This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on July 8, 1994.

Are the Mississippi Ethics in Government laws violated should a city/county hospital enter into an agreement of employment with a physician to provide professional services and the use of the physician's building and equipment by the hospital?

1. Mississippi Laws outside the Jurisdiction of this Commission.

2. Any internal rules and/or regulations of a body which are in addition to (1) above.

The above areas, 1. and 2. are mentioned solely for your possible concern and are not for further comment by this Commission as it lacks authority to render opinion - interpretation in these areas. The Commission suggests that the requestor seek interpretation in these areas from the proper authority.

3. The conflict of interest legal provisions interpreted by the Commission are Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. The opinion which follows is restricted to this body of law - the conflict of interest laws. please note the following:
 

Constitutional Section 109 provides:

"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) and (k) (i) (ii) (iii) (iv) provides:

"(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.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or

(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity."

"(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member."

    The Commission was additionally advised on July 5, 1994, that the physician is not a member of the hospital board and was not previously associated with the hospital.

    Constitutional Section 109, set forth above, is for information purposes and future guidance. Noting that the ;physician is not a member of the hospital board and was not previously associated with the hospital, neither Constitutional Section 109 nor other Ethics laws prohibit the hospital from contracting with the physician.

    The employment of the physician is interpreted by the Ethics Commission to come into being by virtue of the contract of employment between the physician and the hospital. This contract of employment can be modified by the hospital board with out violating the Ethics laws as long as the physician is not a member of hospital board.
 
 

Advisory Opinion No. 94-079-E
July 8, 1994
Page 4

    The physician should be cautioned not to use his official position of employment by the hospital for a pecuniary benefit in violation of Code Section 25-4-105

                                                    Ronald E. Crowe
                                                    Executive Director
 

Mississippi Ethics Commission
146 E. Amite Street
Jackson, Mississippi 39201

Attention: Mr. Ronald E. Crowe, Executive Director Dear Mr. Crowe:

    Our firm is special counsel to the Board of Hospital Commissioners of **** Hospital (the "Board of Commissioners" of the Hospital), The Hospital is owned jointly by the City **** and **** County, Mississippi.

    We hereby request an Advisory Opinion from the Mississippi Ethics Commission addressing the proposed acquisition by the Hospital of the medical practice of ****, a physician whose office is located in ****, Mississippi, (the "Physician") through the employment of the Physician pursuant to a Medical Clinic Employment Agreement.

    The Physician currently operates a medical practice from a facility (the "Building") owned by the Physician (or a legal entity entirely owned by the Physician) using equipment (including computers, software, medical equipment, furniture and fixtures and referred to herein as the "Equipment") owned by the Physician (or a legal entity entirely owned by the Physician).

    In an effort to offer competitive health care services and to continue to serve and promote the health and welfare of the citizens of the Hospital's service area, the Hospital Board of Commissioners desires to acquire the medical practice of the Physician and to establish such practice as a hospital owned medical clinic utilizing the Building and Equipment (the "Medical Clinic"). The Hospital would accomplish this acquisition and
 

Mr. Ronald E. Crowe, Executive Director
June 24, 1994
Page Two
 

provide primary health care services at the Medical Clinic through the employment of the Physician.

    The proposed terms of the Medical Clinic Employment Agreement (the "Agreement") are described below:

1. The Hospital will employ the Physician as its employee to provide services in connection with the Medical Clinic. The Physician will agree to provide to the Hospital, during the term of the Agreement: (i) certain professional services (the "Services") to be performed by the Physician as an employee of the Hospital; (ii) the Building for use by the Hospital; and (iii) the Equipment for use by the Hospital. The Physician's providing the Building and the Equipment will be a condition to his employment to provide the Services.

2. The Physician will receive a specified aggregate compensation from the Hospital under the Agreement, as compensation for the Services and for providing the Building and the Equipment. Although such amount may also be allocated for accounting purposes among the providing of the Services, Building and Equipment, the obligations and compensation will not, however, be divisible under the Agreement.

3. The Hospital will be responsible for the operations and management of the Medical Clinic. Although the Physician will provide professional services to the patients of the Medical Clinic, the Hospital will bill and collect all patient revenue. All expenses of the Medical Clinic will be expenses of the Hospital.

4. The Agreement will address relative rights and obligations of the Hospital and the Physician with respect to maintenance, repair, renewal, replacement and insurance of the Building and the Equipment, the condition in which the Building and the Equipment are to be returned to the Physician upon termination of the Agreement and the relative rights of the parties with respect to any replacements of and improvements to the Building and Equipment.

Mr. Ronald E. Crowe, Executive Director
June 24, 1994
Page Three

    The Hospital and the Physician may, from time to time, enter into amendments to and modifications and extensions of the Agreement (with compensation during any extension to be as set forth in the extension document). The Hospital and the Physician may also, upon expiration of the term of the Agreement, enter into a new agreement addressing the same subject matter in a manner similar to that provided in the Agreement.

APPLICATION OF ETHICS IN GOVERNMENT STATUTES

No public servant shall be a contractor, subcontractor or vendor with the governmental entity of which he is a member, other than in his contract of employment , or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member. (Emphasis added)

    There may be other exemptions from the Ethics in Government Statutes which are applicable to the proposed transaction but are not addressed in this letter.

    Based on the above described structure and proposed activities, please provide us with an Advisory Opinion on the following question:

Do the Mississippi Ethics in Government laws permit the Hospital to enter into the Medical Clinic Employment Agreement as described in this request for the purpose of

Mr. Ronald E. Crowe, Executive Director
June 24, 1994
Page Four
 

acquiring the Physician's medical practice through the employment of the Physician, with the Physician being obligated as a condition of continued employment to provide professional services to the patients of the Hospital's Medical Clinic and also to provide the Building and Equipment presently utilized by the Physician's medical practice and required for the operation of the Medical Clinic; the Hospital and the Physician to enter into amendments to and modifications and extensions of the Agreement (with compensation during any extension to be as set forth in the extension document); and the Hospital and the Physician, upon expiration of the term of the Agreement, to enter into a new agreement addressing the same subject matter in a manner similar to that provided in the Agreement?

Very truly yours,

 ****