Docket No.: 282


IN THE MATTER OF WILLIAM A. BURKE, JR.


Appearing:

Marilyn Lyng O'Connell, Esq.:
Counsel for Petitioner State Ethics Commission

Edward F.McDermott, Esq.:
Counsel for Respondent William A. Burke Jr.

Commissioners: Diver, Ch., Brickman, Burns, Sweeney


Date: October 15, 1985



DECISION AND ORDER


I. PROCEDURAL HISTORY


The Petitioner initiated these adjudicatory proceedings
on March 26, 1985 by filing an Order to Show Cause pursuant to the
Commissions Rules of Practice
Page 249

and Procedure, 930 CMR 1.01(5)(a). The Order alleged that the
Respondent. William A. Burke, Jr., a Public Health Council
(Council) member, had violated G.L. c. 268A, s. 3(b), [1] s.
23(par. 2)(2) [2] and s. 23(par 2)(3) [3] in pursuing his duties
as a consultant for J. Peter Lyons, Inc. (the Lyons Company).
Specifically, Mr. Burke was alleged to have violated s. 3(b) in six
instances by soliciting or receiving something of substantial
value ("entree into the executive offices and the time and
attention these [hospital] chief executives devoted to listening
to information about an insurance package") from Brockton Hospital.
Cardinal Cushing Hospital, Melrose-Wakefield Hospital. Salem
Hospital, South Shore Hospital. and University Hospital for or
because of official acts performed or to be performed by him as a
member of the Council. The eleven s. 23(par. 2)(2) allegations were
premised on Mr. Burke's alleged use or attempted use of his official
position to secure an unwarranted privilege for the Lyons Company,
namely "a personal meeting with the hospital official," with
respect to eleven separate hospitals.[4] The Order also alleged
that Mr. Burke violated s. 23(par. 2)(3) by using his position as
a member of the Council in contacting executive officers of twenty-
seven hospitals in the commonwealth to promote a life insurance
program on behalf of a company for which he was a paid consultant,
during the time that all but one of these hospitals had important
matters pending before the Council.[5]

Mr. Burke filed an answer in which he admitted that he had
served as a Council member and as a paid consultant for the J.
Peter Lyons company during the period in question, and that he had
met with several officers of various hospitals during the period
of his consultant arrangement. Mr. Burke also admitted in his answer
that he became involved in promoting the Company's supplemental
life insurance program. Mr. Burke denied all other material
allegations contained in the Order.

Prior to the commencement of the hearings, the Respondent
moved for Decision on the Pleadings or in the alternative for
Summary Decision. The motion was denied by Commission Chairman
Colin Diver,[6] who was designated as the Presiding Officer. See
G.L. c. 268B, s. 4(c).

Adjudicatory hearings were held on June 11 and 12, July 17 and
August 16, 1985. The parties thereafter filed post-hearing briefs
and presented oral arguments before the Commission on September 11,
1985. In rendering this Decision and Order, each participating
member of the Commission has considered the testimony, evidence and
arguments of the parties.


II. FINDINGS OF FACT


1. The Respondent William A. Burke. Jr. was, at all times
relevant to the violations alleged in the Order to Show Cause, a
member of the Council.

2. The Council is responsible for the review and final
approval of all hospital determination of need applications (DONs)
required by law for substantial capital expenditures, acquisitions
of equipment and changes in services by the hospitals in the
commonwealth.

3. Mr.Burke provided consultant services for the Lyons
Company from January 1983 to October 1984 at a rate of $4,000 a
month.

4. Mr. Lyons hired Mr. Burke as a consultant to introduce him
to people and businesses in need of the financial services which
the Lyons Company could provide. Between January 1983 and October
1984. Mr. Burke introduced him to fifteen or twenty companies,
excluding hospital introductions. Mr. Burke also engaged in venture
capital work and the analysis of the financial needs of companies
and businesses which were of interest to the Lyons Company.

5. In June or July of 1983, Mr. Lyons decided to pursue a
supplemental life payroll deduction program with hospitals. Mr.
Lyons asked Mr. Burke to become involved because he knew (1) Mr.
Burke was on the Council, (2) Mr. Burke was personally acquainted
with a number of hospital administrators and (3) Mr. Burke would
know people in hospitals such as St. Elizabeth's due to his
involvement in the Catholic Church in Boston. Mr. Burke initially
questioned the propriety of working in the hospital field, but was
given assurances by the enrolling agent for the Lyons Company that
it would be no problem.

The six hospitals listed in the s. 3 allegations

6. Mr. Burke placed a call to the chief executive officer
(CEO) of each of the six hospitals on the following dates:

South Shore Hospital - sometime in January
or February of 1984

University Hospital - sometime between
February 28, 1984 and
March 12, 1984

Brockton Hospital - sometime in July of 1984

Cardinal Cushing
Hospital - July 19, 1984

Salem Hospital - August 20, 1984[7]

Melrose-Wakefield
Hospital - during the week of September 10, 1984

7. Each of the six hospitals had a DON pending before
the Council at the time Mr. Burke made contact. The documentary
evidence as well as the testimony of individual hospital CEOs in
the record indicates that the DON process is a difficult and often
lengthy process. which can become quite costly to the hospitals.
Substantial

Page 250

capital outlays depend on the approval of a hospital's DON. In
particular, Melrose-Wakefield Hospital's DON, which was filed in
January 1983 and was still pending as of October 1984, involved the
new construction and renovation of an ancillary services building
and a parking garage for a proposed capital cost of $25,875,000.
Salem Hospital's DON, filed in September 1983 and still pending as
of October 1984, involved general expansion and renovation as well
as the expansion of radiation therapy, for a proposed capital cost
of $21,900,000.

8. In his call to five of the hospitals, including Melrose-
Wakefield Hospital and Salem Hospital, Mr. Burke identified himself
as a Council member.

9. In the calls to both Melrose-Wakefield Hospital and Salem
Hospital, Mr. Burke stated at the outset that he was calling with
regard to something other than the hospital's pending DON.

10. Five of the hospital CEOs, including the CEO of Melrose-
Wakefield Hospital, agreed to meet with Mr. Burke.

11. Five of the hospital CEOs, including the CEOs of Melrose-
Wakefield Hospital and Salem Hospital, stated that they would not
normally meet with an individual selling insurance and that such
a call would be transferred to the personnel or benefits director
of the hospital.

12. Mr. Burke attended meetings with the CEOs of four
hospitals on the following dates:

South Shore Hospital - February 10, 1984
University Hospital - March 12, 1984
Brockton Hospital - August 1, 1984
Cardinal Cushing
Hospital - August 1, 1984

Joanne Costello, a Lyons Company representative, gave the
presentation on the insurance package at these meetings. As to the
two remaining hospitals, (1) all three appointments with the CEO
of Melrose-Wakefield Hospital, scheduled for September 20, 1984,
September 28, 1984 and October 12, 1984, were cancelled by Mr.
Burke and (2) the CEO of Salem Hospital never agreed to meet with
Mr. Burke.

13. As of August 1984, Mr. Burke was making two to three
introductions a month. This number was unsatisfactory to Mr. Lyons,
who expected eight to ten introductions per consultant per month.

14. Mr. Lyons communicated his dissatisfaction to Mr. Burke
in early September 1984,[8] informing Mr. Burke that he did not see
the consultant status as continuing because it was not leading
anywhere.

15. In response to Mr. Lyons' request for a status report
from him, Mr. Burke submitted a memorandum dated September 14, 1984
listing six hospital cases he had opened that week, including
Melrose-Wakefield Hospital, and one hospital case he had closed.

16. In late September or early October 1984. Mr. Lyons
and Mr. Burke had another discussion concerning the fact that the
consultant relationship was not working, and Mr. Burke indicated
that someone was questioning what he was doing in connection with
the hospitals. Mr. Lyons stated that he was willing to keep Mr.
Burke on to make non-hospital contacts.

17. By mutual agreement. Mr. Burke's consultant relationship
was terminated in October of 1984.


III. DECISION


For the reasons stated below, the Commission concludes that
Mr. Burke violated G.L. c. 268A, s. 3(b) with respect to one of the
six hospitals, namely Melrose-Wakefield Hospital.

A. Section 3

Section 3(b) prohibits a public employee from soliciting or
receiving anything of substantial value for himself for or because
of an official act performed or to be performed by him. Its
counterpart, s. 3(a), prohibits anyone from offering or giving
anything of substantial value to a public employee for or because
of any official act performed or to be performed by such an
employee. Unlike s. 2, which is the bribery section of the conflict
law, s. 3 does not require a showing of corrupt intent. See, e.g.
Commonwealth v. Dutney, 4 Mass. App. 363 (1976). Rather, the basis
for a s. 3 violation is the existence of a nexus between the
employee's public duties and the motivation behind the
solicitation. offer or receipt of something of substantial value.
In the Matter of George Michael, 1981 Ethics Commission 59,68. If
such a connection exists, even in the absence of a corrupt intent.
there remains a tendency to provide conscious or unconscious
preferential treatment to the giver of something of value by the
recipient. Section 3, like its federal counterpart 18 U.S.C. s.
201(f) and (g). constitutes a legislative effort to eliminate the
temptation inherent in such a situation. See United States v.
Evans, 572 F.2d 455, rehearing denied 576 F.2d 931 (5th Cir.), cert
denied, 439 U.S.870 (1978).

The actual performance of some identifiable official act as
quid pro quo is not necessary for a violation of s. 3. See
{Commission Advisory No. 8}: accord, United States v. Evans,
supra [addressing s. 3's federal counterpart 18 U.S.C. s. 201 (f) and
(g)]. To require such a quid pro quo would subject public employees
to a host of temptations which would undermine the impartial
performance of their duties. As the Commission stated In the Matter
of George Michael, supra at 68:

Sound public policy necessitates a flat prohibition since the
alternative would present unworkable burdens of proof. It would be
nearly impossible to prove the loss of an employee's objectivity
or to assign a motivation to his exercise of discretion. If public
credibility in government

Page 251

institutions is to be fostered, constraints which are conducive to
reasoned, impartial performance of public functions are necessary,
and it is in this context that Section 3 operates.

B. Elements of a s. 3(b) violation

The three elements necessary to establish a s. 3(b) violation
on Mr. Burke's part are that he:[9]

1. solicited or received something of substantial value

2. for himself

3. for or because of an official act performed or to be
performed by him.

1. Solicitation or receipt of something of substantial value

The term "substantial value" is not defined in the conflict
of interest statute. The vast majority of cases the Commission has
decided containing alleged 13 violations have involved items of
tangible value, such as cash discounts (In the Matter of George
A. Michael, 1981 Ethics Commission 59), private loans (In the
Matter of Rocco J. Antonelli, Sr., 1982 Ethics Commission 101), and
cash payments (In the Matter of Frank Wallen and John Cardelli,
1984 Ethics Commission 197). However, the Commission has also held
that the scope of s. 3 includes items which lack an immediately
ascertainable cash value but which nonetheless possess substantial
prospective worth and utility value. See, e.g. EC-COI-83-70 and 81-
136 (both cases held that unpaid faculty appointments constituted
something of substantial value which could not be accepted by state
employees). In its decisions and orders and disposition agreements
in cases alleging violations of s. 3, the Commission has recognized
that "substantial value" is a standard "to be dealt with by
judicial interpretation in relation to the facts of the particular
case and [is] more desirable than the imposition of a fixed
valuation formula." See e.g.. In the Matter of Rocco J. Antonelli,
Sr,, 1982 Ethics Commission 101, 109 n. 19 citing Final Report
of the Special Commission on Code of Ethics, 1962 House Doc. No.
3650 at 11 upon which the provisions of s. 3 were based.

In the Order to Show Cause, the Petitioner characterized the
"entree into the executive offices and the time and attention these
[hospital] chief executives devoted to listening to information
about the substance package" as having substantial value. The CEOs
in five of the six hospitals listed in the s. 3 allegations
testified that they would not normally meet with an individual
selling insurance, that such a call would be transferred to the
personnel or benefits director of the hospital. Based on this
testimony of the hospital CEOs regarding the standard operating
procedure, the Commission finds that the access Mr. Burke obtained
by virtue of his Council membership to the limited time of the CEOs
for his company's presentation of its insurance package was of
substantial value in this case. First, it enabled the Lyons Company
to bypass competition with other insurance agents before
subordinate hospital personnel. The logical inference to be drawn
is that the opportunity afforded to the Lyons Company to make its
insurance presentation directly to a hospital CEO greatly enhanced
the chance of a sale. Second, based on Mr. Lyons' testimony,[10]
each contact Mr. Burke made was worth approximately $400 to the
Lyons Company. Mr. Lyons testified that (1) he hired Mr. Burke
primarily to make introductions, (2) he paid Mr. Burke $4,000/month
as a consultant and (3) he would consider eight to ten
introductions per month to be satisfactory. On a strict calculation
basis, that would equal approximately $400 per introduction, well
above the $50 benchmark the court established as constituting
"substantial value" in Commonwealth v. Famigletti, 4 Mass. App.
584. 587 (1976).[11] Under these facts, the Commission concludes
that the access to hospital CEOs which Mr. Burke solicited was of
substantial value.[12]

2. For himself

The issue here is whether Mr. Burke's solicitation of
something of substantial value was for himself or merely for the
Lyons Company. The evidence established that Mr. Burke's sole
compensation from the Lyons Company was his $4,000/month consultant
fee: i.e., he would not receive any commission for the consummation
of an insurance contract with a hospital. The question, then.
focuses on the connection between the access to hospital CEOs Mr.
Burke solicited and his retention as a $4,000/ month consultant.

The record is clear that by September 1984. Mr. Burke was
under pressure to make more contacts in order to retain his
position. There is no evidence in the record of Mr. Burke's
involvement in business acquisition/entrepreneurial projects or
non-hospital contacts made during September of that year. On the
contrary. all seven contacts Mr. Burke reported in his September
14, 1984 status report to Mr. Lyons were hospitals. While Mr. Lyons
testified that he would have kept Mr. Burke on as a consultant
making solely non-hospital contacts. Mr. Burke chose to trade on
his Council membership to gain access to hospital CEOs to make
sufficient contacts during this period to reduce the risk of losing
his consultant arrangement. The contact with the CEO of Melrose-
Wakefield Hospital, listed as one of the seven hospital contacts
in Mr. Burke's September 14. 1984 status report, constituted a part
of Mr. Burke's insurance against losing his consultant position.
The Commission therefore finds that the access Mr. Burke obtained
to the CEO of Melrose-Wakefield hospital was of substantial value
to himself as well as to the Lyons Company.

On the other hand. the evidence does not support the
conclusion that the contact Mr. Burke made with Salem Hospital on
August 20, 1984 was of substantial

Page 252

value to him personally. Mr. Lyons testified that by late summer
of 1984, he was unsatisfied with the general direction the Lyons
Company was taking. In particular, Mr. Lyons testified that as of
August 1984, Mr. Burke was making two to three introductions a
month, which was unsatisfactory. While Mr. Lyons' testimony is that
he communicated this dissatisfaction to Mr. Burke in "September,
maybe August," the record as a whole supports the inference that
the discussion took place in early September, as discussed above.
Mr. Burke's contact with Salem Hospital would therefore have
predated this discussion. Without the dependency relationship
between the Salem Hospital contact and Mr. Burke's retention as a
consultant, the Commission finds that the "for himself' element has
not been met with respect to that hospital.

Likewise, the Commission finds that the evidence does not
sufficiently establish the dependency relationship between Mr.
Burke's contacts with "the four hospitals prior to August 1, 1984
and his retention as a consultant Mr. Burke was not initially hired
by Mr. Lyons to work in the hospital field. Mr. Burke called and
met with the CEOs of South Shore Hospital, University Hospital,
Brockton Hospital and Cardinal Cushing Hospital between January
1984 and August 1, 1984. These contacts therefore predated Mr.
Lyons' communication with Mr. Burke that his position was in
jeopardy if the number of introductions he made did not increase.
Moreover, the testimony of John McInerney, a fellow Lyons Company
consultant, indicated that between January and June of 1984, Mr.
Burke and he worked on a number of business acquisition projects
for the Lyons Company. In light of Mr. Burke's business analysis
duties and non-hospital introductions prior to August 1984, the
Commission finds that Mr. Burke's consultant relationship did not
depend on the hospital introductions he made during that period.

In summary, the Commission concludes that the "for himself"
element of a s. 3(b) violation was met only with respect to the
Melrose-Wakefield Hospital.

3. For or because of an official act performed or to be
performed by him.

The Commission finds that there is ample evidence in the
record that the access Mr. Burke solicited from Melrose-Wakefield
Hospital was for or because of an official act performed or to be
performed by him. Mr. Burke placed the contact call directly to the
CEO of Melrose-Wakefield Hospital (Richard Quinlan), instead of the
Hospital's personnel director, thus bypassing the normal channels
required of insurance salesmen seeking accounts with that
Hospital.[13] That call was made by Mr. Burke at a time when
Melrose-Wakefield Hospital's DON, which carried a proposed capital
cost of over $25 million, was pending before Mr. Burke's Council.
Mr. Quinlan testified that the DON was "very" important to Melrose-
Wakefield Hospital: it involved a needed parking garage and the
construction of an ancillary services building to replace the aging
buildings currently in use.

In making contact, Mr. Burke identified himself as a
Council member even though he was contacting the hospital in his
private capacity to sell an insurance package. Mr. Quinlan did
testify that Mr. Burke indicated during the call that the call was
not related to Council business. However, Mr. Quinlan nonetheless
testified that he thought it would be "inappropriate" to cancel the
appointment his secretary had scheduled "because Mr. Burke was a
member of the Public Health Council and I had a DON pending." The
Commission finds that Mr. Burke's disclaimer was ineffective under
the circumstances. A true disclaimer would have been not to mention
his Council membership at all in making contact with the hospitals
in his private capacity. Once Mr. Burke identified himself as a
Council member, the connection between a hospital's public dealings
with the Council and Mr. Burke's private solicitation of a hospital
was forged. Any subsequent disclaimer would prove insufficient due
to the importance of a pending DON to a hospital, as evidenced by
Mr. Quinlan's testimony.

The Commission concludes that the facts surrounding the
Melrose-Wakefield Hospital contact go beyond a mere coincidence of
overlapping private and public dealings with that Hospital. Mr.
Burke placed his insurance sales call directly to CEO Quinlan (1)
at a time when Melrose-Wakefield Hospital had a very important DON
pending before the Council and (2) identified himself as a Council
member even though the call was not related to Council business.
The Commission finds that solicitation under those conditions is
"for or because of official acts."


IV. ORDER


On the basis of the foregoing, the Commission concludes that
William A-Burke Jr.violated G.L. c. 268A. s. 3(b) in connection
with the Melrose-Wakefield Hospital. Pursuant to its authority
under G.L. c. 268B. s. 4(d), the Commission orders Mr. Burke to pay
one thousand dollars ($1,000) to the Commission as a civil penalty
for such violation.
_______________

[1] G.L. c. 268A. s. 3(b) states that "whoever, being a
present or former state. county or municipal employee or member
of the judiciary, or person selected to be such an employee or
member of the judiciary, otherwise than as provided by law for the
proper discharge of official duty, directly or indirectly, asks,
demands, exacts, solicits, seeks, accepts, receives or agrees
to receive anything of substantial value for himself for or because
of any official act or act within his official responsibility
performed or to be performed by him" violates that section.

[2] G.L c. 268A. s. 23 (par. 2)(2) provides that no state
employee shall "use or attempt to use his official position to
secure unwarranted privileges or exemptions for himself or others."

[3] G.L c. 268A. s. 23,(par. 2)(3) provides that no state
employee shall "by his conduct give reasonable basis for the
impression that any person can improperly influence or unduly enjoy
his favor in the performance of his official duties, or that he is
unduly affected by the kinship. rank, position or influence of any
party or person.

[4] Following the Court's ruling in Saccone v. State Ethics
Commission. 395 Mass. 326 (1985) that the commission does not
possess the statutory authority to enforce the provisions of G.L.
c. 268A, s. 23. the Respondent moved to dismiss the s. 23 (par.
2)(2) and (par. 2)(3) allegations of the Order to Show Cause. The
Commission has granted the Respondent's Motion to Dismiss without
prejudice.

[5] This allegation was likewise dismissed without prejudice.
See footnote 4.

[6] To the extent that the Respondent has renewed the
substantive arguments of his motion before the full Commission in
the closing arguments and briefs in the case. they are discussed
infra.

[7] During the direct examination of the Salem Hospital CEO,
the following exchange took place:

Q: Did you receive a telephone call from William A. Burke,
Jr. in September of 1984?
A: I did.

However, his more specific testimony on cross examination regarding


the date of the call placed it on August 20, 1984.

[8] Mr. Lyons testified that this first conversation took
place in "September, during the month of September, maybe August.
September, something like that." while this testimony does not
unequivocally establish that the conversation took place in
September, we reasonably infer that the date of the conversation
"as in September shortly before Mr. Burke's submission of the
September 14. 1984 status report.

[9] As a Council member. Mr. Burke was a state employee and
was therefore subject to the provisions of the conflict of interest
law. G.L c. 268A. The fact that Mr. Burke also qualified as a
"special state employee" [see G.L c. 268A. s. 1(o)] is irrelevant
to this case. inasmuch as s. 3 is not one of the conflict law
provisions which applies less restrictively to special state
employees.

[10] The Commission found Mr. Lyons to be a credible witness.

[11] While a "fixed valuation formula" is not the sole means
for determining substantial value under s. 3. the Court's bottom
line figure is a factor that the Commission will consider in
assessing substantial value.

[12] That is not to say that access in all contexts will be
considered of substantial value for s. 3 purposes. In many
instances, the seeking of such access will be more appropriately
regulated as an unwarranted privilege under s. 23(par. 2)(2). which
prohibits a public employee from using or attempting to use his
official position to secure unwarranted privileges or exemptions
for himself or others. Here, however. Mr. Burke's conduct raises
problems under s. 3 as well.

[13] Mr. Quinlan testified that he would normally refer such
solicitations regarding insurance to a subordinate, namely the
hospital's personnel director.

End Of Decision