HomeMy WebLinkAbout94-575 ConfidentialSTATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 1 71 08 -1 470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
June 20,. 1994
94 -575
Re: Conflict, Public Official /Employee, School District, Director,
Health Insurance, Broker, Public School Consortium, Business
with which Associated.
This responds to your letter of May 17, 1994 in which you
requested confidential advice from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Law
presents any prohibition or restrictions upon a school board member
from either providing his expertise without charge on health
insurance coverage to the school district or from being a
shareholder in a corporation which brokers health insurance to a
public school consortium including the school district
Facts: As the Solicitor for the A School District, a third class
public school district comprised of the B Borough and C and D
Townships, E County, you inquire as to whether a School Board
Member who possesses professional expertise as broker of health
insurance may offer his expertise free of charge to the School
Board regarding health care policies, and secondly whether that
board member, who is a shareholder of a corporation which brokers
health insurance, would have a conflict under the Ethics Law if
that corporation brokers group health insurance to a public school
consortium which includes the school district on which the member
serves.
F has been a School Board Member for A School District 'since
December, 1991 and in a private capacity is presently a 50%
shareholder of G, a Pennsylvania corporation which brokers health
insurance.
The A School District is currently a member of H which is
composed of approximately thirty (30) various public schools
entities, including public school districts, area vo -tech schools
and the I. A School District pays H for group health insurance
Confidential Advice, 94 -575
June 20, 1994
Page 2
which is provided by Blue Cross /Blue Shield of Pennsylvania. G is
interested in working with H to evaluate various group health
insurance plans toward the end of brokering group coverage for H.
F would like to offer his expertise and the services of G as a
health insurance consultant to the School Board free of charge as
it annually evaluates the A School District's group policy.
After citing the statutory definition of conflict of interest
under the Ethics Law, you express your belief that the Ethics Law
would not preclude F or G from providing consultation to the School
Board regarding health insurance coverage. Since the consultation
would be done without charge, you argue that F is not acting to
advance his own "private pecuniary interests" and would be doing
nothing more than bringing his special expertise on this area of
interest to the school district. F would receive some future
pecuniary benefit if H were to contract with G for the provision of
an appropriate group health insurance package. In this regard you
note that the School District does not individually negotiate its
group health policies but rather H negotiates group health care on
behalf of the School District and all other members. You conclude
that F would not be using his status as a Director of the A School
District or any information for any competitive advantage.
After quoting Section 324 of the Pennsylvania School Code of
1949, as amended, you argue that that provision recognizes that
school board members may be associated with or hold stock in
corporations which will bid on and conduct business with the school
districts. You argue that the School Code does not prohibit such
dealings, but rather precludes activities which would lower public
confidence and raise suspicions of impropriety by giving business
entities in which a director is interested an unfair advantage.
F individually wishes to offer his personal expertise to the
School Board in answering any questions regarding the consortium
and group coverage in general. G would not negotiate directly with
the School District but rather G hopes to work with H. The School
District believes that the foregoing facts do not pose any conflict
under the Public School Code or Ethics Law. After reciting Section
401(b) of the Ethics Law, you request a confidential advisory in
this matter.
Discussion: It is initially noted that pursuant to Sections 7(10) •
and 7(11) of the Ethics Law, 65 P.S. §5407(10), (11), advisories
are issued to the requestor based upon the facts which the
requestor has submitted. In issuing the advisory based upon the
facts which the requestor has submitted, the Commission does not
engage in an independent investigation of the facts, nor does it
speculate as to facts which have not been submitted. It is the
burden of the requestor to truthfully disclose all of the material
facts relevant to the inquiry. 65 P.S. 55407(10), (11). An
Confidential Advice, 94 -575
June 20, 1994
Page 3
advisory only affords a defense to the extent the requestor has
truthfully disclosed all of the material facts.
As School Director for A School District, F is a public
official as that term is defined under the Ethics Law, and hence he
is subject to the provisions of that law.
Section 3(a) of the Ethics Law provides:
Section 3. Restricted Activities.
(a) No public official or public
employee shall engage in conduct that
constitutes a conflict of interest.
The following terms are defined in the Ethics Law as follows:
Section 2. 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. "Conflict" or "conflict of
interest" 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 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.
Confidential Advice, 94 -575
June 20, 1994
Page 4
In addition, Sections 3(b) and 3(c) of the Ethics Law provide
in part that no person shall offer to a public official /employee
anything of monetary value and no public official /employee shall
solicit or accept anything of monetary value based upon the
understanding that the vote, official action, or judgement of the
public official /employee would be influenced thereby. Reference is
made to these provisions of the law not to imply that there has
been or will be any transgression thereof but merely to provide a
complete response to the question presented.
Section 3(j). of the Ethics Law provides as follows:
Section 3. Restricted activities
(j) Where voting conflicts are not
otherwise addressed by the Constitution of
Pennsylvania or by any law, rule, regulation,
order or ordinance, the following procedure
shall be employed. Any public official or
public employee who in the discharge of his
official duties would be required to vote on a
matter that would result in a conflict of
interest shall abstain from voting and, prior
to the vote being taken, publicly announce and
disclose the nature of his interest, as a
public record in a written memorandum filed
with the person responsible for recording the
minutes of the meeting at which the vote is
taken, provided that whenever a governing body
would be unable to take any action on a matter
before it because the number of members of the
body required to abstain from voting under the
provisions of this section makes the majority
or other legally required vote of approval
unattainable, then such members shall be
permitted to vote if disclosures are made as
otherwise provided herein. In the case of a
three - member governing body of a political
subdivision, where one member has abstained
from voting as a result of a conflict of
interest, and the remaining two members of the
governing body have cast opposing votes, the
member who has abstained shall be permitted to
vote to break the tie vote if disclosure is
made as otherwise provided herein.
If a conflict exists, Section 3(j) requires the public
official /employee to abstain and to publicly disclose the
abstention and reasons for same, both orally and by filing a
written memorandum to that effect with the person recording the
Confidential Advice, 94 -575
June 20, 1994
Page 5
minutes or supervisor.
Turning to inquires you pose, F generally would not be
prohibited by Section 3(a) of the Ethics Law from offering his
professional expertise free of charge on the health insurance
coverage plans. Since F would perform the service free of charge,
there would be no private pecuniary benefit as to him individually
under Section 3(a) of the Ethics Law. However, G is a business
with which F is associated. Accordingly, F could not use the
authority of office to become an advocate, or participate as a
School Director of A whereby a particular program would be opted
which would be brokered by the business with which F is associated.
Thus, in Amato, Opinion 89 -002, the Commission held that a public
official could not participate in a matter wherein the business
with which he was associated had a financial interest or secondly
where the public official could reasonably and legitimately
anticipate through his participation that a contract would be
awarded with the business with which he was associated. Amato
concerned a conflict by a township commissioner as to voting on a
development where the developer would choose a general contractor
who in turn would select subcontractors who could obtain building
supplies from a business with which the commissioner was
associated.
As to the second inquiry, it is noted that the business with
which F is associated would broker group health insurance to the
public school consortium and in turn derivatively to the A School
District. Although the Ethics Law does not prohibit G, the
business with which F is associated, from brokering . group health
insurance to a public consortium which would include the School
District, the Ethics Law would preclude F as a School Director of
the A School District from participating or voting on matters
concerning the health insurance group coverage plan if F may
reasonably and legitimately anticipate that a business relationship
between G and H would develop through such action. See Amato,
supra.
The propriety of the proposed conduct has only been addressed
under the Ethics Law; the applicability of any other statute, code,
ordinance, regulation or other code of conduct other than the
Ethics Law has not been considered in that thej do not involve an
interpretation of the Ethics Law. Specifically not addressed
herein is the applicability of the Public School Code.
Conclusion: As School Director for the A School District, F is a
public official subject to the provisions of the Ethics Law. The
Ethics Law would not prohibit a School Board Member from offering
his expertise on the issue of health care policies nor prohibit the
business with which the School Board Member is associated from
brokering group health insurance to a public school consortium
such.
Confidential Advice, 94 -575
June 20, 1994
Page 6
which would include the School District provided that the School
Director could not reasonably and legitimately anticipate a
financial relationship developing with such participation. Lastly,
the propriety of the proposed conduct has only-been addressed under
the Ethics Law.
Pursuant to Section 7(11), 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
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
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 fifteen (15) 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 fifteen (15) days may result in the
dismissal of the appeal.
cerely,
incent J'1 Dopko
Chief Counsel