No prohibited conflict of interest would be created under Section 112.313(3), Florida Statutes, were a Hospital District Commission member to be employed by an equipment vendor selling goods to the District. In addition, given the member's lack of involvement in the vendor's domestic operations and the Board's lack of involvement in the decisions to purchase the equipment, Section 112.316, Florida Statutes, would operate to negate any conflict created under Section 112.313(7)(a), Florida Statutes.
Would a prohibited conflict of interest exist were a member of the North Broward Hospital District to be employed by an equipment vendor selling goods to the Hospital District?
Yourquestion is answered in the negative, under the circumstances presented .
You write on behalf of Miguel "Mike" Fernandez, a member of the Board of Commissioners of the North Broward Hospital District ("District") who has served since September 2007.
You relate that the District operates four hospitals and a number of other healthcare facilities throughout Broward County, which are administered through a President/CEO hired by the Board. The member, you advise, is employed by an international corporation recognized as a leader and specialist in hand-carried ultrasound equipment. You state that the corporation has a "global network" in more than 90 countries, and that the member serves as the general manager for the company's Europe and Latin American operations, having "no role, input, or influence" in the company's domestic sales or other business operations in this country. You write that apart from limited stock options, which you describe as "de minimis," the member has no ownership interest in the company.
You relate that the company has sold equipment to the District since 2001. It has no continuing contract with the Board, you state, but its "unique equipment is specifically sought and preferred by certain doctors and other members of the District's medical staff to be used in patient care." You advise that each of the purchases has been below the $250,000 spending threshold which would require approval by the Board. In fact, you write that the equipment provided by the company "is relatively insignificant from the District's financial perspective" and would not generally even "rise to the financial level which would involve the director of purchasing, let alone the President or the Board." In addition, you represent that the equipment is purchased through a group purchasing organization ("GPO")—an organization in which members pool their purchasing power to obtain more favorable prices than would be available to an individual buyer.
Section 112.313(3), Florida Statutes, provides:
DOING BUSINESS WITH ONE'S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:
(a) October 1, 1975.
(b) Qualification for elective office.
(c) Appointment to public office.
(d) Beginning public employment
The first part of this section prohibits a public officer from acting in his official capacity to purchase, rent, or lease any goods, services, or realty from a business entity in which he is an officer or director or in which he owns a material interest, defined at Section 112.312(15), Florida Statutes, to mean "direct or indirect ownership of more than five percent of the total assets or capital stock of any business entity." The second part prohibits a public officer from acting in his private capacity to sell, rent, or lease any goods, services, or realty to his public agency or to the political subdivision in which his agency is located. As the member is not an officer or director of the company, has no ownership interest in the company, and in no way acted to sell goods to the District, no conflict of interest under Section 112.313(3) exists here.
Section 112.313(7)(a), Florida Statutes, provides:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.—No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties.
The first part of Section 112.313(7)(a) prohibits the member from having an employment or contractual relationship with any business entity regulated by or doing business with the District. By selling medical equipment to the District, the company clearly is "doing business" with the member's public agency.
In CEO 83-90, we addressed a question from a member of the board of directors of a public hospital who was employed as a medical representative of a pharmaceutical company selling products to the hospital. We found a prohibited conflict existed under the first part of Section 112.313(7), and would exist even if another representative of the company handled all contact with the hospital, saying, "In our view, the statute does not distinguish between situations in which the public officer is involved personally and situations in which the officer is not involved personally, so long as the officer's employer is doing business with the public agency." Accordingly, in this case a prohibited conflict is presented, unless some exemption applies.
You have indicated that the equipment is purchased through a GPO and that GPOs "operate in a similar manner as a competitive bidding process." Section 112.313(12), Florida Statutes, provides an exception for sealed, competitive bids; however, we have interpreted the requirements of this exemption strictly. CEO 82-68, and see CEO 09-20, fn. 7 ("selections under the Consultants' Competitive Negotiation Act or other methods similar to sealed, competitive bidding do not bring one within the protections of the exemption. CEO 81-28, CEO 89-48, CEO 01-15."). Therefore, we find that the exemption for sealed competitive bids is inapplicable here.
The Code of Ethics also provides:
Construction.—It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, Florida Statutes.]
In CEO 88-63, we dealt with a question from a hospital board member whose law firm represented the trust department of a bank in connection with the bank's fiduciary responsibilities over certain estates, trusts, or guardianships. The hospital board retained the bank for investment management, resulting in a potential conflict of interest for the hospital board member under the first part of Section 112.313(7). We found it appropriate there to apply Section 112.316, because the law firm would be hired as an independent contractor with no managerial responsibilities for the bank, had no duties relating to the commercial division of the bank (which was the division doing business with the board), and was only one of many law firms employed by the bank's trust department.
Similarly, here the corporation is merely a provider of equipment and has nothing to do with the hospital's functions, the part of the corporation for which the member works is completely unrelated to the corporation's domestic business, and the business done between the corporation and the District is not the result of a continuing contract, but is instead on an individual purchase basis. Under these circumstances, we find that Section 112.316 works to negate the prohibition that would exist under a literal application of Section 112.313(7)(a), Florida Statutes.
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 16, 2010 and RENDERED this 21st day of April, 2010.