HomeMy WebLinkAbout04-580 MoranJames Moran
973 Lincoln St.
Dickson City, PA 18519
ADVICE OF COUNSEL
August 6, 2004
04 -580
Re: Conflict; Public Official; Authority Board Member; Authority -Paid Insurance; Life
Insurance; Hospitalization /Medical Insurance; Private Pecuniary Benefit;
Statements of Financial Interests.
Dear Mr. Moran:
This responds to your letters of June 29, 2004, July 2, 2004, and July 6, 2004, 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., imposes prohibitions, restrictions, or disclosure requirements
upon an authority board member with regard to receiving health and life insurance at
the authority's expense and participating in board action approving payment of the bills
for such health and life insurance.
Facts: As a newly- appointed Board Member of the Lackawanna County Transit
S ystem Authority ("Authority"), you request an advisory from the State Ethics
Commission based upon the following submitted facts.
The Authority was created pursuant to the Municipality Authorities Act, 53 Pa.C.S.
§ 5601 et seq. Authority Board members are appointed by the Lackawanna County
Commissioners.
You state that Authority Board members receive health and life insurance at the
expense of the Authority. You further state that each month, the Authority Board
Members vote on the payment of health and life insurance for themselves when they
approve the payment of the bills. You note that the provision of health and life insurance
to Authority Board Members has been in place since the beginning of the Authority.
You ask whether, pursuant to the Ethics Act, you may lawfully receive Authority -
paid health and life insurance benefits and participate in authorizing the payment of bills
for same, and if so, whether you must disclose such benefits on your Statements of
Financial Interests filed pursuant to the Ethics Act.
Moran, 04 -580
August 6, 2004
Page 2
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, the 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.
As an Authority Board Member, you are a public official subject to the provisions
of the Ethics Act.
Section 1103(a) of the Ethics Act provides:
§ 1103. Restricted activities
(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.
65 Pa.C.S. § 1102.
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
Moran, 04 -580
August 6, 2004
Page 3
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.
65 Pa.C.S. § 1103(j).
Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is
prohibited from using the 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. 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 applying the above provisions of the Ethics Act to the instant matter, there is
no question that official action to authorize or pay for insurance for yourself at the
Authority's expense would constitute a use of the authority of your public office. See, 53
Pa.C.S. § 5607(d)(20). It is also clear that the receipt of insurance benefits fully or
partially at a governmental body's expense is a pecuniary benefit. See, Galizia, Order
1186; Dusenberry, Order 1064; Ferrie, Opinion 03 -004.
However, what must be determined is whether such benefits would constitute a
private pecuniary benefit completing the elements for a conflict of interest under Section
1103(a) of the Ethics Act. Governmentally paid insurance coverage is a private
pecuniary benefit if it is not authorized by law. Ferrie, supra; Dawson, Opinion 97 -003
(see also, Krane, Opinion 84 -001; Cowie, Opinion 84 -010; Davis, Opinion 84 -012; and
DomalakesOpiinion 85 -010 for decisions under Act 170 of 1978).
Although the State Ethics Commission does not have the statutory jurisdiction to
interpret laws other than the Ethics Act, such other laws do become relevant in
determining whether a particular pecuniary benefit is authorized in law and therefore
permitted under the Ethics Act, or is not authorized in law and therefore considered a
private pecuniary benefit that may form the basis for a conflict of interest under Section
1103(a) of the Ethics Act. See, O'Connor, Order 1269 at 26; Thompson, Opinion 99-
005, at 3 -4. See also Patterson, Order 1023; Rohanna, Opinion 01 -003; Marsh,
Opinion 93 -00?
In the instant matter, the Municipality Authorities Act provides in pertinent part:
§ 5607. Purposes and powers
Moran, 04 -580
August 6, 2004
Page 4
(d) Powers. —Every authority may exercise all
powers necessary or convenient for the carrying out of the
purposes set forth in this section, including, but without
limiting the generality of the foregoing, the following rights
and powers:
(20) (i) To make contracts of insurance with an
insurance company, association or exchange authorized to
transact business in this Commonwealth, insuring its
employees and appointed officers and officials under a
policy or policies of insurance covering life, accidental death
and dismemberment and disability income... .
(ii) To make contracts with an insurance company,
association or exchange or any hospital plan corporation or
professional health service corporation authorized to
transact business in this Commonwealth insuring or covering
its employees and their dependents but not its appointed
officers and officials nor their dependents for hospital and
medical benefits and to contract for its employees but not its
appointed officers and officials with an insurance company,
association or exchange authorized to transact business in
this Commonwealth granting annuities or to establish,
maintain, operate and administer its own pension plan
covering its employees, but not its appointed officers and
officials.
(iii) For the purposes set forth under this paragraph, to
agree to pay part or all of the cost of this insurance, including
the premiums or charges for carrying these contracts, and to
appropriate out of its treasury any money necessary to pay
such costs, premiums or charges. The proper officers of the
authority who are authorized to enter into such contracts are
authorized, enabled and permitted to deduct from the
officers' or employees' pay, salary or compensation that part
of the premium or cost which is payable by the officer or
employee and as may be so authorized by the officer or
employee in writing.
53 Pa.C.S. § 5607(d)(20) (Emphasis added).
On its face, the above section of the Municipality Authorities Act provides that an
authority's board members may receive life, accidental death and dismemberment and
disability income insurance at the expense of the authority, but may not receive
hospitalization /medical insurance benefits at the authority's expense.
Therefore, you are advised as follows.
Given that the Municipality Authorities Act specifically authorizes authority -paid
life insurance for authority board members, and further authorizes authority board
members to pay for such life insurance, your receipt of life insurance benefits at the
expense of the Authority and your participation in actions to approve payments for such
life insurance would not transgress Section 1103(a) of the Ethics Act. Because
Authority -paid life insurance for Authority Board Members is authorized in law, the
Moran, 04 -580
August 6, 2004
Page 5
receipt of such benefits by an Authority Board Member would not be considered a
private pecuniary benefit contrary to Section 1103(a) of the Ethics Act.
Authority -paid hospitalization /medical insurance benefits are not authorized in
law for authority board members. Therefore, your receipt of such unauthorized
benefits as an Authority Board Member would constitute a private pecuniary benefit
contrary to Section 1103(a) of the Ethics Act. It would be a conflict of interest for you to
participate as an Authority Board Member in official action to pay for unauthorized
Authority - provided hospitalization /medical insurance for yourself.
Finally, pursuant to Section 1105(b)(5) of the Ethics Act, a public official /public
employee is required to disclose on his /her Statements of Financial Interests "[t]he
name and address of any direct or indirect source of income totaling in the aggregate
$1,300 or more." 65 Pa.C.S. § 1105(b)(5). The term "income" is defined in the Ethics
Act as follows:
§ 1102. Definitions
"Income." Any money or thing of value received or
to be received as a claim on future services or in recognition
of services rendered in the past, whether in the form of a
payment, fee, salary, expense, allowance, forbearance,
forgiveness, interest, dividend, royalty, rent, capital gain,
reward, severance payment, proceeds from the sale of a
financial interest in a corporation, professional corporation,
partnership or other entity resulting from termination or
withdrawal therefrom upon assumption of public office or
employment or any other form of recompense or any
combination thereof. The term refers to gross income and
includes prize winnings and tax - exempt income. The term
does not include gifts, governmentally mandated payments
or benefits, retirement, pension or annuity payments funded
totally by contributions of the public official or employee, or
miscellaneous, incidental income of minor dependent
children.
65 Pa.C.S. § 1102 (Emphasis added).
Life insurance benefits, which are authorized but are not required to be provided
to an authority board member, would not be considered a "governmentally mandated"
benefit excluded from the Ethics Act's definition of income. See, 53 Pa.C.S.
5607(d)(20); cf., In re Nomination Petition of Benninghoff, Pa. 850 A.2d 60
(2004). Therefore, you would be required to list the Authority as a source of income on
your Statements of Financial Interests for calendar years in which the income (including
life insurance benefits) that you would receive from the Authority would total in the
aggregate $1,300 or more.
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.
Conclusion: As a Board Member of the Lackawanna County Transit System Authority
("Authority "), you are a public official subject to the provisions of the Public Official and
Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Given that the
Municipality Authorities Act specifically authorizes authority -paid life insurance for
authority board members, and further authorizes authority board members to pay for
such life insurance, your receipt of life insurance benefits at the expense of the Authority
Moran, 04 -580
August 6, 2004
Page 6
and your participation in actions to approve payments for such life insurance would not
transgress Section 1103(a) of the Ethics Act. Authority -paid hospitalization /medical
insurance benefits are not authorized in law for authority board members. Therefore,
your receipt of such unauthorized benefits as an Authority Board Member would
constitute a private pecuniary benefit contrary to Section 1103(a) of the Ethics Act. It
would be a conflict of interest for you to participate as an Authority Board Member in
official action to pay for unauthorized Authority- provided hospitalization /medical
insurance for yourself. You would be required to list the Authority as a source of income
on your Statements of Financial Interests for calendar years in which the income
(including life insurance benefits) that you would receive from the Authority would total
in the aggregate $1,300 or more. 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