Docket No. 517

In the Matter of Katherine Doughty

February 9, 1995

Disposition Agreement





This Disposition Agreement ("Agreement") is entered into
between the State Ethics Commission ("Commission") and Katherine
Doughty ("Doughty") pursuant to s.5 of the Commission's
Enforcement Procedures. This Agreement constitutes a consented
to final order enforceable in the Superior Court, pursuant to
G.L. c. 268B, s.4(j).

On June 22, 1993, the Commission initiated, pursuant to G.L.
c. 268B, s.4(a), a preliminary inquiry into allegations that
Doughty had violated the conflict of interest law, G.L. c. 268A.
The Commission has concluded its inquiry and, on January 18,
1995, voted to find reasonable cause to believe that Doughty
violated G.L. c. 268A.

The Commission and Doughty now agree to the following facts
and conclusions of law:

1. Doughty served as Insurance Commissioner from July 1991
until June 1993. The Insurance Commissioner is appointed by the
Governor.

2. The Insurance Commissioner has overall responsibility
and authority concerning regulation, recommendations and
enforcement of all applicable statutes pertaining to entities
engaged in insurance or insurance-related enterprises.[1] The
Insurance Commissioner is the appointing authority for the
Division of Insurance, the agency responsible for regulating
every facet of insurance business transacted within the
Commonwealth of Massachusetts.

The Division of Insurance is contained within the Consumer
Affairs Secretariat. This Secretariat has as its primary
function the protection of the consumer and the regulation of
certain industries doing business within the Commonwealth. The
objective of the Secretariat is to strike a fair balance between
consumer protection and the fostering of a beneficial business
climate.

3. As the Insurance Commissioner, Doughty regularly
participated in meetings with insurance company lobbyists and
other representatives and employees of insurance companies having
an interest in matters before the Division of Insurance
("interested parties").[2]

4. In addition to meetings held at the Division of
Insurance office, Doughty regularly met with interested parties
outside of the office at restaurants and at entertainment events
("entertainment activities"). Such entertainment activities
included meals at restaurants such as the Parker House, The Bay
Tower Room, The Four Seasons and Biba. In addition, Doughty
attended with interested parties performances of The Phantom of
the Opera, Les Miserables, a Boston Red Sox game and a concert at
Tanglewood.

5. Doughty attended entertainment activities with
interested parties, on average, approximately three times a
week.[3] The interested parties routinely paid for Doughty's
expenses.[4]

6. According to Doughty, who relocated to Massachusetts
from Texas in order to take the position of Insurance
Commissioner, the entertainment activities listed above had both
a social and business purpose.

7. At all relevant times, Doughty knew that the interested
parties paying her expenses had interests in matters before the
Division of Insurance.

8. Doughty did not disclose in writing to her appointing
authority that interested parties were paying, on a regular
basis, for her expenses associated with the entertainment
activities.

9. General Laws, c. 268A, s.23(b)(3) prohibits a public
employee from knowingly, or with reason to know, acting in a
manner which would cause a reasonable person having knowledge of
the relevant circumstances to conclude that anyone can improperly
influence or unduly enjoy her favor in the performance of her
official duties. The subsection further provides that it shall
be unreasonable to so conclude if the

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public employee has disclosed in writing to her appointing
authority the facts which would otherwise lead to such a
conclusion.

10. By engaging in a practice of accepting benefits in
meals and entertainment on a regular basis from individuals who
had an interest in matters before the Division of Insurance, all
while Doughty was in a position to take official action which
could benefit the givers, and without notifying her appointing
authority, Doughty acted in a manner which would cause a
reasonable person knowing all of the facts to conclude that the
interested parties can improperly influence her in the
performance of her official duties.[5] In so doing, she violated
s.23(b)(3).[6] In other words, where interested parties who have
business pending before the Division of Insurance invite the
Insurance Commissioner to attend entertainment events with them
on a regular basis and where the interested parties pay for the
Insurance Commissioner to attend such events, a reasonable person
would conclude that such interested parties can unduly enjoy the
Insurance Commissioner's favor in the performance of her official
duties when matters concerning the interested parties come before
the Division of Insurance. Therefore, a written public
disclosure of these facts to Doughty's appointing authority
pursuant to s.23(b)(3) was required.[7]

11. Doughty cooperated with the Commission's investigation.

12. In view of the foregoing violations of G.L. c. 268A by
Doughty, the Commission has determined that the public interest
would be served by the disposition of this matter without further
enforcement proceedings, on the basis of the following terms and
conditions agreed to by Doughty:

(1) that Doughty pay to the Commission the sum of two
thousand dollars ($2,000.00) as a civil penalty for her
course of conduct in violation of G.L. c. 268A,
s.23(b)(3) by attending entertainment activities as the
guest of interested parties under the circumstances
described above, without disclosing in writing such
activity to her appointing authority; and

(2) that Doughty waive all rights to contest the
findings of fact, conclusions of law and terms and
conditions contained in this agreement and in any
related administrative or judicial proceedings to which
the Commission is or may be a party.

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[1] Legal authority for these actions is contained in G.L.
c. 175, and in other statutes and regulations.

[2] The interested parties were from a variety of sources
who may or may not have had common interests depending upon the
specific matter before the Division of Insurance.

[3] The exact frequency that Doughty attended entertainment
activities as interested parties' guest is unclear due to lack of
recordkeeping and the number of sources.

[4] Virtually all of Doughty's expenses for each of the
above occasions were less than fifty dollars.

[5] Section 23(b)(3) allows a public official to dispel the
appearance of improper influence or undue favor by making a
written disclosure to her appointing authority. Doughty,
however, failed to make such a disclosure. See EC-COI-92-12
(public employee should disclose relationship if ties to person
under regulatory jurisdiction creates a reasonable basis that the
regulatee could enjoy preferential treatment from the public
official); EC-COI-92-7 (public employees should disclose private
business relationships with those under their jurisdiction); EC-
COI-89-16 (public official should publicly disclose to appointing
authority relevant facts surrounding relationship with regulatee
in order to dispel any possible appearance of undue favoritism).

[6] The above conduct also raises concerns under G.L. c
268A, s.3(b). Section 3(b) prohibits a state employee from,
directly or indirectly, receiving anything of substantial value
for or because of any official act performed or to be performed.
The Commission has ruled that anything worth $50 or more is of
substantial value for s.3 purposes. See EC-COI-93-14;
Commonwealth v. Famigletti, 4 Mass. App. 584, 587 (1976). In
addition, the Commission stated in In re United States Trust Co.,
1988 SEC 356, that for s.3 purposes, gifts of less than $50 will
be aggregated under certain circumstances. Here, however, the
Commission has chosen to resolve this matter under s.23(b)(3) in
order to emphasize that a public official's practice of regularly
accepting gratuities of less than $50 in value from individuals
who are subject to that official's regulatory authority violates
s.23(b)(3), even if such individuals have no common interest in
any pending matter before that official.

The above conduct also raises concerns under G.L. c 268A,
s.23(b)(2). Section 23(b)(2) prohibits a public employee from
using or attempting to use her official position to secure for
herself or others unwarranted privileges or exemptions which are
of substantial value and which are not properly available to
similarly situated individuals. Although the Commission has
decided not to resolve the matter under s.23(b)(2), it may do so
if faced with similar facts in the future.

[7] As the Commission stated in Advisory #8 in addressing
the receipt of free passes:

Public employees are already compensated for the
performance of their duties. To request or accept any
item of more than nominal value -- and in

Page 727

most cases these tickets are clearly of more than nominal
value -- from private entities which have been, are, or may
be subject to the public official's responsibilities and
duties, is to use one's public position to secure an
unwarranted privilege and, in addition, necessarily creates
the impression that the private entity may be improperly
influencing or unduly enjoying the favor of the public
official in the performance of their official duties. Such
a practice undermines the public's confidence in the
credibility and impartiality of the governmental process.

Compare 57 Fed. Reg. 153, s.2635.202 (federal employees
prohibited from accepting gifts of less than $50 from the same or
different sources on a basis so frequent that a reasonable person
would be led to believe the employee is using his public office
for private gain).

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