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HomeMy WebLinkAbout84-001 KraneBruce E. Krane RD #1, Box 111A Canonsburg, PA 15317 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION February 24, 1984 RE: Insurance Coverage; Second Class Township Dear Mr. Krane: I. Issue: 84 -001 You ask whether, as a newly - elected Supervisor, you are entitled to participate in certain insurance programs maintained by the Township. II. Factual Basis for Determination: You are a newly - elected Supervisor in North Strabane Township, hereinafter, the Township. You will begin a six -year term as of January, 1984. The Township is classified as a Township of the second class and, accordingly, is governed by and subject to the provisions of the Second Class Township Code, Act of May 1, 1933, P.L. 101, as amended, 53 P.S. 65101 - 67605. As a Supervisor, you will not be employed by the Township in any other capacity. See authority to appoint supervisors as roadmasters, superintendents or laborers, 53 P.S. 65515. You state that the Township has contracted for group hospitalization (including major medical) dental and term life insurance coverage for Township "employees." We assume that the Township, out of its general funds, pays all or part of the premiums associated with these insurance policies. Township Supervisors in the past have been eligible to participate in these plans and certain supervisors have accepted these coverages. The Township solicitor has opined that all supervisors are entitled to participate in these programs and to have all or part of the costs associated with such participation borne out of Township treasury or funds. You seek our review of this question and a determination of the propriety under the Ethics Act of your participation in payment of these insurance coverages. Bruce E. Krane February 24, 1984 Page 2 III. Applicable Law: The law to be applied to this question is as follows: Ethics Act. 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). Second Class Township Code. Section 515. Supervisors may receive from the general township fund, as compensation, twenty -five dollars for each meeting which they attend. The compensation of supervisors, when acting as superintendents, roadmasters or laborers, shall be fixed by the township auditors either per hour, per day, per week, semi - monthly or monthly which compensations shall not exceed compensation paid in the locality for similar services... but no supervisor shall receive compensation as a superintendent or roadmaster for any day he receives compensation for attending a meeting of supervisors, unless such meeting is held after regular working hours. 53 P.S. 65515. Section 7n2. Insurance. To expend out of the general township fund such amount as may be necessary to secure workmen's compensation insurance for its employees, including volunteer firemen of companies duly recognized by the township by motion or resolution, killed or injured while going to, returning from, or attending fires in said township or territory adjacent thereto, or while performing any other duties authorized by the township; to make contracts of insurance with any fire insurance company, duly authorized by law to transact business in the Commonwealth of Pennsylvania, on any building or property owned by such township, to make contracts with any insurance company, so authorized, insuring any public liability of the township including insurance on every township officer, official and employe for liability arising from errors and omissions in the Bruce E. Krane February 24, 1984 Page 3 performance of their duties in the course of their employment, except that liability of elected or appointed officials or officers for surcharge in accordance with law shall not be affected hereby; and to make contracts of insurance with any insurance company, or nonprofit hospitalization corporation, or nonprofit medical service corporation, authorized to transact business within the Commonwealth, insuring its employes, and /or their dependents, or any class or classes thereof, under a policy or policies of group insurance covering life, health hospitalization, medical service, or accident insurance, and may contract with any such company, granting annuities or pensions, for the pensioning of such employes, and for such purposes, may agree to pay part or all of the premiums or charges for carrying such contracts, and may appropriate out of its treasury any money necessary to pay such premiums, or charges, or portions thereof. The supervisors are hereby authorized, enabled and permitted to deduct from the employe's pay, salary or compensation such part of the premium, or charge, as is payable by the employe, and as may be so authorized by the employe in writing. 53 P.S. 65713. Insurance Code. Section 756.2. Group accident and sickness insurance. (a) Group accident and sickness insurance is hereby declared to be that form of accident and sickness insurance covering groups of persons defined in this section with or without one or more members of their families or one or more of their dependents, or covering one or more members of the families or one or more dependents of such groups or persons and issued upon the following basis: (1) Under a policy issued to an employer or trustees of a fund established by an employer, who shall be deemed the policyholder insurancing at least ten employes of such employer for the benefit of persons other than the employer. The term "employes ", as used herein, shall be deemed to include the officers, managers and employes of the employer, the individual proprietor or partner, if the employer is an individual proprietor or partnership, the officers, managers and employes of subsidiary or Bruce E. Krane February 24, 1984 Page 4 affiliated corporations, the individual proprietors, partners and employes of individuals and firms, if the business of the employer and such individual or firm is under common control through stock ownership, contract or otherwise. The term "employes ", as used herein, may include retired employes. A policy issued to insure employes of a public body may provide that the term "employes" shall include elected or appointed officials. 40 P.S. 75612. Group Life Insurance. 532.2. Policies issued to employers or trustees of employer funds. A policy issued to an employer, or to the trustees of a fund established by an employer, to insure employes of the employer for the benefit of persons other than the employer shall be subject to the following requirements. (1) The employes eligible for insurance under the policy shall be all of the employes of the employer, or a I of any class or classes thereof determined by conditions pertaining to their employment. The policy may provide that the term "employes" shall include the employes of one or more subsidiary corporations, and the employes, individual proprietors, and partners of one or more affiliated corporations, proprietors or partnerships if the business of the employer and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership or contract. The policy may provide that the term "employes" shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. The policy may provide that the term "employes' shall include retired employes. A policy issued to insure employes of a public body may provide that the term "employes" shall include elected or appointed officials. 40 P.S. 532.2. Bruce E. Krane February 24, 1984 Page 5 IV. Discussion: As an elected Supervisor you are a "public official" as defined in the Ethics Act and as such your conduct must conform to the requirements of the Ethics Act. We emphasize that our Opinion can only address and answer your question under the provisions of the Ethics Act. Under the Ethics Act you cannot use your office to acquire "financial gain other than compensation provided by law." See Section 3(a) of the Ethics Act cited above. There would he no doubt that if you were included in these various insurance programs and the premiums were paid by the Township, you would be receiving a "financial gain" as that concept is generally understood. The questions remaining are: (1) whether your participation is allowed by law and (2) whether you may accept or vote or otherwise participate in securing and benefitting from these coverages at Township expense by use of your position as Supervisor. The answer to these questions involves review and analysis of the Second Class Township Code to determine what "compensation" is allowed "by law." In this review and analysis we recognize two concepts. First, the Second Class Township Code, as enacted and amended, is intended to be the complete and exclusvie system for governing townships within that classification. See Act of July 10, 1947, P.L. 1481, §4953 P.S. 65103, and for example, 53 P.S. 67201 which repealed 40 P.S. 535 as applied to Second Class Townships. Second, we recognize the well - established concept that elected officials derive their authority and compensation from the law under which they act and when both are defined in law, an official can no more enlarge one than the other. Coltar v. Warminster Township, 8 Pa. Cmwith. 163, 302 A.d 859, 862 (1973). Accord, Commonwealth v. Hanzlick, 400 Pa. 134, 161 A.2d 340 (1960) to the effect that a Township has only those powers expressly granted by the Legislature. Applying these concepts, we conclude that only the Second Class Township Code, hereinafter, the Code, can be consulted to resolve the questions of whether you may participate in the insurance programs in question and whether the Township may pay the premiums associated with such participation. The Code provides that you, as a Supervisor, shall he paid $25 for each meeting you attend. The Code, of course, provides you may be appointed as a roadmaster, superintendent or laborer and if so appointed, may receive "compensation" as approved by the Township auditors. See 53 P.S. 65514 and 53 P.S. 65515 respectively. Likewise, if you were selected to act for the Township as treasurer or secretary, your compensation would be set by the auditors. See 53 P.S. 65531 and 65540, respectively. However, you will not be appointed as permitted under these provisions and thus, your "compensation" is to be defined and confined by Section 515 of the Code, 53 P.S. 65515 to the Code to the °;25 allowed for each meeting you attend. Any gain or benefit you would secure, such as Township payment or contributions to purchase these insurance coverages beyond this `;25, is not authorized by law under these facts and, therefore, may not be secured by use of the authority of your office or your vote as Supervisor. Bruce E. Krane Page 6 February 24, 1984 We recognize that our opinion is contrary to that generally expressed by the Township solicitor and other persons and groups. Accordingly, we will address some of the reasoning and arguments that they have offered to support the conclusion that the Township can pay for your participation in these insurance programs. Proponents of the opposite view to ours represent that Section 702 of the Code, dealing with insurance and authorizing the Township to purchase and pay for certain policies permits your participation in and the Townships payment for these coverages. See 53 P.S. 65713, set forth in Part III above. We agree that the Township could purchase and pay for such policies for employees, some of whom may also be supervisors appointed as such under the Township Code. But in such circumstances, these coverages and payments must, as with pensions, be approved by the Township auditors as part of the compensation allowed for these supervisor- employees. See Hendricks v. East Rockhill Township, 1 0 & C 3d 763 (1977) and Hoak and McCutcheon v. State Ethics Commission, Pa. Cmwlth. 466 A.2d 283 (1983). There is no other authorization or procedure established by which a supervisor who serves as a supervisor only can acquire similar benefits or coverages. Such additional coverages and the costs of same would exceed the strict confines of the $25 compensation limits contained in the Code, negate the intent of the legislature in setting a strict limit on compensation, and constitute an award by the Supervisor to himself of an additional benefit for his service as an officer. It is well - settled that an official is not entitled to "award" himself additional compensation by having the municipality he serves pay for benefits for his performance of his responsbilities as an official. See Hendricks, citing Coltar and Hanzick. This Commission has previously ruled that even assuming supervisors could participate in these types of insurance programs, they could not vote to initiate changes to a program from which they would directly benefit. Weiss, 82 -009. Proponents of the opposite view, recognize these cases but argue that certain provisions of the Insurance Code allow a Township to include and pay for these group insurance coverages for even those supervisors who are not appointed as employees. These provision; of the Insurance Code, while arguably allowing such elected officials to participate in the Township's group accident, sickness and life policies cannot be construed to amend or extend the Township Code. The Insurance Code cannot be read to empower Township officials to take or receive the benefit of the payment of the premiums to secure these policies which are not provided for in the Township Code. Neither the Insurance Code nor the general authorization under the Township Code to purchase and pay for insurance policies can circumvent the strict compensation limits set for those supervisors who do not act as employees ($25 per meeting per 53 P.S. 65515) or the procedure which must be strictly followed whereby supervisor - employees may secure additional, including deferred, compensation such as pensions (by affirmative approval of the auditors). Bruce E. Krane February 24, 1984 Page 7 To assume that these 1955 and 1959 amendments to the Insurance Code permitted elected officials, who do not serve the Township in any other capacity, to be included at Township expense within group accident and life insurance policies would be to assume the legislature, through amendments to the Insurance Code, effectively repealed the limitations on compensation for supervisors and the procedures for approving additional compensation established in the Township Code. Repealers by implication cannot be presumed. 1 Pa. C.S.A. 1971. Likewise, this general permission to participate in such group policies, which would apply to all types of levels of public officials cannot be presumed to enlarge the various and specific municipal codes under which these officials operate and from which any and all power of the officials derive. If these Insurance Code provisions affect the Township Code at all, they do so only to the extent of permitting officials such as yourself, to participate in the group insurance plans of the Township. Insofar as these Insurance Code provisions are posited as a basis upon which you could seek to secure the Township payment of the premiums for such coverages, they are in our opinion, insufficient. We are convinced that if the Legislature desired to allow supervisors who were not serving the Township in any capacity other than as a supervisor, the benefit of Township -paid insurance coverage -- which amounts to a significant increase in the "envelope" of compensation or emoluments associated with the office of the supervisors, they would have amended the Township Code, not the Insurance Code, in clear and unequivocal terms. Compare the 1975 amendment to the Township Code, 53 P.S. 65713, allowing the Township to purchase and pay for errors and omissions insurance for "every Township officer, official and employee." We are aware of the paucity of guidance from the courts in reaching this conclusion. We refer, however, to the recently reported case of Conrad v. Township of Exeter, Berks County Law Journal, Volume 76, No. 2, p. 7 as the precedent most on point. There the Court enjoined a second -class township from continuing to pay the premiums to purchase group life; accident, sickness and disability; medical; hospital and pension policies for supervisors who did not serve as employees or if so appointed, had not received these benefits following the affirmative approval of same by the Township auditors. The Court in Conrad, concluded that the Code allowing Township expenditures for the purchase of insurance coverages explicity distinguished between paying for insurance for township officers, officials, and employees. While the Court found express authority to provide and pay for public liability (errors and omissions) insurance for every township officer, official and employee, expenditures for insurance for life, health, hospitalization, medical services, accident, annuities and pensions were authorized only for employees. Bruce E. Krane February 24, 1984 Page 8 We have reviewed the record of the Conrad case and are convinced the Court was presented with the same arguments as here that certain provisions of the Insurance Code permit officials to participate in and the Township to pay for these type of insurance policies. We agree with the Court's conclusion in Conrad, that expenditures of Township funds to pay for such coverages are not permissible. See and compare Auditors of South Union Township Appeal, 47 Pa. Cmwlth. 1, 407 A.2d 906 (1979) where surcharges were dismissed against second class township supervisors where they had approved hospitalization insurance payments for township employees (some of whom were the supervisors) but who were, in fact, themselves employees engaged in road -work. Absent a clear provision in the Township Code that you as a Supervisor are entitled as a Supervisor to have such coverage paid for by the Township you should not attempt to or secure these coverages at Township expense. V. Conclusion: As a Township supervisor who will not be employed in any other capacity by the Township, you may not, consistent with Section 3(a) of the Ethics Act, use your public office to obtain or have the Township pay the premiums for these insurance coverages because these payments are not clearly authorized by law. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance of the advice given. This letter is a public record and will be made available as such. Finally, any person may request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting reconside- ration should present a detailed explanation setting forth the reasons why the opinion requires reconsideration. SSC /rdp By the Commission ,