Our advice has been requested from the Director of Speech and Hearing at the Great Oaks Center (Department of Health and Mental Hygiene, DHMH) concerning whether she may have a private practice that includes mentally retarded individuals, federal Medicare and State Medicaid clients, or others who are in group homes or private community-based care funded by her agency.

The Requestor is a speech pathologist and audiologist at the Great Oaks Center, a DHMH residential facility serving the mentally retarded and developmentally disabled. Great Oaks is a unit within the Department's Mental Retardation and Developmental Disabilities Administration (MRDDA). It provides comprehensive health care, therapy, education and training services to its residents. It has a day care program and also places some of its clients in community-based day programs. The facility includes residents of all ages and has a population of approximately 475. The Requestor is the Director of the Center's Speech and Audiology Department. Her Department annually completes diagnostic evaluations on all residents, and also provides therapy to those requiring it. She estimates that approximately 50 percent of their work is diagnostic, 35-40 percent is therapy, and the remainder is consultation and in-service training.

Like other residential centers, Great Oaks is part of a continuum of care provided to individuals who are retarded or developmentally disabled. This care may involve referral of residents to day programs or release and transfer of a resident to a less restrictive community-based program, such as a group home. These day programs and group homes are generally operated by private non-profit agencies or organizations licensed and substantially funded by MRDDA. Generally the grantee agencies submit their total budgets, identifying as line items all of the services to be provided to residents. This would include therapy services (such as speech, occupational or physical therapy) whether they are to be provided in-house or by private consultants, and whether they are to be paid with State funds or otherwise. The agency's Management Chief indicates that since the private providers tend to be substantially MRDDA-funded, these types of services usually are purchased with agency grant money.

Though referrals from Great Oaks to these types of programs are not generally initiated by the Speech and Audiology Department (this is usually done by the Social Services Department), the Requestor indicates that she does participate in decisions to refer a client to a group home or other community living arrangement. In fact, according to the Director of Great Oaks, all Department heads participate in a joint decision-making process regarding release into a community-based program. Though not organized strictly as an interdisciplinary team, the Great Oaks decision process functions very much like such a team. Usually a social worker in charge of a particular case presents a discharge plan, and each administrative Department head comments on the aspect of the plan dealing with his particular discipline. The Requestor describes her role, more specifically, as to evaluate the capability of the outside care provider to meet the client's speech therapy requirements. No on-going follow-up is provided once an individual is discharged from Great Oaks, though a list of agencies or other followup sources may be provided.

The Requestor currently has a private solo speech pathology practice. She has a Master's Degree in speech pathology and is licensed by the Board of Examiners of Speech Pathologists, a unit within the DHMH. This Board is established in Title 19 of the Health Occupations Article, Annotated Code of Maryland. It has general licensing authority, but does not appear to have general regulatory authority over speech pathology practices; the primary substantive provisions in Title 19 address practice without a license and misrepresentation. The Requestor is also certified by the American Speech and Hearing Association and currently focuses her practice on speech therapy for the hearing impaired. She has not worked with mentally retarded clients. The Requestor would propose to market her services by mail contact or referrals from other agencies, and indicates that she would reference her general qualifications but not her status as an MRDDA employee. She would provide the services in one of two ways: first, she could contract generally with a particular facility and go to the facility to provide therapy to any client requiring her services; or second, she could provide therapy at her own office on an ad hoc, client-by-client basis. She indicates that she owns the various equipment required for this activity.

Requestor's inquiry has three aspects. First, she wishes to expand her practice to include the mentally retarded. Second, she wishes to know whether she may include in her practice clients (including former Great Oaks residents) from private group homes or other community-based programs in the mental retardation field. A third aspect of this request deals with the Requestor's interest in acceptance of Medicare and Medicaid clients. According to the Requestor, licensed speech pathologists are considered to be qualified providers under the federal Medicare and State Medicaid programs. She indicates that she has not yet applied for a provider number or handled any patients under these programs though she anticipates doing this. Providers under the State Medicaid program have contractual agreements with DHMH which define the Department's requirements and establish reimbursement mechanisms. Providers under the federal Medicare program do not contract directly with DHMH, but the agency's Licensing and Certification Division acts as an agent for the federal government in certifying and monitoring providers under this program. (See our Opinion No. 83-31 for a more complete discussion of these health funding programs.)

This request raises employment and financial interest issues under §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law), as well as potential participation issues under §3-101. Section 3-103(a) prohibits employees from being employed by or having a financial interest in an entity that is regulated by or contracts with their agency (subsection (a)(1)(i)). It also bars any other employment that would impair the person's impartiality or independence of judgment (subsection (a)(1)(ii)). Section 3-101 is a disqualification provision that bars official participation in any matter in which the individual has an interest or which would involve as a party an entity with which he has certain identified relationships.

The first aspect of this request involves consideration of the Requestor's current practice and her plans to expand to include mentally retarded clients. We have generally held solo practices to be entities in which individuals hold both an ownership and employment interest for purposes of §3-103(a). (Opinions No. 84-9, No. 84-3, No. 83-20 and No. 83-3.) However, this practice does not now contract directly with MRDDA or an MRDDA provider to treat mentally retarded clients, and clients paying with private insurance or other sources, or from jurisdictions other than Maryland, would not appear to have any prohibited affiliations with DHMH. Also, though the Requestor is licensed by a unit of her agency, we have held that where a board's licensing authority extends to an individual but not to the practice itself, then there is no authority relationship as contemplated in subsection (a)(1)(i). (Opinion No. 81-46.)

Under these circumstances, we do not believe that the practice, expanded in this limited way to include privately funded mentally retarded clients, would bring the Requestor into violation of either provision of §3-103(a). As there would appear to be no agency authority or contractual relationship between the entity and the Requestor's agency, there would be no violation under the strict language of §3-103(a)(1)(i). Further, since there would appear to be no relationships between the practice, with the limited expansion described, and either DHMH in general or Great Oaks Center in particular, we conclude that this activity would not bring the Requestor within the inconsistent employment bar of §3-103(a)(1)(ii).

We believe, however, that the Requestor's further expansion of her practice to include clients who are residents of MRDDA-funded facilities would raise significant issues bringing it clearly within both of the prohibitions of §3-103(a). First, while we believe that the Requestor's primary employment and interest relationship here is with her practice, it has also been our consistent view that an employment relationship may exist with a private entity to which consultant services are provided. Thus, to the extent she provides services to clients through MRDDA-funded provider entities, the Requestor here would be employed by an entity that contracts with and is under the authority of her agency. The strict prohibition of §3-103(a)(1)(i) would apply to bar this activity unless our outside employment exception regulations apply.

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 the 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.

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 believe that several issues would be raised under these criteria if the Requestor were to accept private clients who are residents of MRDDA-funded facilities, especially given her role in the decision to release a Great Oaks client to a private facility. Under item A, for example, it appears that the Requestor would be able to impact on the private care providers, and also her practice's ability to get clients, by her advice and recommendation regarding the speech therapy capability of a proposed private provider. She is also in the unit (MRDDA) of DHMH that both regulates and contracts with private providers (item D), and could have problems under the Law's §3-101 participation provisions (item E). Also, given the extent and pervasiveness of the MRDDA funding to the providers, it is very likely that the Requestor's private compensation would be funded directly through the MRDDA contract (item H). Issues could also be raised under items B, F and G.

In evaluating this aspect of the request, we have also informally solicited the views of the Requestor's agency supervisors. Both the Center Director and the Director of MRDDA have expressed reservations about this activity, given the dependence of private entities on MRDDA funds and the Requestor's role in the referral and transfer process. Both of these individuals raised concerns that there could be a conflict or real potential for conflict, since the Requestor would be in a position to participate in a Great Oaks decision with regard to transfer of a resident to a private organization where she either has or potentially could have a private contract to provide the speech therapy. In fact, her role in this decision would be to advise as to the adequacy of the very services she would be providing. Agency personnel are therefore concerned that she could be in a position to indirectly build up her own practice through her knowledge of and participation in the Great Oaks release process.

In view of these agency concerns, and where issues are raised under so many of the specific criteria, we also 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, which also involved employees at an MRDDA residential facility. In that request, in evaluating application of item I, we expressed our reluctance to find that the total circumstances of the employment situation do not result in a conflict of interest or the appearance of a conflict "given the close and continuing relationships between private nursing home facilities and State health care entities...." A similar conclusion was reached in Opinion No. 82-40, which involved a Potomac Center employee who wished to be a consultant for an 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 affiliation with a care provider would be 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. 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 private employment activities 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 to expand her practice to include clients from MRDDA-funded providers.

The third question presented in this request has to do with the Requestor's inquiry about her ability to accept clients not funded under MRDDA programs, but through Medicare or Medicaid programs. In several Opinions in which we have considered provider contracts under health and social welfare programs, we have concluded that provider agreements between practitioners and State agencies result in contractual relationships for purposes of §3-103(a)(1)(i). (Opinions No. 84-12, No. 84-9, and No. 82-46.) It has also been our view that both Medicare and Medicaid practitioners are under the authority of DHMH, since the agency has significant responsibilities on behalf of the federal government in management of this program. The Requestor's Medicare and Medicaid practice would therefore involve an employment relationship and possibly a financial interest that would also be prohibited by §3-103(a)(1)(i), unless an exception can be applied.2

In considering application of the exception criteria to this proposed Medicare/Medicaid aspect of the Requestor's practice, we believe that the relationship to her private and official activities is much more remote than the one discussed above regarding MRDDA providers. We therefore believe that an exception can be allowed. In our view, §3-103(a) of the Law reflects a general legislative determination that State employees and officials should not have employment or financial interest 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.

Though some of the criteria could be read individually to apply here, we believe that the total circumstances of the situation support a conclusion that the relationship between the private Medicaid/Medicare practice and official activities is so remote that a conflict of interest or appearance of conflict is unlikely. Moreover, some of the criteria can be overcome by an agency view. As to this aspect of the request, the DHMH Secretary has expressed the view of agency management that expansion of Requestor's practice to include Medicare and Medicaid clients would not create a conflict of interest or appearance of conflict that would impair the credibility of the agency. Also, in formulating the criterion in item G of the regulations, we recognized that the Medicare/Medicaid programs presented unique situations that needed to be evaluated in conjunction with the Department and believe here that item H must be read consistently with this approach.3 Under all of these circumstances, we advise the Requestor that she may expand her practice to include Medicare/Medicaid clients without violating the Ethics Law.

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

Date: June 7, 1984


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

2 Under §1-201(m), financial interest includes an interest as the result of which the owner has received or expects to receive more than $1,000 per year. Though the Requestor's anticipated or actual income from her practice is not known, we assume for purposes of this discussion that she would have a financial interest in her practice. Our financial interest exception regulations appear in COMAR 19A.02.02 and are very similar to the employment exception regulations. The discussion in the text regarding application of an exception to Requestor's Medicare/Medicaid practice is therefore dispositive of issues raised under both the employment and interest aspects of §3-103(a)(1)(i). If the Requestor reaches the $1,000 financial interest threshold, she would, however, need to file a financial interest exception disclosure form.

3 In order to provide clearer guidance to employees and officials, the Commission is preparing a revised regulation which more clearly makes both items G and H subject to agency comment where Medicare/Medicaid or other fixed fee reimbursement programs are involved.