Ethics Commission advice has been requested as to whether and how the exemption and other provisions of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) apply to the service on the Board of Examiners of Nursing Home Administrators (the Board) by an individual affiliated with a major operator of and provider to nursing homes within the State.1 We advise that a properly completed Time of Appointment Exemption Disclosure would result in exemption of the conflicts arising under the strict employment and interest prohibitions of §3-103(a) of the Law. Other provisions of the Law continue to apply, however, and would very significantly constrain the Requestor's activities.
The Requestor serves on the Board of Nursing Home Examiners and is currently being considered for reappointment. This Board is a unit of the Department of Health and Mental Hygiene (DHMH) established pursuant to Health Occupations Article, §8-101 et seq., Annotated Code of Maryland. It includes 11 members, appointed by the Governor based on the recommendation of the Secretary, with the advice and consent of the Senate. There are three consumer members who may not have any business relationships that involve the nursing home industry. Four members must be licensed nursing home administrators and the remaining four must be persons who are not nursing home administrators but who are actively engaged in professions dealing with care of the chronically ill, aged or infirm.
The Board's function is to implement the State's program for licensing administrators of nursing homes. The law provides that a nursing home may not be operated unless it is under the supervision of a licensed nursing home administrator. The Board is empowered to adopt standards for license application and practice of licensees, and to conduct continuing study and investigation of nursing homes and nursing home administrators to improve licensing standards and procedures for enforcing them. The Board has enforcement authority to suspend and revoke licenses and issue reprimands, and may establish continuing education requirements as a condition of renewal. The regulations of the Board also define the general powers of the Board as including the authority to enter any nursing home in the State in connection with its licensing responsibilities, and further provide for access to the licensing file of any nursing home, as well as coordination with the nursing home certification agency in State government in connection with its function to monitor the continuing compliance with the law by licensees.
The Board has an active program. As of March 1992 it had issued 35 new licenses, and 145 renewals for fiscal year 1992, and had a total of 531 active licenses. It had pending approximately 300 files in some stage of license review, and had 32 people in Administrator-in-Training (AIT) Programs. The Board administers 2 written exams 6 times per year and an oral exam 10 times per year. Over 200 continuing education programs have been approved in the fiscal years ending in June 1991 and 1992. The Board meets monthly, and members participate in subcommittees, including Credentials, Complaints and Investigations, Education, Legislative/Rules & Regulations, Liaison, Visitation, Nursing Home Administrators Rehabilitation, and HIV Infected Practitioners Policy Committees.
A significant aspect of the Board's work involves the licensing and credentialing process. This entails meeting academic requirements, completion of up to one year of practical training pursuant to a contract agreement with a preceptor at a particular nursing home, and passing an oral exam administered by the Board's Credentials Committee. Though a significant amount of the processing of the applicants is handled by the Board's staff and the Credentials Committee, there are still many aspects of the process that are reviewed and ruled on by the full Board, which makes decisions on whether to allow prior experience to be applied to reduce the time frame for the AIT Program, and approves all licenses. Also, all members of the Board appear to be members of the Visitation Committee through which a Board member and the Board's Executive Secretary visit the nursing home where the person is training and meet with the individual about the status of the program and the experience to date.
Board members also participate in the processing of complaints received from a variety of sources, voting on recommendations by the Complaints and Investigations Committee on whether to refer formal charges to the Attorney General, and hearing and making the decision in any subsequent administrative process. These matters come before the full Board in several parts of the process and Board members receive information regarding the matter and the surrounding circumstances. The Requestor has participated in visits on several occasions, and serves on and is Chair of the Education Committee. This Committee reviews materials submitted by colleges, individuals, and other organizations for approval of academic and other programs for continuing education credit. The Requestor also is the sole member of the Liaison Committee.
The Requestor was appointed to the Board in June 1990 to fill the remainder of a three-year term that expired in April 1993. She was subsequently appointed by the Governor as Vice-Chairman in 1992. The Requestor was appointed to fill an affiliated professions position on the Board. Materials regarding her appointment thus reflected the fact that at the time of the appointment she was owner and CEO of a private business that would be expected to have significant relationships with the nursing home industry. The business had two primary activities: the sale of nursing-related medical supplies and equipment, and consulting and education in the nursing field. This request originally involved the Requestor's ownership and employment relationships with this business. As the Requestor's activities entailed marketing that was potentially directed to all nursing homes in the State, it was our view that substantial concerns were presented under the employment and interest provisions of §3-103(a)(1) of the Ethics Law.
After presentation of the request, however, this business apparently was sold to another entity, a Pennsylvania corporation that owns and operates nursing homes in the mid-Atlantic region (the Corporation). Subsequently the Corporation in turn purchased another entity, a major nursing home chain that owns and operates many nursing homes in Maryland. As the situation stands as of the issuance of the opinion, the Requestor thus does not have an interest in the business. She is an employee of a Corporation which is very likely the largest nursing home operator in the State, and which engages in other allied activities, including sale of pharmaceutical supplies and nursing supplies and consulting services as provided by the Requestor's former business. The Requestor serves as the Corporation's Vice President of Marketing and Program Development. According to the Requestor, her duties involve developing marketing plans and new programs as a corporate function, and also training activities in the marketing area. She indicates that she has no direct sales responsibilities that would involve direct interaction with nursing homes, but that she will retain customer service relationships with nursing home facilities served by her in her original business.
Section 3-103(a) of the Ethics Law prohibits an official, including a member of a board or commission, from being employed by or having an interest in an entity that contracts with or is subject to the authority of their agency (subsection (a)(1)(i)). It also bars any other employment relationship that would impair the individual's impartiality or independence of judgment (subsection (a)(1)(ii)). Also, § 3-101, 3-104 and 3-107 impact on the conduct of officials, limiting official participation, improper use of prestige, and use of confidential information, respectively.
In the situation here, though the Board's direct authority is focused on nursing home administrators, with the facilities themselves licensed by another DHMH unit, it is clear to us that there are significant and close relationships between these two regulatory programs, and that the Board's authority over the administrators carries over into the functioning of the nursing home facility itself. We therefore believe, in view of this close and significant relationship of the nursing home administrator licensing to the regulation, licensing and operation of nursing homes, that the Requestor's employment with the Corporation is also employment with an entity subject to the authority of her agency that is prohibited by the strict prohibition of §3-103(a)(1)(i) unless an exemption is allowed.2
Exception or exemption is permitted under several provisions of the Law. Section 3-103(a)(1), for example, allows for exception pursuant to Commission regulations addressing the question of whether particular employment results in a conflict of interest or appearance of conflict. Given the extent of the relationships involved here, we do not believe that the regulatory exception can be applied in this situation. The Law also establishes several exemption provisions applying directly to members of boards and commissions, aimed at allowing certain skilled people to be appointed to and retained on boards. This includes the appointee exemption defined in §3-103(a)(2)(iii), which provides that the employment and interest prohibitions of §3-103(a)(1) do not apply to a financial interest or employment held at the time of appointment, provided it is publicly disclosed to the appointing authority, the Commission, and, in instances where confirmation is required, to the Senate prior to confirmation.
The Requestor's term on the Board has expired and her reappointment is being considered by the appointing authority. We therefore conclude that she would be eligible to be exempted from the strict prohibitions of §3-103(a) pursuant to subsection (a)(2)(iii) if she were to submit a timely and properly completed Time of Appointment Exemption Disclosure Form at that time and it is accepted by the appointing authority and by the Senate. The appointee exemption, however, is an element of §3-103(a) and applies only to the strict employment and interest prohibitions of that section. As we regularly advise appointees who submit time of appointment forms, the other conduct-related provisions of the Law continue to apply to limit the activities of the individual while they serve on the State board or commission.
These provisions include §3-101, which requires disqualification from matters in which an individual has an interest or which involve as parties entities with which they have certain employment or business relationships, §3-104, which prohibits the use of prestige of office for one's own gain or that of another, and §3-107, which prohibits the use of official confidential information for one's own economic gain or that of another. These continuing limitations are designed to ensure that persons whose general skills and expertise warrant their appointment and exemption from the strict prohibition, nevertheless are not involved in their official activities in matters directly relating to a private employer, and do not use official position or information to advance the interests of their private employer. We have in interpreting these provisions of the Law generally not viewed them as totally excluding particular service or particular private activity. Rather, we have viewed them as conduct provisions that define constraints and controls on individuals in the conduct of their official functions and private activities.
Though we have concerns about the impact of application of these provisions on the continued viability of the Requestor's service on the Board, we advise the Requestor, the Department and the appointing authority that the Time of Appointment exemption can be applied to allow her appointment to the Board, but that her continued service without violation of the Ethics Law depends on her functioning within the guidelines set forth below regarding compliance with the nonparticipation, prestige and information provisions of the Ethics Law:
(1) The Requestor may not participate in any matter that involves a facility owned or operated by the Corporation, where the facility is identified as a discrete participant in the transaction. This includes, for example, undertaking visitations to these facilities, participating in complaints involving administrators of these facilities, approval or review of a continuing education program submitted by the Corporation for approval, or involvement in AIT program approval or reviews where a Corporation facility is a participant.
(2) The participation limitations in (1) above also apply where the facility involved is one with which the Requestor continues to interact in a customer service capacity, or is one with which her employer has significant vendor dealings.
(3) The Requestor needs to avoid activities on behalf of the Corporation that would involve the Board or related activities, particularly as to any policy or legislative issues where her position on the Board may be seen as relevant to the situation.
(4) The Requestor also needs to continue to be aware of the application of the information provisions of the Law, ensuring that confidential information regarding Board policy or specific decision matters is kept confidential.
In summary, we advise the Requestor that her employment by the Corporation is within the prohibition of §3-103(a) of the Ethics Law. Proper and timely submission of a Time of Appointment Exemption Disclosure would, however, result in application of an exemption allowing this service, provided that the Requestor complies with the other standard of conduct provisions of the Law. Whether her compliance with these provisions would totally impair her ability to function to the extent of limiting her service is a matter for evaluation and monitoring by the agency and the appointing authority.
Mark C. Medairy, Jr., Chairman
Shirley P. Hill
Michael L. May
Mary M. Thompson
Date: November 17, 1993
1 The nature of the Requestor's affiliations within the nursing home industry has changed since submission of the request. Advice provided in this opinion reflects Commission understanding of her relationships existing at the time of the issuance of the opinion.
2 As we believe that this request is within the strict employment provision in §3-103(a)(1)(i) and the exemption provision of §3-103(a)(2)(iii), we do not further discuss the §3-103(a)(1)(ii) impairment provisions in the text. We wish to note, however, our concern, given the significant relationships of the Requestor's employer to the nursing home industry in Maryland, that this provision of §3-103(a) would also have application to the Requestor\'s situation.