CEO 90-48 -- June 14, 1990

CONFLICT OF INTEREST

COUNTY HOSPITAL FINANCIAL OFFICER SERVING

ON ADVISORY BOARD OF INVESTMENT FIRM

CONTRACTING WITH HOSPITAL

To: Bruce J. Scott, Director, Lee Memorial Hospital (Fort Myers)

SUMMARY:

No prohibited conflict of interest would be created were the chief financial officer of a public hospital to serve on the advisory board of a private investment counseling firm which has contracted with the hospital, where his expenses would be paid by the hospital and the stipend and expense reimbursements advisory board members receive from the firm would be donated to the hospital. As the financial officer would not receive any compensation or other consideration from the investment firm for serving on its advisory board, he would not have an employment or contractual relationship with the firm and his service on the advisory board would not be governed or prohibited by Section 112.313(7)(a), Florida Statutes.

QUESTION:

Would a prohibited conflict of interest be created were the Chief Financial Officer of a public hospital to serve on the advisory board of a private investment counseling firm which has contracted with the hospital, where his expenses would be paid by the hospital and the stipend and expense reimbursements advisory board members receive from the firm would be donated to the hospital?

Your question is answered in the negative.

In your letter of inquiry you advise that Dennis A. Pettigrew serves as Vice President/Chief Financial Officer of Lee Memorial Hospital, a public hospital created by special act of the Legislature. You also advise that recently he has been asked to serve on the five-member advisory board of a private investment counseling firm that has contracted with the Hospital to provide investment services.

The advisory board has no authority to operate or direct the operations of the firm. The board, which is composed of persons from a several states with significant hospital experience, meets periodically to review and discuss investment strategies for healthcare institutions, to critique investment plans developed by the firm's staff, to advise the firm concerning its market approaches to hospital clients, and to comment on the needs and desires of hospitals regarding financial investment policy, generally. Advisory board members receive a stipend for attending board meetings and are reimbursed for their expenses. However, the Financial Officer proposes that the stipend and expense reimbursements be donated directly to the Hospital and that he be considered as a Hospital employee while serving on the advisory board, with the Hospital paying for his time and expenses.

The President of the Hospital has advised that the Chief Financial Officer has no authority to renew, alter, or cancel the Hospital's contract with the firm. The Financial Officer would like to serve on the advisory board in order to expand his knowledge in the investment arena, to increase his contacts within the healthcare industry, and to share the Hospital's experiences with others around the country.

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 (1989).]

This provision prohibits a public employee from having any employment or contractual relationship with a business entity that is doing business with his agency.

In previous opinions we have found that serving as a compensated director of an entity constitutes an employment or contractual relationship with that entity, but that service in such a capacity without compensation does not create an employment or contractual relationship governed by Section 112.313(7)(a). See CEO 80-71 (State employee serving as compensated director of mutual fund company), CEO 89-48 (school board member serving as compensated member of bank's advisory board), CEO 83-70 (city commissioner serving as vice president of nonprofit corporation without compensation), and CEO 89-12 (State agency head serving as director of health maintenance organization without compensation).

Here, the Hospital's Financial Officer would not receive any compensation or other consideration from the investment firm for serving on its advisory board. Under these circumstances his service on the advisory board would not be governed or prohibited by Section 112.313(7)(a). As it appears that his service on the advisory board would be considered to be part of his employment with the Hospital, with the Hospital paying for his expenses, it is for the Hospital to determine whether it has the authority to allow its employee to participate on the advisory board in his capacity as Chief Financial Officer and whether it is in the best interests of the Hospital to do so.

Accordingly, we find that no prohibited conflict of interest would be created were the subject Chief Financial Officer to serve as a member of the advisory board to an investment firm which has contracted to provide services to the Hospital.