Advisory Opinion No.2004-29

Re: Robert S. Crausman, MD MMS FACP FCCP

QUESTION PRESENTED:

The petitioner, Chief Administrative Officer of the Rhode Island Board of Medical Licensure and Discipline, a state employee, requests an advisory opinion as to whether the Code of Ethics requires any further safeguards, beyond that of recusal, when the Board of Medical Licensure and Discipline considers disciplinary matters involving the petitioner’s business associates and/or spouse.

RESPONSE:

It is the opinion of the Rhode Island Ethics Commission that the petitioner, Chief Administrative Officer of the Rhode Island Board of Medical Licensure and Discipline, a state employee, must not only recuse in matters involving the petitioner’s business associates and/or spouse, but must also comply at all times with pertinent provisions of the Code of Ethics, including, but not limited to, R.I. Gen. Laws §§ 36-14-5(b), (d) and (e).

The petitioner makes the following representations: He serves as the Chief Administrative Officer of the Rhode Island Board of Medical Licensure and Discipline (Board). In this capacity, the petitioner administers and supervises the activities of the Board. The Board is responsible for the licensure of physicians, the investigation of complaints concerning physician practice, and the discipline of physicians found to have demonstrated unprofessional conduct. The petitioner’s wife is a nurse. The petitioner is a physician. He does not currently practice clinical medicine in the State of Rhode Island, nor does he intend to while serving as the Chief Administrative Officer. The petitioner and his wife are majority shareholders in a small internal medicine practice that his wife and another physician operate in the City of Pawtucket. The petitioner intends to recuse from any Board review or action relating to any member of this practice. The petitioner is also a minority shareholder in a limited liability company (LLC) that rents out certain diagnostic equipment (i.e., an echo machine) and provides corresponding technical support services to approximately eight medical practices. The petitioner is not currently involved in the marketing of these services, nor is he involved in the daily operations of this LLC. However, it is the petitioner’s understanding that the LLC has a contractually-based relationship with each of its clients. The petitioner intends to recuse from any Board review or action relating to any member or client of this LLC.

Under the Code of Ethics, a public official may not accept other employment that would either impair his independence of judgment as to his official duties or employment or require him to disclose confidential information acquired by him in the course of his official duties. See R.I. Gen. Laws § 36-14-5(b). He is prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, a family member, business associate, or any business by which he is employed or represents. See R.I. Gen. Laws § 36-14-5(d). Finally, a public official may not represent himself, any individual or business entity before any state or municipal agency of which he is a member or by which he is employed. See R.I. Gen. Laws §§ 36-14-5(e) and (f).

Additionally, a public official may not participate in any matter in which he has a financial interest which is in substantial conflict with the proper discharge of his official duties in the public interest. See R.I. Gen. Laws § 36-14-5(a). A “substantial conflict” is present where a public official, a family member, a business associate, an employer, or any business which the public official represents will derive a direct monetary gain or suffer a direct monetary loss by reason of the official’s activity. See R.I. Gen. Laws § 36-14-7(a). A “business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.” R.I. Gen. Laws § 36-14-2(3).

In order to determine whether a business relationship rises to the level of a “business association” under Section 2(3), the Commission must examine the nature of the association and the scope of the parties’ business dealings. For example, in A.O. 97-103, the Commission examined the business relationship between a Westerly Town Councilor self-employed as a builder/real estate developer and a certain commercial loan officer. The Councilor’s association with the loan officer involved obtaining loans to operate his business. Additionally, the Councilor described his association with the loan officer as a “necessarily . . . close and dependent business relationship.” Not only had the Councilor previously obtained loans from this officer, he admittedly expected to obtain future loans from the same officer. Given the “close and dependent” nature of the Councilor’s business relationship with the loan officer, the Commission advised the Councilor to recuse from participating in any subject matter which would likely impact the loan officer. See also A.O. 84-40 (concluding that a Newport City Councilor could not participate in changes to zoning ordinances given that the proposed amendments would likely impact certain of his clients’ businesses).

Conversely, in A.O. 96-6, after considering the business relationship between a Westerly Town Councilor privately employed as an officer of the Washington Trust Company and the bank’s approximately 25,000 customers, the Commission found that the parties’ relationship was far too remote to preclude the Councilor from participating in matters in which a bank customer appeared before the Council. “Absent some direct and current involvement between the petitioner and a customer of the bank or with a decision of the bank that directly affects the particular customer, or the involvement of a customer whose business substantially impacts the economic fortunes of the bank,” the Commission concluded that the normal course of commercial dealings between the Councilor and the bank’s customers did not rise to the level of a business association as defined in R.I. Gen. Laws § 36-14-2(3). A.O. 96-6; see also A.O. 2001-07 (concluding that a Westerly Town Councilor could participate and vote on matters involving customers of his haircutting business since the parties did not have a contractually-based or specific business relationship); A.O. 2000-17 (concluding that a Jamestown Town Councilor could participate and vote on a matter involving a bid submitted by an engineering firm despite the fact that the Councilor’s private engineering firm had previously rented GPS equipment to the firm at issue); A.O. 99-21 (concluding that a Westerly Town Councilor could participate in the review and/or award of a contract for an administrator of the Town's landfill despite the fact that the Councilor’s store sold automobile parts in the ordinary course of business to certain companies that might respond to the Town's Request for Proposals).

Here, the petitioner and his wife are majority shareholders in a small internal medicine practice. The petitioner is also a minority shareholder in an LLC which provides diagnostic equipment and technical support services to medical practices. Under such circumstances, these two business entities as well as any member thereof, including the petitioner’s spouse, constitute business associates of the petitioner under the Code of Ethics. The Commission has not examined the nature and scope of the petitioner’s business relations with each of the LLC’s clients, nor made a case-by-case determination as to whether any of the LLC’s clients qualify as a business associate of the petitioner since he plans to recuse voluntarily on all matters relating to any client of the LLC. As the Chief Administrative Officer of a board that is responsible for the licensure, investigation and discipline of physicians, the petitioner is correct in assuming that he should take no official action on any matter relating to his spouse and/or business associates. Notice of recusal should be filed in accordance with R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-2(3)

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-5(e)

36-14-5(f)

36-14-6

36-14-7(a)

Related Advisory Opinions:

2001-7

2000-17

99-21

99-11

98-142

98-141

98-117

97-112

97-103

97-30

96-6

95-12

84-40

Keywords:

Business associate

Business interest

Financial interest

Recusal