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Interpretative Opinion 00-01: Conflict of Interest

May 1, 2000

Charlotte Brookins-Hudson, General Counsel
Council of the District of Columbia
Washington, DC  20004

Re: Conflict of Interest – Councilmember Jack Evans

Dear Ms. Brookins-Hudson:

This responds to your request for an opinion, by letter dated April 27, 2000, concerning whether Councilmember Jack Evans’ vote on Bill 13-333, the “Physicians Negotiations Act of 2000” (Bill), presents a conflict of interest in view of his employment with Central Benefits Mutual Insurance Company (Central) of Columbus, Ohio.  You state that the Bill allows for “joint negotiation by competing physicians of certain terms and conditions of contracts with health plans”; and that some in the insurance industry claim that the passage of the Bill would “shift medical liability from providers to insurers, which could lead to additional and significant cost increases”.  Further, you state that it is speculated that  “a vote to defeat this legislation could be construed as benefiting insurance companies, including Central . . .”.  You advise that Mr. Evans has been associated with Central since January 1999.

  DC Code § 1-1461(b) provides that “[n]o public official shall use his or her official position or office to obtain financial gain for himself or herself . . . other than that compensation provided by law for said public official.  This subsection shall not affect a vote by a public official:  (1) on any matter that affects a class of persons (such a class shall include no less than 50 persons) of which such public official is a member if the financial gain to be realized is de minimis . . .”.

18 U.S.C. § 208 further restricts District employees from participating personally and substantially in government matters requiring decision-making and/or advice when, to their knowledge, they have a direct or indirect financial interest in the matter.  (emphasis added).  This federal statute has had longstanding applicability to District officers and employees, including members of the Council of the District of Columbia.
Pursuant to CFR § 2640.103, which implements 18 U.S.C. § 208, an employee’s participation is personal and substantial when he or she directly takes part in the matter, and his or her involvement is “of significance to the matter.”  Moreover, an employee is prohibited from participating in an official capacity in a matter in which he or she has a financial interest “if the particular matter will have a direct and predictable effect on the interest.”  The test for a direct financial interest is whether there is a “close causal link between any decision or action to be taken in the matter and any expected effect of the matter on the financial interest.”  A predictable effect is found where there is a real, rather than speculative, possibility that the matter will affect the financial interest.

In addition to matters that affect the employee’s own financial interests, the prohibition of 18 U.S.C. § 208 applies to particular matters that affect the financial interests of the employee’s spouse, minor child, general partner, or an organization or entity in which the employee serves as officer, director, trustee, or general partner.

Based on your representations, it would appear that the financial interests of Central Benefits Mutual Insurance Company, for whom Councilmember Evans serves as a Vice President and local representative, could be affected by the vote on Bill 13-333.  Further, it is conceivable that the outcome of this Bill may affect the financial interests of Mr. Evans by virtue of his employment with Central.  Therefore, it is the opinion of this Office that Mr. Evans should recuse himself from voting on the referenced legislation, and that he should follow the recusal procedures in DC Code § 1-1461(g), as implemented by regulations at 3 DCM.R. § 3303, to avoid a conflict of interest.