engaged in their responsibilities.
Saturday, October 11, 2014
IHRC's Reevaluation of Indiana HBPA 2014 Registration Application - Part 2
On June 26, 2014, the Indiana Horse Racing Commission (IHRC) held a hearing on the renewal application of the Indiana Horsemen's Benevolent and Protective Association (INHBPA) to receive slot funding as a registered horsemen's association. This hearing was originally scheduled to take place on October 29, 2013, but what the IHRC described as a "complaint" filed by INHBPA board member Kim Hobson regarding the handling of benevolence funds led to a six month investigation into those practices.
For more background on this subject, including IBOP's findings and commentary prior to the hearing, please read the Part 1 as a prerequisite to this article: http://www.ibopindy.blogspot.com/2014/06/ihrcs-reevaluation-of-indiana-hbpa-2014.html.
After Ms. Hobson addressed the commission (Official Transcript: Pages 86 through 93) regarding the reasons for her complaint and her experiences in dealing with cronyism in benevolence-related eligibility and benefit receipt, dealing with denials for requests for information required by HBPA By-Laws and dealing with threats against her, here's what former Chairman Bill Diener had to say, "Miss Hobson, I personally wanted to thank you for filing the complaint because I concur with our executive director but for your filing this complaint, there would have been no change to the HBPA."
Here's what IHRC Executive Director Joe Gorajec had said earlier (Official Transcript: Page 76, Line 14 Through Page 77, Line 25)
"JOE GORAJEC: First off, I would like to piggyback on the question that Commissioner Pillow asked of Mike Brown with regard to the impact of the complaint on the process of improving the organization. And I have maybe a little bit different take. I think the complaint in and of itself was a very positive development in that had the Commission not received the complaint, then, quite frankly, we would probably have a continuation of practices that, quite frankly, shouldn't have been continued. So from that standpoint I think the complaint was very positive.
And I think Miss Hobson, even though when you read the report, it is not, it's written in such a way that does not confirm some of the allegations or some of the things that she tried to lead us to, quite frankly, didn't pan out. I think overall these improvements wouldn't have been made absent the complaint.
Having said that, in a perfect world the complaints would be unnecessary because the HBPA would have been more open and transparent in the past. Some of the things that we looked at, the time frame for the investigation was from 2009 to 2013. So we were looking at things three and four years old. And, quite frankly, that shouldn't be.
If things are going on that shouldn't be going on three, four years ago, they should have been brought up, handled and addressed three or four years ago. More importantly, they should have been brought up, handled and addressed not by the Commission but by the HBPA and the Board of Directors.
And I think when you look at the reevaluation,I think the most important thing to look at is what the reevaluation caused, which is all of the improvements and corrective action steps."
In a perfect world, Mr. Gorajec is correct in that complaints to the commission should not be unnecessary. In a perfect world, the IHRC staff would have done their jobs to supervise the INHBPA's benevolence funds over the last five years to understand there was no openness or no transparency with an appointed benevolence board having more authority than the elected INHBPA board. If things were "going on that shouldn't be going on," the IHRC staff should have known through their oversight. Clearly, Mr. Gorajec throws that responsibility to the INHBPA and its board members, yet ignores that Indiana law requires the IHRC to provide oversight to benevolence funds. In short, these issues were "brought up" by the INHBPA, but only by a single member seeking reforms. Did other board members simply not care enough? Or, was their family members receiving benefits, which violated the commission-required conflict of interest policy, an influence on their view of their own responsibilities?
As a result of Ms. Hobson's complaint, the INHBPA was required to take many corrective actions, especially regarding eligibility for a horseman to receive benevolence funds. Mr. Gorajec said this about the INHBPA's eligibility requirements, "First off, there were concerns that were well founded about eligibility requirements. HBPA had eligibility requirements. They were not enforcing all of their requirements. One thing to be said is that they were not enforcing all their requirements apparently uniformly." (Official Transcript: Page 78, Lines 7 through 12) Not uniformly enforcing eligibility requirements is saying that there was selective application of who got benevolence funds and who did not which still begs the question, on what basis were people declined for benevolence funds?
One of the most significant corrective action steps was the termination of the INHBPA Benevolence Trust and its board in favor of the elected INHBPA board. The fact that the INHBPA was using a non-elected board to oversee benevolence funds was evident in every INHBPA application for slot funds since 2008. Yet, this somehow came as a surprise to the IHRC staff during their investigation.
What was also in every INHBPA registration application since 2008 was the eligibility requirements for a horsemen to receive benevolence. Given that the INHBPA was not following their own commission-approved eligibility requirements, means that each application submitted to the IHRC for review was a lie. In effect, the INHBPA provided false documentation to the IHRC each year which is a violation of the IHRC's rules on horsemen's associations applications. Also, each year, senior leaders of the INHBPA would testify under oath at the IHRC's hearing on the application as to its legitimacy. Again, violations of the IHRC's rules and of Indiana statute. Yet, no sanctions were levied (just yet) on anyone. Below is the entire discussion regarding sanctions:
"CHAIRMAN DIENER: Questions for Joe? I have a hypothetical question. Your recommendation is, was that this application of HBPA be denied unless a revised application was submitted that addressed many of your concerns. You did not propose whether or not there should be any sanctions. Do you consider sanctions warranted in this case or not?
JOE GORAJEC: No. Based on our findings, no."
(Official Transcript: Page 80, Line 22 through Page 81, Line 4)
Since the IHRC's commissioners were acting as an Administrative Law Judge regarding the INHBPA's application at this June hearing, their sole agenda was to sit in judgment of the application, not sanctions. In our view, approving the application with the considerable corrective action steps was the right move. There are many on the backsides of the tracks that truly need assistance from these funds. However, sanctioning a licensee has to be a separate event from the hearing or an additional ruling based upon the IHRC's Due Process and Disciplinary Procedures and Indiana statute. While Mr. Gorajec wasn't going to sanction anyone for his own lack of oversight with these funds, with a new Chairman of the IHRC, that jury is actually still out. Under Indiana law the commissioners themselves or the commissioners collectively can recommend sanctions. The hearing on the INHBPA's 2015 application, which will take place before the end of the year, may just be very interesting.
For the full transcript to the IHRC meeting on June 26, 2014, follow this link: http://www.in.gov/hrc/files/IHRC_June_26_2014_meeting_full.pdf
. The relevant pages to the hearing on the INHBPA's registration application are pages 42 through 108.
For more background on this subject, including IBOP's findings and commentary prior to the hearing, please read the Part 1 as a prerequisite to this article: http://www.ibopindy.blogspot.com/2014/06/ihrcs-reevaluation-of-indiana-hbpa-2014.html.
After Ms. Hobson addressed the commission (Official Transcript: Pages 86 through 93) regarding the reasons for her complaint and her experiences in dealing with cronyism in benevolence-related eligibility and benefit receipt, dealing with denials for requests for information required by HBPA By-Laws and dealing with threats against her, here's what former Chairman Bill Diener had to say, "Miss Hobson, I personally wanted to thank you for filing the complaint because I concur with our executive director but for your filing this complaint, there would have been no change to the HBPA."
Here's what IHRC Executive Director Joe Gorajec had said earlier (Official Transcript: Page 76, Line 14 Through Page 77, Line 25)
"JOE GORAJEC: First off, I would like to piggyback on the question that Commissioner Pillow asked of Mike Brown with regard to the impact of the complaint on the process of improving the organization. And I have maybe a little bit different take. I think the complaint in and of itself was a very positive development in that had the Commission not received the complaint, then, quite frankly, we would probably have a continuation of practices that, quite frankly, shouldn't have been continued. So from that standpoint I think the complaint was very positive.
And I think Miss Hobson, even though when you read the report, it is not, it's written in such a way that does not confirm some of the allegations or some of the things that she tried to lead us to, quite frankly, didn't pan out. I think overall these improvements wouldn't have been made absent the complaint.
Having said that, in a perfect world the complaints would be unnecessary because the HBPA would have been more open and transparent in the past. Some of the things that we looked at, the time frame for the investigation was from 2009 to 2013. So we were looking at things three and four years old. And, quite frankly, that shouldn't be.
If things are going on that shouldn't be going on three, four years ago, they should have been brought up, handled and addressed three or four years ago. More importantly, they should have been brought up, handled and addressed not by the Commission but by the HBPA and the Board of Directors.
And I think when you look at the reevaluation,I think the most important thing to look at is what the reevaluation caused, which is all of the improvements and corrective action steps."
In a perfect world, Mr. Gorajec is correct in that complaints to the commission should not be unnecessary. In a perfect world, the IHRC staff would have done their jobs to supervise the INHBPA's benevolence funds over the last five years to understand there was no openness or no transparency with an appointed benevolence board having more authority than the elected INHBPA board. If things were "going on that shouldn't be going on," the IHRC staff should have known through their oversight. Clearly, Mr. Gorajec throws that responsibility to the INHBPA and its board members, yet ignores that Indiana law requires the IHRC to provide oversight to benevolence funds. In short, these issues were "brought up" by the INHBPA, but only by a single member seeking reforms. Did other board members simply not care enough? Or, was their family members receiving benefits, which violated the commission-required conflict of interest policy, an influence on their view of their own responsibilities?
As a result of Ms. Hobson's complaint, the INHBPA was required to take many corrective actions, especially regarding eligibility for a horseman to receive benevolence funds. Mr. Gorajec said this about the INHBPA's eligibility requirements, "First off, there were concerns that were well founded about eligibility requirements. HBPA had eligibility requirements. They were not enforcing all of their requirements. One thing to be said is that they were not enforcing all their requirements apparently uniformly." (Official Transcript: Page 78, Lines 7 through 12) Not uniformly enforcing eligibility requirements is saying that there was selective application of who got benevolence funds and who did not which still begs the question, on what basis were people declined for benevolence funds?
One of the most significant corrective action steps was the termination of the INHBPA Benevolence Trust and its board in favor of the elected INHBPA board. The fact that the INHBPA was using a non-elected board to oversee benevolence funds was evident in every INHBPA application for slot funds since 2008. Yet, this somehow came as a surprise to the IHRC staff during their investigation.
What was also in every INHBPA registration application since 2008 was the eligibility requirements for a horsemen to receive benevolence. Given that the INHBPA was not following their own commission-approved eligibility requirements, means that each application submitted to the IHRC for review was a lie. In effect, the INHBPA provided false documentation to the IHRC each year which is a violation of the IHRC's rules on horsemen's associations applications. Also, each year, senior leaders of the INHBPA would testify under oath at the IHRC's hearing on the application as to its legitimacy. Again, violations of the IHRC's rules and of Indiana statute. Yet, no sanctions were levied (just yet) on anyone. Below is the entire discussion regarding sanctions:
"CHAIRMAN DIENER: Questions for Joe? I have a hypothetical question. Your recommendation is, was that this application of HBPA be denied unless a revised application was submitted that addressed many of your concerns. You did not propose whether or not there should be any sanctions. Do you consider sanctions warranted in this case or not?
JOE GORAJEC: No. Based on our findings, no."
(Official Transcript: Page 80, Line 22 through Page 81, Line 4)
Since the IHRC's commissioners were acting as an Administrative Law Judge regarding the INHBPA's application at this June hearing, their sole agenda was to sit in judgment of the application, not sanctions. In our view, approving the application with the considerable corrective action steps was the right move. There are many on the backsides of the tracks that truly need assistance from these funds. However, sanctioning a licensee has to be a separate event from the hearing or an additional ruling based upon the IHRC's Due Process and Disciplinary Procedures and Indiana statute. While Mr. Gorajec wasn't going to sanction anyone for his own lack of oversight with these funds, with a new Chairman of the IHRC, that jury is actually still out. Under Indiana law the commissioners themselves or the commissioners collectively can recommend sanctions. The hearing on the INHBPA's 2015 application, which will take place before the end of the year, may just be very interesting.
For the full transcript to the IHRC meeting on June 26, 2014, follow this link: http://www.in.gov/hrc/files/IHRC_June_26_2014_meeting_full.pdf
. The relevant pages to the hearing on the INHBPA's registration application are pages 42 through 108.
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