Subject: Conflicts of Interest/Dual Position Holding and Business Associations
Requested By: Mary Ann Borgeson, Douglas County Board of Commissioners
Questions Presented: 1) Can a person serve as both a county board member and the Policy Secretary of the Nebraska Department of Health and Human Services? 2) Can a county board member vote on matters involving her employer? 3) Can a county board member functioning as the chairman of the governing board of a mental health region vote on matters concerning her employer? 4) Can a county board member, functioning as a member of a governing board of a county hospital, serve as chair of the board and vote on matters involving her employer?
Conclusion: See analysis.
Facts: A member of the county board is considering applying for the position of Policy Secretary with the Nebraska Department of Health and Human Services. She wishes to know if she can serve simultaneously as a member of the county board and as Policy Secretary.
The county board member holds the position of Community Service Systems Representative with Alegent Health. In that position she is responsible for Alegent’s community plan which essentially involves positive interaction with the community. Alegent Health is in the business of operating health care facilities and conducting health care programs in health care facilities. Her only relationship with Alegent is an employee/employer relationship. Neither the county board member nor a member of her immediate family own stock in Alegent.
The county board member is considering applying for the position of Policy Secretary with the Nebraska Department of Health and Human Services (HHS).
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It is the duty of the Policy Secretary to facilitate planning and coordinate budgets within the state Health and Human Services System. See §81-3008 of the state statutes. The county board member wishes to know if it is a conflict of interest for her to serve simultaneously as the Policy Secretary and a county board member.
As a member of the Douglas County Board, the board member serves on the governing body of Region VI. Region VI is a mental health region created by §71-5003. The county board member wants to know if she has a conflict of interest as to matters coming before the Region VI governing body involving Alegent Health.
As a member of the Douglas County Board, the board member serves on and chairs the Board of Trustees of the Douglas County Hospital. The members of the county board serve as the members of the hospital board of trustees pursuant to the provisions of §23-3502(4) of the state statutes. The board member wants to know if it is a conflict of interest for her to serve as the Chairperson of the Board of Trustees of the Douglas County Hospital because of her employment with Alegent. Further, she wants to know if she has a conflict as to matter coming before the Board of Trustees involving Alegent.
Analysis: Section 49-1499 of the Nebraska Political Accountability and Disclosure Act (NPADA) provides that an elected county official has a potential conflict of interest if he or she is faced with taking an official action or making an official decision which could result in a financial benefit or detriment to: a) the official; b) a member of his or her immediate family; or c) a business with which he or she is associated. In addition, the benefit or detriment must be distinguishable from that experienced by the general public or a broad segment of it.
An elected county official with a potential conflict of interest is required to disclose the interest in writing to the Nebraska Accountability and Disclosure Commission. If the Commission finds that there is a conflict, the county official is required to take such action as the Commission shall prescribe to remove himself or herself from the conflict. Typically, the Commission requires the official to abstain from participating or voting on the matter in which there is a conflict.
The term immediate family is defined by §49-1425 as “a child residing in an individual’s household, a spouse of an individual, or an individual claimed by that individual or that individual’s spouse as a dependent for federal income tax purposes.”
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The term business is defined by §49-1407 as “any corporation, partnership, limited liability company, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint-stock company, receivership, trust, activity, or entity.”
Section 49-1408 of the NPADA describes a business with which an individual is associated as a business in which the official is “a partner, limited liability company member, director or officer.” An individual may also have a business association if the individual or a member of that individual’s immediate family own closed corporate stock in the entity valued at one thousand dollars or more or which represents a five percent equity interest. If the stock is publicly traded a business association exists if the individual or a member of his or her immediate own stock valued at ten thousand dollars or more or which represents a ten percent equity interest.
With these provisions in mind, we respond to the questions presented.
Question: Would it be a conflict of interest to simultaneously serve as a member of the Douglas County Board and as Policy Secretary for HHS?
Response: No. Holding two governmental positions simultaneously is referred to as dual office holding. The NPADA does not prohibit dual office holding. In fact, neither §49-1499 nor the rest of the NPADA addresses the matter at all. In order to determine if there is a legal impediment to dual office holding one must look to the statutes governing each position. That is, the county board member must look to the statutes pertaining to county board members and the statutes pertaining to the Policy Secretary. The statutes pertaining to some positions include restrictions on the activity of the person holding that position. For example, §75-101(3) pertaining to members of the Public Service Commission provides that a “commissioner shall not hold any other office under the government of the United States, this state, or of any other state and shall not, while such commissioner, engage in any other occupation.”
Section 81-3008 of the Nebraska Statutes requires the Policy Secretary “to serve full time at the pleasure of the Governor.” Potentially, the requirement of full time service could preclude simultaneous service as a county board member. However, this provision is outside Commission’s jurisdiction and we have no authority to interpret it. Consequently, the county board member may wish to seek legal advice on this issue from another source.
Question: Can a county board member vote on matters coming before the county board involving her employer?
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Response: Yes, if the county board member does not have a business association with the employer as defined in §49-1408. An individual who is an employee of a corporation, but who is not an officer, director, limited liability company member or partner does not have a business association with corporation by virtue of the employment. The county board member is an employee of Alegent. She is not an officer, director, limited liability company member or partner of Alegent. Neither she nor an immediate family member own stock in Alegent. Accordingly, she does not have a business association with Alegent.
In taking the position that employment with an entity does not by itself constitute a business association we note that an earlier version of §49-1408 provided that an individual could have a business association based upon being “a partner, director, officer, or employee”. However, in 1986 LB 548 deleted the word employee from section 49-1408. We must conclude, therefore, that section 49-1408 as it exists today, is not intended to include an employee.
Question: Can a county board member functioning as a member and chair of the governing board of a mental health region vote on a matter coming before the mental health region board which involves her employer?
Response: Yes. As stated above, the county board member does not have a business association with the employer. Consequently, she would not have a conflict of interest based upon the fact that the matter before the mental health region board involves her employer.
Question: Can a county board member functioning as a member of the board of trustees of a county hospital vote on matters coming before the board of trustees which involve her employer? Can she serve as the chair of the board?
Response: Yes. As stated the county board member does not have a business association with the employer and does not have a conflict of interest as the result of that employment. There is nothing in the NPADA which would prohibit the county board member from serving as chair of the board of trustees.
It is important to note that this opinion is based upon our understanding that the only potential interest that the county board member has in matters involving her employer is the employment itself. If action by the county board, the hospital board of trustees, or the mental health region board as to Alegent results may result in a financial benefit or detriment to the county board member or a member of her immediate family, a conflict could exist. For example, if an action by one of these governing bodies as to Alegent makes it reasonably foreseeable that the county board member would receive a promotion or a commission, she would
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have a potential conflict of interest. Under such circumstances, she would be required to follow the disclosure process prescribed by §49-1499.
Summary: A county board member who serves by virtue of that position as a member of a mental health region board and a county hospital board of trustees does not have a conflict of interest as to matters coming before any of those governing bodies involving her employer if mere employment is her only connection with the matter. Nothing in the NPADA would prohibit her from serving as the chair of the hospital board of trustees. It is not a conflict of interest to simultaneously serve as a county board member and the Policy Secretary for the Nebraska Department of Health and Human Services. The NPADA does not address the concept of dual office holding.
Adopted as an Advisory Opinion pursuant to the provisions of §49-14,123(10) and Title 4, Chapter 1, Rules of Practice and Procedure. As provided in §49-14,123(10), this Advisory Opinion shall be binding upon the Commission, unless amended or revoked, concerning the person or public body who requested the opinion and acted in reliance on it in good faith unless material facts were omitted or misstated by the person in the request for the opinion.
Dated this ______ day of March 1999.