We have received an opinion request from a nurse in the Division of Nursing, Manpower Resources Administration (Department of Health and Mental Hygiene, DHMH), concerning whether she may have a private business providing consulting services to private nursing homes.
The Requestor works in the Nursing Division as an in-house consultant to State-operated health institutions, including its chronic disease hospitals, mental health facilities, and State-operated nursing homes. Her duties include development of training programs and other types of continuing education and orientation programs; provision of assistance to institutions regarding nursing needs, hiring practices and qualifications, and organization and management of nursing personnel; and serving in a coordination liaison capacity between and among the institutions and DHMH central office administrations. Her duties relate entirely to DHMH facilities and do not involve interaction with private facilities. The Director of the Manpower Resources Administration indicates that the Requestor may be consulted if a State facility is to be closed, expanded or otherwise changed, but her input would generally be as to nursing needs after a basic decision has been made, rather than directed at that decision process itself.
The Requestor has an R. N. and B.S. in nursing, and holds Master's degrees in Education and Art. She has taught at the college level and done research with the U.S. Army. She has been with the DHMH for eleven years. During her first ten years with the State she worked in the agency's Division of Licensing and Certification, serving two years as a surveyor and eight years as a surveyor coordinator. Her job involved responsibilities for surveying nursing homes, to evaluate whether they meet the twenty-one conditions of participation that must be met by such facilities for them to be reimbursed by medicare/medicaid programs. Her activities involved her having contact with all of the State's nursing home facilities. Though her service as a coordinator did not involve regular day-to-day field contacts, she did supervise the surveyors and was the appeal mediator where there were disagreements as to whether the conditions were met.
The Requestor would like to establish a consulting business in which she would provide troubleshooter types of management advice to private nursing homes. She has not yet made any definite plans about how the operation would function, though she does plan to limit it to nursing homes, and she recognizes that this is the identical population with which she dealt in her prior DHMH position. She states that she expects simply to do a mail announcement to these facilities, announcing her availability and soliciting business. She intends to rely on her educational background, her nursing skills and her prior DHMH work experience, and would concentrate on assisting entities in meeting the conditions for medicare/medicaid certification.
This request raises issues under the outside employment provisions of § 3-103(a)(1)(i) of the Public Ethics Law (Article 40A, § 3-103(a)(1)(i), Annotated Code of Maryland, the Ethics Law), particularly our regulations implementing the exception provisions of this section. COMAR 19A.02.02. Basically, § 3-103(a)(1)(i) bars an employee from having any interest or employment with an entity that is regulated by or contracts with his agency. The Ethics Law, however, allows exceptions to this bar where the Commission determines that the employment would not result in a conflict of interest or the appearance thereof. This exception has been implemented in regulations that define situations where a relationship between a person's agency and her private duties would be so remote that a conflict or appearance of conflict would be unlikely.
The Requestor proposes to provide services to nursing homes. These entities are substantially regulated by DHMH, as they are licensed by the Division of Licensing and Certification (under the Assistant Secretary for Health Regulatory Services). Nursing homes also have significant contractual and other financial relationships with DHMH, as they generally function within the medical assistance programs administered by the Department (under the Assistant Secretary for Medical Care Programs). We have generally treated sub-units of principal cabinet departments as part of a single indivisible agency (see Opinions No. 80-18, No. 82-18, No. 82-40, and No. 82-47).1 Thus, though the Requestor's duties apparently do not impact on nursing homes, and she works for a different Assistant Secretary (Administration), the nursing homes would still be viewed as having these relationships with her agency for purposes of §3-103(a).
We also believe that the Requestor's relationship with the nursing homes would constitute an employment relationship as contemplated by § 3-103(a)(1)(i). We have generally treated private consulting businesses as individual entities with which the employee has both an interest and employment relationship (see Opinions No. 82-3 and No. 82-16). However, we have also held that provision of personal services to an entity can, for purposes of § 3-103(a), be viewed as an employment relationship with that entity even if the services are provided through an intervening contractor or consulting business. (See Opinions No. 80-18 and No. 82-36.) Applying these principles, the Requestor's service to nursing homes must thus be viewed as an employment relationship barred by § 3-103(a)(1)(i), unless the exception provisions to that prohibition can apply.
Regulations implementing this exception became effective on January 31, 1983 (COMAR 19A. 02.01), and implement introductory language in § 3-103(a), which provides that the prohibitions of subsection (a)(1) apply "except as permitted by regulation of the Commission where such interest is disclosed or where such employment does not create a conflict of interest or appearance of conflict". The purpose of the exception is to avoid situations where a violation would result from technical application of the elements of § 3-103(a) even where there is no conflicting relationship between the private interest or employment and official duties. The exception criteria define the circumstances where the relationship between an employee's agency and private duties is remote, and the possibility of a conflict of interest or the appearance of conflict is unlikely. The criteria include findings that:
A. The State duties do not significantly impact on the outside employer or a contract between the outside employer and the agency.
B. The employee is not directly supervised by a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.
C. The employee does not supervise a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.
D. The employee is not affiliated with the specific unit in the agency that exercises authority over or contracts with the outside employer.
E. The employee has complied with other relevant sections of the Ethics Law.
F. The outside employment involves no non-ministerial duties significantly relating to the agency's authority over the employer.
G. The employee's private duties do not involve negotiating or carrying out a contract between the agency and the outside employer (except for broad fixed reimbursement contracts).
H. The private compensation is not directly funded by a State contract.
I. The specific circumstances of the situation do not otherwise create a conflict of interest or the appearance of a conflict.
Since the Requestor's duties in the Manpower Resources Administration do not involve interaction with nursing homes, many of the criteria do not raise issues. However, Items F and G deal with the nature of an employee's private duties and their relationship to the official's agency. We believe that this situation comes under these items, since the Requestor's proposed efforts would be specifically directed at her client's ability to comply with agency requirements. This activity, taken with the Requestor's extensive prior duties with nursing homes and significant involvement with them, raise general appearance of conflict issues under Item I of the criteria.
Also, it should be noted, that some of the criteria specifically call for agency views. We have coordinated this request with the DHMH designated agency contact point for outside employment exception issues. He has evaluated it and talked to other agency personnel regarding this situation, and has provided written agency comments. In this correspondence the agency's Deputy Secretary indicated that the proposed employment "would be detrimental to the interests of *the* Department...and would present the appearance of a conflict of interest that would impair the credibility of *the* Department." Taking into account these agency views and all the circumstances of this request, we are unable to conclude that the relationship between the Requestor's private duties and her agency is sufficiently remote to warrant application of the exception. Her establishment of a private consulting business as proposed would therefore be barred as a violation of § 3-103(a) of the Ethics Law.
Herbert J. Belgrad, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: June 27, 1983
1 Except as otherwise specifically cited to the Maryland Register, all Opinion citations are to Commission Opinions published in COMAR, Title 19A.