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HomeMy WebLinkAbout09-580 Pezzuti ADVICE OF COUNSEL December 18, 2009 James F. Pezzuti 506 Vernon Avenue Harrisburg, PA 17109-4031 09-580 Dear Mr. Pezzuti: This responds to your letter dated October 16, 2009 (postmarked October 26, 2009, and received October 27, 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.C.S. § 1101 et seq., would impose any restrictions upon employment of the Director of the Bureau of Community Development in the Office of Long Term Living within the Pennsylvania Department of Public Welfare following termination of Commonwealth service. Facts: You request an advisory from the Pennsylvania State Ethics Commission regarding the post-employment restrictions of the Ethics Act. You have submitted facts that may be fairly summarized as follows. Effective September 18, 2009, you retired from Commonwealth employment as the Director of the Bureau of Community Development (“Bureau”) in the Office of Long Term Living within the Pennsylvania Department of Public Welfare (“DPW”). You have submitted copies of your official DPW position description and the job classification specifications for the position of Director of the Bureau (job code 48865), both of which documents are incorporated herein by reference. You state that DPW would like for you to work as an annuitant under the 95-day annuitant program (see, 71 Pa.C.S. § 5706(A.1)) to help finish some specific projects and in particular, to do the following: (1) work for the Office of the Secretary on housing issues pertinent to DPW concerns, especially in the Southeastern and Philadelphia market areas; (2) consult with the Bureau of Autism Affairs regarding program design, implementation and operational issues concerning the ACAP program and the Autism Waiver; and (3) finish work you started that requires a particular expertise in Medicaid financing and program design. In addition to working part-time as an annuitant for the Department, you would like to work as a part-time consultant for a national consulting firm named “Sellers Dorsey” (“SD”), which firm specializes in creating transformational change in public health care programs. You state that SD has a contract with DPW to maximize federal financial participation in the Medical Assistance Program and for healthcare reform. Pezzuti, 09-580 December 18, 2009 Page 2 You further state that SD represents several clients in Pennsylvania and is actively seeking new Pennsylvania clients. You propose to assist SD with the following activities: ? Developing, marketing, and implementing the nursing home managed care concept whereby nursing home chains partner with Medicare Advantage plans/SNPs to avoid unplanned hospitalizations and improve compliance with drug formularies through quality improvement and care management efforts; ? Marketing and servicing nursing homes and states in right sizing and expanding continuum of care efforts; ? Marketing, obtaining approval, and implementing waiver assessment; ? Supporting SEIU, Inspiris, and other clients outside of Pennsylvania or at the federal level; and ? Marketing and servicing Long Term Care providers with adjusting their business models to meet current and future demands. You would also like to work as a part-time consultant for a firm named “Pezzuti & Proper LLC” (“P&P”). You state that your consulting would be limited to working with states, the federal government, the National PACE Association, and PACE Technical Assistance Centers regarding the implementation and management of the Program for All Inclusive Care for the Elderly in states other than Pennsylvania. Based upon the above submitted facts, you seek guidance as to whether the Ethics Act would impose any restrictions upon you with regard to your proposed post- retirement employment activities. 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. In the former capacity as the Director of the Bureau, you would be considered a public employee and an “executive-level State employee” subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Therefore, upon retiring from the Commonwealth, you became a former public employee and a former executive-level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Section 1103(i) restricts former executive-level State employees as follows: § 1103. Restricted activities (i)Former executive-level employee.-- No former executive-level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business Pezzuti, 09-580 December 18, 2009 Page 3 or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). Section 1103(i) restricts the ability of a former executive-level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of a new employer, rather than the new employer itself. See, Confidential Opinion, 94-011. However, Section 1103(i) would not prohibit you from working as a part-time consultant for a business or corporation (such as, for example, SD or P&P) subject to the conditions that you would not have actively participated in recruiting such business or corporation to Pennsylvania, and that you would not have actively participated in inducing such business or corporation to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official/public employee from accepting a position of employment. However, it does restrict the former public official/public employee with regard to “representing” a “person” before “the governmental body with which he has been associated”: § 1103. Restricted activities (g)Former official or employee.-- No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms “represent,” “person,” and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. Pezzuti, 09-580 December 18, 2009 Page 4 "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion, 93-005, as well as a new governmental employer. Ledebur, Opinion 95-007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official/public employee; (4) participating in any matters before the former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89-005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official/public employee on invoices submitted by his new employer to the former governmental body, even if the invoices pertain to a contract that existed prior to termination of service with such governmental body. Shay, Opinion 91-012. However, if such a pre-existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95-011. A former public official/public employee may assist in the preparation of any documents presented to his former governmental body. However, the former public official/public employee may not be identified on documents submitted to the former governmental body. The former public official/public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for, the new employer. Section 1103(g) only restricts the former public official/public employee with regard to representation before his former governmental body. The former public official/public employee is not restricted as to representation before other agencies or entities. However, the “governmental body with which a public official/public employee is or has been associated” is not limited to the particular subdivision of the agency or other governmental body where the public official/public employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion 90-006; Sharp, Opinion 90-009-R. The governmental body with which you are deemed to have been associated upon termination of service as the Director of the Bureau is DPW in its entirety, including but not limited to the Bureau. Pezzuti, 09-580 December 18, 2009 Page 5 Until the expiration of a full one-year period following your September 18, 2009, retirement from Commonwealth employment as the Director of the Bureau, or until you would resume providing services to DPW under the 95-day annuitant program in a position falling within the Ethics Act’s definition of “public employee,” whichever would come first, Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” before DPW with promised or actual compensation. When Section 1103(g) of the Ethics Act would be applicable, Section 1103(g) would not prohibit you from working as a part-time consultant for SD or P&P. However, during such period(s) of applicability, Section 1103(g) would prohibit you from engaging in any activities that would constitute prohibited representation before DPW as outlined above. If you would return to work for DPW as an annuitant, you would again be considered a “public employee” subject to the Ethics Act, and the restrictions of Section 1103(g) would cease to apply. Upon termination of work for DPW as an annuitant, you would once again become a former public employee subject to the restrictions of Section 1103(g), and a full one-year period of applicability of Section 1103(g) would begin anew. During such time(s) as you would work for DPW as an annuitant and would be considered a “public employee,” you would be subject to Sections 1103(a) and 1103(j) of the Ethics Act, which 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: Pezzuti, 09-580 December 18, 2009 Page 6 § 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. "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. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official/public employee to abstain 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. Pezzuti, 09-580 December 18, 2009 Page 7 In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act generally 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. If the private employer or business with which the public official/public employee is associated or a private customer/client would have a matter pending before the governmental body, then generally, the public official/public employee would have a conflict of interest as to such matter. Kannebecker, Opinion 92-010; Miller, Opinion 89- 024. 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. You are advised that at such time(s) as you would be a public employee subject to the Ethics Act, to the extent that you would perform work as a consultant for a firm such as SD or P&P, such business relationship with the firm generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the firm. See, Kannebecker, supra; Miller, supra. In each instance of a conflict of interest, you would be required to abstain fully from participation and in each instance of a voting conflict, to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Governor’s Code of Conduct. Conclusion: In the former capacity as the Director of the Bureau of Community Development (“Bureau”) in the Office of Long Term Living within the Pennsylvania Department of Public Welfare (“DPW”), you would be considered a public employee and an “executive-level State employee” subject to the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, 51 Pa. Code § 11.1 et seq. Upon retiring from the Commonwealth, you became a former public employee and a former executive-level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. The restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act as outlined above must be followed. Based upon the submitted facts that: (1) DPW would like for you to work as an annuitant under the 95-day annuitant program (see, 71 Pa.C.S. § 5706(A.1)) to help finish some specific projects; and (2) in addition to working part-time as an annuitant for the Department, you would like to work as a part-time consultant for national consulting firm Sellers Dorsey (“SD”) and for Pezzuti & Proper LLC (“P&P”), you are advised as follows. Section 1103(i) of the Ethics Act would not prohibit you from working as a part- time consultant for a business or corporation (such as, for example, SD or P&P) subject to the conditions that you would not have actively participated in recruiting such business or corporation to Pennsylvania, and that you would not have actively participated in inducing such business or corporation to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. With regard to Section 1103(g) of the Ethics Act, the governmental body with which you are deemed to have been associated upon termination of service as the Director of the Bureau is DPW in its entirety, including but not limited to the Bureau. Until the expiration of a full one-year period following your September 18, 2009, retirement from Commonwealth employment as Director of the Bureau, or until you would resume providing services to DPW under the 95-day annuitant program in a Pezzuti, 09-580 December 18, 2009 Page 8 position falling within the Ethics Act’s definition of “public employee,” whichever would come first, Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” before DPW with promised or actual compensation. When Section 1103(g) of the Ethics Act would be applicable, Section 1103(g) would not prohibit you from working as a part-time consultant for SD or P&P. However, during such period(s) of applicability, Section 1103(g) would prohibit you from engaging in any activities that would constitute prohibited representation before DPW as outlined above. If you would return to work for DPW as an annuitant, you would again be considered a “public employee” subject to the Ethics Act, and the restrictions of Section 1103(g) would cease to apply. Upon termination of work for DPW as an annuitant, you would once again become a former public employee subject to the restrictions of Section 1103(g), and a full one-year period of applicability of Section 1103(g) would begin anew. During such time(s) as you would work for DPW as an annuitant and would be considered a “public employee,” you would be subject to Sections 1103(a) and 1103(j) of the Ethics Act. At such time(s) as you would be a public employee subject to the Ethics Act, to the extent that you would perform work as a consultant for a firm such as SD or P&P, such business relationship with the firm generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the firm. In each instance of a conflict of interest, you would be required to abstain fully from participation and in each instance of a voting conflict, to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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