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HomeMy WebLinkAbout718 SvetzMr. Joseph J. Svetz R.D. #2, Box 222 Tamaqua, PA 18252 Re: 88 -095 -C Dear Mr. Svetz: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Order No 718 Before: Helena G. Hughes, Chair G. Sieber Pancoast Dennis C. Harrington Michael J. Washo Date Decided: July 27, 1989 Date Mailed: July 28, 19 119 The State Ethics Commission received a complaint regarding you and a possible violation of the State Ethics Act, No. 170 of 1978, 65 P.S. 401 et. seq. You were notified in writing as to the commencement of the investigation and as to the specific allegation(s). The investigation has now been completed and a Findings Report was issued to you which constituted the Complaint by the Investigation Division of the State Ethics Commission. An Answer was filed and a hearing was deemed waived. The record is now completed. This Order of the Commission is hereby issued which sets forth the individual allegations, findings, discussion and conclusion as follows: I. Allegation: That you, a Supervisor for Rush Township, Schuylkill County, violated the following provisions of the Ethics Act (Act 170 of 1978), when you received medical insurance benefits at township expense and did not meet eligibility requirements: 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. S403(a). Mr. Joseph J. Svetz Page 2 A. Findings: 1. You serve as a township supervisor for Rush Township, Schuylkill County, Pennsylvania. a. You have served in this position from January, 1986. b. You are self employed in the sewer installation business. 2. Rush Township provided a medical and health insurance program for full -time township employees. a. You participated in this program and received benefits provided for with township funds. b. You advise that it was the practice in Rush Township to provide medical /health insurance benefits for full -time employees and supervisors who were not full -time even before you become a supervisor. 3. Minutes of the meetings of the Rush Township Board of Supervisors indicate the following regarding insurance benefits provided for township employees: a. January 6, 1986 - Mr. Svetz moved and Mr. Fegley seconded the motion that the same roadworkers previously appointed by the township be appointed. All individuals so appointed to receive a $.50 per hour raise; bringing the salaries to $5.70, $6.05, $6.35 per hour. All voted yes. Mr. Svetz moved and Fegley seconded the motion that the benefits for full -time township employees continue as they were which include: continued medical benefits, one week paid vacation, and seven paid holidays. All voted yes. b. January 5, 1987 - Mr. Svetz moved and Mr. Fegley seconded the motion that the same roadworkers as in 1986 be appointed at the same wages. All voted yes. Mr. Svetz moved and you seconded the motion that the benefits for full -time employees would continue as in 1986. All voted yes. c. June 4, 1987 - during public participation, George Pinkey asked if the solicitor had checked into the issue of the supervisors health insurance. Attorney DeSantis replied that he reviewed the matter and determined that if the supervisors were employed by the township then they become Mr. Joseph J. Svetz Page 3 employees and the township may pay for their insurance but such must be approved by the auditors. George Pinkey stated that he is sure the supervisors would have no objection if he asked the Ethics Commission in Harrisburg to look into it. Supervisors replied that would be good. d. January 4, 1988 - Mr. Pinkey moved to appoint Paul Fegley roadmaster for 1988. Mr. Fegley seconded the motion, all voted yes. Mr. Fegley moved to appoint George Pinkey, assistant roadmaster for 1988. Mr. Hoppes seconded the motion. All voted yes Mr. Fegley moved that the township roadworkers all be retained and that compensation be increased as follows: equipment operators from $6.35 to $6.60 per hour, Truck drivers' compensation will be increased from $6.05 to $6.30 per hour and laborers from $5.70 to $6.00 per hour. Medical benefits are to continue and six paid vacations and seven paid holidays with one personal day to be provided. All voted yes. e. October 10, 1988 - Mr. Pinkey stated that there is one bill on the list of bills for Trustees Insurance Fund that has been the subject of debate with the supervisors. Mr. Fegley said that he is paying for his own insurance and that the time he went on the insurance program he was trying to prove a point. The solicitor for the township, at that time, had told him it was legal and he (Fegley) responded that if that's the case, put me on. Mr. Hoppes said that he doesn't have it and such was discontinued when he was no longer a full -time roadmaster. Mr. Pinkey said that since 1985, it is his interpretation of the law that it is not appropriate for a non - working supervisor to have the township pay that bill and he asked Attorney Semanchik if the township could institute proceedings to recover that money that had been paid for non - working supervisor's health insurance. Attorney Semanchik said that under the new Act (41 of 1988) it is perfectly clear that what the act provides amnesty for any payments made by the township toward the individuals' pension or health plan until March 31, 1985. Any payments after that date are unauthorized. Attorney Semanchik said that an individual would have a right to complain if the board wishes to question it. Mr. Pinkey moved that the township notify the Ethics Commission to investigate the insurance payments after March, 1985. Mr. Fegley seconded the motion. Mr. Pinkey and Mr. Fegley voted yes and Mr. Hoppes abstained. Mr. Joseph J. Svetz Page 4 4. Minutes of the Rush Township Board of Auditor meetings for the years 1979 through and including 1987 indicate no reference to any form of medical, health or other insurance for township supervisors employed by the township. a. Minutes of the auditor meetings of January 5, 1988 indicates medical coverage to continue for each supervisor, but not for family coverage. b. Minutes of the board of auditors meeting for 1989 during which compensation for supervisors was fixed do not indicate any mention of medical /health or other insurance for working supervisors. 5. By way of letter dated March 11, 1986, to the Rush Township Board of Supervisors from the township board of auditors, the supervisors are advised that the board of auditors have unanimously agreed that the Rush Township Supervisors will receive individual medical coverage. 6. By way of letter dated November 1, 1988 to Mr. Paul Fegley from Mark Semanchik, Esquire, Solicitor for the Rush Township Board of Supervisors, Mr. Svetz is advised as follows: a. The letter is being submitted at the request of the township board of supervisors. b. At the regular meeting of October 10, 1988, the board of supervisors, after reviewing the effects of Act 41 - 1988, determined that non - employee supervisors could not receive township provided for insurance benefits after March 31, 1985. c. The township had provided benefits for Mr. Fegley after March 31, 1985. d. Township records indicate that amounts were paid as follows: $427.34 during 1987 and $741.70 during 1988. e. It is further indicated that the township expects that this matter will be addressed and resolved within 10 days of the receipt of this letter. 7. Records of Rush Township indicate that receipt of payment in the amount of $1,169.04 was received from you on November 14, 1988. Mr. Joseph J. Svetz Page 5 a. Payment was made by way of check dated November 14, 1988 in the above mentioned amount payable from the Meridian Bank Account of S. Paul Fegley, Excavating and Hauling. b. Township records further contain a receipt dated November 14, 1988, indicating the township's receipt of the above amount and further indicating that such payment was made as reimbursement of township paid medical benefits for 1987 and 1988. 8. The township medical /health insurance program was administered through the Trustees Insurance Fund, Camp Hill, Pennsylvania. 9. Mark Semanchik, Solicitor for Rush Township, provided the following information in relation to the instant situation: a. He has served as solicitor for Rush Township from January, 1988 to the present. b. At the regular meeting of the township board of supervisors on October 10, 1988, the board reviewed the affect of Act 41 -1988. c. It was determined that a non - employee township supervisor may not receive medical insurance benefits paid by the township and that any benefits received prior to March 31, 1985, would be included in the amnesty provision for which reimbursement would not be required. d. Mr. Semanchik, as a result of the above review, advised that he sent letters to Mr. Svetz and Mr. Fegley demanding reimbursement of the township paid medical payments for the years 1986 through 1988. Mr. Svetz was asked to return $1583.88 and Mr. Fegley was asked to return $1169.04. e. Payment was made within 10 days of the receipt of that letter. 10. Joseph Svetz provided the following information in relation to the instant situation: a. He served as a township supervisor for Rush Township from January, 1976 to December, 1987. b. He was appointed as a township auditor in September, 1988 and has served in this role since that date. c. He served as an assistant township roadmaster from 1985 to 1987. Mr. Joseph J. Svetz Page 6 d. From 1959 through 1976, all Rush Township Supervisors had received medical insurance benefits at the township's expense. e. When he became a township supervisor in 1976, he did not accept payment for this coverage because such was provided for by his full -time employer. f. At a later point in time, he began to receive these benefits from the township. g. He was advised by the State Association of Supervisors that such was acceptable. h. During 1984, he decided not to have the township pay for his benefits in 1985. i. During 1986, the auditors apprised him that they would approve payment of insurance benefits for township supervisors and he, therefore, agreed to accept payment of the premiums. Former township solicitor, Paris DeSantis, had advised that the payment of these medical benefits by the township for supervisors was appropriate. k. He reimbursed the township in excess of $1500 for payments that had been made on his behalf. 11. You provided the following information in relation to the instant situation: a. You served as a township supervisor for Rush Township from January, 1986 to the present. b. You also served as a roadmaster from January, 1988 to the present. c. You are the individual who brought the payments of medical insurance premiums for Rush Township Supervisors out into the open. d. You were aware of the law and were aware of the fact that the State Ethics Commission has ruled on these issues. You were certain that such payments were illegal. Mr. Joseph J. Svetz Page 7 (1) You indicate that there may have been one supervisor who may not have taken coverage because he had medical insurance at his place of employment. e. You disagreed with former Solicitor Paris DeSantis whose oral opinion was that such payments were acceptable as long as they were not challenged. DeSantis never gave a written opinion on this issue. f. You were testing Mr. DeSantis when you allowed yourself to be put on the roles of the medical /health insurance program. You wanted to prove a point. g. You reimbursed the township in the amount of $1,169.04 representing the amount of premiums paid on your behalf. B. Discussion: As a township supervisor, you are a public official as that term is defined in the State Ethics Act. 65 P.S. S402; Sowers, Opinion 80 -050. As such, you are subject to the provisions of the Ethics Act and the restrictions therein are applicable to you. Initially, it is noted that Section 5 of Act 9 of June 26, 1989 provides, in part, as follows: "This amendatory act shall not apply to violations committed prior to the effective date of this act, and cause of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto." Since the occurrences in this case transpired prior to the effective date of Act 9 (June 26, 1989), we must apply the provisions of Act 170 of October 4, 1978, P.L. 883 to determine whether the Ethics Act was violated. Section 3(a) of the State Ethics Act quoted above specifically provides, in part, that a public official may not use public office to obtain a financial gain for himself other than compensation provided by law. 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 Mr. Joseph J. Svetz Page 8 supervisor. J(rane, 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. Haile 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,, 109 Pa. Commw. Ct. 432, 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 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 & 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, (1979). In the instant matter, you were not a full -time working supervisor of the township. You did not receive the requisite auditor approval for township paid insurance /health benefits and even if you did, such would be unavailing because you were not a full -time employee entitled to such coverage. The lack of auditor approval is reflected in the minutes of the auditor meetings for the calendar years 1979 through 1987. As to the 1986 calendar year, a letter of the auditors reflect an approval of payment for health insurance for the supervisors. The question arises as to whether there may be a retroactive approval for insurance coverage for 1987. This Commission has addressed the question of whether auditors may retroactively approve insurance benefits in prior determinations: Saunders, Opinion 85- 006 -R; Shaffer, Order 540. In these cases, it was held that auditors in a Mr. Joseph J. Svetz Page 9 January organizational meeting could not retroactively approve insurance benefits for prior years. The aforecited decisions were based upon a provision in the Second Class Township Code which states in part: The auditors of townships shall meet annually, at the place of meeting of supervisors, on the dav following the dav which is fixed by this act for organization of the township supervisors: and shall organize by the election of a chairman and secretary, and shall audit, settle, and adjust the accounts of the supervisors, . superintendents, roadmaster, treasurer, and tax collector of the township and fix the compensations for the current near authorized in Section 515 hereof." 53 P.S. S65542, (emphasis added). It is clear from the above quoted provision of law that the auditors must set the compensation on the day following the supervisors' organizational meeting. In any event, as noted above, you were not entitled to these benefits and hence the auditors did not have the power to fix a compensation that was not allowed by law and that was regulated by statute in the Second Class Township Code. See Nanovic Opinion 85- 005. It should also be noted that even if the above 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. Comm. 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 S409(a). Mr. Joseph J. Svetz Page 10 (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 S409(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. 5407 9(iii). See also McCutcheon v. State Ethics Commission, supra. This 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, you violated Section 3(a) of the Ethics Act when you received a total of $1,583.88 ($753.84 in 1986 and $830.04 in 1987). However, since you have made restitution, this Commission will take no further action. C. Conclusion and Order: 1. As a Rush Township Supervisor, 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 township paid insurance benefits for 1986 and 1987, which was compensation other then provided by law. 3. The total gain you received in violation of Section 3(a) of the Ethics Act referenced by paragraph 2 amounts to $1,583.88. 4. Since you have made restitution of the $1,583.88 to Rush Township, this Commission will take no further action. This Order is final and will be made available as a public document fifteen days after issuance. However, you may request reconsideration which will defer public release of this Order pending action on your request by the Commission. A request for reconsideration, however, does not affect the finality of this Order. Mr. Joseph J. Svetz Page 11 A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of your reasons as to why reconsideration should be granted in conformity with 51 Pa. Code S2.38. The files in this case will remain confidential in accordance with Section 8(a) of the Ethics Act, 65 P.S. 408(a) during the fifteen day period and no one, including yourself, unless the right to challenge this Order is waived, may violate confidentiality by releasing, discussing or circulating this Order. However, confidentiality does not preclude you from discussing this case with your attorney at law. Any person who violates 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, 65 P.S. 409(e). By th- Commission / elena G. Hughes Chair