Loading...
HomeMy WebLinkAbout85-021 DiceBruce E. Dice, Esquire 795 -20 Pine Valley Drive Pittsburgh, PA 15239 Re: Insurance and Hospitalization Benefits, Municipal Authority Members, Statement of Financial Interests Dear Mr. Dice: This responds to your letter of August 23, 1985, wherein you requested the opinion of the State Ethics Commission. I. Issues: Whether municipal authority members may receive various insurance benefits from the authority without violating the State Ethics Act. Whether the receipt of such insurance benefits would obligate the members of the municipal authority to file Statements of Financial Interests. II. Factual Basis for Determination: You serve as Solicitor for the Plum Borough Water Authority, a municipal authority organized under the Pennsylvania Municipal Authorities Act. The members of the authority are appointed officials who receive no compensation. You have asked whether these authority members may, within the purview of the State Ethics Act, receive insurance or hospitalization benefits at the authority's expense. You have also asked whether the receipt of such benefits would, in any way, obligate the members of the authority to file a Statement of Financial Interests. III. Discussion: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION October 23, 1985 85 -021 The State Ethics Commission has on a number of occasions addressed the propriety of a public official's receipt of pension and insurance type benefits within the provisions of the State Ethics Act. Krane, 84 -001; Cowie, 84 -010; Domalakes, 85 -010; McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529, 466 A.2d 283 (1983). Bruce E. Dice, Esquire October 23, 1985 Page 2 Our analysis of this issue generally has been based upon Section 3(a) of the State Ethics Act and our interpretation thereof. That Section provides as follows: 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). A public official may not, under this provision of law, use or otherwise obtain through his public position financial gain other than the compensation provided by law. As part of such an analysis, it must be determined whether the receipt of such insurance benefits, by a public official, constitutes "financial gain" and whether it's part of the compensation provided by law. We have already determined in a number of opinions that pension benefits, life insurance, hospitalization and medical insurance benefits, in fact, are financial gain. See Krane, 84 -001; Cowie, 84 -010; and McCutcheon v. State Ethics Commission, supra. In order to determine whether these benefits are part of the compensation provided by law, we must look to the statutory authority under which the municipal authority was created. The Pennsylvania Municipal Authority Act provides, in part, that the authority may: Make contracts of insurance with any insurance company, association or exchange authorized to transact business in the Commonwealth of Pennsylvania, insuring its employees and appointed officers and officials under an individual policy or policies of insurance covering life, accidental death and dismemberment, and disability income or under a policy or policies of group insurance covering life, accidental death and dismemberment, and disability income provided that statutory requirements for such group insurance, including but not limited to requisite number of el i gi l bl a employees and/or appointed officers and officials, are met as provided for in ... "The Insurance Company Law of 1921. 53 P.S. 306 q. Bruce E. Dice, Esquire October 23, 1985 Page 3 The Act also provides that the authority may: Make contracts with any insurance company, association or exchange or any hospital plan corporation or professional health service corporation authorized to transact business in the Commonwealth of Pennsylvania, insuring or covering its employees and /or their dependents (but not its appointed officers and officials nor their dependents) for hospital and /or medical benefits; and to contract for its employees (but not its appointed officers and officials) with any insurance company, association or exchange authorized to transact business in the Commonwealth of Pennsylvania granting annuities or to establish, maintain, operate and administer its own pension plan covering its employees (but not its appointed officers and officials).. 53 P.S. 306 q. These provisions, which we believe to be controlling, clearly set forth that authority members may receive life, accidental death, disability, etc. insurance, but may not receive hospitalization or medical -type benefits. Based upon our previous rulings we, thus, believe that the receipt of the latter of these benefits would constitute a financial gain other than the compensation provided by law. We note that you reference to Section 756.2 of the Insurance Code and the poss- ibility that said provision of law may be controlling. See, 40 P.S. §756.2. We have already addressed the applicability of this provision of law to municipal codes and have determined that the specific municipal code provisions are controlling. See, Krane, 84 -001. We now address the second question raised in your request. You have asked whether the receipt of the allowable insurance benefits will obligate the authority members to file Statements of Financial Interests under the Ethics Act. Your concern in this respect, is founded we assume, upon the definition of "public official" as set forth in the State Ethics Act. The definition provides as follows: Section 2. Definitions. "Public official." Any elected or appointed official in the Executive, Legislative or Judicial Branch of the State or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement Bruce E. Dice, Esquire October 23, 1985 Page 4 for personal expense, or to otherwise exercise the power of the State or any political subdivision thereof. "Public official" shall not include any appointed official who receives no compensation other than reimbursement for actual expenses. 65 P.S. 402. While you do not specifically set forth your concern, it appears as though your question regards whether the receipt of such insurance benefits would constitute compensation which would remove a public official from the above exemption, thereby requiring a filing of the Statement of Financial Interests. We need not address this particular issue further because of the Supreme Court of Pennsylvania ruling in Snider v. Thornburgh, 469 Pa. 159, 436 A.2d 593, (1981). In Snider, the court found the definitional phrase "public official" unconstitutional insofar as it operated to exempt appointed /non - compensated officials from Ethics Act coverage. As a result, the Court stated that the exclusion of appointed, non - compensated officials from the definition of public officials is removed. Thus the only question to be resolved is whether, under the Ethics Act as it now exists, municipal authority members are required to file a Statement of Financial Interests. The Act sets forth the relevant filing requirements as follows: Section 4. Statement of financial interests required to be filed. (d) No public official shall be allowed to take the oath of office or enter or continue upon his duties, nor shall he receive compensation from public funds, unless he has filed a statement of financial interests with the commission as required by this act. 65 P.S. 404(d). Judicial decisions have also firmly established that the filing requirement of the Act is equally applicable to public employees and public officials. See Kremer v. State Ethics Commission, 56 Pa. Commw. 160, 424 A.2d 968, at 969 (1981); reversed on other grounds Pa. , 469 A.2d 593, (1983). The term public official must now be defined as follows: Any elected or appointed official in the Executive, Legislative or Judicial Branch of the State or any political subdivision thereof, provided that it shall not Bruce E. Dice, Esquire October 23, 1985 Page 5 include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense, or to otherwise exercise the power of the State or any political subdivsion thereof. 65 P.S. §402 (as modified by Snider v. Thornburgh, Supra.) In order to determine whether municipal authority members are public officials within this definition, it must be determined whether or not such authorities are merely advisory boards that have no power to expend public funds or otherwise exercise the power of the State or political subdivisions. Municipal authorities are clearly independent agencies that are part of the Commonwealth. Commonwealth v. Erie Metropolitan Transit Authority, 281 A.2d 882, 444 Pa. 345, (1971). Appointed members of such agencies are, without doubt, "public officials." One need look no further than the powers and duties of said authorities in order to determine that they are more than advisory in nature and do, in fact, have the power to exercise the power of the State. See, 53 P.S. §306. We will not here outline all of these powers as they are clearly delineated in the Municipal Authorities Act. Indeed, a number of judicial pronouncements have al ready held such authority members to be public - ._officials. Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, 22 A.2d 686, (1941). In Forney v. State Ethics Commission, 56 Pa. Comm. 539, 425 A.2d 66, (1981), it was clearly established that such members were public officials within the purview of the Ethics Act. Except for the then existing exemption, all authority members would have been required to file the Statement of Financial Interests. Based upon the foregoing, we now find that members of municipal authorities are public officials within the purview of the State Ethics Act and are, therefore, required to file Statements of Financial Interests. In order to accord uniform treatment to all affected authority members, we will apply this determination prospectively. In accordance with this, we will not require the filings for such members until May 1 , 1986. This w i l l afford the affected officials ample opportunity to be notified of our determination in this matter. Additionally, we note that our implementation of the Snider decision may affect other governmental bodies that were not previously covered by the Ethics Act. Bruce E. Dice, Esquire October 23, 1985 Page 6 We will thus, promulgate rules and regulations, in accordance with the law, to establish criteria in determining whether the members of such other governmental bodies are also covered by the filing requirements of the Act. IV. Conclusion: Members of municipal authorities may, within the purview of the State Ethics Act, receive from the authority insurance covering life, accidental death and dismemberment and disability income. They may not receive hospital, or health and medical insurance benefits. Members of municipal authorities are public officials within the definition of that term as set forth in the Act and must, therefore, file a Statement of Financial Interests. Said filing must be effected by May 1, 1986 for the prior calendar year. 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. JJC /sfb By the Commission, HERBE B. CONNER Chai an