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State Ethics Commission is not required to show an individual knowing and intentional engaged in prohibited post-public employment conduct

State Ethics Commission is not required to show an individual knowing and intentional engaged in prohibited post-public employment conduct
Matter of Gormley v New York State Ethics Commn., 2008 NY Slip Op 09245, decided on November 24, 2008, Court of Appeals

The issue before the Court of Appeals: Does Public Officers Law §73(18) required the New York State Ethics Commission to prove that an individual knew the alleged offending conduct was prohibited and he or she acted intentionally to violate the statute in order to impose a penalty? The Court of Appeals concluded that the Commission is not required to make such a showing.

William J. Gormley worked for the New York State Department of Health (DOH) from 1973 to 1995, serving in a variety of senior management positions including serving as Executive Director of a project that developed and implemented New York's "RUGS-II case mix reimbursement system." RUGS-II was a system used to determine Medicaid reimbursement rates paid to nursing homes.

In 1997 Gormley established a health care consulting firm. In 2004 he was paid $11,880 by a group of nursing homes to prepare an expert affidavit to support their litigation challenging the RUGS-II system.

The Ethics Commission notified Gormley that he may have violated the "lifetime bar" under Public Officers Law §73(8)(a)(ii) when he executed his ?expert affidavit? for the nursing homes. Public Officers Law §78[8](a)(ii) -- the so-called lifetime bar -- provides that a state employee shall not "after termination of [state] service [1] practice, communicate or otherwise render services before any state agency or [2] receive compensation for any such services rendered ... on behalf of any ... entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he or she personally participated during the period of his ... service or employment, or which was under his ... active consideration."

Ultimately the Commission determined that portions of Gormley affidavit violated the lifetime bar because it took "unfair advantage of his insider's knowledge." The Commission imposed a civil penalty of $3,500 pursuant to Public Officers Law §73(18). In so doing, the Commission rejected Gormley?s argument that the statutory language "knowingly and intentionally" required the Commission to show that he knew that his actions violated the law.

In addressing Gormley?s appeal of the Commission?s determination, the Appellate Division found that substantial evidence supported both the Commission's determination that (1) the lifetime bar had been violated and (2) its imposition of a civil penalty.

Conceding that his conduct violated the statute?s lifetime bar, Gormley continued his challenge to the civil penalty imposed by the Commission by appealing to the Court of Appeals. His argument: the Commission was required to show that he "knowingly and intentionally" violated the law in order to impose a civil penalty.

The Court of Appeals affirmed the Appellate Division?s ruling, noting that Public Officers Law §73(18) provides that "any person who knowingly and intentionally violates the provisions of subdivision ... eight ... shall be subject to a civil penalty" (emphasis added)." "In this case,? said the court, Gormley ?conceded that his actions constituted a violation of the lifetime bar provision."

To impose a civil penalty, said the court, the Commission needed only to show that Gormley was aware of the nature and circumstances regarding the submission of the expert affidavit on the RUGS-II system, a matter in which he personally participated, and had the conscious objective to prepare the expert affidavit.

The bottom line: The Ethics Commission is not required to show that an individual?s actions constituted a ?knowing and intentional? violation of the Ethics Law in order to find the individual guilty and impose a penalty authorized by law.

The full text of the decision is posted on the Internet at:

http://www.courts.state.ny.us/reporter/3dseries/2008/2008_09245.htm

Full post as published by New York Public Personnel Law on November 25, 2008 (boomark / email).