CEO 77-48 -- March 9, 1977
CONFLICT OF INTEREST
COUNTY HOUSING AUTHORITY COMMISSIONER DOING BUSINESS WITH INSURANCE CARRIERS WHICH ARE DOING BUSINESS WITH AUTHORITY
To: Stephen G. Beneke, Counsel, Pinellas County Housing Authority, Clearwater
Prepared by: Phil Claypool
SUMMARY:
No conflict of interest as contemplated by s. 112.313(7)(a), F. S. 1975, is created where a county housing authority commissioner is licensed as an agent for an insurance company which does business with the authority but who neither writes insurance policies for the authority nor receives commissions from such policies. Although he is prohibited by the above-cited statute from having a contractual relationship with a business entity doing business with his public agency, s. 112.316 further provides that it is not the intent of the Code of Ethics to preclude private pursuits which do not interfere with the full and faithful discharge of public duty. Because the commissioner receives no remuneration from the insurance company on its policy with the housing authority, and because he would have no reason to favor the particular company over others by which he is also licensed, his private interests are sufficiently removed from his public duties so as to create no conflict contemplated by s. 112.313(7)(a). Nor is that provision of the law violated where the commissioner/insurance agent holds accounts written through other agents by an insurance company with which he has no license but which is doing business with the housing authority, so long as those agents are not doing business with the housing authority. In this situation he has a contractual relationship with the individual agents through whom an account is written rather than with the insurance company itself. Various other relationships with insurance companies which, in turn, do business with the housing authority or with lessors of projects of the authority create no conflict, based on the above rationales.
QUESTIONS:
1. Would a prohibited conflict of interest be created were a county housing authority commissioner to be licensed as an agent for the insurance company which writes the group health and life insurance for employees of the authority?
2. Does a prohibited conflict of interest exist where a county housing authority commissioner is an insurance agent who has several accounts written through other agents by an insurance company with which he has no license but which is doing business with the housing authority?
3. Does a prohibited conflict of interest exist where a housing authority commissioner is licensed as an agent by an insurance company, a division of which provides fire insurance for the housing authority?
4. Does a prohibited conflict of interest exist where a housing authority commissioner, as an insurance agent, has several accounts placed with an insurance company on a brokerage basis and has accounts placed with that company through an assigned risk pool, where that company writes the workmen's compensation insurance for the housing authority?
5. Does a prohibited conflict of interest exist where a housing authority commissioner, as an insurance agent, has several accounts in other states written by an insurance company which writes fire insurance for the housing authority?
6. Does a prohibited conflict of interest exist where a housing authority commissioner has accounts written through another agent on a brokerage basis with an insurance company which writes the fire and liability insurance for two projects of the housing authority?
7. Does a prohibited conflict of interest exist where a housing authority commissioner is a licensed agent for an insurance company which provides fire insurance for the housing authority but where he is not the agent of record for that account?
8. Does a prohibited conflict of interest exist where a housing authority commissioner has several accounts written on a brokerage basis through agents of an insurance company which provides fire and liability insurance for the lessor of a project of the housing authority?
9. Does a prohibited conflict of interest exist where a housing authority commissioner has accounts written as a brokering agent through a broker of an insurance company which writes the crime insurance for the housing authority?
Question 1 is answered in the negative.
In your letter of inquiry you have stated that you are counsel for the Pinellas County Housing Authority and that Mr. Charles Amos serves on the commission of that authority. The subject commissioner has been licensed by the State of Florida to act as an insurance agent in the areas of life, health, property, and casualty insurance, and his insurance agency does business in all of these areas.
According to information provided by the commissioner, he was licensed until recently as an agent for the insurance company which writes the group health and life insurance for employees of the authority. His license as an agent for the company was requested by a general agent for the company. A general agent is assigned a certain geographic area by the company and has the responsibility for all production, training, and licensing of agents within that territory. The general agent's income is derived both from policies he has written as an agent and also from an override commission paid by the company and earned from all business placed by the agents he is training and licensing. The subject commissioner had a contract with the insurance company and received income only from accounts on which he was recorded as an agent with the company. As that contract was a "vested contract," he will receive renewal commissions payable in the amount and for the period of time specified by the contract regardless of the fact that his agent's license has been terminated by the company.
In the present situation, the group health and life insurance policy for the authority was written directly by the general agent under whom the commissioner was licensed as an agent, with the commissioner receiving no commission or other benefit from the account.
The commissioner anticipates again being licensed as an agent with the company through a different general agent and wishes to know if this would involve him in a prohibited conflict of interest.
The Code of Ethics for Public Officers and Employees provides in relevant part:
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 is an officer or employee . . . . [Section 112.313(7)(a), F. S. 1975.]
This provision prohibits a public officer from having a contractual relationship with a business entity which is doing business with his agency. The subject commissioner's agency is the particular county housing authority which he serves. Section 112.312(2), F. S. (1976 Supp.). As the insurance company has provided the group health and life insurance for the employees of the authority, it is "doing business" with the authority. Thus it appears that this provision prohibits the subject commissioner from being licensed as an agent for this company, which would constitute having a contractual relationship with the company.
However, in construing the Code of Ethics we must also consider another provision which states:
Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, F. S. 1975.]
The above-quoted provision makes it clear that the Code of Ethics shall not be construed to prohibit a public officer from holding private interests which do not interfere with the full and faithful discharge of his duties; in effect, this section imposes a "rule of reason" upon the application of the Code of Ethics to any particular set of circumstances. Therefore, we must look to the public policies which underlie a provision of the Code of Ethics and apply that provision in accordance with those policies.
One of the essential purposes of s. 112.313(7)(a) is to prohibit those situations in which a public officer could obtain preferential treatment from or award public business to a business entity with which he is associated. However, here it is apparent that the subject commissioner will receive no remuneration from the insurance company on its policy with the housing authority because he is not the agent of record on the housing authority account. Nor does it appear that he would have any particular reason to favor this insurance company over any of the numerous other companies which have licensed him as an agent.
In short, we feel that, in the present situation, the subject commissioner's private interests are sufficiently removed from his public duties that the literal language of s. 112.313(7)(a) should not control.
Accordingly, we find that a prohibited conflict of interest would not be created were a county housing authority commissioner to be licensed as an agent for the insurance company which writes the group health and life insurance for employees of the authority.
Question 2 is answered in the negative.
According to information provided by the subject housing authority commissioner, Travelers Insurance Company provides auto and liability insurance for the housing authority. The subject commissioner has no license with Travelers, but he does have several accounts which are written by that company through agents who are licensed by the company other than the agent who has the housing authority's account. In this "brokering" relationship, he receives a percentage of the commission on each account from the company's agent on that account.
In this situation, the subject commissioner has a contractual relationship with the individual agent through whom an account is written, rather than with the insurance company itself. Accordingly, s. 112.313(7)(a) does not apply, and we find that no prohibited conflict of interest exists where a housing authority commissioner has placed several accounts with an insurance company through agents of that insurance company with which he has no license but which is doing business with the housing authority.
Question 3 is answered in the negative.
According to information provided by the subject commissioner, fire insurance is written for the housing authority by the Glens Falls Insurance Co., a division of Continental Insurance Co., which has licensed the subject commissioner as an agent. He receives no financial or other benefit from Continental or any Glens Falls agent for this policy.
This question presents essentially the same relationship between public officer and private business entity as that presented by question 1 of this opinion. Accordingly, we find that the rationale of our answer to that question is equally applicable to this question and we answer this question in the negative.
Question 4 is answered in the negative.
According to information provided by the subject commissioner, the workmen's compensation insurance for the housing authority is written by Employers Insurance of Wausau. He has several accounts placed with that company in other states on a brokerage basis and in Florida through an assigned risk pool.
This question presents issues which are substantially identical to those in questions 1 and 2, above. Accordingly, this question is answered in the negative.
Question 5 is answered in the negative.
According to information provided by the subject commissioner, the fire insurance for two projects of the housing authority is written by Allendale Mutual Insurance Company. The commissioner has several accounts written by that company in other states but is not licensed by the company in Florida.
This question presents essentially the same issues as question 1, above, and it is answered accordingly in the negative.
Question 6 is answered in the negative.
According to information provided by the subject commissioner, fire and liability insurance for two projects of the housing authority is written by Cherokee Insurance Company. Although he is not licensed directly as an agent by that company, he has placed business with it on a brokerage basis through an agent other than the one handling the housing authority account.
As this question is substantially the same as question 2, above, we answer this question accordingly in the negative.
Question 7 is answered in the negative.
According to information provided by the subject commissioner, the fire insurance on a project of the housing authority is written by Foremost Insurance Company, for which he is a licensed agent. The subject commissioner does not receive any benefits of any kind on this policy, either from the company or the agent on the account. He does not know the agent writing this coverage; nor has he discussed this coverage with the company at any time.
This question is substantially the same as question 1, above, and is answered accordingly in the negative.
Question 8 is answered in the negative.
According to information provided by the subject commissioner, the fire and liability insurance for one of the housing authority's projects is written by Aetna Insurance Company. However, this coverage is purchased by the lessor of the project rather than by the housing authority. The subject commissioner has several accounts written by the company on a brokerage basis through agents other than the agent on the project's account, but he does not hold a license as agent for the company.
Section 112.313(7)(a), which was quoted above in our answer to question 1, prohibits a public officer from having a contractual relationship with a business entity which is doing business with his agency. This provision does not apply here because the insurance company is doing business with the lessor of the project rather than with the subject commissioner's agency, the housing authority.
Accordingly, we find that no prohibited conflict of interest. exists where a housing authority commissioner has several accounts written on a brokerage basis through agents of an insurance company which provides fire and liability insurance for the lessor of a project of the housing authority.
Question 9 is answered in the negative.
According to information provided by the subject commissioner, the crime insurance for the housing authority is written by Lloyd's of London. He is not licensed directly as an agent by that company, but he does have accounts written by them in Florida and other states; on these accounts he acts as a brokering agent through a broker, or general agent, of the company.
This question presents substantially the same issues as those in question 2, above, and therefore it is answered in the negative.