Advisory Opinion No. 95-115

Re: Ernest C. Shaghalian

A. QUESTION PRESENTED

Whether Ernest C. Shaghalian, an Employee of the Department of Elderly Affairs, may apply for the return of his license to work as an insurance agent given that he draws his salary for his public employment from the Department of Business Regulation, an agency which regulates the insurance industry.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the petitioner, an employee of the Department of Elderly Affairs, will not violate the Code of Ethics if he applies and receives a license to work as an insurance agent, notwithstanding the fact that the Department of Business Regulation pays his salary. This conclusion is based on the petitioner's representation that, in his position with the Department of Elderly Affairs, he is not involved with regulating the insurance industry.

C. DISCUSSION

1. Facts

On March 14, 1991, the petitioner was laid-off from his position with the Department of Transportation and placed on a preferred reemployment list. On February 5, 1995, after four years on this list, the Department of Business Regulation (DBR) hired the petitioner to serve as the Chief Property & Casualty Insurance Analyst of the Insurance Division. As terms of his employment, DBR required the petitioner a) to resign from his insurance agency and place the stock from this agency in a blind trust; and b) to relinquish his insurance license to DBR during his tenure with the Department.

The petitioner advises that on October 9, 1995, he was transferred to the Department of Elderly Affairs. The petitioner indicates that, although he works for the Department of Elderly Affairs in a position which does not involve the regulation of insurance, his salary is still funded from DBR's budget.

The petitioner has recently applied to DBR for the return or reissuance of his insurance license. According to the petitioner, the Insurance Division has refused his application since he is still technically employed by DBR.(1)

2. Analysis

At issue in this advisory request is whether the petitioner, an employee of the Department of Elderly Affairs, may obtain and/or renew his license to work as an insurance agent if his actual salary for public employment falls within DBR's budget. Under the Code of Ethics, the petitioner may not engage in any business or professional activity which is in substantial conflict with the proper discharge of his duties or employment in the public interest. See R.I. Gen. Laws § 36-14-5(a). The petitioner is also prohibited from using his position or confidential information received though his position to obtain financial gain for himself or for any business by which he is employed. See R.I. Gen. Laws § 36-14-5(d). Additionally, pursuant to R.I. Gen. Laws § 36-14-5(b), the petitioner may not accept other employment which will either impair his independence of judgment as to his official duties or require him, or induce him, to disclose confidential information acquired by him in the course of his official duties. Finally, under the provisions of R.I. Gen. Laws § 36-14-5(e), the petitioner is prohibited from representing himself before any state agency by which he is employed.

After considering his request and the relevant provisions of the Code of Ethics, we conclude that the petitioner will not violate the Code if he works as a licensed insurance agent while he is simultaneously an employee of the Department of Elderly Affairs, even if his salary is funded by DBR.(2) This conclusion is based on the petitioner's representation that, in his new position with the Department of Elderly Affairs, he is not involved with insurance regulation. This conclusion is also consistent with a past advisory opinion issued to the Deputy Director of the DBR in which we recognized that an employee of the DBR would not violate the Code if he or she retained or renewed a license which involved a regulated business, provided that the license concerned an area of business which has no direct relation to the employee's responsibilities in a particular division. See A.O. 93-70 (opining further that, because of what could be perceived as an unfair advantage and a clear appearance of impropriety, no individual could hold an active license from a Department Division in which that employee is working). We caution and advise the petitioner, however, that, should he be transferred from the Department of Elderly Affairs, he should seek further guidance from this Commission on this license issue.

Footnotes

(1) Anthony A'Rico, Deputy Director of DBR, confirmed the facts as presented by the petitioner. Mr. A'Rico indicated that the petitioner, although on loan to Department of Elderly Affairs, still maintains the title of "Chief Property and Casualty Insurance Rate Analyst." Mr. A'Rico advised that DBR is attempting to have the petitioner reclassified and anticipates that this will happen in the near future. Mr. A'Rico stated that DBR will not reissue the petitioner's license until he is reclassified.

(2) Although we conclude that the Code of Ethics does not prohibit the petitioner from receiving his license to work as an insurance agent while he is employed with the Department of Elderly Affairs, we do not express an opinion as to whether the petitioner is entitled to the reissuance of his insurance license. There is nothing in the Code of Ethics that prohibits the DBR from creating and enforcing internal regulations and policies dictating when a present or former employee is entitled to the reissuance of a license. Therefore, while the Code does not prohibit him from receiving his license, whether he is so entitled under properly enacted regulations is not a determination made by this Commission.

Keywords

Licensing