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HomeMy WebLinkAbout07-531 AndresDavid M. Andres, D.O. Andres -Bush Internal Medicine Associates 3742 State Route 257 Seneca, PA 16346 Dear Dr. Andres: ADVICE OF COUNSEL May 7, 2007 07 -531 This responds to your letter dated March 27, 2007, 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 present any prohibitions or restrictions upon a school director, who in a private capacity as a physician is a member of a limited liability corporation, with regard to participating in matters relating to the selection of a school physician for the school district, where a bid has been submitted by another physician who is also a member of the school director's limited liability corporation. Facts: As a School Director for the Franklin Area School District (hereinafter the School District "), you request an advisory from the State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You are a local physician and a member of Andres -Bush Internal Medicine Associates, a limited liability corporation (hereinafter also referred to as the Corporation "). You recently found out that the School District advertised a request for bids for a school physician. You state that the business manager for the School District placed a notice in the local newspaper and mailed invitations for bids to local physicians. Your office did not receive an invitation to bid on the job due to the fact that you are a School Director for the School District. Todd A. Bush, M.D., who is a member of the Corporation, saw the public notice for bids placed in the local newspaper, and he subsequently submitted a bid for the position of school physician for the School District. You state that you and Dr. Bush, as private business owners, discussed your current arrangement as school physician with another school district as compared to Dr. Bush's bid submitted to the School District. At a closed session of the School Board, it was brought to your attention by the School District's Solicitor that there might be a violation of the Ethics Act as a result of the bid submitted by Dr. Bush. You further state that the Solicitor was unable to advise Andres, 07 -531 May 7, 2007 Page 2 you as to whether you could avoid transgressing the Ethics Act if you would abstain from any votes with respect to the selection of a school physician and would have no personal income generated from Dr. Bush's arrangement with the School District. Based upon the above submitted facts, you seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon you with respect to participating in matters before the School District that would involve the selection of a school physician, including but not limited to the bid submitted by Dr. Bush. 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 that your inquiry relates to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent that your inquiry relates to future conduct, your inquiry may and shall be addressed. As a School Director for the Franklin Area School District, 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 (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 Andres, 07 -531 May 7, 2007 Page 3 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 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. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, 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. The use of authority of office is not limited merely to voting, but extends 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. In each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public 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. In the event that the required abstention results in the Andres, 07 -531 May 7, 2007 Page 4 inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. Section 1103(f) of the Ethics Act provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The term "contract" is defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; Andres, 07 -531 May 7, 2007 Page 5 (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. It is administratively noted that the Public School Code of 1949 as amended ( "Public School Code ") provides in pertinent part: 3 -324. Not to be employed by or do business with district; exceptions (a) No school director shall, during the term for which he was elected or appointed, as a private person engaged [sic] in any business transaction with the school district in which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act ... (c) It shall not be a violation of this section for a school district to contract for the purchase of goods or services from a business with which a school director is associated to the extent permitted by and in compliance with 65 Pa.C.S. Ch. 11 (relating to ethics standards and financial disclosure). 24 P.S. § 3- 324(a), (c). On its face, Section 3- 324(c) of the Public School Code permits contracting to occur between a school district and a business with which a school director is associated as long as the restrictions and requirements of the Ethics Act are fully observed and satisfied. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interests 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, staff, 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 or private clients(s). Miller, Opinion 89- 024; Kannebecker, Opinion 92 -010. In the instant matter, given that you are a member of the Corporation, the Corporation would be a business with which you are associated. As a general rule, pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest in Andres, 07 -531 May 7, 2007 Page 6 matters before the School District that would financially impact you, the Corporation, or the Corporation's clients. See, Miller, supra; Kannebecker, supra. In considering your specific inquiry, the submitted facts do not indicate whether the Corporation would be financially impacted if Dr. Bush would be selected to serve as the School District's school physician. Therefore, this Advice must necessarily be limited to providing general guidance as to Section 1103(a) of the Ethics Act. You are advised that as a School Director, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to the School District's selection of a school physician to the extent you or the Corporation would be financially impacted if Dr. Bush, a member of the Corporation, would be selected as the School District's school physician. Pursuant to Section 1103(a) of the Ethics Act, you would be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a School Director, to effectuate a private pecuniary benefit to yourself or the Corporation through action favorable to Dr. Bush or through a detriment to a competitor for the school physician work. See, DiBerardinis, Opinion 07 -010; McGinty, Opinion 07 -009; Pepper, Opinion 87 -008. In addition, you would generally have a conflict of interest with regard to voting to approve the payment of invoices that would be submitted by the Corporation to the School District. In each instance of a conflict of interest, you would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The abstention requirement would extend beyond voting to include any use of authority of office. For example, as a School Director, you could not participate in matters involving the qualifications for the school physician position, the terms of the contract, or the review or selection of bids or proposals. Finally, the requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. To the extent the Corporation would contract with the School District, or would subcontract with a person awarded a contract with the School District, and the value of the Corporation's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) would be applicable. 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 School Director for the Franklin Area School District ( "School District "), 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. Andres -Bush Internal Medicine Associates ( "the Corporation "), a limited liability corporation of which you are a member in a private capacity as a physician, would be considered a business with which you are associated. Pursuant to Section 1103(a) of the Ethics Act, you would generally have a conflict of interest in matters that would financially impact you, the Corporation, or the Corporation's clients. As a School Director, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to the School District's selection of a school physician to the extent you or the Corporation would be financially impacted if Dr. Bush, a member of the Corporation, would be selected as the School District's school physician. Pursuant to Section 1103(a) of the Ethics Act, you would be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a School Director, to effectuate a private pecuniary benefit to yourself or the Corporation through action favorable to Dr. Bush or through a detriment to a competitor for the school physician work. In addition, you would generally have a conflict of interest with regard to voting to Andres, 07 -531 May 7, 2007 Page 7 approve the payment of invoices that would be submitted by the Corporation to the School District. In each instance of a conflict of interest, you would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The abstention requirement would extend beyond voting to include any use of authority of office. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. To the extent the Corporation would contract with the School District, or would subcontract with a person awarded a contract with the School District, and the value of the Corporation's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act would be applicable. 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. 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, Robin M. Hittie Chief Counsel