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HomeMy WebLinkAbout09-541 SemerodKeith D. Semerod 735 First Street Pottsville, PA 17901 Dear Mr. Semerod: ADVICE OF COUNSEL April 24, 2009 09 -541 This responds to your letters dated February 25, 2009, and March 17, 2009, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would impose any prohibitions or restrictions upon a deputy administrator of a county mental health and mental retardation program, who in a private capacity is a licensed social worker, with regard to providing sychotherapy to clients as an independent contractor to a private company where: (1) the company is initiating service delivery in the county; and (2) the county will have a contractual agreement with the company to provide start up monies to the company and purchase services from the company. Facts: You have requested an advisory from the Pennsylvania State Ethics C ommission based upon the following submitted facts. You are employed with Schuylkill County ( "the County "), Pennsylvania, as the Deputy Administrator for Mental Health and Mental Retardation ( "MH /MR "). You have submitted a copy of a County Classification Description for your current position, which document is incorporated herein by reference. It is administratively noted that the Classification Description lists your job title as MH /MR Deputy Administrator (Program Specialist II). You have also submitted a job description for your current position, which document is incorporated herein by reference. A private company named "Professional Counseling, Consulting & Human Services LLC" ( "the Company ") is initiating service delivery in the County. The Company is replacing an outpatient mental health provider that closed in 2009. You state that the County's MH /MR office will have a contractual agreement with the Company to provide start up monies to the Company and purchase services from the Company. The Company will serve clients with private insurance as well as clients covered by publicly funded programs. In your private capacity, you are a licensed social worker. The Company has approached you with an opportunity to provide psychotherapy to clients for three to five evening hours per week as an independent contractor to the Company. You have submitted copies of an unsigned Company therapist contract entitled "Mental Health Semerod, 09 -541 April 24, 2009 Page 2 Therapist Services Agreement" ( "the Agreement ") and an organization chart for the Company, both of which documents are incorporated herein by reference. It is noted that the Agreement provides, in pertinent part, as follows: MENTAL HEALTH THERAPIST SERVICES AGREEMENT 1 Engagement. PCCHS engages Mental Health Therapist to provide the Services as described in Section 2 and Exhibit "A," and Mental Health Therapist agrees to provide services to clients of PCCHS as an independent contractor at the PCCHS locations.... 6. Independent Contractor. It is agreed that in the performance of services under this Agreement, the Mental Health Therapist shall at all times act as an independent contractor with respect to PCCHS, and not as an employee or agent of PCCHS. Nothing contained in this agreement shall be construed to create an employment, joint venture, partnership, association, or other affiliation between the parties, it being specifically agreed that the relationship is and shall remain that of independent parties to a contractual relationship as set forth in this Agreement.... Mental Health Therapist shall be required to pay self - employment taxes, FICA, Social Security, and income taxes as a self - employed independent contractor.... Mental Health Therapist Services Agreement, at 1, 7. You state that you have known the administrator of the Company for ten years through working together. You state that in your position with the County, you have not had any involvement with the Company. Based upon the above submitted facts, you ask whether you would have a conflict of interest under the Ethics Act with regard to providing psychotherapy to clients as an independent contractor to the Company. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As the Deputy Administrator for MH /MR for the County, you are a public employee subject to the provisions of the Ethics Act. This conclusion is based upon the Classification Description and the job description, which when reviewed on an objective basis, indicate clearly that the power exists to take or recommend official action of a non - ministerial nature with respect to one or more of the following: contracting; procurement; administering or monitoring grants or subsidies; planning or zoning; Semerod, 09 -541 April 24, 2009 Page 3 inspecting; licensing; regulating; auditing; or other activity(ies) where the economic impact is greater than de minimis on the interests of another person. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa. C. S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. Semerod, 09 -541 April 24, 2009 Page 4 "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. 65 Pa. C. S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office, including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position- -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity or private client(s). Miller, Opinion 89- 024 Kannebecker, Opinion 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Any business as to which you are a director, officer, owner, or employee or in which you have a financial interest would be considered a business with which you are associated. A sole proprietorship or self - employed individual is included within the Semerod, 09 -541 April 24, 2009 Page 5 definition of the term "business" as set forth in the Ethics Act. 65 Pa.C.S. § 1102; In Re: Nomination Petition of Paulmier, 594 Pa. 433, 937 A.2d 364 (2007). Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as the Deputy Administrator for MH /MR for the County, you would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the customer(s) /client(s) of any business(es) with which you are associated. See, Kannebecker, supra; Miller, supra. In response to your specific inquiry, you are advised as follows. An advisory cannot provide a ruling as to past conduct. You are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your prospectively entering into a business arrangement with the Company as an independent contractor providing psychotherapy to clients subject to the conditions that: (1) you did not use the authority of your public position as the Deputy Administrator for MH /MR for the County in any matter pertaining to the Company or its principals at a time when you had an actual or reasonable expectation that you would enter into a business arrangement with the Company or would otherwise receive a private pecuniary benefit relating to the Company; and (2) you did not otherwise use the authority of your public position or confidential information received as a result of being in your public position in furtherance of securing a business arrangement or other private pecuniary benefit with respect to the Company or its principals. Cf., Desmond, Opinion 08 -004. To the extent that you would perform work as an independent contractor to the Company, such business relationship with the Company generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the Company. See, Kannebecker, supra; Miller, supra. In each instance of a conflict of interest, you would be required to abstain fully from participation. The abstention requirement would extend beyond voting to include any use of authority of office. In each instance of a voting conflict, you would be required to abstain fully and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. The propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the County Code or professional code(s) of ethics such as the National Association of Social Workers ( "NASW ") Code of Ethics. Conclusion: As the Deputy Administrator for Mental Health and Mental Retardation ( "MH /MR ") for Schuylkill County ( "the County "), Pennsylvania, you are a public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. Based upon the submitted facts that: (1) a private company named "Professional Counseling, Consulting & Human Services LLC" ( "the Company ") is initiating service delivery in the County and is replacing an outpatient mental health provider that closed in 2009; (2) the County's MH /MR office will have a contractual agreement with the Company to provide start up monies to the Company and purchase services from the Company; (3) the Company will serve clients with private insurance as well as clients covered by publicly funded programs; and (4) the Company has approached you with an opportunity to provide psychotherapy to clients for three to five evening hours per week as an independent contractor to the Company in your private capacity as a licensed social worker, you are advised as follows. An advisory cannot provide a ruling as to past conduct. You are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your prospectively entering into a business arrangement with the Company as an independent contractor providing psychotherapy to clients Semerod, 09 -541 April 24, 2009 Page 6 subject to the conditions that: (1) you did not use the authority of your public position as the Deputy Administrator for /MR for the County in any matter pertaining to the Company or its principals at a time when you had an actual or reasonable expectation that you would enter into a business arrangement with the Company or would otherwise receive a private pecuniary benefit relating to the Company; and (2) you did not otherwise use the authority of your public position or confidential information received as a result of being in your public position in furtherance of securing a business arrangement or other private pecuniary benefit with respect to the Company or its principals. To the extent that you would perform work as an independent contractor to the Company, such business relationship with the Company generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the Company. In each instance of a conflict of interest, you would be required to abstain fully from participation. The abstention requirement would extend beyond voting to include any use of authority of office. In each instance of a voting conflict, you would be required to abstain fully and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel