Loading...
HomeMy WebLinkAbout96-008 BieberElaine Lytle Mead Deputy Chief Counsel Department of Labor and Industry Office of Chief Counsel 1616 Labor and Industry Building 7th and Forster Streets Harrisburg, PA 17120 Dear Ms. Mead: 1996. STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt Allan M. Kluger Boyd E. Wolff DATE DECIDED: 11/5/96 DATE MAILED: 11/13/96 96 -008 Re: Conflict, Public Employee, Department of Labor and Industry, State Workers' Insurance Fund, Administrative Officer III, Contract, Business with which Associated, Spouse. This Opinion is issued in response to your advisory request on September 30, I. ISSUE: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon an Administrative Officer with the State Workers' Insurance Fund, Department of Labor and Industry as to contracted services by a business owned by her spouse. 11. FACTUAL BASIS FOR DETERMINATION: As Deputy Chief Counsel for the Department of Labor and Industry (L &I), State Workers' Insurance Fund (SWIF), L &I requests an advisory as to the conduct of its employee, Sandra A. Bieber (Bieber). Your specific inquiry relates to SWIF contracts for out -of -state claim investigation services (SPC 237486) and surveillance services (SPC 230139). In 1995, SWIF issued a request for proposals (RFP) for a contract to provide out -of -state claim investigation services (SWIF RFP- 6 -95). SWIF ultimately rejected Mead /Bieber, 96 -008 November 7, 1996 Page 2 all of the proposals because a weighting of 40% for cost and 60% for technical quality had been used in the RFP evaluation, rather than the usual weighting of 50% for cost and 50% for technical quality. SWIF refused to consider a proposal submitted by Bieber & Associates under SWIF RFP -6 -95 because it was not timely submitted. Your understanding is that a messenger for Bieber & Associates delivered the proposal a few minutes late. The messenger stated that he was at the reception area at the proper time but no one was there to accept the proposal. SWIF denies this assertion and contends that the messenger was simply late. Because all of the submitted proposals for SWIF RFP -6 -95 were rejected, SWIF issued another RFP for a contract to provide out -of -state claim investigation services (SWIF RFP- 3 -96). Six proposals were submitted and disqualified except for one submitted by "Bieber & Associates, Inc. for Risk Management Services." The six proposals were reviewed by a committee of five SWIF employees. Prior to that review, the committee had determined that in order for the contract to be awarded, a bidder must receive a technical score of at least 243 points. Four of the six bidders did not meet the minimum qualification. The fifth bidder was disqualified because it submitted a non - responsive cost proposal by adding a charge of $25 per hour for travel time above and beyond its cost proposal. Your understanding is that if this travel charge were included in the cost proposal, the cost to SWIF would have been significantly higher than the cost proposed by Risk Management Services. Thus, the fifth bidder would have been the low bidder only if its cost proposal without the travel charge would have been considered. In early June, 1996 the contract was awarded to "Bieber & Associates, Inc., for Risk Management Services." No other contracts were awarded and no other contracts are currently in effect for out -of -state claims investigation services. A contract (SPC 237486) in the amount of $1.2 million, effective July 1, 1996 through June 30, 1998, is currently being routed for the necessary signatures and approvals on behalf of the Commonwealth . Bieber's spouse George is the owner of Bieber & Associates, Inc. Risk Management Services, a division of Bieber & Associates, is not a separate corporate entity and is a registered fictitious name of Bieber & Associates. John Appleton, the attorney for Bieber & Associates, advised that Bieber is not an owner, nor is she an officer or director of Bieber & Associates. In late June, 1996, Bieber became employed by L &I as an Administrative Officer III (AO3) with SWIF. Bieber had previously been employed by the Department of Public Welfare for several years prior to her transfer to SWIF. As an A03 with SWIF, Bieber is responsible for SWIF's fraud unit and supervises staff engaged in the investigation of fraud and abuse, including underwriting investigations, claimant investigations, provider investigations, and service provider investigations. A copy of Bieber's job description has been obtained which is incorporated herein by reference. It is possible that, in the course of her duties, Bieber may recommend that an out -of -state investigation be initiated in connection with a matter which has been referred to her as a case of potential fraud. Such investigations would be performed by Risk Management Services under SPC 237486. Mead /Bieber 96 -008 November 7, 1996 Page 3 You believe that from 1993 through 1995, 217 potential instances of fraud were referred to SWIF's fraud unit. Only 10 of those cases related to persons or entities residing or located outside of Pennsylvania. Referrals from the fraud unit constitute only a portion of the referrals made under the out -of -state claim investigation contract; referrals are made for other SWIF program purposes which are unrelated to the activities of the fraud unit. Bieber does not have any supervision or overall responsibility for the implementation or administration of SPC 237486. It is your understanding that SWIF's Claims Division administers the contract and Bieber does not work in that Division. Although you believe that Bieber is not authorized to make any direct referrals, she would make a recommendation to her supervisor who would decide whether to refer a matter to Risk Management Services for an out -of -state claim investigation. SWIF has also entered into a contract with Bieber & Associates to provide surveillance services in SWIF Zone 2 (Pottsville, Sunbury, and Scranton). This contract (SPC 230139) is in the amount of $100,000 for the period March 1, 1996 through February 28, 1998 and is fully executed and approved. SPC 230139 and several other contracts were awarded pursuant to an RFP process. Just as with SPC 237486, Bieber may recommend surveillance as to a potential fraud case which has been referred to her. If such surveillance were to be performed in SWIF Zone 2, it would be performed by Bieber & Associates under SPC 230139. SPC 230139 covers only a small portion of Pennsylvania. Of the 217 potential instances of fraud which were referred to SWIF from 1993 to 1995, only 17 of those were related to persons or entities located in SWIF Zone 2. Bieber does not have any supervisory or overall responsibility with respect to the implementation or administration of the contract; referrals from the fraud unit constitute only a portion of the referrals made under the surveillance contract. Bieber would not make the referrals but would recommend to her supervisor that such referrals be made. You request an advisory as to whether the above situation constitutes a violation of the Ethics Law for Bieber. You state that pending receipt of this advisory, Bieber will recuse herself from any matter which may result in services being requested under SPC 237486 or SPC 230139 and will immediately refer such matters to her supervisor who will initiate and supervise all activities so that Bieber will have no role whatsoever with respect to such matters. At the public meeting on November 5, 1996 you, Ralph Chase (phonetic), John Paniterri (phonetic), and Bieber appeared as to SWIF. In addition, Bieber's attorney, Judy Price and George Bieber and his attorney, John Appleton (phonetic) appeared. You offered the following additional information. The contract awarded to Bieber & Associates was incorrectly stated as for Zorie II when in fact the contract covers the Zone III area. In addition, in Zone III there are four contracts in place with recommendations made by Bieber's supervisor to the District Administrator who makes assignments on a rotational basis. As to 1996, the statistics on referrals are consistent with the above numbers. Mead /Bieber, 96 -008 November 7, 1996 Page 4 Finally, you posed two questions as to whether Bieber may continue to serve as a public employee in SWIF, L &I and second whether the contracts which Bieber & Associates have with SWIF remain viable. III. DISCUSSION.: It is initially noted that pursuant to Sections 7(10) and 7(11) of the Ethics Law, 65 P.S. §§407(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, this 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 P.S. §§407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As an Administrative Officer III for the Department of Labor and Industry, State Workers' Insurance Fund, Bieber is a public employee as that term is defined under the Ethics Law, and hence she is subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law 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. "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. Mead /Bieber, 96 -008 November 7, 1996 Page 5 "Immediate family." A parent, spouse, child, brother or sister. "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 In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 3(f) of the Ethics Law provides as follows: Section 3. 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. The above provision of the Ethics Law requires that an open and public process must be used in all situations where a public official /employee, spouse, child or their business contracts with his own governmental body, or subcontracts with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more. This open and public process would require that the following be observed as to the contract with the governmental body: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor/ applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered and; Mead /Bieber 96 -008 November 7, 1996 Page 6 (4) public disclosure of the contract offered, awarded and accepted. Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervision or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities (j) 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 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. If a conflict exists, Section 3(j) requires the public 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 his supervisor. In this case, Bieber would have a conflict under the Ethics Law as to any matter involving Bieber & Associates including the contract services. Even though Bieber may not have any financial interest in Bieber & Associates , it is a business owned by Bieber's spouse. Hence, Bieber & Associates is a business with which a member of Bieber's immediate family is associated as that term is defined under the Ethics Law. Bieber cannot use any confidential information or the authority of office, her position, for a pecuniary benefit to Bieber & Associates. Bieber's conflict under Section 3(a) would prohibit her from having any involvement in matters with Bieber & Associates, as for example, where a recommendation for a referral would be made to have Bieber & Associates perform services under these contracts with SWIF. See, Spiegelman, Opinion 91 -01 1. Bieber must recuse herself and satisfy the disclosure requirements of Section 3(j). Mead /Bieber 96 -008 November 7, 1996 Page 7 As to Section 3(f), the contracting provision applies in this case. Since the contracts to Bieber & Associates were through an RFP process, it would appear that the "open and public process" requirements have been satisfied. Section 3(f) directs that Bieber may have no supervision or responsibility as to the implementation or administration of such contracts. As to the two questions posed, the Ethics Law would n_Qt preclude Bieber from continuing her employment with SWIF, L &I. Second, the contracts with Bieber & Associates are not vitiated by the Ethics Law. Even if there were a problem under Section 3(f), which we do not find in this case given that the RFP process was an open and public one, it is the province of the courts, but not this Commission, to void such contracts. 65 P.S. §403(f). Bieber must conform her conduct with the restrictions noted above. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed is the Governor's Code of Conduct or State Adverse Interest Act. IV. CONCLUSION: An Administrative Officer in the State Workers' Insurance Fund in the Department of Labor and Industry is a public employee subject to the provisions of the Ethics Law. The Administrative Officer has a conflict under Section 3(a) of the Ethics Law as to matters involving a business owned by her spouse. The Administrative Officer must recuse herself from such matters and satisfy the disclosure requirements of Section 3(j) of the Ethics Law. Section 3(f) of the Ethics Law permits contracting between the business which is owned by her spouse and the State Workers' Insurance Fund as to contracts which are in excess of $500 and awarded through an open and public process but prohibits the Administrative Officer from having any supervision or overall responsibility as to such contracts. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(10), the person who acts in good faith on this opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. By the Commission, mission, A Daneen E. Reese Chair