New York State
Ethics Commission


Advisory Opinion No. 92-24: Application of Public Officers Law §74 to certain employees of the Department of Health engaged in outside employment with entities that are regulated and licensed by the Department.

Introduction

The following advisory opinion is issued in response to an inquiry from the New York State Department of Health ("Department") as to whether there would be a violation of the Public Officers Law if surveyors and emergency medical services ("EMS") representatives, employees of the Department, were to engage in outside employment or service with entities that are regulated and licensed by the Department.(1)

Pursuant to the authority vested in it by Executive Law §94(15), the New York State Ethics Commission ("Commission") hereby renders its opinion that (1) Department surveyors, whether full or part-time and whether or not policymakers, may not engage in compensated outside employment with regulated and licensed hospitals, as defined, except to the extent indicated herein and (2) Department emergency medical services representatives may perform voluntary services for regulated and licensed voluntary emergency organizations consistent with the Department's conditions on this type of outside activities and other conditions set forth in this opinion.

Background

The Department has inquired about its current policy of approving the outside activity requests of (1) the Department's surveyors and (2) the Department's EMS representatives.

Surveyors

Pursuant to Public Health Law §2803, the Commissioner of Health or his or her designee has the power to inquire into the operation of hospitals and to conduct periodic inspections to determine compliance with statutes and regulations governing minimum standards of quality and adequacy of care, rights of patients, rates of payment and reimbursement. Public Health Law §2801 defines the term "hospital" to mean any facility or institution engaged principally in providing services by or under the supervision of a physician. The term includes a public health center, diagnostic center, treatment center, dental clinic, nursing home,(2) rehabilitation center, out-patient department, etc. At least one such inspection each year shall include full on-site examination of the medical, nursing care, dietary and social service records of a hospital. Failure to comply with the Public Health Law and Department regulations could lead to a hospital's losing its operating certificate or the assessment of civil penalties.

The Department employs approximately 300-400 health care professionals, such as nurses, physicians, nutritionists, and physical and occupational therapists, as surveyors of hospitals which are regulated and licensed by the Department.(3) Surveyors have not been designated by the Department as serving in policy-making positions.(4)

Surveyors are engaged solely in inspection and investigatory duties on behalf of the Department and do not perform clinical duties on behalf of the agency. Some surveyors review and evaluate the quality of health care offered by regulated and licensed hospitals by comparing their observations against pre-established Department criteria.(5) Surveyors may also investigate cases of patient abuse and neglect reported through the Department's telephone hotline. As part of their duties, surveyors may review patient incident reports and the care provided by the hospital and its staff. The surveyors' findings determine whether hospitals are in compliance with the Public Health Law and the Department's regulations.

Surveyors are assigned inspections and investigations based upon their expertise and not strictly by their professional title. Surveyors are assigned to specific surveying programs relating to hospitals, long-term care (skilled nursing, convalescent facilities), home health care and health maintenance organizations ("HMOs"). Due to staffing limitations, surveyors may be asked to perform surveying activities outside of their program areas.

In recent years, DOH, concerned about the lack of current practitioners on its surveying staff, has begun recruiting physicians with active medical practices to serve as part-time surveyors. According to DOH, recruitment of part-time physicians/surveyors is dependent upon the ability of these employees to engage in outside employment with regulated and licensed hospitals.

Both full-time and part-time surveyors frequently request approval to engage in compensated outside employment with hospitals which are regulated and licensed by the Department. According to the Department, five full-time and two part-time physicians/surveyors are known to engage in outside employment. Of these seven physicians, six are self-employed in clinical practices and may have privileges at regulated and licensed facilities. The remaining physician/surveyor serves as a consultant to a regulated and licensed facility. Seven other surveyors who are not physicians have received DOH's approval to work at licensed and regulated facilities.

Surveyors who have outside employment with regulated hospitals act only in clinical capacities in those hospitals. DOH is not aware of any instance in which a surveyor working for a regulated hospital participates in any way on behalf of the hospital in a survey of the facility. Nor is DOH aware of any of its surveyors conducting DOH duties in hospitals by which they are employed. It has been the Department's policy to approve outside employment with regulated hospitals provided that the surveyor is not involved in any regulatory activity concerning the particular outside employer. Consequently, the Department allows any surveyor who wishes to accept outside employment with a regulated and licensed hospital to do so only if:

  1. the surveyor, as a Department employee, has absolutely nothing to do with the outside employer;

  2. the surveyor does not discuss any facet of the survey process or results of a survey involving the surveyor's outside employer with any other DOH employees performing the survey; and

  3. co-workers and supervisors are advised of the surveyor's outside work and are instructed not to discuss any matter with the surveyor involving the surveyor's outside employer.

DOH has not instituted the above-mentioned conditions as a formal written procedure. According to the Department, conditions numbers (1) and (3) would be subjects of collective bargaining.

EMS Representatives

Department employees serving as EMS representatives are responsible for evaluating the ambulance services and training provided by volunteer rescue squads, volunteer ambulance organizations and volunteer fire departments. EMS representatives have not been designated by the Department as serving in policy-making positions.(6)

The Department has encouraged EMS representatives to be active in voluntary emergency organizations to keep their skills up-to-date. Thus, the Department has permitted EMS representatives to volunteer with local voluntary emergency organizations. To guard against conflicts of interest, the Department requires that each EMS representative agree that he or she (1) will not serve as an officer or in a policy-making position with the voluntary emergency organization; (2) will report to the Department any deficiencies in the organization which, if not immediately corrected, would be sufficient to warrant a hearing, or any actions by another emergency organization which would be sufficient to warrant a hearing; and (3) will not be present at any inspection performed by Department staff except as a result of an unscheduled spot inspection. The Department does not assign an EMS representative to inspect a voluntary emergency organization of which he or she is a voluntary member.

Applicable Statute

Public Officers Law §74 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.

Standards set forth in §74(3) which further explain and define the above-mentioned rule and which pertain to the present circumstances, include the following:

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.

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

Due to the distinction between voluntary service and compensated outside employment, the Department's policies in relation to surveyors and EMS representatives shall be discussed separately.

1. Whether the Department's surveyors may engage in compensated outside employment for regulated and licensed health care providers.

In Advisory Opinion No. 91-3, the Commission found that non-policymaking clinicians employed by the Office of Mental Retardation and Developmental Disabilities ("OMRDD") may engage in compensated outside employment for not-for-profit providers of services which are licensed and have their rates set by OMRDD "as long as those employees are not engaged in duties directly or indirectly related to licensing or rate setting of not-for-profit providers of services, and as long as they do not negotiate, authorize or approve such licenses or rates in any way."(7) In that opinion, the Commission stated:

The Commission concludes that all non-policymaking employees of OMRDD should not be prohibited by the Ethics Law from having employment relationships with providers. Such a blanket prohibition would be overly broad and serve no purpose in furtherance of the provisions of the Public Officers Law. Rather, in addressing whether there is a prohibited appearance of a conflict of interest under §74, the Commission must consider the nature of the employees' duties on behalf of OMRDD.

. . . .

the Commission concludes that the ethical Standards of Public Officers Law §§74(3)(d), (f) and (h) do not preclude a non-policymaking State officer or employee, who is completely removed from the licensing or rate setting functions of his or her State agency, from having an employment relationship with a provider of services. (emphasis added.)

Applying the criteria established in Advisory Opinion No. 91-3 to the instant matter, the Commission must examine the nature of the duties of the surveyors on behalf of the Department.

Unlike the case of the clinicians employed by OMRDD who provide strictly medical and related care to the agency's clients, surveyors inspect and evaluate hospitals to determine whether they are in compliance with the Public Health Law and the Department's regulations. The findings and recommendations of surveyors are directly related to a facility's continued licensing by the Department.

The surveyor may be known to, or personally familiar with, other Department surveyors assigned to inspect and evaluate his or her outside employer. This may be true even if the surveyor engages in outside employment in an area office different from the one in which he or she is assigned. The surveyor's outside work for a regulated and licensed hospital could be reviewed by another surveyor inspecting the facility or responding to a patient complaint. The public reasonably could perceive that a regulated and licensed hospital employs a Department surveyor to benefit from the surveyor's contacts with the Department.

The Commission cannot ignore the fact that the outside activity is for compensation and thus the surveyors will receive an economic benefit arguably for the knowledge, expertise and contacts they bring from their duties with the Department. Furthermore, surveyors employed by licensed and regulated facilities may owe a duty of loyalty to the facility which may affect their performance in their survey or in their DOH position. It is the resulting appearance of impropriety that leads the Commission to conclude that surveyors, whether full or part-time, and whether or not policymakers, may not engage in compensated outside employment, including teaching appointments, with regulated and licensed hospitals without violating Public Officers Law §74.

DOH has proposed that in regard to a nurse/surveyor, the Commission expand on the result reached in Advisory Opinion No. 91-3 which allowed non-policymaking State employees to be employed by licensed providers only if the employee had no role in licensing and certification. Here, the surveyors do have a role in licensing decisions for the entities they survey. DOH suggests that the Commission limit the prohibition on outside employment of the DOH nurse/surveyor to the specific category entity i.e., hospital, nursing home, etc., to which a surveyor is assigned. Thus the nurse/surveyor would be permitted to engage in compensated outside employment for hospitals if the nurse/surveyor is not part of DOH's hospital survey team. That limitation on the prohibition is based on the DOH assertion that "hospitals and nursing home surveyors are very distinct groups in DOH's area offices."

The Commission agrees and concludes that the limitation on outside employment for surveyors extends only to the category of entity for which the survey is conducted. This interpretation would allow nurses surveying nursing homes to work in hospitals and nurses surveying hospitals to work in nursing homes. Under the circumstances presented by DOH, there would be no opportunity for a nurse/surveyor to influence the outcome of a survey on his or her outside employer because the nurse/surveyor would not be assigned to the specific survey area. Such outside employment by a nurse/surveyor will be subject to the same conditions as set forth previously in this opinion. Of course, were DOH to require any surveyor to conduct a survey at an entity in a different category from his or her regular assignment, that surveyor may not accept or retain any outside employment at that category of entity.

The Commissioner has also proposed that surveyors with consulting arrangements with hospitals be permitted to continue this outside employment. However, Public Officers Law §74(3)(i) prohibits any full-time State employee from selling goods or services of any kind to any entity which is regulated by the employee's State agency. This issue was previously discussed in Advisory Opinion No. 91-3 in which the Commission concluded that engagement in an outside activity as a consultant is the equivalent of the "sale of services."(8) Consequently, the Commission concludes that any full-time DOH surveyor may not engage in any compensated consulting activities or have a consulting arrangement with a licensed and regulated entity.

As to those DOH surveyors who are engaged in outside clinical practices and who may have privileges at licensed and regulated facilities but are neither employees nor consultants of such facilities, the Commission reaches a different conclusion. Although there is a nexus between a hospital and physicians with privileges, it is less direct; absent are the issues of hours, salary and direct supervision. Unlike employees or consultants, physicians with privileges receive no income or reimbursement directly from the licensed and regulated hospital. Therefore, surveyors with outside clinical practices may have privileges at DOH licensed facilities as long as they are not paid directly from the hospital and they do not involve themselves directly or indirectly with the survey process on behalf of the hospital. They should also avoid communication with DOH employees about matters concerning any hospitals at which they have privileges. (This caution would not apply, of course, to a communication to report a problem or violation at the facility.)

In all cases a surveyor must abide by the conditions already imposed by DOH (see page 5 of this opinion). Furthermore, as in the case of EMS representatives, surveyors may not serve as an officer or in a policymaking position with a licensed hospital, will report to DOH any deficiencies in the hospital which, if not immediately corrected, could be sufficient to warrant a hearing, or any actions by another licensed hospital which would be sufficient to warrant a hearing and will not be present at any inspection performed by Department staff except as a result of an unscheduled spot inspection.

2. Whether EMS representatives may perform volunteer services for voluntary emergency organizations.

In Advisory Opinion No. 90-25, the Commission concluded that policy-making employees may not serve as uncompensated members of the board of directors of not-for-profit agencies licensed or regulated by the policymaker's State agency. In Advisory Opinion No. 91-4, the Commission expanded its prior determination when it concluded that non-policymaking employees of an agency who had direct or indirect job responsibilities relating to the oversight of day care centers could not serve on the board of directors of a day care center. The Commission stated:

The perception that an individual may be motivated in the performance of his or her job duties by a private interest concerning that day care center, rather than the public interest involving the enforcement of statutes and regulations relating to day care centers in an unbiased and professional manner, leads to a violation of Public Officers Law §74. The conflict between private interest and public service, whether real or perceived, supports the finding of such a violation.

In the instant case, the Commission finds that there is the potential for a conflict of interest if EMS representatives were to perform volunteer services for voluntary emergency organizations because of their duties of inspection and evaluation on behalf of the Department. The situation is similar to the circumstances at issue in Advisory Opinion No. 91-4.

The Commission has been informed that the Department has taken steps to ensure that EMS representatives are not in violation of Public Officers Law §74 by placing conditions on their volunteer service.(9) The Commission has carefully considered these conditions. To safeguard the integrity of the EMS program and to provide further protection against conflicts of interest, the Commission determines that additional conditions must be placed on EMS representatives' outside volunteer services for regulated entities. In addition to conditions (1)-(3) the Department already imposes on EMS representatives (see pp 6-7 of this opinion), each EMS representative must agree in writing that he or she (4) will not receive any compensation for any services performed for the organization and (5) leave the site at the time of an unscheduled Department inspection.

Conclusion

The Commission concludes that the Department's surveyors may not engage in compensated outside employment for regulated and licensed hospitals except to the extent indicated herein and that the Department amend its current policy in responding to surveyors' outside activity requests in accordance with this opinion. EMS representatives may perform volunteer services for emergency voluntary organizations consistent with the conditions established and set forth in this opinion.

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

Barbara A. Black
Angelo A. Costanza
Robert E. Eggenschiller
Donald A. Odell, Members

Dated: December 15, 1992


Endnotes

1. The Commission previously tabled its determination of the issue to provide the new Commissioner of Health ("Commissioner") an opportunity to comment on the Department's inquiry. On September 2, 1992, the commissioner, through his general counsel, provided his views on the issue.

2. The term "nursing home" is further defined to mean a facility providing nursing care to sick, invalid, infirm, disabled, convalescent persons in addition to lodging and board or health-related services.

3. The Department has six area offices located in Buffalo, Rochester, Syracuse, Troy, New Rochelle and New York City.

4. Employees designated as policymakers are subject to the requirements of the Commission's regulations on outside activities, 19 NYCRR Part 932.

5. According to DOH, these criteria are disseminated to all hospitals and the procedures followed in the survey process are well-known and established.

6. See footnote 3, supra.

7. Advisory Opinion No. 91-3, page 2.

8. See Advisory Opinion No. 91-3, pages 7 and 8.

9. In Advisory Opinion No. 91-4, the Commission noted that the State agency could take reasonable efforts to reduce the possibility of a conflict of interest in the performance of its statutory and regulatory functions with regard to such employees having a private relationship with a day care center.


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