OFFICIAL ADVISORY OPINION NO. 05-119-E

January 6, 2006

This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on January 6, 2006, basing its approval solely on the facts and circumstances stated herein.

May the attorney for a public hospital board lease real property to the hospital board?

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:

Code Section 25-4-103(a), (h), (n) and (p)(i)(ii)(iii) states:

“(a) ‘Authority’ means any component unit of a governmental entity.

(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.

(n) ‘Property’ means all real or personal property.

(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(3)(a) and (4)(b)(d) states:

“(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, 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, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his
relative:

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent:

(i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or

(ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant.”

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

I am the Administrator of a County Hospital, a community hospital, and I am requesting an official advisory opinion with regard to the following issue:

May the community hospital lease or sublease office space from the attorney for its board of trustees?

More specifically, the facts are as follows:

1. The County Hospital is a community hospital organized and existing pursuant to Sections 41-13-10, et seq., Miss. Code Annot. (1972), as amended. It is owned by the County and it is governed by its Board of Trustees which are appointed by the Board of Supervisors of the County.

2. The attorney for the Board of Trustees of the County Hospital is an attorney in private practice and the Board of Trustees are one of his many clients. He works for them as an independent contractor on an as needed basis at an agreed hourly rate plus expenses. He does not regularly attend the Board meetings or perform any other regularly scheduled activities or services. Rather, he performs such legal services and gives such legal advice as he is requested on an as needed [basis] by myself and the Board of Trustees. The Board of Trustees has been one of the attorney’s clients under this arrangement continuously since 1990. Attached are the Hospitals records of payment to the attorney for the Calendar Year 2005, which helps to illustrate the scope and extent of his representation.

3. The Board of Trustees relies on the attorney for most state law issues such as compliance with the community hospital statutes and the public purchasing laws. The Board of Trustees relies on other attorneys for Medicare and Medicaid compliance issues and other Federal health care law issues.

4. The Hospital desires to rent office space in downtown for the operation of a respiratory therapy clinic.

5. The attorney is the owner of office space in downtown which is vacant and for rent at a very reasonable price.

6. After checking available space and rental prices in the downtown area, I am of the opinion that the space he has is the only reasonable available from commercial sources that are suitable for the Hospital’s needs and that rental of this space would allow the Hospital to obtain its objectives with the least expenditure of public funds. There is a lot of unoccupied space in downtown but most of it is in poor condition and unsuitable for the Hospital’s needs.

7. The Board of Trustees is willing to engage independent counsel for the purpose of this transaction.

8. The Board of Supervisors is willing to go through public advertisement for bids to lease the property and then sublease it to the Hospital.

In summary, is there any way the Hospital can lease or sublease from the attorney, or are we completely straight-jacketed by the ethics laws so that the Hospital will be required to look elsewhere at a much greater expenditure of public funds.

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

The first question to be addressed is whether the attorney is a public servant, as defined in Section 25-4-103(p)(ii), Miss. Code of 1972, quoted above. The Commission has previously opined that an attorney for a governmental board with a general scope of representation who is not a government employee is an agent for the board and therefore a public servant. See Ops. Miss. Ethics Commn. No. 05-063-E, 04-115-E and 96-055-E. Likewise, when an attorney is not a government employee but an
independent contractor to a governmental entity, the scope of representation may determine whether the attorney is a public servant. This is a determination that must be made on a case-by-case basis, relying on the specific facts of each situation.

Here, the volume of work for which the attorney has been compensated over the past year is relatively small, as evidenced by the record of payments attached to the request but not attached to this opinion. However, the operative fact is not the volume of the attorney’s work but rather the scope of his authority. The scope of this attorney’s agency is broad, especially as juxtaposed with the other attorneys relied upon by the board “for Medicare and Medicaid compliance issues and other Federal health care law issues.” While those other attorneys might not qualify as public servants, the attorney in issue here is a public servant subject to the Ethics in Government Laws.

Section 25-4-105(3)(a), Miss. Code of 1972, quoted above, prohibits a public servant such as a community hospital board attorney from being a contractor, subcontractor or vendor to the hospital. Section 25-4-105(4) contains a number of narrow exceptions to the proscriptions of Subsection 3, but none of those exceptions apply in this situation.

For example, Section 25-4-105(4)(b) allows a public servant to “be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent.” (emphasis added) An “authority” is defined in Section 25-4-103(a) as a “component unit of a governmental entity.” A community hospital owned by a county is an authority of county government. Thus, the exception is inapplicable between the attorney and the community hospital. However, if this subsection were applicable here, it would apply to the sale of “goods, services or property.” (emphasis added) See also Op. Miss. Ethics Commn. No. 97-138-E. “Property” is defined in
Section 25-4-103(n) as “all real or personal property.”

By contrast, Section 25-4-105(4)(d) allows a public servant to “be a contractor, subcontractor or vendor with any authority of the governmental entity” but only for the sale of “goods or services,” not property. (emphasis added) While this exception could operate to allow other types of transactions between a community hospital board and its attorney, it does not apply to the transfer of an interest in real property. See Op. Miss. Ethics Commn. No. 98-019-E. Thus, the school board attorney is prohibited from leasing or subleasing real property to the community hospital he serves.


Scott Rankin
Executive Director