CEO 93-28 -- September 2, 1993

CONFLICT OF INTEREST; VOTING CONFLICT

STATE SENATOR'S COMPANY'S SUBSIDIARY PROVIDING

COLLECTION SERVICES TO INSURANCE RECEIVER

To: (Name withheld at the person's request.)

SUMMARY:

A prohibited conflict of interests does not exist under Sections 112.313(7)(a) and 112.313(3), Florida Statutes, where the subsidiary of a company of a State Senator provides collection services to court-appointed receivers of insolvent domestic insurance companies. The services are not being provided to the Legislature (the Senator's public agency), Section 112.313(7)(a)2, Florida Statutes, is applicable to negate any conflict due to "regulation," the provision of services arises out of the Senator's business expertise rather than from his public position, and the provision of services does not involve lobbying the Legislature.

No voting conflict requiring disclosure or other prohibited conflict would be created were the Senator to participate in legislation affecting the Department of Insurance or domestic insurance companies as long as the legislation does not inure to the special private gain of the Senator, his company, or its subsidiary.

Shareholders, officers, agents, or employees of the Senator's company or its subsidiary, other than the Senator himself, are not prohibited by Article II, Section 8(e), Florida Constitution, or Section 112.313(9)(a)3, Florida Statutes, from personally representing the Senator's company or its subsidiary before the Department of Insurance. CEO's 93-24, 91-8, 91-1, 89-18, 81-6, and 77-168 are referenced.

QUESTION 1:

Does a prohibited conflict of interest exist where you, a State Senator, are an officer, director, and shareholder of a company whose wholly-owned subsidiary provides collection services to court-appointed receivers of insolvent domestic insurance companies?

Your question is answered in the negative.

By your letter of inquiry and accompanying materials, we are advised that you are a member of the Florida Senate, serving the 16th District, first elected in 1991. We are advised further that you are a shareholder, director, and officer of a corporation which wholly owns a subsidiary which provides collection services to court-appointed receivers of insolvent domestic (Florida) insurance companies. A given receiver, who may or may not be an employee of the Florida Department of Insurance, you relate, receives direction from the court and the Department. In addition, you advise that the subsidiary's compensation for collection services is governed by a standard "Provider Contract," an example of which you enclosed with your letter of inquiry.

Sections 112.313(3) and 112.313(7)(a), Florida Statutes, appear to be the only provisions of the Code of Ethics for Public Officers and Employees which need to be addressed under this inquiry. Those statutes provide:

DOING BUSINESS WITH ONE'S AGENCY.--No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision of any agency thereof, if he is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes.]

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.]

Section 112.313(3) prohibits your purchasing services for your public agency from any business entity of which you, your spouse, or child is an officer, partner, director, or proprietor or in which you or your spouse or child, or any combination thereof, has a material interest. It further prohibits your acting in a private capacity to provide services to your agency.

The first clause of Section 112.313(7)(a) prohibits your holding a contractual relationship with a business entity or an agency which is subject to the regulation of, or which is doing business with, your public agency, and its second clause prohibits your holding a contractual relationship that will create a continuing or frequently recurring conflict between your private interests and the performance of your public duties or that would impede the full and faithful discharge of your public duties.

We find that a prohibited conflict of interest does not exist under Section 112.313(3) because the services provided by your company's subsidiary are being provided to various court-appointed receivers of insolvent domestic insurance companies and not to your agency (the Legislature). See, for example, CEO 89-18 (Question 1).

Under the first clause of Section 112.313(7)(a), we find no prohibited conflict. It is apparent from the scenario that neither your company (an entity with which you have a contractual relationship), its subsidiary, nor the receivers are doing business with the Legislature, and none of these entities or persons is "regulated" by the Legislature within the meaning of Section 112.313(7)(a) due to the language of Section 112.313(7)(a)2, Florida Statutes, which provides:

When the agency referred to is a legislative body and the regulatory power over the business entity resides in another agency, or when the regulatory power which the legislative body exercises over the business entity or agency is strictly through the enactment of laws or ordinances, then employment or a contractual relationship with such business entity by a public officer or employee of a legislative body shall not be prohibited by this subsection or be deemed a conflict.

See, for example, CEO 81-6, CEO 91-8, and CEO 93-24.

In examining questions regarding members of the Legislature under the second clause of Section 112.313(7)(a), we have expressed our concern that a legislator's private endeavors not involve lobbying the Legislature, not encompass activities related to lobbying, and not arise out of or directly relate to issues that might be expected to come before him in his official capacity as a legislator. Your scenario does not encompass lobbying the Legislature; your private provision of services to receivers arises from your business expertise and skills, not from your public position; and the subject matter of your private work does not appear to relate directly to issues that might come before you in your official capacity. See CEO 93-24 and CEO 91-1. Therefore, we find no prohibited conflict under the second clause of Section 112.313(7)(a).

QUESTION 2:

Would a prohibited conflict of interest or a voting conflict of interest be created were you to participate by authorship, vote, or debate in legislation affecting the Department or affecting domestic insurance companies?

The voting conflicts law portion of the Code of Ethics applicable to your inquiry provides:

No state public officer is prohibited from voting in his official capacity on any matter. However, any state public officer voting in his official capacity upon any measure which would inure to his special private gain; which he knows would inure to the special private gain of any principal by whom he is retained or to the parent organization or subsidiary of a corporate principal by which he is retained; or which he knows would inure to the special private gain of a relative or business associate of the public officer shall, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. [Section 112.3143(2), Florida Statutes.]

This provision would not prohibit your voting on any matter. However, it would require your filing of a memorandum regarding a vote which would inure to your special private gain and regarding a vote which you know would inure to the special private gain of your company or its subsidiary. Thus, unless legislation affecting the Department or domestic insurance companies also specially affects you personally, your company, or its subsidiary, such legislation would not be a matter requiring your filing of a memorandum. In addition, assuming that a matter or measure affects you, your company, or its subsidiary, the gain from it would not be "special" within the meaning of the voting conflicts law if the class affected by it were large. See CEO 89-18 (Question 2).

Section 112.313(6), Florida Statutes, is the only other provision of the Code of Ethics which is arguably applicable to your second inquiry. Section 112.313(6) provides:

MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31.

For purposes of this provision, the term "corruptly" is defined as follows:

'Corruptly' means done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his public duties. [Section 112.312(9), Florida Statutes.]

Findings under this section are difficult to make in the context of an advisory opinion because a determination of intent must be made utilizing all of the factual detail and nuances of an evidential situation. However, since it is the public duty of a legislator to participate fully regarding legislation and since legislation (particularly a general act) usually affects many people or concerns, we find it hard to conceive of a situation in which a legislator's authorship, vote, or debate regarding legislation would run afoul of this provision, unless the legislation primarily or significantly benefited the legislator or a person or entity with whom he had an economic or familial affiliation, or unless there were a complete absence of any public purpose for the legislation.

This question is answered accordingly.

QUESTION 3:

Does Article II, Section 8(e), Florida Constitution, prohibit shareholders, officers, agents, or employees of the subsidiary, or of your corporation, other than yourself, from personally representing the subsidiary or your corporation before the Department or its agents in connection with obtaining or performing the subsidiary's contracts with court-appointed receivers?

This question is answered in the negative.

In addition to the facts described above, you advise that you have never communicated, either through discussions or correspondence, with any employee of the Department of Insurance regarding the subsidiary's contract with the Department. When it has been necessary to discuss performance of the work with officials of the Department, you advise, your corporation has always been represented by its attorney or employees so that you may avoid any personal contact with staff of the Department.

Article II, Section 8(e) provides in relevant part:

. . . . No member of the legislature shall personally represent another person or entity for compensation during term of office before any state agency other than judicial tribunals. . . .

We applaud the measures that you state you have taken to avoid violating Article II, Section 8(e). Neither this Constitutional provision nor its statutory parallel [Section 112.313(9)(a)3, Florida Statutes] would prohibit persons other than yourself from engaging in the personal representation described in your question, as long as they are not themselves members of the Legislature. See CEO 77-168.