New York State
Ethics Commission


Advisory Opinion No. 99-08: Whether Public Officers Law 74 precludes employees of OMRDD from contracting with or being employed by a consultant to providers which are licensed by and have their rates set by OMRDD.

INTRODUCTION

The following advisory opinion is issued in response to a request from Paul R. Kietzman ("Kietzman"), General Counsel to the Office of Mental Retardation and Developmental Disabilities ("OMRDD"). He asks whether OMRDD employees who work at a developmental disabilities services office ("DDSO") may, as an outside activity, contract with or be employed by a consultant to voluntary service providers which are licensed by and have their rates set by OMRDD.

Pursuant to the authority vested in the State Ethics Commission ("Commission") by Executive Law 94(15), the Commission renders its opinion that OMRDD employees are not barred by Public Officers Law 74(3)(i) from selling their services by contract to the consultant. The other standards contained in 74(3) permit them to be employed by the consultant, except that those employees involved with the licensing and rate setting functions and those who deal directly with the consultant in their official capacity are barred by these standards from either a contractual arrangement with or employment by the consultant.

BACKGROUND

OMRDD and one of its DDSOs have contracts with a consultant for the provision of diagnostic services, training and therapy services to a specific consumer population. The consultant also provides similar services, through separate contracts, to voluntary service providers. These providers are licensed by and have their rates set by OMRDD.

The consultant is seeking to hire employees of the DDSO to perform services under its contracts with the licensed providers. Kietzman asks whether these employees may, as an outside activity, work for the consultant as a contractor or an employee and serve the voluntary providers. According to OMRDD, it does not set the rates, either generically or individually, that the provider pays its consultants.

APPLICABLE LAW

Public Officers Law 74 provides minimum standards against which State officers and employees are expected to gauge their behavior. The rule with respect to conflicts of interest is contained in subdivision 2. It provides:

No officer or employee of a state agency . . . should have any interest, financial or otherwise, direct or indirect, or engage in any business or 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.

Following the rule with respect to conflicts of interest, Public Officers Law 74(3) provides standards of conduct which address actual as well as apparent conflicts of interest:

(a) No officer or employee of a state agency . . . should accept other employment which will impair his independence of judgment in the exercise of his official duties.

(b) No officer or employee of a state agency . . . should accept employment or engage in any business or professional activity which will require him to disclose confidential information which he has gained by reason of his official position or authority.

(c) No officer or employee of a state agency . . . should disclose confidential information acquired by him in the course of his official duties nor use such information to further his personal interests.

(d) No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.

. . . .

(f) An officer or employee of a state agency . . . should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by the kinship, rank, position or influence of any party or person.

. . . .

(h) An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts in violation of his trust.

(i) No officer or employee of a state agency employed on a full-time basis . . . . should sell goods or services to any person, firm, corporation or association which is licensed or whose rates are fixed by the state agency in which such officer or employee serves or is employed.

. . . .

DISCUSSION

In order to understand the request that is presented here, it is necessary to begin by looking back to Advisory Opinion No. 91-3. There, the Commission was asked whether clinicians employed by OMRDD could work for providers that were licensed by the agency and which had their rates set by the agency.

The Commission first held that 74(3)(i) prohibited any OMRDD employee from offering his or her services to a licensed provider as a consultant. This conclusion was reached because the cited provision prohibits any State employee from selling ". . . services to any person, firm, corporation or association which is licensed or whose rates are fixed by the state agency in which such officer or employee serves or is employed."

The Commission then went on to hold that 74(3)(i) did not prohibit OMRDD employees from being employed by a licensed provider because employment, unlike service as a consultant, did not involve the sale of services. However, it excepted from this conclusion those employees who were designated as policymakers and those employees who were involved in the licensing and rate setting functions (i.e., the rates OMRDD reimburses providers for services) of the agency based on the provisions of Public Officers Law 74(3)(a)-(h). They were prohibited from obtaining such employment.(1)

The question presented by Kietzman's request is, in essence, whether those employees who are barred by 74(3)(i) from serving as contractors to licensed providers, and employees who are barred by 74(3)(a)-(h) from serving as employees of licensed providers, may work for a consultant to such providers. More specifically, the questions are (1) whether any OMRDD employee may sell, by contract, his or her services to a consultant to a licensed provider, and (2) whether those who are barred from employment by a provider may obtain employment with a consultant to a provider.

OMRDD is asking these questions because it is concerned that its employees might circumvent the restrictions imposed by Public Officers Law 74 and applied in Advisory Opinion No. 91-3 by seeking to work for a consultant to providers rather than for the providers directly.

With regard to whether an agency employee may offer his or her services to a consultant to providers under a contractual arrangement, the answer is clearly, yes. Section 74(3)(i) is quite specific. It acts to bar an employee's selling services to a licensee of the agency for which he or she works, or to an entity whose rates are fixed by the agency. Since the consultant to the providers is neither licensed by nor has its rates fixed by OMRDD, this prohibition does not apply to such an arrangement.(2)

The more difficult question is whether those OMRDD employees who are barred from employment by licensed providers because of their involvement in licensing and rate setting functions are similarly barred by the standards of Public Officers Law 74(3) from employment by a consultant to such providers. In Advisory Opinion No. 91-3, the Commission held that the bar derived not from any specific statutory prohibition, but, rather, from the standards of the code of ethics as set forth in Public Officers Law 74(3). This is consistent with the manner in which the Commission has always approached the question of whether a State employee may engage in an outside activity. The Commission has looked at the employee's duties on behalf of the agency for which he or she works, the relationship of the agency and the employee to the proposed outside activity, whether the employee would be in a position to use his or her position to secure unwarranted privileges, and whether the outside activity would impair the employee's independence of judgment in the exercise of official duties (see Public Officers Law 74(d), (f) and (h), and Advisory Opinion No. 95-43).

In Advisory Opinion No. 91-3, the concern of the Commission, which caused it to prohibit certain agency employees from engaging in outside employment with licensed providers, was the relationship of those employees to the licensing and rate making functions. It was the particular State job of these employees that gave rise to this bar. This concern does not change if the same employees serve a licensed provider as employees of a consultant to the provider rather than as employees of the provider itself. For example, a provider might be more willing to hire Consultant A over Consultant B if it knew that A had as its part-time employee a State worker who was responsible for setting the provider's rates. In this example and others, where there is a nexus between the employees' State responsibilities and the entity that is receiving their services, 74 would prohibit the outside employment. To find a different result in this situation would place form over substance. Thus, those employees who were barred by Advisory Opinion No. 91-3 from serving as employees of licensed providers are similarly barred from serving providers by becoming employees of a consultant to the providers. Because this conclusion is based upon their State function, rather than the nature of the arrangement, these employees are also barred under 74 from contracting with such a consultant for the purpose of serving the providers.

Other OMRDD employees who may, under Advisory Opinion No. 91-3, be employed by providers, may be employed by their consultants without a violation of the standards of Public Officers Law 74, unless they work with the consultant in their official capacity. The Commission has, in Advisory Opinion No. 92-12, barred a State employee from working for a contractor with which he or she is involved in an official capacity.

CONCLUSION

The Commission concludes that OMRDD employees are not barred by Public Officers Law 74(3)(i) from selling their services by contract to a consultant to licensed providers. However, the standards of Public Officers Law 74(3) would prohibit those employees who are involved with the licensing and rate setting functions and those who deal directly with the consultant in their official capacity from contracting with or being employed by the consultant for the purpose of serving such providers.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for opinion or related supporting documentation.

All concur:

Paul Shechtman, Chair
Robert J. Giuffra, Jr.
Henry G. Gossel
O. Peter Sherwood, Members

Dated: April 14, 1999


Endnotes

1. The Commission's conclusion with respect to those designated as policymakers has been called into question by the case of Hancox v. Bress, 208 AD 2d 1031 (Third Dept., 1994) decided after Advisory Opinion 91-3 was issued. The Commission, therefore, no longer makes a distinction between policymaking and non-policymaking employees in this circumstance.

2. There may be rare occasions where a different consultant is required to be licensed by OMRDD because of the services it provides. Section 74(3)(i) would apply in such a circumstance, and a contractual arrangement would be prohibited.


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URL: http://www.nysl.nysed.gov/edocs/ethics/99-08.htm