CEO 76-181 -- October 25, 1976
CONFLICT OF INTEREST
COUNTY NURSING HOME ADMINISTRATOR HOLDING INTEREST IN PRIVATE NURSING HOME IN COUNTY
To:††††† Jack Kenney, Chairman, Escambia County Commission, Pensacola
Prepared by:†† Bonnie Johnson
Although both the appearance of and potential for conflict are great where the administrator of a county nursing home privately owns a material interest in and is an officer and director of a private nursing home located in the county, no conflict of interest is found to exist based on the facts presented. Florida Statute s. 112.313(7)(1975) prohibits a public officer or employee from holding private employment or having a contractual relationship with any business entity which is regulated by or does business with his public agency or which presents a frequently recurring conflict with his public duties. As the private nursing home is neither regulated by nor does business with the county home, no conflict exists on that basis. Nor does an examination of the factual circumstances indicate that a frequently recurring conflict exists, as the two homes do not appear to compete for patients or employees. Additionally, the administrator attests to spending at least 50 hours per week at the county home, thus precluding the likelihood that private interests interfere in this regard. Although potential conflicts were found to exist by the Attorney General as well as by a grand jury and special citizens committee charged with investigating this matter, no evidence of actual wrongdoing was cited. Accordingly, this commission cannot in good conscience rule that a conflict exists, as no disregard of public duty is apparent based on the facts presented. The Code of Ethics provides that it is not the law's intent to preclude private interests which do not interfere with the full and faithful discharge of public duty, and that conflict of interest laws must be designed so as not to impede unreasonably the recruitment or retention by government of those best qualified to serve. Fla. Stat. ss. 112.316 and 112.311(2)(1975). As these two provisions appear to protect public officials from charges of conflict based on mere appearance or insubstantial potential, no conflict of interest is found in the subject nursing home administratorís simultaneously holding the above- described interests in a private nursing home located within the county.
Does a prohibited conflict of interest exist where a county employs in the position of administrator of the county nursing home one who privately owns a material interest in and is an officer and director of a private nursing home located in the county?
This question is answered in the negative.
We understand, based upon your letter of inquiry and accompanying materials, that Mr. Larry Johnson currently is employed by the county as Administrator of the Escambia County Nursing Home. Privately, he is the President and a member of the Board of Directors of, and owner of 60 percent of the capital stock in, Bay Crest Nursing Home, a private facility operating within the county under the direction of a full-time administrator. Mr. Johnson has informed our staff that he draws a salary from Bay Crest for his service on the board of directors.
The Code of Ethics for Public Officers and Employees provides in relevant part as follows:
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 is an officer or employee, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties . . . . [Fla. Stat. s. 112.313(7)(a)(1975).]
Accordingly, a public employee is prohibited from holding private employment or having a contractual relationship with any business entity which is regulated by or does business with his public agency, or which presents a recurring conflict with his public duties. Pursuant to s. 112.312(2)(1975), Mr. Johnson's public agency is the county nursing home, which was established as a separate department directly under the supervision of the county commission. As Bay Crest neither does business with nor is regulated in any manner by the county or any of its agencies, the first sentence of the above- quoted provision is inapplicable. It therefore is incumbent upon us to analyze your question in terms of whether the subject private interest creates a conflict of a continuing or frequently recurring nature.
In order to fully understand the contemplation of this prohibition, we find it useful to read this section in conjunction with other provisions of the code. In its statement of legislative intent and declaration of policy, the Code of Ethics provides that
[i]t is essential to the proper conduct and operation of government that public officials be independent and impartial and that public office not be used for private gain other than the remuneration provided by law . . . . [Fla. Stat. s. 112.311(1)(1975).]
It is further declared to be the policy of the State of Florida that
no officer or employee of a state agency or of a county, city, or other political subdivision of the state, and no member of the Legislature or legislative employee, shall have any interest, financial or otherwise, direct or indirect; engage in any business transaction or professional activity; or incur any obligation of any nature which is in substantial conflict with the proper discharge of his duties in the public interest. . . . [Fla. Stat. s. 112.311(5)(1975).]
Read together, these provisions prohibit the use of public office for private gain, and forbid a public official's pursuit of any private interest which interferes with the full and impartial discharge of his duties to the public. In the situation before us, the potential for violation appears substantial. Based on the facts provided us and peculiar to this situation, however, we find no ethical standards to have been breached.
As pointed out in AGO 073-428 on this matter, the two nursing homes do not compete for patients, as the county home primarily houses indigent persons while Bay Crest patients pay in large part from private funds. According to information provided our staff by Mr. Johnson, the monthly cost for care at the county nursing home is $610, while Bay Crest's fee is $780. Approximately 95 percent of the county home's income is met by Medicaid, Social Security, and other retirement benefits; 4 percent is derived from the county; and only 1 percent from private funds. Bay Crest, on the other hand, derives 57.4 percent of its income from private sources and receives no money from the county. The county home houses an average of 155 patients who are selected on the basis of need by the home's admission committee from its waiting list. As of August 20, 1976, Bay Crest had 114 patients. It has no waiting list, and admittance is based on ability to meet the cost of care at that facility. Mr. Johnson has informed us that only one patient ever has transferred from the county home to Bay Crest, such move having been made at the request of the patient's family in order that she might join her husband, a resident of the private home. Mr. Johnson further reports that Bay Crest lost money on the admission.
While it does not appear that the two institutions are rivals with respect to patients, the question arises as to the likelihood of their competing for employees. Both homes do employ registered nurses, licensed practical nurses, orderlies, and nurses' aides. At the county nursing home, however, these positions pay from $.09 to $.67 more per hour than at Bay Crest, thus precluding the likelihood that the private home would draw employees from the county institution. In response to our inquiry as to whether any employee transfers have occurred, Mr. Johnson reports only two. It is our understanding that an orderly at the county home resigned his position in 1973 and left the city; he returned approximately 2 months later, however, at which time he was employed by Bay Crest as an office worker. Also in 1973, the assistant director of nursing at the county home left that position after approximately 5 months to become Director of Nursing at Bay Crest. Mr. Johnson explains that she was over-qualified for the position held at the county home but had little hope for advancement, as the director of nursing at the county institution had no plans to leave in the foreseeable future. Upon informing Mr. Johnson that she was actively seeking better employment elsewhere, the subject nurse was offered and accepted the position at Bay Crest. Currently, she serves as administrator of another convalescent home in the state.
Turning our attention to the possibility that the amount of time spent at Bay Crest could conflict with the full and faithful discharge of Mr. Johnson's responsibilities to the county, we note that he has submitted a sworn statement that he regularly spends at least 50 hours a week in his capacity as administrator of the county home. His regular hours are from approximately 8:30 a.m. to 5:30 p.m. In addition, he attests to regularly visiting the county home on evenings, weekends, and holidays. He states that he has no regular hours at Bay Crest, but often visits the private facility in the morning before his county office hours and on weekends and evenings, for a total of approximately 10 to 12 hours per week. Numerous employees and patients, as well as members of patients' families, have attested in writing to the efficient and humane management of the county home and to the concern and availability of Mr. Johnson.
A grand jury and a special citizens committee appointed by the county commission, both charged with investigating the existence of or potentiality for conflict in this matter, have commended Mr. Johnson for his effective and efficient operation of the county home. In pertinent part, the citizens committee reported to the county commission that, based on the statements of persons interviewed, employees and patients at the county home
were overwhelmingly unanimous in their approval of the efficiency and attitude of Mr. Johnson toward the patients of Escambia Nursing Home both before and after his appointment at the Bay Crest Nursing Home. And, no notable change has occurred in his attitude or efficiency since then. It was even stated that plans and efforts were still anticipated and being made to continue further improvements toward the patients' comfort and employees' working conditions. Those people solicited favored Mr. Johnson's retention as Escambia County Nursing Home Administrator.
Similarly, the grand jury reported in June of 1973:
It is the finding of this Grand Jury that Larry Johnson has effectively and efficiently operated the Escambia County Nursing Home through maintaining a high degree of professional competence and personal good conduct. This finding is based on testimony to the effect that patients have been properly cared for, that all financial records are in proper form and that county owned equipment has been properly maintained and accounted for.
Both of the above groups recommended that Mr. Johnson be retained as administrator of the county nursing home. The grand jury, however, further recommended that Mr. Johnson "divest himself of all personal and financial interests in Bay Crest Nursing Home," based upon its finding that a conflict of interest exists by virtue of his dual interests. The grand jury explained this finding as follows:
A conflict of interest by a public official is a situation in which the discharge of his public office is jeopardized by a personal obligation or financial interest which could conflict with these public duties. This body has determined that Nursing Home Administrator Larry Johnson has in all respects discharged his public duties, but that Johnson has put himself or allowed himself to be put in a position which could interfere with the proper discharge of his public duties.
In AGO 073-428, the Attorney General similarly found only potential conflicts, but nonetheless recommended that Mr. Johnson divest himself of either his public post or private interest in Bay Crest, "in order to avoid any possible criticism as well as any possible violation of the Standards of Conduct Law."
While we cannot argue with the soundness of this advice, the question before us is whether a conflict exists under current law. The revised Code of Ethics for Public Officers and Employees, which took effect on October 1, 1975, defines the term "conflict" or "conflict of interest" to mean "a situation in which regard for a private interest tends to lead to disregard of a public duty or interest." Fla. Stat. s. 112.312(6)(1975). Based on the facts before us, we cannot in good conscience say that any conflict is evident. In light of the following provision of the Code of Ethics, we further feel that this commission must be chary in construing the law so as to prohibit private interests which evidence, either under the law or in actual practice, no interference with public duty:
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 duties to the state or the county, city, or other political subdivision of the state involved. [Fla. Stat. s. 112.316(1975).]
Moreover, it is declared as a matter of legislative intent and stated policy that the Code of Ethics is not designed to unreasonably limit a public servant's private pursuits:
It is also essential that government attract those citizens best qualified to serve. Thus, the law against conflict of interest must be so designed as not to impede unreasonably or unnecessarily the recruitment and retention by government of those best qualified to serve. Public officials should not be denied the opportunity, available to all other citizens, to acquire and retain private economic interests except when conflicts with the responsibility of such officials to the public cannot be avoided. [Fla. Stat. s. 112.311(2)(1975).]
Recognizing that even the appearance of impropriety may undermine the confidence of citizens in their government, we nevertheless feel that the facts before us are not sufficient to warrant a finding of conflict under the law. In fact, the two provisions quoted above appear to protect public officials from charges of conflict based on mere appearance or insubstantial potential. Accordingly, we find no conflict of interest, based on information presently before us, in your county's nursing home administrator simultaneously holding the above-described interests in a private nursing home located within the county.