Thud, clunk, thump.

Those were the sounds of the other shoes dropping, the fallout many saw coming after a well-publicized review of North Dakota's worker's compensation agency.

The agency on Wednesday fired three of its top executives, shaking things up as recommended in a third-party analysis released last week.

Newly unemployed are Kay Grinsteinner, Jim Long and Billi Peltz.

Among other findings, the Conolly &Associates report called for the restructuring of management at Workforce Safety and Insurance. The agency has followed through, terminating three employees who had previously filed for "whistleblower" status, fearing they'd be fired for speaking up about perceived problems at WSI.

Grinsteinner was internal audit manager. Long and Peltz worked in the human resources department.

They were let go in three separate and quick actions Wednesday, though the possibility of their dismissal had been the subject of community discussion for quite a while.

The issue goes back several months, to when Grinsteinner claimed to have found information damning to WSI. She said there was evidence the agency might have inappropriately denied claims to injured workers. She also claimed to have obtained a journal belonging to WSIcommunications executive Mark Armstrong, in which there was an indication Armstrong was leaking agency information to the press via a third party.

Long and Peltz said they cooperated with law enforcement during an investigation into the alleged wrongdoing. Because of that, they said, they feared for their jobs and filed for whistleblower protection under the state's Public Employees Relations Act. A fourth whistleblower, WSI fraud investigator Todd Flanagan, was fired in December.

But the third-party audit, called for by Gov. John Hoeven, found no basis for Grinsteinner's claims.

Rather, it said she had a "profound misunderstanding of her role" as internal auditor, "and a disturbing sense of self-importance and lack of judgment." The review also said HR leadership had to be strengthened and trust in the department restored.

Acting on the report, WSI's Audit Committee met Wednesday morning and voted 4-0 to fire Grinsteinner. The termination, which came with no severance package, was effective immediately. Right after the meeting, Peltz and Long were notified by interim CEOJohn Halvorson that they were being fired as part of the agency's reorganization. Again, no severance.

In a statement from Armstrong, WSIsaid Long's job was being eliminated "to accomplish a flatter organizational structure." Long had been on paid leave since November.

In his termination notice, Halvorson told Long "the acting senior management team confirms there is no confidence in your ability to return to WSI and effectively lead."

Long had his own take on the proceedings, and said he would file a lawsuit challenging his dismissal.

"It's kind of D-day for whistleblowers," he said. "It was just a matter of time for them to conjure up enough gumption to actually pull the trigger. Very obviously to anyone who looks at this, is it's in retaliation for folks that were cooperating with law-enforcement officers."

Peltz said her termination was a farce.

"What happened today is clearly retaliation,"she said. "Three people were terminated due to the Conolly report, and all three happen to be whistleblowers? The Conolly report is a farce, and the executive team who are truly responsible for the issues at WSI are still employed. The issues at WSI will remain as long as the current executive staff and legal staff remain."

Grinsteinner referred questions to her attorney, Mike Geiermann. He said it was hard to believe that after spending more than $300,000 on the reviews, this is what transpired.

"It's beyond comprehension that after the state of North Dakota spends thousands of dollars to investigate WSIand its services to the injured workers, the four whistleblowers are the only people that get terminated,"Geiermann said. "It's clearly, in our opinion, retaliation for claiming whistleblower status and the actions that were taken by these people to report what they perceived as (problems) in the agency."

Long said the actions should serve as notice to other state employees.

"The message this sends to every state employee in North Dakota is, if something is going on in any agency that's illegal or unethical, they just better shut up about it because this is what happens," he said.

But the Audit Committee, in its termination of Grinsteinner, said the message was something else entirely.

"The internal audit manager position is extremely important at WSI," committee member Mark Jackson said. "If we're going to ensure the needs of injured workers are protected, we need someone who can perform the duties of internal audit manager as intended. The Conolly report makes it crystal clear that Ms. Grinsteinner is not doing that, and is incapable of doing it in the future. We need to find someone who can."

Board member Mark Gjovig, former chairman of the Audit Committee, agreed with Jackson.

"It was unfortunate that (Grinsteinner) put the staff, the board and even the entire state through this,"Gjovig said before the vote to terminate her. "It's a huge expense that never had to take place if these statements weren't made, if these actions hadn't been taken. I don't see any more way to work with her. I can't. The staff can't. I don't see any other way. Ihave a total lack of trust in her and no confidence in her ability to perform her job."

The only dissenting opinion at Wednesday's meeting belonged to WSIboard member Ed Grossbauer, who had no say in Grinsteinner's future because he wasn't on the Audit Committee. He agreed Grinsteinner shouldn't have rifled through Armstrong's desk, but said that doesn't negate the findings.

"They were painting with a broad brush, saying she was doing an ineffective job, when in fact they don't like what she's finding,"Grossbauer said. "The fact of the matter is, what she found (in Armstrong's journal, about information leaked to the media) was damaging not only to Mr. Armstrong, but also the organization.

"There's a big pitcher of Kool-Aid that was poured," Grossbauer said, "and I think I'm the only one not drinking it."

WSI officials hope to hire a new interim CEO - also based on a recommendation by Conolly - soon. Hoeven's pick would be former Fargo Mayor Bruce Furness. The Tribune tried to reach Hoeven, but was unsuccessful. Ryan Bernstein, Hoeven's attorney, said they didn't have a problem with WSIacting on the personnel matters before the new CEO was hired.

"It appears with all of these changes that WSI is moving forward to implement the recommendations from the outside consultant,"Bernstein said. "When the new CEO comes in, and we hope that's soon, that individual can move forward and get some people in there and they can all move forward together."

Brad Ballweber, chairman of the Audit Committee, said WSIwould advertise soon to replace Grinsteinner. Armstrong's statement said WSI would also immediately begin the search for Peltz's replacement. Long's position was eliminated.

Halvorson - who wrote Long's termination letter and gave Peltz the choice of resigning or being fired Wednesday - declined to comment, saying any information was in the statement sent by Armstrong.

For more on that, see the sidebar to this story, with the headline "WSI to reorganize."