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HomeMy WebLinkAbout951 ShetlerIn Re: Dio M. Shetier Before: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 File Docket: 93- 047 -C2 Date Decided: 12/15/94 Date Mailed: 12/27/94 James M. Howley, Chair Daneen E. Reese, Vice Chair Roy W. Wilt Austin M. Lee Allan M. Kluger The Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the State Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq. Written notice of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served upon completion of the investigation which constituted the Complaint by the Investigation Division. An Answer was not filed and a hearing was waived. A consent agreement was submitted by the parties to the Commission for consideration which was subsequently approved. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document fifteen days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. §408(h). Any person who violates confidentiality of the Ethics Law is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. §409(e). Confidentiality does not preclude discussing this case with an attorney at law. Shetler, 93- 047 -C2 Page 2 I. ALLEGATION: That Dio M. Shetler, a Supervisor for Anthony Township, Montour County violated provisions of the State Ethics Act (Act 9 of 1989) when he purchased a private health and accident insurance policy which was paid for with public funds and when he participated in approving payments of said premiums; and when his company contracted with the township to provide heavy equipment without an open and public process. Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. II. FINDINGS: (f) No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, 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. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 P.S. §§403(a), (f) . 1. Dio Shetler has served as Township, Montour County, a. He has also served as 1983. a Township Supervisor for Anthony Pennsylvania since January, 1983. Township Roadmaster since January, 2. Shetler was annually appointed Roadmaster at reorganization Shetler, 93- 047 -C2 Page 3 meetings of the Anthony Township Board of Supervisors. 3. Shetler's hours worked as roadmaster are on a part -time basis. a. His duties consist of working on the roads repairing equipment as well as directing a part -time road crew. b. The other two township supervisors also work on the roads on a part -time basis. 4. Anthony Township does not employ full -time employees to work on township roads. a. The township employs part -time road workers on an as- needed basis for snow removal and road repair projects. 5. The Anthony Township Board of Auditors have set compensation for supervisors employed by the township as follows: a. 2/27/92 b. 2/22/93 c. 1/11/94' - Roadmaster - $8.50 /hour Supervisor - $8.15 /hour Roadmaster - $8.50 /hour Supervisor - $8.15 /hour - All supervisors - $8.50 /hour 6. During the January 7, 1992 auditor's meeting, Supervisor Dio Shetler requested a $.50 /hour pay increase for supervisors and some type of health insurance for supervisors. a. The auditors deferred action. 7. At the January 4, 1993 meeting of the Anthony Township Supervisors the following action was taken: The board of supervisors set a policy for payment of group medical insurance for all employees and family that qualified. Employees must average 14 or more hours work per week or more in the prior year to be eligible. Bills from the employees present insurance carriers will be acce¢ted. Motion by Dio Shetler and seconded by Jeffrey Bieber. Jack Kirkner abstained from voting and the other two members voted in favor of the motion. 8. None of Anthony Township's part -time employees worked an average of fourteen (14) hours per week in the prior year to qualify for insurance coverage. 9. The members of the board of supervisors were the only employees who qualified for medical insurance coverage. Shetler, 93- 047 -C2 Page 4 10. Beginning in January approved , , 1993, the Anthony Township Supervisors payments of premiums for the medical insurance of Supervisors Dio Shetler and Jeffrey Bieber. a. Supervisor Willard Kirkner did not accept payment of his medical insurance premiums by the township. 11. Supervisor Shetler was Cross /Pennsylvania Blue Shield 1touPolicy b No. 19 301241. Blue a. This coverage is not part of a township group plan. 1 2. Beginning in January, 1994, Shetler switched his coverage a to the Pennsylvania Farmers Service Union to Customer No. 1933010. 13. Supervisor Jeffrey Bieber was insured by the Geisinger Health Plan from January, 1993 through April, 1993 at a monthly premiums of $270.38. a. Coverage was switched to the Pennsylvania Grange Service effective July 1, 1993 at quarterly premiums of $1,012.40. 14. Beginning on January 4, 1993, Anthony Township began making payments for Shetler's medical insurance premiums as follows: a. 1993: DATE 01/04/93 03/31/93 06/15/93 09/15/93 PAYEE Capital Blue Cross Capital Blue Cross Capital Blue Cross Capital Blue Cross CHECK NO 23 2370 2420 2454 AMOUNT $1,238.10 $1,238.10 $1,238.10 $1,2 3 8.10 $4,952.40 b. 1994: 01/19/94 PA Farmers Union Service 2536 $ 324.14 15. Total paid by the township for Shetler's medical coverage: 1993: $4,952.40 1994: $ 324.14 (1 month) $5,276.54 16. All of the invoices for Shetler's premiums were approved by the board of supervisors at regular meetings. a. Shetler participated in approving payments of those bills. Shetler, 93- 047 -C2 Page 5 17. At the February 15 of Auditors, the Willard Kirkner's to accept health other supervisors a . , 1993 meeting of the Anthony Township Board auditors discussed increasing Supervisor salary by $1.00 /hour in lieu of his decline insurance that was being receiving by the No motion was made or approved regarding this item. 18. In July, 1993, a township resident questioned the legality of the supervisors insurance plan and whether a township supervisor could have premiums for his medical insurance paid by the township. a. The resident quoted the Pennsylvania State Association of Township Supervisors' March 1993 publication of Pennsylvania Township News which advised that the Second Class Township Code authorizes township supervisors to participate in township group medical programs. Supervisors are not authorized to have individual medical insurance policies paid for by the township. b. The supervisors did not respond to this question. 19. At the August 3, 1993 auditors meeting, Larry Flora, Chairman of the Board of Auditors, reported that expenditures for private medical insurance would not be approved. a. Flora advised that he checked with the Department of Community Affairs and that the Geisinger Health Plan for Supervisor Bieber and Blue Cross /Blue Shield Plan for Shetler will not be approved. b. Flora reported that payments were improper and would be surcharged. 20. On August 13, 1993, Larry Flora, in his capacity as Chairman of the Board of Auditors, wrote to Richard Brittain, Anthony Township Solicitor requesting a written opinion regarding medical insurance for township supervisors as follows: a. The Supervisors have cited the SECOND CLASS TOWNSHIP CODE, ARTICLE V, TOWNSHIP OFFICERS, (b) Township Supervisors, Township Superintendent, and Roadmasters, Section 515. Compensation of Supervisors (b)(7)(c)(1) Cumulative Supplement #4 as criteria for their qualification for Medical Insurance. Do the Supervisors qualify for insurance per this Section? b. The Supervisors have cited the SECOND CLASS TOWNSHIP CODE, ARTICLE VII, GENERAL POWERS, Section 702., Supervisors to Exercise Powers, XIII. Insurance. D. Shetler, 93- 047 -C2 Page 6 Cumulative Supplement #4 as the criteria to direct payment of Health Insurance Policies. Do the Township Supervisors have the authority to authorize payment for two (2) different Health Insurance Policies (both policies are group policies obtained by the supervisors prior to entering Fiscal Year 1993 when payment of these policies were authorized? 21. In a written opinion dated September 8, 1993, Solicitor Richard Brittain responded to the auditors as follows: a. The supervisors qualify for medical insurance coverage under the Second Class Township Code. b. This applies to full -time or part -time working supervisors. c. Also supervisors who may not work other than performing administrative duties and attending meetings are eligible. d. Auditor approval is not required. e. Payment of the supervisor's medical insurance premiums is not considered to be a form of compensation. f. The issue of the supervisors authorizing payment for two different health insurance policies is a complex question. The supervisors can authorize payment of premiums for two separate medical insurance policies. (1) Payments are made by the township directly to the medical insurance company. (2) The township incurred no loss as a result of this practice of paying medical insurance premiums. 22. At the September 13, 1993 meeting of the Anthony Township Supervisors, the following action was taken regarding medical insurance for township supervisors: a. Motion by Shetler to direct the secretary - treasurer to determine the difference in cost between the premiums of Chairman Bieber's medical insurance policy and Supervisor Shetler's medical insurance policy and to develop a schedule of repayment to the township for the amount determined. Motion seconded by Kirkner and carried by a 3 to 0 vote. g- Shetler, 93- 047 -C2 Page 7 23. Shetler reimbursed Anthony Township in an amount of $1,135.56 for insurance premiums. a. This represents the difference between the amount paid for Shetier's medical insurance and the amount paid for Bieber's insurance. 24. Total expended by Anthony Township for medical insurance premiums for Dio Shetler from January 1, 1993 through January, 1994: a. $5,276.54 $1,135.56 $4,140.98 25. Anthony Township contracted with Carol Construction Company for the rental of a John Deere loader in August, 1991. 26. Carol Construction is named after Carol Shetler, the wife of Supervisor Dio Shetler. a. The loader which was leased, a John Deere 555, is owned by Supervisor Dio Shetler. b. Carol Construction has been owned by Dio Shetler and his wife, Carol, since at least mid -1990. 27. Carol Construction and Supervisor Shetler share the same address, R.D. 1, Box 251, Turbotville, Pennsylvania, 17772. 28. Records of Anthony Township confirm that Carol Construction submitted an invoice dated October 14, 1991 for a John Deere Loader for 79 hours at $50.00 /hour totalling $3,950.00. 29. On October 25, 1991, the township issued check no. 441 to Carol Construction in the amount of $3,950.00. a. This check was approved by the board of supervisors at the October, 1991 public meeting. b. Shetler was present at this meeting. 30. The township did not advertise or request formal bids on the rental of this John Deere 555 loader. a. The supervisors assert that quotes were requested by the supervisors. b. No records exist of these quotes. c. The purpose of seeking bids was to widen a township road Shetler, 93- 047 -C2 Page 8 which was a bus route. 31. No discussion by the supervisors with regard to this contract is reflected in the minutes of the supervisor's meetings in August and September, 1991. a. The other supervisors contacted Shetler about providing a bid for the loader. b. The supervisors informally agreed from Carol Construction due to the and no need for the larger loader. 32. Shetler asserts that his rental fee normally charged for such a service. 33. Dale Sellers, a general contractor, submitted a telephone quote to Supervisor Shetler for the rental of a loader. a. The quote was for a FL14 -B loader at a rate of $65.00/ hour. to lease the loader lower per hour cost was below the rate b. The FL14 -B loader has a clearing range of two and three - quarters yards. c. The John Deere 555 loader has a clearing range of one and one -half yards. 34. An audit conducted by the Pennsylvania Auditor General's Bureau of County Audits of the Anthony Township Liquid Fuels Fund for the period 1990 through December 31, 1991 resulted in a finding that the contract with Carol Construction was a related party transaction. a.. The report found that the expenditure of $3,950.00 was paid to a construction company owned by a township supervisor. b. A recommendation of this audit was that the Pennsylvania Department of Transportation review this finding to determine if $3,950.00 should be reimbursed to the Liquid Fuels Tax Fund. 35. By letter of November 16, 1993 to Anthony Township, Gerald Kerprich, Director of Municipal Services, Pennsylvania Department of Transportation, upheld the findings of the Pennsylvania Auditor General. a. The transaction was a non - permissible expenditure from the Liquid Fuels Tax Account. Shetler, 93- 047 -C2 Page 9 b. Reimbursement from the General Fund in the amount of $3,950.00 to the Liquid Fuels Fund was required. 36. On December 30, 1993, Anthony Township issued check no. 2521 in an amount of $3,950.00 to the Anthony Township State Fund as reimbursement directed by the Pennsylvania Department of Transportation. a. The check is signed by Township Secretary William Stellfax and Supervisor Dio Shetler. III. DISCUSSION: As a Supervisor for Anthony Township, Montour County, Dio M. Shetler, hereinafter Shetler, is a public official as that term is defined under Act 9 of 1989. 65 P.S. §402. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of June 26, 1989 provides, in part, as follows: This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired after the effective date of Act 9 (June 26, 1989), we must apply provisions of Act 9 to determine whether the Ethics Act was violated. Under Section 3(a) of Act 9 of 1989 quoted above, a public official /employee shall not engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined under Act 9 of 1989 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 Shetler, 93- 047 -C2 Page 10 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 or his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. §402. In addition, Section 3(f) of Act 9 of 1989 specifically provides in part that no public official /employee or spouse or child or business with which he or the spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. The issue before us is whether Shetler as an Anthony Township Supervisor violated the conflict provision, Section 3(a) of Act 9 of 1989, regarding the receipt of township paid health and accident insurance benefits and the contracting provision,. Section 3(f) of Act 9 of 1989, regarding contracting between the business with which Shetler was associated and the township without an open and public process. Shetler served as an Anthony Township Supervisor from 1983 to the present. In addition Shetler has served as a roadmaster on a part time basis. The township does not employ full time employees to work on township roads but rather hires part time employees on an as needed basis for snow removal and road repair projects. The Anthony Township Board of Auditors set the hourly rates of compensation for the working supervisors and roadmasters at reorganizational meetings. Although Shetler at the January 7, 1992 Auditors' meeting requested a $0.50 per hour increase for health insurance benefits, the Auditors deferred on taking action. Thereafter, at the January 4, 1993 meeting of the Anthony Township Board of Supervisors, Shetler made a motion, seconded by Bieber, which passed on a two to zero vote, with the third supervisor abstaining, to have paid group medical insurance for all employees who qualified by working an average of fourteen or more hours per Shetler, 93- 047 -C2 Page 11 week in the prior year, 1992. Under those parameters, only the Members of the Board of Supervisors, but no other part time employees, met the minimum fourteen hours per week eligibility requirement. From January, 1993 forward the Anthony Township Supervisors approved the payments for the premiums for the medical insurance for Shetler and Bieber only; the third Supervisor declined to accept payment of medical insurance premiums by the township. Thereafter, the township began making payments for Shetler's medical insurance premiums as delineated in Fact Finding 14. The plan in question was not a township group plan but was an individualized medical insurance policy for Shetler. At the July, 1993 meeting of the Board Supervisors, a township resident questioned the legality of such individualized insurance plans noting an article in the Pennsylvania State Association of Township Supervisors (PSATS) Township News, March, 1993, that supervisors are not authorized to have individual medical insurance paid by the township. The Supervisors did not respond to the citizen's inquiry. Thereafter, at an August 3, 1993 Auditor's meeting, the Chairman of the Board of Auditors reported that the expenditures for private medical insurance would not be approved in that the payments were improper and subject to surcharge. The Chairman of the Board of Auditors wrote on August 13, 1993 to the township Solicitor requesting a written opinion regarding the medical insurance for township supervisors and in particular whether the Supervisors qualify for insurance under the Second Class Township Code and second, whether the Supervisors have the authority to authorize payments for two different health insurance policies for Shetler and Bieber. The Solicitor responded in a written opinion of September 8, 1993 advising that the supervisors qualified for medical insurance under the Second Class Township Code which would apply to full time or part time working supervisors, that supervisors performing administrative duties are eligible, that auditor approval is not required, that the payment of supervisor's medical insurance premium is not a form of compensation, that the issue of supervisor's authorizing payment for two different health insurance policies is a complex question and that supervisors may authorize payment for two separate medical insurance policies on the basis that the payments are made by the township directly and that the township incurred no loss as a result of such practice. At the September 13, 1993 meeting of the Anthony Township Board of Supervisors, action was taken to direct the Secretary/ Treasurer to determine the cost differential between Shetler's and Bieber's medical insurance payments and to develop a schedule of repayment to the township. Thereafter, Shetler reimbursed the township in the amount of $1,135.56 for the insurance premiums Shetler, 93- 047 -C2 Page 12 which represented the difference between the amount paid for Shetler's and Bieber's medical insurance. In August, 1991 the township contracted with Carol Construction Company (Company) for the rental of a John Deere loader. The Company has been owned by Shetler and his wife since at least mid -1990. The Company submitted an invoice dated October 14, 1991 in the amount of $3,950.00 representing the usage of the loader for seventy -nine hours at $50.00 per hour. On October 25, 1991 the township issued a check in payment which was approved by the Township Board of Supervisors with Shetler being present at that meeting. The township did not advertise nor request bids for the rental of the loader although the Supervisors assert that quotes were requested. Minutes of the Board of Supervisors for August and September of 1991 do not reflect any discussion by the Supervisors regarding the contract although the supervisors assert that they contacted Shetler about providing a bid for the loader and informally agreed to lease the loader from the Company due to the lower per hour costs. Shetler claims that his rental fee was below the normal rate charged for such a service. Dale Sellers, a general contractor submitted a telephone quote to Shetler for the rental of the loader at a rate of $65.00 per hour; his loader has a clearing range of two and three- quarters . yards as compared to Shetler's which has a clearing range of one and a half yards. In an audit conducted by the Office of the Auditor General, the report found that since the expenditure of $3,950.00 was paid to a company owned by a township supervisor, a recommendation would be made to PennDOT to review and determine if the liquid fuel tax should be reimbursed to the Commonwealth. Thereafter, PennDOT in a letter of November 16, 1993 indicated that the transaction was not a permissible expenditure and required reimbursement to the liquid fuels fund. On December 30, 1993 Anthony Township issued a check in the amount of $3,950.00 to the township state fund as reimbursement as per the direction of PennDOT. In applying the provisions of Section 3(a) of Act 9 of 1989 to the above facts, we must conclude upon this record that there is no violation of that provision of law. We have held that if a public official receives compensation which is specifically authorized in law, then the receipt of that compensation is not a private pecuniary benefit under the Ethics Law. Confidential Opinion, 91- 001. However, if a public official uses the authority of office to obtain financial gain which is compensation other than provided for by law, then such is a private pecuniary benefit in violation of Section 3(a) of Act 9 of 1989. Hessinger, Order 931. Shetler, 93- 047 -C2 Page 13 The issue in this case is whether the receipt by Shetler of the township paid medical insurance is violative of Section 3(a) of Act 9 of 1989. The Second Class Township Code (Code) does provide the following limited authorization for the receipt of such medical benefits by supervisors: (1) Supervisors and their dependents shall be eligible for inclusion in group life, health, hospitalization, medical service and accident insurance plans paid in whole or in part by the township. . . . Participation by supervisors shall not require auditor approval. Such insurance shall be uniformly applicable to those covered and shall not improperly discriminate in favor of supervisors. 65 P.S. §65515 The Code does allow for the receipt by supervisors of medical insurance benefits without the need for a supervisor to be in a working position or without the need for auditor approval. The authorization is qualified to the extent that the insurance must be uniformly applicable and must not discriminate in favor of the supervisors. In the instant matter, Shetler and Bieber were the only two of all of the township part time employees who qualified for the receipt of the township paid medical insurance. However, without sufficient evidence of record to establish an improper discrimination, we must conclude that the supervisors under the facts of this case were entitled to receive such township paid medical insurance benefits. Accordingly, we find no violation of Section 3(a) of Act 9 of 1989 regarding the receipt of such township paid medical insurance benefits by Shetler. As to the contracting issue in this case, we find a technical violation of Section 3(f) of Act 9 of 1989 when the Company contracted with the township for the usage of a loader. The Company is a business with which Shetler is associated. The term business with which associated is defined under Act 9 of 1989 as follows: 65 P.S. §402. Section 2. Definitions "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. Shetler, 93- 047 -C2 Page 14 Since Shetler along with his wife owned the Company, it is clear that the Company is a business with which Shetler is associated. Further, the contract in the amount of $3,950.00 was in excess of the $500.00 bidding requirement of Section 3(f) of Act 9 of 1989. The contract was not put out for bids despite the assertion that quotes were requested by Accordingly, since the contract was in excess of h$ $ . and was supervisors. not awarded through an open and public process, We find a technical violation of Section 3(f) regarding such contracting between the Company, the business with which Shetler is associated and the township. Schweinsber , Order 940. Based upon the totality of facts and circumstances in this case, we will take no further action. IV. CONCLUSIONS OF LAW: 1. Dio M. Shetler as a Anthony Township Supervisor County, is a public official subject to the provisionsMoftAct 9 of 1989. 2. Shetler did not violate Section 3(a) of Act 9 regarding the receipt of townshi of 1989 benefits. P paid medical insurance 3 . A technical violation of Section 3(f) of Act 9 of 1989 occurred when Carol Construction Company, a business with which Shetler was associated, contracted with the township for a front loader service contract which was in excess of $500.00 and was not awarded through an open and public process. In Re: Dio M. Shetler File Docket: 93- 047 -C2 Date Decided: 12/15/94 Date Mailed: 122/27/94 ORDER NO. 951 1. Dio M. Shetler as a Anthony Township Supervisor, Montour County, did not violate Section 3(a) of Act 9 of 1989 regarding the receipt of township paid medical insurance benefits. 2. A technical violation of Section 3(f) of Act 9 of 1989 occurred when Carol Construction Company, a business with which Shetler was associated, contracted with the township for a front loader service contract which was in excess of $500.00 and was not awarded through an open and public process. 3. Based upon the totality of the facts and circumstances this Commission will take no further action. BY THE COMMISSION, JAMES M. HOWLEY,