No. 08-I-13 State Ethics Commission Official Advisory Opinion September 2008
The Indiana State Ethics Commission (“Commission”) issues the following advisory opinion concerning the State Code of Ethics pursuant to IC 4-2-6-4(b)(1).
Summary
42 IAC 1-5-5 Outside employment (IC 4-2-6-5.5)
42 IAC 1-5-6 Conflicts of interest; decisions and voting (IC 4-2-6-9)
42 IAC 1-5-7 Conflicts of interes; contracts (IC 4-2-6-10.5)
A Charge Nurse with Madison State Hospital inquired as to whether a conflict of interest would arise if the Hospital referred patients to an adult care facility owned by his wife. SEC found that no conflict of interest would arise despite his vested interest as long as the Charge Nurse observed the prohibitions found in each of the aforementioned rules, namely the restrictions on disclosing confidential information and the requirements for entering into a contract with the State.
Background
A Registered Nurse was hired by Madison State Hospital (“Hospital”) as a Charge Nurse 3, two months ago. The Hospital is part of the state’s Family and Social Services Administration (“FSSA”).
The Charge Nurse’s wife owns a business which provides care for elderly individuals on the Medicaid Waiver program or for private payment. In addition, his wife has a contract under the Adult Foster Care program (“AFC”) of FSSA. Pursuant to this contract, the AFC inspects the Charge Nurse’s business yearly. Last month, the Charge Nurse and his wife were approached by the local Council on Aging regarding the placement of a patient from the Hospital in one of his wife’s care facilities.
The Charge Nurse’s wife has owned the business for nine years. While his wife is the owner, the Charge Nurse acquired a vested interest in the business when they married last year. The Charge Nurse handles the paperwork for the business on his off hours from his job at the Hospital. His wife handles any decisions related to accepting a patient into care from the Hospital. The income earned from this venture helps support their family.
As a Charge Nurse at the Hospital, he states that he does not have any input on the placement of Hospital patients in healthcare facilities.
Issue
Would a conflict of interest arise for the Charge Nurse if the Hospital refers patients to an adult care facility owned by his wife?
Relevant Law
IC 4-2-6-5.5
Conflict of interest; advisory opinion by inspector general
IC 4-2-6-9
Conflict of economic interests
IC 4-2-6-10.5
Prohibition against financial interest in contract; exceptions
IC 4-2-6-1
Definitions
Analysis
Based on the facts of this case, a conflict of interest under IC 4-2-6-5.5 could possibly arise for the Charge Nurse if his involvement in his wife’s business would require him to disclose confidential information that was gained in the course of his state employment. To the extent that his involvement in the business would not trigger any of the restrictions set forth in the rule, particularly subsection (b), a conflict of interest would not arise for the Charge Nurse.
A second conflict of interest could arise for the Charge Nurse under IC 4-2-6-9. This provision prohibits a state employee from participating in any decision or vote in which various individuals, including the employee or the employee’s spouse, has a financial interest in the outcome of the matter. According to this rule, the Charge Nurse would be prohibited from participating in a decision or vote in which he or his wife has a financial interest in. In this case, the prohibition would apply to a decision regarding the referral of a Hospital patient to his wife’s business. However, because the Charge Nurse indicates that he does not have decision making authority in his position with the Hospital regarding patient placement, it does not appear that a conflict of interest under IC 4-2-6-9 would arise.
A third conflict of interest rule that must be considered is IC 4-2-6-10.5. This rule generally prohibits a state employee from having a financial interest in a contract made by an agency. This restriction, however, does not apply to an employee that does not participate in or have official responsibility for any of the activities of the contracting agency, provided the statutory criteria are met.
In this case, the Charge Nurse does not appear to have contracting responsibilities at the Hospital. However, the restriction in IC 4-2-6-10.5 applies when a state employee has an interest in a contract made by an agency. The Charge Nurse indicates that he has a vested interest in his wife’s business by virtue of their marital status. In addition, the Charge Nurse owns one of the homes that is utilized in the business. Accordingly, the Charge Nurse must ensure compliance with the statutory criteria set forth in IC 4-2-6-10.5 (b)(1)(A)-(D).
Conclusion
To the extent that the Charge Nurse ensures compliance with the foregoing analysis, a conflict of interest would not arise for the Charge Nurse if the Hospital refers patients to an adult care facility owned by his wife.