Advisory Opinion No. 96-75

Re: Jeffrey A. Lanphear, Dennis Algiere, June Gibbs & Bradford Gorham

A. QUESTION PRESENTED

The Petitioner, on behalf of three Legislators, requests an advisory opinion as to whether the Senators may participate and vote on the state budget bill for fiscal year 1996-1997 which contains articles concerning hospitals or other bills concerning hospitals given that each Senator is a Member of the Board of Directors of a Hospital.

B. SUMMARY

The Commission concludes that the Legislators must recuse themselves when hospital issues appear before them. This opinion is based on potential violations of R.I. Gen. Laws § 36-14-5(a), (d) & (7)(a) as the Westerly, Newport, and Roger Williams General Hospitals are business associates of Senators Algiere, Gibbs, and Gorham, respectively, and the Senators can expect the hospitals will derive a financial gain or suffer a financial loss by reason of the Senator's participation on hospital issues. In the event that this or any other matter concerning hospitals should come before them at the Senate, the Petitioners should utilize the notice and recusal sections provided in R.I. Gen. Laws § 36-14-6. The Senators may vote on the budget as a whole, but must recuse if they are called upon to vote on any hospital matters separately. Additionally, the Senators may participate to the extent permitted under Commission Regulation 36-14-7003, the public forum exception.

C. DISCUSSION

1. Facts

The Petitioner requests an advisory opinion on behalf of three Senators. The General Assembly is considering bill 96-H 8783, adopting the state budget for fiscal year 1996-1997. The bill contains three articles relating to hospitals. Those articles are: Article 14 - relating to hospital licensing fees; Article 25 - relating to $75,000 limit on cost per admission; and Article 31 - relating to the elimination of the certificate of need requirement. The Petitioner represents that this legislation could change during the legislative process and that there is also now proposed a bill which concerns the certificate of need requirement. Certificates of need have historically been required by the State Health Department when a hospital wanted to make a large expenditure, ie. cat scan equipment, so that a hospital near another hospital does not necessarily receive the same equipment in an effort to keep health care costs down. Currently certificates of need are required for expenditures over $100,000. The proposed legislation will either eliminate the requirement or increase the expenditures level to $500,000.

Each of the Senators sits on a Board of Directors of a hospital in Rhode Island. Senator Dennis Algiere is a member of the Board of Directors of the Westerly Hospital. Senator June Gibbs is a member of the Board of Directors of the Newport Hospital. Senator Gibbs also sits on the Senate Finance Committee. Senator Bradford Gorham is a member of the Board of Directors of the Roger Williams General Hospital. The Petitioner represents that the hospitals could suffer a financial impact if the pending bill is passed.

The Petitioner requests an advisory opinion as to whether the Senators may vote on this bill given their interests as a member of the Board of Directors of a particular hospital.

2. Analysis

The issue presented in this advisory opinion request concerns whether Senators may vote on matters concerning hospitals where they sit as a Member of a Board of Directors of a hospital. The Rhode Island Code of Ethics provides that the Petitioner may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. Substantial conflict is defined as a direct monetary gain or a direct monetary loss that accrues, by virtue of the public official's activity, to that individual, a family member, a business associate, an employer, or any business which the public official represents. R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). Additionally, the Code provides that the Petitioner shall not use his office to obtain financial gain for himself or a business associate, other than as provided by law. R.I. Gen. Laws § 36-14-5(d). The term "business associate" is defined as a person joined together with another person to achieve a common financial objective. R.I. Gen. Laws § 36-14-2(8).

The Commission has found that public officials are "business associates" of those entities where they serve as a member of the Board of Directors. The Commission has required recusal by public officials when their non-profit organization appeared before the public official's agency. See A.O. 89-103, A.O. 92-67, A.O. 92-31, A.O. 91-07. See also A.O. 95-92 (American with Disabilities Act Coordinator employed by Department of Administration who is also on the Board of Directors of the PARI Independent Living Center, a member of a American with Disabilities Act Coalition, and mediator with the Governor's Commission on the Handicapped must recuse himself from participating in decisions when they appear before him at the Department of Administration); A.O. 91-86 (Director of Economic Development for State of Rhode Island must recuse himself from participating in matters relating to donating land to a college where the Director is also a trustee of that college); and A.O. 93-60 ( Doctor on Health Services Council may have a substantial conflict with matters appearing before him concerning a particular hospital if he serves on its Board of Directors).

The Commission has also found that Legislators may not participate in matters which result in a financial gain to themselves or their business associates. In A.O. 92-28, the Commission found that a State Representative who was also a physician for a Massachusetts Company that has offices in Rhode Island could not sponsor or vote on legislation relating to the budget for public and private health care expenditures, reform of the R.I. medical malpractice laws and health care restructuring relating to overhead costs to R.I. hospitals and doctors. See also A.O. 91-16 (Legislator who was employed as a commercial recycling representative, but neither shareholder nor officer of his employer, could not participate in discussions and voting on legislation concerning recycling or solid waste matters); A.O. 91-6 (Senator could not participate or vote on matters involving credit unions now closed as he was also Vice President and member of Board of Directors of the East Providence Credit Union); A.O. 90-25 (State Representative could not participate in legislation that would impact his insurance client); A.O. 95-25 (Legislator who is also an employee of a non-profit community based organization that receives funding from the legislature advised not to participate in matters specifically relating to her employer); A.O. 95-20 (Legislator could not participate or vote in matters specifically relating to private employment at a non-profit organization but could vote on budget generally). (The Commission has not reached the class exemption of Section 7(b) in the above opinions where direct impact was found on the legislators' business associates. However, the Commission has allowed legislators to vote on particular issues if they met the Section 7(b) exemption. See A.O. 95-20 (above). In this matter, in accordance with General Commission Advisory No. 13, it is unclear to what extent the hospital's income will be affected by the pending legislation. Additionally, the number of hospitals in Rhode Island are limited.) See also A.O. 95-48 (Legislator whose private employment was in substance abuse area, could vote on budget generally, but restricted by Section 7(b) if substance abuse issues were voted on separately).

After considering the Code of Ethics and previous advisory opinions, the Commission concludes that Senators Algiere, Gibbs and Gorham must recuse themselves when hospital issues are before them. This opinion is based on potential violations of R.I. Gen. Laws § 36-14-5(a), (d) & (7)(a) as the Westerly, Newport, and Roger Williams General Hospitals, are business associates of Senators Algiere, Gibbs, and Gorham, respectively, and the Senators can reasonably expect that the hospitals will derive a financial gain or suffer a financial loss by reason of the Senators' participation on hospital issues. In the event that this or any other matter concerning hospitals should come before them in at the Senate, the Petitioners should utilize the notice and recusal sections provided in R.I. Gen. Laws § 36-14-6. However, the Senators may vote on the budget as a whole, but must recuse if they are called upon to vote on any hospital matters separately. Additionally, to the extent permitted under Commission Regulation 36-14-7003 which permits any person subject to the Code of Ethics to publicly express his own viewpoint in a public forum on any matter of general public interest or on any matter which directly affects the individual, the Senators may participate in any public discourse about the matters.

Under the public forum exemption, the Senators may testify before any subcommittee, or confer with colleagues in any open and public forum, provided that they do not actively sponsor, or vote on legislation affecting hospitals.

Code Citations:

36-14-2(8)

36-14-5(a)

36-14-5(d)

36-14-6

36-14-7(a)

36-14-7(b)

36-14-7003

Related Advisory Opinions:

95-92

95-48

95-25

95-20

93-60

92-67

92-28

92-31

91-06

91-07

91-16

91-86

90-25

89-103

Keywords:

business associate

business interest

non profit boards