CEO 95-19 -- August 31, 1995
CONFLICT OF INTEREST
FORMER AHCA EMPLOYEE EMPLOYED BY PREPAID MEDICAID
HEALTH PLAN PROVIDER CONTRACTING WITH AHCA
To: (Name withheld at the person's request.)
The Code of Ethics permitted a Medical/Health Care Program Analyst for the Agency for Health Care Administration to leave that position for employment with a health management company which contracted with the State to provide managed care services for Medicaid recipients. Although as an AHCA employee the individual had reviewed the health care company's application to become a Medicaid HMO contractor, her involvement in that review process was not so "substantial" that her employment would violate Section 112.3185(3), Florida Statutes. Further, while the employee evidently did, during the term of the FY 1993-94 contract, have an employment relationship with a business entity in connection with a contract for contractual services that had been within her responsibility while an AHCA employee, under the specific factual circumstances presented the former AHCA employee did not violate Section 112.3185(4) because, as an AHCA employee she did not conceive of the need to contract with the health care company for Medicaid HMO services, she was not substantially involved in the decision to contract or in developing the contract, and she was not in a position to benefit this particular HMO contractor. Therefore, Section 112.316, Florida Statutes, controls over the prohibition of Section 112.3185(4), Florida Statutes.
Was the Code of Ethics for Public Officers and Employees violated where you, formerly employed as a Medical/Health Care Analyst by the Agency for Health Care Administration, subsequently became employed by a maintenance organization contracting with the Agency for Health Care Administration to provide prepaid health care services for Medicaid recipients?
Under the circumstances presented, your question is answered in the negative.
Through your letter of inquiry and subsequent correspondence and discussions with our staff, we are advised that you began working for the Florida Department of Health and Rehabilitative Services in February 1980, moving to the Department's Medicaid Managed Care Office in January 1989. In July 1993, the entire program and its staff were transferred to the Agency for Health Care Administration. In your position as a Medical/Health Care Analyst with this program, you reviewed applications submitted by health care companies seeking approval to become Medicaid prepaid health plan providers. Approved providers were awarded contracts to extend Medicaid prepaid health care services to Medicaid recipients who met the criteria for enrollment in Medicaid prepaid health plans. We understand that the contract award process was not a selective award through a request for proposal process but, instead, was an open process whereby any and all applicants who met established criteria were awarded contracts. You advise that your responsibilities simply entailed reviewing language in applications and comparing it with the required language. When parts were incorrect or missing, you notified the applicant, who then forwarded the requested supplementation. When the application appeared complete and in compliance with all requirements, you advised your supervisor who, in turn, conferred with the Bureau Chief and made the decision to award the contract. After the applicant signed the contract, it was routed to various AHCA individuals for sign-off, with final sign-off by the Director of Medicaid. After that, the document was forwarded to the Health Care Financing Administration for review and approval at the federal level. You further advise that Medicaid managed care contracts cover one fiscal year (July 1 through June 30), at the end of which a new contract is negotiated contingent upon satisfactory performance during the previous fiscal year.
As an AHCA employee, one of the many applications you reviewed was that of a company applying to become a Medicaid managed care provider for FY 1993-94. That company obtained a contract with AHCA, and in November 1993 you were approached by its president/CEO, who offered you a position with his company. After due consideration, you accepted his offer, submitted your resignation to AHCA effective December 31, 1993, and began employment with this health care company on January 1, 1994. In April 1994, the company formed a subsidiary and all employees were involuntarily transferred to this new subsidiary. Since that time, you have been an employee of this subsidiary, which manages the health care company's Medicaid contract with AHCA. In this position your duties have focused mainly on the development of the company's application to the Department of Insurance for its commercial HMO certificate of authority, and you also have served as the liaison between the company and various governmental agencies with which it does business, including AHCA, HRS, and the Department of Insurance. Although your AHCA supervisors congratulated you on your new position at the time you left the agency, a question has since arisen over the potential applicability of Section 112.3185, Florida Statutes, to your subsequent employment with the health care company.
The Code of Ethics for Public Officers and Employees provides:
No agency employee shall, after retirement or termination, have or hold any employment or contractual relationship with any business entity other than an agency in connection with any contract in which the agency employee participated personally and substantially through decision, approval, disapproval, recommendation, rendering of advice, or investigation while an officer or employee. [Section 112.3185(3), Florida Statutes (1993).]
No agency employee shall, within 2 years of retirement or termination, have or hold any employment or contractual relationship with any business entity other than an agency in connection with any contract for contractual services which was within his responsibility while an employee. [Section 112.3185(4), Florida Statutes (1993).]
The first of these provisions prohibited you from leaving AHCA for employment with a business entity that has contracted with AHCA if your employment is in connection with that contract and if you participated personally and substantially in the procurement or development of the contract. Here, although your subsequent employment with the health care company appears to have been, at least for a time, in connection with its FY 1993-94 contract with AHCA, we cannot conclude that your participation in reviewing the company's application to become a Medicaid HMO was "substantial." We take this view because of your representations that you simply compared language in applications to that which was required, and because your role in the contract approval process was of such a limited nature. In CEO 87-8, we concluded that a Department of Transportation employee's involvement in a contract with a engineering firm was not so "substantial" as to preclude his subsequent employment with the firm where he had distributed an "advance notification" for the project study. See also CEO 88-32, in which we further examined the phrase "personally and substantially" as discussed in similar federal regulations. Thus, in our view, Section 112.3185(3) did not prohibit your subsequent employment with the health care company or its subsidiary.
Section 112.3185(4) prohibits a former State employee from being employed with any business entity within two years of her retirement in connection with any contract for contractual services which was within her responsibility while an agency employee. At the time of your resignation from AHCA, "contractual services" referred to the definition contained in Section 287.012, Florida Statutes. We note that that definition was amended since we rendered CEO 83-8 and CEO 84-91, as it formerly excluded health services. Nonetheless, while the health care company's contract with AHCA may likely be considered one for "contractual services," we cannot conclude that your subsequent employment with the health care company or its subsidiary violates Section 112.3185(4), Florida Statutes. In our view, Section 112.3185(4) was designed to prevent State employees from using their public positions to conceive of a need for services, develop a contract to obtain those services, and then to "switch sides" and go to work for the entity that was awarded the contract that they conceived and developed while public employees. Here, it is clear that you as an AHCA employee did not conceive of the joint State/Federal Medicaid HMO program. Nor did you as an AHCA employee have any ability to target potential contractors for Medicaid HMO contracts. Instead, the contracting process appears to have been more of a licensing procedure whereby any company meeting certain criteria received a contract with the agency to provide managed health care services to Medicaid recipients. Nor does it appear that you were in a position to economically benefit this particular contractor over any others, as the capitation rates paid by Medicaid to prepaid health plans was determined by others within AHCA. Finally, it is evident that neither you nor your AHCA supervisors had, at the time of your resignation, concerns that the situation might violate Section 112.3185. Your supervisors congratulated you on your career change and wished you well, and at your retirement party presented you with a plaque thanking you for your many years of dedicated public service. Now, nineteen months after leaving AHCA, the propriety of your subsequent employment is being questioned. Therefore, while you may very well have had employment--at least for the period in which the FY 1993-94 contract was in effect--with a business entity in connection with a contract for contractual services that was within your area of responsibility while an AHCA employee, we must read the prohibition of Section 112.3185(4) in conjunction with the following provision of the Code of Ethics:
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. [Section 112.316, Florida Statutes (1993).]
We have previously construed this provision to temper the literal language contained within various provisions of the Code of Ethics. Based upon the foregoing considerations, we believe that it is appropriate to construe this provision to conclude that your post-AHCA employment with the health care company and its subsidiary did not violate Section 112.3185(4), Florida Statutes.
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on August 31, 1995, and RENDERED this _____ day of September, 1995.
William J. Rish