Advisory Opinion No. 2000-16

Application Of Conn. Gen. Stat. §1-84b(b) To Insurance Department Contracts

Mr. John F. Gies, a former employee of the Insurance Department (the Department) has asked the State Ethics Commission how the requirements of Conn. Gen. Stat. §1-84b(b) apply to the following facts.

Mr. Gies has accepted post-state employment with the actuarial services group of Ernst and Young. The firm is on a current list of approved service providers to the Department, and last provided actuarial audit services pursuant to this listing in 1998. Firms on the approved list are selected to perform services based on a multi-faceted departmental review process; a process in which Mr. Gies played no role while in state service. The firms’ compensation for such services is a function of reviewed/approved billing rates established at the time the firms are selected for inclusion on the Department’s list, and said rates are on file and available for public review. Finally, pursuant to agreement, the Department does not make direct payments to the audit firms for services rendered. Rather, audit firms performing services on behalf of the Department bill the audited entities, and are paid by these entities in accordance with the established rates previously referenced. Given these facts, Mr. Gies wishes to know how §1-84b(b) will apply to his work for Ernst and Young on behalf of the Department during his first year of post-state employment.

In pertinent part, §1-84b(b) states that:

No former executive branch or quasi-public agency public official or state employee shall, for one year after leaving state service, represent anyone, other than the state, for compensation before the department, agency, board, commission, council or office in which he served at the time of his termination of service, concerning any matter in which the state has a substantial interest.

In interpreting and applying this provision, the Commission has established a limited exception, allowing former public servants to represent themselves before their former agencies within the proscribed time period for the purpose of entering into consulting agreements, provided the rate of pay is equal to no more than the individual was earning at the time of separation from state service. In essence, the exception is designed to allow the State to utilize a former employee’s expertise, while preventing the individual from using his contacts or influence at the agency to negotiate an enhanced rate of pay. See, State Ethics Commission Advisory Opinion No. 89-25 (amended) 51 CLJ No. 24, p. 2E (12/12/89).

The exemption was intended to apply to instances where the former state servant was personally negotiating and entering into a consulting contract with his or her former agency. In marked contrast, any contract issued in this instance will be: between the private employer and the Department; executed pursuant to previously agreed upon terms; and paid for by the audited entity, not the State. Given these factors, any potential conflict of interest is far too attenuated to trigger the application of the §1-84b(b) exception.

As a consequence, during Mr. Gies’ first year of post-state employment, his compensation rate is a matter to be determined by him and his employer and will not be subject to the §1-84b(b) restrictions. The foregoing ruling is, of course, premised on the understanding that, during the one year period, Mr. Gies will play no role whatsoever in representing his employer in any negotiation or amendment of its contractual agreements with the Department. Furthermore, during this period neither Ernst and Young nor Mr. Gies may inform those responsible for selecting service providers of his potential involvement in audit work for the Department. And finally, Mr. Gies’ remuneration may not be increased (e.g., a bonus payment) based on the award of such work.

By order of the Commission,

Stanley Burdick,
Chairman