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