CEO 96-27 -- December 3, 1996

CONFLICT OF INTEREST

COUNTY PUBLIC HOSPITAL BOARD CHAIRMAN EMPLOYED BY COMPANY

OWNING SPECIALTY HOSPITAL PROVIDING CARE TO PATIENTS,

INCLUDING THOSE DISCHARGED FROM PUBLIC HOSPITAL

To: Elizabeth C. Marshall, Attorney (Sarasota)

SUMMARY:

No prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, where the chairman of the county public hospital board is employed by a health services company operating a chain of specialty hospitals. The chairman=s employer is not doing business with or regulated by the hospital board, although a side-by-side corporation which supports the hospital board is doing business with the company as a result of its purchase of one of the company=s nursing homes. Moreover, the chairman=s employer and her agency are not considered to be Acompetitors@ either in the types of services each provides or for the patients each treats. The chairman could not, however, market her employer=s services to the president or staff of the public hospital overseen by her board, because the board has substantial authority over its president and its bylaws restrict board members from having direct contact with hospital employees.

QUESTION:

Would a prohibited conflict of interest be created were the chairman of a county hospital board to be employed by a specialty hospital to market its services to nursing homes and other health care entities, where some of the patients it treats are discharged to it from the public hospital on whose board she serves?

Your question is answered in the negative subject to the condition noted below.

Through your letter of inquiry and other information associated with your opinion request, we are advised that you seek this opinion on behalf of Phyllis J. Cobb, an elected member of the Sarasota County Public Hospital Board who is presently serving as its Chairman. Until recently, the Chairman=s private employer was a corporation which operated two nursing homes in Sarasota County. See CEO 92-38. However, that corporation has been purchased by a health services company which operates a chain of 36 specialty hospitals throughout the United States. Additionally, we understand that a private, nonprofit corporation which supports Sarasota Memorial Hospital has finalized the purchase of a skilled nursing facility from the health services company.

In her position with the health services company, the Chairman=s duties include marketing its services to nursing homes and other health care entities. You advise that she also works with discharge planners at acute care hospitals to help arrange for the discharge of patients who are in need of continued specialized services. We are advised that Sarasota Memorial Hospital employees would not make referrals to the Chairman=s employer. Instead, you relate that in most instances, the referral would be made by the patient=s attending physician when the level of care a patient needs is determined. In instances where the referral is not made by the patient=s doctor, the Hospital=s social services department gives the patient a list of facilities providing the required level of service, and the patient or family members make the decision. Thus, the duties of Hospital employees are limited to arranging the details of the discharge to the facility once it has been selected.

You have also represented that the patient population her employer seeks is not the same patient population sought by facilities owned and operated by the Hospital Board, and the services her employer provides are different than those provided by Sarasota Memorial Hospital, although it does compete with other providers of specialized patient care operating in the area. Generally, you relate, her employer seeks patients whose hospitalization requires a lengthy stay with respiratory care provided by a team of specialists, and its patients often come from acute care hospitals in an effort to reduce costs. Conversely, Sarasota Memorial Hospital, the acute care hospital operated by the Sarasota County Hospital Board, prefers to discharge those types of patients to facilities such as her employer=s, since the Hospital is often not reimbursed for caring for those patients beyond a short period of time. Additionally, although her employer contracts with skilled nursing facilities, retirement centers, and assisted living facilities to provide its specialized services to patients at those facilities, the Hospital Board does not own or operate facilities such as these and its services are provided to inpatients at Sarasota Memorial Hospital. Based upon these circumstances, you question whether the Chairman=s employment with the company creates a conflict of interest prohibited by the Code of Ethics for Public Officers and Employees.

The applicable statute, Section 112.313(7)(a), Florida Statutes, states:

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 or she 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 or her private interests and the performance of his or her public duties, or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes (1995).]

The first part of Section 112.313(7)(a) prohibits a public officer from having an employment relationship with a business entity which is doing business with or regulated by her agency. The second part of the statute prohibits a public officer from having an employment relationship which creates a continuing or frequently recurring conflict between her private interests and the performance of her public duties, or which impedes the full and faithful discharge of her public duties.

Although you have indicated that the nonprofit support corporation has purchased a facility from the health services company and would therefore be Adoing business@ with that company for purposes of Section 112.313(7)(a), the nonprofit support corporation is a separate and distinct corporate entity apart from the Sarasota County Public Hospital Board. Thus, under the rationale of our previous opinion to the Chairman, CEO 92-38, no conflict of interest is created under the first part of Section 112.313(7)(a) because her employer is not doing business with the Hospital Board.

Examining the second part of this provision, in CEO 76-181 we rendered an advisory opinion to an administrator of a county nursing home who also had an ownership interest in a private nursing home located within the same county. Although that opinion examined other issues, of consequence here is our finding in that opinion that the two nursing homes did not compete for patients and that his situation did not violate Section 112.313(7)(a). That conclusion is also relevant to the Chairman=s situation, as neither her agency, the Sarasota County Public Hospital Board, nor the hospital it operates, Sarasota Memorial Hospital, are competitors with her employer for the same type of patients or services.

However, we note that the Chairman=s employment responsibilities potentially involve interaction with staff from acute care hospitals. Notwithstanding, the Chairman has indicated that she would not solicit employees of Sarasota Memorial Hospital to make referrals to her employer=s facilities and that she is not in a position to reward or penalize them for their referral patterns. As long as the Chairman refrains from coordinating discharges with the staff of Sarasota Memorial Hospital, we would not view her employment as creating a conflict of interest under the second part of Section 112.313(7)(a). We adopt this view based upon the Hospital Board=s own bylaws and upon our opinion precedent. In CEO 80-68, we opined that a school board member could not solicit the sale of insurance to school personnel based on the school board=s authority over its personnel. Here, the Hospital Board employs only the president of Sarasota Memorial Hospital and delegates to him all authority and responsibility for personnel matters. Therefore, the Board has limited authority over other employees of the Hospital, and no impediment to the Chairman=s public duties is created merely by her employment with the health services company. Further, Article V, Section 4, of the Board=s bylaws state: AAny and all business by Board members and the Hospital will be carried on directly with the President or his designee.@ Thus, because the Hospital Board has substantial authority over the Hospital President and because the Hospital Board=s bylaws restrict Board members from having direct contact with Hospital employees, we conclude that only if the Chairman marketed her employer=s services to the president or staff of Sarasota Memorial Hospital would her employment violate the second part of Section 112.313(7)(a).

Accordingly, subject to this condition, we find that no prohibited conflict of interest would be created where the Hospital Board Chairman is employed by a health services company to market its services to other health care entities.

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 3, 1996 and RENDERED this 5th day of December, 1996.

__________________________________

Mary Alice Phelan

Chair