Opinion 2000 - 8


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


CONFLICTS OF INTEREST -- Interest in Contract (county health commissioner as partner with a member of a not-for-profit corporation providing home health care services to county) -- Medical Services (county health commissioner as partner with a member of a not-for-profit corporation providing home health care services to county)

HEALTH AND HEALTH SERVICES -- Contracts for (home health care services)

PUBLIC HEALTH LAW 352; GENERAL MUNICIPAL LAW 800(3), 802(1)(f): A county public health commissioner who has a real estate partnership with a member of a not-for-profit corporation that provides home health care services to the county would not have a prohibited interest in the not-for-profit corporation's contract with the county. The county, however, should review its code of ethics to ascertain whether it contains any pertinent provisions. Also, the commissioner should consider recusing himself from the performance of functions in connection with the award of the contract for home health care services, with those functions instead being performed by a deputy.

You ask whether a county public health commissioner who has a real estate partnership with a member of a not-for-profit corporation that provides home health services to the county has a conflict of interest. The real estate partnership has not rented and does not currently rent space to the county. Also, the not-for-for-profit corporation presently does not rent space from the partnership, although in the past the corporation was a tenant of the partnership. You state that, in connection with contracts for home health care services, the public health commissioner has certain of the powers and duties set forth in General Municipal Law 801 (see Public Health Law 352). You further state that, at the time of the commissioner's appointment, the not-for-profit corporation had a contract with the county to provide home health care services and that, at that time, the commissioner also was a member of the corporation. Several months after his appointment, he relinquished his membership in the corporation.

Article 18 of the General Municipal Law (800 et seq.) contains provisions of law which relate to conflicts of interest of municipal officers and employees, including county officers and employees (General Municipal Law 800[4], [5]). Pursuant to section 800(3) of the General Municipal Law, a municipal officer or employee has an "interest" in any contract with his or her municipality if he or she receives a direct or indirect pecuniary or material benefit as a result of that contract. In addition, a municipal officer or employee is deemed to have an "interest" in the contracts of a firm, partnership or association of which he or she is a member or employee, and in the contracts of a corporation of which he or she is an officer, director, employee or stockholder (General Municipal Law 800[3][b]-[d]). For this purpose, a "contract" includes any express or implied claim, account, demand against, or agreement with a municipality (General Municipal Law 800[2]).

Unless a statutory exception applies (see General Municipal Law 802), section 801 of the General Municipal Law would prohibit the interest if the officer or employee, individually or as a member of a board, has the power or duty to: (a) negotiate, prepare, authorize or approve the contract or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such powers or duties. When an interest is not prohibited, section 803 generally requires written public disclosure of the nature and extent of actual or prospective interests in contracts, to be made to the governing board of the municipality for inclusion in the official record of the board's proceedings. 

Based on the foregoing, since the real estate partnership presently does not rent property to the not-for-profit corporation, it appears that the commissioner would not derive a direct or indirect pecuniary or material benefit as a result of the county's contract with the not-for-profit
corporation. Moreover, even if the commissioner did have an interest as a result of the county's contract with the not-for-profit corporation, the interest would not be prohibited because of the exception in General Municipal Law 802(1)(f). Section 802(1)(f) provides an exception for contracts with not-for-profit corporations or other voluntary not-for-profit corporations or associations, although disclosure pursuant to section 803 would be required.1

Although we conclude that there would be no prohibited interest in the county's contract with the not-for-profit corporation here, the county, nonetheless, should review its code of ethics to ascertain whether it contains any pertinent provisions. Section 806(1)(a) of the General Municipal Law requires the governing body of each county, city, town, village and school district to adopt a code of ethics setting forth for the guidance of its officers and employees the standards of conduct reasonably expected of them.

Moreover, the courts of this State have held public officials to a high standard of conduct and, on occasion, have negated certain actions which, although not violating the literal provisions of article 18 or a municipality's code of ethics, violate the spirit and intent of these enactments, are inconsistent with public policy, or suggest self-interest, partiality or economic impropriety (see, e.g., Zagoreos v Conklin, 109 AD2d 281, 491 NYS2d 358; Matter of Tuxedo Conservation and Taxpayers Ass'n v Town Board of the Town of Tuxedo, 69 AD2d 320, 418 NYS2d 638; Conrad v Hinman, 122 Misc 2d 531, 471 NYS2d 521). Thus, even in the absence of a violation of article 18 or the county's code of ethics, the county should take steps to ensure that selection of a home health care provider does not give rise to even an appearance of partiality. Compliance with competitive bidding requirements or, when competitive bidding is not required, with a request for proposals or quotation process in accordance with the county's procurement policies and procedures (see General Municipal Law 103, 104-b) can help ensure that such contracts are awarded in the best interests of the county (see 1996 Opns St Comp No. 96-6, p 13). In addition, if the position of deputy commissioner has been established (see Public Health Law 353), the commissioner should consider recusing himself from the performance of functions in connection with the award of the contract for home health care services, with those functions instead being performed by the deputy (cf. Kagatt v Dinkins, 148 Misc 2d 510, 560 NYS2d 736; see 1998 Opns St Comp No. 98-3, p 6).

May 17, 2000
Daniel J. Guiney, Esq., County Attorney
County of Allegany

1 We note that, as a member of the corporation, the commissioner had an interest in the county's contract with the not-for-profit corporation at the time he was appointed to office (see General Municipal Law 800; 27 Opns St Comp, 1971, p 186). That interest, however, was not prohibited because the contract was with a not-for-profit corporation and was entered into before he was appointed to office (General Municipal Law 802[1][f], [h]). Disclosure, however, was required pursuant to section 803.