CEO 85-39 -- May 23, 1985

CONFLICT OF INTEREST

COUNTY HEALTH FACILITIES AUTHORITY MEMBERS SERVING ON BOARD OF DIRECTORS OF BANK ACTING AS TRUSTEE FOR BONDS ISSUED BY AUTHORITY; APPLICABILITY OF CODE OF ETHICS TO ATTORNEY FOR AUTHORITY

To: Mr. Thomas H. Thurlow, Jr., Attorney for Martin County Health Facilities Authority

SUMMARY:

No prohibited conflict of interest exists where members of a county health facilities authority serve on the board of directors of a bank which is the trustee for bonds issued by the authority. Section 154.238, Florida Statutes, specifically exempts this situation from the prohibitions of the Code of Ethics. Under the circumstances presented, the attorney for the authority is an "independent contractor," and therefore is not governed by the Code of Ethics for Public Officers and Employees. CEO's 81-48 and 81-60 are referenced.

QUESTION 1:

Does a prohibited conflict of interest exist where members of a county health facilities authority serve on the board of directors of a bank which is the trustee for bonds issued by the authority?

This question is answered in the negative.

In your letter of inquiry you advise that .... and .... are members of the Martin County Health Facilities Authority. You also advise that to date the Authority has authorized only one bond issue. The trustee for the bond issue is a local bank and trust company. The subject Authority members serve on the board of directors of that bank.

The Code of Ethics for Public Officers and Employees, in Section 112.313(3), Florida Statutes, prohibits a public officer from acting in his official capacity to purchase any services for his agency from a business entity of which he is a director. In addition, Section 112.313(7), Florida Statutes, prohibits a public officer from having any employment or contractual relationship with a business entity which is doing business with his agency.

However, Section 154.238, Florida Statutes, provides as follows:

Authorization to deal with bank which employs a member of the authority. -- Notwithstanding any general or special law, rule, regulation, or ordinance to the contrary, including ss. 112.311- 112.326, an authority may sell its bonds to a bank, as defined in s. 662.02(1), which employs a member of the authority as an officer, director, or employee and may appoint a bank to serve as trustee or cotrustee under a trust indenture relating to bonds issued under this part, notwithstanding the fact that an officer, director, or employee of the bank which is interested in purchasing or serving as trustee or cotrustee for proposed or outstanding bond issue shall vote on any matter related to such bond issue after the interest of the bank in such bond issue becomes known to him.

In our view, this provision permits a health facilities authority member to serve as a director of a bank which is acting as trustee for bonds issued by the Authority, notwithstanding the prohibitions of the Code of Ethics.

Accordingly, we find that no prohibited conflict of interest exists where the subject Authority members serve on the board of directors of a bank which is acting as the trustee for bonds issued by the Authority.

QUESTION 2:

Does the Code of Ethics for Public Officers and Employees prohibit you, the attorney for a health facilities authority, from serving on the board of directors of a bank which is acting as trustee for bonds issued by the authority, and prohibit you from serving on an advisory council to a hospital for which bonds have been issued by the authority?

Your question is answered in the negative, as we find that the standards of conduct of the Code of Ethics for Public Officers and Employees do not govern your conduct as attorney for the Health Facilities Authority.

In your letter of inquiry you advise that in addition to serving as the attorney for the Martin County Health Facilities Authority, you serve on the board of directors of the bank which is acting as trustee for bonds issued by the Authority. You also advise that you serve on an advisory council to the local hospital for which the bonds were issued.

In previous opinions we have advised that the standards of conduct provided in Section 112.313, Florida Statutes, do not apply to a person whose relationship with a governmental entity is as an "independent contractor," rather than as a public officer or employee. See, for example, CEO 81-48 and CEO 81-60. In a telephone conversation with our staff, you advised that you are a member of the law firm which represents the Health Facilities Authority and that your work is billed on an hourly basis. No taxes or social security are withheld from the amount paid to the firm for your services. You are not entitled to any vacation, sick leave, or other benefits. The work you perform for the Authority is part of your private practice, and all materials, equipment, and books used as attorney for the Authority are provided by your law office. In accordance with CEO 81-48 and CEO 81-60, therefore, we find that your relationship with the Authority is that of an "independent contractor," rather than that of a public employee.

Accordingly, we find that the Code of Ethics does not prohibit you from serving as a director of the bank or on the advisory council to the hospital. As an attorney, you may wish to contact The Florida Bar concerning the application of the Code of Professional Conduct, however.