Advisory Opinion No. 2012-25 Advisory Opinion No. 2012-25 Re: Peter B. Baute, MD QUESTION PRESENTED The Petitioner, a New Shoreham Town Council member, a municipal elected position, requests an advisory opinion regarding how to manage and avoid potential conflicts of interest involving the Town Council’s consideration of matters involving Block Island Health Services, which operates a non-profit medical center that receives annual subsidies from the Town of New Shoreham, given that he is currently the interim administrator of Block Island Health Services. RESPONSE It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a New Shoreham Town Council member, a municipal elected position, is required to recuse from the Town Council’s consideration of matters involving Block Island Health Services, which operates a non-profit medical center that receives annual subsidies from the Town of New Shoreham, given that he is currently the interim administrator of Block Island Health Services. The Petitioner is a member of the New Shoreham Town Council (“Town Council”). He informs that his term expires in November 2012 and that he is not seeking re-election. He states that Block Island Health Services (“BIHS”) is a private, non-profit entity which operates the Block Island Medical Center (“Medical Center”). He represents that the Medical Center provides daily care and emergency services to the Town’s permanent residents and visitors. He informs that the Town provides BIHS with an $87,000 annual subsidy for the operation of the Medical Center and also provides the Medical Center’s office building and two residences for staff, rent free. Additionally, he states that his wife is a member of the Board of Directors of BIHS, which is a voluntary, unpaid position. In his private capacity, the Petitioner, now retired to New Shoreham, is a surgeon with experience in practice management after serving as the president of a surgical group in Warwick, Rhode Island. Given his qualifications and experience, he represents that the BIHS Board of Directors asked him to serve as interim administrator of the Medical Center while BIHS searches for a permanent replacement for the executive director who left the position in July, 2012. He states that he accepted the position in a volunteer capacity, requested not to receive a salary and planned to be out of the position by October 1, 2012. He informs that his responsibilities do not involve finances, but rather, focus on managing the day-to-day activities related to personnel and operations. He represents that he will not be a candidate for the permanent position of executive director of the Medical Center. To avoid any potential conflicts of interest, the Petitioner proposes to recuse from any Town Council issues related to BIHS and the Medical Center for the duration of his tenure on the Town Council. The Petitioner asks if his proposed recusal procedure is sufficient to insulate him from conflicts of interest. The Code of Ethics prohibits a public official from using his public office or confidential information received through his public office to obtain financial gain for himself, his family, his business associate, or any person by which he is employed or whom he represents. R.I. Gen. Laws § 36-14-5(d). Additionally, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. Section 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that he, any person within his family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). The Commission has repeatedly concluded that public officials are “business associates” of the entities for which they serve either as members of the Board of Directors or in other leadership positions that permit them to affect the financial objectives of the organization. See, e.g., A.O. 2012-9; A.O. 2011-27; A.O. 2010-25; A.O. 2009-29; A.O. 2009-10; A.O. 2008-35; A.O. 2007-58; A.O. 2007-45. If an official has such a leadership position, the Commission has required the official to recuse if the interests of the organization would be affected by any action to be taken by his public agency. However, the Code does not prohibit a public official from taking action that impacts a spouse’s business associate unless, as a result, there is a likely corresponding financial impact upon the official’s spouse. A.O. 2005-14. Here, although the Petitioner is serving in a volunteer capacity, the nature of his position as interim administrator, his management of the daily activities and overall control of personnel and operations gives him the ability to affect the financial objectives of the Medical Center. See A.O. 2003-4 (opining that the petitioner, as the executive director of the Misquamicut Business Association (“MBA”), was in a position to affect the interests of the MBA and, thus, was a business associate of the MBA). Therefore, the Petitioner is a business associate of BIHS and the Medical Center. Accordingly, it is the opinion of the Ethics Commission that the Petitioner is required to recuse from the Town Council’s consideration of matters involving BIHS and the Medical Center, given that he is currently the interim administrator of BIHS.[1] Additionally, in response to the Petitioner’s advisory opinion request letter, his specific proposal to recuse from any Town Council issues related to BIHS and the Medical Center for the duration of his tenure on the Town Council is sufficient to insulate him from conflicts of interest. Notice of recusal shall be filed in accordance with § 36-14-6. Code Citations: § 36-14-2(3) § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) Related Advisory Opinions: A.O. 2012-9 A.O. 2011-27 A.O. 2010-25 A.O. 2009-29 A.O. 2009-10 A.O. 2008-35 A.O. 2007-58 A.O. 2007-45 A.O. 2005-14 A.O. 2003-4 Keywords: Business Associate Recusal [1] The Petitioner’s wife is also a business associate of BIHS because she serves as a member of its Board of Directors. However, in this matter it is the Petitioner’s independent business association with BIHS that necessitates his recusal from any Town Council matters involving BIHS and the Medical Center. Given that his wife is a volunteer, unpaid member of the Board of Directors of BIHS, it is unlikely that any official action by the Town Council regarding BIHS would have a financial impact upon the Petitioner’s spouse, and thus, his spouse’s business association would not trigger the recusal provisions of the Code of Ethics.