CEO 89-12 -- April 13, 1989

CONFLICT OF INTEREST

SECRETARY OF DEPARTMENT OF HEALTH

AND REHABILITATIVE SERVICES SERVING ON

BOARD OF HEALTH MAINTENANCE ORGANIZATION

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

SUMMARY:

A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, if the Secretary of the Department of Health and Rehabilitative Services were to accept a position with compensation on the Board of Directors of a health maintenance organization. In that event, he would be employed by a business entity regulated by his agency, and such employment would impede the full and faithful discharge of his public duties. A prohibited conflict of interest would not be created if the Secretary accepted the position without compensation, although such acceptance is not advised. CEO's 85-1; 87-4; 87-5; 87-49; and 87-58 are referenced.

QUESTION:

Would a prohibited conflict of interest be created were you, the Secretary of the Florida Department of Health and Rehabilitative Services, to accept a position on the Board of Directors of a health maintenance organization?

Your question is answered below.

In your letter of inquiry you advise that you, the Secretary of the Department of Health and Rehabilitative Services, have been asked to serve on the Board of Directors of a health maintenance organization. The health maintenance organization, according to your letter, is a nonprofit organization which contracts with the Department of Administration to provide health coverage to State employees. You advise that the organization does not contract directly with the Department of Health and Rehabilitative Services but that HRS employees utilize the services of this organization. You further advise that Board members for the organization can elect to receive minimal compensation of approximately $300.00 per month for their services.

You state in your letter of inquiry that the Department of Insurance regulates health maintenance organizations (HMO's) but that the Department of Health and Rehabilitative Services (HRS) also is involved with HMO's pursuant to Sections 641.47-641.58, Florida Statutes. An HMO must obtain a health care provider certificate from HRS in order to do business in Florida. HRS also is required to examine the quality of the health care services provided by HMO's every three years. HMO's must submit written incident reports to HRS. In addition, if an HMO has a nursing home or another facility which requires a certificate of need and licensure, HRS would be the agency which would grant or deny the certificate of need and the license. You advise that the HMO in question currently does not have any facilities which would require a certificate of need or license and that it does not have any plans to develop such a facility in the immediate future.

You state that you wish to avoid any appearance of impropriety and that you desire to comply with the laws of Florida. You therefore ask if you can serve on the Board of Directors of this health maintenance organization without violating the Code of Ethics for Public Officers and Employees.

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 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.

We previously have advised that noncompensated service as an officer or director of a nonprofit corporation does not constitute an "employment or contractual relationship" under Section 112.313(7)(a), Florida Statutes. See CEO 87-49 and CEO 87-4. Therefore, we are of the opinion that Section 112.313(7)(a), Florida Statutes, could not prohibit you from serving on the Board of the HMO should you choose not to accept compensation. With HRS having some degree of regulatory power over health maintenance organizations pursuant to Chapter 641, Florida Statutes, however, we believe that accepting a position on the Board could impair at least the appearance of impartiality and therefore would not be advisable. See CEO 85-1.

We are of the opinion that Section 112.313(7)(a) would prohibit you from serving on the Board of Directors of the health maintenance organization should you choose to accept compensation, as accepting compensation from the HMO would constitute "an employment or contractual relationship" under Section 112.313(7)(a). See CEO 87-5. We are also of the opinion that although health maintenance organizations may be regulated primarily by the Department of Insurance, the authority given to the Department of Health and Rehabilitative Services under Chapter 641 would place health maintenance organizations under the regulation of your agency within the intent of Section 112.313(7)(a), Florida Statutes. See e.g. CEO 87-58. In addition, pursuant to the reasoning of CEO 85-1, we find that your service on the Board of Directors could impede the full and faithful discharge of your public duties. Therefore, your acceptance of a position on the Board of Directors for a health maintenance organization for compensation would constitute a violation of Section 112.313(7)(a), Florida Statutes.

Accordingly, we find that accepting a position on the Board of Directors for a health maintenance organization without compensation is not advisable but is not prohibited by the Code of Ethics for Public Officers and Employees. Acceptance of a position on the Board with compensation, however, would constitute a violation of Section 112.313(7)(a), Florida Statutes.