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HomeMy WebLinkAbout97-013 KaiserSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Linda S. Kaiser, Esquire Senior Vice President Reliance Insurance Three Parkway Philadelphia, PA 19102 -1376 Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt Boyd E. Wolff Julius Uehlein DATE DECIDED: 10/3/97 DATE MAILED: 10/14/97 97 -013 Re: Public Official, Executive -level State Employee, Attorney, Commissioner, Insurance Department, Former Public Official, Employment, Insurance Company, Senior Vice President, General Counsel, Corporate Secretary, Section 3(g), Section 3(i). Dear Ms. Kaiser: This Opinion is issued in response to your advisory request on June 9, 1997. I. ISSUE: Whether the Public Official and Employee Ethics Law imposes any prohibition or restrictions upon the former Insurance Commissioner as to employment as Senior Vice President, General Counsel, and Corporate Secretary for an insurance company. II. FACTUAL BASIS FOR DETERMINATION: You have served as an Insurance Commissioner for Governor Tom Ridge since January, 1995. You resigned from that position effective June 27, 1997 to accept employment in the private sector. Effective July 7, 1997, you began employment as Senior Vice President, General Counsel, and Corporate Secretary with Reliance Insurance Company (Reliance). The position of General Counsel reports to the General Counsel of Reliance Kaiser, 97 -013 October 7, 1997 Page 2 Group Holding, Inc. and oversees a staff of lawyers, paraprofessionals and support staff. As General Counsel, you would be responsible for rendering legal advice and representation to Reliance and its affiliates on a variety of matters, including the interpretation of Pennsylvania insurance laws, filings with the Insurance Department and examinations by the Department. Although this matter was scheduled for the public meeting on August 15, 1997, we granted a continuance at your request. Since you were unable to appear at that meeting on October 3, 1997, you submitted a letter dated September 30, 1997 in which you provided the following analysis. Based upon the holding in PUC Bar Assn. v. Thornburgh, infra, you argue that the Ethics Law does not apply to your activities as an attorney. You acknowledge that you as a lawyer are subject to the Pennsylvania Rules of Professional Conduct. You cite Rules 1.11 and 1.9 as applicable to your situation. Rule 1.11 entitled "Successive Government and Private Employment" prohibits a lawyer from representing a private client as to any matter in which the lawyer personally and substantially participated as a public official /public employee, unless the government agency consents after consultation. Rule 1.9 entitled "Conflict of Interest, Former Clients" prohibits a lawyer from using information relating to a former representation of a client to the disadvantage of that client. If a situation would arise where those Rules would have application, you will assign the matter to a subordinate who will report directly to Reliance officers or directors. Such matters will be "screened" so there will be no discussion with you. In addition, you will instruct Reliance employees that the applicable files be labeled appropriately to reflect the screening and that the Pennsylvania Insurance Department be notified of such screening to ascertain compliance. Lastly, you have consulted with the Past Chair of the ABA Standing Committee on Ethics and Professional Responsibility to ensure that you are fulfilling your ethical obligations to your former client. You request an advisory as to any restrictions which the Ethics Law may impose upon your employment as an attorney with Reliance Insurance Company and specifically as to the prohibition upon a former public official representing a person for compensation before his former governmental body for a period of one year after termination of service. III. DISCUSSION: As the Insurance Commissioner for the Department of Insurance, you were considered a "public official" and "executive -level State employee" subject to the Public Official and Employee Ethics Law ( "Ethics Law ") and the Regulations of the State Ethics Commission. See, 65 P.S. §402; 51 Pa. Code §11.1. Upon termination of public service, you became a former public official and a former executive -level State employee subject to the restrictions of Section 3(g) and Section 3(i) of the Public Official and Employee Ethics Law. Section 3(i) restricts former executive -level State employees as follows: Kaiser, 97 -013 October 7, 1997 Page 3 Section 3. Restricted Activities (i) No former executive -level State employee may for a period of two years from the time that he terminates his State employment be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participates in recruiting to the Commonwealth of Pennsylvania or that he actively participated in inducing to open a new plant, facility or branch in the Commonwealth or that he actively participated in inducing to expand an existent plant or facility within the Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. Section 3(i) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 3(i) apply even where the business relationship is indirect, such as where the business in question is a client of the new employer, rather than the new employer itself. See, Confidential Opinion No. 94 -011. However, Section 3(i) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for Reliance provided and conditioned upon the assumptions that you did not actively participate in recruiting Reliance to Pennsylvania, and that you did not actively participate in recruiting or inducing Reliance to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to Reliance. Turning to Section 3(g) of the Ethics Law, although this provision does not prohibit a former public official /public employee from accepting a position of employment, it does restrict the public official /public employee with regard ` to "representing" a "person" before "the governmental body with which he has been associated": Section 3. Restricted activities. (g) No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. §403(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Law as follows: Kaiser, 97 -013 October 7, 1997 Page 4 Section 2. Definitions. "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 P.S. §402. The term "Person" is very broadly defined. It includes the former public employee himself, Confidential Opinion 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official /employee; (4) participating in any matters before the - former governmental body on behalf of a person; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 3(g) also generally prohibits the inclusion of the name of a former public official /public employee on invoices submitted by his new employer to the former governmental body, even though the invoices pertain to a contract that existed prior to termination of public service, Shay, Opinion 91 -012. However, if such a pre- existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams /Webster, Opinion 95- 011 A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the public official /public employee may not be identified on documents submitted to the former governmental body. The public official /public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, Kaiser, 97 -013 October 7, 1997 Page 5 however, the activity in this respect should not be revealed to the former governmental body. The Ethics Law would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Section 3(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R. The governmental body with which you were associated upon termination of public service would be the Insurance Department in its entirety. Therefore, for the first year after termination of service with the Insurance Department, Section 3(g) of the Ethics Law would apply and restrict "representation" of "persons" before the Insurance Department. However, because you have accepted the position of General Counsel, as well as Senior Vice President and Corporate Secretary, the restrictions of the Ethics Law as noted above are inapplicable to those activities which constitute the practice of law by you as an attorney. Pennsylvania Public Utility Bar Association v. Thornburgh, 434 A.2d 1327, 62 Pa. Commw. Ct. 88 (1981), affirmed per curiam 450 A.2d 613, 498 Pa. 589 (1982) dealt with the applicability of Section 3(e) (now Section 3(g)) of the Ethics Act, Act 170 of 1978, to attorneys in the regulation of the practice of law. Commonwealth Court held that Section 3(e) of the Ethics Act of 1978 was an impermissible intrusion - upon the Supreme Court's authority to regulate an attorney's conduct. We have applied this decision to mean that there are no prohibitions of Section 3(g) of the Ethics Law upon the activities of an attorney as to conduct that constitutes the practice of law. Spataro, Opinion 89 -009. Commonwealth Court in Pennsylvania Public Utility Commission Bar Association, supra, indicated that any activity in which the attorney purports to render professional services to a client may only be regulated by the Supreme Court. Therefore, insofar as your conduct before the Insurance Department would constitute the practice of law, Section 3(g) of the Ethics Law cannot be applied to restrict such activities. If the activities you intend to undertake before the Insurance Department do not fall within the category of the "practice of law," the restrictions of Section 3(g) of the Ethics Law would be applicable. An activity which would not constitute the "practice of law" or would not be undertaken in the capacity as lawyer - client, is lobbying. However, assuming the activities you undertake are in the capacity of lawyer - client, Section 3(g) of the Ethics Law, pursuant to the mandate of the Supreme Court's ruling, would be inapplicable. Kaiser, 97 -013 October 7, 1997 Page 6 In any event, you should be advised that your activity, even if Section 3(g) of the Ethics Law were to be applicable, would not regulate your conduct, except with respect to the Insurance Department, your former governmental body. Therefore, any representation which you might undertake with respect to a client or employer before any entity other than the Insurance Department would not be restricted by Section 3(g) of the Ethics Law in any event. Based upon the facts which have been submitted, this Opinion has addressed the applicability of Sections 3(g) and 3(i) only. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 3(a) of the Ethics Law. Further, you are advised that Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; the propriety of any other statute, code, regulation, or ordinance other than the Ethics Law has been considered. Specifically not addressed in this Opinion is the applicability of the Rules of Professional Conduct, Governor's Code of Conduct or the State Adverse Interest Act. IV. CONCLUSION: Upon termination of service with the Insurance Department, the Insurance Commissioner became a former public official and a former executive -level State employee subject to the restrictions of Section 3(g) and Section 3(i) of the Ethics Law. Under Section 3(i) of the Ethics Law, the Commissioner would not be prohibited from being employed by, receiving compensation from, assisting, or acting in a representative capacity for the new employer based upon the assumptions that she dice not actively participate in recruiting the new employer to Pennsylvania, and that she did not actively participate in recruiting or inducing the new employer to open or expand a plant, facility, or branch in Pennsylvania through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. With regard to Section 3(g), the former Commissioner is restricted for a period of one year from representing her new employer before the Insurance Department, her former governmental body. Section 3(g) would not apply to the extent that the former Commissioner is representing her new employer in an attorney /client relationship. The propriety of the proposed conduct has only been addressed under the Ethics Law. Further, with service terminated, the Ethics Law would require that a Statement of Financial Interests be filed by no later than May 1 of the year after termination of service. Pursuant to Section 7(10), the person who acts in good faith on this opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This Opinion is a public record and will be made available as such. Kaiser, 97 -013 October 7, 1997 Page 7 Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. B the Commission, antippu6 Daneen E. Reese Chair