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HomeMy WebLinkAbout85-595 GirmanE. P. Girman, Esquire Girman R Bachrach 513 Courts Place Pittsburgh, PA 15219 Dear Mr. Girman: State Ethics Commission 308 Finance Building P. O. Box 11470 Harrisburg, Pa. 17108-1470 November 1R, 1985 ADVICE. OF COUNSEL 85 -595 Re: Township Commissioner, Employee Insurance Company, Township Insurer This responds to your letter of October 30, 1985, wherein you requested the advice of the State Ethics Commission. Issue: Whether any conflict of interest is occasioned where a first class township purchases employee insurance henefits from a company that is the employer of a township commissioner. Facts: You are Solicitor for Baldwin Township, a Township of the first class. You indicate that Carlton J. Hartman is an elected member of the township hoard of commissioners. You further indicate that Mr. Hartman is also a salaried employee for the Protective Life Insurance Company. Mr. Hartman holds the position of Regional Manager of group sales. The township is currently considering purchasing insurance,henefits for the non- uniformed employees of the township. The specific benefits that are being considered would he in the nature of a pension plan. You indicate in your letter that various proposals have heen received and reviewed by the township. You indicate that an independent agent has suhmitted a proposal on hehalf of the Protective Life Insurance Company. Mr. Hartman has had no professional or pecuniary connection with the independent agent. You indicate further that if the plan with Protective Life is approved by the township, Mr. Hartman would receive no commission or other pecuniary gain. You have asked whether the foregoing factual situation presents any conflict of interest within the purview of the State Ethics Act. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania E. P. f;i rman, Esquire November 18, 1985 Page 2 Discussion: As a township commissioner, Mr. Hartman is a public official as that tern is defined in the State Ethics Act. 65 P.S. 6402; Knox, 81 -009. As such, his conduct must conform to the requirements thereof. The State Ethics Act provides as follows: Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). The Act further provides that: Section 2. Definitions. "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 holder of stock. 65 P.S. 402. It is clear, that as a salaried employee of the Protective Life Insurance Company, Mr. Hartman is associated with that company within the definition of the State Ethics Act. It is equally clear, therefore, that Mr. Hartman may not, in his public position, undertake any activity that would benefit that company. Additionally, Mr. Hartman may not use any confidential information obtained as a township commissioner to benefit the Protective Life Insurance Company. Prior Commission opinions and advices would require Mr. Hartman to abstain from any participation in the township's review and consideration of proposals submitted to the township by the Protective Life Insurance Company. Additionally, Mr. Hartman should abstain from reviewing the proposals submitted by any other insurance company in relation to this matter. This is specifically required in that negative votes for other insurance companies may be perceived as votes in favor of the Protective Life Insurance Company. Mr. Hartman, therefore, should abstain completely from the township's review, consideration and purchase of the insurance benefits. Additionally, Mr. Hartman's abstention should be recorded in the appropriate township records, i.e. minutes, and the reason for his abstention should also be noted. Such abstention, if not done in at a public meeting, should be open to public review and inspection. E. P. Girman, Esquire November 18, 1985 Page 3 In addition to the foregoing, the Ethics Act also provides that: Section 3. Restricted activities. (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). While you do not indicate in your request for advice whether Mr. Hartman or a member of his immediate family is a director, officer, or owner of more than 5% of the equity of the Protective Life Insurance Company, we have nevertheless made note of Section 3(c) above. If Mr. Hartman does stand in this relationship to that company, the township must employ an open and public process prior to the award of any contract to that business. This open and public process would require prior public notice of the contracting possibility: Sufficient time for a reasonable and prudent competitor to be able to prepare and present an application of proposal: Public disclosure of all applications or proposals considered and public disclosure of the contract awarded or offered and accepted. See Howard, 79 -044, Fields, 82 -006, Cantor, 82 -004. Additionally, within this Section of the Ethicct, Mr. Hartman would similarly be required to abstain from all participation, discussion, consideration and review of the insurance proposals considered by the township. Conclusion: There is no absolute prohibition on a township purchasing insurance from an insurance company that employs a member of the township board of commissioners. The township commissioner so employed must abstain from the review, consideration, and award, of the insurance contract. In addition, if the township commissioner or a member of his immediate family is a director, officer, or owner of more than 5% of the equity of the insurance company seeking to contract with the township, the contract must be awarded through an open and public process as set forth in this advice. Pursuant to Section 7(9)(ii), this 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, providing the requestor has E. P. Gi rman, Esquire November 18, 1985 Page 4 di sclosed 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 he made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. JJC /sfb Si ncerely, J. Genera ounsel