Dr. Jesse H. Meredith, Chairman
Commission
for Health Services
NC
Department of Health & Human Services
1915
Mail Service Center
Raleigh,
North Carolina 27699-1915
Re: Commission
for Health Services
Public
Official’s Involvement in Decision-Making Process Given His Employment by a
Petitioner to his Public
AO-04-001A
Dear
Dr. Meredith:
We are in receipt of your March 2, 2004, request for an advisory opinion raising conflict of interest/appearance of conflict questions related to a Commission for Health Services member’s private consulting work for a company seeking approval of its product by the Commission. Your request raises numerous difficult ethical questions, several of them perhaps questions of first impression for the Board. At the same time, your meeting schedule calls for an extremely quick response. In order to respond to your request in a timely fashion while at the same time not rushing a potentially significant and far-reaching opinion, the Chairman has agreed to issue a temporary, interim opinion addressing the matters of the most immediate concern. It is contemplated that this temporary, interim opinion will be superceded by a comprehensive advisory opinion as soon as possible. Until that happens, this advisory opinion shall remain in full force and effect according to the Board's "Rules and Regulations" and may be relied upon by all Public Officials impacted thereby.
All
advisory opinions, both preliminary and final, are based upon the particular
facts presented and issues raised in the specific request for an advisory
opinion. As such, the scope of each opinion is limited to the request made and
should only serve as a recommendation to the particular parties involved. That
is particularly true in this case.
I understand the basic facts to be as follows. The Commission for Health Services (“CHS” or “the Commission”) was created with the authority to adopt rules to protect and promote the public health and implement the public health programs administered by the Department of Health and Human Services (“DHHS” or “the Department”). North Carolina General Statutes (“N.C.G.S.”) §130A-29. The Commission consists of 13 members, four of whom are elected by the North Carolina Medical Society and nine of whom are appointed by the Governor. N.C.G.S. §130A-30. Pursuant to Governor Easley’s Executive Order Number One on public service ethics (“EO One” or “the Order”), the nine gubernatorial appointees are covered “Public Officials” subject to the jurisdiction of the Board of Ethics (“BOE” or “the Board”).
As with many covered boards, the Commission has several members who must fill “designated seats”: members who must come from a certain background or profession. One such member must be either a registered engineer experienced in sanitary engineering or a soil scientist. N.C.G.S. §130A-30 (b).
One
of the gubernatorial appointees to the Commission is a licensed soil scientist
and an expert on wastewater systems. In
his private employment, this member works as a consultant and expert witness on
soils, groundwater, and environmental issues representing both private and
public sector entities. One of his clients is a wastewater systems manufacturer
seeking Commission approval of its product as “an accepted wastewater system”
pursuant to a recently-enacted law. See N.C.G.S. §130A-343. Pursuant to this
statute, the Commission makes the decision on whether to approve the
manufacturer’s product as an accepted wastewater system. The manufacturer’s
request is being handled as a petition for approval as an accepted wastewater
system, rather than as a rulemaking petition.
The manufacturer’s petition first came before the Commission at its November 2003 meeting, at which time the Commission member recused himself from consideration of the petition because of work done for the applicant-company. The Commission chair appointed a sub-committee to review the petition, consult with staff, and report back to the full Commission at its February 2004 meeting. This sub-committee consisted of two Commission members. The Commission sometimes appoints sub-committees to address highly technical issues. These sub-committees are non-statutory and serve a strictly advisory role – they make recommendations to the full Commission for final action there. Because the member in question had recused himself from voting on the petition due to his employment with the applicant, the chair intentionally did not include this member on the advisory sub-committee.
At
the first meeting of the advisory sub-committee, the Commission member appeared
as a consultant for the applicant. After clearly disclosing his consultant
role, he sat at the table with company representatives, he asked and answered
substantive questions, he talked about various technical issues, he had direct
discussions with the two sub-committee members, and he made recommendations. In
short, he was a full participant in the meeting on behalf of his employer, the
applicant.
After
this sub-committee meeting, Commission counsel reviewed various Board of Ethics
opinions and determined that the member’s actions on behalf of the manufacturer
might pose a potential conflict of interest or at least the appearance of a
conflict. Counsel discussed his concerns with the Commission member, and the
member also reviewed the Board of Ethics opinions. Based upon his review of the
opinions and discussions with Commission counsel, the member agreed to refrain
from any discussions with sub-committee members and DHHS staff regarding his
client’s petition.
At
the next sub-committee meeting on the petition, the Commission member again
appeared with the company and its attorneys. In discussions with Commission
counsel before the meeting began, the member advised that he would not
participate in the discussions or do anything that might be construed as
attempting to influence the sub-committee members or department staff. The
member said that he was only there to advise the attorneys for his client.
Counsel reiterated his position that the member’s attendance in his role as a
private consultant might constitute a conflict of interest or appearance of a
conflict. The member indicated that he did not believe his attendance should be
interpreted as influencing the sub-committee and that he did not believe that the
Board of Ethics’ advisory opinions prohibited attendance at the meetings.
Counsel also suggested to the member that an advisory opinion should be sought
from the Board of Ethics on this matter. The member remained at the
sub-committee meeting and sat with the company representatives behind the
attorneys for the applicant-company. He did not speak to the sub-committee
members or staff regarding the petition during the meeting. He did discretely
advise the attorneys for the company during the meeting. If I am mistaken about any of the foregoing facts, or if there is
additional relevant information needed for a complete understanding of the
issues involved, please let me know at once and they can be incorporated into
the final opinion.
Based on these facts, you have asked four (4) questions
relating to conflict of interest and the appearance of conflict in the context
of the member’s consulting work for the petitioner. We will address each of
these questions fully and completely at a later time, but in light of your
upcoming March 9 sub-committee meeting and March 19 full Commission meeting, we
offer this interim guidance.
First of all, in situations such as this, there needs to
be immediate and full disclosure of the employment relationship between the
Public Official and the individual or entity appearing before the Official’s
public body (in this case the Commission). At the latest, this would be when the Official is hired or retained by the
petitioner or applicant. Depending on the particular situation, the Official
might need to disclose serious discussions or negotiations of employment with
an individual or entity appearing before or intending to appear before the
Official’s public body. Early disclosure will enable agency heads and their
legal counsel to take appropriate preventive and/or remedial measures,
including seeking timely advice from available sources.
Second, the Official needs to take extreme care not to
“use or disclose information gained
in the course of, or by reason of, his or her official responsibilities in a
way that would affect a personal financial interest.” Section 7 (a) (4) of the
Order (emphasis added). A “personal financial interest” would obviously include
one’s role as a paid consultant for an applicant appearing before an Official’s
particular board or commission. This includes, but is not limited to, the
improper use or disclosure of confidential information.
Third, the member in question should totally and
absolutely recuse himself from the decision-making process, wherever that might
take place. As stated in the preamble to the ethics Order, “Officials should be
prepared to remove themselves immediately from decisions, votes, or processes where even the appearance of a
conflict exists” (emphasis added). The rules are clear when it comes to the
ultimate decision-making at the full Commission meeting: the member should not
vote on his client’s petition (which he has recognized, acknowledged, and acted
upon). Moreover, he should not discuss it with or answer questions from other
Commission members or staff.
The Board’s directives are also clear when it comes to
trying to do indirectly what one if prohibited from doing directly (sometimes
referred to as “lobbying” in the Board’s opinions). In an opinion dealing with
an occupational licensing board, the Board of Ethics stated,
Members should not participate in,
vote on, influence, or attempt to influence the decision to license an
individual if they have a personal interest in the outcome, or a reasonably
foreseeable benefit from the outcome.
AO-93-002 (August 27, 1993). Thus a Public Official (like
the Commission member here) cannot attempt to influence fellow Officials or
staff to vote or act a certain way when he himself is prevented from
participating due to a conflict or appearance of conflict. This prohibition is
not limited to a particular location and would include trying to influence a
decision through someone else (like an agent or proxy).
The Board’s decisions are less clear when it comes to
dealing with sub-committees, but based upon the facts of this case, the member
in question should not participate in, influence, or attempt to influence the
efforts of the ad hoc sub-committee
dealing with his client’s petition. This would include openly advising his
employer’s attorneys, technical experts, or other representatives at the
sub-committee meeting. In fact, given these restrictions and the Order’s clear
mandate that the public decision-making process not only be but also appear to be
totally free from any type of undue influence, bias, or self-interest, I see no
reason for the member to attend any sub-committee meetings dealing with his
client’s petition.
I
hope this interim opinion adequately addresses your immediate concerns, and we
will issue a full preliminary advisory opinion as quickly as possible. If you
have any questions or need to add any additional information, please let me
know at your convenience.
Sincerely,
Perry Y. Newson
Executive
Director