HomeMy WebLinkAbout665-R UremovichSTATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COM
ORDER NO. 665 -R
DATE DECIDED: Februa 2 2, 1989
DATE MAILED: March 7, 1989
Mr. George F. Uremovich
c/o Robert Ceisler, Esquire
321 Washington Trust Building
Washington, PA 15301
Re: 87 -027 -C
Dear Mr. Uremovich:
The State Ethics Commission has received a complaint regarding
you and a possible violation of Act 170 of 1978. On January inq
a hearing in the matter was conducted and relevant evidence and' 1989,
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: g
1. Allegation• That you, a Union Township Supervisor, 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, when you received
compensation for duties other than roadmaster, laborer or
secretary /treasurer and received townshi
holiday pay without auditor approval. P paid insurance, overtime and
A. Findings-
1. You served as an elected Township Supervisor in Union Townshi P,
Washington County Pennsylvania.
a. You served in this position from 1986.
b. You were appointed as a township roadmaster.
2. Minutes of the Union Township Board of Auditors meetings
indicate the following regarding compensation for supervisors.
a. January 3, 1979 - seven per cent increase for supervisors
was voted on and approved.
Mr. George F. Uremovich
Page 2
b. January 8, 1980 - increase of six percent for super-
visors was voted on and approved.
c. January 5, 1982 - compensation for supervisors was set
at $6.80 per hour.
d. January 4, 1983 - compensation for supervisors acting
as roadmasters was fixed at $6.80 per hour.
e. January 4, 1986 - compensation for roadmaster
supervisors set at $9.41 per hour.
f. January 6, 1987 - compensation was set for roadmaster
supervisors who operate equipment at $9.81 per hour and
$9.09 for those who do not.
(i) It is noted that no other compensation was
requested by the supervisors acting as roadmasters
and therefore no motion or vote was made on
insurance, paid vacation or paid holidays.
g. January 5, 1988 - compensation for supervisor
roadmasters set at $10.21 per hour with time and one
half for work exceeding 8 hours per day or 40 hours per
week.
(i) George Uremovich and Steve Parrish requested
hospitalization insurance for
roadmasters /employees working full time or a
minimum of 15 hours per week.
(ii) The auditors also authorized certain paid holidays
for supervisor /employees.
3. Pursuant to a standard procedure the Union Township Auditors
would make a notation as the last item on the annual
reorganizational meeting minutes indicating the compensation that
had been fixed for the township supervisors.
a. These notations indicate as follows:
(i) January 5, 1981 - wages for supervisor -
roadmasters, $6.80 per hour.
(i
Mr. George F. Uremovich
Page 3
(ii) January 4, 1982 - wages for supervisor-
. $6.80 per hour.
January 3, 1983 - wages for supervisor
roadmasters, $6.80 per hour.
(iv) January 3, 1984 - wages for supervisor_
roadmasters,-$7.15 per hour.
(v) January 7, 1985
roadmasters, $9
(vi) January 7, 1986
roadmasters, $9.
- wages for
.11 per hour
- wages for
46 per hour
supervisor-
supervisor-
(vii) January 5, 1987 - wages for supervisor -
roadmasters fixed at $9.09 for non - operators
and $9.81 for operators.
4 . A review of the minutes of the township supervisor meetin g
for the years 1981 through 1987 do not indicate any action or
discussion of health medical or hospitalization insurance
benefits for township supervisors.
5 . The minutes of a meeting of the township supervisors on
October 5, 1983 indicate that on motion of Gabig, second by the sec retary /treasurer was authorized to increase life
insurance coverage on employees to $20,000 per person.
6. Records obtained from the Trustees Insurance Fund, Cam
Hill, PA provide as follows: p
a. State Mutual Life Assurance Company of America group
insurance enrollment card for hospitalization, life and
weekly indemnity coverage for George and Elizabeth
Uremovich dated October 27, 1986.
(i) Enrollment is for insurance as a Union Township
employee.
(ii) Occupation listed as roadmaster.
b. Premium statements (annual) for hospitalization
coverage for you (no. 44948) indicate as follows:
Mr. George F. Uremovich
Page 4
(i) Statement Date Amount
November 10, 1986 $1,687
(pro -rated 11/1/86 to 10/31/87)
September 15, 1987 $1,857
(ii) The township auditors approved this coverage for
1988 and therefore $1,547.50 of the payment for
the statement of September 15, 1987, (The amount
for the period after January 1, 1988) was
authorized as part of your compensation.
c. Premium statements (annual) for life insurance coverage
for you, (no. 62- 04 -20), indicate as follows.
(i) Statement Date Amount
11/1/86 $173
(pro -rated 11/1/86 to 8/31/87).
7/15/87 $207.40
(ii) The township auditors - approved this coverage for
1988 and therefore $138.28 of the statement of
July 15, 1987, (the amount for the period after
January 1, 1988) was authorized as part of your
compensation.
d. Premium statements (annual) for disability insurance
coverage for you, (no. 20214) indicate as follows:
(i) Statement Date Amount
11/1/86 $11.75
(pro -rated 11/1/86 to 1/31/87)
12/15/86 $41.00
12/15/87 $41.00
Date
6/27/86
7/4/86
9/1/86
Mr. George F. Uremovich
Page 5
(ii) The auditors approved this
therefore the payment ($41
statement, dated 12/15/87,
of your compensation.
7. A Union Township audited financial statement dated December
3, 1983 to the township board of supervisors from the township
board of auditors contained the following comment as an area of
concern:
a. Insurance coverage for supervisors as a
question by PA Ethics Commission. Practice under
8. By letter dated March 23, 1983 to the Union Township Board
of Supervisors, Township Solicitor Robert L. Ceisler advised the
supervisors that they could participate in the township's
insurance policies so long as the policy identifies th group
supervisors as employees.
9. By memo dated April 13, 1987 to the Union Township Board of
Supervisors, Township Solicitor Robert L
Ceisler
supervisors that a supervisor who is also roadmaster advises the
eligible to receive health insurance benefits but that the
affirmative approval of the auditors must be obtained.
10. Township records contained an update memo from the
Pennsylvania State Association of Township Supervisors dated
March 5, 1984 noting a recent Ethics Commission ruling
determining that a non - employed township supervisor was not
eligible to receive insurance benefits at the township expense.
(i) The memo advises supervisors to consult with the
township solicitor.
11. Payroll records of Union Townshi
relating to overtime and holiday pay that you the following
Y P y that you reeceived:
Holiday
July 4th
Labor Day
coverage in 1988 and
) for the 1988
was authorized as part
Surplus
Overtime Food Hours Rate Paid $
2
14.19
8 9.46
8 9.46
28.38
75.68
75.68
Mr. George F. Uremovich
Page 6
9/10
9/11
9/17
9/24
9/25
9/30
11/4
11/27
11/28
12/25
1/1/87
1/2
1/22
1/23
2/8
3/23
3/24
3/25
4/4
4/17
9/7
11/3
11/26
11/27
12/5
12/15
12/16
12/25
5/25
6/1
7/3/87
12/17
12/16
TOTALS
12. Michael
Election Day
Thanksgiving Day
Holiday n
Christmas
New Years Day
Good Friday
Labor Day
Election Day
Thanksgiving Day
Holiday N
Christmas
Decoration Day
Holiday
4th of July
16
2
1
2.5
3
4.5
3.5
3
5
3
3
.5
.5
36 28 128
T. Borne testified as follows:
14.19
14.19
14.19
4 9.46
4 9.46
14.19
8 9.46
8 9.46
8 9.46
8 9.46
8 9.81
14.72
14.72
14.72
14.72
4 9.81
4 9.81
4 9.81
14.72
8 9.81
8 9.81
8 9.81
8 9.81
8 9.81
14.72
4 9.81
4 9,81
14.72
8 9.81
8 9.81
8 9.81
8 9.81
14.72
14.72
28.38
14.19
35.47
37.84
37.84
7.10
75.68
75.68
75.68
75.68
78.48
44.16
66.24
51.52
44.16
39.24
39.24
39.24
73.60
78.48
78.48
78.48
78.48
78.48
44.16
39.24
39.24
44.16
78.48
78.48
78.48
78.48
7.36
44.16
$2043.80
a. He served as an Auditor in Union Township from 1981 to
1986.
b. The auditors in their reorganizational meeting approved the
applicable hourly rate for supervisors.
Mr. George F. Uremovich
Page 7
c. The supervisors never requested the auditors to approve
insurance benefits, overtime pay or holiday pay.
d. He did not speak to the supervisors about benefits but the
auditors made internal comments regarding supervisors'
compensation.
e. The auditors received a letter from the solicitor
questioning the auditors' authority on some of the internal
comments.
f. After the auditors became aware that the supervisors were
receiving insurance benefits, they wrote letters to DCA and
to the State Ethics Commission.
The auditors received a response from either DCA or the
State Ethics Commission that the supervisors would not be
entitled to insurance benefits.
g.
h. In the 1983 Audit Statement, the auditors questioned
whether the supervisors were full -time employees so as to be
entitled to receive paid holidays.
i. He did not think any - supervisor was a full -time employee.
j. Jack Gabig, as a supervisor, was working 40 hours a week and
would be full -time.
k. The auditors approved only the hourly rate as compensation
for supervisors.
1. The auditors felt that supervisors should be treated
comparably to road workers regarding the applicable hourly
rate.
m. The auditors made several expressions that the supervisors
were not entitled to benefits.
n. The auditors did not surcharge the supervisors.
13. Donald Bucich provided the following testimony:
a. He served as an Auditor in Union Township for six years.
Mr. George F. Uremovich
Page 8
b. After a reorganizational meeting, the auditors set the
hourly rate for compensation for supervisors.
c. Aside from 1988, there was never any request to approve
insurance coverage for supervisors.
d. There was
pay.
e. After the
receiving
practice.
f. The auditors questioned the practice by referencing it in an
internal comment to the 1983 Audit Statement.
The auditors received a copy of a letter from the solicitor
to the supervisors expressing his legal opinion that the
practice was legal.
h. After discussions with people in other townships and the
DCA, the auditors questioned the practice in the 1984 Audit
Statement.
g.
i. The supervisors did not request approval
insurance or holiday pay or vacation pay
j•
never any request to approve holiday or vacation
auditors learned that the supervisors were
insurance benefits, they decided to question the
The chairman of the Board told him that
authority to rule on something to which
entitled.
k. The auditors did not intend to deprive the supervisors of a
comparable hourly rate that employees received.
1. The auditors did not surcharge the superisors.
m. The supervisors participated in the same insurance plan
that was provided for all township employees.
n. The insurance plan was in existence prior to the time that
you became a supervisor.
o. Overtime pay had to be approved as compensation.
in 1986 or 1987 for
the auditors had no
the supervisors were
Mr. George F. Uremovich
Page 9
p. The auditors did not approve or surcharge as to overtime.
14. Larry Spahr provided the following testimony:
a. He is a supervisor in Union Township since 1978.
b. The prior Board of Supervisors, before he became a member o
the Board, provided group insurance to township employees. of
c. The township plan provides coverage to all employees.
d. The township plan does not treat the supervisors
differently then any other members of the plan.
e. The plan does not provide the supervisors with the
possibility of realizing any cash or divided annuity.
f. He had three conversations with Dan Bucich about insurance
and recommended that the Board of Auditors seek a legal
opinion.
g. A second conversation occurred in Dave Mathies' Office
wherein Mr. Gabig was also present.
h. The third conversation was among Mr Bucich
[sic] and Mr. Gabig regarding a second opinion
solicitor that contradicted his prior opinion.
i. Mr. Bucich expressed his concern that if insurance cover
were dropped, the township might incur a liability. age
j. In his conversation with Mr.
statement as one o Bucich, he considered Bucich's
versus potential liiabilityhofhtheltownshisurance coverage
k. Holiday and overtime
pay P
p Y were part of the benefit under the
road employees'
contract.
1 . The provisions for holiday and overtime had been in all
contracts beginning at a point in time prior to his
becoming a supervisor.
m. He received holiday and overtime pay on occasion.
Mr. George F. Uremovich
Page 10
p. The roadmasters in
employed to do the
n. The benefits received by the supervisors are no different
than those received by the road crew under the collective
bargaining agreement.
o. He was paid for surplus food distribution on two occasions
q.
Overtime occurred
CP -2 jobs.
Union Township have been traditionally
food distribution.
for either resurfacing of roads or state
r. Snow removal would also warrant working overtime.
t. He voted for payment of insurance premiums.
u. He admitted that the auditors never approved compensation
for the supervisors.
w. The supervisors never formally requested the auditors to
include insurance as part of their compensation.
a. You became a Union Township Supervisor in January,
1986.
b. You began receiving insurance benefits in October,
1986.
s. Township insurance benefits were billed to the township and
he voted to pay those premiums as part of a list of bills.
v. The supervisors received an opinion from the solicitor that
the supervisors /employees had the right to participate in
the program.
x. After the solicitor issued a second opinion, he informed Mr.
Gabig that the auditors would be contacted regarding
dropping the insurance.
y. Since he works full -time as Director of Elections, his
position in the township is part -time.
15. You provided the following information in relation to the
instant situation to a State Ethics Commission investigator:
Mr. George F. Uremovich
Page 11
c. You were merely following past practice by enrolling in
the insurance programs.
d. You were not aware that auditor approval was necessary
as a pre condition to the receipt of insurance
benefits.
e. The solicitor informed the supervisors in 1987 that
they could obtain insurance benefits if the auditors
approved it.
f. The supervisors decided to wait until 1988, the next
year to seek such approval.
g. The auditors should have told you that you were not
entitled to these benefits.
h. Jack Gabig, another supervisor, told you that you were
entitled to overtime and holiday pay.
)•
1. You were not aware that the auditors had to approve
overtime pay or holiday pay.
Distribution of butter and cheese is part of the road
worker function.
k. You did not intentionally violate any rules.
1 . The overtime pay and holidaa was
received by other members of the roadtcrew. as that
16. You testified as follows:
a. You are a supervisor and full -time roadmaster who works
a forty hour week and overtime on occasion.
b. You voted to pay insurance premiums like all other
bills.
c. Prior to 1988, you did not request the Board of
Auditors to approve insurance, holida
pay as part of your compensation. y pay or overtime
Mr. George F. Uremovich
Page 12
d. You do not receive vacation, sick or personal days.
e. You received holiday pay in 1986 and 1987.
B. Discussion: As a township supervisor, you are a public
official as that term is defined in the State Ethics Act. 65
P.S. §402; Sowers, Opinion 80 -050. As such, you are subject to
the provisions of the Ethics Act and the restrictions 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).
The first matter for consideration involves your receipt of
township paid insurance benefits. 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,
Opinion 84 -001; Cowie, Opinion 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 Svnoski v. Hazle Township,
93 Pa. Commw. 168 500 A.2d 1282, (1985); In re: Appeal of the
Auditors Report of Muncv Creek Township, Pa. Commw. Ct.
520 A.2d 1241, (1987); Hunt, Order 348 -R. The foregoing
principle was recently reaffirmed by Pennsylvania Commonwealth
Court in Yocabet v. State Ethics Commission, Pa. Commw. Ct. _
531 A.2d 536 (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 Act when
he received a salary for the position secretary /treasurer which
Mr. George F. Uremovich
Page 13
had not been set by
Order of the Ethics
the financial gain,
the auditors. The Court, in affirming the
Commission which required a restitution of
noted on page 539 of its Opinion:
"Section 7 of the Ethics Act instructs the
Commission to investigate 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 the conflict wit out ain." (Emphasis
supplied).
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 Commission, 77 Pa.
Cmwlth. 529 466 A.2d 283 (1983); Conrad v. Exeter Townshi , 27 D
& C 3d 253, (1983). These principles of law ar now well settled
and constitute the law under which this situation must be
reviewed. See In re: Re ort of Audit of outh Union Townshi
47 Pa. Commw. 1, 407 A.2d 906, (1979).
In the instant matter, you were the township
supervisor /roadmaster. The record reflects that you have
received township paid benefits from October, 1986. It is clear
from the above analysis that a employee supervisor may only
receive these paid township insurance benefits only if the
requisite auditor approval was given. No such approval (prior to
1988) was given in this case as can be verified from the
auditor's minutes. Further, your township solicitor specifically
noted in a April 13, 1987 memo that the auditors would have to
approve these benefits. Under these circumstances, you received
insurance benefits without the requisite auditor approval and
hence you received a financial gain which is not part of your
authorized compensation. See McCutcheon v. State Ethics
Commission, supra.
It should also be noted that even if these benefits had been
received in good faith, such would not be controlling. Good
faith receipt of such benefits, even when based upon a
solicitor's advice, will not alleviate the necessity of a public
official reimbursing his governmental body for the receipt of a
financial gain for which he was not entitled.
County v G A. 353, 1987 See McCutcheon Ethics Commission, 79 Pa. 639, 36 supra; K 353 A
( ); McCutcheon v.
p peal, 66 Pa. Commw. 1,
Mr. George F. Uremovich
Page 14
444 A.2d 761, (1982). As a result, you must reimburse the
township for this financial gain.
The State Ethics Act provides as follows:
Section 9. Penalties.
(a) Any person who violates the provisions of
Section 3(a) and 3(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.
Section 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
gain resulting from such violation. 65 P.S.
Section 409•(c).
In addition to the above, the State Ethics Act provides that
the Commission may forward the "results of any investigation to
the appropriate 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.
The last matter relating to insurance benefits which must be
addressed by this Commission concerns House Bill 1577 of 1987
which was signed into law on March 30, 1988 as Act 41 of 1988.
Since the foregoing Act provides amnesty for pension /insurance
benefits received by township supervisors for the period between
January, 1959 and March 31, 1985 only, that Act has no
application to the instant matter.
Therefore, under the above provision of law, the insurance
benefits that you received between October, 1986 and 1988 when
auditor approval was received would violate Section 3(a) of the
Ethics Act. In this case, you received a financial gain of
Mr. George F. Uremovich
Page 15
C
$2,291.37 in the above period. The foregoing amount must be
returned to your governmental body, Union Township.
Turning to the matter of your receipt of pay or overtime or
holiday pay, Section 515 of the township code sets forth when
supervisors may receive compensation. Generally, township
supervisors may be employed by the township as a roadmaster,
laborer, or secretary /treasurer as noted above. 53 P.S. §65515;
65531; 65540. Township supervisors may not receive any other
compensation except as provided. This concept has been upheld by
various courts in the Commonwealth. In Coltar v. Warminster
Township, 8 Pa. Commw. Ct. 163, 302 A.2d 859, (1973), the
Commonwealth Court of Pennsylvania held that a second class
township supervisor may not appoint himself to positions other
than those set forth in the township code ( roadmaster, laborer,
or secretary /treasurer), and receive compensation therefore.
See also Conrad v. Exeter Township, supra. It is clear,
therefore, that the duties for which a township supervisor may be
compensated are strictly regulated by the township code; the
supervisor's pay must be specifically, set forth by the township
compensated for services rendered in that position, pay _ l u ho
overtime pay for which you were compensated were not related to
your roadmaster position but were related to the office
supervisor.
You, thus, received compensation that was not part of that
provided for by law.
Further, this Commission has already held that township
auditors have no authority to fix compensation for township
supervisors who are performing duties outside of those fixed by
law or for working in positions not established in the township
code. Nanovic, 85-005. The auditors have indicated they did not
approve this "pay;" in any event, the auditors did not have the
power to fix a compensation that was not allowed by law and that
was regulated by statute (compensation as a supervisor).
You, however, argue that there should be no violation on a
"philosophical basis" because the supervisors have acted
ethically and have done nothing for which they should be
criticized. The difficulty with this argument is that this
Commission must apply the Ethics Act and may not decide cases on
Mr. George F. L'removich
Page 16
some amorphous concept of ethics. Snyder v. Thornburgh 496 Pa.
324, 437 A.2d 1 (1981).
It is then suggested that the McCutcheon case is
distinguishable because the supervisors, in the cited case, only
took insurance for themselves. This argument fails by virtue of
the decisions in the Svnoski and Muncv Creek Township cases,
supra. As to the assertion that these benefits which were
received were comparable to other employees, the crucial element
is that working supervisors must obtain auditor approval for
these benefits and that was not done.
Your argument that your solicitor's opinion is a good faith
defence has been discussed and rejected, supra.
You then argue that Act 41 of 1988 warrants a dismissal of
the complaint on the theory that working supervisors did not need
auditor approval effective March 30, 1988. You assert that Act
41 indicates a legislative intent that this coverage was proper
without auditor approval. The - argument -is- fatally flawed because
the General:=Ass-; lyt only ptbvidedr rn aty=forthe period- between
January 1, 1959 and March 31, 1985; the legislative intent' is
clear that the amnesty ends as of March 31, 1985. Since
restitution is ordered for the period after March 31, 1985, this
order is consonant with Act 41 and the legislative intent
therein.
As for the holiday pay and overtime pay, the fact that the
requisite auditor approval was lacking defeats that argument.
As a result, this Commission finds that you received
compensation in the form of holiday pay and overtime pay that was
not in accordance with that set forth by law. The gain which you
received for this type of pay amounts to $2043.80.
C. Conclusion and Order:
1. As a township supervisor in Union Township, you are a
"public official" and, as such, are 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 township paid insurance benefits
Mr. George F. Uremovich
Page 17
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 during the
period between October, 1986 and 1988 when you
received auditor approval, which gain amounts to
$
3. You violated Section 3(a) of the Ethics Act when you
received holiday pay and overtime pay as a supervisor
which was not within the compensation provided in the
Second Class Township Code, which gain amounts to
$
4. The total financial gain which you received from
insurance benefits and holiday was not part of the compensation tion provi ed by
amounts to $4,335.17.
5. You are hereby ordered to remit to the State Ethics
Commission, within thirty (0) days of the date of this
order, the amount of $4,335.17, made payable to Union
Township as restitution for the financial gain that you
received.
6. 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).
Mr. George F. Uremovich
Page 18
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 W. Marshall, III
Chairman