An opinion has been requested concerning whether the Executive Director of the Subsequent Injury Fund (the Fund) may represent clients in a private law practice before the Workmen's Compensation Commission (the WCC or Commission).
The Requestor served as the supervising attorney for the Subsequent Injury Fund when it was a part of the Workmen's Compensation Commission, and played a significant role in developing the legislation that established the Fund as an independent agency in 1982.The Requestor was appointed as the Executive Director of the Fund in July 1983. The Fund was established to replace the Workmen's Compensation Fund as an independent specialized insurance fund. Its function is to provide a funding source to cover the portion of a compensable workmen's compensation injury that is related to a pre-existing condition. The objective of the program is to relieve insurer/employers of the burden of compensation attributable to a condition existing at the time of an injury, and avoid situations where an individual could not be employed because of risks related to an existing disabling condition.
The Fund's enabling law (Article 101, §66, Annotated Code of Maryland) establishes a mechanism for assessment of employers for the money in the Fund, and for management and investment of these monies by the Fund. It provides that disbursements from the Fund are to be made to claimants based on a determination by the Commission, and establishes criteria for these determinations. According to the Requestor, the fundamental criteria are that the combined disability from the pre-existing condition and the subsequent impairment result in a "permanent disability exceeding fifty per centum (50 percent) of the body as a whole" and that the previous impairment must also have been a hindrance to employment.
In contested cases before the Commission, there are usually two parties, the claimant and the employer/insurer. If at any time during the proceeding it appears that the circumstances of the disability meet the criteria for Fund participation, then either party may implead the Fund, that is, move to have it added as another party. Possibly whether to implead the Fund at all could be a settlement issue. When it is impleaded, the Fund's status in the case and before the WCC is comparable to that of any other party. It is described by both the Requestor and the Commission's Counsel as "just another specialized insurer." (The State Accident Fund is another example of a specialized insurer involved in Commission claims.) The Fund is subject to the Commission's rules and jurisdiction and its rights and obligations are determined by the WCC in the same manner as other parties. The Commission has no budget, personnel, policy or other management authority over the Fund, though it does handle some of its administrative functions. In fact, according to the Requestor, the 1982 legislation abolishing the Workmen's Compensation Fund and establishing the Subsequent Injury Fund was specifically intended to separate the Fund from the Commission.
According to the Requestor, his duties are primarily administrative and mainly deal with the money held and managed by the Fund, including developing accounting mechanisms and keeping statistical information. He also has budget, legislative liaison and personnel duties, though he states that his personnel duties do not involve direction of attorneys who represent the Fund before the Commission. These individuals are members of the Attorney General's staff directed by a Supervising Attorney General who reports to the Attorney General. The Requestor states that he does not go to hearings or otherwise get directly involved in preparation for Commission hearings, though he may function as a general resource person who is familiar with the Fund's law, and he was recently authorized to approve settlements of up to $5,000. He also supervises investigators who may be involved in follow up tracking of claimants who are receiving Fund benefits.
The Requestor is an attorney who has what he describes as a very limited private practice.He says he does wills and other non-litigative matters. He indicates that recently he has had three matters pending before the Commission. The Requestor says that none of these cases involved the Fund. He states that he would not represent an individual whose claim involved the Fund, and would turn a case over to another attorney if the Fund were to be impleaded after a case had started. The issue here was initially raised when the Requestor first appeared before the Commission, and one of the Commissioners questioned whether there was a possible conflict of interest. As a result of this concern, a request was submitted to the Ethics Commission.
The primary issue presented here is whether the Requestor's representation of workmen's compensation claimants would violate the employment provisions of §3-103(a) of the Public Ethics Law.1 Subsection (a)(1)(i) of §3-103 prohibits an employee or official from being employed by or having a financial interest in an entity that is under his authority or that of an agency with which he is affiliated. Application of this provision to the circumstances presented here depends on interpretation of some of the more technical definitions of this section, particularly in defining the entity with which the Requestor is employed or has an interest. Under prior Ethics Opinions, individuals engaging in a solo private practice have been viewed as having both an interest and employment relationship with their practices.2 Also, the Requestor's appearances before the WCC on behalf of clients could be viewed as placing his private practice entity under that agency's authority.
It is not clear to us, however, that the WCC is an agency with which the Requestor is "affiliated" for purposes of §3-103(a)(1)(i). He works for the Fund, and these matters, of course, are being heard and determined by the Workmen's Compensation Commission. Based on this relationship, we conclude that even if the Requestor's representation of clients before the Commission brings him (as a law practice sole proprietorship) under the authority of that agency, his employment with another agency that may appear as a party before it does not, as a general matter, result in an "affiliation" with the WCC as contemplated in §3-103(a)(1)(i). We thus believe that the restrictively worded provision of subsection (a)(1)(i) does not apply here.
It is our view, however, that the more general inconsistent employment language of subsection (a)(1)(ii) does apply. This section generally forbids any employment that would impair the individual's impartiality or independence of judgment. In applying this provision we have not necessarily looked for actual existing impairment, but we have considered the nature of an individual's duties to determine whether he has official functions that would be impaired by his outside activities. The Requestor indicates that he does not directly appear in matters being presented to the Commission. He is, however, assigned significant liaison duties with the Commission and public or private entities concerning workmen's compensation legislative issues and other administrative matters. In our view, these duties, along with his general management and policy coordination with Fund legal staff, would be expected to be impacted by his having cases pending before the Commission, even though they may not involve the Fund. Also, he does have limited authority to approve WCC settlements involving the Fund.
Under these circumstances, and in view of the purpose of the Law to avoid conflicts of interest and even the appearance of conflict (see §1-201(b) of the Law), we believe that for the Requestor to maintain a legal practice handling workmen's compensation cases would be within the inconsistent employment prohibition of §3-103(a)(1)(ii) of the Law. We note that Requestor's prior cases have not involved the Fund or individuals with pre-existing conditions where the Fund could be expected to be involved. Commission personnel indicate, however, that very often the potential liability of the Fund may not be known or capable of evaluation at the time a case begins, and that the Fund may be involved in settlement negotiations and other preliminary determinations.
Thus, though the Requestor's limited past activity may not have presented an operational problem in the particular context of those cases, we believe that a continuing practice would raise serious concerns under §3-103(a)(1)(ii) and other sections of the Law.3 It would bring him before an administrative tribunal that adjudicates cases involving his State agency, and involve him as a private party in negotiations and other activities involving attorneys who might also be involved in dealings with the Fund, thus resulting in both appearance and potential impairment problems under §3-103(a)(1)(ii). We therefore advise the Requestor that he should refrain in his private legal practice from handling any cases before the Workmen's Compensation Commission.
Herbert J. Belgrad, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Thomas D. Washburne
Date: January 29, 1985
1 Article 40A, §3-103(a), Annotated Code of Maryland (the Ethics Law). Though compensation for workmen's compensation claims is contingent on the outcome, the contingent compensation provision of §3-103(c) of the Law would not appear to apply here since that section specifically provides that "nothing herein shall preclude an official or employee from assisting or representing a party for contingent compensation in any matter before or involving the Workmen's Compensation Commission ...."
2 See, for example, our Opinions No. 84-30, No. 84-22, No. 83-28, No. 83-5, and No. 82-51.
3 For example, the Requestor's status as the Fund's chief executive officer could, in itself, raise issues under the prestige of office provision of §3-104 of the Ethics Law.