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HomeMy WebLinkAbout1224 KrainesIn Re: Judith Kraines File Docket: X -ref: Date Decided: Date Mailed: Before: Daneen E. Reese, Chair John J. Bolger Frank M. Brown Susan Mosites Bicket Donald M. McCurdy Michael J. Healey 00- 039 -C2 Order No. 1224 11/15/01 11/30/01 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was held. The record is complete. Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter 11 of Act 93 of 1998, 65 Pa.C.S. §1101 et seq., which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under Act 93 of 1998. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with Chapter 11 of Act 93 of 1998. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Kraines, 00- 039 -C2 Page 2 I. ALLEGATION: That Judith Kraines, a (public official /public employee) in her capacity as a Controller for Berks County, violated the Sections 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act (Act 93 of 1998) when she used the authority of her office for the private pecuniary benefit of herself and /or a member of her immediate family and /or a business with which a member of her immediate family is associated by approving payments to her husband for pathologist fees which were in excess of amounts set in a contract between her husband and Berks County; and when the contract made with her husband, in excess of $500, was entered into without an open and public process, including public bidding and prior public notice of bids awarded. II. FINDINGS: A. Admitted Pleadings 1. Periodic notice letters were forwarded to Judith Kraines in accordance with the provisions of the Ethics Law advising her of the general status of the investigation. 2. The Investigative Complaint was mailed to the Respondent on February 2, 2001. 3. Judith Kraines has served as the Berks County Controller since January 1996. 4. Judith Kraines is married to Dr. Neil A. Hoffman. a. Dr. Neil A. Hoffman is a board certified forensic pathologist. b. Dr. Hoffman is the only board certified forensic pathologist in Berks County. 5. Dr. Hoffman and other pathologists from the Reading Hospital and Medical Center have been used by the Berks County Coroner's office to perform autopsy and other pathology services since at least January 1989. 6. Berks County's contractual relationship with Dr. Neil Hoffman pre -dates Judith Kraines' tenure as County Controller. a. Dr. Hoffman's business relationship with Berks County dates back to at least 1989. b. Judith Kraines has served as Controller since 1996. 7 Coroner Fatora gave Dr. Hoffman authorization to invoice the county at the rate of $600.00 per autopsy. 8. Throughout 1995 Hoffman invoiced Berks County $600.00 for each autopsy performed. a. Dr. Hoffman would invoice Berks County on a monthly basis for services performed, including autopsies. b. Invoices would be submitted directly to County Coroner William Fatora. c. Fatora would approve the invoices and forward them to the County Controller's office. Kraines, 00- 039 -C2 Page 3 d. The 1995 increase in autopsy fees to $600.00 per occurrence was not challenged by the former Controller. 9. The Office of Controller is responsible for preparing and compiling a bill list which is submitted to the County Commissioners for approval prior to payments being issued to vendors. 10. Effective March 1998 payments to Dr. Hoffman increased to $800.00 per autopsy. a. Kraines was the Controller at the time the fees increased from $600.00 to $800.00 per autopsy. 11. Between January 1996 and February 2000, Dr. Hoffman was compensated for performing 119 autopsies. a. Year Autopsies 1996 26 1997 31 1998 20 1999 35 2000 7* *Does not include four (4) autopsies paid by court order on December 15, 2000, at $1,200.00 each. 12. Dr. Hoffman was compensated at a rate of $600.00 per autopsy for sixty (60) autopsies ($36,000) invoiced for between January 1996 and February 1998. 13. Dr. Hoffman was compensated at a rate of $800.00 per autopsy for fifty -nine (59) autopsies ($47,200) he invoiced for between March 1998 and July 13, 2000. 14. Kraines was in office in 1998 when billings from Hoffman for autopsies increased from $600.00 to $800.00 per autopsy. 15. Based on the internal audit conducted by the Office of Finance and Budget, the Berks County Commissioners contracted with CBIZ Business Solutions to conduct an audit of the Office of Corner [sic]. a. The audit covered the period January 1997 through December 1999. 16. Berks County did not seek competitive sealed bids for autopsy or other pathology services prior to the July 13, 2000, agreement with Dr. Hoffman. 17. During the Commissioners' July 13, 2000, meeting, Kraines requested County Solicitor Alan Miller [to] provide her with a legal opinion stating that her processing of "Dr. Hoffman's bills presents no conflict of interest under Sections 1103(a) or 1103(f) of the Ethics Act." a. Kraines also requested [that] Solicitor Miller "state for the record how the public notice and disclosure requirements of Section 1103(f) of the Ethics Act have been complied with ..." b. Kraines stated that absent the opinion requested from Solicitor Miller she is not willing to continue "approving invoices from Dr. Hoffman." 18. Dr. Hoffman terminated his July 13, 2000, contract with Berks County effective Kraines, 00- 039 -C2 Page 4 August 26, 2000. 19. On September 9, 2000, Berks County entered into an independent contractor agreement with Forensic Pathology Associates, 120 South Cedercrest Boulevard, 2 Floor, Allentown, PA, to perform autopsy and other pathology services. a. Additional agreements for autopsy and other pathology services were entered into with Drs. Margaret Freeman, Jettie V. Hunt and Marc Filstein on September 28, 2000. B. Stipulation of Findings 20. The Investigative Division of the State Ethics Commission received a signed, sworn complaint alleging that Judith Kraines violated provisions of the State Ethics Act (Act 93 of 1998). 21. Upon review of the complaint the Investigative Division initiated a preliminary inquiry on June 19, 2000. 22. The preliminary inquiry was completed within sixty days. 23. On August 10, 2000, a letter was forwarded to Judith Kraines, by the Executive Director of the State Ethics Commission informing her that a complaint against her was received by the Investigative Division and that a full investigation was being commenced. a. Said letter was forwarded by certified mail, no. 7099 3400 4638 2349. b. The domestic return receipt bore the signature of Judith Kraines, with a delivery date of August 12, 2000. 24. Periodic notice letters were forwarded to Judith Kraines in accordance with the provisions of the Ethics Law advising her of the general status of the investigation. 25. The Investigative Complaint was mailed to the Respondent on February 2, 2001. 26. Judith Kraines has served as the Berks County Controller since January 1996. 27. Kraines' duties and responsibilities as County Controller are defined in the County Code, 16 P.S. §101 et seq. 28. The County Controller's signature must by law be affixed to all checks issued for payment of county bills. 29. Respondent Judith Kraines is and at all relevant times was married to Neil A. Hoffman, M.D. a. b. c. Dr. Hoffman is a board certified forensic pathologist. Dr. Hoffman is employed full -time as a pathologist at the Reading Hospital and Medical Center, Reading, Berks County. Dr. Hoffman is the only board certified forensic pathologist in Berks County. 30. At all times relevant to the subject allegation, Dr. Hoffman and other pathologists from the Reading Hospital and Medical Center have been used by the Berks County Coroner's office to perform autopsy and other pathology services. Kraines, 00- 039 -C2 Page 5 31. Berks County's contractual relationship with Dr. Neil Hoffman pre -dates Judith Kraines' tenure as County Controller. a. Dr. Hoffman's business relationship with Berks County dates back to at least 1979. b. Judith Kraines has served as Controller since 1996. 32. In October 1988, the Berks County Board of Commissioners entered into a contract with Dr. Neil A. Hoffman. a. This contract was effective January 1, 1989, and indicated it automatically renewed under the exact terms and conditions unless one of the parties hereto provided written notice to the other prior to December 15 annually. b. This contract was signed by County Commissioners Michael F. Feeney, Anthony Carabello, Glenn B. Reber, and by Dr. Neil A. Hoffman. 33. For items listed as contract services under the 1989 document, Dr. Hoffman was paid on a monthly basis pursuant to a monthly memorandum sent from Coroner Fatora to the Controller, Budget Director, Chief Clerk's Office, and the County Commissioner. a. For services listed as "non- contract services" under the document, Dr. Hoffman was paid pursuant to invoices sent to the Coroner and attached to a memorandum issued from the Coroner to the aforementioned recipients. 34. Specific financial terms of the agreement provided for Dr. Hoffman to receive a $7,000.00 per year retainer to cover external examinations, scene examinations, consultations, autopsy reviews, quality control of cases, professional referrals, and medical opinions for attorneys and insurance companies. a. Non - contracted services were identified as standard autopsies, forensic autopsies, x -rays, toxicology, specialized lab work, and court appearance fees. b. The agreement stated the non - contracted services were to be paid at the following rates: 1. Standard Autopsy - $380.00 2. Forensic Autopsy - $450.00 3. X -rays, toxicology and specialized lab work - As charged 4. Court appearances - $200.00 per appearance plus $75.00 per hour after the first two (2) hours c. The contract had an automatic renewal clause with any changes or notice of cancellation having to be made on or before December 15 of each year. 35. Until the year 2000, no other pathologist had a contract with Berks County. a. None of the other pathologists routinely provided the "contract" services as Kraines, 00- 039 -C2 Page 6 designated in the 1998 Hoffman agreement. b. None of the other pathologists received a retainer. c. When the other pathologists performed non - contracted services, such as autopsies, they were paid the same rate as Dr. Hoffman. 36. Between January 1989 and July 2000 Dr. Hoffman regularly performed autopsy and other pathology services for Berks County. a. This work was done at the direction of Coroner William Fatora, on an as needed basis. b. Both Dr. Hoffman and other pathologists performed pathology services for the county during this time period. 37. Resolution No. 694 -89 was approved by the Berks County Commissioners authorizing an addendum to the contract with Neil Hoffman extending the contract for calendar year 1990. a. All fees were to remain at $380.00 and $450.00 except for court testimony and appearances. 38. Between 1989 and July 13, 2000, the financial terms of Resolution 694 -89 were not formally amended. 39. In 1995 Dr. Hoffman approached Coroner Fatora seeking an increase in autopsy fees paid to $600.00 per autopsy for himself and all other pathologists performing work on behalf of the Berks County Coroner's Office. a. Dr. Hoffman requested the increase because other pathologists were charging approximately double the amount charged to Berks County per autopsy. b. Coroner Fatora did not tell Dr. Hoffman he would need to renegotiate terms of his 1989 agreement to reflect the increase in autopsy fees. 40. Coroner Fatora gave Dr. Hoffman authorization to invoice the county at the rate of $600.00 per autopsy. 41. The county commissioners did not by resolution at a public meeting approve the increase to $600.00 per autopsy. 42. Throughout 1995 Dr. Hoffman and the other pathologists invoiced the Berks County Coroner $600.00 for each autopsy performed. a. Dr. Hoffman and other pathologists would invoice the Berks County Coroner as services were performed, including autopsies. b. Invoices would be submitted directly to County Coroner William Fatora. c. Fatora would approve the invoices and forward them to the County Controller's office. d. The 1995 increase in autopsy fees to $600.00 per occurrence was not challenged by the former Controller, the Budget Director, the Solicitor, or the Commissioners. Kraines, 00- 039 -C2 Page 7 43. The Office of Controller prepares and compiles a bill list which is submitted to the County Commissioners for approval prior to payments being issued to vendors. a. The bill lists are compiled from invoices submitted by various county departments and invoices submitted directly to the Controller. b. The bill list and invoices are reviewed by the Budget Director's office prior to them being submitted to the Commissioners. 44. When Judith Kraines took office as Controller in January of 1996, Dr. Hoffman and the other pathologists were invoicing the Coroner for autopsies at a rate of $600.00 per occurrence. Per the original contract, Dr. Hoffman continued to receive $7,000.00 annually for his consulting services. 45. Judith Kraines, as County Controller, did not question the payment of $600.00 per autopsy fee to Dr. Hoffman or other pathologists after she became Controller, in January 4996 [sic]. 46. Between January 1996 and December 1997 Dr. Hoffman and other pathologists invoiced the Coroner and were paid by the county for autopsies at a rate of $600.00 per occurrence. 47. In November 1997 Dr. Hoffman discussed with Coroner Fatora increasing for himself and the other pathologists at Reading Hospital the rate for autopsy fees from $600.00 to $800.00 per occurrence beginning with work performed in 1998. a. Thereafter, each increased invoice for autopsies at the new rate of $800 per occurrence was submitted to the Coroner for payment. b. Fatora would approve the invoices and forward them to the County Controller's Office. 48. The Berks County Board of Commissioners did not formalize any agreement with Dr. Hoffman or any other pathologists increasing autopsy fees to $800.00 per occurrence during 1998 for him or any of the other pathologists. 49. Payments to the pathologists in Berks County were increased to $800 per autopsy for work done in 1998. a. The increase was not approved by resolution at a public meeting by the County Commissioners. b. Kraines was the Controller at the time the fees invoiced to the Coroner increased from $600.00 to $800.00 per autopsy. 50. Procedurally, payments made to pathologists for services rendered to the County were made as follows: a. Invoices from Dr. Hoffman and other pathologists were submitted to the Coroner's Office for payment. b. On a monthly basis Coroner Fatora would prepare a report detailing each invoice and payment and send the report with a signed cover memo, evidencing his approval, to the Board of Commissioners, the Budget Director and the Controller. He attached the invoices and memos requesting payments to the Controller's copy of the report. Kraines, 00- 039 -C2 Page 8 c. The Controller would review the invoices, assigning voucher numbers and creating bill listings. d. The bill lists and individual invoices were provided to the Budget Director's office for review by his staff. e. The Budget Director's office has four hours to review the week's invoices. f. The Budget Director's office reviews the invoices and any supporting documentation to insure [sic] the budget line has been properly coded, sufficient budget dollars exist for the item and there is proper authorization for the invoice. g. h. After review by the Budget Director's staff, the bill list is forwarded to the Commissioners for their approval. The Commissioners sign an authorization to place their signatures on the checks. Once the Commissioners approve the bill lists, checks are signed by the county's data processing center. k. Printed checks include computer generated signatures of at least two (2) commissioners, the Controller and treasurer. Printed checks are distributed from the county treasurer's office. 51. Between January 1996 and September 2000, Kraines, in her official capacity as Controller, or her designee, participated in the process to issue payments to Dr. Neil A. Hoffman and other pathologists for autopsy and other professional services. J. In the event an impropriety is detected by the Budget Director's office that cannot be immediately corrected, the bill is pulled and will not be submitted to the commissioners for their approval. a. This includes the increase in autopsy fees to $800.00 per autopsy. b. Neither Kraines herself nor her Deputy Controller compared the invoiced rates submitted by Dr. Hoffman and other pathologists with contractually approved amounts. c. Neither Kraines nor any Controller or Deputy Controller or the Budget Director's office or the Commissioners discovered any impropriety with the autopsy fees invoiced to the Coroner. 52. Between 1996 and 2000, Berks County made payments totaling $122,220.65 to Dr. Hoffman for autopsy and other professional services. Annual totals are as follows: a. Year No. of Payments Total Paid 1996 13 $23,299.96 1997 12 $28,099.96 1998 12 $23,650.46 1999 14 $37,780.15 2000 6 $ 9,390.12 53. Kraines' signature was affixed to all 57 checks issued to her husband between 1996 Kraines, 00- 039 -C2 Page 9 and 2000 for services rendered by him contract and covered by court orders. 54. Dr. Hoffman['s] invoices to the Berks Cou services performed as follows except the was not invoiced: Voucher Voucher Invoice Date No Amount Date 01/18/96 059895 $2,383.33 01/18/96 12/18/95 10/20/95 12/18/95 02/15/96 062794 $1,783.33 01/16/96 01/10/96 02/01/96 03/14/96 287219 $583.33 03/01/96 04/11/96 290135 $2,083.33 04/01/96 03/01/96 03/06/96 03/14/96 05/09/96 292943 $2,583.33 05/01/96 04/10/96 04/10/96 04/09/96 04/08/96 06/13/96 296599 $583.33 06/03/96 07/11/96 299595 $1,183.33 06/28/96 07/01/96 08/15/96 303404 $3,783.33 07/12/96 07/03/96 07/03/96 07/22/96 07/10/96 07/29/96 08/01/96 09/12/96 306171 $1,183.33 09/03/96 08/06/96 10/10/96 309200 $3,583.33 08/30/96 09/03/96 09/09/96 09/17/96 09/19/96 10/01/96 10/17/96 310312 $600.00 09/24/96 on the aforesaid contract, outside the my Coroner detailed autopsy and other contracted monthly amount of $583.33 Services Forensic Consult Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Service Prof. Service Prof. Service Testimony Autopsy Autopsy Prof. Service Autopsy Autopsy Witness Fee Autopsy Prof. Service Autopsy Prof. Service Witness Fee Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Service Prof. Service Autopsy Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Service Autopsy Cost $583.33 $600.00 $600.00 $600.00 $600.00 $600.00 $583.33 $583.33 $583.33 $300.00 $600.00 $600.00 $583.33 $600.00 $600.00 $200.00 $600.00 $583.33 $600.00 $583.33 $200.00 $600.00 $600.00 $600.00 $600.00 $600.00 $583.33 $583.33 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $583.33 $600.00 Kraines, 00- 039 -C2 Page 10 11/14/96 313089 $583.33 11/01/96 Prof. Service $583.33 12/12/96 316016 $2,383.33 10/31/96 Autopsy $600.00 10/31/96 Autopsy $600.00 10/31/96 Autopsy $600.00 12/01/96 Prof. Service $583.33 Voucher Voucher Invoice Date No Amount Date Services Cost 01/16/97 319442 $2,083.33 12/06/96 Witness Fee $300.00 12/27/96 Autopsy $600.00 12/18/96 Autopsy $600.00 01/02/92 Prof. Service $583.33 02/13/97 322317 $2,383.33 01/09/97 Autopsy $600.00 01/07/97 Autopsy $600.00 01/08/97 Autopsy $600.00 02/03/97 Prof. Service $583.33 03/13/97 325427 $883.33 02/25/97 Witness Fee $300.00 03/03/97 Prof. Service $583.33 04/10/97 328334 $3,783.33 03/18/97 Witness Fee $200.00 03/03/97 Autopsy $600.00 03/03/97 Autopsy $600.00 03/04/97 Autopsy $600.00 03/18/97 Autopsy $600.00 03/18/97 Autopsy $600.00 04/01/97 Prof. Service $583.33 05/08/97 333891 $3,583.33 04/08/97 Autopsy $600.00 04/22/97 Autopsy $600.00 04/01/97 Autopsy $600.00 04/28/97 Autopsy $600.00 04/30/97 Autopsy $600.00 05/02/97 Prof. Service $583.33 06/12/97 337626 $1,783.33 05/05/97 Autopsy $600.00 05/27/97 Autopsy $600.00 05/29/97 Prof. Service $583.33 07/11/97 340988 $2,083.33 06/19/97 Witness Fee $300.00 06/16/97 Autopsy $600.00 06/20/97 Autopsy $600.00 07/01/97 Prof. Service $583.33 08/15/97 344758 $2,983.33 07/07/97 Autopsy $600.00 07/07/97 Autopsy $600.00 07/07/97 Autopsy $600.00 07/30/97 Autopsy $600.00 08/01/97 Prof. Service $583.33 09/12/97 347464 $1,783.33 08/05/97 Autopsy $600.00 08/06/97 Autopsy $600.00 09/02/97 Prof. Service $583.33 Kraines, 00- 039 -C2 Page 11 10/10/97 350412 $583.33 10/01/97 Prof. Service $583.33 11/14/97 354411 $4,183.33 10/29/97 Autopsy $600.00 10/30/97 Autopsy $600.00 10/24/97 Autopsy $600.00 10/22/97 Autopsy $600.00 10/16/97 Autopsy $600.00 10/03/97 Autopsy $600.00 Voucher Voucher Invoice Date No Amount Date Services Cost 11/02/97 Prof. Service $583.33 12/05/97 356460 $1,983.33 11/03/97 Witness Fee $850.00 11/19/97 Witness Fee $200.00 11/18/97 Witness Fee $350.00 12/01/97 Prof. Service $583.33 01/23/98 361217 $1,183.33 12/18/97 Autopsy $600.00 01/03/98 Prof. Service $583.33 02/13/98 363540 $2,521.33 01/30/98 Witness Fee $238.00 01/16/98 Witness Fee $500.00 01/13/98 Autopsy $600.00 01/13/98 Autopsy $600.00 02/02/98 Prof. Service $583.33 03/13/98 366667 $583.33 03/02/98 Prof. Service $583.33 04/09/98 370166 $5,695.83 03/18/98 Autopsy $800.00 03/19/98 Witness Fee $312.50 03/06/98 Autopsy $800.00 03/18/98 Autopsy $800.00 03/27/98 Autopsy $800.00 03/25/98 Autopsy $800.00 03/26/98 Autopsy $800.00 04/01/98 Prof. Service $583.33 05/15/98 374266 $2,183.33 04/07/98 Autopsy $800.00 04/07/98 Autopsy $800.00 05/01/98 Prof. Service $583.33 06/12/98 377231 $2,383.33 06/01/98 Prof. Service $583.33 05/27/98 Witness Fee $200.00 05/13/98 Autopsy $800.00 05/11/98 Autopsy $800.00 07/17/98 380979 $1,383.33 07/01/98 Prof. Service $583.33 07/01/98 Autopsy $800.00 08/14/98 383978 $583.33 08/01/98 Prof. Service $583.33 09/11/98 387129 $3,783.33 09/01/98 Prof. Service $583.33 08/05/98 Autopsy $800.00 08/05/98 Autopsy $800.00 08/14/98 Autopsy $800.00 Kraines, 00- 039 -C2 Page 12 10/09/98 389918 $583.33 11/13/98 394543 $1,383.33 12/04/98 396418 $1,383.33 Voucher Voucher Date No Amount 01/15/99 401492 $2,183.33 01/22/99 402243 $275.93 02/19/99 405732 $1,933.33 03/12/99 408564 $5,583.33 04/09/99 411793 $1,883.33 05/07/99 05/14/99 414886 $279.26 415861 $5,383.33 06/11/99 419122 $970.83 07/16/99 422853 $3,783.33 08/20/98 10/01/98 10/21/98 11/01/98 11/25/98 11/25/98 Invoice Date 12/24/98 11/27/98 01/01/99 12/23/98 01/12/99 01/21/99 01/07/99 01/28/99 02/01/99 02/18/99 11/02/98 02/19/99 02/16/99 02/01/99 02/09/99 02/09/99 03/01/99 04/05/99 04/05/99 04/05/99 04/01/99 04/23/99 04/05/99 04/05/99 04/13/99 04/20/99 04/26/99 04/28/99 05/01/99 05/11/99 06/01/99 06/23/99 06/29/99 06/24/99 06/29/99 07/01/99 Autopsy Prof. Service Autopsy Prof. Service Prof. Service Autopsy Services Autopsy Autopsy Prof. Service Autopsy Slides Autopsy Slides Witness Fee Witness Fee Autopsy Prof. Service Witness Fee Autopsy Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Service Witness Fee Witness Fee Autopsy Prof. Service Witness Fee Autopsy Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Service Witness Fee Prof. Service Autopsy Autopsy Autopsy Autopsy Prof. Service $800.00 $583.33 $800.00 $583.33 $583.33 $800.00 Cost $800.00 $800.00 $583.33 $224.25 $51.68 $350.00 $200.00 $800.00 $583.33 $200.00 $800.00 $800.00 $800.00 $800.00 $800.00 $800.00 $583.33 $300.00 $200.00 $800.00 $583.33 $279.26 $800.00 $800.00 $800.00 $800.00 $800.00 $800.00 $583.33 $387.50 $583.33 $800.00 $800.00 $800.00 $800.00 $583.33 Kraines, 00- 039 -C2 Page 13 08/13/99 426059 09/10/99 429193 10/15/99 433169 Voucher Date No. 11/12/99 436037 12/10/99 439493 01/14/00 443459 02/11/00 447037 03/17/00 451644 05/26/00 06/09/00 09/22/00 *12/15/00 459073 460685 472624 482749 $2,983.33 $1,383.33 $4,583.33 Voucher Amount $2,570.83 $3,983.33 $6,183.33 $583.33 $690.13 $450.00 $583.33 $900.00 $5,868.75 08/03/99 08/03/99 08/03/99 08/02/99 08/13/99 08/27/99 10/01/99 09/16/99 Invoice Date 09/21/99 09/21/99 09/21/99 09/16/99 10/18/99 10/01/99 10/07/99 11/01/99 11/05/99 11/12/99 11/10/99 11/11/99 11/11/99 12/01/99 12/27/99 12/27/99 12/28/99 12/28/99 12/28/99 12/28/99 12/29/99 01/03/00 02/01/00 02/29/00 03/01/00 05/09/00 06/01/00 09/06/00 10/05/00 10/05/00 10/05/00 10/05/00 11/21/00 10/19/00 Autopsy Autopsy Autopsy Prof. Service Autopsy Prof. Services Prof. Services Autopsy Services Autopsy Autopsy Autopsy Autopsy Witness Fee Autopsy Autopsy Prof. Services Witness Fee Autopsy Autopsy Autopsy Autopsy Prof. Services Autopsy Autopsy Autopsy Autopsy Autopsy Autopsy Autopsy Prof. Services Prof. Service Transparencies Prof. Services Witness Fee Prof. Service Witness Fee Autopsy Autopsy Autopsy Autopsy Witness Fee Witness Fee $800.00 $800.00 $800.00 $583.33 $800.00 $583.33 $583.33 $800.00 Cost $800.00 $800.00 $800.00 $800.00 $387.50 $800.00 $800.00 $583.33 $200.00 $800.00 $800.00 $800.00 $800.00 $583.33 $800.00 $800.00 $800.00 $800.00 $800.00 $800.00 $800.00 $583.33 $583.33 $106.80 $583.33 $450.00 $583.33 $900.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $618.75 $450.00 Kraines, 00- 039 -C2 Page 14 *Paid per Order of Court 55. Between January 1996 and February 2000, Dr. Hoffman was compensated for performing 119 autopsies. a. Year Autopsies 1996 26 1997 31 1998 20 1999 35 2000 7 56. Controller Kraines never sought advice through the State Ethics Commission on the issue of autopsy fees paid to Dr. Hoffman, her husband. a. Kraines did not compare whether payments made to her husband for autopsies were consistent with the terms of the 1989 contract. b. Kraines held office in 1998 when billings from Hoffman for autopsies increased from $600.00 to $800.00 per autopsy. 57. All invoices for payment were processed by the Controller's office in due course including those for autopsy fees and then submitted to the Board of Commissioners for formal approval and vote for payment after review by the Budget Director's office. 58. Based on an internal investigation into the Office of the Coroner by the Office of Finance and Budget, the Berks County Commissioners contracted with CBIZ Business Solutions to conduct an audit of the Office of Corner [sic]. a. The review covered the period January 1997 through December 1999. 59. As a result of questions being raised regarding potential Ethics Law violations such as the lack of [an] open and public process followed by the Board of Commissioners in procuring a new contract with her husband, on the advice of her Solicitor, Controller Kraines refused to approve any further payments for autopsy and other pathology services provided by Dr. Hoffman. 60. Commissioners Timothy Reiver and Judy Schwank approved county contract No. PC- 120 -2000 which Solicitor Alan Miller had negotiated on behalf of the Board of Commissioners with Dr. Hoffman on July 13, 2000, confirming the autopsy fees at $800. a. Terms of the contract included a $7,000.00 annual retainer for external examinations, scene examinations, criminal case testimony, education, attorney and insurance referrals and consultations. b. Additional charges of $800.00 per standard or forensic autopsy and $300.00 per court appearance with a $75.00 per hour fee after the first two hours were also agreed upon. c. Charges for x -ray, toxicology and specialized lab work are to be paid as charged. 61. This marked the first new written contract entered into between the county and Dr. Hoffman since Ms. Kraines had assumed the position of Controller. Kraines, 00- 039 -C2 Page 15 62. Berks County did not seek competitive sealed bids for autopsy or other pathology services prior to the July 13, 2000, agreement with Dr. Hoffman. 63. During the Commissioners' July 13, 2000, meeting, Kraines requested [that] County Solicitor Alan Miller provide her with a legal opinion stating that her processing of "Dr. Hoffman's bills presents no conflict of interest under Sections 1103(a) or 1103(f) of the Ethics Act." a. Kraines also requested [that] Solicitor Miller "state for the record how the public notice and disclosure requirements of Section 1103(f) of the Ethics Act have been complied with . . ." b. Kraines stated that absent the opinion requested from Solicitor Miller she is not willing to continue "participating in the approval of invoices from Dr. Hoffman" under the July 13, 2000, contract. 64. Dr. Hoffman terminated his July 13, 2000, contract with Berks County effective August 26, 2000. 65. On September 9, 2000, Berks County entered into an independent contractor agreement with Forensic Pathology Associates, 120 South Cedercrest Boulevard, 2 Floor, Allentown, PA, to perform autopsies and to prepare for court and testify. a. Additional agreements for autopsy and related services were entered into with Drs. Margaret Freeman, Jettie V. Hunt and Marc Filstein on September 28, 2000. 66. No one is currently under contract to perform the "contracted" services provided for under the agreements with Dr. Hoffman. 67. Judith Kraines did not have any role in the County's decision to utilize the services of Dr. Hoffman. 68. Judith Kraines did not have any role in the increase of autopsy fees paid to the pathologists. 69. During her tenure as Controller, Judith Kraines' office has suffered staff shortages. 70. Berks County does not have an efficient way to centrally file or research county contracts. 71. Berks County has over 12,000 contracts on file. 72. Statutorily, the Controller of Berks County is supposed to perform in excess of 100 audits annually, including auditing the row office accounts. 73. Mrs. Kraines' predecessor did not audit the Coroner's office. 74. Mrs. Kraines has caused one audit of the Coroner's office account to be completed during her tenure for the years 1995 -1996. a. The one audit completed by Kraines was not a forensic audit. 75. Mrs. Kraines is not a certified public accountant and does not hold a degree in accounting. Kraines, 00- 039 -C2 Page 16 76. The decision not to conduct additional audits of the Coroner's office was recommended by Audrey Kirkhoff, CPA, former Chief Deputy of the Controller's Office in charge of audits. 77. Ms. Kirkhoff supported her recommendation due to the principles of materiality and staffing issues. 78. The type of audit typically completed by a Controller's office would not have detected the issue concerning autopsy fees. 79. Most Controllers of third class counties have never audited their County Coroner's offices. Those Controllers who did audit their coroner, including Berks County, audited the coroner only once. 80. Dr. Hoffman is the only board certified forensic pathologist in Berks County and he is the most qualified pathologist in death investigations in Berks County. 81. Dr. Hoffman's [sic] and the other pathologist's [sic] autopsy fees for Berks County were at all times relevant hereto below market value. 82. The fees charged by Dr. Hoffman and the other pathologists represent a cost saving[s] to Berks County in comparison to the other pathologists in South Central Pennsylvania. 83. All services invoiced by Dr. Hoffman were performed in an efficient and professional manner. 84. In terms of autopsy fees, Dr. Hoffman was not treated any differently than the other licensed pathologists working at Reading Hospital. 85. The Coroner has discretion to determine which pathologist is to perform an autopsy. 86. The Coroner is the only official, other than a judge, who is authorized by law to order an autopsy. 87. The County's Coroner informed the solicitor for the Berks County Commissioners of the need to increase the pathologists' fees for autopsies. 88. By memo dated August 31, 1990, County Coroner William Fatora informed now Common Pleas Judge Jeffrey Schmehl, then County Solicitor, of the justification to increase the fees for autopsies. 89. The memo requested the County Solicitor to make the proper adjustments needed to the 1988 contract. 90. The County Solicitor never made any changes to the contract. 91. Again in 1995 the Coroner, in a document entitled Topics of Discussion, informed the County Commissioners of an increase in the autopsy fees. 92. The document contains a handwritten note from current County Solicitor Alan Miller indicating the document was maintained in the Solicitor's file concerning the Coroner's Office. 93. Prior to 1998, the County's Coroner oversaw two increases to the autopsy fees paid to pathologists without the County Commissioners requiring any amendment to the contract. Kraines, 00- 039 -C2 Page 17 94. When the increase occurred in 1998, the Coroner assumed he had the discretion to effectuate the change and did not believe a change to the ten year old document was necessary. 95. All pathologists work full -time for the Reading Hospital and Medical Center. 96. The pathologists perform their services at the request of, and on behalf of, the coroner, not Dr. Hoffman. C. Testimony 97. William A. Fatora served as the Berks County Coroner from February 1988 to February 2001. a. As Coroner, Fatora determined when an autopsy would be performed. 1. Autopsies are ordered when there is suspected criminality or an unknown cause of death. b. Autopsies were referred to Reading Hospital, usually to Dr. Hoffman, a forensic pathologist. c. Berks County and Hoffman entered into a contract for providing pathological services. d. Autopsy bills from Hoffman would be received by the coroner, held for the month, and then sent to the Controller's office. e. After Hoffman discussed raising his fees to the current rates with Fatora, he suggested that Hoffman submit his bills with the higher fees (of $600). f. For a period in 2000, the Controller's office held up some of Hoffman's bills for payment. g. The coroner's office was audited in 1997. h. Following another discussion between Hoffman and Fatora, Hoffman raised his fees from $600 to $800. 1. The $800 amount was suggested by Hoffman. Hoffman entered into a new contract with Berks County in July of 2000. 1. The contract provided for an $800 fee for autopsies which was the amount that Hoffman was already being paid. J. Hoffman's invoices were not only sent to the Controller's office but also to the budget secretary, chief clerk, and county commissioners. k. Fatora wrote a memo to the County Solicitor that there would be an increase in autopsy fees charged to the county as of January 1, 1991. Fatora referenced an increase in autopsy fees in a memo prepared for a county budget hearing, circa 1995. Kraines, 00- 039 -C2 Page 18 m. When Fatora was coroner, Hoffman was the only pathologist who had a contract with Berks County. 98. Terry L. Heckman has been the Berks County Budget Director since January 1996. a. Heckman's department prepares the master budget for the county, oversees payroll and financing transactions, and reviews bills to ensure that there is appropriated money in the budget. b. From 1993 through 1995, Heckman was Chief Deputy Controller under William Campbell. c. After Kraines was elected Controller but before she was sworn in, she visited the Office of Controller Campbell on two occasions. 1. On the one occasion, there was a conversation among Kraines, Campbell and Heckman. (a) Campbell stated to Kraines that because the Controller's Office dealt with matters involving her spouse, Kraines would have to be careful. d. Not only is there a printing process for county checks but there is also a manual process for issuing checks. 1. Circumstances occurred where the Controller refused to sign checks. e. Berks County has a process for paying its bills. 1. A majority of the invoices currently go to the Controller's Office. (a) Some bills, such as utility bills, go to the Purchasing Director. 2. An invoice is compared to a support document, such as a contract. 3. For the relevant time period, some invoices went to department heads, such as row officers. (a) The department would approve the payment of the invoice and forward it to the Controller's Office. (b) The County Commissioners must approve the payment of invoices. g. (c) The Controller is in a position to pay or withhold payment only after the County Commissioners give their approval. 4. The Controller's Office holds the county contracts. f. The Controller's Office has an oversight function to ensure that any bidding process complies with applicable rules. 1. The Controller's Office was present for bid openings. The Controller's Office would do spot checks to verify the correctness of certain invoices. Kraines, 00- 039 -C2 Page 19 1 Kraines has a more involved program than the spot check program which was in place when Heckman was in the Controller's Office. (a) Kraines' office audits have increased both in number and scope. h. When Heckman worked in the Controller's Office, the increase in Hoffman's fees was not detected. 99. Mark Christopher Scott has been a Berks County Commissioner since January 1996. a. Contracts are attached to resolutions voted on by the County Commissioners. (1) If the resolution is approved, it is signed and the contract is executed by the Commissioners. b. As to contracts for professional services, RFP's are advertised. (1) The proposals are opened by the Commissioners under the supervision of the Controller. (2) The proposals are evaluated by the department head. c. Problems with invoices should be flagged by the Controller's Office. d. Scott was unaware that Hoffman's autopsy fees increased during the 90's. e. Hoffman had a contract with Berks County in the late 1980's to provide forensic pathological services for the coroner's office. f. The County Commissioners have the ability to reject a payment for their own reasons. 100. Diane Walck is an employee in the Berks County Controller's Office. a. Walck processes bills for payment. (1) Invoices are entered into the computer and then forwarded to the budget office. (2) In the last year, Kraines began reviewing bills before they were entered into the computer. b. Checks may be manually processed in the county. c. In the absence of the Controller, the Deputy Controller has authority to use the signature plate for county checks. 101. Lisa Mayshak is employed by the Berks County Controller's Office. a. Mayshak compares invoices with the contracts that the county has with vendors. b. Contracts are physically maintained in a safe in the Controller's Office. Kraines, 00- 039 -C2 Page 20 c. Invoices are reviewed against contracts to determine whether payment shall be made. 102. Richard Tracy, a Certified Internal Auditor, is employed as the Deputy Controller in the Berks County Controller's Office. a. Tracy plans, schedules, and directs internal audits of the county. (1) Focus is placed in revenue areas where there is sole control of funds or large revenue streams. b. There are audits mandated by the County Code, such as, for the row officers, district justices and tax collectors. 103. Fred Fisher is an Accounts Payable Supervisor in the Berks County Controller's Office. a. For checks, the signature stamp or signature plate is in a safe. (1) It takes two people to get the stamp or plate. (2) There is a log which reflects who accesses the stamp /plate. b. Kraines' name as Controller was on the checks issued to Hoffman. (1) Her name was affixed by signature plate. 104. Judith Kraines is the Berks County Controller. a. When Kraines became Controller, internal controls were needed in the office. (1) There was a problem because of a lack of centralization as to contracts. b. Kraines had a problem in obtaining copies of contracts from the County Commissioners. c. Since approximately 1979 or 1980, Kraines knew that her spouse was providing professional services to Berks County. d. Kraines put an internal control in place as to related party transactions. (1) This applied to anyone in the Controller's Office as to a transaction involving a relative. e. Kraines does not recall that at the two meetings with Heckman and Campbell, Campbell told her about a conflict on her part as to her spouse's invoices. f. The Controller has the power to withhold making payment. g. Payments to Kraines' spouse were processed through the Controller's Office. h. Kraines never directed her staff to pull her spouse's contract in order to make a check against his invoices. Kraines, 00- 039 -C2 Page 21 105. For payments to Hoffman from January 1998 to December 15, 2000, Kraines did not sign in or sign out the signature plate for any invoice runs containing payments to her spouse. D. Documents 106. Exhibits ID -2 -6 are photocopies of the preliminary inquiry, investigation, notice to Kraines, and status reports. a. The Investigative Division complied with the statutory time requirements of the Ethics Act as to completion of the preliminary inquiry, investigation, notices, and issuance of the Investigative Complaint. 107. Exhibit ID -7 is in part a photocopy of a contract between Berks County and Hoffman for services to be provided by Hoffman for the Coroner's Office. a. The contract was effective January 1, 1989. b. The annual fee for delineated services is $7,000 per year. (1) Additional fees are $380 for a standard autopsy, $450 for a forensic autopsy, and $200 for court testimony plus $75 per hour after the first two hours. (2) Other fees are to be charged on a case by case basis. c. Resolution 694 -89 adopted on December 21, 1989, authorized a contract addendum as to the Hoffman contract. (1) The addendum provided inter alia: "Extension: Automatic extensions of this original contract and the addendum dated above shall automatically renew for an additional year under the exact same terms and conditions unless and until one to [sic] the parties heretg provides written notice to the other party on or before December 15 of each year." 108. Exhibit ID -8 are photocopies in part of a letter of the Berks County Coroner dated February 1, 1996, to Kraines as Controller and others, with the Coroner's Office report for January 1996 attached. a. The expenditures include, in part, payments to Hoffman which included autopsy fees in the amount of $600. (1) The $600 fees were in excess of the agreed fees as per the contract between Hoffman and Berks County. 109. Exhibit ID -10 is a photocopy of a contract between Hoffman and the Berks County Commissioners dated July 13, 2000. a. Hoffman, as independent contractor, would provide specified professional services as per Attachment A. (1) Enumerated services were to be performed for a payment of $7,000 per year. Kraines, 00- 039 -C2 Page 22 (2) Autopsies would be performed for $800 for a standard or forensic autopsy. Court testimony would be $300 per appearance plus $75 per hour after the first two hours. (3) 110. Exhibit ID -11 is a photocopy of a schedule of payments made to Hoffman while Kraines has been the Berks County Controller. 111. Hoffman received payments in excess of the contracted amount for autopsies as follows for the years 1996 through 2000: 1996 - $ 3,900 1997 - 4,650 1998 - 6,400 1999 - 12,250 2000 - 2.450 Total $29,650 112. Exhibit R -3 is a photocopy of a letter dated February 2, 1998, together with the Coroner's office report for January 1998, to Kraines and others. a. There are delineated payments to Hoffman. b. There are four invoices from Hoffman to the Coroner. (a) Two invoices are for forensic autopsies at $600 each. (b) One invoice relates to testimony and totals $500. (c) One invoice relates to testimony and totals $238. 113. Exhibit R -4 is a photocopy of a letter dated March 2, 1998, together with the Coroner's office report for February 1998, to Kraines and others. a. There are delineated payments to Hoffman totaling $1,831.48. III. DISCUSSION: At all times relevant to this matter, the Respondent, Judith Kraines, hereinafter Kraines, has been a public official subject to the provisions of the Public Official and Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401, et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 et seq., which Acts are referred to herein as the "Ethics Act." The allegations are that Kraines violated Sections 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act when she used the authority of her office for the private pecuniary benefit of a member of her immediate family by approving payments to her spouse for pathologist fees which were in excess of amounts set forth in a contract between her spouse and Berks County; and when contracts made between her spouse and Berks County, in excess of $500, were entered without an open and public process. Section 3/1103. Restricted activities (a) Conflict of interest. — No public official or public employee shall engage in conduct that constitutes a Kraines, 00- 039 -C2 Page 23 conflict of interest. 65 P.S. § 403(a)/65 Pa.C.S. §1103(a). The term "conflict of interest" is defined under Act 9 of 1989/Act 93 of 1998 as follows: Section 2. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of interest" does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. § 402/65 Pa.C.S. § 1102. Section 3(a)/1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 3(f)/1103(f) of Act 9 of 1989/Act 93 of 1998 provides: Section 3/1103. Restricted activities (f) No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 P.S. § 403(f)/65 Pa.C.S. § 1103(f). Kraines, 00- 039 -C2 Page 24 Section 3(f)/1103(f) of Act 9 of 1989/Act 93 of 1998 specifically provides in part that no public official /public employee or spouse or child or business with which he or the spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. facts. Having noted the issues and applicable law, we shall now summarize the relevant Even before Kraines became Controller, her spouse, Dr. Neil Hoffman (Hoffman), had provided pathological services for many years to the Berks County Coroner's Office. Subsequently, in October of 1988, the County Board of Commissioners entered into a contract with Hoffman for pathology and autopsy services, effective January 1, 1989. The terms of the contract provided that Berks County would pay Hoffman $7,000 annually to perform "contract" services. In addition, there were specified "non- contract" services which included $380 for a standard autopsy and $450 for a forensic autopsy. The contract contained an automatic renewal clause, the operation of which would cause the contract to renew under the exact same terms and conditions unless one of the parties would give written notice to the other party prior to December 15 of any year. In 1989, the Board of Commissioners passed a resolution authorizing an addendum to the contract, which extended the contract through the calendar year 1990 and re- established the fees for standard and forensic autopsies at $380 and $450 respectively. While this contract was in effect, Hoffman, on a few different occasions, had discussions with the coroner about Hoffman's autopsy fees being below the prevailing rate. As a result of the discussions, Hoffman raised the amount of his fees for performing autopsies. However, Hoffman did not approach the county commissioners about raising such fees. There were no further resolutions of the county board authorizing amendments to the initial contract. Hoffman submitted invoices and received payments at an increased rate of $600 per autopsy for the years 1995 through 1997, and $800 per autopsy for the years 1998 through January 2000. It was not until July of 2000 that the County entered into an entirely new contract with Hoffman which provided for a $7,000 annual retainer and an $800 fee per autopsy. In November of 1995, Kraines won the election for Berks County Controller. Prior to being sworn into office, Kraines met with the outgoing Controller, William Campbell, and his Chief Deputy, Terry Heckman. During one of those meetings, Campbell specifically cautioned Kraines that she would have to be careful because her spouse was submitting invoices to the Controller's Office. After Kraines became Controller, her office continued to process Hoffman's invoices along with the myriad of other county bills. The record does not reflect any specific directives by Kraines as to staff in the Controller's Office regarding processing Hoffman's invoices or cross checking Hoffman's invoices against his county contract. However, the record does reflect that Kraines' signature appeared on all of the Berks County checks that were issued to her spouse. The foregoing included those checks where Hoffman increased his autopsy fees from $450 to $600 and then to $800, despite his county contract which limited such autopsy fees to $450. The parties have filed briefs and reply briefs. The Investigative Division seeks violations of the Ethics Act arguing: Kraines' failure to perform the duties of the Controller's Office as provided in law constituted a use of authority of office; Kraines allowed her signature to be affixed to the checks payable to her spouse; Kraines failed to assign the oversight functions to the Deputy Controller as to Kraines, 00- 039 -C2 Page 25 her spouse's transactions; Kraines had prior knowledge of the conflict issue but failed to direct staff to crosscheck her spouse's invoices with his county contract; the 1989 contract between Hoffman and Berks County renewed annually as another new contract so that the failure to bid the contract after Kraines became Controller violated Section 3(f)/1103(f) of the Ethics Act; the failure to bid the 2000 contract between Hoffman and the County which was in excess of $500 violated Section 1103(f); each autopsy contract that exceeded $500 required an open and public process; and Kraines should pay restitution of $64,650 based upon violations of Sections 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act. Kraines asserts that she did not violate the Ethics Act and argues: Hoffman performed autopsies which were non - contract services; Kraines had no personal involvement in processing payments to her spouse; Kraines took no affirmative action to violate the Ethics Act; the county paid Hoffman the same amount for autopsies as other pathologists; the autopsy fees Hoffman received fell with the "de minimis" exclusion to conflict; Hoffman's 1989 contract with the county occurred before Kraines became Controller; Kraines had no authority to compel a contract through an open and public process; passivity by Kraines did not result in a violation of Section 3(a)/1103(a) of the Ethics Act; the County Code required checks to have Kraines' signature which is perfunctory; Kraines, as Controller, sets policy but does not handle the daily bill processing; the lack of annual audits of the Coroner's Office does not result in an Ethics Act violation; the County Code restricts the Controller from refusing approval as to any particular transaction; other offices in the county also failed to uncover the increases in autopsy fees over the contract amount; the singular 1989 contract extended to 2000; the county could not possibly bid every autopsy over $500; and Kraines completely removed herself from any involvement with processing payments to her spouse. Having highlighted the facts, issues, and positions of the parties, we preliminarily note that Kraines, at the hearing sought a dismissal alleging a lack of clear and convincing evidence to support a violation of Section 3(a)/1103(a) of the Ethics Act (Tr. at 403). We deny Kraines's Motion to Dismiss based upon the disposition below. We must now determine whether the actions of Kraines violated Sections 3(f)/1103(f) or 3(a)/1103(a) of Act 9 of 1989 as codified by Act 93 of 1998. As to the Section 3(f)/1103(f) allegation, the record reflects that in October 1988, the County Board of Commissioners entered into a contract with Hoffman for pathology and autopsy services, effective January 1, 1989. The contract provided that the County would pay Hoffman a $7,000 annual retainer to perform "contract" services, and certain set fees to perform "non- contract" services. The fees for "non- contract" services included $380 for a standard autopsy and $450 for a forensic autopsy. The contract contained a clause for an automatic renewal under the exact same terms and conditions unless one of the parties would give written notice to the other party prior to December 15 of each year. In 1989, the Board of Commissioners passed a resolution authorizing an addendum to the contract, which extended it through calendar year 1990 and reestablished the fees for standard and forensic autopsies at $380 and $450 respectively. Although there were no further resolutions of the Board authorizing amendments to the 1989 contract, Hoffman submitted invoices and received payments at an increased rate of $600 per autopsy for the years 1995 through 1997, and $800 per autopsy for the years 1998 through January 2000. It was not until July of 2000 that the County entered into an entirely new contract with Hoffman, which provided for a $7,000 annual retainer and an $800 autopsy fee. The question of whether Kraines violated Section 3(f)/1103(f) of the Ethics Act, given the above circumstances, raises a legal issue of whether a contract that is automatically renewed constitutes a new contract or a continuation of the original contract. Kraines, 00- 039 -C2 Page 26 It is incumbent upon us to resolve this issue so that we may determine whether Section 3(f)/1103(f) violation(s) occurred. If the automatic renewal clause did not have the legal effect of creating a new contract each year, then the original contract merely continued or extended so as to be already in place at the time Kraines took office as Controller in 1996. In Pennsylvania, a contract that automatically renews itself without a change in terms constitutes a continuation of the original contract rather than a new contract. In Flanagan v. Fidelity Bank, 438 Pa. Super. 516, 652 A.2d 930 (1995) the Superior Court held that a two -year certificate of deposit purchased in 1968, which provided that the bank would pay the principal amount plus 5% interest at maturity, and if not surrendered at maturity, the certificate of deposit would renew at its principal amount and "accrued interest," earned interest at its contractual rate of 5 %, where the owner did not present the certificate of deposit for payment until 1990. Superior Court stated: The old contract... paid five percent interest per year, compounded daily and posted quarterly. By using the term `renew,' the certificate of deposit does indicate the applicable interest rate: the originally stated rate of five percent. We see no reason to consider prevailing market rates, or read in a rate of zero percent, as the trial court did." Id. at 520. Based upon the old contract, the Superior Court awarded 5% interest for the entire period up to the time that the owner presented the certificate of deposit to the bank for payment. See also, Koynak v. Commonwealth of Pa., Aid to Nonpublic Educ., Dep't. of Educ., 11 Pa. Commw. 556, 314 A.2d 355 (1974) (Plaintiff's mandamus suit against the Department of Education to recover on a contract that was automatically renewed twice without a change in terms was in reality one claim based upon the original contract); and Scott v. Spezialetti, 72 Pa. D. & C.2d 269 (1975) (a lease containing a provision that it would automatically renew from year to year created a perpetual lease at a fixed rental rate). We find that the 1988 county contract did not become a new separate contract throughout its subsequent renewals. Coroner Fatora's "authorization" to Hoffman to invoice the County at the increased autopsy rates was not legally binding on the County since Fatora was not authorized to enter into or amend contracts on behalf of the County in the first place. See, The County Code, 16 P.S. § 1801 (county commissioners are sole contractors for the county); and Alco Parking Corp. v. Public Parking Authority of Pittsburgh, 706 A.2d 343 (Pa. Super. 1998) (oral promises made by chairman of public parking authority to a parking management corporation to renew a contract was not binding on the parking authority, where the chairman lacked authority to enter into contracts on behalf of the authority, and the contract was not in writing and signed by the chairman, as required by the authority's by- laws). Further, neither Hoffman nor Berks County ever gave notice of any changes prior to December 15 of each year as required by the contract. Aside from the addendum to the initial contract, the County Board of Commissioners never took any formal action to approve or ratify any changes to the contract. Since the terms and conditions of the initial contract remained unchanged throughout each of its renewals, we find that Kraines did not violate Section 3(f)/1103(f) of the Ethics Act as to the 1996, 1997, 1998, and 1999 contracts because such contracts, as renewed, constituted extensions of the original contract, which was already in place at the time Kraines took office as Controller in 1996. As to the 2000 contract, we likewise find no Section 3(f)/1103(f) violation by Kraines. As noted above, Section 3(f)/1103(f) of the Ethics Act specifically covers instances where the contracting occurs between the public official /public employee, his spouse, child or any business with which associated, and the governmental body with which the public official /public employee is associated. The Ethics Act defines "governmental body" as any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body, or other establishment in the Executive, Legislative or Judicial Branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function." 65 P.S. § Kraines, 00- 039 -C2 Page 27 402/65 Pa.C.S. § 1102. In the instant case, the "office" in the "political subdivision" is the Controller's Office in Berks County. Thus, the governmental body with which Kraines is associated is the Controller's Office. The 2000 contract, which terms included a $7,000 annual retainer and additional charges of $800 per standard or forensic autopsy, was entered into between the County Commissioners and Hoffman. In that the 2000 contract did not involve the governmental body with which Kraines is associated, that is, the Controller's Office, we find that Section 3(f)/1103(f) is not implicated. Our determination as to Kraines' governmental body comports with our prior holding in Hitt, Opinion 90 -005, wherein we held that the governmental body with which a former manager of the commercial and industrial section of the Assessment Office of Allegheny County is associated would be the Assessment Office itself and the Allegheny County Board of Property Assessments, Appeals and Review, which reviews assessments made by the Assessment Office. Finally, we note that the foregoing analysis on Kraines' governmental body would have equal application as to the so- called 1996, 1997, 1998, and 1999 contracts. In that we have disposed of the Section 3(f)/1103(f) allegation as to the 1988/1989 and 2000 contracts on the primary basis that the contracting between Hoffman and Berks County did not involve Kraines' governmental body, we need not address the respective arguments of the parties. As to the Section 3(a)/1103(a) allegation, the record reflects that printed checks include stamped signatures of at least two commissioners, the controller and the treasurer. The record also reflects that Kraines' signature was affixed to all 57 checks issued to her spouse between 1996 and 2000. In addition, Kraines herself was placed on notice that she would have a conflict as Controller in processing claims for autopsy fees submitted by her spouse. Heckman, whom we find to be a credible witness, testified that he and the retiring Controller, Campbell, met with Kraines after she was elected but before she was sworn in as Controller. Campbell specifically advised Kraines that because the Controller's office processed invoices from her spouse, she would have to be careful. Nevertheless, Kraines participated in the process to issue payments to her spouse for autopsy and other professional services by allowing her name as Controller to be affixed to the county checks payable to her spouse for the services he provided. Further, some of those payments were in excess of Hoffman's county contract. Lastly, Kraines' actions resulted in private pecuniary benefits to her spouse, an immediate family member, as that term is defined in the Ethics Act. The private pecuniary benefits consisted of fees that were in excess of the amount set forth in the contract Hoffman had with the County. Accordingly, Kraines technically violated Section 3(a)/1103(a) of the Ethics Act when she used the authority of her office for the private pecuniary benefit of a member of her immediate family by approving payments to her spouse for pathologist fees that were in excess of the fees set forth in the contract between her spouse and Berks County. See, Kurtz, Order 1116; Perino, Order 980; Leniq, Order 989. In light of our finding of a technical violation above, we will now address the major arguments proffered by Kraines on this issue: the county paid Hoffman the same amount for autopsies as other pathologists; the autopsy fees Hoffman received fall within the de minimis exclusion; Hoffman had no contract with the county as to autopsy fees; the County Code required Kraines' signature on checks; Kraines, as Controller, sets policy but does not handle the daily bill processing; the lack of annual audits of the Coroner's Office does not result in an Ethics Act violation; the County Code restricts the Controller from refusing approval as to any particular transaction; other offices in the county also failed to uncover the increases in autopsy fees over the contract amount; Kraines completely removed herself from any involvement with processing payments to her spouse; and Kraines' passivity constituted no personal involvement and no affirmative action as to processing payments for her spouse. Kraines, 00- 039 -C2 Page 28 Kraines' arguments will be addressed in the order that they appear above. Kraines' assertion that Hoffman received the same fee for autopsies as all of the other pathologists is essentially an argument that the class /subclass exclusion to the statutory definition of "conflict of interest" applies, thereby negating a violation of Section 3(a)/1103(a). In order for that exclusion to apply, Hoffman would have to be in a class /subclass consisting of more than just one person and would have to be affected to the same degree as the other members of the class /subclass. See, Van Rensler, Opinion 90 -017. In that Hoffman was the one and only pathologist who had a contract with the county, the class /subclass exclusion does not apply. Kraines prefaces her de minimis argument by contending that the fees Hoffman received were below fair market value and represented a cost savings to the County. The value of services rendered is irrelevant in determining whether a private pecuniary benefit exists under the Ethics Act. We have found that a private pecuniary benefit exists even when a public official receives compensation for services provided to his governmental body at a discounted rate. See, Cours, Order 1150; See also, Gallen, Order 1198 (wherein we held that the fact that the township got a "better deal" by purchasing insurance from an insurance company with which members of the township commissioner's immediate family were associated, was not significant to our Section 3(a)/1103(a) analysis). Based upon the above contention, Kraines nevertheless concludes that the de minimis exclusion to the statutory definition of "conflict" applies in this case. Kraines asserts that "de minimis" involves an economic impact, rather than a dollar amount. (Reply Brief, p. 4). First, the term "de minimis economic impact" is defined in Section 2/1102 of the Ethics Act as an economic consequence (as opposed to impact) which has an insignificant effect." 65 P.S. § 402/65 Pa.C.S. § 1102. We have determined that "de minimis" does entail a "dollar amount." See, Schweinsberq, Order 900, wherein we stated: In applying the de minimis economic impact exclusion, we must note that this is not a term that we may quantify as to a set dollar amount for all cases; to the contrary, the definition must be applied and determined on a case by case basis since a given dollar amount which may be de minimis in one case would not be so in another based upon the factual circumstances. Id. at 18. Hence, the definition of "de minimis economic impact," as an economic consequence, does include the dollar amount of the transaction involving the public official or immediate family member. Given the amount of the autopsy fees paid to Hoffman in excess of the amount specified in the county contract, the de minimis exclusion has no application. With regard to the argument that Hoffman had no contract with the county as to autopsy fees, Kraines states that the autopsy services were [not] provided pursuant to a contract." (Reply Brief, p. 4). The contract between Hoffman and the County, a copy of which is part of the record as ID 7, provides for a $7,000 retainer for basic services, plus designated or non - designated fees for "non- contracted services," including $450 for a forensic autopsy and fees as charged" for other services. If no contract existed as to autopsy services, as Kraines suggests, Hoffman and the County Commissioners would not have limited themselves to any specified amount for such extra services. Unlike fees for other "non- contracted services" such as x -rays, toxicology, and specialized lab work, which were stipulated to be as charged," the fee for forensic autopsies was expressly limited to a set dollar amount. Thus, the contract provides for enumerated services at an annual fee at $7,000 plus extra (non- contracted) services, beyond the standard retainer, which are delineated at agreed upon amounts or as fees as charged." This argument of Kraines is Kraines, 00- 039 -C2 Page 29 erroneous. Kraines contends that pursuant to the County Code, 16 P.S. § 1751, the controller's signature, which she claims is merely perfunctory, must appear on county checks. Parenthetically, we note that both parties have stipulated as a finding that the county controller's signature must, by law, be affixed to all checks issued for payment of county bills. See, Finding 28. In that this is a conclusion of law rather than a statement of fact, the stipulation is of no import. As to Kraines' argument, we interpret Section 1751 in conjunction with other applicable sections of the County Code. See, Statutory Construction Act, 1 Pa.C.S. §1932 ( "Statutes or parts of statutes must be read in pari materia when they relate to the same person or things or to the same class of person or things. "); and 1 Pa.C.S. § 1921 ( "Every statute shall be construed, if possible, to give effect to all of its provisions. ") In this regard, Section 408(a) of the County Code provides as follows: § 408. Deputies to act in certain cases (a) Whenever any county officer is authorized or required to appoint a deputy or deputies, such deputy or principal deputy, where there are more than one, shall, during the necessary or temporary absence of his principal, perform all duties of such principal, and also, in case of a vacancy or as provided in section 401(b), and until a successor is qualified. While fulfilling these duties, in the case of a vacancy, the deputy shall receive the salary provided by law for the principal or the salary provided for the deputy, whichever is greater. 16 P.S. § 408(a) (Emphasis added). Although Section 1751 provides that all county checks shall be signed by the county treasurer, county controller, and at least two county commissioners, Section 408 authorizes the deputy controller to perform all of the duties of the controller during the controller's absence. Therefore, construing Section 1751 and Section 408 in pari materia, it becomes clear that Kraines' deputy could have acted in her stead by signing his /her name to the county checks payable to Hoffman utilizing the manual check issuance process. Hence, Kraines' arguments on this issue are without merit and are rejected. We are likewise unmoved by Kraines' next two arguments that she is responsible for establishing policy, not completing the day -to -day handling of bill processing, and that she is not required to perform an annual audit of the Coroner's Office. We find these arguments to be totally irrelevant because Kraines, as Controller, was responsible for performing her duties in accordance with the County Code. With regard to Kraines' assertion that she lacked a legal basis for refusing to process her spouse's invoices, we note that Section 1702 of the County Code provides that the controller may refuse to authorize any fiscal transaction where it appears that such transaction: 1) is not authorized by law; 2) has not been undertaken according to law; 3) has not received approval according to law; or 4) is one in which the controller believes fraud may be involved. 16 P.S. § 1702. Had Kraines performed her statutory duty to verify all claims against the County, she would have determined that her spouse's invoices for autopsy fees were in excess of the contract and hence, not in accordance with the law. In that we find that Kraines did have a statutory basis to refuse authorization for payment of her spouse's invoices, we reject this argument. Kraines, 00- 039 -C2 Page 30 Kraines' argument that other offices in the County also failed to discover that the autopsy fees charged by her spouse were in excess of the contract is rejected as immaterial. We find Kraines' contention that she was completely removed from the actual processing of her spouse's payments due to her lack of involvement in "signing out" her signature plate, reviewing invoices as they were received from the Coroners office, inputting information into the County's computer system, and handling day -to -day bill processing, unavailing for the following reason. Kraines was on notice that she would have a conflict of interest as to transactions involving her spouse, which conflict would have required her to abstain from participating in such transactions. Since Kraines knew that she would have to abstain, she should have directed her deputy or another to crosscheck her husband's invoices with the contract he had with the County and manually sign his /her name to the County checks. Had this been done, the excessive autopsy fees would have been flagged and a check in the correct amount bearing the deputy's signature would have been issued. In short, but for the fact that Kraines failed to direct her deputy to act in her stead, her spouse would not have received private pecuniary benefits consisting of the payments by the County of autopsy fees in excess of the contract rate. Kraines asserts that "[she] delegated the duties of the bill paying process for payment to her husband," (Reply Brief, p1) citing the testimony of Walck and Tracy (Tr. 502, 621 -622). Those two witnesses in that part of their testimony essentially stated that Kraines "Night now" does not input bills for payment and Kraines approves invoices for her own department but remains out of the loop" for other invoices. Such testimony does not establish or even rise to the level of Kraines delegating the review of her spouse's invoices because of her conflict. In fact, Kraines' own testimony establishes the opposite. See, Fact Finding 104h. (Tr. 743). Further, Exhibit R -16, cited by Kraines in support of her argument, is unavailing because it is merely the log for the signature plates. Finally, with regard to Kraines' assertion that such inaction by definition cannot, as a matter of law, be considered a use of authority of office, this issue raises a fine point concerning the legal implications of the failure to perform a duty imposed by law upon a public official. In the instant case, the County Code imposes certain duties upon the controller to: "refuse to authorize any fiscal transaction which is, by law, subject to his supervision or control where it appears that such transaction is not authorized by law, or has not been undertaken according to law, or has not received approval according to law, or as to which he desires upon reasonable grounds to investigate for or has already discovered any fraud, flagrant abuse of public office or any criminal act or neglect of any officer or other person of the county relating to their public accounts and transactions" (16 P.S. § 1702); "scrutinize, audit and decide on all bills, claims and demands whatsoever against the county" (16 P.S. § 1750); and keep on file a copy of all written contracts (16 P.S. §1801). The question becomes whether a failure or an omission by Kraines to fulfill any of the above duties as controller may be the basis for a finding of a "use" of authority of office for a private pecuniary benefit. In McGuire and Marchitello v. State Ethics Commission, 657 A.2d 1346 (1995), Commonwealth Court held that there could be no violation under the Ethics Law as to two municipal authority members who took no affirmative action, and hence did not use the authority of office when they as municipal authority members received compensation which was determined prior to their taking office, even though the compensation was in an amount in excess of that which was provided for by law: "Use" of public office requires action by a public official that in some way facilitates his receipt of compensation to which he is not entitled, such as in Yacobet where the individual voted to increase his own salary without having authority to do so. Mere mistaken acceptance by a public official of a compensation check Kraines, 00- 039 -C2 Page 31 in an amount that was determined prior to his term in office is devoid of the type of action needed to constitute "use" of office for the purpose of obtaining personal financial gain. Slip Opinion, at 13, 14. Thus, Commonwealth Court has held that non - action in certain instances does not constitute a use of authority of office or an "act ", both in the above case and in a case involving a former public employee representing a person before his former governmental body. Id Stephens v. State Ethics Commission, 132 Pa.Commw. 71, 571 A.2d 1120 (1990). In reviewing McGuire and Marchitello, we find that it is distinguishable in that it did not involve a dereliction by a public official of a statutorily mandated duty, whereas the instant case does involve a public official failing to perform the duties of controller as set forth in the County Code. Further, we are aware that under some circumstances, the omission of a duty imposed by law may result in legal consequences to the public official. In the case, In re 1983 Audit Report of Belcastro, Controller, 528 Pa. 29, 595 A.2d 15 (1991), appellant, Washington County Controller, appealed an order of Commonwealth Court, which affirmed the dismissal of several surcharges levied by appellant upon county commissioners and upon the sheriff. The Supreme Court of Pennsylvania noted that the controller, prior to levying the surcharges, approved the payment of vouchers for services known to be in excess of the contract rate, for services known not to be covered by any existing contract, and for services without questioning the legality of the underlying contract. The Court held that where a county controller has actual or implied knowledge of the questionable nature of a claim presented for approval, the controller must first refuse payment pursuant to 16 P.S. §1752 as a prerequisite to levying a surcharge on that item. In affirming Commonwealth Court's dismissal of a surcharge imposed by the controller, the Supreme Court stated: The Controller consistently approved, without objection, the payments which are the subject of the current surcharges. Pursuant to 16 P.S. § 1801, copies of all contracts entered into on behalf of the county are to be filed in the controller's office. Thus, had the Controller performed her statutory duty to verify all claims she would have checked the files and would have realized that the County had not entered into any contract for these services. See, 16 P.S. § 1750. Accordingly, we conclude that the Controller should have known that these services were not covered by any contract prior to her approving payment thereon and is, therefore, precluded from levying surcharges against the Commissioners on the basis of their payments made to RBA for these services. In re 1983 Audit Report of Belcastro, Controller, 528 Pa. 29, 37 (1991). As in In re 1983 Audit Report of Belcastro, Controller, Kraines had a statutorily mandated duty to fulfill her responsibilities as Controller. Given that she was aware of her conflict, she should have directed her deputy or another to discharge her responsibilities in matters involving her spouse. We find it disconcerting that Kraines, despite being placed on notice of a conflict, chose instead to "look the other way" rather than to delegate her duties to a subordinate who could have acted in her stead. In this case, the result of Kraines' inaction was a complete lack of oversight with regard to Hoffman's invoices. We are troubled by the fact that she, as an agency head, failed to implement the appropriate protocol to ensure that someone else in her office would carry out her duties. However, we need not address the issue of whether Kraines' inaction constitutes a "use" of authority of office given that we have determined that Kraines did use the authority of her office as Controller by allowing her signature to be affixed to the County's checks payable to Hoffman, which resulted in a technical violation of Section 3(a)/1103(a) of the Ethics Act. Kraines, 00- 039 -C2 Page 32 Based upon our disposition of the allegations above and given the totality of the facts and circumstances in this case, we find that the imposition of restitution is not warranted. IV. CONCLUSIONS OF LAW: 1. Kraines, as Controller for Berks County, is a public official subject to the provisions of Act 9 of 1989/Act 93 of 1998. 2. Kraines did not violate Section 3(f)/1103(f) of the Ethics Act as to the 1996, 1997, 1998, and 1999 contracts between her spouse and the Berks County Commissioners because such contracts, as renewed, constituted extensions of the original contract, which was already in place at the time Kraines took office as Controller in 1996 and such contracts did not involve her governmental body, the Controller's Office. 3. Kraines did not violate Section 3(f)/1103(f) of the Ethics Act as to the 2000 contract because such contract was between her spouse and the Berks County Commissioners, which is a separate governmental body from the Controller's Office. 4. A technical violation of Section 3(a)/1103(a) of the Ethics Act occurred when Kraines used the authority of her office for the private pecuniary benefit of a member of her immediate family by approving payments via her stamped signature on county checks to her spouse for pathologist fees which were in excess of amounts set forth in a contract between her spouse and Berks County. In Re: Judith Kraines : File Docket: 00- 039 -C2 : Date Decided: 11/15/01 : Date Mailed: 11/30/01 ORDER NO. 1224 1 Kraines, as Controller for Berks County, did not violate Section 3(f)/1103(f) of the Ethics Act as to the 1996, 1997, 1998, and 1999 contracts between her spouse and the Berks County Commissioners because such contracts, as renewed, constituted extensions of the original contract, which was already in place at the time Kraines took office as Controller in 1996 and such contracts did not involve her governmental body, the Controller's Office. 2. Kraines did not violate Section 3(f)/1103(f) of the Ethics Act as to the 2000 contract because such contract was between her spouse and the Berks County Commissioners, which is a separate governmental body from the Controller's Office. 3. A technical violation of Section 3(a)/1103(a) of the Ethics Act occurred when Kraines used the authority of her office for the private pecuniary benefit of a member of her immediate family by approving payments via her stamped signature on county checks to her spouse for pathologist fees which were in excess of amounts set forth in a contract between her spouse and Berks County BY THE COMMISSION, DANEEN E. REESE, CHAIR