HomeMy WebLinkAbout564 LudwickiMr. Chester Ludwicki
11279 Center Highway
North Huntingdon, PA 15642
Re: 87 -010 -C
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
Order No. 564
DECIDED: May, 26, 1987
MAILED: June 2, 1987
Dear Mr. Ludwicki:
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:
A. Allegation: That you, North Huntingdon Township Commissioner, violated
Section 3(a) of the Ethics Act which prohibits a public employee's or public
official's use of office or confidential information gained through that
office to obtain financial gain, in that you authorized the township to pay,
from township funds, dental and life insurance premiums on your behalf.
B. Findings:
1. You have served as a commissioner of North Huntingdon Township, a first
class township, since at least January, 1985. As a public official you are
subject to the provisions of the State Ethics Act.
2. The North Huntingdon Township Commissioners have been receiving dental and
life insurance coverage at township expense since at least 1979.
3. Minutes of the North Huntingdon Township Commissioners' meeting of
February 14, 1979 confirms that Resolution 103 of 1979 was unanimously passed
which authorized township commissioners to be included in a dental care plan
of Delta Central of Pennsylvania Program Pre -paid Dental Care, Plan Blue.
a. You were not a township commissioner at this time.
4. Township records confirm the fol,Jowing amounts paid on your behalf for
life and dental insurance premiums to the Municipal Employers Insurance
Trust:
a. January through November, 1985 - $49.85 /month (39.90 dental, $9.45
term life, $.50 service charge). Total $548.25.
Mr. Chester Ludwicki
Page 2
b. December, 1985 through September, 1986
$10.35 term life, $.50 service charge). Total07$477.63(�42.22 dental,
5. You voluntarily discontinued your participation in the plan in September,
1986.
6. You stated that you were elected in 1982 but did not join the plan until
1984. When there was an indication of problems with insurance coverage you
informed Township Manager, Robert Arch, to terminate your coverage. You feel
as though commissioners are entitled to the coverage because if something
happened to them on township time or in a. township vehicle. You also stated
you were not aware of the restrictions with insurance coverage and that you
would be willing to make restitution. You added that Solicitor Cole told you
to wait until a ruling was received from the State Ethics Commission before
dropping out when Coles' October, 1985 letter came out.
7 . By correspondence dated October 17, 1985, Solicitor Thomas Coles informed
the board of commissioners of insurance benefits for township commissioners as
follows:
a. I am sure you have all read your Legislative Bulletin dated October
7, 1985 from the Pennsylvania. State Association of Township
Commissioners, but on the reverse side the matter involving House
Bill 1296 was addressed. This House Bill involves the issue of
insurance benefits of Township Commissioners.
prevent legal actions against Commissioners who Hhave Bill
received6 will
insurance benefits at Township expense prior to December, 1984. I am
not certain what that means with reference to after December, 1984.
The State Ethics Commission has recently taken action which mandated
repayment of insurance premiums in cases where Commissioners had been
receiving i- nsurance benefits at Township expense. While not
authorizing specific benefits for Commissioners, House Bill 1296 does
prohibit prosecution of local officials. Obviously, the House action
differs very significantly from a Bill introduced in the Senate,
Senate Bill 602, which would specifically authorize insurance
benefits for Commissioners at Township expense. Senate Bill 602 has
been reported from the Senate Local Goyernment Committee, chaired by
Senator Frank Pecora (R Allegheny) and is currently in the Senate
Rules Committee.
Obviously the above is a very tricky, complex and difficult
situation and one which I would be pleased to discuss with the Board
of Commissioners at its convenience.
Mr. Chester Ludwicki
Page 3
8. You agreed to remimburse North Huntingdon Township for insurance costs in
three installments:
a. June, 1987 - $341.99.
b. September, 1987 - $341.99.
c. December, 1987 - $342.00.
Total: $1,025.88
9. The township manager will provide verification of this payment to the
State Ethics Commission.
B. Discussion: As a first class township commissioner, you are a public
official within the purview of the State Ethics Act. 65 P.S. §402; Dodds,
84 -011; Hanlon, 400 -R. As such, your conduct must conform to the requirements
of the State Ethics Act.
The Ethics Act 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).
The State Ethics Commission has previously reviewed the question of
whether these types of insurance coverages constituteefinancial gain within
the above provision of law. See Krane, 84 -001 and Davis, 84 -012. In Krane
and Davis, the Commission determined that such benefits constituted financial
gain. See also; Synoski v. Hazel Township, Pa. Commw. Ct. , 500 A.2d
1282, (1985); In Re Appeal of the Auditors Report of Muncy Creek Township,
Pa. Commw. Ct. , 520 A.2d 1241, (1987).
We will adopt the analysis in those Opinions as applicable here and move
to the question of whether these coverages are "provided by Law" to be paid
for by the township.
We have previously considered this issue specifically in relation to
First Class Township Commissioners., See Hanlon, 400 -R; Dombroski, 401 -R.
Mr. Chester Ludwicki
Page 4
The First Class Township Code provides, in part, authorizes
Commissioners:
...to make contracts with any insurance company, so
authorized, insuring any public liability of the township,
and to make contracts of insurance with any insurance
company, or non - profit hospitalization corporation, or
non - profit medical service corporation, authorized to
transact business within the Commonwealth, insuring its
employes, or any class or classes thereof, or their
dependents, under a policy or policies of group insurance
covering life, health, hospitalization, medical and
surgical service, or accident insurance.
• •
...As used in this clause, the terms "employe" and
"employes" shall include township commissioners, if the
commissioner works on a full -time basis in his capacity as
superintendent, road master, laborer or secretary for the
township. Such commissioners eligible for inclusion in
such plans must meet the same requirements, including
hours of employment, as other full -time employes of the
township. Other commissioners shall be eligible for
inclusion under a policy or policies of group insurance
covering life, health, hospitalization, medical and
surgical service or accident insurance only if they pay
their pro rata share of the premiums. Such insurance
shall be uniformly applicable to those covered and shall
not give eligibility preference to, or improperly
discriminate in favor, of, commissioners. :As used in this
clause, the terms "employe" and "employes" exclude
independent contractors and all township engineers and
solicitors. Any life, health, hospitalization, medical
service or accident insurance coverage contract entered
into by a township between January 1, 1959, and December
31, 1984, that includes or provides c,pverage for
commissioners shall not be void or unlawful solely because
of such inclusion of commissioners nor shall any penalty,
assessment, surcharge or disciplinary action of any kind
occur as a result of such participation by such
commissioners; and insurance benefits payable to insureds
or their beneficiaries arising out of or on account of
deaths, injuries, acciderfts or illnesses occurring prior
to the effective date of this amendatory act shall remain
the property of the insureds or their beneficiaries. 53
P.S. §56563.
Mr. Chester Ludwicki
Page 5
In our previous rulings we concluded that a commissioner in a township of
the first class could not receive or secure for himself, through his office,
compensation, whether considered monthly payments, salary or the value of
insurance premiums paid for by the township in excess of the compensation
allowed and limited by law.
The township code provides that township commissioners may receive
certain health, medical, life and insurance benefits if they are also employed
by the township in certain capacities. Additionally, the amended First Class
Township Code provides that any insurance benefits which a commissioner
received between the years 1959 and December 31, 1984, shall not be void and
said commissioner shall not be charged, or assessed any other penalty as a
result of his participation in that plan.
The "amnesty" provision of Act 82, however, does not go beyond December
31, 1984. As a result, any benefits paid after that period of time on behalf
of township commissioners could be subject to assessment under the State
Ethics Act. We note, that as a result of the State Ethics Commission
investigation, you have notified the Commission of your intent to reimburse
the township for the premiums for this period of time.
We further note, that even under the law as it currently exists, while
you may have received a finanical gain that was not provided for in the First
Class Township Code, we believe that your receipt of these benefits was not an
intentional violation of the State Ethics Act, but rather based upon the
advice that you have received from various advisors. Good faith receipt of
.such benefits, however, will not alleviate the necessity of a public official
reimbursing his govermental body for the receipt of compensation for which he
was not entitled. See Allegheny County v. Grier, 179 Pa. 639, 36 A. 353
(1879), Kestler Appeal, 66 Pa. Commw. 1, 444 A.2d. 761, (1982).
The amount of township funds expended on your behalf for the benefits
totaled $1,025.88. This Commission has been authorized to afford public
officials who receive a financial gain in violation of the Act the opportunity
to divest themselves of that gain and thereafter take no further action.
McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, (1982); 65 P.S.
§407 9(iii).
We believe that this result is appropriate in the instant situation.
C. Conclusion and Order: As a township commissioner in a township of the
first class, you are a public officta1 subject to the provisions of the State
Ethics Act.
Mr. Chester Ludwicki
Page 6
Your receipt of certain health benefits during the period January, 1985
through April, 1987, at the township's expense, acquired in and through your
public office, was the receipt of a financial gain other than the compensation
provided by law.
The amount of gain received in violation of the Act equaled $1,025.88.
You are hereby ordered to remit payment in that amount to North
Huntingdon Township.
You have arranged to make this restitution in three installments as set
forth in findings and the State Ethics Commission will receive
verification thereof. As such, we will take no further action in this
matter.
Our files in this case will 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).
By the Commission,
A I
G. Sieber Pancoast
Chairman
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