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HomeMy WebLinkAbout95-567 KaiserSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL May 16, 1995 The Honorable Linda S. Kaiser Insurance Commissioner Commonwealth of Pennsylvania Insurance Department 1326 Strawberry Square Harrisburg, PA 17120 95 -567 Re: Conflict, Public Official /Employee, Honorarium, Insurance Department, Call for Papers, Awards, Travel Expenses, Competition. Dear Commissioner Kaiser: This responds to your letter of April 20, 1995, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon Pennsylvania Insurance Department officials or employees with regard to accepting honoraria and travel expense reimbursement for participating in a call for papers and having their papers selected for presentation at a symposium related to the insurance industry. Facts: You are the Insurance Commissioner of the Pennsylvania Insurance Department and seek advice from the Commission under the Ethics Law concerning Insurance Department officials and employees participating in a call for papers jointly sponsored by the National Association of Insurance Commissioners (NAIC) and the American Risk and Insurance Association. NAIC is an independent organization comprised of insurance commissioners from the fifty states and U.S. territories. One of the NAIC's goals is to promote regulatory uniformity of the insurance industry throughout the United States. The NAIC also serves as a forum to explore and develop innovations and improvements in state regulation of the insurance industry. To further its goals, the NAIC writes model laws and regulations and urges their adoption by the states. The NAIC often sponsors seminars and symposia to improve the knowledge of its regulatory members and their staffs and to encourage discussion of new developments and innovative approaches to regulation. With your letter, you included the call for papers The Honorable Linda S. Kaiser, 5-50 May 16, 1995 Page 2 which provides in part: "An honorarium will be awarded for each paper that is accepted and presented." You state the call for papers provides $5,000.00 and $2,500.00 awards for papers selected for presentation and also provides reimbursement of the authors' expenses connected with travel to a symposium. You note that any participation by an Insurance Department official or employee will directly utilize, at least in part, knowledge and expertise gained through employment with the state. You also note that the cash awards would be at least indirectly related to the use of such knowledge and expertise. You assert that participation by a department employee would nevertheless undoubtedly enhance the standing of the Commonwealth within the NAIC and the insurance industry. You also state that the Insurance Department and the Commonwealth would no doubt benefit from the personal development of a participating employee. Consequently, you would like to encourage your staff to compete but need guidance from the Commission. You ask whether a Commonwealth official or employee may respond to the call for papers and, if selected, accept the award and travel expense reimbursement if the paper is developed entirely on the official or employee's own time and without the use of any Commonwealth materials or resources. Discussion: As officials and employees of the Pennsylvania Insurance Department, your staffinembers are public officials and public employees as those terms are defined under the Ethics Law, and hence they are 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. Section 3(d) of the Ethics Law provides: Section 3. Restricted activities (d)(1) No public official or public employee shall accept an honorarium. (2) This subsection shall not be applied retroactively. 65 P.S. §403 (a) , (d) . The following terms are defined in the Ethics Law as follows: Section 2. Definitions. The Honorable Linda S. Raiser, 95 -56T May 16, 1995 Page 3 "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. "Honorarium." Payment made in recognition of published works, appearances, speeches and presentations and which is not intended as consideration for the value of such services which are nonpublic occupational or professional in nature. The term does not include tokens presented or provided which are of de minimis economic impact. 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. In applying the above provisions of the Ethics Law to the instant matter, it is noted that Section 3(a) of the Ethics Law does not prohibit public officials /employees from outside business activities or employment; however, the public official /employee may not use the authority of office for the advancement of his own The Honorable Linda S. Kaiser, 95- 567'` May 16, 1995 Page 4 private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. A public official /employee must exercise caution so that his private business activities do not conflict with his public duties. Crisci, Opinion 89 -013. Thus, a public official /employee could not perform private business using governmental facilities or personnel. In particular, the governmental telephones, postage, staff, equipment, research materials, personnel or any other property could not be used as a means, in whole or part, to carry out private business activities. In addition, the public official /employee could not during government working hours, solicit or promote such business activity. Pancoe, supra. Similarly, Section 3(a) would expressly prohibit the use of confidential information received by holding public office / employment for such a prohibited private pecuniary benefit. In applying Section 3 (d) of the Ethics Law, the Commission has differentiated as to whether the speaking engagement is an outside professional activity which would not be restricted by Section 3 (d) of the Ethics Law or whether the fee for the speaking engagement is an honorarium which would be prohibited by Section 3(d) of the Ethics Law. See, Baker, Opinion 91 -004. In Pancoe, Opinion 89 -011, the Commission determined that a public official /public employee was not prohibited from outside business activities provided there was not a use of the authority of office for the advancement of the public official's /public employee's own personal financial gain. As to honoraria, the issue is whether the speaking engagement is a professional business activity or a speaking engagement /published work in the capacity as a public official /employee. In resolving such questions, the Commission has applied certain criteria to submitted facts and circumstances to determine whether the payment for a speaking engagement, published work, appearance or presentation is a prohibited honorarium or allowable as non - public occupational or professional. The criteria applied include but are not limited to the following: the private occupation of the public official /public employee, the expertise of the public official /public employee in the area, the history of activity in the occupation prior to public service, the purpose for the invitation, the capacity in which the public official /public employee is invited, the subject of the speech, work or presentation, the group spoken to and the composition as to members or non - members of the group, the purpose for gathering the group, the amount of the fee relative to the services performed, the source of the invitation, the event at which the speech is given, the subject matter of the speech or published work as compared to the normal subject matter dealt with by the occupational/ professional group and any other relevant factors. The Honorable Linda S. Kaiser, 95 -567, May 16, 1995 Page 5 In the instant matter, it is clear under the facts which you have submitted that the receipt of the $5,000.00 or $2,500.00 by Insurance Deparmtent officials and employees as a result of participation in the call for papers described above would be honoraria prohibited under the Ethics Law. See Richardson, Opinion 93 -006. The Ethics Law would not restrict the submission of papers but would prohibit the receipt of an honorarium for performing such work. In addition, such honoraria cannot be declined in favor of the Insurance Department. See, Richardson, supra, where the Commission ruled that various public officials /employees in the state system of higher education could not decline honoraria for themselves in favor of their respective universities. As to a travel expense, reimbursement would not be prohibited by the Ethics Law. Noye, Opinion 91 -007. Insurance Department officials /employees would not be prohibited from receiving reimbursement for travel expenses associated with an activity in which the officials /employees did not use the authority of their office or employment or any confidential information received through their office or employment for the private pecuniary benefit of themselves, immediate family members or a business with which they or immediate family members are associated. Furthermore, although its receipt is not prohibited under the Ethics Law, the travel expenses reimbursement must be reported by the officials /employees if such reimbursement exceeds $500.00. Section 5 of the Ethics Law provides that among other information, the yearly Statements of Financial Interests shall include [t]he name and address of the source and the amount of any payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where such actual expenses for transportation and lodging or hospitality exceed $500 in the course of a single occurrence. This paragraph shall not apply to expenses reimbursed by a governmental body, or to expenses reimbursed by an organization or association of public officials or employees of political subdivisions which the public official or employee serves in an official capacity. 65 P.S. 5405{b)(7)(i). See Confidential, Advice 91 -597. In summary, while the Ethics Law would prohibit the Insurance Department officials /employees from receiving honoraria, it would not prohibit the travel expense reimbursement. 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 they do not involve an The Honorable Linda S. Kaiser, 95 -567 May 16, 1995 Page 6 interpretation of the Ethics Law. Conclusion: As Insurance Department officials and employees, your staffinembers are public employees subject to the provisions of the Ethics Law. Section 3(d) of the Ethics Law would prohibit them from receiving honoraria. The Ethics Law would not, however, prohibit travel expense reimbursement subject to the qualifications noted above. The reimbursed travel expenses must nevertheless be reported on the public official /employee's Statement of Financial Interests. 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. such. 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 thirty (30) days of the date of this Advice pursuant to 51 Pa. Code 513.2(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 thirty (30) days may result in the dismissal of the appeal. cerely, Vincent Dopko Chief Counsel