CEO 82-28 -- May 20, 1982
CONFLICT OF INTEREST
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES EMPLOYEE ENGAGING IN CONSULTATION BUSINESS
To: Mr. Steven W. Huss, Attorney, Health and Technical Support Services, Department of Health and Rehabilitative Services
No prohibited conflict of interest was created where a Mental Health Program Analyst Supervisor with the Department of Health and Rehabilitative Services was an officer and shareholder in a corporation formed to provide consulting services relating to the development of educational systems. Although the employee was the contract manager for a project which developed an education curriculum for training staff to assist in the treatment and rehabilitation of mental health patients, the materials developed under that contract were not used by the consulting corporation. Nor was a continuing or frequently recurring conflict of interest created because, as contract manager, the employee had no supervisory relationship with any person funded under the contract.
Regarding consultation performed by the employee for the State of Virginia, it does not appear that the employee misused his public position for his benefit, although no final conclusion could be reached in an advisory opinion.
Was a prohibited conflict of interest created where a Mental Health Program Analyst Supervisor with the Department of Health and Rehabilitative Services was an officer and shareholder in a corporation formed to provide consulting services relating to the development of educational systems?
This question is answered in the negative.
In your letter of inquiry you advise that Dr. Robert C. Ashburn is a Mental Health Program Analyst Supervisor in the Mental Health Manpower Development Program of the Program Planning and Development, Mental Health Program Office, Department of Health and Rehabilitative Services. In this position, he is responsible for supervising mental health manpower training program development. In addition, he served as contract manager of a unit treatment and rehabilitation program contract between the Department and a community college, under which the community college developed an educational program for training staff at State hospitals to assist in the treatment and rehabilitation of mental health patients through classes given for credit at various community colleges.
You also advise that the subject employee together with two other individuals formed and was an officer and shareholder of a corporation which was intended to provide consultation services in the development of educational systems. The other individuals involved in the corporation were the president of the community college which had contracted to develop the unit treatment and rehabilitation curriculum and the project manager hired by the community college to perform the contract work. During the time the subject employee owned his interest in the corporation, the corporation submitted a proposal to the State of Virginia Department of Mental Health and Mental Retardation to develop curriculum materials for mental health and mental retardation staff and submitted a draft concept paper to the Florida Department of Education; neither of these proposals was accepted. The materials developed by the community college pursuant to the contract managed by the subject employee were not provided by the corporation because differences in organizational structures and program needs made those materials inappropriate.
The Code of Ethics for Public Officers and Employees does not prohibit a public employee from having any private economic interests whatsoever. Rather, the Code of Ethics recognizes that public servants should be permitted to acquire and retain private economic interests except when conflicts of interest cannot be avoided. Section 112.311(2), Florida Statutes. In accordance with this public policy, the Code of Ethics places certain restrictions upon the private economic activities of a public employee. For example, under Section 112.313(3), Florida Statutes, a public employee cannot transact business with his own agency. Nor is a public employee permitted to contract with or be employed by a business entity which is doing business with, or is subject to the regulation of, his agency. Section 112.313(7), Florida Statutes. Neither of these provisions appears to be applicable under the circumstances presented to us.
In addition, the Code of Ethics provides:
DISCLOSURE OR USE OF CERTAIN INFORMATION. -- No public officer or employee of an agency shall disclose or use information not available to members of the general public and gained by reason of his official position for his personal gain or benefit or for the personal gain or benefit of any other person or business entity. [Section 112.313(8), F. S.]
In a previous opinion, CEO 80-21, we advised that this provision would prohibit a public employee from offering his services as a consultant relating to dispute resolution alternatives, where he had been employed by the State to direct a project on dispute resolution alternatives. There, the information which he would have been imparting was gained by reason of his research, preparation, and experience while an employee. Similarly, in CEO 81-54, we advised that this provision would prohibit an employee of the Department of Health and Rehabilitative Services from forming a consultation corporation to provide a training program developed by him for the Department.
The situation of the subject employee and his corporation, however, differs from the situations presented in these earlier opinions. The corporation apparently did not intend to sell materials or information developed under the contract between the Department and the community college as part of any educational system which it would have developed. Rather, the corporation would have been utilizing the expertise of its members in the development of programs which would differ because of the particular needs of the states or public agencies involved.
Section 112.313(7)(a), Florida Statutes, also prohibits a public employee from having any 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. As used in this provision, the phrase "conflict of interest" is defined to mean "a situation where regard for a private interest tends to lead to disregard of a public duty or interest." Section 112.312(6), Florida Statutes.
In our view the subject employee had a contractual relationship with each of the other shareholders of the corporation. A corporate charter is in the nature of a contract between the corporation and its stockholders, and also between the stockholders themselves. See 8 Fla. Jur. 2d Business Relationships, Section 56; 18 C.J.S. Corporations, Section 71; and 18 Am. Jur. 2d Corporations, Section 85.
The issue of whether a prohibited conflict of interest is created by virtue of a contractual relationship between a public employee and a subordinate employee has not been raised before. We are of the opinion that generally no continuing or frequently recurring conflict of interest would arise from such a relationship. It is possible that where a public employee has an ongoing business relationship with a subordinate, that private business relationship and the employee's interests in keeping that relationship harmonious, productive, and profitable would impede the employee's duty of impartially evaluating the subordinate's job performance and would lead to a frequently recurring conflict between those interests.
However, under the circumstances you have presented, it does not appear that such a substantial conflict of interest is present. The subject employee did not select the project director who was responsible for the performance of the contract by the community college. In addition, the project director's performance under the contract was reviewed through a curriculum committee established to review all of the materials developed in the program. As contract manager, the subject employee had no supervisory relationship with any person funded under the unit treatment and rehabilitation contract.
Accordingly, under the circumstances you have presented, we find that no prohibited conflict of interest existed where the subject employee was an officer and a shareholder in this particular consulting corporation.
Was the Code of Ethics for Public Officers and Employees violated where the subject Mental Health Program Analyst Supervisor provided assistance to the State of Virginia in the area of mental health and mental retardation at the expense of that State?
In your letter of inquiry you advise that the subject employee made three trips to the State of Virginia prior to the formation of the consulting corporation. The first trip was made as a staff member of the State Manpower Development Program, with the subject employee traveling on State time and his travel and expenses being paid by a federal grant. At that time, the subject employee shared information on the State's unit treatment and rehabilitation development efforts, and the State of Virginia shared material it had developed. The subject employee received no payment of any kind from the State of Virginia.
The second trip was made at the request of the State of Virginia for the purpose of helping them select a training director. This trip was made while on annual leave, and the State of Virginia did pay the employee's expenses and one day's consulting fee.
The third trip also was made at the request of the State of Virginia, which wanted the subject employee to review its mental health and mental retardation facilities and to provide the State with information on how its system could be improved. The subject employee was on annual leave at that time, and expenses for his trip were paid by the State of Virginia, although no consulting fee was charged or paid. During this trip, the possibility of the employee's working with Virginia to develop training materials for mental health and mental retardation staff was discussed. At the conclusion of this trip, Virginia asked whether the subject employee would be interested in submitting a proposal to develop a human services paraprofessional model curriculum for that State. The proposal subsequently was made by the consulting corporation.
The Code of Ethics provides in relevant part:
MISUSE OF PUBLIC POSITION. -- No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit or exemption for himself or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), F. S.]
The term "corruptly" is defined to mean
done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his public duties. [Section 112.312(7), F. S.]
As we have observed in previous opinions, this statute requires a determination of intent which is extremely difficult to make while rendering an advisory opinion, since intent is to be determined from an examination of all relevant circumstances. We are able to do this when a complaint has been filed concerning a given situation on the basis of evidence presented through investigation and hearing, but in rendering an advisory opinion we are handicapped by a lack of access to information concerning all the circumstances of the situation, as well as information concerning the credibility of the individuals involved.
For these reasons we cannot reach a final conclusion as to whether the subject employee's actions constituted a misuse of his public position in violation of this statute. However, it does not appear that, under the circumstances presented, the subject employee used his position in providing assistance to the State of Virginia, as he was traveling while on annual leave. Nor do the circumstances you have presented suggest that the subject employee utilized his public position to obtain consulting work with the State of Virginia.