An Opinion has been requested concerning whether the Provost of a local campus of Montgomery Community College (MCC or the College) may serve on the Board of Directors of a health maintenance organization that contracts with the College.
The Requestor has been employed at Montgomery College for 22 years, and since 1974 has held basically the same position he now holds, as Provost of this particular campus. The provost position description describes the incumbent as "serving in an administrative position in a line capacity," "directly responsible and accountable to the Academic Vice President for the overall effective and efficient administration of the total campus." The more specific duties include development and management of instructional programs, and responsibility for student development services, facilities and security, financial management, personnel management, campus governance and long-range planning.
The Provost's personnel management duties include, among other things, recommending full-time faculty appointments and supervising the faculty selection process, including advising instructional deans about budget review and financial limitation aspects of this process, recommending salary and rank placement for all full-time and part-time faculty, and assuring that administrative and academic requirements have been met as to recommended appointees. He is also authorized to make part-time faculty appointments, required to provide for and approve evaluation of all campus faculty, and to recommend salaries, contract renewal and tenure action. Personnel duties also include making initial and subsequent rank assignments, appointing department chairs/program coordinators, and authorizing release time and other special assignments on campus. There are 70 employees on his campus who report to the Requestor.
The Requestor indicates that the Provost's duties at MCC are now almost entirely directed to student and academic matters, as other matters such as facilities decisions (i.e., maintenance, security) and personnel policy matters are handled at the College's central office under the Vice-President for Administration. Employees on the campus who perform those functions report to administrative personnel at the central office. He states that, though his individual appointment recommendations are generally accepted, he has never had a role in personnel policy decisions, such as those regarding health benefits. According to the Requestor, this function has always been centralized. He states that he regularly participates in the College President's cabinet meetings, and does not recall employee health contract matters ever coming up.
This request involves the Requestor's continued service on the Board of Directors of the Maryland-Individual Practice Association, Inc.(MDIPA), a private non-profit health maintenance organization (HMO) plan based in Rockville, Maryland. The plan is an individual practitioner-model of HMO involving approximately 500 practitioners. Under this model, participants in the plan have private practitioners that they interact with in the traditional doctor-patient relationship, rather than through a clinic practice as with the other model HMO. MDIPA is a federally-qualified plan for the Montgomery County service area, as set forth in the federal Health Maintenance Organization Act (42 U.S.C. §300e et seq.).
The federal law establishes requirements for operation and qualification of HMO's, including their manner of supplying basic and supplemental health services to members; their organization, practice and activities; and open enrollment period requirements. The law provides for establishment of payment schedules in accordance with regulations established by the Secretary of Health, and also requires employers (including State and political subdivisions employing 25 or more individuals) to include one qualified HMO of each model (individual practice association or clinic) as part of an employee health benefit plan. MDIPA is the only individual practice type HMO currently qualified in Montgomery County. It contracts with most major employers in Montgomery County and has about 33,000 members.
The Requestor indicates that he serves as one of the lay members required by the federal statute to be on the Board. He states that the Board does not establish rates or negotiate particular contracts. He says its role is directed at policy decisions, regarding, for example, scope of coverage and availability to various groups, such as retirees. The Requestor also serves on the Members Services Committee, which considers issues relating to improvement of services to members. For example, he cites recent development of agreements with Giant Pharmacy with regard to provision of prescription services, and with the YMCA for price reductions for MDIPA members taking certain aerobics courses. The Member Services Committee also considers and decides grievances filed by members regarding provision of services.
According to a staff member in MCC's personnel office, the College offers MDIPA as a health plan, along with two clinic model HMO's and a regular indemnity contractor. The College pays 80 percent of the indemnity contractor premium and the same dollar amount for the HMO's. This amounts to $717.89 per calendar year for individual coverage and $2002.27 per calendar year for family coverage. The personnel staffer states that this percentage has been in effect for about 10 years, before there were any HMO plans. He indicates that determinations as to this percentage and other health plan decisions are staffed within the personnel office under the Vice President for Administration. Employee complaints generally raise individual issues as to service, and are referred to MDIPA. Concerns regarding the mechanics of coverage that can be handled by the College are dealt with in the Personnel Office.
The personnel staff member indicates that the Requestor (and other Provosts) are not involved in this process or other matters relating to employee benefits. There are 60 MCC employees (of a possible 950) who are in the MDIPA plan, which is governed by an agreement between the College and MDIPA. There is apparently another possible individual practice plan (primarily operating in Prince George's County) that is expected to be qualified for Montgomery County. The law requires only one to be offered and there could therefore be a question of competition and discretionary choices by the College. Apparently such decisions would be made by the College Trustees based on staff work within his office. He indicates that the likely result in this circumstance would be to offer any qualified plan.
This request raises issues primarily under the 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), which bars outside employment with an entity that contracts with one's agency. The Requestor has been on MDIPA's Board in a non-compensated capacity for approximately two years. He submitted this request in view of a recent decision by the entity to compensate its Board members at the rate of $100 per meeting. We have consistently said that service in a fiduciary capacity on managing boards can result in an employment relationship even without compensation. (See, for example, Opinions No. 84-17, No. 83-24, No. 82-45, and No. 82-43.1 In our view, the Requestor therefore has an employment relationship with MDIPA, despite the low compensation, and, in fact, even if he were not to accept it. Since the entity has a contractual arrangement with the College, the strict prohibition of §3-103(a)(1)(i) would apply to bar the Requestor's service on the Board, unless an exception can be applied under the exception criteria established by us pursuant to the proviso in §3-103(a) that the prohibition applies, "except as permitted by regulation of the Commission...where such employment does not create a conflict of interest or the appearance of conflict."
Regulations implementing this exception provision are set forth in COMAR 19A.02.01. They include several criteria identifying circumstances where the relationship between an employee's outside employment and his agency would be so remote that a conflict of interest or appearance of conflict would be unlikely. They allow exception, for example, where the employee's official duties involve no significant impact on his outside employer, and where his outside position is not directly funded by a contract with this State agency. (See our Opinion No. 84-25 for a more detailed discussion of the exception criteria.) The regulatory procedure requires review and determination regarding each factor in order to conclude that the absence of the relationships supports a finding that no conflict or appearance thereof exists.
We have considered the application of the exception criteria to the Requestor's affiliation with MDIPA, and conclude that an exception may be allowed in this situation. We note here that personnel matters are a centralized function at MCC, and that Provosts do not have responsibilities either for the mechanics of or policy relating to personnel matters. The Requestor also indicates that his participation in President's cabinet meetings has never involved any discussion or consideration of issues relating to employee health programs. We have also taken into account the Requestor's description of his responsibilities with MDIPA, particularly noting that he has not been (and does not contemplate being) involved in any matters relating to the particular contract with the College. He has also stated that he would not participate in consideration of any appeal matter that involves any MCC employee covered by MDIPA. Moreover, we note that the number of MDIPA participants at the College is small (60) compared to the total population (950), and represents a very small fraction of MDIPA's 33,000 member clients.
In view of the fact that the Requestor's duties as Provost and his activities with MDIPA appear to be sufficiently remote from the College's contractual relationships with MDIPA, we conclude that there would be no conflict of interest or appearance of conflict and that this affiliation may therefore be excepted from the prohibitions of §3-103(a)(1)(i). Also, given the apparently limited relationships between the Requestor's private affiliation and the College and his duties as Provost, we do not believe that his service on the MDIPA Board must be viewed as "inconsistent employment" under §3-103(a)(1)(ii) of the Law. The outside employment situation as described to us here, does not, in our view, raise clear and serious concerns about the Requestor's ability to properly carry out his official duties. (See our Opinions No. 82-42 and No. 81-28 for a discussion of this provision.)
We therefore advise the Requestor that his service on the MDIPA Board, as described to us, does not result in a violation of the Ethics Law. He should, however, keep in mind that this activity, through not absolutely barred by §3-103(a), continues to be subject to the other conflict of interest provisions of the Law. These include the non-participation provision (§3-101), the bar against use of prestige of one's office (§3-104), and the prohibition against misuse of official information (§3-107). The Requestor should thus take care to avoid any involvement, within the context of his official position, relating to MCC health plans, or to the participation by College employees in the MDIPA plan.
Herbert J. Belgrad, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Thomas D. Washburne
Date: November 7, 1984
1Except as otherwise expressly cited to the Maryland Register, Opinion citations are to Ethics Commission Opinions published at COMAR Title 19A.