HomeMy WebLinkAbout419 BerryMs. Esther Berry
1313 6th Avenue
Beaver Falls, PA 15010
Re: 84 -154 -C
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
September 17, 1985
Order No. 419
Dear Ms. Berry:
The State Ethics Commission has received a complaint regarding you and a
possible violation of Act 170 of 1978. The Commission has now completed its
investigation. The individual allegations, conclusions, and findings on which
those conclusions are based are as follows:
I. Allegation: That you, a Councilmember for the City of Beaver Falls,
violated Section 3(a) of the Ethics Act, 65 P.S. 403(a), by having the city
pay for a hospitalization /medical plan and life insurance policy in which you
participate.
A. Findings:
1. You have served as a city councilmember of Beaver Falls since January,
1982 and, as such, are subject to the Ethics Act (Act 170 - 1978).
2. You state that you were not aware that you were eligible for health care
coverage until you were asked to sign the forms.
3. The city continues paying for an insurance policy on your life.
4. According to the city clerk, officials are automatically added to the
hospitalization and life insurance plans when they assume office.
5. The city auditor acknowledges that he was aware the city paid for borough
officials participation in life and hospitalization plans but never questioned
it.
Ms. Esther Berry
- Page 2
September 17, 1985
6. City council took the following actions relating to insurance:
a. Ordinance #975 passed by council Av l 13, 1951 and signed by Mayor
Edward C. Corcoran, authorized contracts with insurance companies
insuring the employees cf the City of Beaver Falls under policies for
group insurance covering life, health and accident insurance and
agreed that the borough could pay part of the premirnums. This
ordinance was based on Section 2403 of the Third Class City Law as
amended May 22, 1933 which authorized council to contract with
insurance companies insuring its employees under group insurance
policies for life, health, or accident insurance.
b. This ordinance authorized the city to contract for group life
insurance for its employees with Sun Life Assurance Company of
Canada Zurich General Accident and Liability Insurance Company,
LTD, insuring its employees under a group, health and accident
policy.
c. The city was authorized to pay approximately 2/3 of the premiums or
charges for such contracts but this payment was not to exceed $7 per
month for each employee.
7. The council also approved an ordinance in. 1976. This ordinance involved
changes in compensation, expenses, bonds and organization of the police
department but did not affect Ordinance #975, The 1976 ordinance did not deal
with life insurance or hospitalization benefits.
8. The city has paid premiums for your participation in the life insurance
program as follows:
a. From February, 1983 through January, 1984
b. From February, 1984 through September, 1984
c. From October, 1984 through September, 1985
$ 96.00
$ 72.00
$108.00
9. The total cost to the city for your participation in the life insurance
program from February, 1983 to September, 1985 was $276.00.
10. The city has paid the following premiums for your particiation in the
hospitalization program from:
a. February, 1982 through January, 1983 at $55.41 per month. $664.92
b. February, 1983 through January, 1984 at $62.91 per month. $754.92
c. February, 1984 through October, 1984 at $72.90 per month. $656.10
d. November, 1984 through September, 1985 at $79.40 per month. $873.40
Ms. Esther Berry
- Page 3
September 17, 1985
11. The total premiums paid by the city for your hospitalization program from
February, 1982 through September, 1985 was $2,949.34.
B. Discussion: As an elected member of city council, you are a public
official as that term is defined in the State Ethics Act. 65 P.S. §401 et.
seq. As such, your conduct must conform to the requirements thereof. Boyle,
80 -020.
The Ethics Act provides, in part, that:
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).
Within this provision of law, this Commission has determined that a public
official may not use his office to approve, obtain, accept or otherwise
receive financial gain other than his compensation provided by law. This
Commission has also held, on a number of occasions, that insurance coverage of
the type herein involved is, in fact, financial gain. See Krane, 84 -001;
Cowie, 84 -010; Domalakes, 85 -010. See also Conrad v. Township of Exeter et.
al., 76 Berks 7, D &C 3d (1983).
The question to be resolved, therefore, is whether this insurance
coverage is compensation provided by law. For this answer we, must look to
the Third Class City Code.
The Code provides that:
§36016. Salaries
Councilmen shall receive for their services during
their term of service annual salaries, to be fixed by
ordinance, payable in monthly or semimonthly instalments (sic).
Councils may, by the ordinance fixing said salaries,
provide for the assessment and retention therefrom of
reasonable fines for absence from regular or special
meetings of council or councilmanic committees. The
salary paid to any councilman shall not be less than two
hundred and fifty dollars per year.
Ms. Esther Berry
-Page 4
The compensation to be received by councilmen shall not
be increased or diminished after their election; but
succeeding counci "s may change all compensation, said
change to take effect a::. to councilmen taking office at
least six months after the passage of the ordinance
providing for such change. 53 P.S. §36016
The Code also provides:
§37403. Specific powers
September 17, 1985
In addition to other powers granted by this pct, the
council of each city shall have power, by ordinance:
To make contracts of insurance with any insurance
company, or nonprofit hospitalization corporation, or
nonprofit medical service corporation, authorized to
transact insurance business within the Commonwealth,
insuring its elected or appointed officers, officials and
employes, cr any class or classes thereof, or their
dependents, under a policy or policies of group insurance
covering life, health, hospitalization, medical service,
or accident insurance. 53 P.S. §37403
The Code clearly provides a mechanism fo:• the purchase of insurance of
the type here in question for elected or appointed officials of cities of the
third class. The Code also sets forth a method by which the salary of council
members is to be fixed.
Our reading of the law, however, also clearly indicates that when a
public official has the power to fix compensation for himself, the mechanism
provided for such power must be complied with strictly.
While it cannot be questioned that the General Assembly has the inherent
power to declare the public policy of the Commonwealth and may confer upon
members of council of municipalities power to appoint themselves to membership
upon boards of authorities and to fix their own salaries as it has been done
here, such grant of power must be strictly construed and strictly applied.
Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, (1941); See also
Warminister Township appeal, 56 D &C 2d 99, (1971); Genkinger v. New Castle,
368 Pa. 547, (1951); McCutcheon v. State Ethics Commission, 77 Commw. 529,
(1981). Both the salary of councilmen as well as the purchase of insurance
benefits for officials must be authorized by a duly enacted city ordinance.
There is no other mechanism through which these benefits may be obtained by
such officials. Here, while there is an ordinance authorizing such benefits
for employees, there is no counterpart for elected or appointed officials.
The officials herein involved are not employees and, therefore, may not
Ms. Esther Berry
- Page 5
receive their benefits pursuant to that ordinance. See Domalakes, 85 -010;
Mlakar, 84 -011. The code provisions regarding the purchase of insurance
clearly and without doubt distinguishes between officials, officers and
employees. This distinction may not he ignored.
We believe that the benefits here in question must be authorized by duly
enacted ordinance in order to qualify as compensation provided by law. The
requirement of such an ordinance is not just a technicality but a provision of
law which must be strictly applied. Richland Township v. Breiner, 8 Bucks
107, (158) Emert et. al. v. Hatfield Township, 74 Montg. 249 (1957).
Your receipt of these benefits, thus, constitutes a violation of Section
3(a) of the State Ethics Act as they were financial gain other than
compensation provided by law and received through your public office.
The Ethics Act provides that:
Section 9. Penalties.
(a) Any person who violates the provisions of Section 3(a)
and (b) is guilty of a felony and shall be fined not more
than $10,000 or imprisoned for not more than five years,
or be both fined and imprisoned. 65 P.S. 409(a).
(c) Any person who obtains financial gain from violating
any provision of this act, in addition to any other
penalty provided by law, shall pay into the State
Treasury a sum of money equal to three times the
financial gai n resulting from such vi olation. 65 P.S.
409(c).
September 17, 1985
Additionally, the Commission may make a recommendation for prosecution by
the appropriate prosecuting authority unless the person who is in violation of
the Act returns any financial gain obtained in violation of the Act. See
McCutcheon /Hoak v. State Ethics Commission, 77 Pa. Commw. 529, 466 A.2d 283,
(1982). We believe that this result should be reached in the instant matter.
We will not impose the treble damages authorized in Section 9(c).
The amount of financial gain obtained in violation of the Ethics Act is
$3,225.34 (See findings No. 9 and 11).
C. Conclusion: You violated the State Ethics Act when you received, at the
city's expense, medical, hospitalization and life insurance as a city
councilperson, without such benefits being authorized by city ordinance.
Ms. Esther Berry
- Page 6
September 17, 1985
The financial gain realized therefrom was $3,225.34, the amount paid by
the city for the premium regarding the coverage. Unless, within thirty days
of this Order, you remit a check to the State Ethics Commission in the amount
of $3,225.34 made payable to the City of Beaver Falls, we will refer this
matter to the appropriate law enforcement offical.
Upon the receipt of said check, we will close our files in this matter.
Our files in this case w i l l remain confidential in accordance with
Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will be made available as a public document 15 days after service (defined
as mailing) unless you file documentation with the Commission which justifies
reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code
2.38, During this 15 -day period, no one, including the Respondent unless he
waives his right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Any person who violates the confidentiality of a Commission proceeding
is guilty of a misdemeanor and shall be fined not more than $1,000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
JJC /sfb
By the Co issio
erbert B. Conner
Chai rman