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Home My WebLink About87-637 StanichakJoseph M. Stanichak, Esquire 700 Franklin Avenue 87 -637 ALiquippa, PA 15001 Re: Conflict of Interest, Municipal Authority Member, Accident and Health Policy Dear Mr. Stanichak: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783-1610 December 7, 1987 ADVICE OF COUNSEL This responds to your letter of November 11, 1987, wherein you requested advice from the State Ethics Commission. Issue: Whether a Municipal Authority Member may consistent with the State Ethics Act receive accident and health policy benefits from the Authority. Facts: In your letter you state that you represent Mr. Edward Iorfido, who is a duly elected member of the town council of the Borough of Ambridge and also serves as a member of the Board of Directors of the Ambridge Water Authority, hereinafter Authority. You further state that Mr. Iorfido receives $50 per month as a duly elected councilman but receives no remuneration as a member of the Board of Directors of the Authority. It is further stated by you that the Authority has a group accident and sickness policy number 70917662, certificate number 1677, which covers all employees in the Board of the Authority. You further state that Mr. Iorfido has been suffering from several debilitating illnesses which necessitated an operation for the removal of polyps from his voice box, as well as oxygen and pressure problems which have made him eligible to receive $40.00 per week under the accident and health policy for disability purposes. You conclude by asking whether Mr. Iorfido by virtue of his being disabled may make application for payment of the benefits under the policy; which has been issued by the State Mutual Life Insurance Company of America. Discussion: As a muter of the Authority, Mr. Iorfido is a "public official" as that term is defined in the Ethics Act. See Dice, 85 -021; 65 P.S. §402. As such, Mr. Iorfido is subject to the State Ethics Act and the restrictions therein apply to him. Joseph M. Stanichak, Esquire December 7, 1987 Page 2 Section 3(a) of the Ethics Act provides: 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). Under the above provision, the Ethics Commission has determined that the use of office by a public official to obtain a gain or benefit for himself which is not provided for in law constitutes a "financial gain other than compensation provided by law." See McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529 (1983). See also Yocabet v. State Ethics Commission, Pa. Commw. (1987) filed on September 18, 1987 at 834 C.D. 1986. Although the State Ethics Commission may only address questions regarding the duties and responsibilities of public officials within the purview of the State Ethics Act, this Commission does not specifically have the statutory jurisdiction to interpret provisions of the Municipal Authorities Act. However, if some other provision of law somehow impacts upon the provisions of the State Ethics Act or the Ethics Act accords jurisdiction in relation to other provisions of law, then this Commission may be required to interpret such provisions of law. See Bigler, 85 -020. Additionally, the Ethics Act allows the Commission to address other areas of possible of conflict. 65 P.S. §403(d). This Commission has determined that within the above provision of law, a public official may not accept any compensation to which he knows or otherwise should know he or she is not entitled. Huff, 84 -015; Domalakes, 85 -010. The Commission's determination was founded on the intent of the Act which is primarily concerned with insuring that the financial interests a public official are not in conflict with the public trust. 65 P.S. §401. Within this provision of law, the Commission has determined that when a public official accepts compensation to which he or she by law is not entitled, the financial interests of said offical are in conflict with the public trust. Applying the above principles to the instant situation, it is necessary to review the relevant provisions of the Municipal Authorities Act. The Pennsylvania Municipal Authority Act provides, in part, that the authority may: Joseph M. Stanichak, Esquire December 7, 1987 Page 3 Make contracts of insurance with any insurance company, association or exchange authorized to transact business in the Commonwealth of Pennsylvania, insuring its employees and appointed officers and officials under an individual policy or policies of insurance covering life, accidental death and dismemberment, and disability income or under a policy or policies of group insurance covering life, accidental death and dismemberment, and disability income provided that statutory requirements for such group insurance, including but not limited to requisite number of eligible employees and /or appointed officers and officials, are met as provided for in ... "The Insurance Company Law of 1921. 53 P.S. 306 q. The Act also provides that the authority may: Make contracts with any insurance company, association or exchange or any hospital plan corporation or professional health service corporation authorized to transact business in the Commonwealth of Pennsylvania, insuring or covering its employees and /or their dependents (but not its appointed officers and officials nor their dependents) for hospital and /or medical benefits; and to contract for its employees (but not its appointed officers and officials) with any insurance company, association or exchange authorized to transact business in the Commonwelath of Pennsylvania granting annuities or to establish, maintain, operate and administer its own pension plan covering its employees (but not its appointed officers and officials). 53 P.S. 306 q. The above provisions clearly provide that Authority members may receive life, accidental death and dismemberment and disability benefits but may not receive hospitalization or a medical type benefits. Based upon the above analysis and previous rulings by this Commission, if the proposed payments under the "accident and health policy" are in the nature of insurance covering life, accidental death and dismemberment, or disability income, then the State Ethics Act would impose no prohibition upon Mr. Iorfido from receiving those benefits. However, if the "accident and health policy" is in the nature of hospitalization or medical type benefits, then those benefits would constitute a financial gain other than compensation provided by law, contrary to Section 3(a) of the Ethics Act. Joseph M. Stanichak, Esquire December 7, 1987 Page 4 Conclusion: As a member of the Authority, Mr. Iorfido is a public official subject to the provisions of the State Ethics Act. If the proposed benefits which Mr. Iorfido contemplates receiving under a "accident and health policy" are classifiable as life, accidental death and dismemberment or disability income, than the Ethics Act would not prohibit Mr. Iorfido from the receipt of said benefits; if the benefits are in the nature of hospitalization or medicial type benefits, then the receipt of the latter type benefits would constitute a financial gain other than compensation provided for by law which would be contrary to Section 3(a) of the Ethics Act. Pursuant to Section 1(9)(71), 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, Vincent J. Dopko General Counsel