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HomeMy WebLinkAbout668 NurnbergerRe: 87 -026 -C I. Allegation: That you Section 3(a) of the Ethics employee's or public offic information gained through insurance benefits at the auditor approval. rs 4_,f STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Mr. Daniel Nurnberger c /o-Robert Ceisler, Esquire 321 Washington Trust Building Finleyville, PA 15332 Order No. 668 Date Decided: $ugust_18.._1988 Date Mailed: Seutemher_is, 1988 Dear Mr. Nurnberger: 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 Union Township Supervisor, violated Act which prohibits a public ial's use of office or confidential that office, in that you received township's expense without prior A. Findings: 1. You served as an elected Township Supervisor in Union Township, Washington County Pennsylvania. a. You served in this position from 1963 until December 1986. b. You were appointed as a full -time township roadmaster until 1983. c. You then became a full -time road foreman. d. You thereafter served as an inspector from 1985. 2. Minutes of the Union Township Board of Auditors meetings indicate the following regarding compensation for supervisors. Mr. Daniel Nurnberger Page 2 a. January 3, 1979 - seven per cent increase for supervisors was voted on and approved. 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 anr' $9.09 for those who do not. (i) It is noted that no other compensation was requested by the supervisors acting 's rc a'fLastEd and therefore no motion or vote rias made on Insurance, paid vacation or paid holidays. January 5, 1988 - compensation for supervisor roadmasters set at $10.21 per hour euith 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 mould make a notation as the last item on the annual reorganizational meeting minutes indicating the cnmpr %cation that had been fixed for the towns "lip supervisors. a. These notations indicc_,te as followsv Mr. Daniel Nurnberger Page 3 (i) January 5, 1981 - wages for roadmasters, $6.80 per hour (ii) January 4, 1982 - wages for roadmasters, $6.80 per hour. (iii) 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 - wages for supervisor - roadmasters, $9.11 per hour. (vi) January 7, 1986 - wages for supervisor - roadmasters, $9.46 per hour. January 5, 1987 - wages for supervisor - roadmasters fixed at $9.09 for non operators and $9.81 for operators. (vii) supervisor- supervisor- 4. The auditors never approved insurance benefits in the above noted years as part of the compensation for employee- supervisors. 5. A review of the minutes of the township supervisor meeting for the years 1981 through 1987 do not indicate any action or discussion of health medical or hospitalization insurance benefits for township supervisors. 6. The minutes of a meeting of the township supervisors on October 5, 1983 indicates that on motion of Gabig, second by Speer, the secretary /treasurer was authorized to increase life insurance coverage on employees to $20,000 per person. 7. Records obtained from the Trustees Insurance Fund, Camp Hill, PA provide as follows: a. State Mutual Life Assurance Company of America group insurance enrollment card for hospitalization, life and weekly indemnity coverage for Daniel E. and Frieda L. Nurnberger dated February 15, 1964. (i) Enrollment card is for insurance as Union Township employee. Mr. Daniel Nurnberger Page 4 (ii) Occupation listed as road supervisor. b. Effective date of insurance 3/1/64 with changes from P- 1 to P -2 on 11/1/66 and from P -2 to P -4 on 10/1/83. r_. Premium statements (annual) for hospitalization coverage for you (no. 041968) indicate as follows: (i) Statement Date Amount September 1, 1977 $331.00 September 1, 1978 $412.00 September 1, 1979 $531.00 September 1, 1980 $617.00 September 1, 1981 $731.00 September 1, 1982 $763.69 September 15, 1983 $130.00 September 14, 1984 $130.00 September 16, 1985 $130.00 September 19, 1986 $148.00 (ii) The above coverage was cancelled on January 13, 1987. (iii) A refund of $104.76 was received by the township as a result of this cancellation. (iv) The above statements covered a one year period. J. 'ra:ium statements (annual) for life insurance coverage P ^r you, (no. 62-04-19) indicates as follows: (i 'r Etaten:znt Dzte Amount .Jut 1 1779 $ 66.95 Mr. Daniel Nurnberger Page 5 July 1, 1980 $ 66.95 July 1, 1981 $ 66.95 July 1, 1982 $ 66.95 July 15, 1983 $ 66.95 July 16, 1984 *170.75 July 15, 1985 $170.70 July 15, 1986 *170.70 (ii) The above coverage was cancelled on January 15, 1987. (iii) The township received a refund of *96.85 as a result of such cancellation. (iv) The above statements covered a one year period. e. Premium Statements (annual) for disability insurance coverage for you, (no. 008369) indicates as follows: (i) Statement Date Amount December 1, 1978 $48 December 1, 1979 $48 December 1, 1980 *48 December 1, 1981 $48 December 1, 1982 *48 December 15, 1983 $41 December 14, 1984 $41 December 16, 1985 $41 December 15, 1986 *41 Mr. Daniel Nurnberger Page 6 (ii) The above coverage was cancelled on January /5, 1987. (iii) The township received a refund of *41.00 as a result of this cancellation. (iv) The above statements covered a one year period. 8. 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 practice under question by PA Ethics Commission. 9. By letter dated March 23, 1983 to the Union Township Boarc.. of Supervisors, Township Solicitor Robert L. Ceisler advised the supervisors that they could participate in the township's group insurance policies so long as the policy identifies the supervisors as employees. 10. By memo dated April 13, 1987 to the Union Township Board of Supervisors, Township Solicitor Robert L. Ceisler advises.the supervisors that a supervisor who is also a roadmaster is eligible to receive health insurance benefits but that the affirmative approval of the auditors must be obtained. 11. 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. 12. Michael T. Bourne a former Union Township Auditor provided tte following information: a. He served as an auditor from 1981 through 1987. b. He never, as an auditor, approved any insurance benefits for the township supervisors prior to 1988 Mr. Daniel Nurnberger Page 7 c. The auditors never approved overtime or holiday pay for supervisors. 13. Donald M. Bucich a Union Township auditor provided the following information: a. He served as an auditor from 1983 to the present. b. He never as an auditor approved any insurance benefits for the township supervisors prior to 1988. c. In 1983 the supervisors were advised by the auditors that they could not receive insurance benefits without auditor approval. d. He had seen an article in a newspaper and showed it to the supervisors. e. The supervisors and the solicitor disagreed with the auditors until 1987 when the solicitor changed his opinion. f. The supervisors never asked the auditors for insurance benefits. g- The auditors never approved overtime or holiday pay for supervisors. 14. You provided the following information in relation to this situation: a. Township employees began receiving insurance benefits in the late 196O's. b. You also were receiving benefits at that time. c. You were not aware that the auditors had to approve insurance benefits as part of your compensation. d. Your insurance coverage was cancelled in the beginning of 1987. e. All of the township supervisors received insurance benefits at the township's expense. Mr. Daniel NurrhPrger Page 8 f. 9- All of the supervisors were appointed ruadmasters. In 1987 the solicitor advised that audit necessary to receive these benefits. h. The relationship between the auditors ant . was not good. supervisor i. A prior solicitor opinion in 1983 indicated that auditor approval was not necessary. j- approval wa._, You were never surcharged for the insurance benefits k. You believe that the auditors were not doing their jobs. B. Discussion: As a township supervisor, you arc 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 folloc :: 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 ;J life insurance benefits when such supervisor acts only in capacity of a supervisor. Krane, Opinion 84 -001; Cow_p, (pinion 84 -010. Additionally, even if such a supervisor is employed by the township as a superintendent, secretary /treasur - roadmaster or laborer in accordance with the Second Class To•- •nship Code, such benefits are considered compensation and must, therefore, be Mr. Daniel Nurnberger Page 9 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 Report of Muncy 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 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 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 without gain." (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 Township, 27 D b 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: Resort of Audit of South Union Township, 47 Pa. Commw. 1; 407 A.2d 906, (1979). In the instant matter, you have been the township supervisor /roadmaster as well as road foreman and inspector. The record reflects that you have received township paid benefits since 1977. 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 was given in this case as can be verified from the auditor's minutes and statements of the auditors themselves. 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 Mr. Daniel Nurnberger Page 10 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. See Allegheny County v. Grier, 179 Pa. 639, 36 A. 353, (1987); McCutcheon v. State Ethics Commission, supra; Kestler Appeal, 66 Pa. Commw. 1, 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 investigatior 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 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. Mr. Daniel Nurnberger Page 11 Although Section C of Act 41 addresses the questions of amnesty as to insurance benefits that were received by non- employee supervisors and hence does not address the question of insurance benefits that were received by employee supervisors who did not get auditor approval, it is noted that Section 2 of the Act provides for a blanket amnesty to "elected officials, except township supervisors who are provided for in Section 525, [Section C] and appointed township officials who are not employees of the township." Since working employee supervisors are elected officials and since this category of supervisors was not provided for in Section 515, Section 2 is then applicable and 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 such 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, any insurance benefit that you received between January 1, 1959 and March 31, 1985 would implicate Section 3(a) of the Ethics Act; however, no penalty or assessment may be charged for the benefits received in this period due to the amnesty provisions of Act 41 of 1988. The receipt of said insurance benefits after March 31, 1985 would transgress Section 3(a). In this case, you received a financial gain of $638.96 for the period of April 1, 1985 forward. The foregoing amount must be returned to your governmental body, Union Township. 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." Fir. Daniel Nurnberger Page 12 2. Section 3(a) of the Ethics Act is implicated when you received various insurance benefits at township expense for the period up to March 31, 1985; however, since House Hill 1577 of 1988, which was signed into law as Act 41 of 1988, provides amnesty as to the receipt of those benefits, no penalty or assessment may be charged for the receipt of those benefits during that period. 3. You violated Section 3(a) of the Ethics Act when you received a gain through public office consisting of township paid insurance benefits which gain is not compensation provided for by law in that such benefi% • had not been fixed and approved by the township auditors as part of your lawful and authorized compensation for the period April 1, 1985 forward. 4. The financial gain which you received and which was nrt part of the compensation provided by law amounts to *638.96. 5. You are hereby ordered to remit to the State Ethics Commission, within thirty (30) days of the date of this order, the amount of *638.96, 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 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. Mr. Daniel Nurnberger Page 13 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, eAbtxl.kupz- Joseph W. Marshall, III Chairman STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108-1470 TELEPHONE (717) 783 -1610 October 24, 1988 Mr. Daniel Nurnberger R.D. 1 Finleyville, PA 15332 Re: Order No. 668, File No. 87 -026 -C On October 14, 1988, the State Ethics Commission received your payment for reimbursing Union Township as required by Order No. 668. We have forwarded your check No. 790 dated October 8, 1988, in the amount of $638.96 to Union Township. This letter will be part of the Order and a public record as such. JJC /na cc: Public Binder Sin rc elTy hn J. •nti'no Exec ve Director