HomeMy WebLinkAbout14-528 Fox
ADVICE OF COUNSEL
June 27, 2014
Crystal Fox
Senior Counsel
Governor’s Office of Administration
Office of Chief Counsel
Room 405 Finance Building
613 North Street
Harrisburg, PA 17120
14-528
Dear Ms. Fox:
This responds to your letter dated April 30, 2014, 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 prohibitions or restrictions upon an individual
serving as the Deputy Director of the Pennsylvania eHealth Partnership Authority
(“Authority”) with regard to performing the duties of his public position, where: (1) in a
private capacity, the individual is the majority owner of an IT services firm (“Business 1”)
that partners with larger firms to pursue federal IT contracts; (2) the three minority
owners of Business 1 also own a company (“Business 2”) that has provided contract
staff to the Authority as a subcontractor to a vendor and has worked with certified
Health Information Service Providers on sub-grants awarded by the Authority; (3) two of
the three minority owners of Business 1 also own another company (“Business 3”) that
provides services to Business 1 and Business 2; (4) prior to being appointed as the
Deputy Director of the Authority, the individual provided services to the Authority as an
employee of Business 2; and (5) the individual has done work as a consultant for
Business 3.
Facts:
You have been authorized by David Grinberg (“Mr. Grinberg”), who is the
Deputy Director of the Authority, to request an advisory from the Pennsylvania State
Ethics Commission on his behalf. The following facts are drawn from your advisory
request letter and copies of the following documents submitted in conjunction with your
advisory request letter, which are incorporated herein by reference: (1) a memorandum
dated March 21, 2014, from Christopher R. Sullivan, Deputy General Counsel with the
Pennsylvania Governor’s Office of General Counsel, to the Authority Board of Directors,
regarding Mr. Grinberg’s business interests/relationships and his employment with the
Authority; (2) various Authority organization charts; (3) a job description for the position
of Deputy Director of the Authority; and (4) the By-laws and various resolutions of the
Authority.
Fox, 14-528
June 27, 2014
Page 2
The Authority was established pursuant to the Pennsylvania eHealth Information
Technology Act. See, 35 P.S. § 510.101 et seq.
Mr. Grinberg is the majority owner of a company named “DynaVet Solutions”
(“DynaVet”), which is an IT services firm that partners with larger firms to pursue federal
IT contracts. The day-to-day operations of DynaVet are run by its three minority
owners.
The three minority owners of DynaVet also own a company named “DynaMed
Solutions, LLC” (“DynaMed”), which focuses on health IT work and provides staffing
services. DynaMed has provided contract staff to the Authority as a subcontractor to a
vendor named “Computer Aid Inc.” (“CAI”) and has worked with certified Health
Information Service Providers on sub-grants awarded by the Authority.
Two of the three minority owners of DynaVet also own a company named
“DynaNet.” DynaVet and DynaMed buy certain administrative services, such as
bookkeeping, from DynaNet, and Mr. Grinberg has done work for DynaNet as a
consultant.
Prior to being appointed as the Deputy Director of the Authority, Mr. Grinberg
worked at the Authority through DynaMed from June 14, 2011, until March 21, 2014.
DynaMed provided Mr. Grinberg’s services to the Authority through CAI. Mr. Grinberg’s
role at the Authority was that of Program Manager, with certain responsibilities
pertaining to creating and maintaining project and program artifacts, developing and
implementing policies and procedures, and balancing resources against plans.
Effective March 21, 2014, Mr. Grinberg resigned from his employment with DynaMed
and became a Commonwealth employee. Mr. Grinberg was then appointed to the
position of Deputy Director of the Authority. (It is administratively noted that per the
Authority’s web site, Mr. Grinberg was appointed to the position of Deputy Director of
the Authority effective March 24, 2014.)
All Authority grants that were previously outstanding have expired such that there
is no outstanding Authority-related work being done by any grant recipient which could
involve DynaMed as a subcontractor. To the best of Mr. Grinberg’s knowledge,
DynaMed currently has no work with any entity with which the Authority does any kind
of direct business.
Based upon the above submitted facts, you seek guidance as to what actions Mr.
Grinberg would be required to take in order to ensure his compliance with his ethical
obligations.
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.
It is further initially noted that, pursuant to the same aforesaid Sections of the
Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To
the extent that your inquiry relates to conduct that has already occurred, such past
conduct may not be addressed in the context of an advisory opinion. However, to the
extent your inquiry relates to future conduct, your inquiry may and shall be addressed.
Fox, 14-528
June 27, 2014
Page 3
As the Deputy Director of the Authority, Mr. Grinberg is a public official/public
employee subject to the provisions of the Ethics Act.
Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is
prohibited from engaging in conduct that constitutes a conflict of interest:
§ 1103. Restricted activities
(a)Conflict of interest.--
No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
65 Pa.C.S. § 1103(a).
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.
"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.
Fox, 14-528
June 27, 2014
Page 4
It is noted that Section 1103(a) of the Ethics Act does not prohibit public
officials/public employees from having outside business activities or employment.
However, subject to the statutory exclusions to the Ethics Act’s definition of the term
“conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, 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 could form the basis for a conflict of interest under Section 1103(a) of the
Ethics Act would include the pursuit of a private business opportunity in the course of
public action (Metrick, Order 1037) and 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 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. The abstention requirement 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.
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the \[public official/public employee\] of the potential
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public official/public employee “must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of
one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231.
Based upon Kistler, the existence of a violation of Section 1103(a) would depend
upon the circumstances in a given case. Raphael, Opinion 13-003.
Sections 1103(b) and 1103(c) of the Ethics Act, 65 Pa.C.S. §§ 1103(b), (c),
provide in part that no person shall offer or give to a public official/public employee
anything of monetary value and no public official/public employee shall solicit or accept
anything of monetary value based upon the understanding that the vote, official action,
or judgment of the public official/public employee would be influenced thereby:
§ 1103. Restricted activities
(b) Seeking improper influence.--
No person
shall offer or give to a public official, public employee or
nominee or candidate for public office or a member of his
immediate family or a business with which he is associated,
anything of monetary value, including a gift, loan, political
contribution, reward or promise of future employment based
on the offeror's or donor's understanding that the vote,
official action or judgment of the public official or public
employee or nominee or candidate for public office would be
influenced thereby.
Fox, 14-528
June 27, 2014
Page 5
(c) Accepting improper influence.--
No public
official, public employee or nominee or candidate for public
office shall solicit or accept anything of monetary value,
including a gift, loan, political contribution, reward or promise
of future employment, based on any understanding of that
public official, public employee or nominee that the vote,
official action or judgment of the public official or public
employee or nominee or candidate for public office would be
influenced thereby.
65 Pa.C.S. § 1103(b)-(c).
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
DynaVet is a business with which Mr. Grinberg is associated in his capacity as
an owner. Subject to the statutory exclusions to the definition of “conflict” or “conflict of
interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, Mr. Grinberg would have a
conflict of interest in his capacity as the Deputy Director of the Authority in matters that
would financially impact him or a business with which he is associated, such as
DynaVet.
Under the submitted facts, neither DynaMed nor DynaNet would be considered a
business with which Mr. Grinberg is associated, and neither entity would be considered
a customer/client of DynaVet. Additionally, although Mr. Grinberg has done work for
DynaNet in the past as a consultant, there is no indication in the submitted facts that Mr.
Grinberg will do any more work for DynaNet, and this Advice expressly assumes that
Mr. Grinberg will not do any more work for DynaNet.
The ownership of DynaMed and DynaNet by two or more of the three minority
owners of DynaVet, of which Mr. Grinberg is the majority owner, would not in and of
itself form the basis of a conflict of interest for Mr. Grinberg under Section 1103(a) of the
Ethics Act in matters before the Authority that would financially impact DynaMed or
DynaNet. Under the submitted facts, for a conflict of interest to exist under Section
1103(a) of the Ethics Act, there would have to be a private pecuniary benefit to Mr.
Grinberg or DynaVet.
In each instance of a conflict of interest, Mr. Grinberg would be required to
abstain from participation.
Pursuant to Section 1103(c) of the Ethics Act, Mr. Grinberg would be prohibited
from soliciting or accepting anything of monetary value based upon an understanding
that his vote, official action or judgment would be influenced thereby.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the Governor’s Code of Conduct or the State Adverse Interest Act.
Conclusion:
As the Deputy Director of the Pennsylvania eHealth Partnership
Authority (“Authority”), David Grinberg (“Mr. Grinberg”) is a public official/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) the
Authority was established pursuant to the Pennsylvania eHealth Information Technology
Act; (2) Mr. Grinberg is the majority owner of a company named “DynaVet Solutions”
(“DynaVet”), which is an IT services firm that partners with larger firms to pursue federal
Fox, 14-528
June 27, 2014
Page 6
IT contracts; (3) the day-to-day operations of DynaVet are run by its three minority
owners; (4) the three minority owners of DynaVet also own a company named
“DynaMed Solutions, LLC” (“DynaMed”), which focuses on health IT work and provides
staffing services; (5) DynaMed has provided contract staff to the Authority as a
subcontractor to a vendor named “Computer Aid Inc.” (“CAI”) and has worked with
certified Health Information Service Providers on sub-grants awarded by the Authority;
(6) two of the three minority owners of DynaVet also own a company named “DynaNet”;
(7) DynaVet and DynaMed buy certain administrative services, such as bookkeeping,
from DynaNet, and Mr. Grinberg has done work for DynaNet as a consultant; (8) prior to
being appointed as the Deputy Director of the Authority, Mr. Grinberg worked at the
Authority through DynaMed from June 14, 2011, until March 21, 2014; (9) DynaMed
provided Mr. Grinberg’s services to the Authority through CAI; (10) Mr. Grinberg’s role
at the Authority was that of Program Manager, with certain responsibilities pertaining to
creating and maintaining project and program artifacts, developing and implementing
policies and procedures, and balancing resources against plans; (11) effective March
21, 2014, Mr. Grinberg resigned from his employment with DynaMed and became a
Commonwealth employee; (12) Mr. Grinberg was then appointed to the position of
Deputy Director of the Authority; (13) all Authority grants that were previously
outstanding have expired such that there is no outstanding Authority-related work being
done by any grant recipient which could involve DynaMed as a subcontractor; and (14)
to the best of Mr. Grinberg’s knowledge, DynaMed currently has no work with any entity
with which the Authority does any kind of direct business, you are advised as follows.
DynaVet is a business with which Mr. Grinberg is associated in his capacity as
an owner. Subject to the statutory exclusions to the definition of “conflict” or “conflict of
interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, Mr. Grinberg would have a
conflict of interest in his capacity as the Deputy Director of the Authority in matters that
would financially impact him or a business with which he is associated, such as
DynaVet. Under the submitted facts, neither DynaMed nor DynaNet would be
considered a business with which Mr. Grinberg is associated, and neither entity would
be considered a customer/client of DynaVet. Additionally, although Mr. Grinberg has
done work for DynaNet in the past as a consultant, there is no indication in the
submitted facts that Mr. Grinberg will do any more work for DynaNet, and this Advice
expressly assumes that Mr. Grinberg will not do any more work for DynaNet. The
ownership of DynaMed and DynaNet by two or more of the three minority owners of
DynaVet, of which Mr. Grinberg is the majority owner, would not in and of itself form the
basis of a conflict of interest for Mr. Grinberg under Section 1103(a) of the Ethics Act in
matters before the Authority that would financially impact DynaMed or DynaNet. Under
the submitted facts, for a conflict of interest to exist under Section 1103(a) of the Ethics
Act, there would have to be a private pecuniary benefit to Mr. Grinberg or DynaVet. In
each instance of a conflict of interest, Mr. Grinberg would be required to abstain from
participation. Pursuant to Section 1103(c) of the Ethics Act, Mr. Grinberg would be
prohibited from soliciting or accepting anything of monetary value based upon an
understanding that his vote, official action or judgment would be influenced thereby.
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
Fox, 14-528
June 27, 2014
Page 7
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