CEO 09-17 -- October 28, 2009



To: Name withheld at person's request


Under the particular material facts presented regarding the particular governmental entity, neither a hospital authority's financial services firm nor the firm's personnel serve as a chief administrative or executive officer or employee of the authority under Section 112.3136, Florida Statutes, and thus that Section is inapplicable.


Under the circumstances presented, is a financial services firm serving as a hospital authority's "chief administrative or executive officer or employee," such that the firm's officers, directors, chief executive officer, or employees are deemed "public officers" or "public employees" under Section 112.3136, Florida Statutes?

Under the particular material facts presented regarding the Hospital Authority that is the subject of this opinion, your question is answered in the negative.

By your letter of inquiry, a telephone conversation between you and our staff, and additional information supplied by you to our staff via email, we are advised that you inquire in behalf of your client, the Board of Commissioners of the West Volusia Hospital Authority (Authority), seeking guidance as to whether newly-enacted Section 112.3136, Florida Statutes, applies to the Authority's financial services firm.[1] The statute[2] provides:

112.3136 STANDARDS OF CONDUCT FOR OFFICERS AND EMPLOYEES OF ENTITIES SERVING AS CHIEF ADMINISTRATIVE OFFICER OF POLITICAL SUBDIVISIONS.—The officers, directors, and chief executive officer of a corporation, partnership, or other business entity that is serving as the chief administrative or executive officer or employee of a political subdivision, and any business entity employee who is acting as the chief administrative or executive officer or employee of the political subdivision, for the purposes of the following sections, are public officers and employees who are subject to the following standards of conduct of this part:

(1) Section 112.313, and their 'agency' is the political subdivision that they serve; however, the contract under which the business entity serves as chief executive or administrative officer of the political subdivision is not deemed to violate s. 112.313(3) or (7).

(2) Section 112.3145, as a 'local officer.'

(3) Sections 112.3148 and 112.3149, as a 'reporting individual.'

Clearly, it is not the intent of the new law to subject all vendors or providers of services to governmental entities, and their officers and employees, to its enumerated ethics provisions. Rather, the language of the law demonstrates that it applies only in situations where the provider serves "as the chief administrative or executive officer or employee of a political subdivision."[3] Thus, under your inquiry, it is necessary for us to evaluate the firm's relationship with the Authority, in order to determine whether the firm is encompassed within the relevant language.

Continuing, you emphasized by telephone to our staff, and we duly note, that the Authority does not own or operate any hospital; that its hospital was leased and then sold; and that its provision of medical and mental health services is contracted out to hospitals, clinics, and other providers. Further, you advise that the firm is both a licensed certified public accountant (CPA) partnership and a registered investment advisory firm, which, by contract, performs administrator, accountant, and special accountant work for the Authority, and which proposes to provide co-investment advisor work for the Authority. Also, you advise that the contracts between the Authority and the firm which underlie the firm's work for the Authority do not designate the firm as a chief executive officer or a chief administrative officer of the Authority; that the contracts made it possible for the Authority to eliminate its two remaining employee positions in 2006; and that the contracts provide that the Authority's governing board, not the firm, will be responsible for management decisions and functions.

Under the material situation presented in your inquiry, and under that situation alone, we find that the firm is not serving as the chief administrative or executive officer or employee of the Authority, and, thus, that none of the firm's officers, directors, or employees is subject to the various ethics law provisions via application of Section 112.3136.[4] Section 112.3136 was created to close the long-existing "loophole" in the applicability of the ethics laws and the jurisdiction of the Commission on Ethics to persons and firms who were, except for the vehicle of a contract and the label of "independent contractor," substantively indistinguishable from a public officer or a public employee who held a traditional governmental position performing comprehensive, administrative/executive, core functions at the center of an active local government.[5] The statute was not intended to encompass providers of primarily specific professional or credentialed services (e.g., accountancy, investment advice)[6] to local governments.

Accordingly, under the particular circumstances presented regarding the particular governmental entity, we find that neither the financial services firm which contracts with the Authority nor any of its personnel serve as the chief administrative or executive officer or employee of the Authority, and, thus, that Section 112.3136, Florida Statutes, is inapplicable to them.[7]

ORDERED by the State of Florida Commission on Ethics meeting in public session on October 23, 2009 and RENDERED this 28th day of October, 2009.

Cheryl Forchilli, Chair

[1] Further, if we determine that the statute applies, you seek guidance as to whether a prohibited conflict of interest would be created under Section 112.313(3) or Section 112.313(7)(a), Florida Statutes, by the firm's provision of additional services to the Authority in concert with an investment advisor for the Authority.

[2]Created via Chapter 2009-126, Laws of Florida (Senate Bill No. 252).

[3]The codification of the Authority's special legislation (Chapter 2004-421, Laws of Florida, House Bill No. 837) describes the Authority as "an independent special tax district." Section 1.01(8), Florida Statutes, provides that "[t]he words 'public body,' 'body politic,' or 'political subdivision' include counties, cities, towns, villages, special tax school districts, special road and bridge districts, bridge districts, and all other districts in this state."

[4]Concomitantly, we do not find that there is any employee of the firm who is serving as the chief administrative or executive officer or employee of the Authority.

[5] See, inter alia, In re KENNETH HOOPER (city manager), Commission on Ethics Complaint Nos. 06-102, 06-107, and 06-108 (Consolidated), and In re JOHN CANADA (town administrator), Complaint Nos. 05-098 and 05-060 (Consolidated).

[6] Compare the language of Section 112.3136 to that of Section 112.313(16), Florida Statutes, which closed a specific, professional services ethics laws loophole for "local government attorneys."

[7] A result of our finding herein is that Sections 112.313(3) and 112.313(7)(a), Florida Statutes, are inapplicable to the firm and its personnel, vis-à-vis a conflict of interest, if any, which might exist were the Authority to do business with an investment advisor and were the firm to share in earned fees with the advisor as a co-investment advisor. However, the Authority apparently has the power to address any possible conflict or appearance of conflict via contract provisions which it may or may not choose to draft, negotiate, or implement.