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HomeMy WebLinkAbout03-005 Ver EllenPatricia A. E. Ver Ellen, M.A., M.D. Grizman -2 Torrance State Hospital State Route 1014 Torrance, PA 15779 -0111 Re: Public Official /Public Employee; FIS; Subcontractor; Independent Contractor; Physician; State Hospital. Dear Dr. Ver Ellen: This Opinion is issued in response to your letter dated April 28, 2003, by which you requested an advisory opinion from the State Ethics Commission. I. ISSUE: OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Frank M. Brown Susan Mosites Bicket Donald M. McCurdy Michael Healey DATE DECIDED: 6/23/03 DATE MAILED: 7/8/03 03 -005 Whether a physician providing services at a State Hospital pursuant to a subcontractor agreement with an independent contractor is a public official /public employee required to file Statements of Financial Interests pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. II. FACTUAL BASIS FOR DETERMINATION: You seek a determination as to whether, in your capacity as a physician providing services at Torrance State Hospital pursuant to a subcontractor agreement with an independent contractor, you are required to file Statements of Financial Interests pursuant to the Ethics Act. You have submitted a copy of the Subcontractor Agreement executed in April 2002 by you as the subcontractor and AmeriCare Services, Inc. as the contractor, which Subcontractor Agreement is incorporated herein by reference. The Subcontractor Agreement provides, in pertinent part, as follows: Ver Ellen, 03 -005 July 8, 2003 Page 2 AGREEMENT: 2.01 PHYSICIAN SERVICES: Subcontractor shall furnish coverage for the psychiatric service of said Hospital. Said coverage to consist of the presence of the Subcontractor at the Hospital approximately thirty -five (35) hours per week, between Monday through Friday. 3.01 STANDARDS AND OTHER REGULATIONS: It is understood and agreed that the standards of professional practice and areas of responsibility of Subcontractor shall be set by the Hospital and Subcontractor shall abide by the by- laws, rules and regulations of the Hospital. * ** 5.01 PROFESSIONAL FEES: Contractor agrees to pay Subcontractor eighty -five ($85.00) dollars per hour to be paid on a monthly basis for psychiatric services provided at the Hospital. Payment of each installment shall be made by Contractor at the end of each month, only for services accepted by the Hospital and on or about every thirty -one (31) days thereafter. 6.01 INDEPENDENT CONTRACTOR: No relationship of employer and employee is created by this Agreement, it being understood that Subcontractor will act hereunder as an independent contractor, that Subcontractor shall have no claim under this Agreement or otherwise against Contractor for vacation pay, sick leave, unemployment insurance benefits of any kind; that Contractor shall neither have nor exercise control or direction over the methods by which Subcontractor agrees to perform his said work and functions; that Subcontractor agrees to perform his said work and functions in strict accordance with currently approved methods and practices in medicine; that the sole interest of Contractor is to ensure the result of [sic] said psychiatry services shall be performed and rendered in a competent, efficient, satisfactory manner, and in accordance with the standards required by the Hospital. As an independent contractor, Subcontractor is responsible for the payment of all federal, state and local taxes that may arise as a result of monies he shall receive from Contractor. In the event that any federal, state or local taxing authority determines that Subcontractor is Contractor's employee, Subcontractor shall pay any income, Social Security, unemployment, or other taxes that said authority contends should have been withheld from payment to Subcontractor, plus any penalty and interest, and shall reimburse the same to Contractor should said authority collect them from Contractor. 7.01 TERMINATION: Notwithstanding the foregoing, either party may terminate this Agreement at any time for cause. Termination for "cause" shall be a termination by Contractor by reason of Subcontractor's malpractice, conduct unbecoming a physician, commission of a felonious offense, any actions detrimental to the best interests of the Ver Ellen, 03 -005 July 8, 2003 Page 3 Contractor, including but not limited to, Contractor's right under the contract with the Hospital and incident thereto, any interference or attempt to interfere in anyway for any reason with said contract, accepting unauthorized compensation, violations of the terms and conditions of this Agreement, or any other improper conduct as determined by Contractor. It is further agreed that if Contractor and Hospital or the Commonwealth of Pennsylvania do not conclude or renew their agreement for any reason, justified or not, or if said Agreement is terminated by either party for any reason, justified or not, then this Agreement may be terminated at the option of the Contractor, this also shall constitute termination for "cause ", in the event of said nonrenewal or termination. Contractor may terminate Subcontractor at anytime without cause. A termination by Subcontractor for "cause" shall be a termination by him by reason of Contractor's violation of the terms of this Agreement. * ** 9.01 LIABILITY: The Subcontractor agrees that the professional services he /she performs as a result of this Agreement will be his /her sole and individual responsibility and that he /she will be solely liable for those acts. It is the responsibility of the Subcontractor to provide the Contractor with a copy of his /her current medical malpractice liability coverage policy, issued by an insurance carrier admitted and authorized to conduct insurance business in the Commonwealth of Pennsylvania. .. . Subcontractor Agreement at 1 -3. You state that you are not an invested state employee. You are paid an hourly rate for your services and receive no benefits. No deductions are taken from your payment for services rendered. Your legal residence is Washington, and you have worked as an independent contractor at a number of facilities including Torrance in three different states during calendar year 2002. You contend that you should not be required to file a Statement of Financial Interests under the Ethics Act because: (1) you do not hold and you are not seeking any managerial, political, or oversight position; 2 the form has nothing to do with the practice of medicine in your current capacity; and 3 you object to the nature of the information required to be disclosed on the form. Based upon the above, you ask whether you are required to file Statements of Financial Interests pursuant to the Ethics Act. III. 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 that the requestor has submitted. In issuing the advisory based upon the facts that the requestor has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that 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. The requirements for filing Statements of Financial Interests pursuant to the Ethics Act apply to public officials, public employees, candidates, nominees, and full- Ver Ellen, 03 -005 July 8, 2003 Page 4 time and art -time solicitors, as those terms are defined in the Ethics Act. See, 65 Pa.C.S. § 1102, 1104 -1105. Based upon the facts that you have submitted, you are clearly not a candidate, nominee, or solicitor. Therefore, you would only be required to file Statements of Financial Interests if you would fall within either the definition of "public official" or the definition of "public employee" as set forth in the Ethics Act. The terms "public official" and "public employee" are defined in the Ethics Act as follows: § 1102. Definitions "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonministerial nature with regard to: (1) contracting or procurement; (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or any other activity where the official action has an economic impact of greater than a de minimis nature on the interests of any person. The term shall not include individuals who are employed by this Commonwealth or any political subdivision thereof in teaching as distinguished from administrative duties. 65 Pa.C.S. § 1102. The Regulations of this Commission similarly define the terms "public official" and "public employee" and set forth additional criteria for applying the definitions. 51 Pa. Code § 11.1. In applying the first portion of the definition of "public official," a public official is a person who: (1) is elected by the public; (2) is elected or appointed by a governmental body; or (3) is an appointed official in the executive, legislative or judicial branch of the Commonwealth of Pennsylvania ( "Commonwealth ") or a political subdivision of the Commonwealth. Muscalus, Opinion 02 -007. Factually, you have not been elected or appointed to any governmental position. Therefore, as a physician providing services at Torrance State Hospital pursuant to the aforesaid Subcontractor Agreement with AmeriCare Services, Inc., you do not fall within any of these three categories, and the definition of "public official" as set forth in the Ethics Act does not apply to you. (5) Ver Ellen, 03 -005 July 8, 2003 Page 5 The definition of "public employee" requires a more in -depth analysis. In applying the first portion of the definition of "public employee," a public employee must: (1) be an individual (see, Myers, Opinion 96 -004); and (2) be "employed by" either the Commonwealth or a pliticai subdivision of the Commonwealth. In everyday usage, the phrase "employed by" is capable of different meanings, specifically: (1) relating to the employer - employee relationship; and (2) referring to the use of someone or something in some capacity. We are aware that under the first Ethics Act, Act 170 of 1978, and the Regulations that were promulgated under that Act, this Commission opined that an individual was not exempted from the definition of "public employee" merely because services were provided based upon a service purchase contract as opposed to an employer- employee relationship. See, Massiah- Jackson, Opinion 80 -036. However, under the current Ethics Act and R ulations, we are compelled to reach a different result. The current Commission Regulations include the following definition of the term "employed by ": § 11.1. Definitions. Employed by —Used in any capacity, with or without compensation. This definition is only used in the context of section 6(d)(5) of the act (65 P.S. § 406(d)(5)). 51 Pa. Code § 11.1 (Emphasis added) (made applicable to Section 1106(d)(5) of the current Ethics Act by Section 2, Act 93 of 1998). This Commission's Regulations, having been duly promulgated, have the force and effect of law, and this Commission is duty -bound to observe them. See, e.q., Commonwealth v. State Conference of State Police Lodges of Fraternal OrderPolice, 513 Pa. 285, 520 A.2d 25 (1987); Teledyne Columbia- Summerill Carnegie v. Unemployment Compensation Bd. of Review, 634 A.2d 665 (Pa. Cmwlth. 1993). Given that this Commission s Regulations limit the use of the above meaning of "employed by" to some other Section of the Ethics Act, the only meaning that is left to apply in interpreting phrase "employed by" as it appears in the definition of "public employee" is the meaning referencing the employer - employee relationship. The necessary conclusion is that in order to be a "public employee" subject to the Ethics Act, an individual must stand in an employer - employee relationship with the Commonwealth or a political subdivision of the Commonwealth. We note that the employer - employee relationship is characterized by various indicia of employment, such as: (1) control by the employer of the means, method, and manner by which services are performed; (2) withholding by the employer from payments to the employee for taxes, Social Security, and the like; and (3) in some instances, the provision of benefits to the employee. See, McGlathery, Opinion 00 -004; Confidential Opinion, 97- 008 -R. In the instant matter, there do not appear to be any indicia of employment. You are paid an hourly rate for services, and there are no amounts withheld from your payments. You receive no benefits. The Subcontractor Agreement expressly provides that you are acting as an independent contractor and that no relationship of employer - employee is created by the Subcontractor Agreement. You have assumed full responsibility and liability for your professional services. AmeriCare Services, Inc. neither has nor exercises control or direction over the methods by which you agree to perform your work and functions under the Subcontractor Agreement. Although the Torrance State Hospital sets standards of professional practice, areas of responsibility, Ver Ellen, 03 -005 July 8, 2003 Page 6 by -laws, rules and regulations that you must observe, you do not receive payments from or have any contractual arrangement with the State Hospital. Based upon the above, we determine that as a physician providing services at Torrance State Hospital pursuant to the aforesaid Subcontractor Agreement with AmeriCare Services, Inc., you are not an employee of the Commonwealth or a political subdivision of the Commonwealth. Therefore, you are not a "public employee" as defined by the Ethics Act. Since you are neither a "public official" nor a "public employee" as defined by the Ethics Act, you are advised that you are not required to file Statements of Financial Interests pursuant to the Ethics Act as to your work at the Torrance State Hospital. The only provision of the Ethics Act that applies to you is Section 1103(b), which applies to everyone. Section 1103(b) of the Ethics Act provides in part that no person shall offer to a public official /public employee anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public employee would be influenced thereby. Reference is made to this provision 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. Lastly, 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 and any requirements for filinq the Code of Conduct Statement of Financial Interests. IV. CONCLUSION: In order to qualify as a "public official" subject to the Public Official and Employee Ethics Act "Ethics Act'), 65 Pa.C.S. § 1101 et seq., a person must be: (1) elected by the public; (2) elected or appointed by a governmental body; or (3) an appointed official in the executive, legislative or judicial branch of the Commonwealth of Pennsylvania ( "Commonwealth ") or a political subdivision of the Commonwealth. In order to qualify as a "public employee" subject to the Ethics Act, an individual must stand in an employer - employee relationship with the Commonwealth or a political subdivision of the Commonwealth. In the absence of any election or appointment to a governmental position with the Commonwealth, and in the absence of any indicia of employment by the Commonwealth, a physician providing services at a State Hospital pursuant to a subcontractor agreement with an independent contractor is neither a public official nor a public employee as defined by the Ethics Act and is not required to file Statements of Financial Interests pursuant to the Ethics Act as to such capacity. Pursuant to Section 1107(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. By the Commission, Louis W. Fryman Chair