CONFLICT OF INTEREST

HOSPITAL DISTRICT BOARD MEMBER EMPLOYED BY
COMPANY CONTRACTING TO MANAGE SURGICAL CENTER

To:       Mr. Samuel S. Goren, General Counsel, North Broward Hospital District (Ft. Lauderdale)

SUMMARY:

Under the circumstances presented, no prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a hospital district commissioner to be employed by a private management firm that has a contract to manage a surgical center in which the hospital district previously had an ownership interest and with which the hospital district previously had a management contract. CEO 82-78 is referenced.¹

QUESTION:

Would a prohibited conflict of interest be created were a management firm employing a hospital district commissioner to manage a surgical center which the hospital district previously co-owned and managed?

Under the circumstances presented, the question is answered in the negative.

In your letter of inquiry and additional information provided to our staff, you relate that this opinion is sought on behalf of Mr. Miguel "Mike" Fernandez ("member"), a member of the Board of Commissioners of the North Broward Hospital District ("District"), who has served on the Board since September 2007.

You state that the member is employed as vice president for operations and business development by a company which has a contract to manage a surgical center, beginning June 1, 2013. You state that the member has no equity or ownership interest in the company or in the surgical center.

You relate that the District co-owned the surgical center with a physicians group until November 1, 2012, when the District divested its interest because of an administrative determination that the ownership interest was no longer financially viable for the District. You state that the surgical center presently is owned by a group of 15 physicians. You relate that the surgical center is managed by the District but that on June 1, 2013, the District's management contract will terminate and the company will assume management of the surgical center under a new contract between the company and the surgical center. You explain that the member, as an employee of the company, expects to interact with the District regarding immediate administrative details of the transition from the District to the company for management of the surgical center but then to have no further contact with the District in his position with the company.² You state that the company presently has no contracts with the District and that the member will not seek to develop contracts between the company and the District.³

You state that 30 of the 79 surgical center staff surgeons, including 5 of the 15 members of the center's ownership group, also have privileges to practice medicine at District hospital facilities. You relate that the Board approves privileges for physicians at District hospitals after considering recommendations as to such privileges by the hospitals' medical executive committees.

Section 112.313(7)(a), Florida Statutes, located within the Code of Ethics and relevant to your inquiry, provides:

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 any 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 member from having employment or a contractual relationship with any business entity regulated by or doing business with the District. However, since the member's employment would be with the company, a business entity which has no contract with and otherwise is not doing business with the District, we find that the member would not have employment or a contractual relationship with a business entity doing business with his agency, and thus that his employment with the company would not be prohibited by the first part of Section 112.313(7)(a).⁴ Business entities typically are separate from one another for purposes of Section 112.313(7)(a). CEO 82-78.

The second part of Section 112.313(7)(a) prohibits any employment relationship which would give rise to an actual conflict. Thus, the relevant question is whether the member's employment with the company would create a continuing or frequently recurring conflict between his private interest and the performance of his public duties as a member of the Board of Commissioners of the District, or whether it would create an impediment to the full and faithful discharge of his public duties. This prohibition "establishes an objective standard which requires an examination of the nature and extent of the public officer's duties together with a review of his private employment to determine whether the two are compatible, separate, and distinct or whether they coincide to create a situation which 'tempts dishonor.'" Zerweck v. State, Commission on Ethics, 409 So. 2d 57, 61 (Fla. 4th DCA 1982).

Under the circumstances presented, we find that there is no substantive indication of any actual conflict between the member's private interest as an employee of the company and his public duties as a member of the Board of Commissioners of the District. This finding is based on your statement that the member's agency, the District, will not be called upon to approve any contracts involving the surgical center, since the District will have terminated its ownership in and management contracts with the surgical center, and also based on our conclusion that the member would not necessarily be tempted to disregard his public duty in order to gain favor with his private employer if he were to participate in approval of District hospital privileges for a physician who practices medicine at the surgical center and who also has an ownership interest in the center. For example, a vote by the member for a revocation of District hospital privileges for a physician practicing at and partly owning the separate surgical center would be unlikely to affect the relationship between the member and his private employer, which is the management company for the surgical center. Therefore, we find that the member's employment with the company would not create a prohibited conflict of interest under the first and second parts of Section 112.313(7)(a).

The question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on June 7, 2013, and RENDERED this 12th day of June, 2013.

____________________________________

Susan Horovitz Maurer, Chair

^[1]Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us).

^[2]We find that, in order to avoid a prohibited conflict, the member must not communicate with the District as to any dispute or issue involving the company and must not represent the company before the District Board.

^[3]A contract between the company and the District, whether or not developed by the member, would implicate, as to the member, Sections 112.313(3) and 112.313(7)(a), Florida Statutes. You should advise the member to contact the Commission staff for further guidance if such a contractual relationship were to potentially arise in the future.

4We also see no indication that the District regulates the company.