An advisory opinion has been requested from a staff psychologist at the Rosewood Center (part of the Mental Retardation and Developmental Disabilities Administration (MRDDA)), concerning whether she may be employed doing psychological testing at a facility which is funded by and regulated by MRDDA, and which also may have either day program or transfer clients from the Rosewood Center.

The Requestor is a staff psychologist at the Rosewood Center (Rosewood or the Center), a MRDDA residential facility housing approximately 1,100 mentally retarded children and adults. The Center is organized for administrative purposes into several units, each of which is designed to serve individuals at similar functional levels and with similar behavioral characteristics. The Requestor works in a unit whose residents are adults of both sexes who are severely to mildly retarded. All are ambulatory and most have emotional/behavioral problems. Though Rosewood is a totally residential facility, clients in this unit are likely to be the most "community ready," and about 50 percent may be in day programs at other facilities. The Requestor indicates that this type of program is often a first step toward release from Rosewood and transfer to a less restrictive residential setting.

According to the Requestor, she is responsible for developing and monitoring behavioral treatment programs for clients within her unit. She sees all of the unit's clients on an annual basis for general review and evaluation, and works more closely with those identified as having behavioral problems. She may be involved in some individual counseling, but more often would be designing a behavioral modification program (such as provision of incentives for discontinuing certain activities). These programs are implemented by aides working on the wards, and are periodically monitored. The Requestor indicates that her duties do not include her actual attendance at interdisciplinary team meetings conducted annually as to each client. She does, however, impact transfer and day program decisions through reports on behavioral characteristics of the client, providing them to the Psychological Evaluator, who includes them in his report and participates directly in the team meetings.

This request involves the Requestor's outside employment with The Chimes, Inc., a private non-profit residential and day program for the mentally retarded. The Chimes operates a residential facility, several group homes, an activity center, a sheltered workshop and a school. In many of these activities it is subject to the substantial licensing authority of the MRDDA, established pursuant to the Health-General Article, Title 7, Annotated Code of Maryland. Residential facilities, for example, must meet requirements regarding physical plant, admission policies, records, personnel, and operational requirements. (COMAR 10.22.02 and 10.22.04.) Group homes must meet certain administrative standards, have policies on admission, termination of services, transfer and resident care, and meet requirements regarding the provision of medical, dietary and other professional services, and also physical plant and record-keeping. (COMAR 10.22.03.)

The Chimes is also one of many private organizations providing services to the mentally retarded through MRDDA's community services grant program. Under this program grant awards are made to continue existing levels of care, considering the nature and cost of the program offered, including compliance with MRDDA's licensing criteria. Organizations annually submit a detailed budget, which is reviewed by central office MRDDA personnel, who establish the level of funding for existing services. An evaluative team considers the organization's salaries, equipment, and program to determine the cost per client, and the MRDDA funding is based roughly on a certain number of clients (or capacity, or attendance days) multiplied by that cost figure. The grant program is not strictly a reimbursement program, though the number of clients served and the particular services provided are relevant factors in the funding determination.

Private providers also bid on a competitive basis for expanded community care service. In connection with an agency effort to move more clients into the community, MRDDA issues a Request for Proposals (RFP) advertising the availability of funding for additional clients. Providers submit proposals setting out their services and the costs. Based on interdisciplinary team reviews, MRDDA has a prioritized list of clients within State institutions that are eligible for release to a community-based program. A particular RFP may target the population of a specific facility, and providers may bid on particular clients, who are listed by identification number with a short description of their problems and treatment requirements. The Chimes' total funding under the MRDDA program for FY 1983 was a little over $2 million, approximately 65 to 70 percent of the entity's budget.

The Requestor's work for The Chimes involves doing IQ testing. She says she works on a varied schedule performing tests as assigned to her; she indicates that she has never tested a client who is involved in a State program. She states that this testing is done annually as required by applicable regulations. She is paid a set fee per evaluation. The Requestor indicates that she does not do any direct client counseling at The Chimes and does not do psychological evaluation work at Rosewood. Nor, she says, is she significantly involved in agency decisions to transfer a client or refer for a day program. She states, however, that she has had occasion to talk to staff at The Chimes in connection with Rosewood residents who are in a Chimes day program, and who have behavior problems there that are also the subject of a behavior modification program at the Center. The Chimes currently has 10 or 11 clients in its total 250-person day program who are residents at Rosewood. The organization's Deputy Director estimates that approximately half of the agency's 108 residents were at one time in one of many residential centers in the area.

We have reviewed this employment situation with the Requestor's agency management. The Rosewood Center Director has expressed some reservations about this situation, based on her view that the Requestor functions as an integral part of the interdisciplinary team that would make recommendations regarding transfer or referral. Though she recognizes that she could possibly exclude the Requestor from referral and transfer decisions, she also notes that the Requestor may have some general interactions on these types of issues with parents, relatives or other guardians. She also has the more general concern that the private providers are competing for grant dollars. While she does not wish to prohibit outside employment across-the-board, she wants her employees to be sensitive in these situations, and to avoid situations where these private providers think they can get the inside track by hiring agency employees. This view is generally reinforced by MRDDA's Acting Director. Noting that "clients leave the residential centers all the time," the Director is concerned that providers not be able to influence employees in order to get clients. Though she recognizes that the competitive RFP process and priority list have insulated employees some, she still foresees problems where residential staff are directly involved with providers who receive substantial MRDDA funds.

This request raises issues under the outside employment provisions of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). This section prohibits outside employment by officials and employees with any entity that is under their authority or that of their agency, or that has or is negotiating a contract with their agency. Since The Chimes has contractual relationships and is significantly regulated by MRDDA, the Requestor's employment with it would be barred by this prohibition unless she is excepted pursuant to our outside employment exception regulations. Authority for this exception is set forth in the introduction to §3-103(a), which provides that the prohibition applies "except as permitted by regulation of the Commission...where such employment does not create a conflict of interest or appearance of conflict." This exception provision was added to the Ethics Law in 1981 partly based on the recommendation of the Commission that flexibility be added to the absolute prohibitions in §3-103(a). Its purpose is to avoid situations where a violation would result from purely technical application of the elements of §3-103(a), even where there is no conflict or appearance of conflict between the private interest or employment and official duties.

In developing exception criteria implementing the employment portion of this provision (COMAR 19A.02.01), we sought to define circumstances where the relationship between an employee's official duties and the private employment is so remote that the possibility of a conflict of interest or the appearance of conflict is unlikely. If all of these regulatory standards of remoteness are met, the employment would be allowable, despite the existence of authority or contractual links between an individual's State and private employers. 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. 032;

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 the State contract.

I) The specific employment circumstances do not otherwise create a conflict of interest or the appearance of a conflict.

We have evaluated the Requestor's situation in view of these criteria. We believe that there are issues raised under several of the criteria that make it impossible for us to conclude that the relationship between the Requestor's private employer and State agency is sufficiently remote that a conflict of interest or appearance of conflict is unlikely. Under items A and C, for example, the Requestor is involved in and is supervised by decision-makers in the patient transfer decision. She is affiliated with the DHMH unit (MRDDA) that regulates and funds The Chimes (item D). Her work for The Chimes involves IQ testing required by MRDDA regulations and grant awards (items F and G). And the extent of MRDDA funding for The Chimes raises a substantial likelihood that her compensation would be from State funds (item H).

We understand that the Requestor does not directly decide which clients will be transferred or use private day care programs, and that she is not involved in the grant process that establishes funding levels for providers. We also note that changes in job duties and other factors could be made to technically avoid application of some of the criteria and limit her participation in matters potentially impacting on The Chimes. In implementing §3-103(a), however, in conjunction with the nonparticipation provisions of §3-101 of the Law, we have viewed them as separate provisions expressing different concerns as to the conduct and activities of officials of the State. We have thus not accepted disqualification as a "cure" of a violation of the prohibitions in §3-103(a), and we do not interpret our exception regulations as adopting that approach.

In our view, §3-103(a) of the Law reflects a general legislative determination that State employees and officials should not have employment relationships with private entities that have contractual and regulatory dealings with their agency. The exception provision in the Law was intended to allow flexibility to avoid technical application of a prohibition where there is no conflict of interest or appearance of conflict. Thus, the regulations were drafted as indicators by which to measure actual or potential conflicts of interest, rather than as a series of purely technical criteria. This approach reflects the purposes of the Law, set forth in §1-102, to assure the public of the impartiality of public officials, recognizing that the public may not be in a position to know or understand how reorganization of duties or nonparticipation actually serves to avoid a conflict or appearance thereof.

Moreover, where issues are raised under so many of the specific criteria, we believe that the more general concern expressed in item I becomes a significant issue. In fact, we find these circumstances to be very similar to those presented in our Opinion No. 82-41,1 which also involved employees at a MRDDA residential facility. In that request, in evaluating application of item I, we indicated that item I of the criteria requires a determination that the total circumstances of the employment situation do not result in a conflict of interest or the appearance of a conflict. We are reluctant to make such a finding given the close and continuing relationships between private nursing home facilities and State health care entities such as Deer's Head. We believe that in connection with the provision of services to a dynamic and interconnected patient population, the relationships of the nursing homes to the State health care system may be sensitive, and that private economic interests of private (sometimes "for profit") facilities are not always consistent with those of State care providers.

A similar conclusion was reached in Opinion No. 82-40, which involved a Potomac Center employee who wished to be a consultant for a MRDDA care provider. In our view the principles addressed in these Opinions on application of the exception regulations to circumstances such as this are controlling here. The Requestor's outside employment is with an entity that has significant regulatory and contractual relationships with her agency, and that is part of a dynamic care continuum for a defined client population. It is therefore prohibited by § 3-103(a)(1)(i) of the Ethics Law. Moreover, under the circumstances of this situation, we do not believe it is appropriate to conclude that the relationship between the Requestor's agency, her duties, and her outside employer is so remote that a conflict of interest or appearance of conflict is unlikely. We therefore advise her that an exception may not be granted to allow her employment to continue.

Herbert J. Belgrad, Chairman
    Reverend John Wesley Holland
    Betty B. Nelson
    Barbara M. Steckel

Date: January 26, 1984


1 Except as expressly cited to the Maryland Register, all Opinion citations are to Ethics Commission Opinions published at COMAR Title 19A.