CEO 83-90 -- December 15, 1983

CONFLICT OF INTEREST

HOSPITAL BOARD MEMBER EMPLOYED BY COMPANY SELLING TO HOSPITAL

To: Ms. Frances Dean, Member-elect, Lee County Hospital Board of Directors

SUMMARY:

A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a member of the Board of Directors of a public hospital to be employed as a medical representative of a pharmaceutical company selling products to the hospital, unless one of the exemptions contained in Section 112.313(12), Florida Statutes, applies. The exemptions might include business transacted under a rotation system among qualified suppliers; business transacted by sealed, competitive bid; emergency purchases; and purchases of supplies for which the pharmaceutical company is the only source of supply.

QUESTION:

Would a prohibited conflict of interest be created were you to serve on the board of directors of a public hospital while being employed as a medical representative of a pharmaceutical company which sells to the hospital?

Your question is answered in the affirmative, subject to the exceptions noted below.

In your letter of inquiry you advise that you are employed as a medical representative of a pharmaceutical company which sells its products to various physicians and hospitals, including the hospital operated by the Lee County Hospital Board of Directors. As medical representative, you advise, you are employed for a salary to create markets for the company's products, to explain their uses, and to solve any problems that may arise. In this connection, you have contact with purchasing personnel at a hospital and sometimes fill out orders; you also have contact with other employees of the hospital to determine whether the products are used and whether they are used properly. You question whether you may serve on the Board of Directors of the Lee County Hospital while maintaining these activities on behalf of your employer.

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), Florida Statutes (1981).]

This provision prohibits a public officer from being employed by a business entity which is doing business with the officer's public agency.

Initially, we must determine whether members of the Hospital Board of Directors are "public officers" for purposes of the Code of Ethics. Chapter 63-1552, Laws of Florida, creates the Hospital Board to govern the public county hospital. Section 11 of that Act provides:

Hospital board members shall receive no compensation for services as members of such board and shall not be deemed to be county or public officers, but such board shall be a county agency for the administration and management of the hospital. Each member of the hospital board, prior to the passage of any bond issue provided for herein, shall execute a bond payable to the county in a sum fixed by the county board for the faithful performance of his duties.

The Legislature's intent in providing that Hospital Board members shall not be deemed to be county or public officers is far from clear, but it is clear that this language was not intended to exempt Board members from the provisions of the Code of Ethics for Public Officer and Employees, which initially was adopted by the Legislature in 1967. Since Hospital Board members are elected at general elections (Chapter 83-454, Laws of Florida) to serve on the governing board of the public hospital, we find that they are "public officers" for purposes of the Code of Ethics. This conclusion is buttressed by the fact that, according to the attorney for the Board, vacancies on the Board have been filled by gubernatorial appointees; under Article IV, Section 1(f), Florida Constitution, the Governor is authorized to fill by appointment vacancies in elective or appointive state or county offices.

In our opinion, Section 112.313(7)(a) prohibits you from serving on the Hospital Board while being employed by a company which is selling its products to the hospital. Similarly, in CEO 81-28, we found that a county commissioner could not be employed by an engineering firm doing business with the county; in CEO 80-10, we found that a school board member could not be employed by a foundation leasing a facility from the school district; and in CEO 79-76, we found that a school board member could not be employed by a company selling a building to the school district. In our view, the statute does not distinguish between situations in which the public officer is involved personally and situations in which the officer is not involved personally, so long as the officer's employer is doing business with the public agency. Therefore, we believe that your employment would constitute a violation even if another medical representative of your employer handled all contact with the county hospital personnel.

However, it is possible that one or more exemptions within the Code of Ethics might apply to purchases made by the hospital from the pharmaceutical company. As we do not know the procedures used by the hospital to make such purchases, it is possible that the following exemptions may apply, if:

Within a city or county the business is transacted under a rotation system whereby the business transactions are rotated among all qualified suppliers of the goods or services within the city or county. [Section 112.313(12)(a), Florida Statutes.]

The business is awarded under a system of sealed, competitive bidding to the lowest or best bidder and:

1. The official or his spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;

2. The official or his spouse or child has in no way used or attempted to use his influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and

3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Department of State, if he is a state officer or employee, or with the supervisor of elections of the county in which the agency has its principal office, if he is an officer or employee of a political subdivision, disclosing his interest, or his spouse's or child's interest, and the nature of the intended business. [Section 112.313(12)(b), Florida Statutes, as amended by Chapter 83-26, Laws of Florida.]

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. [Section 112.313(12)(d), Florida Statutes.]

The business entity involved is the only source of supply within the political subdivision of the officer or employee and there is full disclosure by the officer or employee of the officer's or employee's interest in the business entity to the governing body of the political subdivision prior to the purchase, rental, sale, leasing, or other business being transacted. [Section 112.313(12)(e), Florida Statutes.]

With respect to the last exemption, for sole sources of supply, if there are products which are manufactured only by the pharmaceutical company which employs you, the hospital may purchase those products. We suggest that the disclosure required by this exemption (Commission on Ethics Form 4A) be filed once for all types of items purchased by the hospital from the pharmaceutical company, where the company is the only manufacturer of the product.

Accordingly, we find that a prohibited conflict of interest would be created were you to serve on the Hospital Board while being employed as medical representative of a pharmaceutical company selling to the hospital, unless such sales are made in accordance with one or more of the exemptions listed above.