This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on June 1, 2001, basing its approval solely on the facts and circumstances stated herein.

May a community hospital contract to pay the moving and relocation expenses and a portion of the student loans of a physician to relocate within the hospital's service area when the physician will be employed by a medical clinic in which a member of the hospital's board of trustees is an equity member?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."

Code Section 25-4-103(c), (f)(i)(ii), (g)(v), (h) and (p)(i)(ii)(iii) states:

"(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105(2) states:

"(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member."

Pertinent facts and circumstances in the form of the requestor's letter, absent identifying data, are attached hereto and considered a part of this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

Constitutional Section 109 and Code Section 25-4-105(2), both cited above, prohibit a member of a governmental body, including a community hospital trustee, from having an interest, direct or indirect, in a contract authorized by the member's body or board during his term and for one year thereafter.

In Frazier v. State, 504 So. 2d 675, (Miss. 1987), the Mississippi Supreme Court set forth the four elements for applying the prohibition imposed by Constitutional Section 109 (and therefore Code Section 25-4-105(2)). The four elements are:

1. Is there a governmental contract with the state, county, municipality or district?

2. Does the public officer have an interest, direct or indirect, in the contract?

3. Is the contract authorized by a law passed or order made by a board or public body of which the public officer is a member?

4. Was the authorizing law or order passed during the public officer's term or within one year after the expiration (or termination) of such term?

In the circumstance presented herein, all four elements identified by the State Supreme Court in Frazier will be met.

First, there will be a governmental contract between the community hospital and the physician.

Second, the hospital trustee will have an interest in the community hospital's contract with the physician as the physician will become an employee of the trustee's medical clinic.

Third, the physician's contract will have been authorized by the community hospital's board of trustees.

Finally, the community hospital's contract with the physician will have been authorized during the hospital trustee's term of office.

Based on the above, Constitutional Section 109 and Code Section 25-4-105(2) will prohibit the community hospital from contracting with the physician to pay his moving and relocation expenses and a portion of his student loans when the physician will be employed by the medical clinic in which the hospital trustee is an equity member.

The different scenarios and alternatives set forth in the requestor's letter in Issue 1a and 1b, Issue 2, 2a, 2b and 2c, and Issue 3 will not affect or modify the above finding.

The requestor is cautioned to advise the hospital trustee that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2). Even without a board member's vote, the authorization by the member's board nonetheless results in a contract in which the board member has a prohibited interest.
 

Ronald E. Crowe

Executive Director