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HomeMy WebLinkAbout616-R WinnMr. Vincent Winn 916 Amelia Avenue Belle Vernon, PA 15012 Re: 86 -121 -C Dear Mr. Winn: TATS' MTHICS COMMISSION 308 FINANCE BUILDING HARRIS3URG, PENNSYLVANIA !7120 ORDER OF THE COMMISSION Order No. 616 -R Date Decided: June 10, 1988 Date Mailed: June 24, 1988 The Ethics Commission has reviewed the allegation(s) that you have violated the Ethics Act, Act 1978 -170. On February 18, 1988, a hearing on the matter was conducted and relevant evidence and testimony was presented. 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 Washington Township Supervisor, violated Section 3(a) of the Ethics Act which prohibits a public employee or public official's use of office or confidential information gained through that office to obtain financial gain by receiving prescription drugs, health insurance and a life insurance policy at the township's expense. A. Findings: 1. You have serves" as a Washington Township Supervisor since January, 1986, and, as such, you are subject to the provisions of the State Ethics Act. 2. You have also served as an elected township auditor for twenty -two years. You resigned as auditor upon being elected to the board of supervisors. 3. Minutes of township reorganization meetings disclose that you have also been appointed township road superintendent. a. Compensation for this position has been set by the township auditors. b. You report to work every morning, review the work with the crew, visit the work site, review the program of the day and plan for the following day. 4. Records of the Washington Township Auditors and Board of Supervisors disclose the following regarding compensation set for the supervisors: Mr. Vincent Winn Page 2 a. January 7, 1986: upervi sors Roadmaster Superi ntendent- lf Road `ec /Treas. b. January 6, 1987: Supervi sors Roadmaster $7.00 per hour while acting in the capacity of a Supervisor and a written explanation of work performed to be submitted before payment is made to the Secretary. $500.00 per month plus road insnections as code permits. - $350.00 per month. Compensation to be 4% on all expenditures - -paid by him. $7.00 per hour while acting in the capacity of a Supervisor and a written explanation of work performed to be submitted before payment is made to the Secretary. $500.00 per month plus road inspections as code permits. Superintendent -- $350.00 per month. of Roads Sec /Treas. Compensation to be $14,750.00 annually.- Sec /Treas. Bond is $125,000.00 and the Assistant Treasurers bond is $12,000.00. 5. Supervisor Ernest Reppert, who also serves as township secretary /treasurer, advised that each year a letter was prepared by the supervisors with compensation requests and sent to the auditors. The auditors would sign the letter indicating their approval and return the letter to the supervi sors. a. Reppert stated that insurance coverage was never discussed, approved or disapproved as part of these letters or approved by the auditory but the insurance accounts were audited i.e., they part of the annual audit and the premiums were paid. b. Your compensation as road superintendent was included in these letters. F'.r. Vincent Vi nn Page 3 c . You participated in the preparation of this letter. 6, records of the Provident Inaemnity Life Insurance Company disclosed the following regarding insurance coverages paid for you by the township while you served as township auditor: a. Coverage was provided by Provident from October, 1974 through September, 1982; the Policy Number was EG -0592- 0272 -1. b. Your coverages included life insurance $3,000, Accidental DerAil. & Dismemberment $3,000, Prescription Drug Co- Payment Plan. c. Premiums were paid on your behalf as follows: 1976: $ 21.39 (3 months) 1977: $ 90.96 1978: $103.14 1979: $105.36 1980: $121.42 1981: $122.88 1982: $112.24 (9 months) Total $677.39 i. On January 29, 1974, memo was sent from Provident Representative Howard Brogan to David McQuillan of the home office of Provident enclosing applications for you and the other auditors. The memo stated, "The township would like to add the auditors to their coverage effective January 7, 1974." Records of the Columbia Life Insurance Company disclosed the following information regarding payments made on your behalf by the township for various ferns of insurance coverage: a. This included both the time you served as auditor and as township supervisor. b. The coverages were effective March 25, 1982. You were covered by Policy Numbers AKME0986 (proscription, dental ;..ad medical) LKSM4718 (life insurance) until you were elected supervise, -. '.n April, 1986, Policy Number AKSM4718 (basic hodical benefits was added). Mr. Vincent Winn Page 1 . Payments were made as follows: Year AKME 0986 1982 $ 419.44 1983 $ 365.97 1984 $ 213.86 1985 $ 263.02 1986 $2,585.64 1987 $ 974.49 AKSM4718 LK3M47 " $ 11.80 $115.00 $129.60 $158.10 $ 65.30 $186.60 $243.63 $ 77.75 Total $ 4fi. $ 4C0.9 $ 343.45 $ 421.12 $2,837.54 $1,295.87 $5,809.29 (To May) 8. Other records of Columbia disclosed the following: a. March 14, 1986 - Enrollment application for you listing occupation az township supervisor -road superintendent. Dependents listed as wife and son. b. April 24, 1986 - Memo from Warren Arleth, Columbia Agent to the *ome office stating to place you on full covers7e,, prescription drugs, life, comprehensive nealth and PH. c. May 1, 1986 - Columbia new business turn-in form reflecting an upgrade in coverage for you, effective April 17, 1986. d. May 7, 1986 - Certificate of Insurance for you noting additional medical coverages and PH for you and your family. e. March 10, 1987 - Letter from Ernest Reppert, Washington Secretary /Treasurer to Columbia requesting a change in coverage from comprehensive to Plan B since you had been fully covered by group insurance through your place of employment. The letter requests refunds of excess premiums. f. April 8, 1987 - Revised Certificate of Insurance for you as a result of the change in coverages. g. April 7, 1987 - Check requisition, Check #18504 to Washington Township in an amount of $1,759.07 refunding premium for AKME0986 only. Mr, Vincent W.i , n Page 5 9. Lane Beaver, Vice - President of Columbia Life Insurance advised that tl.e Plan B is actually a cheaper plan than the full comprehensive plan. He stated that you were added to the full comprehensive in 1986. Plan B makes paynr.t directly to the insured, not the provider. The full comprehensive plan, with expanded coverage, pays the provider. 10, William J. O'Keefe, Special Investigator for the State Ethics Commissions, testified as follows: a. That he interviewed Ernest Reppert who said that to his knowledge, the auditors had not approved insurance for supervisors. b. You were also interviewed and you stated that since you received irsurance as an auditor, you took it for granted that auditors had approved the insurance. c. In tiie interview of David Summers, Mr. Summers stated that to his knowledge, the auditors had not approved the insurance. 11. Selma S. Russell, Auditor, provided the following testimony: a. In January, 1986, she began as an auditor to do the 1985 books. b. When Ernest Reppert told her that she had insurance, she asked if it was legal and he (Reppert) said yes. c. She called the State Ethics Commission and was advised that neither auditors nor supervisors could get insurance benefits. d. That when she received prior rulings from the State Ethics Commission on insurance benefits, she gave a copy of those rulings to her fellow auditor, Robert L. Campbell. e. In a public meeting, when someone questioned benefits for the auditors, she stated that she replied that benefits for both auditors and supervisors were not legal. f. That Mr. Campbell wanted to set up a meeting with the supervi s rs regarding benefits but the supervisors did not get back to him,. g. As auditor, she acted upon and approved the compensation for the supervisors in 1986 and 1987 as well as approving the books. h. She stated that she did not approve insurance benefits. i. For the 1986 year, she didn't even raise the matter of insurance benefits because it was in the hands of the State Ethics Commission Plr. Ali nc'nc Wi n:t ge 6 j. ahP did nit fire ;:y except 1 o' in the eudi tors ri, roc that insurance was *prop' 2, Rober~ L, Ccmpt -e11, Auditor, gave the following testimony: a, That he was aopoi need an auditor in 1986. L. Although he wanted to be an auditor for the insurance, he did not use the coverage because he found it was illegal. c. That he took no action to allow or disallow insurance for the supervisors because it was in the hands of the State Ethics C1,mmi ssi on. c . tie tried to set up a meeting with the supervisors as to the legality of insurance but they decided not to meet with him. e. :larch of 1986, he took the State Ethics Commission prior rulings c:. i ^surance to Supervisor Summer's house, gave and discussed the documents with him. As to the letter from the supervisors regarding compensation, there N"• no mention of insurance benefits. g. There were no exceptions by the new auditors the first time they did the boos because they did not know about insurance benefits. h. That there was no written objection or exception and no approvals or denials by the auditors in the 1986 and 1987 auditors' report. i . He did no approve health care benefits for the supervi sJr:;, 13. David Summers, Supervisor and Roadmaster provided the following: a. The following information was provided to a State Ethics Comrssion i nvesti gator: (1) He served as a township supervisor for (25) years. (2) He also serves as township roadnester and receives a monthly sal,:vy. He is on call 24 hours a day, but he has never worked full -time hours, such as (35) or (40) hours each week. Neither of the oth:, supervisors fill out a time sheet to reflect hours or days worked. S:t ;lThr nt Wi i .i ".' j° (3) Hi duties general 'y email gciN t) the township building in ' - nc and advi si r:g the r c;:tw of the days activities. iperv:sor Winn also help cut. :te and Winn come bac': and ;heck later in the day. t;e comes in when its snowing on an as ?eedeC. basis. (4) The supervisors have had insurance coverages with Provident Indemrity Insurance and later with Columbia Insurance Company. He has -ven a member of either plan since at least 1979, (5) He currently receives life insurance and interim insurance fir ^;s pital ization that is not paid by Medicare. Prior to reachinv age - 65, he had full hospitalization. (6) T+9 the best of his knowledge, the auditors have never approved the insurance for supervisors but they never disapproved it either until the present. b. The following testimony was given by David Summers at the hearing. (1) That he was a roadmaster for 25 years and received the insurance. s2) That the auditors got insurance and they did not question the coverage as to the supervisors. (3) There was no mention of insurance but he believed that the auditors would have approved it if they were asked to. (4) Many township roadmasters receive these benefits. (5) He admits that he know payments were made for insurance on his behalf. (6) He stated that he did not ask the auditors for approval but approved the payment himself as supervisor. (7) In terms of restitution, he stated that he only receives social security of $575 per month plus a pension of $475 per month but your home is paid for. 14. You as Supervisor and Road Superintendent, provided the following: (a) The following information' was provided to a State Ethics Commission i nvestiga tor. (1) You served as a township auditor for over twenty years. nc,2nt Wi ;'age (2) You were elected supervisor in 1986 and subsequently resigned as auditor. You also are the appointed road superintendent. (3) Th,?. auditors did not know it was their job to approve or disapprove insurance coverage for the supervisors. (4) While serving as auditor you were permitted to participate in the prescription and life insurance plans. After being elected supervisor you were able to obtain the hospitalization coverage. (5) You and Supervisor Summers get the road crews going in the morning and periodically check -up on them during the day. You have, r� occassion, gone out with the crews when snow plowing needs to be done, but they usually have enough men for the trucks, (b) The following testimony was given by you: (1) That you received insurance both as auditor and Supervisor and didn't question it when you were in either position. (2) The auditors never questioned insurance coverage. (3) When you were an auditor, you approved what the supervisors requested and did think you had to approve health care. (4) You did not respond to the auditors because you didn't have to. (5) You stated that you did not tell the auditors they were entitled but merely that the auditors got coverage in the past. 15. Ernest Reppert, Supervisor and Secretary, provided the following: (a) The following information was provided to a State Ethics Commission i nvestigator: (1) He has had the insurance since taking office in 1984. (2) In past years, all of the auditors, the school crossing guard and part -time custodian, received life and prescription insurance. The auditors had to know the supervisors were getting the insurance. The auditors never did anything in previous years. (3) When the auditors questioned the insurance in early 1986, he contacted the solicitor who advised to continue the practice as is, and that the whole issue is still up in the air. Mr. Vincent Page 9 h, : even put )bent Can.;.bc11 on as an auditor• so that Campbell cold receive thc overage. Campb.r.i l was ill and had no i ; ;surance. (5) Y u and Summers serve as roadmaster and road superintendent. These are 24 hour on call positions. ;')`, His position is full -time. He is on call 24 hours a day and that he works 50 hours a week. (b) The following testimony was given Mr. Reppert: (1� The auditors did not question insurance coverage and they, the auditors, had the benefits. (2) He did not receive written notice that the coverge was improper. (3) Prior to 1988, he never submitted insurance coverage :or auditor approval. (4) He did not meet with the auditors because he felt they :'ere nitpicking and besides, the books were closed. 16. William Trenk, former Auditor, gave the following testimony. a. He served as auditor between 1962 and 1973 and from 1975 through 1979. b. He was aware of insurance coverage for auditors and supervisors bot was not aware that auditor approval was needed. c. The supervisors told him that they were entitled to insurance benef its. d. He did not authorize insurance payments. 17. Mr. John Kasuda, a former auditor in Washington Township for the period between 1979 and 1984, was interviewed by State Ethics Commission Investigator William J. O'Keefe in the presence of Attorney Joseph Rygiel, counsel for the respondents. Mr. Kasuda stated: that he imagined that the supervisors were getting insurance benefits; that when he was an auditor, he got prescription insurance and lastly that he did not recall ever being asked to approve the insurance for supervisors but he would have given such approval if he were asked by the supervisors for it. Mr. Vincent Win :j P age 10 18. Solicitor Joseph Rygi el , is of the vim: thrt once the auditors approve the salaries for the supervisors, the supervisors became employees and coed be afforded the insurance coverage equal to all other employees in the township as well as for the auditors. 19. House Bill No. 1577 of the 1987 Session was passed by the General As. embly of the Commonwealth of Pennsylvania and signed into law by the Governor on March 10, 1988. The foregoing Act provides, in part, amnesty to non - employee supervisors who received various township paid pension plans or group life, health, hospitalization, medical service and accident insurance plans, as well as to employee supervisors who received such pension benefit; without auditor approval, but the amnesty covers the period only betwer.t January 1, 1959 and March 31, 1985. B. Discussion: As a township supervisor, you are a public official as tht tern is defined in the State Ethics Act. 65 P.S. §402; Sowers, 80 -050. A: such, you are subject to the provisions of the Ethics Act and the restrict therein are applicable to you. Generally, the State 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). Within the above provision of law, this Commission has previously determined that a township supervisor may not receive at the township's expense, health, hospitalization, medical and life insurance benefits when such supervisor acts only in the capacity of a supervisor. Krane, 84 -001; Cowie, 84 -010. Additionally, even if such a supervisor is employed by the township as a superintendent, secretary /treasurer, roadmaster or laborer in a.cordance with the Second Class Township Code, such benefits are considered compensation and must, therefore, be fixed as such by the township board of auditors. See Synoski v. Hazle Township, 93 Pa. Commw. 168, 500 A.2d 1282, (1985); In re: Appeal of the Auditors Re.ort of Munc Creek Townshi ., Pa. Comrrw. Ct. , 520 A.2d 1241, (19: ; Hunt, No. -R. he foregoing principle was recently reaffirmed by Pennsylvania Commonwealth Court in `r"ocabet v. State Ethics Commission, Pa. Commw. A.2d (1987; filed at 834 C.D. 1986 on September 18, 1987. In the cited case, the Court held inter alia that a township supervisor violated Section 3(a) of the Ethics Pct when he received a salary for the position of secretary /treasurer which ;•ad not been set by the auditors. The Court, in affirming the Order of tt,c Ethics Commission which required a restitution of the financial gain, noted on page 5 of its Opinion: er, Vi ncent Winn Page 12 iimi la rly, Commonweal - :ourt 1% M :Catch.. .1, su . spec i `i ca 'ohe auditors must take affirmative = ion; in , : r ,`or 'irking cur ,rvisorn to receive such benefits: The undoubted power of the supervisors under Section 712 to enter into insurance contracts for the township "insuring its employees ... or any class or classes t'+ereof," is not sufficient to legitimatize supervisor'>' actions in purchasing these policies for themselves, ,i r t': absence of affirmative action by the township aAitors under Section 515. Id. at 538. Since both the testimony of the three auditors and super vi sors in thr;' s crsc reflect that there was no affirmative approval of insurance benefits by the 'editors for the supervisors, the requisite "affirmative action" was lacking :end hence, you, as a supervisor were not entitled to these benefits. Additionally, you argue that the Pennsylvania Insurance Code expresAy , uthorizes coverage for elected officials as a class for whom health car urance may be provided. This precise argument was made and rejected by the r in in Exeter Township, supra. Fji it has been settled by the courts that insurance benefits are a form of compensation. See Edinger v. Upper Makefield Township, 25 D & C 3rd 512 (1983)., Finally, a specific statutory exclusion of health care premiums under the IRS; has no relevance in determining whether such benefits are financial gain under the Ethics Act. Further, Commonwealth Court has det._rmined in McCutcheon, supra that such benefits are compensation. It also should be noted that even if these benefits h4nd be n received in good faith, such would not be controlling. Good faith receipt of such benefits, even when based upon a solicitor's advice, will nog a'leviate the necessity of a public official reimbursing his governmental nody for the receipt of a financial gain for which he was not entitled. See Allegheny County v. Grier, 179 Pa. 639, 36 A. 353, (1897); McCutcheon State Ethics ommission, supra; Kestler Appeal, 66 Pa. Commw. 1, 444 A 2i& 1982) . As result, this Commission believes that you must reimburse the township for t.his financial gain. the Stale Ethics Act provides as follows:= Section 9. Penalties. ,) Any person who violates the provisions of Section 3(a) end (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). Mr. Vicert Wi ran ry .ge 11 Section 7 of the Ethics Act instructs the Commission to ;nvestigate situations where there is a reasonable belief that financial conflict may exist, and if conflict is found, to require the offender to remove himself from th• conflict without gain. - , y benefits received other thar as provided for above, would constitute a financial gain obtained in violation of the State Ethics Act. See, McCutcheon v. State Ethics Commission, 77 Pa. Comm. 529, 466 A.2d 283, : Conrad v. Exeter Township, 27 D & C 3d 253, (1983). These principles law are now well settled and constitute the law under which this situWt r'!st be reviewed. See In Re: Report of Audit of South Union Township, `a.: .c:; mw. 1, 407 A.2d 906, (1979). In the instant situation, while you were an appointed secretary /treasu;-' ' and, therefore, eligible to receive the in question benefits, there would hive to be the requisite approval by the township board of auditors for this to be considered part of your authorized compensation. See McCutcheon v. State Ethics Commission, supra. The facts in this case establish that the auditors did not give the required approval. The testimony of Auditors Selma Russell, Robert L. Campbell and former Auditor William Trenk establish that there was no auditor approval for these benefits. This is also corroborated by the statement John Kasuda. Not only do the facts establish that the auditors never approved insurance coverage for supervisors, they also indicate that you had knowleo7e boto of this Commission's decisions on insurance coverage which you ignore Lastly, you and the other supervisors failed to attend a meeting called by the Judi tors regarding health insurance coverage. You raise the legal issue that if the auditors did not make an exception their audit or if they did not disapprove the insurance benef the they must be considered as having approved the benefits. The foregoine +rgument has been addressed and rejected by the courts. See Hendrick: v. ra' t Rockhili Township 1 D & C 3rd 763 (1977): The mere fact that the auditors never affirmatively „4b jetted to the purpose of the pension plan is not tantamount to the affirmative action of the auditors in fixing the compensation for the supervisors and roadmasters additionally to the compensation already fixed at $5 and later $6 per hour. Therefore, we can only conclude that the supervisors exceeded their authority in adopting and purchasing a pension and annuity plan for their own benefit as additional compensation for their services as either supervisors or as supervisor- roadmasters. See Commonwealth v. Hanzlick, supra. Id. at. 771, 771. Mr, Ali ncent Ali nn P- ?e 13 (c) Any person who obtains financial gain from violating ny 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 gain resulting from such violation. 65 P.S. 409(c). In addition to the above, the State Ethics Act provides that the Commission may forward the results of any investigation to the appropria:c: prosecuting authority unless the alleged offender removes himself from the conflict of interest by divesting himself of any financial gain received in violation of the State Ethics Act. 65 P.S. §407 9(iii). See also McCutcheon v. State Ethics Commission, supra, the Commission may order restitution of financial gains received in violation of the law. Thc. last matter which must be addressed by this Commission concers House Bill 1577 of 1987 which was signed into law on March 30, 1988 as Act 41 1988. Although Section C of Act 41 addresses the questions of amnesty as to insirance benefits that were received by non - employee supervisors and hence does not address the question of insurnce benefits that were received by emp' oyee supervisors who did not get auditor approval, it is noted that S - ction 2 of the Act provides for a blanket amnesty to "elected officials, xcept township supervisors who are provided for in Section 515, [Section C] and appointed township officials who are not employees of the township." Since working employee supervisors are elected officials and since this ctegary of supervisors was not provided for in Section 515, Section 2 is then applycable which provides: "Any such insurance coverage contract entered into by a township between January 1, 1959, and March 31, 1985, that includes or provides coverage for elected officials, except as provided in section 515, or appointed township officials who are not employes of the township, shall not be void or unlawful solely because such inclusion of su -,h officials was subsequently found to be without lawful authority. No penalty, assessment, surcharge, forfeiture or disciplinary action of any kind may occur as a result of participation by such officials." Therefore, under the above provision of law, the insurance benefits that you received between Janaury 1, 1959 and March 31, 1985 would not violate Section 3(a) of the Ethics Act but the receipt of said insurance benefits after March 31, 1985 would transgress Section 3(a). In this case, you received these benefits in 1986 and 1987 which was after the amnesty period; the total benefits you received amounts to $2,374.34. The foregoing amount must be returned to your governmental body, Washington Township. Vi n -ent Winn Page 14 C. Conclusion and Order: 1. As a township supervisor in Washington Township, you are a "public official" subject to the provisions of the Ethics Act. 2. You violated Section 3(a) of the Ethics Act when you received a gain through public office consisting of prescription drugs, health insurance and a life insurance policy at the township's expense, which gain is not compensation provided for by law in that such benefits had not been fixed and approved by the township auditors as part of your lawful and authorized compensation for the years 1986 and 1987. :5, The financial gain which you received and which was not part of the compensation provided for by law amounts to $2,374.34, 4. You are hereby ordered to remit to the State Ethics Commission, within thirty (30) days of the date of this order, the amount of $2,374.34 made payable to Washington Township as restitution '.'or the financial gain that you received. 5. Failure to comply with the provisions of this order will result in a referral of this matter to the appropriate law enforcement authority for further civil or criminal proceedings. 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 5 business days after service (defined as mailing). 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). The confidentiality provision does not restrict respondents consultation with legal counsel. By the Commission, Joseph Wa Marshall, 111 Chai man