HomeMy WebLinkAbout727 FegleyMr. Paul Fegley
R.D. #2, Grier City
Box 120A
Barnesville, PA 18214
Re: 88 -096 -C
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
Order No. 727
Before: Helena G. Hughes, Chair
Robert W. Brown, Vice Chair
W. Thomas Andrews
G. Sieber Pancoast
James M. Howley
Date Decided: September 26, 1989
Date Mailed: September 28, 1989
Dear Mr. Fegley:
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 not 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
Mr. Paul Fegley
Page 2
of his immediate family, or a business with which
he is associated. 65 P.S. 5403(a).
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.
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
employees and the township may pay for their insurance but
such must be approved by the auditors. George Pinkey stated
Mr. Paul Fegley
Page 3
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.
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.
Mr. Paul. Fegley
Page 4
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.
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
Mr. Paul Fegley
Page 5
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.
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
Mr. Paul Fegley
Page 6
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.
He was advised by the State
such was acceptable.
h. During 1984, he decided not
benefits in 1985.
g.
•
Association of Supervisors that
to have the township pay for his
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.
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.
Mr. Paul Fegley
Page 7
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. §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.
g -
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
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, 109 Pa. Commw. Ct. 432, 531 A.2d 536 (1987). In the
cited case, the Court held inter alia that a township supervisor
Mr. Paul Fegley
Page 8
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 cTain." (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 served as a roadmaster from January,
1988 to the present. You and your family received medical insurance
at township expense in 1987 and 1988. In 1987, you were not a working
supervisor in the township; in 1988, you were a working roadmaster
and there was approval by the auditors for medical coverage but it did
not extend to family members.
Based upon the above legal analysis, it is clear that you and
your family were not entitled to township paid coverage in 1987 and
your family was not entitled to such coverage in 1988. Therefore, the
receipt of these benefits, being unauthorized in law, violated Section
3(a) of the Ethics Act as a financial gain other than compensation
provided by law.
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; Restler Appeal,
66 Pa. Commw. 1, 444 A.2d 761, (1982). As a result, you must
reimburse the township for this financial gain.
Mr. Paul Fegley
Page 9
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
5409(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 5409(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 $1,169.04 ($427.34 in 1987 and $741.70 in 1988).
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.
Mr. Paul Fegley
Page 10
3. The total gain you received in violation of Section 3(a) of
the Ethics Act referenced by paragraph 2 amounts to
$1,169.04.
4. Since you have made restitution of the $1,169.04 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.
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 52.38.
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, z
e tr -%f/
elena G. Hughes
Chair
Mr. Robert Shook
Page 11
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. 5403(a).
This Commission, in the past, has reviewed the above provision of
law specifically regarding the issue of expense allowances in
relation to certain public officials and the retention of excess funds
relating to such expense allowances. Generally, in reviewing the
county code provisions in relation to expense allotments for officials
who attend the annual meeting of the State Association of County
Officials, this Commission specifically determined that such officials
were only entitled to receive their expense allowances as actually
incurred up to and not exceeding certain per diem amounts for
attendance at such meetings. The Commission made this determination
based upon a specific review of the county code provisions allocating
such expense allowances and under the provisions of the State Ethics
Act as applied thereto. The Commission further determined that any
funds in excess of this amount, received and retained by said
officials through their official positions, would constitute
financial gain other than the compensation provided for by law and,
thus, be a violation of Section 3(a) of the State Ethics Act. See
Bigler, 85 -020.
Specifically, the Commission determined that because the
municipal code only permitted expense reimbursements for actual
expenses or within a certain dollar amount, funds requested and
received in excess of the permitted amount through the public
official's office and retained by said public official would
constitute a financial gain other than the compensation provided by
law. Public officials who, through their public positions, receive
and retain excess funds would thus be in violation of Section 3(a) of
the State Ethics Act.
Our position in relation to this analysis was reaffirmed in
Hawkins, 368. In Hawkins, this Commission determined that a county
sheriff had violated Section 3(a) of the State Ethics Act when,
through his position, he requested and received expense allowances for
attendance at a state sheriff's convention in excess of that which was
permitted by the code. Specifically, the county sheriff received
certain funds even though he had not attended the convention.
Additionally, he had received funds in excess of that specifically
allowed by the county code. Similarly, we determined that county
official would not be permitted to receive reimbursement for attending
a convention of the official's organization if such individual did
not, in fact, attend. See Shultz 369. Our analysis in all of these
cases was based upon long standing judicial interpretation of these
provisions of law. See Bechak v. Corak, 414 Pa. 522, 201 A.2d 213,
Mr. Robert Shook
Page 12
(1964); Susquehanna County Auditor's report 118 Pa. Super 47, 180 A.
148, (1935); Walker v. Somerset County, 26 D & C 2d 775, (1961).
In the instant situation, in order to determine whether Section
3(a) of the Ethics Act has been implicated through the activity as
outlined in the findings of fact, we must first review what
compensation in the form of expense allowances is permitted by the
Second Class Township Code. Based upon a determination as to what
compensation is permitted, we will then be able to determine if you,
through your public position, obtained financial gain in the form of
excess expense allowances when such was not provided for by law as
part of your compensation.
The Second Class Township Code provides as follows in relation to
expenses for the attendance of township supervisors at annual
association conventions:
The supervisors may designate one or more of
the following elected or appointed officials of
the township to attend the annual meeting of the
State association: supervisors, township
secretary and /or township manager. Said
convention shall be held in the Commonwealth in
accordance with the procedures adopted byu the
State association. These delegates expenses shall
be paid by the respective townships out of the
township general fund. 53 P. S. §65611.
The expenses allowed the delegates attending
the annual meeting may be in an amount not
exceeding ninety dollars per day for each delegate
for not more than four days including the time
employed in traveling thereto and therefrom,
together with mileage going to and returning from
such meeting. 53 P. S. §65612.
This provision of law is virtually identical to the one that we
have reviewed in our previous opinion. Based upon that review as
applied herein, a township supervisor may not use his position to
obtain a financial gain in the form of excess expense allowances. The
above expense allowance provision as noted would require reimbursement
for actual expenses not to exceed $90 per day.
As to the PSATS Convention, you were overpaid by $133.80 which
you returned to the township. In addition, you received excessive
reimbursement of $160.43 for attendance at an April, 1986 seminar.
Mr. Robert Shook
Page 13
Finally, as to a September, 1986 workshop, you were overpaid by
$11.80.
Generally, 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. §409(a).
The Act further provides:
Section 9. Penalties.
(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. §409(c).
The State Ethics Commission also has the authority to make an
affirmative recommendation to an appropriate law enforcement
authority for the initiation of criminal charges pursuant to the
above provision of law or for the dismissal of charges depending upon
factual circumstances.
This Commission has also been granted the authority to offer the
opportunity to an individual who has obtained financial gain as a
result of a violation of the State Ethics Act the opportunity to
divest himself of said gain. See McCutcheon v. State Ethics
Commission, 77 Commw. Ct. 529, 466 A.2d 283, (1983). The Commission
has, on a number of occasions, offered individuals the opportunity to
divest themselves of the gain received and thereafter, recommended no
further criminal action. The financial gain that you received in the
instant situation equals $172.23.
You have made payment to Cambria Township in the amount of as
reimbursement for the excess expense money that you received. You
have thereby removed yourself from the conflict by making restitution
and hence no further action will be taken.
C. Conclusion and Order:
1. You, as a Township Supervisor are a public official subject
to the provisions of the State Ethics Act.
Mr. Robert Shook
Page 14
2. You violated Section 3(a) of the Ethics Act by receiving a
financial gain other than compensation provided by law when
you received payments in excess of those authorized in law
for attending PSATS conventions, workshops or seminars.
3. The financial gain referenced in paragraph two amounts to
$172.23.
4. Since you have removed yourself from the conflict by making
full restitution, no further action will be taken.
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.
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 §2.38.
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 the'Commission,
,Z J
Helena G. Hughes
Chair