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Home My WebLink About88-582 HafnerSTATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL Claude Hafner, II, Esquire 4071 North Hanover Street Hershey, PA 17033 June 14, 1988 8S-F7 Re: Conflict of Interest, Member of the General Assembly; Insurance Agent; Selling insurance to a business which contracts with the Commonwealth Dear Mr. This requested Hafner: responds to you letter of May 13, 1988, in which you advice from the State Ethics Commission. Issue: You ask whether the State Ethics Act presents any restriction or prohibition upon a member of the General Assembly from selling an insurance policy as an agent to a business which . would contract with the Commonwealth of Pennsylvania. Facts: You state that you are an attorney representing a member of the General Assembly who is also an insurance agent and who has been contacted by organizations which wish to buy a policy and his services as an agent when those organizations do business with the Commonwealth of Pennsylvania. In particular, you state that the insured is a provider of medical assistance services to public assistance recipients for which such business obtains payment from the Department of Public Welfare. You note that the insured provides goods or services to the Commonwealth on a bid basis with the contract being awarded to the lowest bidder as per the applicable Commonwealth and departmental procurement regulations. You then state that the insured provides goods or services as per the request for proposals which are judged in accordance with publicly stated criteria in accordance with applicable Commonwealth and departmental procurement regulations. Thereupon you note that only one of the criteria is price and that the other criteria are graded by a departmenta.. panel wherein the review is done in an objective manner although there may be some element of subjectivity involved. You conclude Claude Hafner, :i l , `squire June 14, 1988 Page 2 by requesting advice under the Ethics Act as to whether this member of the General Assembly may sell and service an insurance policy under the foregoing circumstances. Discussion: As a member of the General Assembly, the individual is a public official within the definition of that term as set forth in the Ethics Act and the regulations of this Commission. See Corrigan Opinion, 87 -001; 65 P.S. §402; 51 Pa. Code §1.1. As such, he is subject to the provisions of the Ethics Act. 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 1- .is 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). Section 3(a) basically provides that a public official or employee may not use his public office or confidential information to obtain a financial gain other than compensation as provided for by law for himself or a member of his immediate family or a business with which he is associated. Under this provision, the Ethics Commission has determined that the use of office by a public official to obtain a gain or benefit for himself or a member of his immediate family which is not provided for in law constitutes a "financial gain other than compensation provided for by law." These determinations have been appealed to the Commonwealth Court of Pennsylvania which has affirmed the Orders of the Commission. See McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529 (1983). See also Yocabet v. State Ethics Commission, Pa. Commw. , 531 A.2d 536 (1987). Thus, under this provision, a public official may not use his public position to secure benefits for himself or a member of his immediate family which are not provided for by law. Domalakes, Opinion 85 -010; likewise, the receipt of private financial gain or benefit through use of office is not permitted under this section, Huff, Opinion 84 -015. Basically, the Ethics Act does not state that it is inherently incompatible for a public official to serve or be employed as an insurance agent. In the instant matter, the Claude Hafner, II, Esquire June 14, 1988 Page 3 Ethics Act would not then prohibit this member of the General Assembly from serving as insurance agent for an organization that would do business with the Commonwealth of Pennsylvania under the above facts and circumstances. See Goodman Opinion, 88 -011. Section 3(b) of the Ethics Act provides: (b) No person shall offer or give to a public official or public employee or candidate fo public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public employee or candidate for public office would be influenced thereby. 65 F.S. 403(b). Section 3(b) of the Ethics Act must be referenced in crcer to provide a complete response to your inquiry. Under Section 3(b) of the Ethics Act cited above, which a public official oa employee must observe, a public official or employee must neithe7^ offer nor accept anything of value on the understanding or with the intention that his judgment would be influenced thereby. It is assumed such a situation does not exist here. This Section is referenced not to indicate that any such activity has been c_• will be undertaken but in an effort to provide a complete response to your inquiry. Section 3. Restricted activities. (d) Other areas of possible conflict shall be addressed by the commission pursuant to paragraph (9) of Section 7. 65 P.S. 403(d). Under the above provision of law, the Ethics Commission, however, is also empowered to address other areas of possible conflict pursuant to Section 3(d). 65 P.S. §403(d). Fritzinger, Opinion 80 -008; DeBenedictis, Opinion 86 -002. The parameters of the type of activity encompassed by this provision are generally reviewed in light of the preamble to the Ethics Act which enunciates the legislative intent of the Act. The intent and Claudc Hafner, II, Esquires June 14, 1988 Page 4 purpose of the Act is to strengthen the and confidence of the people in their government by , sSuring the public that the financial interests of the holders of public office prrsent neither a conflict nor the apl'iarance or a conflict with the r,.blik: trust. A public offici 1 or employee, pursuant to this provision, is to ensure that their personal financial interest. .resent neither a conflict nor the appearance of a conflict with the public trust. 65 P.S. 5401. Such a conflict may e:.ist wh >re an individual represents one or more adverse irL.erests. Alt�no, Opinion 80 -007; where an individual serves in positior_s that are incompatible or conflicting; Nelson, Opinion 85 -009. or where such an official or employee accepts compensation to v'ich he is not entitled. Domalakes, Opinion supra. Although the Ethics Act would not restrict the 17.ember of the General Assembly from acting as the insurance agent who would sell and service this policy, the Ethics Act would impose restrictions upon that individual in that he could not use public office or confidential information to obtain this business. 65 P.S. S403(a). Further, the public official could not use Commonwealth offices or personnel or facilities or equipment in soliciting or performing his private business nor could his legislative office be used as a contact point. See Dorance Order, 456. Lastly, the propriety of the proposed conduct has only brm addressed under the Ethics Act; the applicability of any othr..r 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 in this advice is the applicability of the insurance laws, the State Adverse Interest Act or the Legislative' Code of Conduct in that none of these statutes involve an interpretation of the Ethics Act. Conclusion: As a member of the General Assembly he is E. public: official subject to the provisions of the State Ethics I.ci.. Although the Ethics Act would not prohibit this individual from selling or servicing insurance policies to organizations that do business with the Commonwealth of Pennsylvania, the Ethics Act would impose certain restrictions upon his conduct as noted above. Lastly, the propriety of the proposed conduct ir's only been addressed under the Ethics Act. 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 co: - duct in any 01.11 - civil Claude Hafner, II, Esquire June 14, 1988 Page 5 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. such. This letter is a public record and will be : avcilabio as Finally, if you disagree with this Advice or if you 3 any reason to c hallenge same, you may request that the f-i1 Commission review this Advice. A personal appearance; b=fore the Commission will be scheduled and a former Opinion freim the Commission will be issued. Any such appeal must to mr r s, in writing, to the Commission within 15 days of servi of this Advice pursuant to 51 Pa. Code §2.12. Sincerely, Vincent Y. Dopko, General Counsel