HomeMy WebLinkAbout417-R HegnerMayor Leo Hegner
c/o George A. Verlihay, Esquire
1015 Seventh Avenue
Beaver Falls, PA 15010
Re: 84 -152 -C
c 'Y
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
May 2, 1986
Order No. 417 -R
Dear Mayor Hegner:
The State Ethics Commission has received a complaint regarding you and a
possible violation of Act 170 of 1978. The Commission has now completed its
investigation. A hearing on the matter was conducted on December 4, 1985,
at which time relevant testimony and evidence was received. The individual
allegations, conclusions, and findings on which those conclusions are based
are as follows:
I. Allegation: That you, Mayor of the City of Beaver Falls, violated Section
3(a) of the Ethics Act, 65 P.S. 403(a), by having the city pay for a
hospitalization /medical plan and a life insurance policy in which you
participate.
A. Findings: .
1. You have served as an official of Beaver Falls for the past seven years:
a. You have served as Mayor since January 15, 1982, and had served as a
councilmemher for four years prior to that date.
h. Your salary as Mayor is $2,500 per year.
c. As Mayor and former councilmember, you are subject to the provisions
of the Ethics Act (Act 170 - 1978).
2„ You state that you were not aware that you were eligihle for health care
coverage as Mayor until you were asked to sign the forms.
a. Upon the assumption of your duties as a city councilman in 1978, you
were requested by the city clerk to sign a card enrolling you in the
Reaver Falls Insurance Program.
h. You did not participate in any vote in order to receive this
hospitalization or life insurance.
Mayor Leo Hegner May 2, 1986
Page 2
c. The insurance program was in effect prior to your assuming office
i n 1978.
3. You believe your participation in this program is authorized by a city
ordinance and the Third Class City Code.
4. You terminated your participation from the health care plan in October,
1984 because you found that you cculd receive the same benefits through the
plan provided by your wife's emp coyer.
5. According to the city clerk, officials are automatically added to the
hospitalization and life insura ;,c plans when they assume office.
6. The city auditor acknowledges tai`.: tie was aware the city paid for city
officials participation'in life and hospitalization plans but never questioned
it.
7, City council tc.ok the following actions relating to insurance;
a. Ordi nano•, #975 passed by council April 13, 1951 and signed by Mayor
Edw-•rd C. Corcoran, authorized contracts with insurance companies
insuring the employees of the City of Beaver Falls under policies for
group insurance covering life, health and accident insurance and
agreed that V.e city could pay part of the premimums. This
ordinance was based on Section 2403 of the Third Class City Law as
amended M 22, 1933 which authorized council to contract with
i nsur unce companies insuring its employees under -group insurance
policies for life, health, or accident insurance.
b. This ordinance authorized the city to contract for group life
i nsu -ance for its employees with Sun life Assurance Company of
Canada and Zurich General Accident and Liability Insurance Company,
LTD, insuring its employees under a group, health and accident
policy.
c. The city was authorized to pay approximately 2/3 of the premiums or
charges for such contracts but this payment was not to exceed $7 per
month for each employee.
d. The city clerk and mayor who were in office in 1951 and who were
involved in the passage of Ordinance #975 have affirmed that it was
the intent of the city council, at that time, to include city
officials and officers within the provisions of the ordinance.
8. The council also approved an ordinance in 1976. This ordinance involved
changes in compensation, expenses, bonds and organization of the police
department but did not affect Ordinance #975. The 1976 ordinance did not deal
with life insurance or hospitalization benefits.
9. Ordinance No. 975 was passed prior to your term in office.
Mayor Leo Hegner
Page 3
, 1986
10. The city has paid premiums for your participation in the life insurance
program as follows:
b.
c .
d.
e.
a. From January 1, 1981 through January 1, 1982
From February, 1982 through January, 1983
From February, 1983 through January, 1984
From February,.,1984 through September, 1984
From October, 1984 through September, 1985
1981 through January, 1982
1982 through January, 1983
1983 through January, 1984
1984 through September, 1984
b. From December,
c. From February,
d. From February,
e. From February,
$ 78.00
$ 96.00
$ 96.00
$ 72.00
$108.00
In addition to the above premiums, the city paid life insurance premiums
to Dominion Life Insurance Company during 1979 and 1980. No individual
premimum breakdown is available but based on the total premium and number of
persons covered, the city paid $4.70 per month per person in 1979 and $4.39
per month per person in 1980.
11. The total cost to the city for your participation
program from January, 1981 through September, 1985 was
12. The city has paid the following premiums for your
hospitalization program:
a. From March, 1981 through December, 1981
in the life insurance
$450.00.
participation in the
$ 983.43
$ 309.24
$1,855.44
$2,107.56
$1,433.37
13. The total premiums paid by the city for your hospitalization program from
March, 1981 through September, 1984 were $6,689.04.
14. The State Ethics Commission investigation commenced on or about October
18, 1984.
a. Your receipt of hospitalization benefits had terminated prior to the
initiation of this investigation. Your receipt of life insurance at
city expense continues and from October 84, through September 85, the
city paid approximately $108.00 for this coverage.
15. The city of Beaver Falls maintained a group vision plan for city
officials. You did not participate in this plan at the city expense.
Mayor Leo Hegner May 2, 1986
Page 4
16. Other city officials have received similar hospitalization and life
insurance benefits at city expense.
17. You served the city o: Beaver Fal is ra:y a Mayor and are not employed by
the city in any other capacity.
18. The Beaver Falls city council ,_, iticu- ly ha- passed ordinances adopting
city budgets. These budgets inclo,:ed payments for hospitalization and life
i nsurance.
B. Discussion: As an elected maycr and as a member of city council, you were
a public official as that term is defined in the State Ethics Act. 65 P.S.
§401 et,. seq. As such, your conduct must conform to the requirements thereof.
Boyle, 80 -0 20; Rosenfelt;, 82 -010.
T ;e Ethics Act provides, in part, that:
Section 3. Restricted activities.
() No public officialor public employee shall use his
pudic office or any confidential information received
through his holding public office to obtain financial gain
oth:.,° than compensation provided by law for himself, a
member of his immediate family, or a business with which
he associated. 65 P.S. 403(a).
Within this provision of law, this Commission has determined that a public
official may not use his office to approve, obtain, accept or otherwise
receive financial gain other than his compensation provided by law. This
Commission has also held, on a number of occasions, that insurance coverage of
the type herein involved is, in fact, financial gain. See Krane, 84 -001;
Cowie, 84 -010; Dornalakes, 85 -010. See also Conrad v. Township of Exeter et.
al., 76 Berks 7, D &C 3d , (1983).
The question to be resolved, therefore, is whether this insurance
coverage is compensation provided by law. For this answer, we must look to
the Third Class City Code.
1 hc Code provides that:
§:,6016. Salaries
Councilmen shall receive for their services during
their term of service annual salaries, to be fixed by
ordinance payable in monthly or semimonthly instalments (sic).
Councils may, by the ordinance fixing said salaries,
provide for the assessment and retention therefrom of
reasonable fines for absence from regular or special
Mayor Leo Hegner
Page 5
meetings of council or councilmanic committees. The
salary paid to any councilman shall not be less than two
hundred and fifty dollars per year.
The compensation to be received by councilmen shall not
be increased or diminished after their election; but
succeeding councils may change all compensation, said
change to take effect as to councilmen taking office at
least six months after the passage of the ordinance
providing for such change. 53 P.S. §36016
§36208. Salary
The mayor of each city shall receive for his services
during the term of service an annual salary to be fixed by
ordinance, payable in such equal instalments (sic) as council
shall provide. The council shall, by ordinance, fix the
amount of salary to be paid to the mayor for his services,
and may provide for the assessment and retention therefrom
of reasonable fines for absence from regular or special
meetings of council or councilmanic committees. The
amount of salary in cities shall not be less than five
hundred dollars.
The amount of compensation for the mayor in any of the
said cities shall not be increased or diminished after his
election. Succeeding councils may change the amount of
the mayor's compensation, but such change shall not affect
the compensation of the mayor then in office or of any
person taking office as mayor within six months of final
passage of the ordinance providing for such change. 53
P.S. §36208
The Code also provides:
§37403. Specific powers
In addition to other powers granted
council of each city shall have power,
To make contracts of insurance with
company, or nonprofit hospitalization
nonprofit medical service corporation,
transact insurance business within the
by this act, the
by ordinance:
any insurance
corporation, or
authorized to
Commonwealth
May 2, 1986
Mayor Leo Hegner May 2, 1986
Page 6
insuring its elected or appointed officers, officials and
employes, or any class or classes thereof, or their
dependents, under a policy or policies of group insurance
covering life, health, hospitalization, medical service,
or accident insurance. 53 P.S. 537403
The code clearly provides a mechanism for the purchase of insurance of
the type here in question for elected or appointed officials of cities of the
third class. The code also sets forth the method by which the salaries of
councilmembers and the mayor is to be fixed.
Our reading of the law also clearly indicates that when a public official
has the power to fix compensation for himself, the mechanism provided for such
power must be complied with strictly.
While it cannot be questioned that the General Assembly has the inherent
power to declare the public policy of the Commonwealth and may confer upon
members of council of municipalities power to appoint themselves to membership
upon boards of authorities and to fix their own salaries as it has been done
here, such grant of power must be strictly construed and strictly applied.
Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, (1941); See also
Warminister Township appeal, 56 D &C 2d 99, (1971); Genkinger v. New Castle,
368 Pa. 547, (1951); McCutcheon v. State Ethics Commission, 77 Commw. 529,
(1981). Both the salary of councilmen and the mayor, as well as the purchase
of insurance benefits for officials, must be authorized by a duly enacted city
ordinance. There is no other mechanism through which these benefits may be
obtained by such officials. In the instant situation, an ordinance was passed
i n 1951 which authorized the city to contract for the purchase of various
insurance benefits for employees of the city. While the ordinance did not
reference to such coverage for officials or officers of the city, we have
received the sworn statements of several individuals who were in office at the
time of the passage of the ordinance. These individuals, in substance, have
indicated that it was the intent of the ordinance to extend the insurance
coverage to members of council and other city officials. The council had
believed that the ordinance, in fact, had accomplished this goal.
In several matters we have, in the past, accepted the statements of
intent of authorized officials as sufficient evidence of appropriate approval.
Kiniry, 84 -008; Saunders, 85- 006 -R. Based upon our prior decisions, we
believe that the intent of Ordinance #975 was to extend the insurance coverage
to the city officials.
We must here note that the argument has been advanced; that the
officials and officers of the city are, in fact, employees within the meaning
of that term. Our decision herein is not based upon that analysis and we
believe that the officers and officials are not employees of the city. See,
e.g., Conrad v. Exeter Township, 76 Berks L.J. No. 2p. 7, (1983); In Re:
Appeal of Auditors Report of Muncy Creek Township, 16 Lycoming Rep. 159,
(1985).
Mayor Leo Hegner May 2, 1986
Page 7
Our decision is based solely upon our finding that the Third Class City
Code allows for the purchase of such insurance benefits for city officials and
our finding that the ordinance enacted was intended to implement this
provision of the code.
As such, we do not believe that you violated the State Ethics Act in the
instant situation.
We must note, that the problems encountered in this matter were
occasioned by the faulty language of the in question ordinance.
In this respect, we strongly suggest that said ordinance be amended so as
to include the proper language to clearly extend the benefits to officials
and officers of the city.
C. Conclusion: Based upon the foregoing, we do not believe that you violated
the State Ethics Act when you received certain insurance benefits. The Third
Class City Code allows for the purchase of such benefits for officials of a
city when a duly enacted ordinance is promulgated. Here, while the ordinance
only references to such benefits for employees, we believe that it was also
the intent of the council to provide said benefits to officials and officers
as well. We do suggest that an appropriate ordinance be enacted so as to
avoid future problems of this type.
Our files in this case will remain confidential in accordance with.
Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will be made available as a public document 15 days after service.(defined
as mailing) unless you file documentation with the Commission which- justifies
reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code
2.38. During this 15 -day period, no one, including the Respondent unless he
waives his right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Any person who violates the confidentiality of a Commission :proceeding
is guilty of a misdemeanor and shall be fined not more than $1,000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
By the Commission,
G. Sieber Pancoast
Chairman