HomeMy WebLinkAbout84-547 CamellaJames D. Carmella, Esquire
Carmella & Tomb, Solicitors
Indiana County Commissioners
Indiana, PA 15701
RE: Hewitt Insurance Agency, Contracting
Dear Mr. Carmella:
Mailing Address.
STATE ETHICS COMMISSION
348 nom-, e btl
HARRISBURG, PA L1 t 2a
TELEPHONE: (717) 783 -1610
April 5, 1984
ADVICE OF COUNSEL
84 - 547
This responds to your letter of March 15, 1984, in which you requested
advice from the State Ethics Commission.
Issue: You ask whether a newly elected county commissioner in Indiana County,
where you serve as solicitor, faces any restrictions under the Ethics Act
vis -a -vis his insurance business.
Facts: You serve as Solicitor for the Indiana County Commissioners, As
Solicitor, you request advice on behalf of Anthony Hewitt, a newly elected
County Commissioner in Indiana County, hereinafter, the County. Mr. Hewitt is
an insurance agent within the County and is the owner of Hewitt Insurance
Agency. In these capacities, Mr. Hewitt operated as the insurance agent for
the County prior to taking office and wrote all the insurance for the County.
The policies of insurance entered into by the Board of County Commissioners
prior to Mr. Hewitt's assumption of his post as County Commissioner, were set
to expire at various times. For example, some policies were entered into in
1982 and do not expire until 1986." Annual premiums are due under these
policies but the policy when it was originally bid and awarded, for example,
could have been for a three, four, or five year package policy. These bids
and the awards were made prior to Mr. Hewitt's assumption of his post as
County Commissioner.
You indicate that Mr. Hewitt, however, will benefit from these contracts
insofar as he will continue to receive a commission based upon the premium
payments due under these policies. A question has been raised regarding the
renewal of these insurance coverages when the policies lapse and a question
has been raised regarding whether Hewitt Agency can write insurance for the
various authorities established by Indiana County. It should be noted that
you indicate that these authorities are independent entities formed under the
Municipalities Authorities Act.
State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania
James D. Carmella, Esquire
April 5, 1984
Page 2
You have posed the following questions:
1. What affect does Mr. Hewitt's election have on the insurance
contracts which Indiana County entered into prior to his election to
office, specifically address the payment of annual premiums?
2. Can Commissioner Hewitt vote on payment of the annual premiums for
the above - mentioned insurance policies?
3. Can Commissioner Hewitt bid on future contracts of insurance of
Hewitt Agency with Indiana County?
4. Can Commissioner Hewitt bid on and if successful, write insurance
for the various authorities in Indiana County.
Discussion: It is clear that Mr. Hewitt, as an elected official within
Indiana County is a "public official" as that term is defined in the State
Ethics Act. See 65 P.S. 402. As such, Commissioner Hewitt's conduct must
conform to the requirements of the State Ethics Act. Intially, before
reviewing the requirements of the State Ethics Act, we note that the
jurisdiction of the Ethics Commission and our ability to provide advice is
limited to the requirements of the State Ethics Act. Accordingly, we cannot
and are not empowered to render any advice or opinion regarding the provisions
of the County Code, 16 P.S. 1806, which you referred to in your
correspondence.
Under the provisions of the Ethics Act, it is clear that Commissioner
Hewitt is "associated" with the Hewitt Insurance Agency, as those terms are
defined in the State Ethics Act. See 65 P.S. 402. Thus, following Mr.
Hewitt's assumption of office as a County Commissioner, as the owner of Hewitt
Agency, he must conform his conduct to the requirements of Section 3(c) of the
State Ethics Act should he or his Agency wish to contract with the County.
Section 3(c) of the State Ethics Act provides that:
(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).
James D. Carmella, Esquire
April 5, 1984
Page 3
Thus, any contract in excess of $500 which is to be entered into between
the County and the Hewitt Agency, following Mr. Hewitt's assumption of office,
must be awarded in an open and public process which provides for the
following:
1. prior public notice;
2. public disclosure of all proposals considered; and
3. public disclosure of the award of the contract.
These requirements as set forth in the Commission's Opinion in Howard,
79 -044 require that competitors of the Hewitt Agency who seek to contract with
the County should be given a reasonable time or opportunity within which to
submit applications or proposals to secure this However, if the
above standards are complied with, the Hewitt Agency can contract with the
County even now that Mr. Hewitt is serving as a County Commissioner.
Incidentally, the restrictions of Section 3(c) of the Ethics Act apply to
a "business" with which Mr. Hewitt is "associated" vis -a -vis the governmental
body with which Mr. Hewitt is associated. In this case, Mr. Hewitt is
associated with the County. The Commission has concluded that an authority
established under the Municipal Authorities Act is a separate and distinct
legal entity from the incorporating municipality, in this case, the County.
Thus, Mr. Hewitt would not be deemed to be "associated" with the authorities
created by the County and, therefore, the open and public process requirements
of Section 3(c) of the Ethics Act would be inapplicable to a contract between
Hewitt Agency and an authority under these facts. This is because the
authorities are not the "governmental body" with which Mr. Hewitt is
associated. See Ryan, 80 -014 and Lynch, 79 -047.
It should also be noted that there is no provision within the Ethics Act
or any opinion of the Ethics Commission which would indicate that those
contracts which were entered into between the County and Hewitt Agency prior
to Mr. Hewitt's assumption of his responsibilities as County Commission would
be affected by his election to that post. Specifically, those contracts which
pre -dated Mr. Hewitt's assumption of office are not affected by or subject to
the open and public process requirement of Section 3(c) of the Ethics Act in
particular. This statement is true insofar as the contracts are not yet
subject to re- bidding or re -award and even though the contract period may
cover a period of time after Mr. Hewitt assumed office .
We should also review the provisions of Section 3(a) of the State Ethics
Act which provide as follows:
James D. Carmella, Esquire
April 5, 1984
Page 4
(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).
Under this provision Mr. Hewitt may not use his public office or
confidential information received through his public office to secure
financial gain for himself or the Hewitt Agency. Under Section 3(a) of the
State Ethics Act, the Commission has required a public official to abstain
from participating in decisions, including discussions and votes, leading to
an award of a contract under which he as an individual may benefit or which
might be to the benefit of a business with which he is associated.
Incidentally, the "business with which he is associated" includes the Hewitt
Agency as a business in which the official, here Mr. Hewitt, is a director,
officer, owner, employee, or holder of stock. See 65 P.S. 402. Under Section
3(a) of the Ethics Act and the opinions of the Commission, then, it is clear
that, if, and when the County re -bids and is to re -award any contract of
insurance, Commissioner Hewitt should abstain from participating in the
County's decisions on these contracts.
The Commission has determined that as to contracts which may be written,
either prior to the official's assumption of office or otherwise, where the
vote on the payment of routine bills regarding such a contract may be
submitted for consideration, if no dispute exists resp ct to such
payment, a public official may participate in the municipality's decision
regarding such payment even where the payment may be to a "business with which
he is associated." See Stewart, 79 -070. Thus, insofar as the insurance
contract payments or even the renewal premiums associated with these long -term
contracts may be said to be non - negotiable, routine, and not subject to
dispute, Commissioner Hewitt could vote on the payment of the bills associated
with these items. However, with respect to any re -award or re- negotiation or
any circumstance in which a dispute as to payment under the contracts might
arise, Commissioner Hewitt should abstain in order to comply with provisions
of Section 3(a) of the Ethics Act.
In order to answer your specific questions as they were oppose, we will
address them as they were presented as follows:
1. As discussed above, those contracts between Indiana County and the
Hewitt Agency entered into prior to Commissioner Hewitt's assumption
of office are not affected by nor are they subject to the
requirements of the Section 3(c) of the Ethics Act. The annual
payment of premiums by the County associated with these contracts
may he made as these contracts originally required.
James D. Carmella, Esquire
April 5, 1984
Page 5
SSC /rdp
2. Commissioner Hewitt can vote on the annual renewal premiums related
to these insurance policies which were negotiated prior to his
assumption of office so long as the payment of these premium amounts
is certain, set in the original contract, are non - negotiable and not
subject to dispute so as to be considered routine.
3. Commissioner Hewitt's Agency or Commissioner Hewitt can seek to
secure future contracts of insurance with Indiana County so long as
the open and public process requirements of Section 3(c) of the
Ethics Act are met and Commissioner Hewitt abstains and places the
reason for such abstention on the public record, as discussed above,
in order to comply with Secton 3(a) of the Ethics Act.
4. Because the authorities created by Indiana County are separate and
distinct legal entities from the County, it cannot be said that
Commissioner Hewitt is "associated" with these authorities to the
extent that he is "associated" with the County itself. Accordingly,
Commissioner Hewitt and his Agency can bid on the insurance business
of the authorities without imposition of the requirements of Section
3(c) of the Ethics Act and may, if successful in his bid, provide
such insurance service to these authorities.
Conclusion: The conduct of Commissioner Hewitt as the owner of Hewitt
Insurance Agency and as an elected County Commissioner within Indiana County
should be governed by the requirements 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
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 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.
Sincerely,
ndra S. Ch stianson
General Coun el