81.21

An opinion has been requested from the Commission concerning the application of the exemption language of §3-103(a) of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) to potential appointees of the Health Services Cost Review Commission. 032;

The Health Services Cost Review Commission (HSCRC) is established in Article 43, §§568H to 568Z, Annotated Code of Maryland. Section 568J, which deals with the membership of the HSCRC, calls for a seven-member commission appointed by the Governor, and further provides that the "appointees shall be persons who are interested in problems of health care, of which four (4) shall be persons who have no connection with the management or policy of any hospitals or related institutions." The HSCRC has substantial regulatory and investigative powers in the area of health services costs. It may specify accounting systems for hospitals and related institutions and require and investigate financial reports; and it has the power to initiate investigations, to review and approve rates, and to promote and approve alternative methods of rate determination. It is required to establish a program for disclosure by officers, directors, or trustees of non-profit hospitals or related institutions, of business transactions between the hospital or institution and business entities with which they are connected.

The Governor's appointments office in considering potential appointees to the HSCRC has requested an opinion as to whether the language in §568J would bring appointees who "are either employed by or have an interest in a hospital or related institution" under the exemption language of §3-103(a) of the Ethics Law. Section 3-103(a) prohibits an official from having a financial interest in or being employed by an entity under the authority of his agency or from having an employment relationship that would impair his impartiality or independence of judgment. It further provides, however, that the prohibition does not apply to a

public official who is appointed to a regulatory or licensing authority pursuant to a statutory requirement that persons subject to the jurisdiction of the authority be represented in appointments to it.¹

A similar provision was included in the employment §of the Code of Ethics (predecessor to the Ethics Law, Title 19, COMAR, Art. III, §7), and application of it to the HSCRC was considered by the Attorney General in an opinion to the Board of Ethics (the Commission's predecessor agency). (Title 19, COMAR, Attorney General Opinion No. 8.) The Attorney General concluded there that the generally applicable Code of Ethics should not be applied to "condemn outside employment as unethical where the General Assembly, by a statute addressed to a specific agency..., has declared that very employment to be permissible, if not required."

The Ethics Commission addressed this language of §3-103(a) in consideration of its Opinion No. 80-16, and also rejected a very narrow reading of the section's exclusionary language. That Opinion involved a union member appointed to the Maryland Apprenticeship and Training Council pursuant to a requirement that it include representatives of "employee organizations." The question presented here is whether the general requirement that appointees of HSCRC be "interested in problems of health care," can be viewed as requiring persons regulated by it to be members; or if the specific discussion of persons having "connections with the management or policy of any hospitals or related institutions" could be so construed.

The HSCRC enabling law deals with requirements regarding appointees in two ways. First, it includes a positive statement that members must be persons "interested in problems of health care." And second, it adopts a more negative approach requiring at least four members to "have no connection with the management or policy of any hospitals or related institutions." We note that neither the general description of persons required to be appointed nor the negative approach regarding those more directly involved with regulated entities appears to compel appointment of persons having connections with regulated entities. However, we agree with the Attorney General's approach that statutes of the Legislature should be read to complement each other if possible. In our view, the Health Services Cost Review statute quite clearly contemplates that persons with hospital connections will serve on the HSCRC. To read §3-103(a) and the exception language of sub§(a)(2)(i) restrictively could frustrate this legislative purpose by requiring application of a rule generally prohibiting appointment of members having employment and other relationships with hospitals or related institutions.

We believe that the better approach is to read the two statutes compatibly and apply §3-103(a)(2)(i) to persons appointed to the HSCRC pursuant to the implied statutory requirement that it include persons involved with hospitals and related institutions. Such members should be aware, of course, that they continue to be bound by the other conflict of interest provisions in Title 3 of the Ethics Law, including the §3-101 requirement of disqualification in matters in which they or entities with which they are connected are involved.

Herbert J. Belgrad, Chairman
    Jervis S. Finney
    Reverend John Wesley Holland
    Barbara M. Steckel

Date: June 23, 1981

¹ Subsequent to consideration of this request by the Commission, §3-103(a) of the Ethics Law was amended to change its substantive prohibitions and to add exemption provisions not relevant here. (Laws of 1981, Ch. 796.) The quoted language, which was not altered from the original Law, is §3-103(a)(2)(i) of the amended law.