86.17

OPINION NO. 86-17

The attorney for Prince George's Community College (PGCC or the College) has requested an opinion as to whether the President of the College may accept appointment as a noncompensated director of the Institutional Board of Prince George's General Hospital and Medical Center (the Hospital), a major hospital within Prince George's County. The Hospital is one of several former county facilities now operated by the Community Hospital and Health Care Systems, Inc. (the Corporation). The By-laws of the Corporation establish a central Board of Directors with the power and authority to manage the property and affairs of the Corporation. It is the entity that makes all of the general policy decisions as to the programs and activities of the individual facilities within the system.

Each facility, in turn, has its own Institutional Board which appears to have the general operational responsibility for managing the facility and implementing the programs and policies established by the central Board of Directors. For example, among other things, the Corporation's By-laws provide that the Institutional Boards:

1) recommend policies for approval and make recommendations regarding new programs, and monitor and evaluate the efficacy of policies, programs and services;

2) consistent with the Board's policies, determine standards for and verify the qualifications of physicians requesting the privilege of giving medical treatment to patients in the facility;

3) assure the facility's compliance with the Board's rules and regulations governing the admission of patients and care and treatment of patients;

4) consistent with Board policies, monitor and make recommendations concerning the adherence of facility employees to required standards of licensure, accreditation and certification;

5) formulate and recommend policies and programs concerning marketing, public relations and community out-reach; and

6) require the medical staff to establish proper by-laws governing the professional activities of the facilities in the ethical practice of medicine, conduct of staff members, qualifications of staff membership, and other provisions necessary for the welfare of all patients and the protection of the facility.

The By-laws also provide for indemnification of all officers, including members and officers of the Institutional Boards, against any liability asserted against and incurred upon them by virtue of their status with the Corporation.

The President has been employed by the College since 1962 and served as its President since 1972. Pursuant to the Education Article, §16-203, Annotated Code of Maryland, the Board of Trustees of the College is responsible for and exercises full control over the College. In addition, §16-204 of the Education Article defines the duties of community college presidents to include:

1) reporting directly to the Board of Trustees;

2) recommending the appointment by the Board of qualified faculty and employees;

3) recommending the discharge of employees for good cause by the Board;

4) being responsible for the conduct, administration and supervision of the College; and

5) attending the meetings of the Board.

The Board has also delegated significant administrative authority to the President, including the authority "to contract, in furtherance of Board approved programs and curricula, with governmental and private institutions, agencies, firms and organizations for the purposes of providing clinical, practical, and/or on-the-job training or work-study opportunities for students of the College." The President has also been delegated significant responsibilities in initial faculty appointments and to contract for the full or part-time services of other personnel.

Prince George's Community College has a student body of approximately 7,500 FTE (full-time-equivalent) students. Its programs include a number of offerings in the health technology fields, including medical laboratory, medical record, nuclear medicine, nursing, radiology technology and respiratory therapy. There are approximately 500 students in these programs, which involve collaborative efforts with many medical facilities in the area. The Hospital, however, is the largest facility in the area, and is therefore one with which the College has significant relationships. Provision of clinical opportunities (for nursing students, for example) also involves provision of services by the students to the Hospital.

There are several agreements between the College and the Hospital (all signed or designated to be signed by the President on behalf of the College). They involve arrangements for the Hospital to provide clinical and educational opportunities for College students in the health technology fields, as well as provision for hospital physicians to serve as medical directors of certain College programs. Except for compensation paid to physicians serving as medical directors, these agreements apparently do not involve the direct exchange of funds. The agreements, however, do appear to require some College expenditure for insurance coverage. The College has also offered extension courses in hospital facilities without formal agreement, and apparently "the College and Hospital have enjoyed a close working relationship for many years." This seems to be part of the reason for the President's selection.

This request presents issues under the outside employment provisions of §3-103(a)(1) of the Public Ethics Law (Article 40A, §3-103(a)(1), Annotated Code of Maryland, the Ethics Law), particularly the strict bar in subsection (a)(1)(i) against employment with an entity that contracts with one's agency. As a preliminary matter we believe that the President's service on the Institutional Board constitutes an employment relationship. We recognize the position is not compensated, and that the primary policy-making and governing body of the Hospital appears to be the Corporation's Board of Directors. The Institutional Boards, however, do seem to have substantial operational responsibilities, and the fact that their members are included in the indemnification program could reflect an expectation that they have and exercise authority in the operation and management of their respective facilities. We have consistently held that even non-compensated service on governing boards of organizations gives rise to the type of fiduciary duty and duty of loyalty that must be viewed as an employment relationship, and believe this is the case here.1

Since the President's service on the Institutional Board would constitute employment with the Hospital, it would be covered by §3-103(a)(1)(i) if the College contracts with the Hospital. There appear to be many types of interaction between the two entities, some formal and others more casual. Though they may not involve direct payments between the College and the Hospital, these agreements do reflect substantial operational obligations. We have in the past found these types of agreements to be contracts for purposes of §3-103(a)(1)(i) (see, for example, Opinions No. 82-4 and No. 84-2), and therefore conclude that the President's affiliation with the Hospital would be prohibited by §3-103(a)(1)(i) unless an exception can be applied based on criteria developed pursuant to statutory exception language set forth in §3-103(a) of the Law. This language allows exception from the prohibition, in accordance with Commission regulations, where the relationship would not result in a conflict of interest or appearance of conflict. The regulations dealing with outside employment exceptions are published at COMAR 19A.02.01. Their approach is to set forth general guideline criteria for assuring that an outside employment relationship is so remote from the individual's agency activities and official duties that the possibility of a conflict or appearance thereof is remote.

The criteria include, for example, consideration of possible impact by the employee on his outside employer, and also the relationship of the employee to supervisors, other employees, or the unit of his agency that impact on his outside employer. The regulatory criteria also deal with the nature of the employee's private duties, considering whether they involve implementation of a contract between the employer and the agency and whether the individual's private compensation comes directly from the State contract. Our application of the criteria to this request reflects some concerns that are similar to those presented in earlier Opinions addressing comparable issues. In an early Opinion applying the regulatory exception criteria, for example, we found that an administrator in the Crippled Children's Program of the Department of Health and Mental Hygiene could not serve on the Board of Trustees of a hospital with which his program was involved (Opinion No. 82-45). In another Opinion we reviewed the criteria in detail and advised a University of Maryland Chancellor that he could not serve on the Board of Directors of a private company that had contractual dealings on his campus (Opinion No. 83-1).

We believe that the situation here raises similar concerns. The President is the primary administrative and programmatic officer of the College, and the health technology programs present a significant component of the entity's academic program. He is responsible to enter into agreements with the Hospital that are vital to the effective functioning of these programs, and he has personnel and other supervisory authority over other College employees involved in these programs. Also, his responsibilities on the Institutional Board would, as in Opinion No. 82-45, significantly involve fundamental operational activities involved in managing the Hospital. His situation would therefore present concerns under aspects of the criteria dealing with the nature of his College duties, and also his functions on behalf of the Hospital.

Under all of these circumstances we are unable to conclude that the relationships between his private and official activities are sufficiently remote to allow an exception. We therefore advise the President that his proposed service on the Hospital's Institutional Board is prohibited by §3-103(a)(1)(i) of the Ethics Law and that this prohibition cannot be overcome by application of the regulatory exception.

Thomas D. Washburne, Chairman
    Reverend John Wesley Holland
    Betty B. Nelson
    Barbara M. Steckel

Date: July 8, 1986

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1 See for example, our Opinions No. 85-19, No. 84-26, No. 84-23 and No. 83-24.