CEO 87-56 -- July 30, 1987

CONFLICT OF INTEREST

HOSPITAL DISTRICT EMPLOYEE SERVING AS PRESIDENT

OF NONPROFIT SUPPORT CORPORATION

To: Ms. Elizabeth C. Marshall, Attorney for Sarasota County Public Hospital Board, Sarasota

SUMMARY:

No prohibited conflict of interest would be created were an administrative employee of a hospital district board to serve without compensation as the president of a nonprofit corporation which functions exclusively for the support and promotion of the board's facilities. Here, there is a unity of interests between the board and the corporation, and the employee would not receive any additional compensation from the corporation for his services. CEO 85-59 is referenced.

QUESTION:

Would a prohibited conflict of interest be created were an administrative employee of a hospital district board to serve without compensation as the president of a nonprofit corporation which functions exclusively for the support and promotion of the board's facilities?

Your question is answered in the negative.

In your letter of inquiry you advise that the Sarasota County Public Hospital Board governs an independent special district created by Chapter 26468, Laws of Florida (1949), as amended. This legislation authorizes the Board to support unaffiliated, nonprofit corporations which operate in furtherance of the Board's provisions for the health care needs of the people of the district. Such a nonprofit corporation was created in 1986 to further the interests of the Hospital Board by providing for the delivery and support of health care and health care related services to the extent consistent with the needs of the Hospital Board.

Recently, you advise, the corporation became aware that a great deal of the expertise required for the planning and operation of the corporation lay with the administrators of the Hospital, who are familiar with the health care needs of the people in the district. Therefore, the corporation approached the Hospital Board with a proposal to contract with the Board to provide a district employee to serve as president of the nonprofit corporation for one year. The employee would remain an employee of the Board and in no way would become an employee of or be compensated by the corporation. The corporation would pay the Hospital Board for the half-time services of their employee, who would be entitled to reimbursement from the corporation for his expenses incurred in connection with transacting the corporation's business.

In our view, this situation is substantially the same as that presented in CEO 85-59, in which we advised that trustees or staff of a historic preservation board could serve as officers or directors, without compensation, of a nonprofit direct support organization created under statutory authority to operate for the benefit of the board. There, we found a unity of interests between the purposes of the preservation board and the direct support organization, and we noted that the board reasonably could have concluded that maximum control over the organization could be retained through direct involvement of board trustees and staff in the organization. Finally, we observed that as trustees and staff would not be compensated by the organization, they would not be placed in a position from which they could derive any private gain through the organization.

Similarly, in this case, the nonprofit corporation has been created to further the interests of the Hospital Board, and the employee provided by the Board to the corporation would not receive any additional compensation from the corporation for his services. Therefore, we find that the rationale of CEO 85-59 is equally applicable here.

Accordingly, we find that no prohibited conflict of interest would be created were an administrative employee of the Hospital District Board to serve without compensation as the president of the nonprofit support corporation.