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HomeMy WebLinkAbout84-011 DoddsMr. J. Robert Dodds c/o Leslie J. Mlakar, Esquire Loughran, Mlakar & Bilik 704 First Natioral Bank Bldg. Greensburg, PA 15601 II. Factual Basis for Determination: STATE ETHICS COMMISSION 308, FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION June 19, 1984 84 -011 RE: Penn Township; First Class Township; Commissioners, Insurance Coverage Dear Mr. Dodds: I. Issue: On your behalf, Attorney Leslie Mlakar, solicitor for Penn Township, asks whether you, a Commissioner of a First Class Township, may participate in and have the Township pay premiums for your participation in insurance programs such as group hospitalization, dental and life insurance programs. Attorney Mlakar represents Penn Township, hereinafter, the Township, as solicitor. This Township is a First Class Township and therefore, subject to the provisions of the First Class Township Code, 53 P.S. 55101 et. seq, hereinafter, the Township Code. Your solicitor has reviewed your question and rendered an opinion concluding that you may participate in the Township group hospitalization, dental and term life insurance plans and may request the Township deduct the cost of premiums associated with these policies /plans from your monthly compensation, but could not have the Township pay the premiums for your coverage from general funds of the Township. You are particularly desirous of participating in these plans and Attorney Mlakar suggested that you follow -up on his opinion by seeking and securing our Opinion on this matter. For purposes of this Opinion we will also assume that the Township, at Attorney Mlakar's advice, does not at present allow commissioners to participate in these insurance programs; no other township officials are currently enrolled in such programs and no other less than full -time Township employees would be eligible for such programs, with the exception of a part -time Secretary who is covered by the Township hospitalization plan. Attorney Mlakar also added that insurance covering accident /sickness and disability is available to Township workers on a deduction from payroll basis. Leslie J. Mlakar, Esquire June 19, 1984 Page 2 III. Applicable Law: 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). Section 1. Purpose. The Legislature hereby declares that public office is a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation of that trust. In order to strengthen the faith and confidence of the people of the State in their government, the Legislature further declares that the people have a right to be assured that the financial interests of holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this act shall be liberally construed to promote complete disclosure. 65 P.S. 401. First Class Township Code: § 55703. Compensation. Each township commissioner shall receive a salary of not more than eight hundred dollars per year in townships having a population of less than four thousand, not more than twelve hundred dollars per year in townships having a population of four thousand and more but less than ten thousand, not more than fifteen hundred dollars per year in townships having a population of ten thousand and more but less than fifteen thousand, not more than twenty -four hundred dollars in townships having a population of not less than fifteen thousand and not more than twenty -five thousand, and not more than three thousand dollars in townships having a population in excess of twenty -five thousand. Such salaries shall be payable monthly or quarterly for the duties imposed by the provisions of this act. 53 P.S. 55703. Leslie J. Mlakar, Esquire June 19, 1984 Page 3 § 55603. Compensation. Elected officers of townships shall receive such salary, compensation or emoluments of office as may from time to time be fixed by ordinance of the township in accordance with provisions of section 703. Any change in salary, compensation or emoluments of office shall become effective at the beginning of the next term of the elected officer. Appointed officers and employes of the township shall receive such compensation for their services as the township commissioners shall prescribe. 53 P.S. 55603. § 56801. Power to make contracts. Townships may make contracts for lawful purposes and for the purpose of carrying into execution the provisions of this act and the laws of the Commonwealth. 53 P.S. 56801. § 56523. Insurance. To make contracts with any fire insurance company, association or exchange, including mutual companies duly authorized by law to transact insurance business in the commonwealth, insuring any building or property of the township; to make contracts with any insurance company insuring any public liability of the township; to appropriate such amount as may be necessary to secure insurance or compensation for volunteer firemen of companies duly recognized by the township by motion or resolution, killed or injured while going to or returning or attending fires; to make contracts of insurance with any insurance company, association or exchange authorized to transact business in this Commonwealth insuring township employes or any class or classes thereof under a policy or policies of insurance covering workmen's compensation, life, health or accident insurance, and to contract with any such company granting annuities or pensions for the pensioning of such employes, and to agree to pay part or all of the premiums or charges for carrying such contracts, and to appropriate moneys from the township treasury for such purposes. 53 P.S. 56523. Leslie J. Mlakar, Esquire June 19, 1984 Page 4 § 56811. Penalty for personal interest in contracts. Except as otherwise provided in this act, no township official, either elected or appointed, who knows or who by the exercise of reasonable diligence could know, shall be interested to any appreciable degree, either directly or indirectly, in any contract for the sale or furnishing of any supplies or materials for the use of the township or for any work to be done for such township involving the expenditure by the township of more than three hundred dollars in any year, but this limitation shall not apply to cases where such officer or appointee of the township is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction and in which he cannot be possibly benefitted thereby, either financially or otherwise. But in the case of a commissioner, if he knows that he is within the exception just mentioned, he shall so inform the commissioners and shall refrain from voting on the expenditure or any ordinance relating thereto and shall in no manner participate therein. Any official or appointee who shall knowingly violate the provisions of this section shall be subject to surcharge to the extent of the damage shown to be thereby sustained by the township, to ouster from office, and shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced to pay a fine not exceeding five hundred dollars. 53 P.S. 56811. § 58502. General repeal; acts saved from repeal. All other acts and parts of acts inconsistent with, supplied by or appertaining to the - subject matter covered by this act are repealed. It is the intention that this act shall furnish a complete and exclusive system for the government and regulation of townships of the first class, except as to the several matters enumerated in section 103 of this act. This act shall not repeal or modify any of the provisions of the Public Utility Law, nor any law, enforcement of which is vested in the Department of Health or the Sanitary Water Board, or the provisions of any law, the enforcement of which is vested in the Department of Forests and Waters or the Water and Power Resources Board. 53 P.S. 58502. Leslie J. Mlakar, Esquire June 19, 1984 Page 5 Insurance Code § 535 Group insurance authorized; state and municipal officers, employes and dependents; deductions from wages The Commonwealth of Pennsylvania, or any department or division thereof, and any county, city, borough, incorporated town, township, school district, vocational school district or institution district may and are hereby specifically authorized 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 elected or appointed officers and employes or any class or classes thereof, or their 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 proper officer, agency, or board or commission of any of the above political divisions or subdivisions, having authority to enter into such contracts of insurance, are hereby authorized, enabled and permitted to deduct from the officer's or employe's pay, salary or compensation, such part of the premium as is payable by the officer or employee and as may be so authorized by the officer or employe in writing. 40 P.S. 535. § 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 insuring at least ten employes of such employer for the benefit of persons other than the Leslie J. Mlakar, Esquire June 19, 1984 Page 6 employer. The term "employes ", as used herein, shall be deemed to include the officers, managers and employes of the employer, the individual proprietor or partnership, the officers, managers and employes of subsidiary or 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 officials. 40 P.S. 756.2. 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 all 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 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 elected or appointed official. 40 P.S. 532.2. Leslie J. Mlakar, Esquire June 19, 1984 Page 7 IV. Discussion: We have already asked and analyzed the question of whether these type of insurance coverages constitute financial gain and whether they are "compensation ". See Krane, 84 -001 and Davis, Request No. 84 -049, Opinion filed on June 19, 1984. We will adopt the analysis in those Opinions as applicable here and move to the last question of whether these coverages are "provided by law" to be paid for the Township. Responding to this question, we agree with Attorney Mlakar's conclusion that you may not participate in the Township's insurance programs and have the Township pay the premiums associated with your participation out of general funds of the Township. If you were to acquire these coverages and the Township were to pay for same (except by way of deduction from the monthly salary payable to you as Commissioner, as Attorney Mlakar suggests), you would be securing financial gain for yourself other than the compensation provided by law in contravention of Section 3(a) of the Ethics Act. We have already analyzed those provisions of the Insurance Code, set forth in Part III above with respect to Second Class Townships (Krane) and Boroughs (Davis). Our analysis in this case is similar. We begin with the premise that the First Class Township Code was intended to be the exclusive mechanism and source of authority for governing such townships. See 53 P.S. 58502 and 53 P.S. 55103 (which did not "save" insurance as a topic or the Insurance Code from repeal upon the reenactment of the First Class Township Code in 1949). As with the Borough Code at issue in Davis, we conclude that this Township Code repealed any reference to the Insurance Code provisions at 40 P.S. 535. The power of such a Township, as is at issue here, to appropriate money to pay for premiums for insurance coverage for you, as Commissioner, must arise from some other source. The Township Code itself contains a general power to contract for insurance but limits the "compensation" allowed for commissioners as well. See 53 P.S. 55703. This limitation, when read in conjunction with the mechanism prescribed in the Township Code (53 P.S. 55603) for increasing the "salary, compensation and emoluments of office" as may be fixed by ordinance, evidences the intent of the Legislature to limit and fix such payments. Particularly in the absence of any Ordinance duly passed and prospectively effective as required by 53 P.S. 55603 which would grant these insurance coverages paid for by the Township, it cannot be said that you, as Commissioner, can simply be added or ask to be added to these policies as a matter of policy or practice. Leslie J. Mlakar, Esquire June 19, 1984 Page 8 We do not, by this statement, imply that Commissioners such as yourself can grant themselves this coverage in the event of the passage of a properly passed and prospectively applied Ordinance. Indeed, we question the reliance upon the authority of 40 P.S. 532.2 and 756.2 as the basis for the Township's payment of premiums for your coverage. While these coverages are within the scope of compensation they are not clearly provided by law to be paid for by the Township. As such, our conclusion is, consistent with Attorney Mlakar's advice to you, that you must refrain from using your public office to secure the payment of premiums associated with these insurance benefits by the Township. V. Conclusion: As Commissioner, you cannot receive or secure for yourself, through the use of your office, compensation -- whether considered monthly payment, salary or the value of these insurance premiums paid for by the Township -- in excess of the compensation allowed and limited by law and duly enacted ordinance. Section 3(a) of the Ethics Act prohibits the use of your public office to secure this financial gain beyond this limit because it is compensation and not authorized by law. As Commissioner, you could participate in these insurance programs without violation of the Ethics Act as long as these limitations on the compensation provided by law are not exceeded. 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. Finally, any person request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the opinion requires reconsideration. SSC /rdp This letter is a public record and will be made available as such.