CONFLICT OF INTEREST

CITY PURCHASING COVID-19 TESTING SERVICES
FROM LOCAL HOSPITAL OF WHICH MAYOR IS A BOARD MEMBER

To: Lynn Gelin, City Attorney (Delray Beach)

SUMMARY:

Sections 112.313(3) and 112.313(7)(a), Florida Statutes, will not give rise to a conflict of interest for the Mayor of a City when the City renews a contract for COVID-19 lab testing services with the hospital of which she is a member of the Board of Directors. The exception to the conflict of interest for emergency purchases to protect the health, safety, and welfare of the citizenry found in Section 112.313(12)(d), Florida Statutes is applicable. Referenced are CEO 83-76, CEO 87-41, CEO 92-35, and CEO 09-1.

QUESTION:

Is a prohibited conflict of interest created where the Mayor of a City is also a member of the Board of Directors of a hospital and the hospital sells COVID-19 laboratory testing services to the City?

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

In your written inquiry, and in subsequent telephone conversations with Commission staff, you explain that the Mayor of a City has been a member of the City Commission for approximately six years. In October of 2020, the Mayor became a member of the Board of Directors of Delray Medical Center (DMC). Although DMC board members typically receive compensation for their board service, the Mayor refuses that compensation.

COVID-19 is a respiratory disease caused by the Novel Coronavirus and, on March 11, 2020, the World Health Organization first characterized COVID-19 as a pandemic. COVID-19 is associated with a lengthy period during which an infected person is contagious, but often symptom free. The Centers for Disease Control and Prevention (CDC) recommends diagnostic testing for those with signs or symptoms of COVID-19 and rapid, point-of-care screenings to identify asymptomatic cases.¹ As of March 23, 2021, according to the Florida Department of Health, Division of Disease Control and Health Protection, there have been 1,974,051 cases of COVID-19 among Florida residents resulting in 83,503 resident hospitalizations and 32,779 Florida resident deaths.²

The State and City have acknowledged the impact of COVID-19 in a series of emergency declarations. On March 1, 2020, Governor Ron DeSantis issued Executive Order 20-51, declaring a public health emergency due to the emergence and community spread of COVID-19 in Florida. On March 9, 2020, Governor DeSantis issued Executive Order 20-52, declaring a state of emergency for the entire State of Florida as a result of COVID-19. Executive Order 20-52 has been extended seven times, including, most recently, a 60-day extension by Executive Order 21-45 on February 26, 2021. Similarly, on March 13, 2020, the City declared a state of emergency. As of March 23, 2021, the local state of emergency has been extended 53 times and remains in effect.

According to you, the City Manager has authority generally to execute contracts on behalf of the City up to $65,000. On May 7, 2020, the City Manager, on behalf of the City, contracted with DMC to purchase COVID-19 lab testing services for the City's homebound residents and for employees who demonstrated symptoms of COVID-19, including the City's police and fire rescue personnel. Under the terms of the contract, DMC charges the City the Medicare fee schedule cost for this service; you inform us that the City's Emergency Manager believes that no entity that accepts Medicare can charge any party less than the Medicare rate. At the time the contract was executed (May 2020) there was a nationwide shortage of COVID-19 testing³ and, consistent with that, the City's Emergency Manager states that DMC was the only venue at the time that could provide routine, ongoing testing. Since May 7, 2020, the Emergency Manager estimates that between 150 to 200 people have been served by this contract, the total cost of which has been approximately $14,000.

The contract is up for renewal again in May 2021 and, because the need for access to reliable COVID-19 testing has not abated, the City seeks to renew the contract with DMC. According to you, the Emergency Manager believes that other local venues now have comparable testing capacity, and believes that if those venues accept Medicare, their contract prices will likely be similar.

With this background, you ask whether the Mayor may continue to be, without ethics conflict, a member of the Board of Directors of DMC if the City renews the contract with DMC for COVID-19 testing services.

Relevant to your inquiry, Section 112.313(7)(a) states:

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.

When the City Manager entered into the original contract on behalf of the City with DMC, the Mayor was not yet a member of the Board of Directors of DMC. Although the Mayor is now an uncompensated member of the DMC Board of Directors, we have found that uncompensated board service is not employment or a contractual relationship. See CEO 6-26 and CEO 20-13. Because the Mayor does not have employment or a contractual relationship with DMC, Section 112.313(7)(a) will not be implicated by the contract renewal.

Section 112.313(3), Florida Statutes, is also implicated by your question. It states:

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 . . . 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.

The first part of this statute prohibits a public officer, and a public employee as purchasing agent, from buying, renting, or leasing realty, goods, or services from a business entity in which the public officer, his or her spouse, or child own a material (greater than five percent) interest or hold a certain position. The second part proscribes a public officer or employee in their private capacity from selling, renting, or leasing realty, goods, or services to his or her agency or any agency of his or her political subdivision. Acting in a private capacity to sell services includes situations where one is a director of a business entity that is selling services to one's agency. See CEO 09-1 (citing CEO 87-41).

Because the Mayor was not on the DMC board of directors when the City and DMC executed the original contract, the original contract did not implicate Section 112.313(3). However, now that she is a member of that board, the proposed non-automatic renewal of the contract will constitute her acting in a private capacity to sell services to her own agency or an agency of her political subdivision, the City. Thus, a conflict of interest is indicated unless the Mayor benefits from an exemption to the application of Section 112.313(3).

We find that an exemption does apply in these unique circumstances. Section 112.313(12)(d), Florida Statutes, states:

In addition, no person shall be held in violation of subsection (3) or subsection (7) if:

(d) An emergency purchase or contract which would otherwise violate a provision of subsection (3) or subsection (7) must be made in order to protect the health, safety, or welfare of the citizens of the state or any political subdivision thereof.

We have not had occasion to consider this exception in an opinion in 29 years, and have not applied the exception in the opinion context to negate a conflict of interest in 37 years. We have found that, for the exemption to apply, a purchase from an otherwise prohibited source must be "reasonably necessitated by the nature of the emergency." See CEO 92-35. In CEO 83-76, we applied the exception to negate a conflict of interest where a city was required by lawful orders of State and federal regulatory agencies to construct a new sewer plant by a date certain or face steep monetary penalties, but there was not sufficient time to condemn a suitable property or wait for a suitable property to come to market, and the city mayor owned the only suitable property (beside a preexisting sewer plant) that did not have intense neighborhood opposition. In that instance, we found that the emergency purchase of the property was necessary and that the purchase was necessary to protect the health, safety, and welfare of the citizens of the city.

Here, the City, like the rest of the Florida and the world at large, is facing a pandemic. The State and the City have both declared a state of emergency and those declarations have been continuously extended and remain in effect. In light of this, it is apparent that there is an emergency. The virus is contagious and has a quantifiable mortality rate. For these reasons, we find that the purchase is related to the health, safety, and welfare of the citizens of the City. Because the CDC recommends testing and rapid screening as a means to curb the transmission of the virus, the City's purchase of lab testing services from DMC appears to be reasonably necessitated by the nature of the emergency.⁴ Therefore, we find that Section 112.313(12)(d) applies to negate the conflict of interest under Section 112.313(3), if the Mayor remains on the DMC Board of Directors.

Your question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on April 16, 2021, and RENDERED 21st day of April, 2021.

____________________________________

JoAnne Leznoff, Chair

^[1] "Overview of Testing for SARS-CoV-2 (COVID-19)," Centers for Disease Control and Prevention, https://www.cdc.gov/coronavirus/2019-ncov/hcp/testing-overview.html (accessed 3/23/21).