New York State
Ethics Commission


Advisory Opinion No. 96-18: Application of the post-employment restrictions of Public Officers Law §73(8) to a former DSS employee who seeks to perform certain services related to his former State responsibilities.

INTRODUCTION

The following advisory opinion is issued in response to a request by [ ] , Assistant Counsel for the Department of Social Services ("DSS"), who asks whether [ ], a former DSS employee, is prohibited by Public Officers Law §73(8)(a)(ii), the lifetime bar, from serving as a subcontractor to the New York State Association of Counties ("NYSAC"), which has signed a contract with DSS, not yet approved by the State Comptroller, to provide federal revenue maximization services.

Pursuant to its authority under Executive Law §94(15), the Commission hereby concludes that Public Officers Law §73(8)(a)(ii) does not prohibit [the former State employee] from serving as a subcontractor and performing the services required by the contract.

BACKGROUND

NYSAC has executed a contract with DSS that has been submitted to but not yet approved by the State Comptroller. It involves application of the federal revenue enhancement process to such areas as Medicaid, Emergency Assistance to Families, Child Welfare, and Public Assistance. In his letter to the Commission, [the requesting individual] describes the purpose of the contract as "matching State/local funded activities with federal program requirements to see if federal funding is available." NYSAC has retained as its subcontractor [the former State employee's firm] which will attempt to convert cases arising in these various categories (described in the contract as "modules") to federal eligibility. The contract provides that NYSAC and [the firm] will be provided only "those clients and expenditures remaining as non federally eligible after all state initiatives." This means that they will pursue only those cases that the State does not pursue under its programs.

The principal of [the private firm] is [the former State employee]. While serving with the agency, he was the Director of the Bureau of [ ]. One of his primary responsibilities while employed at the agency was overseeing a program known as Medicaid maximization. This program seeks federal reimbursement under the Medicaid program when medical services are provided to Medicaid eligible individuals at public expense. When eligible providers seek payment for qualifying services, the federal government assumes 50% of the cost if payment is made under the Medicaid program, thereby saving the State from having to pay for the entire cost of the service. DSS officials advised that through [the former State employee's] efforts, DSS initiated many projects to explore revenue enhancement programs. [The former State employee] was personally responsible for choosing programs. He conducted surveys, performed sampling and established thresholds. For instance, DSS examiners were instructed by [the former State employee] to advise Medicaid providers to submit only cases in which the State was required to pay $5,000 or more because the less expensive cases were not cost effective to pursue.

As a private contractor for NYSAC, [the former State employee] anticipates approaching the same Medicaid providers who participated in the maximization program while he was in State service, but he will be directed to the smaller cases not currently considered by DSS, which has maintained the thresholds established by [the former State employee] during his State service.

On [date], 1995, [the former State employee] requested and received an informal advisory opinion from the Commission, which concluded that the services he seeks to provide as a subcontractor are not prohibited by the lifetime bar. Subsequently, [a union official], who is unaware of the confidential informal opinion, filed a complaint with the Commission alleging that [the former State employee] is prohibited by the lifetime bar from participating in the contract. [The union official] responded to a Commission request for particulars by drawing attention to Commission's Advisory Opinion No. 94-18 (discussed below). [The union official's] complaint sets forth the essential question for the Commission's consideration:

[The former State employee] is . . . actually performing the transactions which involve basic applications for federal Medicaid reimbursements. And these reimbursement applications are not new applications, but are in essence the same repetitive applications, involving the same reimburser (Federal Government, HHS) and the reimbursee (DSS) for the same kinds of Medicaid expenditures [the former State employee] directed while employed at DSS. . . . We have a former Director in DSS who should be lifetime barred from contracting with DSS or its agents. Instead, all signals point to a former employee being directly and integrally involved with his former coworkers and current state employees in performing the very functions he directed and controlled during his tenure with DSS.

[The requesting individual], who is aware of [the union official's] complaint, now seeks this opinion on behalf of DSS to resolve the matter.

APPLICABLE LAW AND DISCUSSION

The post-employment activities of former State officers and employees are governed by Public Officers Law §73(8)(a), which bars former employees from utilizing their "insider" knowledge of State agencies and specific projects for their own benefit or for that of a client. The subdivision sets the ground rules for what individuals may do with the knowledge, experience and contacts gained from public service after they terminate their State employment. Subparagraph (ii) of paragraph (a), the provision relevant here, provides:

No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he personally participated during the period of his service or employment, or which was under his or her active consideration.

This provision, known as the lifetime bar, bars a former employee from rendering services for compensation in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he or she personally participated during the period of his or her State service or which was under his or her active consideration during that period. The question posed to the Commission is whether [the former State employee's] participation in the NYSAC contract is prohibited by the lifetime bar.

DISCUSSION

[The former State employee] was one of a handful of DSS employees who developed and perfected the methods necessary to enhance federal revenue for the State. The Commission considered whether a methodology should be treated as a "transaction" in Advisory Opinion No. 94-9. There, a former employee who had developed a management evaluation technique while in State service was permitted to utilize that technique while acting as a consultant to his former agency. The Commission found that the former employee could use the methodology in his post employment work, saying that "the development of a non-confidential methodology by a State employee should not act as a lifetime barred transaction and prevent the employee from applying that methodology to other uses after he or she leaves State service." However, the Commission distinguished the general use of the methodology from its application to the specific programs on which the former employee had worked. It held that the lifetime bar precluded the former employee's work on these programs, and that he could not, as a consultant, apply the methodology to them. The same methodology applied to the same program was the same transaction.

Applying the foregoing reasoning to an individual who had worked for DSS in the same unit in which [the former State employee] worked, the Commission concluded, in Advisory Opinion No. 94-18, that the individual's use of the Medicaid maximization methodology was permissible as long as he did not apply it to the programs on which he worked while employed at DSS. He was permitted, therefore, to apply his expertise in Medicaid maximization to school districts other than the New York City school district or any other school district with which he might have been involved while employed at the agency. Since he did not, during his tenure at DSS, apply the Medicaid maximization methodology to any hospitals or social service districts, he was eligible to apply it in such situations.

As a DSS employee, [the former State employee] applied the federal revenue enhancement methodology to DSS projects involving hospitals and social services districts. However, the language of the DSS/NYSAC contract limits NYSAC to only those clients and expenditures not covered by current DSS programs, which programs the Commission understands, have not changed since [the former State employee] left the Department. This indicates that the programs on which [the former State employee] worked while in State service are distinguishable, either by thresholds or other means, from those on which he contemplates working for NYSAC. As in Advisory Opinion No. 94-9, [the former State employee] will be applying concepts he employed while serving at DSS, but he will be applying them to different categories of cases than those on which he worked while in State service.

Since the category of cases will be different, it cannot be said that the transactions are the same.(1) The Commission recognizes that [the former State employee] will be working with many of the same providers with which he worked while in State service, but, as the category of cases will be different, he is not precluded by the lifetime bar from working on them.(2)

CONCLUSION

The Commission concludes that [the former State employee] is not prohibited by Public Officers Law §73(8)(a)(ii), the lifetime bar, from serving as a subcontractor for NYSAC under its proposed contract with DSS, as the category of cases on which he would work is different from the category of cases on which he worked when he was employed at DSS.

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:

Evans Brewster
Angelo A. Costanza
Robert E. Eggenschiller
Donald A. Odell, Members

Dated: August 20, 1996


Endnotes

1. Should the contract be amended or DSS change its policies so that [the former State employee's] work would overlap with agency work, this distinction could well be blurred and [the requesting individual] would risk violation of the lifetime bar. This opinion is written based upon the current proposed contract and DSS' current policies.

2. The Commission is aware that there are pending proposals on both the federal and State levels to substantially change the Medicaid program. These changes, if adopted, might well lead the Commission to a different conclusion. [The requesting individual] would be advised to seek a new opinion should Congress or the Legislature enact substantial revisions.



URL: http://www.nysl.nysed.gov/edocs/ethics/96-18.htm