New York State
Ethics Commission


Advisory Opinion No. 92-4: Application of Public Officers Law §74 to a State employee, designated as a policymaker by his State agency, serving as a member of the board of directors of a not-for-profit agency that has certain contacts with the employee's State agency.

Introduction

The following advisory opinion is issued in response to a request from an employee of the Office of Mental Health ("OMH") for a formal opinion as to whether he would violate the Public Officers Law by serving as a member of the board of directors of a not-for-profit agency that has certain contacts with OMH.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by Executive Law §94(15), the Commission hereby renders its opinion that the OMH employee, by virtue of his designation as a policymaker by the agency and his particular job duties, may not serve on the board of directors of a not-for-profit agency that has certain contacts with OMH because of the appearance of a conflict of interest which would occur in violation of Public Officers Law §74.

Background

The individual who is the subject of this opinion serves as [job title] at the [] Psychiatric Center, an OMH facility. He has been designated as a policymaker by his appointing authority. In this position, the individual noted that he has:

[R]esponsibility for the overall direction and operation of the psychosocial, rehabilitation, residential, and community services programs . . . supervision over the Community Services Units . . . includ[ing] on-site and off-site rehabilitation programs and non inpatient residential services . . . out-patient programming . . . and delivery of inpatient and out-patient services are all the responsibilities of the [job title].

On April 19, 1991, the Commission received a letter from the individual requesting an informal opinion on whether he may serve as an uncompensated member of the board of directors of [an adult home].(1) [The adult home] is licensed as an adult home by the NYS Department of Social Services ("DSS") which also establishes the rate [the adult home] may charge clients for residential care. [The psychiatric center] refers individuals to [the adult home]; thereafter, it has no responsibility for individuals who choose to reside there. OMH has entered into an agreement with DSS to perform joint inspections of adult homes such as [this adult home].

The individual notes that his role as a member of the board of directors of [the adult home] would be to ensure that [the adult home's] certification by DSS is maintained, that the adult home's environment is maintained and improved, and that it continues to operate.

OMH requires that certain support services be available to individuals discharged from OMH facilities to adult homes including both OMH licensed and non-licensed support services. By an agreement between [the adult home] and [the psychiatric center], [the psychiatric center] staff provide services at [the adult home] which include on-site rehabilitation, social and residential support activities. OMH licensed not-for-profit providers of services provide services at [the adult home] such as medical and psychiatric care for which the provider charges a fee set by OMH.

Based on the foregoing factors, the Commission, in a letter dated June 28, 1991, denied the individual's request to serve on the board of directors of [the adult home] citing various ethical standards contained in Public Officers Law §74(3). Specifically, the Commission stated the following:

Your holding the positions of [title] and as a member of the board of [the adult home] present several conflicts of interest issues. First, [the psychiatric center] does refer individuals to [the adult home]. The public could reasonably perceive that [the adult home] received preferential treatment from [the psychiatric center] over other adult homes because of your position on the [the adult home's] board. Second, [the psychiatric center] does conduct non-licensed services at [the adult home]. Other adult homes could question whether [this adult home] received greater [psychiatric center] resources because of your dual positions. Third, OMH does possess certain oversight responsibility over [the adult home] by virtue of the fact that OMH requires that certain services be made available to individuals discharged from OMH facilities. This facet of oversight responsibility is directly implicated by your position as [job title] which includes the responsibility for out-patient services. Fourth, OMH does inspect [the adult home] pursuant to OMH's agreement with DSS. Therefore, you may not serve on the board of [the adult home] without the appearance of a conflict of interest under §74.

By letter dated September 23, 1991, the individual requested a formal opinion from the Commission and submitted the following responses to the specific findings of the Commission's June 28, 1991, letter:

1. [The adult home] could appear to receive preferential treatment from OMH for admissions over other adult homes in the area.

The individual cites statistics that [the adult home] has maintained a consistent 20% vacancy rate over the last 5 years, while all other local adult homes in the area operate at or near 100% capacity. The selection and referral of individuals from [the psychiatric center] goes through a community roundtable which includes representatives from all providers of residential services in the area.

2. [The adult home] could appear to receive more resources/support from OMH than the other adult homes in the area.

The individual states that there have been efforts to increase the resources of all adult home providers and that the other large provider in the area has been the recipient of additional resources virtually equal to those received by [the adult home]. Other smaller adult homes (under 12 beds) receive equal access and support from OMH as provided to [the adult home].

3. OMH exercises certain oversight responsibilities over [the adult home] by virtue of the requirement that OMH assure certain support services are available to individuals discharged from OMH facilities to adult homes.

The individual agrees that [the psychiatric center] does have responsibility to plan with the dischargee for a successful return to the community. One aspect of that responsibility is to ensure appropriate housing and support services for the dischargee. [The psychiatric center] is required to assure that any adult home to which an agency client is discharged is currently certified/licensed by DSS.

In the area, [the psychiatric center] refers all dischargees to [a third party] which serves as a liaison between [the psychiatric center] and the local mental health providers including [the adult home]. Local providers decide which dischargees are best suited for their programs with the final decision resting with the dischargee. The selected provider must be certified/licensed by DSS. [The adult home] is licensed by DSS and has maintained its certification with the State agency.

4. OMH inspects [the adult home] pursuant to OMH's agreement with DSS.

The individual states that the OMH/DSS agreement requires DSS to request that OMH review questionable situations involving mentally ill individuals residing in an adult home. The individual, in his position at [the psychiatric center] asserts that he has no authority or influence over the certification and compliance review units of [the psychiatric center].

Discussion

Public Officers Law §74(2) sets forth a code of ethics for State employees, prohibiting conflicts of interest and their appearance. The rule with respect to conflicts of interest, as contained in §74(2), provides the following:

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.

Public Officers Law §74(3) contains standards which further define the rule. In particular, §§74(3)(d), (f) and (h) provide:

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 that are in violation of his trust.

As has often been noted, Public Officers Law §74 is concerned with activities that have the appearance of a conflict of interest; an actual conflict of interest is not required. The issue before the Commission is whether the individual's service on the board of directors of [the adult home] has the appearance of a conflict of interest with his policy-making position with [the psychiatric center].

In Advisory Opinion No. 90-25, the Commission concluded that policy-making employees may not serve on the boards of directors of not-for-profit organizations that are licensed, regulated or whose rates are set by the policymaker's State agency. The Commission determination was a blanket prohibition applicable to all policymakers within the agency irrespective of their specific job responsibilities. As the Commission stated in Advisory Opinion No. 90-25:

This question goes beyond simply the appearance of a conflict of interest faced by this policy-maker, because of the relationship of his agency with the private entity with which he is affiliated. It strikes at all similar situations, where a policy-making employee desires to serve or is serving on the board of an organization which is regulated or licensed by the State agency with which that individual is employed. We conclude that a question of an appearance of a conflict of interest will always be raised in such circumstances. A policy-maker, by definition, has influence in the execution of policy or assists one who does. Even if that policy-maker is not in the line of authority to regulate or oversee the private organization on whose board he or she serves, the appearance that he or she can influence other policy-makers, with whom he or she works or who have appointed him or her, clearly exists whenever favorable action is taken by the agency towards such organization.

While OMH does not, in the literal sense, "license, regulate or set the rates" of [the adult home], [the psychiatric center] and [the adult home] do maintain certain significant contacts. [The psychiatric center] clients go to [the adult home]. [The psychiatric center] staff directly provide support services to [the adult home]; [the adult home] contracts with OMH licensed providers to provide OMH licensed support services at [the adult home]. [The psychiatric center] staff may be part of the DSS inspection that determines whether [the adult home] maintains its certification. [The psychiatric center] staff would be involved in reviewing any questionable situations involving mentally retarded residents of [the adult home]. Therefore, the Commission finds Advisory Opinion No. 90-25 applicable to the requesting individual's situation because of the relationship between [the psychiatric center] and [the adult home] and his status as a policymaker.

Policy-making status demonstrates that a State employee has substantial responsibilities and obligations for his or her agency. In the instant case, the public could perceive that the requesting individual may take actions favorable to [the adult home] or may influence other [the psychiatric center] employees to take such actions. It is public information that the requesting individual is employed by [the psychiatric center] as [job title]. His presence on the board of directors of [the adult home] could raise the suspicion among the public that [the adult home] receives preferential treatment or some other competitive advantage over similarly situated adult homes in the area because of this individual's position with [the psychiatric center]. Every time [the adult home] receives a "benefit" or favorable decision from [the psychiatric center] or OMH, other adult homes, as well as the public in general, may conclude such benefit or decision was provided as a result of this individual's influence with and relationship to [the psychiatric center] and OMH central administration.

Moreover, the requesting individual's specific duties as [job title] relate directly to [the adult home]. His responsibilities on behalf of [the psychiatric center] are to ensure that dischargees go only to certified/licensed facilities which meet and maintain appropriate standards including the provision of OMH licensed and non-licensed support services.

Therefore, because the requesting individual is a policymaker within an OMH facility that has significant contacts with the not-for-profit adult home and because the individual's job duties for the facility relate to the adult home, the Commission finds that there is the appearance of a conflict of interest under Public Officers Law §74 by his serving as a member of the board of directors.

Conclusion

The Commission recognizes the importance of State officers and employees engaging in community service. However, such service must be consistent with the public policy of this State to avoid even the appearance of a conflict of interest in the performance of official duties. Therefore, for all of the foregoing reasons, the Commission concludes the requesting individual may not serve on the board of directors of [the adult home].

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

All concur:

Joseph M. Bress, Chair

Angelo A. Costanza
Donald A. Odell, Members


Dated: February 6, 1992


Endnotes

1. The individual also inquires whether he may serve on the board of directors of another not-for-profit corporation. The Commission determined that the individual's service to the latter corporation would not violate Public Officers Law §74 because the not-for-profit is not regulated by OMH, does not receive referrals from [the psychiatric center] and does not receive any funding from OMH.


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