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HomeMy WebLinkAbout06-566 CONFIDENTIALADVICE OF COUNSEL June 9, 2006 06 -566 This responds to your letter of May 9, 2006, 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., would impose prohibitions or restrictions upon a constable who, in his private capacity, is employed by a company that provides debt collection services, with regard to: (1) the performance of collection services by his Department for certain clients as to accounts that typically have been processed by constables before being placed with the company; or (2) providing constable services on a gratuitous basis to certain of the employer's clients. Facts: As a Pennsylvania Constable, you request an advisory from the State Ethics Commission. You have submitted extensive facts, the material portions of which may be fairly summarized as follows. In your private capacity, you are employed by a private company ( "Company ") as Employment Position A. The Company provides a number of accounts receivable services to a variety of industries, primarily Bs, Cs, and Ds. In particular, the Company provides outsourcing services of what would otherwise be an internal customer collection and claim resolution function; customary collection of delinquent accounts receivables services for accounts considered bad debt; and technology services supporting the revenue cycle management function. As Employment Position A for the Company, you report to the Company's Chief Operating Officer. You state that it is not necessary for you to be a Constable to undertake the services you presently perform or expect to perform on behalf of the Company. You are responsible for managing the collection of delinquent accounts receivables services for accounts considered bad debt, which collection is performed by the approximately [number] employees in your Department working under your direct supervision. You generally do not undertake the collection work directly, but rather, you supervise the work of the Department employees. You are paid a fixed bi- weekly salary. Your existing employment contract does not provide for the receipt of bonuses tied to the successful performance of the Department. The Company's clients include E Clients, F Clients, and G Clients. The E Clients consist of the Hs, for which the Company collects delinquent Is. The J comprises the F Clients. As to both E Clients and F Clients, the Company performs collection work consisting of the following services: receiving placements of debtor accounts for collection; sending collection letters to debtors; following up with calls relating to the Confidential Advice, 06 -566 June 9, 2006 Page 2 letters sent; answering incoming calls in response to the letters, and if successful, collecting the amounts owed. You state that for purposes of your inquiry, the principle difference between E Clients and F Clients is that in most Pennsylvania counties, the accounts to be placed with the Company by F Clients have, in most instances, customarily been processed by constables even though such is not required. The Company's G Clients consist of approximately [number] customers to whom the Company provides collection services. The Company's compensation for collection work is based upon a commission calculated as a percentage of collections achieved. You state that the Company only undertakes collection services where there are no longer Ks, and hence, it is not necessary for a constable or other law enforcement officer to perform the collection work. You seek guidance as to the propriety of the following activities relative to your public position as a Constable and your private employment with the Company: (1) the performance of collection services by your Department for F Clients; and (2) your performance of L work as a Constable on a gratuitous basis for the Company's E Clients and F Clients. As to the former, you state that in your debt collection work with the E Clients and F Clients or their debtors and in your work for the Company, you do not and will not hold yourself out as a Constable. As to the latter, you state that L work may only be done by a constable and specifically involves attempting to obtain M. You state that you would perform such L work free of charge, using the bulk mailing capabilities of the Company. The Company, in turn, would perform the bulk mailing without charge to anyone. You assert that as a Constable, you would have no unique advantage in obtaining or performing the L work by virtue of your employment with the Company. Further, you assure the State Ethics Commission that: (1) you will not engage in conduct constituting a conflict of interest under the Ethics Act; and (2) in each instance of a conflict of interest, you as a Constable will abstain from participating in any matter that in any way would relate to activities with which you have been involved with the Company. 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 requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester 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 requester 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 requester has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, 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 Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. As Constable, you are a "public official" subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted Activities Confidential Advice, 06 -566 June 9, 2006 Page 3 (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 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(a), (j). The following terms pertaining to conflicts of interest under the Ethics Act are defined 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. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, Confidential Advice, 06 -566 June 9, 2006 Page 4 organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "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. 65 Pa. C. S. § 1102. 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. Subject to certain voting conflict exceptions, Section 1103(j) of the Ethics Act requires a public official /public employee with a conflict of interest 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 your inquiry, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position- -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity (Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). If the private employer or business with which the public official /public employee is associated or a private customer /client would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) set forth above. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Under the facts that you have submitted, the Company would be considered a business with which you as an employee are associated. Therefore, pursuant to Section 1103(a) of the Ethics Act, you as a Constable would be prohibited from using the authority of your public office or confidential information received by being a Constable for the private pecuniary benefit of yourself, the Company, or private client(s). Your two specific inquiries shall now be addressed. Confidential Advice, 06 -566 June 9, 2006 Page 5 First, with respect to the performance of collection services by your Department for F Clients, you have factually stated that in your debt collection work with the E Clients and F Clients or their debtors and in your work for the Company, you do not and will not hold yourself out as a Constable. Therefore, you are advised that as long as the performance of collection services by your Department for F Clients would not involve a use of the authority of your public office as Constable or any confidential information you would receive by being a Constable, you would not have a conflict of interest under the Ethics Act as to such work by your Department. With respect to your performance of L work as a Constable on a gratuitous basis for the Company's E Clients and F Clients, you are advised that conditioned upon the assumption that your performance of such gratuitous services would in fact not result in any private pecuniary benefit contrary to Section 1103(a) of the Ethics Act, you would not have a conflict of interest under the Ethics Act in performing such work. This Advice is limited to addressing the applicability of Section 1103(a) of the Ethics Act. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee and no public official /public employee shall solicit or accept 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 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. 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 Pennsylvania Constable, 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. The company ( "Company ") by which you are employed as Employment Position A would be considered a business with which you as an employee are associated. Pursuant to Section 1103(a) of the Ethics Act, you as a Constable would be prohibited from using the authority of your public office or confidential information received by being a Constable for the private pecuniary benefit of yourself, the Company, or private client(s). As long as the performance of collection services by your Department for F Clients would not involve a use of the authority of your public office as Constable or any confidential information you would receive by being a Constable, you would not have a conflict of interest under the Ethics Act as to such work by your Department. Conditioned upon the assumption that your performance of L work as a Constable on a gratuitous basis for the Company's E Clients and F Clients would in fact not result in any private pecuniary benefit contrary to Section 1103(a) of the Ethics Act, you would not have a conflict of interest under the Ethics Act in performing such work. 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 requester 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. Confidential Advice, 06 -566 June 9, 2006 Page 6 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