CEO 13-26 - December 18, 2013
CONFLICT OF INTEREST
UNIVERSITY MEDICAL SCHOOL DEPARTMENT CHAIR ALSO INVOLVED
WITH PRIVATE, NON-PROFIT RESEARCH FOUNDATION
To: Name withheld at person's request (Coral Gables)
No prohibited conflict of interest would exist under Section 112.313(7)(a), Florida Statutes, where the Chair of the Neurology Department of a state university's medical school is involved in a private, non-profit foundation to improve healthcare delivery to patients with chronic neurodegenerative diseases, as long as he does not receive compensation from or otherwise have a contractual relationship with the foundation. However, were he to receive compensation from the foundation or be considered a member of it, a prohibited conflict of interest would exist under the second part of Section 112.313(7)(a), Florida Statutes.
If the foundation and the university enter into a contractual relationship to fund research performed by the foundation, a prohibited conflict of interest would exist under Section 112.313(3), Florida Statutes, because the department chair would be acting in his private capacity as an officer of the foundation to sell services to the university. A conflict could also exist under Section 112.313(7)(a) if he were receiving compensation from the foundation or otherwise had a contractual relationship with it and where it contracted with the university. A possible exemption that could be applied to waive the conflict-Section 112.313(12)(h), Florida Statutes-is referenced, but no finding is made as to its applicability under the circumstances presented. CEO 10-2, CEO 06-24, CEO 06-12, CEO 98-4, CEO 97-6, CEO 95-23, CEO 94-17, CEO 83-70, and CEO 76-181 are referenced.
Would a prohibited conflict of interest be created under Section 112.313(7)(a), Florida Statutes, were the Chair of the Neurology Department of a state university's medical school to be involved in a private, non-profit foundation to improve healthcare delivery to patients with chronic neurodegenerative diseases, but where he receives no compensation and does not otherwise have an employment or contractual relationship with the foundation?
Under the circumstances presented, Question 1 is answered in the negative.
From your letter of inquiry we are advised that you represent … , who chairs the Department of Neurology at Florida International University's (FIU) Herbert Wertheim College of Medicine, and who has authorized you to seek this opinion on his behalf. You explain that concerns have arisen over your client's part-time position with the University and his role in a non-profit corporation he established to improve healthcare delivery to patients with the chronic neurodegenerative diseases of Multiple Sclerosis, Alzheimer's Disease, or Parkinson's Disease.
More specifically, you explain that your client was hired in 2007 to be the founding Chair of the Department of Neurology at FIU's new medical school, and he dedicates 20 percent of his professional time to that position. His current responsibilities as Chair of the Department of Neurology include:
- overseeing the clinical activities of the Chiefs of Service of Neurology at each hospital affiliate;
- developing research programs in neurology;
- providing faculty in adequate numbers to support mentoring of students in all phases of the neurology curriculum;
- monitoring the quality of the education and the educational settings and programs in neurology;
- advising students interested in neurology and advocating for placement of students into neurology residencies nationally; and
- guiding development and overseeing electives in neurology.
In addition to his employment with FIU, he also maintains a private medical practice and has been active on several boards and organizations associated with the University, including its Foundation and the Medical School Founder Society, and is a significant financial supporter of the University and its endeavors.
The private, non-profit foundation your client created is known as Neuroscience Centers of Florida Foundation, Inc. (NSCFF). It grew out of an earlier entity he had been associated with in Vero Beach, and its stated mission is to improve the availability of quality, comprehensive, coordinated, clinical care and to keep patients with one of the three identified neurodegenerative diseases (Multiple Sclerosis, Alzheimer's Disease, or Parkinson's Disease) at home, at work, and out of the hospital. Although your client does not currently receive a salary from NSCFF, his responsibilities to the entity have increased over time, and he is contemplating becoming salaried by NSCFF.
You acknowledge that conflict of interest concerns have been raised due to your client's dual roles as Chairman of the Department of Neurology1 and his private foundation role, as both organizations are engaged in patient care and research, and both seek funding from various sources, including the Florida Legislature. The University has proposed the following guidelines for your client to follow in this regard:
1. Your FIU activities must be kept entirely separate from your private foundation activities. Among other things, this means no use of FIU's name and trademarks on matters involving your private foundation, including on your own private foundation's website; no private foundation activities on university time; and no use of FIU facilities or personnel for private foundation activities.
2. It must always be clear to others what you are doing for FIU and what you are doing for your private foundation. If you believe there may be opportunities for collaboration between FIU and your foundation, it must be approved by [the dean] prior to discussing these potential opportunities with anyone else. No activities, e.g., contracts between your foundation and FIU, will be approved if they will violate the law. Of course, in the context of describing yourself (e.g., on your CV or when giving scientific talks), you may refer to yourself as the Chair of the Department of Neurology as appropriate provided that it is unlikely to create the impression that your private foundation is tied to FIU. There should be no blending of your FIU responsibilities and your private foundation activities and you may not indicate or infer any FIU role in, or support/endorsement of, your private foundation or its activities. And, of course, your FIU responsibilities and position should always be accurately described.
3. You may not use information you learn through your FIU service for the benefit of your private foundation. For example, your foundation may not apply for research grants you learn about through your FIU service. Similarly, you may not engage in fundraising for your private foundation that uses FIU's name or intimates any connection or benefit.
4. If/when engaged in research at FIU, you must complete all required disclosure forms required by the Division of Research or the Institutional Review Board (IRB) and disclose your foundation activities, if required.
5. Under FIU policies, intellectual property conceived by you when performing FIU work, using FIU resources or in your field or discipline, is owned by FIU unless as a part of receiving approval for an outside activity, you have received approval from the Office of the Vice President for Research of a waiver of FIU's intellectual property policy.
6. Prior to engaging any FIU employees at your private foundation or vice versa, you must have [the dean's] prior written approval. You may not engage College of Medicine (COM) students at your foundation.
7. You will need to disclose your private foundation in scholarly articles, on FIU research proposals and in all other instances where a conflict exists and/or there may be confusion about your role.
With this preface, you ask whether a conflict of interest is created by your client's dual roles as department chair for the medical school and as chair of NSCFF.2
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.
This provision prohibits a public employee-even a part-time public employee-from having an employment or contractual relationship with a business entity that is doing business with his agency. It also prohibits employment or contractual relationships which create continuing or frequently recurring conflicts between private interests and the performance of public duties, or which impede the full and faithful discharge of public duties. Our precedent has found that private, non-profit corporations are "business entities." See the definition of "business entity" in Section 112.312(5), Florida Statutes, CEO 94-17, and the opinions cited therein. We also have opined consistently that uncompensated service on the board of directors of a non-profit corporation does not constitute an employment or contractual relationship for purposes of Section 112.313(7)(a). See CEO 83-70, CEO 94-17, and CEO 97-6. Although we have found that membership in a non-profit corporation (which is somewhat analogous to being a shareholder in a for-profit corporation) can constitute a contractual relationship for purposes of Section 112.313(7)(a), e.g., CEO 10-2 and CEO 06-12, there is no representation that your client is a member of the Foundation or that the Foundation is even the type of organization that offers memberships. Therefore, as long as your client does not receive compensation from NSCFF, we would not consider him to have an employment or contractual relationship with the Foundation.
However, if he begins receiving a salary from NSCFF, he would have an employment or contractual relationship with the Foundation, and that raises concerns about a conflict of interest under the first part of Section 112.313(7)(a), if the University enters into a contractual relationship with the Foundation. Of more immediate concern, however, is the conflict that would be created under the second part of Section 112.313(7)(a). The case Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982), is the seminal holding on this issue. In Zerweck, the court held that the second part of Section 112.313(7)(a) establishes an objective standard which requires an examination of the nature of the public employee's duties together with a review of his private employment to determine whether the two are compatible, separate and distinct, or whether they coincide to create a situation which "tempts dishonor." There are many areas in which the interests of the medical school and NSCFF may overlap and potentially be at variance. In particular, the Foundation and the medical school share similar goals in providing clinical care and conducting research, and are likely to compete for funding and staff.3 Therefore, were your client to receive compensation from NSCFF, we believe that a conflict of interest would exist under the second part of Section 112.313(7)(a).
In CEO 76-181, we examined a situation in which a county nursing home administrator owned an interest in a private nursing home located in the same county. Although ultimately we concluded that the situation did not violate Section 112.313(7)(a), because the private nursing home and the county-owned nursing home were not competitors, we noted that the appearance of and potential for conflict was great. The guidelines that have been crafted for your client are commendable, but they are subjective, and depend on your client's willing compliance. We have noted in the past that such "partitioning off" of interests may well be impossible, as a practical matter. See CEO 06-12. Beyond that, as we have stated in other opinions, our concern is whether an official's private interests could coincide with his public duties to "tempt dishonor," rather than with whether the official, through self-imposed limitations, can avoid succumbing to the temptation. See CEO 06-24 and the opinions cited therein.
Accordingly, a prohibited conflict of interest would not exist under Section 112.313(7)(a), Florida Statutes, where the department chair at a university medical school receives no compensation from a private foundation he oversees that provides research and patient care to persons who suffer from particular neurodegenerative diseases, and where he is not a member of the Foundation.
Would a prohibited conflict of interest be created under Section 112.313(3), Florida Statutes, were the university and the private foundation enter into a contract to fund research performed by the foundation?
Under the circumstances presented, Question 2 is answered in the affirmative.
Your client, through his private foundation, has proposed to the University that it enter into a contractual relationship wherein FIU would fund NSCFF for particular research that would benefit FIU's College of Medicine. You explain that this contractual relationship would be independently negotiated by FIU with your client, and would contain specific benchmarks and parameters for any research that is generated. 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.
Section 112.313(3), Florida Statutes, prohibits a public employee acting in a private capacity to sell goods or services to his own agency. We have held previously that a public employee is acting in a private capacity whenever a corporation of which he is a director takes action. See CEO 94-17 and the opinions cited therein. Therefore, we are of the opinion that a contract between FIU and NSCFF would violate Section 112.313(3), Florida Statutes (as well as Section 112.313(7)(a) should your client receive compensation from NSCFF), absent the applicability of an exemption that would operate to waive the conflict. Of the available exemptions, one that might apply is in Section 112.313(12)(h), Florida Statutes. It provides:
The transaction is made pursuant to s. 1004.22 or s. 1004.23 and is specifically approved by the president and the chair of the university board of trustees. The chair of the university board of trustees shall submit to the Governor and the Legislature by March 1 of each year a report of the transactions approved pursuant to this paragraph during the preceding year.
We have addressed this exemption in only two previous opinions, CEO 95-23 and CEO 98-4. In CEO 95-23, a member of a local juvenile welfare services board was an employee of a state university contracting with the board. Although we concluded that his situation did not create a conflict of interest because the proposed transaction was between two public entities, we referenced this exemption and suggested that it could negate a conflict of interest under Sections 112.313(3) and 112.313(7)(a) if one had existed. In CEO 98-4, we concluded that a prohibited conflict of interest was created where a water management district employee taught classes as an adjunct at a state university, because he oversaw the contracts between the district and the university, notwithstanding the exemption in Section 112.313(12)(h), because it did not appear to be applicable. Here, the facts are insufficient to allow us to opine whether the research the Foundation could perform for the University is the type of transaction contemplated by Sections 1004.22 or 1004.23, Florida Statutes, but we note that it requires the approval of the university president and the chair of the university's board of trustees, and must be reported annually to the Legislature and the Governor.
Accordingly, absent the possible application of Section 112.313(12)(h), Florida Statutes, we find that a prohibited conflict of interest would exist under Section 112.313(3), Florida Statutes, if the Foundation enters into a contractual relationship with the University to perform research that would benefit FIU's College of Medicine.
ORDERED by the State of Florida Commission on Ethics meeting in public session on December 13, 2013, and RENDERED this 18th day of December, 2013.
Morgan R. Bentley, Chairman
 You indicate that College of Medicine's Departments of Neurology and Neurosurgery are being restructured into one department-a new Department of Neurosciences-and your client has applied to chair the new department. To the extent his duties and responsibilities would be the same if he is named to that position, the analysis would be the same.
 Our response to your inquiry re-phrases your questions and addresses the issues raised therein. You have indicated that one faculty member serves as Director of the Center, and that the Center previously employed another faculty member.