CEO 77-73 -- May 19, 1977
CONFLICT OF INTEREST
PUBLIC EMPLOYEES OWNING MATERIAL INTEREST IN COMPANY WHICH SELLS SUPPLIES TO COMPANY DOING BUSINESS WITH THEIR AGENCY FINANCIAL DISCLOSURE DEFINITION OF PURCHASING AGENT
To: (Name withheld at the person's request.)
SUMMARY:
No prohibited conflict of interest exists where two employees of a publicly owned hospital serve as officers of and own a material interest in a pharmaceutical supply company which sells items wholesale to another pharmaceutical company which, in turn, sells directly to the hospital. Section 112.313(7)(a), F. S. 1975, prohibits a public employee from having a contractual relationship with a business entity which is doing business with his public agency; in addition, it prohibits a public employee from having a contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties. In the instant case, however, it is the second pharmaceutical company which sells to the hospital (the employees' agency), not the company owned by the employees. And, as the employees do not engage in advising the hospital's purchasing agent as to the purchase of pharmaceutical supplies, their business interest does not appear to conflict with their public duties. Accordingly, no conflict of interest pursuant to the above-cited s. 112.313(7)(a) is deemed to be created.
An employee who advises the hospital's purchasing agent as to which pharmaceutical supplies need to be purchased does not constitute a "purchasing agent" pursuant to the language contained in s. 112.3145(1)(a)3., as he does not have "authority to make any purchase exceeding $100 for any political subdivision of the state or any entity thereof."
QUESTIONS:
1. Does a prohibited conflict of interest exist where two employees of a publicly owned hospital serve as officers of and own a material interest in a pharmaceutical supply company which sells items wholesale to another pharmaceutical company which in turn sells directly to the hospital?
2. Does a person who is employed in the nuclear medicine department of a publicly owned hospital and who advises the hospital's purchasing agent as to which nuclear medicine supplies need to be reordered constitute a purchasing agent for purposes of financial disclosure?
Question 1 is answered in the negative.
In your letter of inquiry and in subsequent telephone conversations with our staff you have stated that you represent Mr. Donald Ward and Mr. Martin Miller and that both are employed by Tampa General Hospital, the first in an administrative capacity in the Nuclear Medicine Department and the second as Chief Nuclear Medicine Technologist. Both employees also own a material interest in a pharmaceutical supply company, and both have received compensation as officers of that company, which sells wholesale to a second pharmaceutical supply company. This second company may submit bids to the hospital for the sale of various drugs and drug items, among which might be various nuclear medicine items previously sold to the second company by the first. Neither of the subject employees owns an interest in the second company; nor do they have any control or management over that company. However, the first company also leases office and supply space from the second.
You have also stated that in the course of their employment with the hospital both subject employees are allowed to advise the hospital's purchasing agent as to what nuclear medicine items are running low in supply and need to be restocked. The decision as to which types and brands of nuclear medicine items should be purchased by the hospital in the first place is made by the chairman of the nuclear medicine department, who advises the hospital's purchasing agent, rather than by the subject employees. In addition, you have stated that, as neither employee has actual purchasing authority, such status is purely advisory; and any advisory function as to what items are needed could be easily transferred to a radiologist at the hospital.
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 . . . ; 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), F. S. 1975.]
This provision prohibits a public employee from having a contractual relationship with a business entity which is doing business with his agency; in addition, it prohibits a public employee from having a contractual relationship that will create a frequently recurring conflict between his private interests and the performance of his public duties.
As employees of the hospital, the subject employees' agency for purposes of the Code of Ethics is the hospital or, more properly, the county welfare and hospital board, the agency which you have stated owns and operates the hospital. Because it is the second pharmaceutical company which sells to the hospital and not the company which is owned by the subject employees, we find the first portion of the above-quoted provision to be inapplicable.
As the subject employees in the past have received compensation in effect for serving as officers of the company owned by them, we deem them to have a contractual relationship with that company. Were the subject employees engaging in advising the hospital's purchasing agent as to what types or brands of nuclear medicine items to buy, we perceive that the employees would have a contractual relationship with their company which would create a frequently recurring relationship between their private interests and their public duties and which might result in the possibility of their using their public employment for private gain. However, since the subject employees' role in the purchase of nuclear medicine supplies for the hospital is only ministerial and the discretion as to whether and what to purchase rests with another employee of the hospital, we find that the second portion of the above-quoted provision is also inapplicable.
Accordingly, we find that the Code of Ethics for Public Officers and Employees does not prohibit employees of a publicly owned hospital from serving as officers of and owning a material interest in a pharmaceutical supply company which sells items wholesale to another pharmaceutical company which in turn sells directly to the hospital which employs them.
Question 2 is answered in the negative.
Section 112.3145(2)(b), F. S. 1975, requires each "local officer" to file a statement of financial interests annually. The term "local officer" is defined in s. 112.3145(1)(a)3., F. S. 1975, to include "a purchasing agent having the authority to make any purchase exceeding $100 for any political subdivision of the state or any entity thereof." As you have stated that the subject employees do not have actual authority to make purchases for the hospital which employs them, although they function in a limited advisory capacity, we find that they are not "local officers" and therefore are not required to make annual financial disclosure.