HomeMy WebLinkAbout635-R HermanMr. Robert L. Herman
Eureka Road, R.D. #3
Edinboro, PA 16412
Re: 86 -032 -C
Dear Mr. Herman:
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 Franklin Township Supervisor, violated Section
3(a) of the State 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 by having the township pay for an
accident /health insurance plan in which you participated.
A.
1.
you
Findings:
You served as a Franklin Township Supervisor from 1980 to May, 1983, when
resigned.
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF.THE COMMISSION
Order No. 635 -R
DATE DECIDED: April 8, 1988
DATE MAILED: April 27, 1988
2, Franklin Township records prior to April, 1978, were destroyed by fire.
3. Franklin Township Supervisors' meeting minutes from April, 1978, through
May, 1983, record the following information about the accident /hospitalization
and life and cancer insurance plans for the supervisors:
a. May 9, 1978 - Supervisors Beck, Ley and Horn are present and vote to
approve the bills presented for payment which include a check to
Columbia Insurance Company for $10,431.64. This amount included
payments for accident /hospitalization, life and pension by the
township on behalf of all three supervisors.
Mr. Robert L. Herman
Page 2
b. August 14, 1979 - A motion is made to update the hospitalization
program, on Mr. Gigliotti's recommendation, and is unanimously
passed. This update cost the township an additional amount of
$160.08. (Mr. Gigliotti is a representative of the Columbia
Insurance Company).
c. January 2, 1979 - Supervisors Beck Ley and Horn are present. Ley is
appointed road foreman on a 2/1 vote - Beck voting no.
d. January 7, 1980 - Supervisors Horn, Ley and Herman unanimously vote
to appoint Ley as roadmaster. You were asked for your feelings on
the 1980 budget, you said that you felt that it was a good budget
(budget included information on expenditures for insurance
coverage).
e. January 5, 1981 - With Supervisors Horn, Ley and Herman present, no
roadmaster is appointed, however, Ley abstains from a motion
concerning the roadmaster wages and mileage rate for use of personal
vehicle. A unanimous -vote to re -adopt the employee benefits schedule
is made.
f. February 24, 1981 - A motion was made by you and seconded by Ley to
purchase cancer insurance from Columbia Insurance for one year and to
approve payment of $271.00 to Columbia Insurance. The payment of
check No. 1735 to Columbia Insurance Company for $271.00 was included
in the bills at the same meeting. Supervisors Ley and Horn were
present.
g.
March 10, 1981 - During a discussion on the bills presented, you
suggested that other options on employee insurance be considered. A
unanimous vote to have you investigate other insurance plans is made.
All bills are approved for payment with the exception of check No.
1738 to Columbia Insurance. Supervisors present were Horn, Ley and
Herman.
h. April 14, 1981 - A unanimous vote was taken to remain with Columbia
Insurance Company after hearing from a representative from Blue
Cross /Blue Shield and a plan sponsored by the State Association. You
requested that your coverage under the hospitalization plan be
dropped and you would make the request in writing. A unanimous vote
was taken to pay the annual premium for health'and life insurance
less the premium for Herman. Supervisors Horn, Ley and Herman were
present.
Mr. Robert L. Herman
Page 3
i. December 30, 1981 - A discussion of applications received for
roadmaster took place with Supervisors Ley. Horn and Herman present.
j. January 4, 1982 - Supervisors Horn, Sachar and Herman were present.
Horn was appointed acting roadmaster until a full -time roadmaster is
appointed on a unanimous vote; he is also appointed assistant
roadmaster on unanimous vote. A unanimous vote to adopt the
employees' benefit schedule is taken which included a change from 90
days to 30 days as the waiting period for new full -time employees.
k. January 3, 1983 - You were appointed Chairman. You abstained from
votin° yourself into this position. Horn is appointed as istant
roadmaster; he abstained from voting for himself. The employee
benefit schedule is re- adopted and stipulated to apply to full -time
employees only by unanimous vote.
1. May 11, 1983 - Supervisors Sachar and Horn were present when Sachar
read a letter of resignation from you dated May 4, 1983. Your
resignation was stipulated by unanimous vote.
4. Franklin Township payroll ledgers show gross amounts paid to each
supervisor from 1978 through 1983:
Robert P. Beck:
1978 1979 1980 1981 1982 1983
$513.38 $513.38 -0- -0- -0- -0-
Cyril N. Ley:
1978 -1979 1980 1981 1982 1983
$14,438.00 $12.170.00 $14,494.00 $15,696.25 $288.75 -0-
Robert L. Herman:
1978 1979 1980 1981 1982 1983
-0- -0- $325.00 $350.00 $601.25 $142.50
5. You stated that you donated your earnings as supervisor to the Fire
Department.
Mr. Robert L. Herman
Page 4
6. Letters and correspondence regarding insurance for the township and its
employees and supervisors from 1975 through 1984 disclosed the following:
a. April 15, 1975 - Enrollment of Cyril Ley and wife Stella with
Keystone State Municipal Employee Insurance Trust, Plan A, Policy No.
KSM -1344, through Franklin Township, Erie County.
b. July, 1979 - Letter from Columbia Accident & Health Insurance Company
to participating townships regarding Keystone State Municipal
Employee Insurance Trust Group, Policy KSM -0100. Update of policy
without a raise in premium.
c. July, 1979 - Letter from Columbia Insurance to participating township
employees regarding increase in benefits.
d. November, 1979 - Letter from Columbia Insurance to participating
townships regarding increase in premium costs.
e. February 4, 1980 - Letter to Frank Gigliotti from Diane Horn deleting
Beck as of January 1, 1980 from the township plan and adding Herman
as of January 1, 1980. Horn also stated in the letter that she was
not able to reach Herman by phone that weekend and that she hoped to
reach him that evening and have him sign the application for
i nsurance.
f. April 16, 1981 - Letter to Gigliotti from Diane Horn stating that
Herman requested to be removed from the accident and health
insurance. Horn stated that a check was enclosed for the total
invoice less the amount of $1,906.32 for Herman's policy and a check
for $271.00 for Cancer Group Insurance.
g. June 39, 1981 - Letter from Lawrence Bol la of Quinn, Gent, Buseck and
Leemhuis, Inc., to Columbia Insurance Company, requesting return of
all funds paid into the pension on behalf of Supervisors Beck, Horn
and Ley.
h. November, 1981, - Letter from Columbia Insurance to participating
townships regarding the increase in premium rates.
1. January 26, 1982 - Letter to Gigliotti from Diane Horn regarding the
cancellation of insurance of Cyril Ley effective January 4, 1982.
Mr. Robert L. Herman
Page 5
j. March 18, 1982 - Letter to Gigliotti from Diane Horn indicating that
the insurance coverage for Henry Horn is to remain as is with the
balance of the insurance to be cancelled with the exception of the
following: Diane Horn - Life; Lee Bochert (roadmaster) - sick and
accident and life.
k. March 4, 1984 - Letter to Gigliotti from Diane Horn regarding the
cancellation of insurance for Henry Horn as of January 1, 1984.
1. April 19, 1984 - Letter to Diane Horn from Joyce Hansen, Pension
Secretary for Columbia Life, regarding enclosed information which
included the group protection record for Franklin Township, effective
date April 9, 1974 to be paid annually:
Robert P. Beck
Cyril N. Ley
Robert L. Herman
A &H
Premium
$655.06
$817.54
$1,906.29
7. Invoices from Columbia Life for the Franklin Township plan and checks from
the Township Marine Bank general fund account to Columbia Insurance:
a. Invoice dated April 15, 1978 - Check No. 1049, dated Ma.; 9, 1978 in
the amount of $10,431.64 (includes the total amount of the invoice,
$6,386.64, plus pension premiums). Check signed by Horn, Ley and
Beck.
b. :nvoict due date April 15, 1979
1979 in the amount of $6,077.91,
c. Letter dated February 29, 1980,
Hernan's cancer policy from Gigl
questions needed to be answered
amount of $53.00 to enroll Herma
Herman, Ley and Horn.
- Check No. 1259, dated A;ri 10,
signed by Beck, Ley and Nora.
in regard to the appli..aton for
iotti to Diane Horn indicating that
by Herman. Check No. 31469 in the
n in the plan. Check signed by
Amount Life
of Life Premium
$5,000 $52.00
$5,000 $126.00
$5,000 $26.40
d. Invoice due date April 15, 1980 - Check No. 1449, dated March 11,
1980 in the amount of $6,985.54 signed by Ley and Horn (Herman was
absent from this meeting).
Mr. Robert L. Herman
Page 6
e. Invoice due date April 1, 1980 - Check No. 1479, dated April 23,
1980, total amount to enroll Herman in the accident, health and life
plans, signed by Herman, Ley and Horn.
f. Letter from Giglioti to Franklin Township dated January 25, 1981
regarding the premiums for Cancer Group Insurance for the three
supervisors and the secretary - Check No. 1735, dated February 24,
1981 in the amount of $271.00, signed by Herman and Ley.
g. Invoice due date April 15, 1981 - Check No. 1779, dated April 14,
1981, in the amount of $4,550.60 (total invoice amount minus the
accident and health premium for Herman), signed by Herman, Ley and
Horn.
h. Invoice due date April 15, 1982 - Check No. 1975, dated April 14,
1982, in the amount of $827.94 (original amount on invoice
- $4,227.91), signed by Herman and Sachar.
i . Invoice due date April 15, 1982 - Copy dated May 5, 1982 with
corrections made accompanied by a check, in the amount of
$3,090.65.
8. Accident /hospitalizaton, life and cancer insurance premiums paid by
Franklin Township on behalf of Robert Herman:
1980
1981
1982
1983
Sub -total
Total
A & H Life Cancer
Premium Premium Premium
$1,776.24 $26.40 $53.00
cancelled $26.40 $50.00
$1,776.24
$1,932.04
$52.80 $103.00
9. You stated that you first discovered that you were on the township
insurance plan around November, 1980, when the supervisors began working on
the budget for the following year.
Mr. Robert L. Herman
Page 7
a. Secretary Horn has stated that in order to enroll a new person on the
township plan, she would contact the insurance company. and they
would send her the necessary forms to be filled out.
b. Secretary Horn stated that she did not remember whether you signed
any forms or filled them out yourself. She did state that she would
have had to ask you for the information and would have told you why
she was requesting the information.
c. You were enrolled on the insurance plan in March, 1980, three months
after you became a Franklin Township Supervisor.
d. Secretary Horn stated in a letter to Gigliotti in February, 1980,
that she had not been able to reach you aver that weekend and that
she hoped to reach you that evening and have you sign the application
for insurance.
10. You stated that the only contact that you had with the other supervisors
during the first two years of your term was at the monthly meetings and that
the way that the books were kept, you never saw a breakdown that indicated
that you were enrolled in the township insurance fund.
a. According to Diane Horn, the
meetings for the supervisors
checks that were signed, but
ask to see them.
invoices were available at all of the
to go through and compare against the
most of the time the supervisors did not
b. That you were kept informed about whatever you asked about and that
occasionally called from work to ask about specific issues.
11. You stated that you do not recall making the motion to approve cancer
insurance in February, 1981, that you feel that this may have been a mistake
in recording on the secretary's part. You felt that if you did make this
motion, it was because you felt at the time that it really didn't include you,
that it was for Henry Horn and Cyril Ley.
12. You resigned from the insurance plan in March, 1981, when you felt that
you could do so with the approval of the other two supervisors, and as soon
as possible after you discovered that you were on the insurance.
a. You stated that you received a call from Frank Gigliotti after you
resigned from the township policy during which he offered you cash
for any claim he might have from Columbia while he collected from his
insurance at General Electric.
Mr. Robert L. Herman
Page 8
13. You stated that you never even had a key to any of the township
supervisors' meeting places until John Sachar succeeded Cyril Ley in office
and that you were excluded from information and the availability of the
township office by Supervisors Horn and Ley.
14. House Bill No. 1577 of the 1987 Session, Act 41 of 1988, was passed by
the General Assembly of the Commonwealth of Pennsylvania and signed into law
by the Governor on March 30, 1988 as Act 41 of 1988. The foregoing Act
provides, in part, amnesty to both working supervisors who did not receive
auditor approval for various township paid pension plans or group life,
health, hospitalization, medical service and accident insurance plans, as well
as to non - working supervisors who received such benefits, but the amnesty only
covers the period between January 1, 1959 and March 31, 1985.
B. Discussion: As a supervisor in Franklin Township, you are subject to the
provisions of the Ethics Act and the restrictions therein are applicable to
you. 65 P.S. §402; Sowers, 80 -050; Sz panowski, No. 539. Section 3(a) of the
Ethics Act provides:
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).
Section 3(a) basically provides that a public official nay not use his
public office or confidential information to obtain a gain other than
compensation provided for by law.
.a.
The compensation which is allowed for a supervisor is strictly regulated
by statutory and decisional law.
Under Section 3(a) of the Ethics Act, 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
accordance 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 ynoski v. Hazle Township, 93 Pa. Commw. 168, 500 A.2d 1282,
Fir. Robert L. Herman
Page 9
(1985); In re: Appeal of the Auditors Report of Muncy Creek Township,
Pa. Comm. Ct. , 520 A.2d 1241, (1987); Hunt, No. 348 -R. The foregoing
principle was recently reaffirmed by Pennsylvania Commonwealth Court in
Yocabet v. State Ethics Commission, Pa. Commw. , 531 A.2d 536 (1987).
In the cited case, the Court held inter alia that a township supervisor
violated Section 3(a) of the Ethics Act when he received a salary for the
position of secretary /treasurer which had not been set by the auditors. The
Court, in affirming the Order of the Ethics Commission which required a
restitution of the financial gain, noted on page 5 of its Opinion:
Section 7 of the Ethics Act instructs the Commission
to investigate situations where there is a reasonable
balief that financial conflict may exist, and if conflict
is found, to require the offender to remove himself from
the conflict without gain.
Any benefits received other than as provided for above, would constitute a
financial gain obtained in violation of the State Ethics Act. See,
McCutcheon v. State Ethics Canmission, 77 Pa. Commw. 529, 466 A.2d 283,
T1983) Conrad v. Exeter Township,? D & C 3d 253, (1983). These principles
of law are now well settled and constitute the law under which this situation
must be reviewed. See In Re: Report of Audit of South Union Township, 47
Pa. Commw. 1, 407 A.2d 906, (T979). Further, the right to sue for the
restitution of the financial gain obtained in violation of the Ethics Act hay.
been upheld by Commonwealth Court in Fee v. Commonwealth of Pennsylvania and
Township of Union, filed at 1932 C.D. 1987 on December 1, 1987.
In the instant matter, you were a non - working supervisor and were
enrolled in an insurance plan beginning in 1980, which provided accident
and health insurance and cancer insurance. The minutes of the Franklin
Township Supervisors' meetings reflect that on January 7, 1980, you commented
on the budget which included information on the expenditures for insurance
coverage. In February 24, 1981, you made a motion to purchase cancer
insurance for a period of one year from the Columbia Insurance Company. Your
coverage continued until April 14, 1981 at which time you requested, in
writing, that you be dropped from the hospitalization plan. Since you were
not a working supervisor and since there was no auditor approval, you could
not, under the second class township code, be legally entitled to receive the
insurance benefits that were paid at township expense. However, Section
1(c)(2) of House Bill 1577 of 1987, Act 41 of 1988, which was signed into law
on March 30, 1988, provides in part: "Any life, health, hospitalization,
,medical service or accident insurance coverage contract entered into by a
',ownship between January 1, 1959 and March 31, 1985, that includes or provides
coverage for non-employe supervisors shall not be void or unlawful solely
Mr. Robert L. Herman
Page 10
because such inclusion of non - employe supervisors 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
non - employe supervisors."
Since the above quoted provision of law provides amnesty to you as a
non - employe supervisor regarding the accident and health insurance which you
received and since the receipt of those benefits occurred in the amnesty
period which covers January 1, 1959 through March 31, 1985, the Commission
finds that there is no violation of Section 3(a) of the Ethics Act.
C. Conclusion and Order:
1. As a Township Supervisor in Franklin Township, you are a "public
official" subject to the provisions of the Ethics Act.
2. There is no violation of Section 3(a) of the Ethics Act regarding the
receipt of accident and health insurance at township expense on your
behalf as a non - working supervisor for the period 1980 through April
of 1981 due to the applicable amnesty provisions in Act 41 of 1988.
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 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,
Joseph,W. Marshall, III
Chairman