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HomeMy WebLinkAbout02-534 KuchanskiRichard T. Kucharski 10 Hulse Street Throop, PA 18512 Dear Mr. Kucharski: ADVICE OF COUNSEL March 13, 2002 02 -534 Re: Conflict; Public Official /Employee; Executive Director; Income Maintenance Administrator 3; County Assistance Office; Pennsylvania Department of Public Welfare; Office of Income Maintenance; Personal Care Home Assisted Living Facility; Personal Care Supplement Recipient; Business With Which Associated; Reviewing Applications for Supplemental Benefits by Subordinate. This responds to your letter of February 6, 2002, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon an executive director for a county assistance office as to holding a one -third ownership share in a private corporation that would own and operate a personal care home assisted living facility, where some of the facility's residents would be Supplemental Security Income Personal Care Supplement recipients whose applications for Personal Care Supplements would be reviewed by the county assistance office through an income maintenance caseworker, who is subordinate to an income maintenance caseworker supervisor, an income maintenance administrator, and then the executive director, respectively. Facts: You are employed as the Executive Director of the Lackawanna County Assistance Office "LCAO ") in the Office of Income Maintenance of the Pennsylvania Department of Public Welfare. Your position title is Income Maintenance Administrator 3. The LCAO is responsible for determining the eligibility of County residents for cash assistance, medical assistance and food stamp benefits in accordance with state and federal regulations. Your job duties include planning, directing, organizing, and administering the operations of the LCAO through a subordinate staff of 140 people. You have submitted copies of your job description and organizational chart, which are incorporated herein by reference. In a private capacity, you have an opportunity to acquire a 1/3 ownership share in a corporation yet to be formed ( "Corporation "), which Corporation would own and Kucharski, 02 -534 March 13, 2002 Page 2 operate a Personal Care Home assisted living facility ( "Facility ") to be located in Throop, Lackawanna County. You state that approximately 80% of the Facility's residents would be private pay residents and the remaining 20% would be Supplemental Security Income ("SSI") Personal Care Supplement recipients, whose eligibility for supplemental benefits would be determined as per the procedures outlined in the Medical Assistance Eligibility Handbook. You have submitted a copy of the Medical Assistance Eligibility Handbook, which is incorporated herein by reference, and which provides in pertinent part as follows. A person residing in a Personal Care Home must be eligible for SSI benefits as determined by the Social Security Administration ( "SSA ") in order to receive a State funded Personal Care Supplement. The Personal Care Supplement provides a monthly Personal Needs Allowance which, in addition to SSI benefits, is used by the resident to pay for the care provided by the home. A Personal Care Home resident may be eligible to receive a Personal Care Supplement if the county Area Agency on Aging, through its OPTIONS program, determines that the resident is "functionally disabled — that is, "[the resident] needs help to perform essential activities of daily living which require more than providing room and board." Medical Assistance Eligibility Handbook, § 391.2. If such a determination is made, OPTIONS forwards a completed application for a Personal Care Supplement to the County Assistance Office ( "CAO "). Upon receipt of an application for a Personal Care Supplement, the CAO reviews the form for completeness and notifies SSA to authorize the Personal Care Supplement. You state that residents of the proposed Facility would be required to have their applications reviewed by the LCAO. The LCAO would conduct the reviews through an Income Maintenance Caseworker ( "IMCW ") assigned to the Nursing Home Unit and under the supervision of an IMCW Supervisor. The IMCW Supervisor would report to an Income Maintenance Administrator, that is, the Assistant Executive Director, who would report directly to you. You note that you would have no direct involvement in the review process conducted by the LCAO. Given the foregoing facts, you ask whether you would have a conflict of interest in holding a one -third ownership interest in the proposed Facility. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. § §1107(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. § §1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As the Executive Director of the Lackawanna County Assistance Office ( "LCAO ") in the Office of Income Maintenance of the Pennsylvania Department of Public Welfare, you are a public employee as that term is defined in the Ethics Act, and hence you are subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities Kucharski, 02 -534 March 13, 2002 Page 3 (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa. C. S. § 1103(a). The following terms are defined in the Ethics Act as follows: § 1102. 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. The term 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. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. Section 1103(j) of the Ethics Act provides as follows: §1103. Restricted activities (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body Kucharski, 02 -534 March 13, 2002 Page 4 required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa. C. S. § 1103(j). In each instance of a conflict, Section 1103(j) requires the public official /employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to your inquiry, you are advised that Section 1103(a) of the Ethics Act does not generally prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may employee use the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89- 011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. If a business with which the public official /public employee is associated or its client(s) would have matter(s) pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter(s). Miller, Opinion No. 89 -024; see also, Kannebecker, Opinion 92 -010. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) set forth above. Having established the above general principles, your inquiry shall now be addressed. It is clear that the proposed Corporation of which you would hold a one -third ownership interest would be a business with which you would be associated. Pursuant to Section 1103(a) of the Ethics Act, you would have a conflict as to matters that would come before you in your capacity as Executive Director of LCAO that would financially impact you, the Corporation, or those doing business with the Corporation. See, Miller supra. See also, Snyder v. State Ethics Commission, 686 A.2d 843 (PCommw. 1996). In that the Corporation would own and operate the Facility, you would also have Kucharski, 02 -534 March 13, 2002 Page 5 a conflict as to matters involving the Facility and its residents. In each instance of a conflict, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. The Ethics Act cannot prohibit you from holding an ownership interest in the Corporation as to which you would be acting in a private capacity with your one -third ownership interest. However, serious concerns exist as to the conflicts of interest that would arise under the Ethics Act with regard to your role as Executive Director in matters pertaining to the Corporation, the Facility, and its residents. The conflicts would not only encompass the foregoing but would also extend to matters involving competitive Personal Care Homes. See, Pepper, Opinion 87 -008. Further, even if you would abstain as to such conflicts and delegate such matters to other staff members, you would have a conflict as to those staff members given their subordinate status to you. The conflicts would pertain to matters involving the supervision, evaluation, discipline, promotion, or demotion of subordinates who would play any role in the review of residents' applications for Personal Care Supplements or similar type benefits needed to pay for care provided by the Facility. See, Confidential Advice, 01 -519. Because you would have so many recurring and ongoing conflicts of interest if you would acquire an interest in the Corporation that would operate the Facility, it would be either very difficult or impossible for you, as a practical matter, to function as Executive Director of LCAO. See, Confidential Advice, 01 -531. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Governor's Code of Conduct. Conclusion: As Executive Director /Income Maintenance Administrator 3 for the Lackawanna County Assistance Office in the Office of Income Maintenance of the Pennsylvania Department of Public Welfare, you are a public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The proposed Corporation of which you would hold a one -third ownership interest would be a business with which you would be associated. Pursuant to Section 1103(a) of the Ethics Act, you would have a conflict as to matters that would come before you in your capacity as Executive Director of LCAO that would financially impact you, the Corporation, or those doing business with the Corporation. In that the Corporation would own and operate the Facility, you would also have a conflict as to matters involving the Facility and its residents. In each instance of a conflict, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. The Ethics Act cannot prohibit you from holding an ownership interest in the Corporation as to which you would be acting in a private capacity with your one -third ownership interest. However, serious concerns exist as to the conflicts of interest that would arise under the Ethics Act with regard to your role as Executive Director in matters pertaining to the Corporation, the Facility, its residents, and competitive Personal Care Homes. Even if you would abstain as to such conflicts and delegate such matters to other staff members, you would have a conflict as to those staff members given their subordinate status to you. The conflicts would pertain to matters involving the supervision, evaluation, discipline, promotion, or demotion of subordinates who would play any role in the review of residents' applications for Personal Care Supplements or similar type benefits needed to pay for care provided by the Facility. Because you would have so many recurring and ongoing conflicts of interest if you would acquire an interest in the Corporation that would operate the Facility, it would be either very difficult or impossible for you, as a practical matter, to function as Executive Director of LCAO. Kucharski, 02 -534 March 13, 2002 Page 6 Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code, § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Vincent J. Dopko Chief Counsel