Advisory Opinion No. 2005-14 Re: David R. Gifford, MD MPH QUESTIONS PRESENTED: The petitioner, Acting Director of the Rhode Island Department of Health, a state appointed position, requests an advisory opinion regarding how to manage and avoid potential conflicts of interest given his spouse's profession as a Rhode Island licensed, practicing physician, and her interaction with the Department of Health as an employee of an entity that has current and likely future contracts with the Department of Health. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that, generally, the proposed recusal procedures set forth by the petitioner, Acting Director of the Rhode Island Department of Health, a state appointed position, are both reasonable and sufficient to avoid potential conflicts of interest given his spouse's profession as a Rhode Island licensed, practicing physician, and her interaction with the Department of Health as an employee of an entity that has current contracts with the Department of Health. The petitioner has been nominated by the Governor of Rhode Island to become the Director of the Rhode Island Department of Health (DOH). He is currently serving as Acting Director of DOH pending confirmation by the Rhode Island Senate. He seeks guidance from the Commission on four issues relating to interactions among the DOH, the petitioner's spouse and his spouse's employer. The questions raised by these issues, and the Commission's response to each, are set forth below. 1. Medical Licensure Board Jurisdiction Over Petitioner's Spouse. The petitioner states that pursuant to Rhode Island law, the Director of the DOH serves as the Chair of the Rhode Island Medical Licensure Board (Board). According to the petitioner, the Board is a 19 member, statutory body that meets regularly to make recommendations on granting physicians a license to practice medicine and to take disciplinary action against license holders. The petitioner further advises that the Board's Chief Administrator, who makes final decisions regarding licenses, is a subordinate of and reports to the Director of DOH. The petitioner's spouse, as a licensed physician, is subject to the Board's jurisdiction. To avoid any conflicts of interest, the petitioner represents that he will recuse himself from any Board discussion or voting related to his spouse's medical license. Furthermore, in order to avoid a situation where the petitioner's subordinate would make a decision regarding the petitioner's spouse's license, the petitioner proposes that final decision on issues surrounding his spouse's license be made not by the Board's Chief Administrator, but by the Managing Director of Health and Human Services[1] who is not subordinate to the petitioner. The petitioner asks whether these procedures are sufficient to avoid a conflict of interest under the Code of Ethics. The Code of Ethics provides that the a public official shall not have any interest, financial or otherwise, direct or indirect, which is in substantial conflict with the proper discharge of his duties in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest occurs if it is reasonably foreseeable that the official or any family member or business associate, or any business by which the official is employed or represents will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. R.I. Gen. Laws § 36-14-7(a); Regulation 7001. Also, a public official may not use his public office or confidential information received through his office for financial gain for himself or any member of his family. R.I. Gen. Laws § 36-14-5(d). These sections of the Code of Ethics act to prohibit the petitioner from taking action as a member of the Medical Licensure Board regarding his spouse's medical license, since it is reasonably foreseeable that such action would result in a financial impact to a family member. The Commission is of the opinion, however, that the recusal procedures proposed by the petitioner and set forth above are both reasonable and sufficient to avoid the conflicts of interest that may arise by reason of the Board's jurisdiction over his spouse's medical licensure. When recusing, the petitioner must complete a statement of conflict of interest and comply with the provisions of R.I. Gen. Laws § 36-14-6. 2. DOH Licensure of Health Care Facilities at Which Petitioner's Spouse Practices. The petitioner states that the DOH is responsible for licensing health care facilities in Rhode Island, including hospitals and clinics. Such licensure is overseen by a DOH Associate Director, who is a subordinate to the Director. The petitioner advises that his spouse currently sees patients at the Providence Community Health Center (PCHC), a DOH-licensed, nonprofit health center in Providence that seeks to provide medical services to low income and medically underserved populations. According to the petitioner, PCHC hires his spouse as a physician consultant and she receives an hourly fee for the time she spends with patients. The petitioner notes that it is likely that his spouse may work at other DOH-licensed health care facilities during the petitioner's tenure at DOH. To avoid any conflicts of interest presented by these facts, the petitioner represents that he will recuse himself from any decisions directly related to the licensing of PCHC and any other health care facility that contracts with his spouse. Aware that licensure decisions will be made by a DOH Associate Director who is subordinate in position to the petitioner, the petitioner states that when licensure issues relating to his spouse's business associates arise he will remove himself from the chain of command and delegate his authority to his own superior, the Managing Director of the Office of Health and Human Services. The petitioner asks whether these procedures are sufficient to avoid a conflict of interest under the Code of Ethics. The sections of the Code previously discussed, particularly §§ 36-14-5(a) and 36-14-5(d), prohibit a public official from using his public office or engaging in official activity that is likely to result in a financial benefit or detriment to himself, his spouse, his business associates or a business by which he is employed or which he represents. The Code defines a "business associate" as two persons or entities joined together to achieve a common financial objective. R.I. Gen. Laws § 36-14-2(3). Pursuant to this definition, the petitioner's spouse is considered to be a business associate of PCHC, and will likely be considered to be a business associate of any other health care facility she contracts with. The petitioner, however, is not a business associate of PCHC nor of any facility that contracts with his spouse. The Code does not prohibit a public official from taking action that impacts a spouse's business associate unless there is a likely, corresponding financial impact upon his spouse as a result. The relationship between the petitioner and PCHC is, accordingly, too remote to trigger the prohibitions of the Code unless it appears that a decision by the petitioner regarding PCHC will directly impact his spouse. Without representations as to particular issues involving PCHC or other facilities, the Commission is unable to offer specific advice as to whether recusal is required. Notwithstanding this lack of particular information, the Commission is of the opinion that if recusal is required the procedures set forth by the petitioner and discussed above are both reasonable and sufficient to avoid the conflicts of interest that may arise by reason of the DOH's jurisdiction over the health care facility licensure of his spouse's business associates. When recusing, the petitioner must complete a statement of conflict of interest and comply with the provisions of R.I. Gen. Laws § 36-14-6. 3. Preexisting Contracts Between DOH and Petitioner's Spouse's Employer. The petitioner represents that his spouse is a salaried employee for Quality Partners of Rhode Island (Quality Partners) as its Director of Outpatient Quality. This position, the petitioner informs, is part of Quality Partners leadership team and is responsible for managing and directing numerous projects. According to the petitioner, Quality Partners is a not-for-profit organization that is under contract with the federal government to be designated as Rhode Island's Quality Improvement Organization (QIO), tasked with assisting physician offices, home health agencies and managed care organizations to improve their quality of care. The petitioner states that in addition to funding from the United States government, Quality Partners receives funding from the State of Rhode Island as well as from not-for-profit foundations and individual providers to assist with quality improvement activities including program implementation, training and evaluation. In particular, the petitioner identifies the following four programs for which Quality Partners currently receives funding from the DOH: a. Diabetes Collaborative & Teamwork contract. A $117,000 contract between Quality Partners and DOH to provide consultants to DOH to run a diabetes teamwork program. Money covers the cost of the program, and no management fee is charged. The petitioner's spouse is the Quality Partners employee responsible for managing the scope of work under the contract. b. Ocean State Adult Immunization Coalition (OSAIC). A $147,000 contract between Quality Partners and DOH in which Quality Partners serves as the financial manager for OSAIC. Money used supports print material, mailings and media promotion related to adult vaccines. No management fee is charged. The petitioner's spouse is the Quality Partners employee responsible for managing the scope of work under the contract. c. Public Reporting Program for Licensed Health Care Facilities. Qualidign, a Connecticut not-for-profit organization, was awarded a contract from the DOH through competitive bidding to implement a legislatively mandated public reporting program for all licensed health care facilities (e.g. hospitals, nursing homes and home health agencies). Qualidign has subcontracted some of this work to Quality Partners. The petitioner's spouse, in her capacity as Director of Outpatient Quality at Quality Partners, has devoted time to this contract. d. Health Information Technology contract. The Rhode Island DOH responded to a Federal Request for Proposal issued by the Agency for Health Research and Quality. In its proposal, DOH partnered with Quality Partners, Brown University and Quality Institute. In response to its proposal, DOH was awarded a five-year, five million ($5,000,000) dollar grant. The petitioner's spouse is the Quality Partners employee responsible for managing the scope of work on this contract. The petitioner represents that the Department of Administration's Chief of Purchasing is responsible for any changes to these contracts, including scope of work, reimbursement, renewal or termination. DOH's Associate Director for Management Services signs the approved contract on behalf of the Director. A member of the DOH program requiring the service, such as the Office Chief or Program Manager, monitors the contract. To avoid any conflicts of interest, the petitioner represents that he will recuse himself from reviewing or taking part in any decisions directly related to the aforementioned contracts with Quality Partners, including changes in remuneration, scope of work, renewal and termination. Instead, the petitioner states that he will defer any such contract issues to the Managing Director of the Office of Health and Human Services. The petitioner asks whether these procedures are sufficient to avoid a conflict of interest under the Code of Ethics. The sections of the Code previously discussed, particularly sections 36-14-5(a) and 36-14-5(d), prohibit a public official from using his public office or engaging in official activity that is likely to result in a financial benefit or detriment to himself, his family members, his business associates or businesses by which he is employed or which he represents. While the Code clearly prohibits the petitioner from participating in matters directly affecting his spouse, or affecting his employer, the Code does not generally preclude a public official from participating in matters affecting his spouse’s employer unless it is reasonably foreseeable that the matter involving the spouse's employer would also result in an impact to the family member. See A.O. 2000-39 (Burrillville Town Councilor may participate in Council's consideration of conflict between owner of Pascoag Lake and surrounding landowners, notwithstanding fact that Councilor's spouse is employed by Episcopal Diocese of Rhode Island as Superintendent of its 180 acre facility abutting Pascoag Lake); A.O. 99-28 (concluding that Westerly Zoning Board of Review member could participate in review of Bess Eaton Donut and Flour Company’s application for special use permit to construct drive-through in two new locations since his relationship with applicant is too remote to implicate Code’s prohibitions and there is no evidence that construction of drive-throughs would impact his spouse’s employment in applicant’s bakery department); and A.O. 98-45 (advising Administrator of Rhode Island Division of Public Utilities and Carriers that he could participate in matters that relate to telecommunications industry or Bell Atlantic despite fact this his spouse was employed by Bell Atlantic since there was no evidence that matter would impact his wife’s employment interest). Notwithstanding these prior advisory opinions where the Commission found no conflict of interest, the Commission has also identified circumstances in which a decision involving a spouse's employer was likely to financially impact the spouse. In A.O. 2000-16, the question presented involved how the Executive Director of Rhode Island Housing and Mortgage Finance Corporation (R.I. Housing) could avoid potential conflicts of interest given R.I. Housing's business dealings with and funding of a not-for-profit community development organization that employed his fiancée as its Executive Director. There, the Commission found that R.I. Housing decisions impacting the fiancée's organization would necessarily impact the fiancée because her employer was dependent upon funding from R.I. Housing to accomplish its mission. See also A.O. 97-35 (concluding, inter alia, that Tiverton School Committee member should not participate or vote on any matter relating to florist services, given her spouse owns a floral shop and has had a business relationship with the School Department). In the instant matter, the petitioner's spouse holds an executive position at Quality Partners and is a member of its leadership team. Furthermore, she is the Quality Partners employee that is responsible for managing each of the DOH contracts referenced above. On the other hand, in at least two of the contracts, the petitioner claims that Quality Partners receives no management fee and that all funds from DOH are used cover the costs of the programs. While Quality Partners receives substantial funds from the State of Rhode Island through the DOH, the petitioner notes that it has other sources of funding including the federal government, foundations and individual health care providers. Furthermore, the petitioner informs that his spouse is a salaried employee whose compensation does not change based on the magnitude or type of contract she manages. Under all of these circumstances, and without knowing each specific decision being considered, the Commission cannot say whether it is reasonably foreseeable that the petitioner's spouse will be financially impacted by DOH decisions relating to these programs and contracts involving Quality Partners. Given this uncertainty, the Commission finds it to be prudent and advisable that the petitioner follow through with his proposed recusals from participating in any decisions directly related to the DOH contracts with Quality Partners, and the deferral of any such matters up the chain of command to the Managing Director of the Office of Health and Human Services. If the petitioner follows these procedures, the Commission is of the opinion that he is sufficiently insulated from the DOH decisions regarding the aforementioned Quality Partners contracts that may financially impact the petitioner's spouse. The petitioner is cautioned, however, that this opinion is based on the facts represented concerning these contracts. Should these circumstances change in a way that makes the financial impact to his spouse more likely or profound, the petitioner should seek further guidance from the Commission. When recusing, the petitioner must complete a statement of conflict of interest and comply with the provisions of R.I. Gen. Laws § 36-14-6. 4. Future Contracts Between the DOH and Petitioner's Spouse's Employer. The petitioner states that, given the mission and experience of Quality Partners and his spouse, it is extremely likely that Quality Partners or some other future employer of his spouse will seek new contracts, respond to a request for proposals or be considered for contracts with the DOH. In order to avoid any potential conflicts of interest, the petitioner states that he will recuse himself from any decisions related to the awarding of contracts to Quality Partners or any other organization that employs or affiliates with his spouse. He proposes to include at least one individual from another department, and one individual from outside state government, in a committee to review and score proposals that involve Quality Partners or any other employer of his spouse. This committee will make recommendations to the Secretary of Health and Human Services and the Department of Administration. The petitioner asks whether these proposed procedures are sufficient to avoid a conflict of interest under the Code of Ethics. Under the Code of Ethics, a public official may not use confidential information received through his holding public office to obtain financial gain for himself, a member of his family, a business associate or a business by which he is employed or which he represents. R.I. Gen. Laws § 36-14-5(d). As has been previously discussed, sections 36-14-5(a) and 36-14-5(d), also prohibit a public official from using his public office or engaging in official activity that is likely to result in a financial benefit or detriment to himself, his family members, his business associates or businesses by which he is employed or which he represents. While the Commission appreciates the petitioner's concern for future compliance with the Code and his willingness to regulate his conduct to avoid prospective and hypothetical conflicts of interest, in the absence of an actual controversy, and without sufficient, specific facts upon which to base an opinion, the Commission declines to give its imprimatur to the proposed recusal procedures. As particular issues arise, the petitioner is advised to seek further guidance from the Commission. The Commission can then base its opinion upon such specific factors as the contract proposed, his spouse's involvement and the extent of any likely financial impact resulting therefrom and the specific procedures proposed to insulate the petitioner from any conflicts of interest. Code Citations: 36-14-2(3) 36-14-5(a) 36-14-5(d) 36-14-6 36-14-7(a) Regulation 7001 Related Advisory Opinions: GCA No. 1 2002-43 2000-39 2000-16 2000-5 99-28 98-115 98-45 97-35 96-118 96-109 96-7 95-71 93-66 91-33 Keywords: Family: Private Employment Nepotism Contracts [1] Pursuant to Executive Order 04-03 entered on March 9, 2004, Governor Donald L. Carcieri created an Office of Health and Human Services within the Executive Department to be supervised by a Managing Director selected by, and serving at the pleasure of, the Governor. Pursuant to the Order, the purpose of the Office of Health and Human Services is to centralize planning, budgeting, policy-making and communications among the Department of Children, Youth and Families, the Department of Elderly Affairs, the Department of Health, the Department of Human Services, and the Department of Mental Health, Retardation and Hospitals. The petitioner represents that he considers his position as Director of DOH to be subordinate to the position of Managing Director of the Office of Health and Human Services.