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HomeMy WebLinkAbout92-558Edwin W. Tompkins, III, Esquire Tompkins & Tompkins P.O. Box 31 Emporium, PA 15834 Dear Mr. Tompkins: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL March 18, 1992 92 -558 Re: Conflict, Public Official /Employee Township Supervisor, Township Paid Benefits, Life Insurance, Cash Surrender Value to the Insured. This responds to your letters of January 23, 1992 and February 6, 1992, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon second class township supervisors with regard to authorizing the township to purchase life insurance policies for all current employees including the supervisors, where the township would own the policies, the employees would designate their beneficiaries, and the policies would be cashed in at retirement or discharge with the cash surrender values belonging to the insured. Facts: As Solicitor for the Shippen Township Board of Supervisors, you seek the advice of the State Ethics Commission on behalf of all three Members of the Board of Supervisors. Shippen Township is a Second Class Township located in Cameron County. Approximately 16 years ago, a pension plan was developed and instituted on behalf of all Township employees, including the Supervisors. When the plan was first initiated, monies from said pension plan were also used to purchase life insurance policies on behalf of each employee, with each policy having a cash surrender value. You state that the practice of purchasing life insurance policies for employees by utilizing funds earmarked for the pension plan was discontinued some time ago. The Township now finds itself in a position where certain long -time employees have existing life insurance policies, but certain newly hired employees have no such Township sponsored life insurance policies. Edwin W. Tompkins, III, Esquire March 18, 1992 Page 2 You state that on the advice of a representative of the Department of the Auditor General, the Township is presently taking steps to return all of the existing life insurance policies (the Township being the owner of all of said policies, with each employee designating beneficiaries on same), and once cash surrender value is received from the carrier, such monies will be placed into the existing pension fund for existing employees, and one retired employee will receive the cash surrender value. Having provided the above historical background, you state that the question which has arisen and which is the purpose of your inquiry, is whether the Board of Supervisors can legally and ethically take action, by ordinance or resolution in the near future, authorizing the Township to purchase new policies for all current employees (including the Supervisors) so that the newly hired employees and the long -time employees will be assured of equal benefits. If proper, the Township intends to purchase the new policies utilizing Township funds, with the Township being the owner of the policies, the employees designating beneficiaries of their choice, and with the intent that said policies will be cashed in at time of retirement or discharge of any employee with the respective cash surrender value going to the employee affected. Based upon all of the above, you request an advisory as to the propriety of the above proposed action in light of the Second Class Township Code, this Commission's Rules and Regulations, and any other laws applicable to this scenario. Discussion: It is initially noted that your request for advice may only be addressed with regard to prospective conduct. A reading of Sections 7(10) and (11) of the Ethics Act makes it clear that an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Law violations by a person who is subject to the Ethics Law. As Supervisors for Shippen Township in Cameron County, Pennsylvania, each of the three Shippen Township Supervisors is a public official as that term is defined under the Ethics Law, and hence each Supervisor is subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. Edwin W. Tompkins, III, Esquire March 18, 1992 Page 3 (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 fot 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. 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 monetaty value and no public official /employee "shall solicit or 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. In reviewing the question posedf this Advice is limited to whether the Supetvisors may receive these benefits under the Ethics Law. Although this ComIiission would hot have the express statutory jurisdiction to intetp'et the Second Class TeWhship Code, it is Edwin W. Tompkins, III, Esquire March 18, 1992 Page 4 necessary in this case to review 53 P.S. §65515 to the extent that it impacts upon the Ethics Law regarding the issue of whether the Supervisors would be using the authority of office to obtain a private pecuniary benefit for themselves. The Second Class Township Code provides for participation by supervisor- employees in insurance plans as follows: (1) Supervisor- employes and their dependents shall be eligible for inclusion in group life, health, hospitalization, medical - service and accident insurance plans paid in whole or in part by the township. No policy of group life insurance shall contain any provision for the accrual or de- ferral of a cash surrender value, loan value or any other nonforfeitable benefit, in addition to or beyond the face amount of insurance, that shall inure to the benefit of the supervisor, . any beneficiary or any other individual having an insurable interest in the life of a supervisor. Such insurance, however, may contain a provision that when the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or the termination of the insured's term of office, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of insurance on any form customarily issued by the insurer at the age and for the amount applied for if: (i) such amount is not in excess of the amount of life insurance which ceases because of such termination; and (ii) the application for the individual policy is made and first premium is paid to the insurer within thirty -one days after such termination. Participation by supervisor- employes shall not require auditor approval. Supervisor- employes eligible for . inclusion in such plans must meet the -same requirements _as.other employes of the township who are eligible to participate in an insurance plan._ Such plans shall not improperly _discri ninate in favor of a $upervisor eiaploye . 53 P.S. S65515(d)(1) (Emphasis added Edwin W. Tompkins, III, Esquire March 18, 1992 Page 5 It is clear that on the face "of. the above provision that in order for a Shippen Township. Supervisor to participate in a Township paid life insurance plan, the Supervisor must `be a Supervisor- employee and must meet the same requirements as other employees of the Township who are eligible to participate in such an insurance plan. There must be no discrimination in favor of supervisor - employees. It is further clear on the face of the above provision of the Second Class Township Code that the type of life insurance in which Supervisor - employees and their dependents are eligible to participate is group life ins urance . There does appear to be any authorization in the Second Class Township Code for any other type of township paid life insurance for Supervisor - employees and their dependents. Finally, the above provision of the Second Class Township 'Code clearly prohibits any provision in such a group life insurance policy for the accrual or deferral of a cash surrender value, loan value, or any other nonforfeitable benefit, in addition to or beyond the face amount of insurance, inuring to the benefit of the supervisor, any beneficiary, or any other individual having an insurable interest in the life of a Supervisor. In considering the above provision to the extent that it impacts upon the Ethics Law, Section 3(a) of the Ethics Law, prohibits the use of 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(a) of the Ethics Law would not prohibit the Shippen Township Supervisor - employees and their dependents from participating. in Township paid group life insurance policies which would conform to the express requirements of 53 P.S. §65515. However, you state that such policies would be cashed in at the time of retirement or discharge of any employee with the respective cash surrender values going to the employee affected. In the case of Supervisor- employees, such a proposed arrangement would not conform to the clear requirements of 53 P.S: S65515(c)(1). Therefore, Section 3(a) of the Ethics Law would prohibit the Shippen Township Supervisors from authorizing the Township to purchase insurance policies which the Supervisors could cash in. You may wish to review Hoak, Order 128, and McCutcheon, Order No. 129, involving supervisors who received the cash surrender value of life insurance - policies to which they were not entitled under the Second Class Township Code. See, McCutcheon v. Eddizi W. Tompkins, It1, Esquire March 18, 1992 Page 6 Com. State Ethics` Com'n 77 Pa. Cmwlth 529, 466 A.2d 283 (1982) (affirming these Orders of the Commission). A postscript is necessary so that this Advice is not misconstrued. First, as noted above, the Commission's jurisdiction is limited to interpreting the provisions of the Ethics Law. Therefore, although you sought an advisory in light of the Second Class Township Code, the Commission's Rules and Regulations, and other laws applicable to the scenario you posed, this Advice does not and cannot offer any interpretation as to whether the proposed conduct would violate other laws such as the Second Class Township Code. Secondly, this Advice expressly does not address action by these Supervisors to return all of the existing life insurance policies and deposit the cash surrender value for same into the existing pension fund. The question of the legality of such a practice would be determined within the parameters of some law other than the Ethics Law. The Ethics Law would only be implicated to the extent that a public official /public employee would use the authority of office to obtain a private pecuniary benefit to himself where in this case such private pecuniary benefit received would be contrary to the express requirements of the Second Class Township Code, 53 P.S. §65515. 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. Conclusion: As Township Supervisors for Shippen Township in Cameron County, Pennsylvania, each Shippen Township Supervisor is a public official subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would not prohibit the authorization of Township paid group life insurance policies in which the Supervisor - employees and their dependents would participate, as long as those policies conformed to the requirements of 53 P.S. §65515. Section 3(a) of the Ethics Law would specifically prohibit the Supervisors from using the authority of office to obtain a private pecuniary benefit for themselves where such private pecuniary benefit received would be contrary to the express requirement of the Second 'Class Township Code, 53 P.S. S65515. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), this 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 Edwin W. Tompkins, III,, Esquire March 18, 1992 Page 7 proceeding, providing the requester. has disclosed truthfully all the material facts and committed the acts complained of in .reliance on the Advice given. such. This letter is a public record and will be made available as Finally, if you disagree with this Advice or if you have any reason to challenge same, - you may request that the fizil Commission review this Advice. A personal appearance before the Commission . will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code §2.12. Vincent . Dopko Chief Counsel GL