CEO 02-2 -- January 29, 2002

 

CONFLICT OF INTEREST

 

COUNTY PUBLIC HOSPITAL BOARD MEMBER ENTERING INTO STAFFING

AGREEMENT WITH HOSPITAL BOARD

 

To:       Hugh C. Ferrell, Sarasota (Attorney)

 

SUMMARY:

 

Because an elected member of the Board of a County Public Hospital is not an employee of the Board and/or the Hospital, and because his relationship to the Hospital relative to his being granted hospital and clinical privileges is one authorized by the State laws governing the Hospital and the rules and regulations of the Board, rather than being contractual, Section 112.313(7)(a), Florida Statutes, does not prohibit him from serving on the Board solely by reason of his having been granted hospital and clinical privileges by the Board.

 

However, because the Cardiac Surgery Agreement that he is required to enter into with the Board in effect is a contract for the staffing of the Hospital's Cardiac Surgery Program, rather than an agreement related solely to the granting of Hospital and/or clinical privileges, Section 112.313(7)(a), Florida Statutes, would be violated were the Board member to sign a new Agreement with the Board.  With respect to the existing agreement, because it was entered into prior to his taking office, Section 112.316, Florida Statutes, may be applied to act as a "grandfather clause," to negate the conflict created by his Agreement with the Board.

 

QUESTION:

 

Would a prohibited conflict of interest be created were a cardiac surgeon who is an elected member of the Sarasota County Public Hospital Board to enter into a new Cardiac Surgery Agreement with the Board?

 

Under the circumstances presented, your question is answered in the affirmative.

 

Through your letter of inquiry, we are advised that you are requesting this opinion as attorney for Dr. Thomas Kelly, a cardiac surgeon and since 1998 an elected member of the Sarasota County Public Hospital Board ("Board"), a body politic in Sarasota County created by special act of the Florida Legislature, which operates the Sarasota Memorial Hospital ("SMH").

You advise that all physicians who practice medicine at SMH must be granted privileges to do so by the Board.  Those physicians who are granted privileges are required to accept, subscribe to, and comply with the rules and regulations adopted by the Board.  Those physicians who do not comply with the Board's rules and regulations, you advise, are subject to having their hospital privileges revoked by the Board.

You advise further that, in addition to general practice privileges, special clinical privileges are "separately and additionally" granted to physicians who have special training and expertise, usually evidenced by Board Certification in a recognized medical specialty.  These clinical privileges, you write, are subject to additional rules and regulations recommended to the Board by a medical sub-specialty committee composed of Hospital staff physicians who practice in that medical sub-specialty.  The rules and regulations are then presented for adoption by the Board and, when adopted by the Board, become the requirements for all physicians granted clinical privileges in that sub-specialty of clinical medicine, you write.  As with hospital privileges, clinical privileges are granted only by the Board and may be revoked only by the Board.

You relate that the Board's granting of "practice and clinical" privileges results in "agreements" between physicians who have been granted clinical and/or hospital privileges and the Board.  These agreements, you advise, are subject to civil litigation for breach.

We are advised that like all other physicians granted clinical privileges by the Board, cardiac surgeons, such as the subject Board member, must be granted clinical privileges.  However, because the number of practicing cardiac surgeons in the Sarasota area is limited, there is no standing committee for the sub-specialty of "Open Heart Surgery," you advise.^[1]  Consequently, the Board adopts rules known as "Cardiac Surgery Agreements," which differ from the rules and regulations prepared by medical sub-committees for other clinical sub-specialties in that the cardiac surgical medical corporations, whose members have been granted clinical privileges by the Board, are required to police their own surgeons.  Nevertheless, in practice, you assert, there is no real difference.

You also advise that, because of the special requirements of the "operating theater" and the high degree of skill and experience that must be maintained by cardiac surgeons performing open heart surgery, a Certificate of Need ("CON") must be granted by the State to the Hospital in order for the Hospital to be able to offer open heart surgical procedures to its patients.  In granting a CON, you write, the State considers the number of open heart surgical procedures needed in the area and limits the numbers of CON's granted in order to insure that physicians who perform the cardiac surgical procedures at the hospital perform enough of them to remain at, and demonstrate, the "highest level of skill."

SMH, you write, is the only hospital in Sarasota County that holds a CON which allows it to offer open heart surgical procedures.  The subject Board member, we are advised, was instrumental in creating the open heart surgery program at SMH in 1983 and performed the first open heart surgical procedure at the Hospital.  He also has performed open heart surgery continuously at the Hospital for the past 18 years under a Cardiac Surgery Agreement between his "medical corporation" and the Board.^[2]

You advise that the Cardiac Surgery Agreement ("Agreement"), a copy of which you provided for our review, is not unique to the subject Board member. It is uniform among all of the cardiac surgery "medical corporations" contracting with the Board.^[3]  It contains the following provision:

 

25.       The Medical Staff appointment and clinical privileges of each contract surgeon providing professional services under this agreement are incident to and coterminous with it and, upon termination of this agreement for any cause, or upon termination of the physician's employment by or affiliation with the corporation, shall automatically terminate without recourse to the hearing and appeal procedures set forth in the Medical Staff Bylaws. [E.S.]

 

Our review of the Agreement leads us to the conclusion that the Agreement is a professional services contract for the staffing of the Hospital's Cardiac Surgery Program.  While the Board agrees to provide, among other things, two (2) or more operating rooms, furniture, equipment, supplies, drugs, and staff required for the efficient operation of the Hospital's Cardiac Surgery Program, the medical corporations contracting with the Board also agree to provide all of the professional surgical and related services required for the Cardiac Surgery Program, including:

 

<                    having at least one qualified surgeon on call within a maximum response time of 30 minutes;^[4]

<                    having its surgeons (no fewer than two, but no more than three) devote substantially their full time to providing cardiac surgical services at the Hospital and confine their surgical activities primarily to adult cardiac surgery requiring the use of cardiopulmonary by-pass, and to other cardiovascular supportive procedures that are concurrent with or related to such primary procedures;^[5]

<                    having its contract surgeons devote a reasonable amount of time to training non-physician Hospital personnel with regard to their duties in the functioning of the Cardiac Surgery Program; and

<                    designating one of its physicians to serve as director of the Cardiac Surgery Program for a six month period each year.

 

The Board member's medical corporation also agrees not to charge patients for professional services rendered under the Agreement in excess of the charges for comparable services in the Southeast region of the State.

The Board also reserves the right to:

 

<                    enter into an agreement that was substantially identical to the agreement between the Board and the medical corporation with a third medical corporation for an additional team of cardiac surgeons, if the corporation failed to properly perform its obligations under the agreement;

<                    question the continued employment of any of the surgeons affiliated with the medical group; and

<                    negotiate on an individual basis with any physician affiliate with the P.A. for continuing medical services should the Agreement be terminated.

 

The subject Board member formed a professional association in 1983, you write, which was granted privileges to perform cardiac surgical procedures by the Board at that time.  Then, in 1990, after the members of the P.A. changed, the Board amended the terms of the clinical privileges agreement, you advise.  Nevertheless, the subject Board member has performed open heart surgery continuously at Sarasota Memorial Hospital for the past 18 years under the current agreement and its predecessor, both of which were entered into prior to his election to the Board in 1998.  Inasmuch as he now is a member of the Board, you relate that he is concerned about whether the Code of Ethics prohibits him from remaining on the Board if he is required to sign a new Cardiac Surgery Agreement, notwithstanding the applicability of the terms of the new agreement to all physicians performing cardiac surgical procedures within the Hospital and his abstention from voting on the terms of, and the Board's acceptance of, the new Agreement.

The relevant provisions of the Code of Ethics for Public Officers and Employees to your inquiry provide as follows:

 

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.  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.

[Sec. 112.313(3), Florida Statutes.]

 

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--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. [Section 112.313(7)(a),Florida Statutes.]

 

Section 112.313(3), Florida Statutes, which you reference in your letter, prohibits the subject Board member from acting in his official capacity, as a member of the Board, to purchase cardiac surgical services for the Board or Hospital from a business entity, such as the P.A. of which he is an officer and/or partner, and from selling his or his P.A.'s services to the Board or Hospital in his private capacity.  We repeatedly have held that one is deemed to be acting in his or her official capacity to purchase or lease goods, services, or realty when a body or board of which one is a member acts to purchase or lease such goods, services, or realty, notwithstanding the public officer's abstaining from voting on the matter.  See CEO 76-213 and CEO 95-13.  We also repeatedly have found that one is deemed to be "acting in a private capacity" to sell or lease goods, services, or realty to his or her agency or political subdivision when a corporation of which he or she is an officer or a director, or in which he or she owns a material interest, sells or leases to his or her agency.  See, for example, CEO 82-51 and CEO 95-13.

Like all other clinical practices, you write, the Board member's P.A. provides its surgical services to its own patients, from whom it receives payment either directly or through its patients' insurers, HMO's, etc.  The Board at the same time provides operating rooms, equipment, supplies, and hospital staff, as it does for the patients of all of the physicians practicing in other clinical sub-specialties at the hospital, and the Hospital receives payment directly or through the patients' insurers, HMO's, etc.  Neither the Board nor the Hospital receives any compensation from the practicing physicians for their use of the operating rooms, equipment, supplies, and hospital staff, and the physicians receive no compensation or remuneration either from the Board or the Hospital for their use of the Hospital to perform their surgical procedures on their patients.

It would appear from the absence of any exchange of compensation or remuneration between the Board or SMH and the subject Board member and/or his P.A. that the Board member is neither purchasing services for the Board from himself and/or his P.A. in his official capacity as a member of the Board nor selling any of his or his P.A.'s services to the Hospital or Board. However, we are unable to definitively determine whether Section 112.313(3) is implicated without additional information  concerning other CON's that the SMH has been granted and other agreements that the Board has entered into with physicians practicing in other clinical sub-specialties at SMH, because, as discussed below relative to the application of Section 112.313(7)(a), Florida Statutes, the Agreement that the Board member and his P.A. are required to enter into with the Board or with SMH appears to be a "staffing" agreement.  Consequently, in order for the Board to be able to maintain its cardiac surgery program at SMH, it may, in effect, through its agreement with the Board member and/or his P.A. to staff the program, be purchasing his and/or his P.A.'s services, and he and/or his P.A. may be selling his or its services to the Board.  Nevertheless, because, as discussed below, we find that a prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were the Board member and/or his P.A. to enter into a new agreement with the Board, it is not necessary for us to determine whether or not Section 112.313(3), would be implicated.

However, with respect to the 1990 Cardiac Surgery Agreement between the P.A. and the Board, even if we assume that the Board, in fact, was purchasing the P.A.'s services or that the Board member was selling his P.A.'s surgical services to the Board in his private capacity, Section 112.313(3)(b), Florida Statutes, "grandfathers-in" the 1990 agreement in order to exempt him from the application of the Section 112.313(3) prohibition while the 1990 agreement is in effect.

Section 112.313(7)(a), Florida Statutes, prohibits the Board member from having an employment or contractual relationship with a business entity if it is doing business with or is subject to the regulation of the Board.  It also prohibits him from having an employment or contractual relationship that creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties or an impediment to the full and faithful discharge of his public duties.

In your letter, you note that all physicians granted privileges to practice at SMH enter into agreements with the Board regarding their hospital and/or clinical privileges and all of the agreements incorporate provisions requiring the physicians to follow the Board's rules and regulations,^[6] as well as to adhere to any additional rules and regulations adopted by the Board for any clinical privileges that also may have been granted by the Board.  On that basis, you suggest that Section 112.316, Florida Statutes,^[7] which requires that the Code of Ethics not be interpreted to preclude private employment which does not interfere with the full and faithful discharge of a public officer's or employee's duties (see CEO 92-30 and CEO 86-30), applies to negate the prohibitions of Section 112.313(7)(a).

In CEO 75-96, we advised that the predecessor to Section 112.313(7)(a) [Section 112.313(5), Florida Statutes (1974 Supp.)] did not prohibit a hospital board member from serving on the medical staff of the hospital operated by the board since medical staff members, with the exception of emergency room physicians who received remuneration from the hospital, were not employees of the hospital and the statute only addressed outside "employment" by public officials.  We also found that the board member's medical staff position was not incompatible with his duties and functions as a member of the hospital board.  The board member's only relationship with the hospital, we observed, was solely one of "privilege to use its facilities for treatment of his patients."

Thereafter, in CEO 84-101, we opined that no violation of Section 112.313(7)(a) would be created were a physician on the medical staff of a hospital to be elected to serve as a commissioner of the hospital authority which operated the hospital.  Although we noted (1) that appointments to the medical staff were made by the hospital authority board based on the recommendations of the executive committee of the medical staff, (2) that disciplinary proceedings against a member of the medical staff were handled by each hospital department, and (3) that revocation of staff privileges could be ordered by the hospital authority board based upon proceedings before the medical staff executive committee and the medical staff as a whole, we concluded that the board member's relationship to the hospital, as a member of the medical staff, rather than being contractual, was one authorized by the laws governing the hospital and the rules and regulations of the hospital authority. We observed that the special act of the Legislature creating the hospital authority authorized its board to prescribe rules and regulations regarding the privileges of membership on the medical staff, and appointments to and revocations of membership on medical staffs of hospitals also were governed by Sections 395.011 and 395.0115, Florida Statutes [now Sections 395.0191 and 395.0193, Florida Statutes].  We concluded further that, as a member of the medical staff of the hospital, the board member was not an employee of the hospital.

Similarly, we conclude here that, because the subject Board member does not appear to be an employee of the Board and/or the Hospital, and because his relationship to the Hospital relative to his being granted hospital and clinical privileges, rather than being contractual, appears to be one authorized by the laws governing the Hospital and the rules and regulations of the Board, he is not prohibited by Section 112.313(7)(a), Florida Statutes from serving on the Board solely by reason of his having hospital and clinical privileges.

Nevertheless, because it appears from a review of the Cardiac Surgery Agreement that you provided that the Agreement, in effect, is a contract for the staffing of SMH's Cardiac Surgery Program, rather than an agreement related solely to the granting of Hospital and/or clinical privileges to the Board member and/or his P.A., we find that were he to sign a new agreement with the Board, he would have a contractual relationship with a business entity, his P.A., which is doing business with his agency, the Board, and/or a contractual relationship which would create a continuing or frequently recurring conflict between his private interests in continuing to perform open heart surgical procedures at the Hospital and his public duties to see that the Hospital's Cardiac Surgery Program is properly staffed and functioning.  Because we find that the Board member's private interests as a practicing Cardiothoracic Surgeon potentially could interfere with the full and faithful discharge his public duties, as a member of the Board, we also are of the opinion that Section 112.316, Florida Statutes, does not apply here to negate the prohibited conflict that would be created were he on behalf of himself or his P.A. to sign a new agreement with the Board.

However, Section 112.316 can be applied here to negate the apparent conflict that exists with respect to the Board member's current agreement with the Board.  In a number of our prior opinions, we have applied Section 112.316 as a "grandfather clause" to negate conflicts in situations in which the business or contract between the public agency and the private entity was entered into prior to the public official taking office. See, for example CEO 88-29, CEO 94-8, and CEO 97-11.  Such a use of Section 112.316, we have reasoned, is appropriate in situation where a public official could not have been tempted to compromise the performance of his or her public duties in favor of his or her private interests regarding an agreement with his or her public agency when he or she held no public office at the time that the agreement was entered into, and therefore, had no public duties to carry out or be tempted to compromise. Consequently, we find that because the 1990 Agreement predated his being elected to the Board, Section 112.316 may be applied here to negate the existence of any conflict created by that agreement.

Accordingly, we find that, while a violation of Section 112.313(7)(a), Florida Statutes, does not exist with respect to the Board member's and/or his P.A.'s current agreement with the Board, a violation of Section 112.313(7)(a), Florida Statutes, would be created were he to enter into a new Cardiac Surgery Agreement with the Board.

 

ORDERED by the State of Florida Commission on Ethics meeting in public session on January 24, 2002 and RENDERED this 29th day of January, 2002.

 

 

__________________________

Ronald S. Spencer, Jr.

Chair