CEO 19-3—January 30, 2019
CONFLICT OF INTEREST
DEPARTMENT OF HEALTH'S CITRUS COUNTY HEALTH ADMINISTRATOR
AND HEALTH OFFICER SERVING ON BOARD OF DIRECTORS OF
NONPROFIT PROVIDING GRANT TO DEPARTMENT
To: Beverly Hunt Diehr, Esquire (Largo)
Under the circumstances presented, no prohibited conflict of interest would be created were the administrator/health officer, or another employee, of a local health department of the Department of Health to serve on the board of directors of a nonprofit corporation providing grant funding to the health department. CEOs 80-46, 85-47, 90-4, 00-23, 06-12, and 18-6 are referenced.1
Would a prohibited conflict of interest be created were the administrator/health officer, or another employee, of a Department of Health's county health department to be appointed by it as a director of a nonprofit corporation that awards grant money to the county health department?
Under the circumstances presented, your question is answered in the negative.
In your letter of inquiry, additional materials supplied to our staff, and telephone conversations between you and our staff, you relate that you make inquiry in behalf of your client, the Department of Health (DOH), and one of its employees. The Department would like to appoint the employee, who is currently the Administrator of DOH's Citrus County health department (DOH-Citrus), or an alternate highly-ranked employee, to serve as a director of the Citrus County Community Charitable Foundation, Inc. (Foundation), a nonprofit Florida corporation with IRS 501(c)(3) status, created by the Citrus County Hospital Board2 pursuant to Chapter 2014-254, Laws of Florida. The purpose of the Foundation is to award grants to eligible organizations that, among other things, serve the medically-related needs of the citizens of Citrus County.3 Section 5.03 F. of the Foundation's bylaws requires that the Public Health Officer (e.g., director or administrator of DOH-Citrus), or alternate highest ranking officer/employee of the department, serve as one of eleven directors on the Foundation's board of directors. You indicate that the subject employee, DOH-Citrus' administrator, served on the Foundation board for several years, that his most recent term has expired, and that the Foundation has proposed his reappointment for another term.
Except for reimbursement of out-of-pocket expenses, you relate that the subject employee will not be compensated for serving on the Foundation's board. You further relate that DOH provides no funding to the Foundation and DOH-Citrus does not purchase, rent, or lease any realty, goods or services from the Foundation. However, you advise that DOH-Citrus has received grant funds from the Foundation. Specifically, you relate that in 20174, the Foundation provided a $10,000 grant to DOH-Citrus "to assist the Department's preparation of a community health assessment addressing medical needs in Citrus County." You indicate that due to anticipated reduction in funding available to DOH-Citrus to provided indigent medical care services, the subject employee anticipates that DOH-Citrus will seek grant funding from any available source—including grants from the Foundation—in order to continue to provide medical care to indigent Citrus County citizens.
Two provisions of the Code of Ethics for Public Officers and Employees are relevant to your inquiry. The first is Section 112.313(7)(a), Florida Statutes, which states:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.—(a) No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee…; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties.
The first part of Section 112.313(7)(a) would prohibit the subject employee from having a contractual relationship with the Foundation, a business entity (defined in Section 112.312(5), Florida Statutes, to include corporations) doing business with (by virtue of a grant agreement between DOH-Citrus and the Foundation) DOH-Citrus. CEO 06-12. The second part would prohibit the subject employee from having a contractual relationship which would create a continuing or frequently recurring conflict between his private interest and the performance of his public duties or which would impede the full and faithful discharge of his public duties.
Both prohibitions are predicated on the existence of a contractual relationship, and we have previously held that reimbursement of expenses does not constitute the "compensation" that would indicate a contractual relationship.5 We have also found that uncompensated directors of a corporation, who are not also members of the corporation,6 have no contractual relationship with the organization. CEO 06-12.7 As the employee has no contractual relationship with the Foundation, we find no prohibited conflict under Section 112.313(7)(a).
The second provision of the Code of Ethics that is relevant to your inquiry is Section 112.313(3), Florida Statutes, which states:
DOING BUSINESS WITH ONE'S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:
(a) October 1, 1975.
(b) Qualification for elective office.
(c) Appointment to public office.
(d) Beginning public employment.
This section prohibits a public employee from acting in an official capacity as a purchasing agent to purchase services for his agency (e.g., DOH-Citrus) from a business entity (e.g., the Foundation) of which he is a director. It also prohibits a public employee from acting in a private capacity to sell services to his own agency. However, Section 112.313(3) does not apply because DOH-Citrus does not purchase, rent, or lease any realty, goods, or services from the Foundation and the Foundation is not selling goods or services to DOH-Citrus. See CEO 18-6. Rather, the Foundation is providing funding to DOH-Citrus.
Accordingly, under the specific circumstances of your inquiry, we find that no prohibited conflict of interest would be created were DOH to appoint the subject employee, or an alternate highly-ranked employee, to serve as an uncompensated director of the Citrus County Community Charitable Foundation, Inc., a nonprofit corporation.
Your question is answered accordingly.8
ORDERED by the State of Florida Commission on Ethics meeting in public session on January 25, 2019, and RENDERED this 30th day of January, 2019.
Guy W. Norris, Chair
Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us).
The Citrus County Hospital Board is an independent special district and agency of Citrus County, pursuant to Chapter 2014-254, Laws of Florida.
See Section 1.03 of the Amended and Restated Bylaws of Citrus County Community Charitable Foundation, Inc.
Before 2017, no grant funding was provided by the Foundation to DOH-Citrus.
See CEO 00-23, fn. 2, and CEO 90-4
Based upon your communications with our staff, this opinion assumes that the subject employee will only serve as a director on the Foundation's board and not also as a member of the nonprofit. See CEO 06-12.
See also, CEO 80-46 and 85-47
We note that Section 5.18 of the Foundation's bylaws prohibits, in part, the nonprofit from entering into any contract or other transaction with the director or any entity in which the director has the authority to plan, direct, or control such entity's activities, unless the requirements for the waiver of this prohibition—as outlined in the bylaws—are met, including, but not limited to, the subject director disclosing the conflict in writing, abstaining from voting or participating in the decision, and leaving the room during any discussion or vote concerning the proposed transaction. However, the bylaws, while having their own requirements, are not standards of conduct or prohibitions within the Code of Ethics and the jurisdiction of the Commission on Ethics.