Advisory Opinion No. 2019-66 Rhode Island Ethics Commission Advisory Opinion No. 2019-66 Approved: November 19, 2019 Re: Jeffrey Barone QUESTION PRESENTED: The Petitioner, the Executive Director of the Cranston Department of Senior Services, a municipal employee position, requests an advisory opinion regarding whether the Code of Ethics prohibits him from working in his private capacity as an independent broker for Medicare and supplemental insurance plans and from answering his subordinates’ questions regarding Medicare and various supplemental insurance plans about which he has knowledge through his licensing as a Medicare producer and certification as a broker for several supplemental insurance providers. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, the Executive Director of the Cranston Department of Senior Services, a municipal employee position, is prohibited by the Code of Ethics from working in his private capacity as an independent broker for Medicare and supplemental insurance plans and from answering his subordinates’ questions regarding Medicare and various supplemental insurance plans while a business associate relationship exists between the Petitioner and the insurance providers. The Petitioner represents that since July 2017 he has been employed by the City of Cranston as the Executive Director of the Cranston Department of Senior Services (“Department”), a municipal department housed in the Cranston Senior Enrichment Center (“Senior Center”). The Petitioner represents that the Department is comprised of six divisions: Adult Day Services; Transvan; Nutrition; Social Services; Retired Senior Volunteer Program; and Programs. He further represents that all the services provided by the Department, with the exception of the Transvan services, are available to all Rhode Island senior citizens regardless of their residency. The Petitioner states that his duties include oversight of the operation of all six divisions, the Department’s budget, 50 full and part-time employees, and approximately 200 volunteers. The Petitioner explains that, during the open enrollment period, the Social Services Division staff members advise senior citizens regarding various Medicare and supplemental insurance plans, assist them with making an educated decision regarding the healthcare plans that would best fit their needs, and submit their applications to the appropriate healthcare provider. The Petitioner represents that the staff does so without compensation from the healthcare providers. The Petitioner states that in August 2019, he became a licensed Medicare producer and was thereafter certified with Blue Cross Blue Shield (“BCBS”), United Healthcare, and Aetna to provide supplemental insurance plans to people ages 65 and older. He adds that he recently began providing Medicare and supplemental insurance plans as an independent broker to people ages 65 and older, on his own time and outside of his public employment with the Department. The Petitioner explains that, as an independent broker, he receives a flat rate commission and is issued a 1099 form from the carrier for each plan for which a senior citizen enrolls. The Petitioner states that Medicare is very strict regarding how brokers approach senior citizens in need of Medicare, adding that the Department and the City of Cranston have a strict internal policy against allowing any independent broker to solicit business at the Center. He explains that the only brokers allowed at the Center are the ones who are employed by BCBS and United Healthcare, who are there only to provide training to the Department’s social workers, who in turn assist the senior citizens with their choice of insurance. The Petitioner states that, although he is not directly involved with the open enrollment process, because of his Medicare and supplemental insurance knowledge, Social Services staff members might occasionally ask him questions regarding plan coverage, for example whether a certain medication is covered under a particular plan. Given this set of facts, the Petitioner seeks guidance from the Ethics Commission regarding whether the Code of Ethics prohibits him from working in his private capacity as an independent broker for Medicare and various supplemental insurance plans and from answering questions from his subordinates regarding the coverage of the various Medicare and supplemental insurance plans. No person subject to the Code of Ethics shall have any interest, financial or otherwise, direct or indirect, or engage in any business, employment, transaction or professional activity which is in substantial conflict with the proper discharge of his duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest exists if a public 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). Additionally, 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 member, his business associate, or any business by which he is employed or which he represents. Section 36-14-5(d). Finally, the Code of Ethics provides that a public official shall not accept other employment that would impair his independence of judgment as to his official duties or require or induce him to disclose confidential information acquired by him in the course of his official duties. Section 36-14-5(b). A business associate is defined as an individual or a business entity joined together with another individual or business entity to achieve a common financial objective. Section 36-14-2(3) & (7). In Advisory Opinion 2017-17, the Ethics Commission opined that a Westerly Town Council member who was privately employed as a financial advisor by Prudential Financial and was authorized to sell, among others, Transamerica Corporation (“Transamerica”) investment products, was a business associate of Transamerica. There, the petitioner received a commission from the company based on that company’s investment products he purchased for his clients, thereby creating an independent financial nexus between himself and any company offering a particular investment product. The Ethics Commission explained that, although the petitioner had never sold Transamerica products, his employer had an ongoing agreement with Transamerica which allowed the petitioner to sell Transamerica products and receive a commission. Here, similar to the facts presented in Advisory Opinion 2017-17, the Petitioner is a licensed Medicare producer who is also certified to sell supplemental insurance coverage through BCBS, United Healthcare, and Aetna, for which he receives flat rate compensation and is issued a 1099 form from those providers based on the number of products he sells to senior citizens. After considering all of the representations herein, and consistent with the Code of Ethics and prior advisory opinions, it is the opinion of the Ethics Commission that a current business associate relationship exists between the Petitioner and the insurance providers whose products he is certified to sell, specifically BCBS, United Healthcare, and Aetna. The Commission has consistently opined that public officials and employees are not inherently prohibited from holding employment that is secondary to their primary public employment or positions subject, however, to certain restrictions and provided that their private employment would neither impair their independence of judgment nor create an interest in substantial conflict with their public duties. See, e.g., A.O. 2013-35 (opining that the Chief of the Rhode Island Bureau of Audits (“BOA”) was not prohibited from engaging in self-employment on her own time as an income tax preparer, notwithstanding that the BOA’s Deputy Chief was supervising an audit of the Division of Taxation, given that the petitioner’s supervision was not required and she removed herself from any involvement). In Advisory Opinion 2016-33, the Ethics Commission opined that a Probation and Parole Supervisor for the Rhode Island Department of Corrections (“DOC”) was prohibited by the Code of Ethics from continuing his part-time, private employment with Rhode Island Batterers Intervention Program (“RIBIP”) following his promotion to a supervisory position because his subordinate officers referred probationers to RIBIP and other batterers’ intervention counseling programs. The Ethics Commission reasoned that the petitioner was ultimately responsible for his subordinate officers’ caseload work, including referrals to the petitioner’s private employer. Furthermore, the Ethics Commission opined that the DOC chain of command positioned the petitioner to be influential and closely associated with the work conducted by his subordinates on their caseloads, and that the caseloads of his subordinate officers were essentially his caseloads given his supervisory authority over them. See also A.O. 2018-32 (opining that a probation and parole officer at the Rhode Island Department of Corrections was prohibited by the Code of Ethics from working in her private capacity as a facilitator at Rhode Island Batterers Intervention Program, given that her caseload specifically included domestic violence offenders requiring referrals to batterer intervention programs). Similar to the petitioner in Advisory Opinion 2016-33, the instant Petitioner is responsible for the oversight of the Social Services Division staff members who are tasked with helping senior citizens to determine what insurance coverage best meets their needs, and with then submitting an insurance application to insurance providers who are the Petitioner’s business associates. Although the Petitioner represents that he is not directly involved in the application process, the Ethics Commission nonetheless emphasizes that the Petitioner remains ultimately responsible for his subordinates’ work, and that the Department’s chain of command positions him to be influential and closely associated with the work conducted by his subordinates relative to the open enrollment process. Furthermore, the Petitioner s work as an independent broker is not completely separate and distinct from his responsibilities as Executive Director of Senior Services because his subordinates could ask him questions regarding the coverage of the various Medicare and supplemental insurance plans, and then, under the supervision of the Petitioner, prepare and submit the applications to insurance providers who are the Petitioner’s business associates. Also, the Petitioner s business association with the insurance providers raises concerns under section 36-14-5(b) about the Petitioner s ability to exercise independence of judgment in his official capacity as the Executive Director of Social Services. Accordingly, after considering all of the representations made herein, the Code of Ethics, including sections 36-14-5(a), (b) and (d), and past advisory opinions, it is the opinion of the Ethics Commission that the Petitioner is prohibited by the Code of Ethics from working in his private capacity as an independent broker for Medicare and supplemental insurance providers while he is employed as the Executive Director of the Department and oversees the Social Services Division staff who assist senior citizens during the annual open enrollment period. Additionally, the Petitioner is prohibited from advising his subordinates regarding the various Medicare and supplemental insurance plans while a business associate relationship exists between the Petitioner and the insurance providers. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(b) § 36-14-5(d) § 36-14-7(a) Related Advisory Opinions: A.O. 2018-32 A.O. 2017-17 A.O. 2016-33 A.O. 2013-35 Keywords: Business Associate Private Employment