Docket No. 528

In the Matter of Life Insurance Association of Massachusetts, Inc.

Appearances:

David A. Wilson, Esq., Counsel for Petitioner

John J. Curtin, Jr., Esq.

Steven W. Hansen, Esq.

Janice W. Howe, Esq. Counsel for Respondent


Commissioners: Brown, Ch., McDonough, Larkin and Rapacki
Presiding Officer: Commissioner George D. Brown, Esq.

Date: December 16, 1997


Decision and Order



I. Procedural History



On June 20, 1995, the Petitioner initiated these proceedings
by issuing an Order To Show Cause ("OTSC") pursuant to the
Commission's Rules of Practice and Procedure. 930 C.M.R. s.s.
1.01(1)(a) et seq. The OTSC alleged that from July 21, 1989 through
March 12, 1993, the Life Insurance Association of Massachusetts,
Inc. ("LIAM") violated G.L. c. 268A, s. 3(a) on nine occasions by
providing free meals and, on one occasion, a set of golf clubs, to
Massachusetts state employees, including several current and one
former state legislator, one legislative staff member and the
Commissioner of Insurance. On July 26, 1995, LIAM filed an Amended
Answer.[1]

Pre-hearing conferences were held on July 26, 1995, October
18, 1995, April 18, 1996, October 17, 1996 and April 30, 1997. At
those conferences, issues surrounding discovery were discussed and
Commissioner George Brown, as the presiding officer, addressed
scheduling and management of the hearing.

To protect information subject to the confidentiality
provisions of G.L. c. 268B, s.4 from disclosure at the hearing, the
parties drafted a confidentiality agreement. On October 20, 1995,
Commissioner Brown incorporated that agreement into a Protective
Order.

Evidentiary hearings were held on three days: May 5, 6 and 7,
1997. At the conclusion of the Petitioner's case, LIAM filed a
Motion to Dismiss which was not ruled on by the Presiding Officer
at that time. LIAM renewed its Motion to Dismiss at the conclusion
of the hearing.

After the conclusion of the evidentiary portion of the
hearing, on May 7, 1997, the parties submitted legal briefs. 930
C.M.R. s.1.01(9)(k). The parties also presented their closing
arguments before the full Commission on September 9, 1997. 930
C.M.R. s.1.01(9)(e)(5). Deliberations began in executive session on
that date. G.L. c. 268B, s.4(i); 930 Code Mass. Regs. s.1.01(9)(m)(1).

In rendering this Decision and Order, each undersigned member
of the Commission has considered the transcript testimony, evidence
and legal argument of the parties.


II. Findings of Fact


The parties, through their counsel, have stipulated and agreed
that the following facts are true and established for purposes of
the adjudicatory proceedings. We adopt their following joint
stipulations as findings of the Commission.

1. LIAM's members' insurance business activities are taxed and
regulated by the Commonwealth of Massachusetts.

2. On average, about six bills affecting the insurance
business are enacted into law each year in the Commonwealth of
Massachusetts.

3. LIAM professional staffers, Frank O'Brien, Steven Tringale
and Elizabeth Rothberg, were

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Massachusetts registered legislative agents for LIAM in certain parts
of the years 1989 through 1993.

4. On July 21-23, 1989, the National Conference of Insurance
Legislators ("NCOIL") held a conference in Boston, Massachusetts.

The 1989 NCOIL Boston conference was attended by, among
others, many insurance industry representatives and state
legislators from around the United States.

5. On July 21, 1989, Massachusetts State Representative
Francis Woodward ("Woodward") and his wife, and William Carroll
("Carroll") and his wife had dinner together at the Marriott in
Boston. The total cost for the July 21, 1989 dinner was $302.53,
inclusive of tax of $12.03 and tip of $50. Mr. Carroll paid the
July 21, 1989 dinner bill with his LIAM American Express card. LIAM
subsequently paid the American Express card charge for the cost of
the July 21, 1989 dinner. Woodward did not pay anything toward the
July 21, 1989 dinner.

6. On or about July 21, 1989, Woodward as a State
Representative and Joint Committee on Insurance House Chairman, had
the authority to take official action on legislative matters which
could affect the financial interests of, among others, LIAM's
members.

7. The July 21, 1989 Marriott dinner was not an official part
of the 1989 NCOIL Boston conference.

8. On December 20, 1989, Massachusetts State Representative
Francis G. Mara ("Mara"), Joint Committee on Insurance staffer
Robert Smith ("Smith") and Luke Dillon ("Dillon") had dinner
together at Locke-Ober Restaurant in Boston. The total cost of the
December 8, 1989 dinner was $150.53 inclusive of tax in the amount
of $6.03 and a tip of $24. Dillon paid the December 20, 1989 dinner
bill with his American Express card. LIAM subsequently reimbursed
Dillon by check for the December 20, 1989 dinner expense. Mara and
Smith did not pay anything toward the December 20, 1989 dinner.

9. On or about December 20, 1989, Mara, as a State
Representative and House Vice Chairman of the Joint Committee on
Insurance, had the authority to take official action on legislative
matters which could affect the financial interests of, among
others, LIAM's members.

10. On March 23-25, 1990, NCOIL held a conference in Tulsa,
Oklahoma. The 1990 NCOIL conference was attended by, among others,
many insurance industry representatives and state legislators from
around the United States.

11. On March 22, 1990, Woodward and his wife, John Hancock
legislative agent F. William Sawyer ("Sawyer") and his wife, and
Carroll had dinner together at the Fountains Restaurant in Tulsa.
The total cost of the March 22, 1990 dinner was $171.42, inclusive
of tax in the amount of $9.25 and a tip in the amount of $30.
Carroll paid the March 22, 1990 dinner bill with his LIAM American
Express card. LIAM subsequently paid the American Express card
charge for the cost of the March 22, 1990 dinner as a business
expense. Woodward did not pay anything toward the March 22, 1990
dinner.

12. On March 23, 1990, Woodward and his wife, Sawyer and his
wife, and Liberty Mutual Insurance Co. legislative agent Thomas
Driscoll ("Driscoll") had dinner together at the Fountains
Restaurant in Tulsa. The total cost for the March 23, 1990 dinner
was $199.28, inclusive of tax in the amount of $10.75 and a tip in
the amount of $35. Carroll paid the March 23, 1990 dinner bill with
his LIAM American Express card. LIAM subsequently paid the American
Express card charge for the cost of the March 23, 1990 dinner as a
business expense. Woodward did not pay anything toward the March
23, 1990 dinner.

13. On or about March 22 and 23, 1990, Woodward, as State
Representative and House Chairman of the Joint Committee on
Insurance, had the authority to take official action on legislative
matters which would affect the financial interests of, among
others, LIAM's members.

14. Neither the March 22, 1990 Fountains Restaurant dinner nor
the March 23, 1990 Fountains Restaurant dinner was an official part
of the 1990 NCOIL Tulsa conference.

15. On November 25-28, 1990, NCOIL held a conference in Lake
Buena Vista, Florida. The 1990 NCOIL Lake Buena Vista conference
was attended by many insurance industry representatives and state
legislators from around the United States.

16. On November 24, 1990, about twenty people, including
Massachusetts State Representatives Frank Emilio ("Emilio") and his
wife, Carroll, Sawyer, Driscoll, insurance industry consultant
Michael Sabbagh ("Sabbagh"), Sabbagh's client William Henne, Daniel

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Foley and Thomas Crowley had dinner together at the Stouffer
Restaurant in Orlando, Florida. The total cost of the November 24,
1990 dinner was $2,243.97, inclusive of tax in the amount of
$109.50 and a tip in the amount of $309.52. Carroll paid the
November 24, 1990 dinner bill with his LIAM credit card. LIAM
subsequently paid the credit card charge for the cost of the
November 24, 1990 dinner. Emilio did not pay anything toward the
November 24, 1990 dinner.

17. On or about November 24, 1990, Emilio, as a State
Representative and a member of the Joint Committee on Insurance,
had the authority to take official action on legislative matters
which could affect the financial interests of, among others, LIAM's
members.

18. The November 24, 1990 Stouffer Restaurant dinner was not
an official part of the 1990 NCOIL Lake Buena Vista conference.

19. Emilio, while a State Representative, on three occasions
in 1988 and 1989 filed proposed legislation for LIAM. During his
tenure as a State Representative, Emilio filed proposed legislation
on a number of occasions for other individuals or entities. Prior to
his election as a State Representative, Emilio had worked as an
insurance agent.

20. In January, 1991, LIAM contributed $127.62 toward the cost
of a dinner held on January 8, 1991 for former Representative
Emilio and a set of golf clubs given to former Representative
Emilio. The total cost of the dinner was $541.24, inclusive of $90
for a tip and $21 for taxes. Nine persons attended the dinner,
including former Representative Emilio and a former aide. The
total cost of the golf clubs was $404.25 of which $19.25 was sales tax.

21. On November 17-20, 1991, NCOIL held a conference in
Scottsdale, Arizona. The 1991 NCOIL Scottsdale conference was
attended by, among others, many insurance industry representatives
and state legislators from around the United States.

22. On November 16, 1991, about twenty persons, including
Carroll and his wife, Sawyer and his wife, Woodward and his wife,
Massachusetts State Senator Robert Havern ("Havern") and his wife,
Massachusetts State Representative Marc Pacheco ("Pacheco"),
Massachusetts State Representative Daniel Ranieri ("Ranieri") and
his wife, Sabbagh, John Hancock lobbyist Ralph Scott and Daniel
Foley had dinner together at the Avanti of Scottsdale Restaurant in
Scottsdale, Arizona. The total cost of the November 16, 1991 dinner
was $1,170, inclusive of tax in the amount of $62.79 and a tip in
the amount of $170. Carroll paid the November 16, 1991 dinner bill
with his LIAM American Express card. LIAM subsequently paid the
American Express card charge for the November 16, 1991 dinner. None
of the Massachusetts state legislators present at the November 16,
1991 Avanti dinner paid anything toward the dinner.

23. On or about November 16, 1991, the Massachusetts
legislators present at the November 16, 1991 Avanti dinner had the
authority to take official action on legislative matters which
could affect the financial interests of, among others, LIAM
members.

24. The November 16, 1991 Avanti dinner was not an official
part of the 1991 NCOIL Scottsdale conference.

25. On May 13, 1992, Massachusetts Insurance Commissioner
Katherine Doughty ("Commissioner Doughty"), Carroll and Dillon had
dinner together at the Four Seasons Restaurant in Boston. The total
cost of the May 13, 1992 dinner was $337.46, inclusive of tax in
the amount of $13.21 and a tip in the amount of $60. Carroll paid
the May 13, 1992 dinner bill with his LIAM credit card. LIAM
subsequently paid the May 13, 1992 credit card bill charge for the
cost of the May 13, 1992 dinner. Commissioner Doughty did not pay
anything toward the May 13, 1992 Four Seasons dinner.

26. On or about May 13, 1992, Doughty, as State Insurance
Commissioner, had the authority to take official action on
regulatory matters which could affect the financial interests of,
among others, LIAM's members.

27. On March 12-14, 1993, NCOIL held a conference at Amelia
Island Plantation on Amelia Island, Florida. The 1993 NCOIL Amelia
Island conference was attended by, among others, many insurance
industry representatives and state legislators from around the
United States.

28. On March 12, 1993, Carroll had dinner at The Grill
Restaurant at the Ritz Carlton Hotel ("Ritz") on Amelia Island,
Florida with about 24 other people, including Massachusetts state
legislators and registered legislative agents and their spouses or
guests. Those present with Carroll at the March 12, 1993 dinner
included Dillon, Sawyer and his wife, registered

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legislative agent Arthur Lewis and his wife, Massachusetts Medical
Society registered insurance industry legislative agent Andrew Hunt,
Blue Cross and Blue Shield registered legislative agent Marcy McManus,
Health Insurance Association of America and Massachusetts Association
of Life Underwriters registered legislative agent Donald Flanagan,
Francis Carroll of the Small Business Service Bureau, Inc., Joint
Committee on Insurance House Chairman Representative Mara and his
wife, Joint Committee on Insurance House Vice Chairman
Representative Thomas Walsh and his wife, Joint Committee on
Insurance and Joint Health Care Committee member Representative
William Cass ("Cass"), Joint Government Regulations House Chairman
Representative Michael Walsh ("Walsh") and his wife, Joint
Government Regulations House Vice Chairman and Joint Health Care
Committee member Representative Kevin Honan ("Honan") and his
guest, Joint Committee on Taxation House Chairman Representative
Angelo Scaccia ("Scaccia"), House Committee on Bills in Third
Reading Chairman Representative John Cox ("Cox") and his wife, and
House Ways and Means Committee member Representative Kevin Poirier
("Poirier").

29. The total cost of the Ritz dinner on March 12, 1993 was
$3,089.16, inclusive of tax in the amount of $146.94 and a tip in
the amount of $493.22. Carroll paid the March 12, 1993 dinner bill
with his LIAM credit card. LIAM subsequently paid the credit card
charge for the cost of the March 12, 1993 dinner. LIAM subsequently
in April, 1993, received contributions towards this expenditure in
the amount of $1,100. None of the Massachusetts legislators
present at the March 12, 1993 Ritz dinner paid anything toward the
dinner.

30. On or about March 12, 1993, the state legislators present
at the March 12, 1993 Ritz dinner, as state representatives, had
the authority to take official action on legislative matters which
could affect the financial interests of, among others, LIAM's
members.

31. The March 12, 1993 Ritz dinner was not an official part of
the 1993 NCOIL Amelia Island conference.

32. None of the expenditures referenced in the Order to Show
Cause were paid by LIAM because of personal friendship.

33. In 1993, House 53 (H.53), An Act Further Regulating
Insurance, was a Weld administration bill to bring Massachusetts
insurance laws into conformity with the National Association of
Insurance Commissioners ("NAIC") accreditation standards program
and was regarded by the Weld administration, insurance regulators
and the insurance industry, as important. H.53 was introduced and
supported by the Governor. The Joint Committee on Insurance held a
public hearing on H.53 on March 22, 1993. Several witnesses
testified in favor of H.53, among them were representatives of the
Weld administration, including the Massachusetts Commissioner of
Insurance, a New Hampshire insurance regulator representing NAIC,
and insurance industry representatives, including Carroll on behalf
of LIAM. No witnesses testified in opposition to H.53. LIAM and
others unrelated to LIAM sought changes to H.53 before its passage.
In the Joint Committee on Insurance, LIAM sought revision of the
extraordinary dividends language in H.53 in order to allow the
legislation to comply with NAIC standards. On June 16, 1993, the
Joint Committee on Insurance reported out favorably an amended
version of H.53 (H.5220). In the Senate, LIAM sought a change to
the extraordinary dividends language when the bill was being
debated on the Senate floor at the third reading stage to correct
an error in the language. The Senate subsequently voted to approve
H.5220.

34. In 1992 and 1993, LIAM supported increased funding for the
Division of Insurance.

35. Prior to and during 1993, LIAM, through its legislative
agents, engaged in legislative activity in connection with certain
insurance and taxation issues.

36. On March 6, 1991, Carroll testified before the Joint
Committee on Taxation. Scaccia then served as House Chairman.

37. In a letter dated March 31, 1992, addressed to Senator
Keating and Representative Scaccia, as Joint Committee on Taxation
Co-Chairmen, Carroll submitted written testimony on behalf of LIAM
supporting H.3466, An Act Reforming the Taxation of Domestic Life
Insurance Companies, a 1992 bill to repeal the state net investment
income tax. The bill was sent to "study" and did not pass. Keating
and Scaccia did not support LIAM's position.

38. In a letter dated March 31, 1992, addressed to Keating and
Scaccia, as Joint Committee on Taxation Co-Chairmen, Carroll filed
written testimony on behalf of LIAM opposing H.2378 and 2568, Acts
Relative to Bank Taxation and Competitive Equality, and H.2912, An
Act Relative to the Taxation of Banks and Bank-like Entities.

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39. By letter dated March 30, 1993, addressed to Keating and
Scaccia, as Joint Committee on Taxation Co-Chairmen, Carroll filed
written testimony on behalf of LIAM supporting H.4434, An Act
Reforming the Taxation of Domestic Life Insurance Companies, which,
if passed, would have repealed the Commonwealth's net investment
income tax on domestic life insurance companies. This bill was
heard by the Joint Committee on Taxation on March 24, 1993.
Subsequent to the hearing, the bill was sent to "study" and did not
pass. Keating and Scaccia did not support LIAM's position.

40. In addition to LIAM's $127.62 contribution to the cost of
the January 8, 1991 dinner and golf clubs for former Representative
Emilio, the American Insurance Association paid $127.62, John
Hancock paid $187.66, The New England paid $187.66 and two other
LIAM member companies paid a total of $195 either directly to
Sawyer or by reimbursing their respective legislative agents who
had paid Sawyer.

41. At times, during the years 1989 to 1991, Woodward took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

42. At times, during 1989 and 1990, Emilio took official
actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

43. At times, during the years 1989 to 1993, Mara took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

44. At times, during the years 1989 to 1993, Smith took
actions as Insurance Committee staffer relating to pending
legislation, including legislation affecting the financial
interests of LIAM's members.

45. At times, during the years 1990 to 1993, Havern took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's
members.

46. At times, during the years 1990 to 1993, Scaccia took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

47. At times, during the years 1991 to 1993, Representative
and Senator Pacheco took official actions concerning pending
legislation, including legislation affecting the financial
interests of LIAM's members.

48. At times, during the years 1990 to 1992, Ranieri took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

49. At times, during the years 1991 to 1993, T. Walsh took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

50. At times, during the years 1991 to 1993, M. Walsh took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

51. At times, during the years 1991 to 1993, Honan took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

52. At times, during the years 1991 to 1993, Poirier took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

53. At times, during the years 1991 to 1993, Cox took official
actions concerning pending legislation, including legislation
affecting the financial interests of LIAM's members.

54. At times, during the years 1991 to 1993, Cass took
official actions concerning pending legislation, including
legislation affecting the financial interests of LIAM's members.

55. At times, during the years 1992 and 1993, Commissioner
Doughty took official actions concerning pending legislation,
including legislation affecting the financial interests of LIAM's
members.

In addition to the foregoing, based on the credible testimony,
exhibits and record, we find the following facts:

56. LIAM is a trade association of Massachusetts based
commercial life, health and disability insurers. Among LIAM's
members during the years mid-1989 to mid-1993 were John Hancock
Mutual Life Insurance Company ("John Hancock"), Massachusetts
Mutual Life Insurance Company ("Mass Mutual"), New England Life

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Insurance Company ("New England"), State Mutual Life Insurance
Company ("State Mutual"), Paul Revere Life Insurance Company ("Paul
Revere"), Boston Mutual Life Insurance Company ("Boston Mutual"),
Berkshire Life Insurance Company ("Berkshire") and Liberty Life
("Liberty").

57. LIAM's primary purpose is to represent its members
collectively on matters related to insurance legislation and
regulatory matters. LIAM's members use the association to monitor
proposed laws and regulatory matters affecting the insurance
business and to advocate their position as group in order to
modify, pass or defeat proposed laws or to affect regulatory
matters.

58. On average, more than 100 bills filed in the Massachusetts
legislature each year affect the insurance business.

59. At all times during 1989 to 1993, bills proposing new
laws, or changes to existing laws, affecting the interests of
LIAM's members were pending in the Massachusetts legislature and
regulatory matters affecting those same interests were under
consideration by Massachusetts insurance regulators.

60. At all times during 1989 to 1993, Carroll was employed by
LIAM as its President and as a Massachusetts registered legislative
agent. During this same time period, LIAM retained the services of
Dillon, an outside lobbyist.

61. On March 6, 1989, the Joint Committee on Insurance
("Insurance Committee") held a hearing on H.4901 (regulating HFV
testing in determining eligibility for health care insurance).
Carroll provided testimony at that hearing opposing H.4901 and
supporting H.609, a pending LIAM-sponsored bill.

62. On June 22, 1989, S.715, which sought to reduce health
insurance rates for non-smokers, was reported out by the Insurance
Committee as "ought not to pass. "

63. In mid-July, Woodward proposed, and the House of
Representatives ("House") approved, an amendment to the universal
health care law (St. 1988, c. 23), which would delay full
implementation of the law by two years.

64. On July 21, 1989, among the bills of interest to LIAM
pending before the Insurance Committee were: H.609, the
LIAM-sponsored Privacy Bill (establishing standards for the
collection, use and disclosure of privacy information concerning
insurance transactions); H.4901 (regulating HIV testing in
determining eligibility for health care insurance); and S.2099
(freezing rates for individual and small group products).

65. On or about October 10, 1989, the House debated S.715, a
bill opposed by LIAM, at which time, Woodward was among a group of
legislators who argued against the bill.

66. On November 28, 1989, the Insurance Committee held a
hearing on S.2099. LIAM employee Steven Tringale provided testimony
in opposition to the bill.

67. On November 9, 1989, the Insurance Committee reported out
both H.609 and H.4901 with a study order.

68. On December 28, 1989, the Insurance Committee reported out
S.2099 with a new draft.

69. During 1990, at least 11 bills of interest to LIAM were
pending before the Insurance Committee, for which Mara continued to
serve as Vice-Chairperson. Those bills included: H.553, the LIAM-
sponsored Privacy Bill; H.734, permitting insurers to value real
estate at assessed value; H. 1349, permitting life insurance
companies to exchange policies with their affiliates; H.2157,
concerning valuation of capital stock of insurers and subsidiaries;
H.5649, concerning investments of insurance companies; H.3343,
regulating access to health care; H.2493, H.2496, H.3560,
concerning gender neutral insurance; H.3559, concerning reduced
insurance rates for non-smokers; and H.79, concerning
discrimination against the handicapped.

70. In 1990, H.553 was sponsored for LIAM by Emilio.

71. In 1990, H.5649, concerning investments of insurance
companies, was sponsored for LIAM by Mara.

72. In 1989 and 1990 Smith provided summaries and explanations
of proposed insurance legislation to the Insurance Committee
members. He also participated in or assisted in the drafting of
proposed legislation and/or amendments to proposed legislation
pending before the Insurance Committee. Additionally, Smith provided

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information to LIAM regarding matters pending before the
Insurance Committee.

73. On March 14, 1990, the Insurance Committee held a hearing
on H.734, a LIAM-sponsored bill (permitting insurers to value real
estate at an assessed value).

74. On March 28, 1990, LIAM submitted testimony to the
Insurance Committee regarding H.3343.

75. On April 2, 1990, LIAM submitted testimony to the
Insurance Committee with regard to H.2493, H.2496, H.3559, H.3560,
H.73, H.553 and H.79.

76. On May 21, 1990, the Insurance Committee reported out
H.553, the LIAM-sponsored privacy bill, with a new draft. The
Insurance Committee reported out favorably H. 734 and H. 1349 on
May 31, 1990 and H.5469 on June 6, 1990, all of which had been
sponsored by LIAM. No report issued from the Insurance Committee in
1990 with regard to the other above-identified bills in which LIAM
had an interest during that year.

77. The January 8, 1991 dinner and gift of golf clubs to
Emilio was organized by Sawyer. In advance of the dinner, Carroll
had agreed to contribute to the event and the gift. Carroll did
not, however, attend the dinner. Of the seven guests, other than
Emilio and his former legislative aide, in attendance at the
January 8, 1991 dinner, one was a representative of LIAM, one
represented the American Insurance Association, and all of the
others were from three of LIAM's member insurance companies
(John Hancock, The New England and Mass Mutual).

78. On February 14, 1991, the Insurance Committee held a
hearing on S.597 establishing a Medex study committee of which LIAM
would be a member. Dillon was scheduled to testify in support of
that legislation.

79. On February 14, 1991, the Insurance Committee held a
hearing in relation to H.1346 (increasing mental illness mandated
benefits), H.1343 (allowing the substitution of outpatient mental
illness treatment for inpatient mental illness treatment) and H.391
(LIAM-sponsored bill allowing exchange of policies between
affiliated companies). Dillon was scheduled to testify in
opposition to H. 1346 and in favor of H. 1343 and H. 39 1.

80. LIAM representatives, including Dillon, submitted
testimony on March 20, 1991 in relation to: H.390 (allowing
domestic insurance companies to convert to stock form of
ownership); H.3973 (allowing certain investments in insurance
policies and annuity contracts); H.4165 (concerning valuation of
capital stock of subsidiaries of insurers); and S.568 (establishing
lower insurance rates for non-smokers).

81. On March 6, 1991, the Joint Taxation Committee ("Taxation
Committee") held a hearing on H.4076 (relating to the taxation of
domestic life insurance companies). At that hearing, Carroll
provided testimony in support of the legislation.

82. On April 3, 1991, the Insurance Committee held a
hearing on S.569 (establishing lower insurance rates for non-drinkers).
LIAM lobbyist Francis O'Brien provided a statement opposing that
legislation.

83. On April 22, 1991, the Insurance Committee held a hearing
on H.2342 (promoting insurance company competition by repealing the
anti-trust exemption). LIAM through its legislative agents,
submitted a statement in opposition to that legislation.

84. On November 16, 1991, H.6206 (health care benefits for
small employers), sponsored by LIAM, was pending before the
Insurance Committee. Also on that date, the following bills of
interest to LIAM were among those pending in the legislature and
ready to be acted upon by both branches: H.6280 and H.6307 (both
relating to health care access and financing).

85. On November 21, 1991, Ranieri, Pacheco and Woodward voted,
at least twice, as members of the House on H.6280.

86. On December 21, 1991, Ranieri, Pacheco and Woodward voted
as members of the House on H.6307.

87. On December 12, 1991 Havern voted on H.6307.

88. On December 4, 1991, the Insurance Committee held a
hearing on H.6206, a LIAM sponsored bill which, on December 5,
1991, was reported out by that Committee with a study order.

89. By the end of the 1991 legislative year, several bills
affecting the financial interests of LIAM's members had been put to
a floor vote of the Upper House and certain of those bills had also
been acted upon by the full

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Senate. These included H.6307 (an mended version of H.6280), signed
into law, St.1991, c. 495; H.1667, signed into law, St.1991, c. 516; H.391,
returned by Governor; H.6015 (an amended version of H.390), signed
into law, St.1991, c. 339; H.3973, signed into law, St.1991, c. 347; and
H.4165, approved and engrossed by House, but died in Senate Third
Reading Committee.

90. As the Commissioner of Insurance in 1992, Doughty headed
the Massachusetts Division of Insurance.

91. Beginning in January, 1992, LIAM representatives met with
Division of Insurance employees regarding obtaining NAIC
accreditation. By the standards of the NAIC, a state division of
insurance is deemed qualified to regulate the industry in its
state. NAIC accreditation in substantial part depends on the state
division of insurance being properly funded, staffed, organized and
managed, as well as the passage of certain legislation.

92. In 1992, LIAM supported NAIC accreditation of the
Insurance Division. Without such accreditation, LIAM took the
position that Massachusetts insurance companies would suffer
substantial competitive disadvantages when doing business in other
states.

93. In early 1992, LIAM representatives believed that Doughty
was "not paying careful attention" to the management aspects of
NAIC accreditation.

94. On April 29, 1992, Carroll contacted Insurance Division
staff member Cynthia Martin seeking to meet with her and Doughty on
that part of the accreditation process relating to "restructuring the
Insurance Division, including funding, staffing, etc."

95. Prior to May 13, 1992, Carroll attempted to discuss
accreditation issues with Doughty in her office, but he had not
been successful. Carroll, therefore, desired to meet with Doughty
in an "informal" or "easier setting" to discuss issues relating to
the management of the Insurance Division in anticipation of an NAIC
accreditation examination visit expected to occurring 1993.

96. In May, 1992, issues relating to the NAIC accreditation,
including the filing of necessary legislation and securing an
appropriation to allow for increased staffing, were pending at the
Division of Insurance.

97. In July, 1992, while LIAM and the Insurance Division were
reviewing drafts of legislation needed for NAIC accreditation, LIAM
lobbyist O'Brien was in frequent contact with the Insurance
Division.

98. By July 29, 1992, the Insurance Division filed the
legislative packet necessary for NAIC accreditation.

99. As of January 25, 1993, H.53 was pending in the Insurance
Committee.

100. As of January 25, 1993, LIAM was engaged in drafting
certain language (relating to an extraordinary dividends provision
in H.53) which it intended to present to the Insurance Committee.

101. In January, 1993, LIAM was engaged in an effort to have
H.53 heard by the Insurance Committee at the earliest possible
opportunity. As of February 4, 1993, Dillon had met with members of
the Insurance Committee concerning a hearing date for H. 53, which
by February 25, 1993, had been scheduled for March 22, 1993.

102. By March of 1993, LIAM and the Division of Insurance had
devised a joint strategy for seeking legislative approval of the
legislation necessary for NAIC accreditation (H.53). That strategy
involved Doughty's meeting individually with each member of the
Insurance Committee and insurance industry representatives.

103. Prior to March 12, 1993, both Carroll and Dillon had
spoken to T. Walsh regarding H.53.

104. On March 8, 1993, the Insurance Committee held hearings
on eight bills which sought to mandate that insurers provide new
health insurance benefits. Those bills were S.615 (insurance
coverage for mental illness), S.624 (access to educational
psychologists services), S.626 (access to mental health services),
S.658 (mandating insurance coverage for bone densitometry), H.313
(requiring insurance payments for the toxin Botulinum), H.716
(providing for home care services for certain children), H. 1320
(improving mental health services), and H.2039 (reimbursement by
health insurers for bone marrow transplants for breast cancer
patients). LIAM submitted a statement in opposition to all of these
bills.

105. As of February 19, 1993, Cox had been identified by
William Sawyer to LIAM as a "key

Page 886

legislator" in relation to the legislature's consideration of H.53.

106. As of February 4, 1993, Dillon had met with the staff of
the House Ways and Means Committee concerning NAIC-related funding
for the Division of Insurance.

107. On March 9, 1993, the Joint Health Care Committee
("Health Care Committee") held a hearing on H. 1818 (relating to
coverage by certain health care insurance plans and policies of
costs arising from speech and language disorders). At that hearing,
LIAM submitted a statement in opposition to the legislation.

108. On March 9, 1993, the Health Care Committee held hearings
in relation to H.506, H. 1812, H.2571 and S.487 (regulating
entities performing utilization review). At that hearing, a
statement in opposition to all four bills was jointly submitted by
LIAM and the Health Insurance Association of America.

109. On March 12, 1993, at least 17 bills, in addition to
those listed in Finding No. 104 , were pending in the Insurance
Committee and of interest to LIAM.

110. On March 12, 1993, H.4434, which concerned the taxation
of domestic life insurance companies, was pending in the Taxation
Committee and of interest to LIAM.

111. On March 12, 1993, several bills of interest to LIAM were
pending before the Health Care Committee which, in addition to
those discussed in Finding Nos. 54 and 55, included a series of
bills relating to a single payer insurance system (S.478, H.1082,
H.2796, H.3555), health care financing (S.489, H.505, H.2018),
determination of need (S.455, H.504, H.2210),
uncompensated care pool (H. 1660, H. 1652, H. 2205), and
competition (H. 1656).

112. On March 22, 1993, the Insurance Committee held a hearing
on H. 1846 (exempting life, health and accident insurance benefits
from seizure under process). In connection therewith, LIAM provided
a statement in support of H. 1846.

113. On March 22, 1993, the Insurance Committee held a hearing
on H. 1110 and H. 2821 (both entitled an Act Creating an Insurance
Community Reinvestment Act). During the hearing Carroll provided a
statement in opposition to the bills.

114. On April 5, 7 and 12, 1993, the Insurance Committee held
hearings in relation to 14 bills which mandated additional
insurance benefits. LIAM submitted a statement opposing all 14
bills.

115. On June 16, 1993, the Insurance Committee reported out
H.53, with a new draft, and H.5220, which was reported out
favorably. Thereafter, H.5220 was referred to the House Ways and
Means Committee which reported out the bill on September 20, 1993
with a recommendation that the bill "ought to pass with certain
amendments." Also on September 20, 1993, H.5220 was reported out
by the House Committee on Bills in Third Reading "to be correctly
drawn." A third reading of the H.5220 followed and the bill was
passed to be engrossed. Following action by the Senate and
concurrence by the House in Senate proposed Amendments, on November
6, 1993, H.5220 was enacted and presented to the Governor, who
signed the bill into law on November 9, 1993.

116. On March 25, 1993, LIAM submitted its recommendation on
14 bills for which the Health Care Committee held hearings on March
24, 1993 (listed in Finding No. 111).

117. On March 24, 1993, the Taxation Committee conducted a
hearing regarding H.4434.


III. Decision


A. Statute of Limitations


As a preliminary matter, we must decide whether the charges
against LIAM with respect to all of the alleged gratuities, except
the meal paid for by LIAM on March 12, 1993, are time-barred. We
conclude, for the reasons discussed below, that none of the charges
is time-barred.

The Commission applies to its proceedings a three year statute
of limitations, including tolling provisions, in accordance with
the principles established by Town of Nantucket v. Beinecke, 379
Mass. 345 (1979). The Supreme Judicial Court stated in that case:

We conclude that the essence of an action under the [conflict
of interest] statute is breach of official duty ... The
[trial] judge properly applied the ... tort statute of
limitations contained in G.L. c. 260, s. 2A.[2] ... The judge
correctly stated that . . . "the statute commences to run when
the plaintiff knew or should have known of the wrong."
[citations omitted] . . .

Page 887

[A]s a general proposition . . . only when those disinterested
persons who are capable of acting on behalf of the town knew or
should have known of the wrong should the town be charged with
knowledge.

Id., 379 Mass. at 349-351 (emphasis added). The Commission's
regulation, 930 C.M.R. s.1.02(10), implements the Beinecke standard
by requiring, among other things, that the Petitioner demonstrate
by a preponderance of the evidence that a disinterested person
capable of enforcing the conflict law[3] learned of the violation
no more than three years before the OTSC was issued.

The Respondent first argues that the statute of limitations is
not subject to tolling where punitive rather than remedial relief
is sought. We reject this argument for the reasons discussed below.

The Respondent falls to cite any Massachusetts or First
Circuit Court of Appeals authority in support of its position.
Instead, it relies on a case from the District of Columbia Court of
Appeals, 3M Co. v. Browner, 17 F.3d 1453 (D.C. Cir. 1994), which is
inapposite. In that case, the federal court interpreted a
particular federal statute of limitations, 28 U.S.C. s.2462,
governing federal actions for the enforcement of a civil fine or
penalty. The Supreme Judicial Court has expressly rejected the
argument that Commission proceedings are governed by a similar
Massachusetts statute of limitations, G.L. c. 260, s.5, applicable
to actions brought by the Commonwealth to recover fines and
penalties under penal statutes. Zora v. State Ethics Commission,
415 Mass. at 647 (1993).

Additionally, the Supreme Judicial Court has "rejected the
notion that the remedy at issue is the primary factor which
determines the applicable limitation period" for a conflict law
violation. Zora, 415 Mass. at 647 (citing Beineke, 379 Mass. at
349). Rather, the Court looked to the nature of the underlying
action to determine the applicable limitations period. It follows,
therefore, that the type of remedy which the Commission might
impose if it finds a violation would not determine when the cause
of action accrues for purposes of commencing the limitations period
in an action under G. L. c. 268A.[4]

Second, the Respondent argues that, even if tolling principles
were applicable, the Petitioner has not demonstrated that the
alleged violations were "inherently unknowable" or that it had
exercised "reasonable diligence" in ascertaining the facts which
give rise to such violations. We reject this argument also.

In Beineke the Court upheld the tolling of the statute of
limitations in an action brought by the Town of Nantucket under G.
L. c. 268A, s.21 to void a deed tainted by Town employees'
violations of G. L. c. 268A, s.s.19 and 20(a). In doing so, the
Court, in effect, applied a "discovery rule," which tolls the
running of the statute of limitations until plaintiff knows or
reasonably should have known of the violation.[5] See, e.g.,
Hendrickson v. Sears, 365 Mass. 830 (1974). Massachusetts courts
apply the rule to avoid the harsh alternative of barring a
plaintiff from being able to bring an action when he or she is
unaware of the injury or violation until the entire or a
significant portion of the limitations period has elapsed. See
Franklin v. Albert, 381 Mass. 611, 619 (1980). As the Court noted
in Beineke, "[w]e feel that a realistic notice concept is
appropriate under the Conflict of Interest Law . . . in order to
further the [protective] purposes of the legislation." Beineke, 379
Mass. at 350.

Pursuant to 930 C.M.R. s.1.02 (10) (c)," the Petitioner
submitted an affidavit of its investigator then responsible for the
case attesting that no complaints relating to the violation had
been received more than three years before the OTSC[7] was issued.
Moreover, it submitted affidavits from the Attorney General and the
Suffolk County District Attorney attesting that their respective
offices had not received any complaints relating to the violations
more than three years before the OTSC issued. We conclude that the
affidavit of the Enforcement Division's investigator establishes by
a preponderance of the evidence that the Petitioner, a
disinterested person capable of enforcing G. L. c. 268A, did not
have actual knowledge of the gratuities more than three years
before the OTSC issued. We further conclude that all the
affidavits, taken together, establish by a preponderance of the
evidence that Petitioner reasonably should not have known of the
gratuities more than three years before the OTSC issued.[8]
Accordingly, the statute of limitations was properly tolled.[9]

Finally, Respondent argues that the two affidavits filed by
the Petitioner with respect to the Office of the District Attorney
for Suffolk County (one from current District Attorney, Ralph C.
Martin, II and one from his predecessor, Newman Flanagan), do not
satisfy the requirements of 930 C.M.R. s.1.02(10)(c). District
Attorney Martin's affidavit reads, in relevant part:

Page 888

On September 2, 1992, I became Suffolk County District
Attorney. In March 1997, I received a request from Special
Investigator Juan A. DeLeon of the Massachusetts State
Ethics Commission to conduct a search of relevant files
and records of the Suffolk County District Attorney's
Office for evidence of any complaint made to this
office regarding the Life Insurance Association of Massachusetts,
Inc., unlawfully providing gratuities to Massachusetts public
officials. I caused a diligent search to be made as requested.
That search, which included all complaint files opened during my
tenure as Suffolk District Attorney, uncovered no records
reflecting receipt of such a complaint by this office at any
time more than three years prior to June 20, 1995, or at any
time since. On information and belief, complaint files for the
period proceeding [sic] my tenure as Suffolk District Attorney
are in the possession of former Suffolk District Attorney
Newman Flanagan.

The affidavit of former Suffolk County District Attorney
Newman Flanagan reads in pertinent part:

I was the Suffolk County District Attorney until September 2,
1992. I have caused to be made a diligent search of the records of
the office of the Suffolk District Attorney in my possession
and found no record of any complaint dated before June 20,
1992, regarding the Life Insurance Association of
Massachusetts, Inc. unlawfully providing gratuities to
Massachusetts public officials.

Respondent asserts that, "Mr. Martin does not purport to have
reviewed any records for complaint files opened prior to September
2, 1992 and thus his affidavit, standing alone, would not satisfy
Rule 1.02(10)(c), which is intended to require Petitioner to show
that a disinterested person learned of the violation no more than
three years before the order [to show cause] was issued."
Post-Hearing Memorandum of Life Insurance Association of
Massachusetts, Inc., p. 13 (emphasis included). Respondent further
argues that Mr. Flanagan's affidavit is inconsistent with the
regulation because it is from a former incumbent, and it is
inadequate by failing to state that the records in his possession
include records of all complaints filed prior to September 2, 1992.
Thus, Respondent concludes that the Petitioner has failed to meet
its burden under the regulation.

We do not find these arguments persuasive. We read Mr.
Martin's affidavit as establishing that, as requested by the
Petitioner, he searched all relevant files and records of his
office including, but not limited to, complaint files opened during
his tenure as District Attorney. Thus, to the extent, if any, that
complaint files opened prior to September 2, 1992 remain in the
office of the Suffolk County District Attorney, Mr. Martin caused
a search of those records to be made. To the extent, if any, that
complaint files opened prior to Mr. Martin's tenure are in Newman
Flanagan's possession, Mr. Flanagan attested that he searched those
records. Thus, we conclude that the Petitioner established by a
preponderance of the evidence that the Office of the Suffolk County
District Attorney received no complaint relating to the
Respondent's alleged violations more than three years before the
OTSC issued.

For all the reasons stated herein, we conclude that Petitioner
has demonstrated by a preponderance of the evidence that it
satisfied the common law tolling principles and the requirements
of 930 C.M.R. s.1.02(c). Thus, none of the Petitioner's claims is
time barred.


B. Section 3(a)


Pursuant to s.3(a) of G.L. c. 268A:
Whoever otherwise than as provided by law for the proper
discharge of official duty, directly or indirectly, gives,
offers or promises anything of substantial value to any
present or former state, county or municipal employee ... for
or because of any official act performed or to be performed by
such an employee ... shall be punished ....

As we have previously stated, s.3(a) establishes a gratuity
offense, the essence of which is the giving of an item of
"substantial value" to a public official "for or because of any
official act performed or to be performed" by him. We have
interpreted the s.3 language to require the Petitioner to establish
the existence of a relationship or nexus between the gratuity and
the performance of a public employee's official acts. See, e.g., In
re Antonelli, 1982 SEC 101, 108; Scaccia 1996 at 844. See also

Page 889


United States v. Sawyer, 85 F.M 713, 729,735-736 (1st Cir. 1996).

It is unnecessary to demonstrate that, by providing the
gratuity, the giver succeeded in influencing the recipient's
performance of his or her official acts. In re Antonelli, supra.
Moreover, the Petitioner need not establish corrupt intent to
influence official decision making. Id. See also, Commonwealth v.
Dutney, 4 Mass. App. Ct. 363, 375 (1976). Rather, as the Commission
recently discussed in Scaccia, 1996 at 844, there can be a s. 3
violation even if the gratuity is intended only to "reward" the
public official for actions he has already taken or which he may
take in the future. Expressing a similar sentiment, the United
States Court of Appeals for the First Circuit stated recently:

As the word gratuity implies, the intent most often
associated with the offense is the intent to "reward" an
official for an act taken in the past or to be taken in the
future... The official act might otherwise be properly
motivated and the gratuity, though unlawful, might not be
intended to influence the official's mindset with regard to
that particular action.

United States v. Sawyer, 85 F.3d at 730. Additionally, we have not
required that a gratuity be tied to specifically identified
official action to be unlawful. Scaccia, 1996 at 844; In re United
States Trust Company, 1988 SEC 3 5 6, 3 5 8 ("For purposes of s. 3,
it is unnecessary to prove that the gratuities were generated by
some specific identifiable act performed or to be performed.");
United States v. Sawyer, 85 F.3d at 738.

Thus, in determining if a gratuity is given for or because of
any official act performed or to be performed, we will evaluate
whether, at the time the donor gives the gratuity, the recipient
has already taken any official act and/or reasonably can be
expected to take any future official act concerning matters of
interest to the donor. See In re Hebert, 1995 SEC 800 at 806. See
also United States v. Sawyer, 85 F.3d at 735-736. Especially given
the prophylactic nature of the conflict of interest law, to
interpret s. 3 otherwise could subject public employees to a host
of temptations which would undermine the impartial performance of
their public duties.

In addition, for at least the past 15 years, we have
interpreted the term "substantial value" to mean meals, golf or
other gifts valued at $50 or more. See Commonwealth v. Famigletti,
4 Mass. App. 584 (1976) Commission Advisory No. 8 (Free Passes) (I
985).[10] In EC-COI-93-14, the Commission re-considered whether $50
should serve as the threshold for substantial value for purposes of
s. 3. The Commission concluded, "[w]e believe that the $50
threshold serves the public interest in maintaining the integrity
of the government decision making process, and provides a realistic
and workable measure which public officials may use to guide their
conduct." Id.[11]


Background Relevant to All Gratuities


LIAM is a trade association of Massachusetts based commercial
life, health and disability insurers. The insurance business in
Massachusetts is subject to many state laws and regulations. LIAM's
primary purpose is to represent its members collectively on matters
related to insurance legislation and regulatory matters. On
average, more than 100 bills filed in the Massachusetts legislature
each year affect the insurance business. LIAM's members use the
association to monitor proposed laws and regulatory matters
affecting the insurance business and to advocate their position as
a group in order to modify, pass or defeat proposed laws or to
affect regulatory matters. At all times here relevant, bills
proposing new laws, or changes to existing laws, affecting the
interests of LIAM's members were pending in the Massachusetts
legislature and regulatory matters affecting those same interests
were under consideration by Massachusetts insurance regulators.

From 1989 through 1993, Carroll was employed by LIAM as
President and as a Massachusetts registered legislative agent.
Additionally, during the relevant time period, LIAM retained the
services of Dillon, an outside lobbyist.


1. July 21, 1989 Dinner (Marriott Hotel, Boston, MA)


The Petitioner alleges that LIAM violated s. 3(a) when it
bought dinner for Woodward and his spouse on July 21, 1989, at a
cost of $50 or more per person, for or because of official acts
performed or to be performed by him.

As the parties have stipulated, Woodward and his wife had dinner
with Carroll and his wife at the Marriott Hotel in Boston,
Massachusetts on July 21, 1989 during the time period of the NCOIL
conference in Boston. The July 21 dinner was not an official part
of the 1989 NCOIL Boston conference. The total cost of the July 21
dinner was $302.53, inclusive of tax of

Page 890


$12.03 and a tip of $50. Carroll paid the July 21 dinner bill with his
LIAM American Express Card, and LIAM subsequently paid the
American Express card charge for the cost of the dinner. Woodward
did not pay anything toward the July 21 dinner.

On July 21, 1989, Woodward was a state representative and
House Chairperson of the Joint Insurance Committee. As a state
representative, Woodward was a state employee within the meaning of
G.L. c. 268A.[12] He had the authority to take official action on
legislative matters which could affect the financial interests of,
among others, LIAM's members. Moreover, Woodward exercised that
authority numerous times during the years 1989 through 1991, taking
official actions concerning legislation affecting the interests of
LIAM's members.

For example, prior to the July 21 dinner, on March 6, 1989,
the Insurance Committee, which was at that time co-chaired by
Woodward, held a hearing on H.4901 (regulating HIV testing in
determining eligibility for health care insurance). Carroll
provided testimony at that hearing opposing H.4901 and supporting
of H.609, a pending LIAM-sponsored bill. On June 22, 1989, S.715,
which sought to reduce health insurance rates for non-smokers, was
reported out by the Insurance Committee as "ought not to pass." In
mid July, 1989, within days of the July 21 dinner, Woodward
proposed, and the House approved, an amendment to the universal
health care law (St. 1988, c. 23), which would delay full
implementation of the law by two years.

At the time Carroll bought dinner for Woodward on July 21, at
least three bills of interest to LIAM were pending in the Insurance
Committee.[13] Given this fact, Woodward's role as Chairman of that
Committee during 1989, and his duties and responsibilities in that
role, Carroll and LIAM should reasonably have expected that
subsequent to the dinner, Woodward would take official acts of
interest to the organization and its members.

The record confirms that Woodward, in fact, did perform such
official acts after July 21, 1989. On or about October 10, 1989,
the House of Representatives debated S.715, a bill opposed by LIAM,
at which time Woodward was among a group of legislators who argued
against the bill. On November 28, 1989, the Insurance Committee
held a hearing on S.2099. LIAM employee Steven Tringale provided
testimony in opposition to the bill. Moreover, the record indicates
that on November 9, 1989, the Insurance Committee reported out both
H.609 and H.4901 with a study order and that on December 28,
1989, the Insurance Committee reported out S.2099 with a new draft.

The July 21 dinner for Woodward and his spouse cost $50 or
more per person[14] and, thus, was "of substantial value" for
purposes of s. 3(a).[15]

LIAM's payment for the July 21 dinner for Woodward was not
provided for by law for the proper discharge of official duties.[16]
Moreover, the parties stipulated that none of the expenditures
referenced in the OTSC, including the July 21 dinner, was paid
by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on
behalf of its member companies on matters related to insurance
legislation and regulation and that, at the time of the July 21
dinner, Woodward had taken numerous official acts and reasonably
could be expected to take future official acts of interest to
LIAM, we conclude that LIAM bought Woodward's (and his wife's[17]
dinner for or because of any official act performed or to be performed
by him. In light of the above-described evidence, we do not find
credible Carroll's testimony that he did not pay for the July 21
dinner for or because of any official act performed or to be
performed by Woodward.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on July 21, 1989, LIAM
violated s. 3(a) by giving a gratuity of substantial value to
Woodward, for or because of any official act performed or to be
performed by him.


2. December 20, 1989 Dinner (Locke-Ober Restaurant,
Boston, MA)


The Petitioner alleges that LIAM violated s. 3(a) when it
bought dinner for Mara and Smith on December 20, 1989.

As the parties have stipulated, Mara and Smith had dinner with
Dillon at Locke-Ober Restaurant in Boston, Massachusetts on
December 20, 1989. The total cost of that dinner was $150.53,
inclusive of tax of $6.03 and a tip of $24. Dillon paid the
December 20 dinner bill with his American Express Card and LIAM
subsequently reimbursed Dillon by check for the

Page 891


December 20 dinner expense. Mara and Smith did not pay anything
toward the December 20 dinner.

On December 20, 1989, Mara was a state representative and
Vice-Chairperson of the Insurance Committee. As a state
representative, Mara was a state employee within the meaning of
G.L. c. 268A. At that same time, Smith was a staff member for the
Insurance Committee. Because he performed services for the
Massachusetts Legislature, Smith also was a state employee within
the meaning of G.L. c. 268A. Mara had the authority to take
official action on legislative matters which could affect the
financial interests of, among others, LIAM's members. Moreover, he
exercised that authority on numerous times during the years 1989
through 1993, taking official actions concerning legislation
affecting the interests of LIAM's members. In addition, during the
years, 1989 through 1993, Smith also took actions relating to
pending legislation, including legislation affecting the interests
of LIAM's members.

For example, prior to the December 20 dinner, on March 6,
1989, the Insurance Committee, which was at that time vice-chaired
by Mara, held a hearing on H.4901 (regulating HIV testing in
determining eligibility for health care insurance). Carroll
provided testimony at that hearing opposing H.4901 and in support
of H.609, a pending LIAM-sponsored bill. On June 22, 1989, S.715,
which sought to reduce health insurance rates for non-smokers, was
reported out by the Insurance Committee as "ought not to pass." On
or about October 10, 1989, the House of Representatives debated
S.715, which was opposed by LIAM. On November 28, 1989, the
Insurance Committee held a hearing on S.2099 in relation to which
LIAM employee Steven Tringale provided testimony in opposition to
the bill. Moreover, the record indicates that on November 9, 1989,
the Insurance Committee reported out both H.609 (a LIAM-sponsored
bill establishing standards for the collection, use and disclosure
of privacy information concerning insurance transactions) and
H.4901 (bill opposed by LIAM regulating HIV testing in determining
eligibility for health care insurance) with a study order.

At the time Dillon bought dinner for Mara, at least one bill
of interest to LIAM was still pending in the Insurance
Committee.[18] Given that fact, Mara's role as Vice-Chairman of
that Committee during 1989, and his duties and responsibilities in
that role, Dillon and LIAM should reasonably have expected that
Mara would take official acts of interest to LIAM and its members
subsequent to the dinner.

The record confirms that Mara, in fact, did perform such
official acts after the December 20 dinner. For example, on
December 28, 1989, the Insurance Committee reported out S.2099 with
a new draft. Furthermore, during 1990, at least eleven bills of
interest to LIAM were pending in the Insurance Committee.[19]
Included among those bills was H.5649, relating to investments of
insurance companies, sponsored for LIAM by Mara.

The record also establishes that in 1989 and 1990, Smith, as
a staff member for the Insurance Committee, provided summaries and
explanations of proposed insurance legislation to Committee
members. He also participated in, or assisted in the drafting of
proposed legislation and/or amendments to proposed legislation
pending before the Insurance Committee. Finally, the record
indicates that Smith provided information to LIAM regarding matters
involving the Insurance Committee. We, therefore, find that at the
time of Smith's acceptance of the December 20 dinner from Dillon,
Smith had taken official actions and LIAM should reasonably have
expected that he would in the future take official actions
affecting its interests.

The December 20 dinner for Mara and Smith cost $50 or more per
person and, thus, was "of substantial value" for purposes of s.
3(a).[20]

LIAM's payment for the December 20 dinner for Mara and Smith
was not provided for by law for the proper discharge of official
duties. Moreover, the parties stipulated that none of the
expenditures referenced in the OTSC, including the December 20
dinner, was paid by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on
behalf of its member companies on matters related to insurance
legislation and regulation and that Mara and Smith had taken
official acts and reasonably could be expected to take future
official acts of interest to LIAM, we find that LIAM bought Mara's
and Smith's dinners on December 20, 1989 for or because of any
official act performed or to be performed by them. In light of the
above-described evidence, we do not find credible Dillon's
testimony that he did not pay for the December 20 dinner for or
because of any official act performed or to be performed by Mara or
Smith.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence

Page 892


that on December 20, 1989, LIAM violated s. 3(a) by giving a gratuity
of substantial value to Mara and Smith, for or because of official acts
performed or to be
performed by them.


3. March 22 and 23, 1990 Dinners (Fountains Restaurant,
Tulsa, OK)

The Petitioner also alleges that LIAM violated s. 3(a) when it
bought dinner for Woodward and his spouse on both March 22, 1990
and March 23, 1990.

As the parties have stipulated, Woodward and his wife had
dinner with Carroll and John Hancock legislative agent Sawyer and
his wife, at the Fountains Restaurant in Tulsa, Oklahoma on March
22, 1990 during the time period of the NCOIL conference in Tulsa,
Oklahoma. On March 23, 1990, Woodward and his wife had dinner with
Carroll, Sawyer and his wife, and Liberty Mutual Company
legislative agent Thomas Driscoll at the Fountains Restaurant in
Tulsa, Oklahoma. The March 22 and March 23 dinners were not an
official part of the 1990 NCOIL Tulsa conference. The total cost of
the March 22 dinner was $171.42, inclusive of tax of $9.25 and a
tip of $30. The total cost of the March 23 dinner was $199.28,
inclusive of tax of $10.75 and a tip of $35. In the case of both
dinners, Carroll paid the dinner bill with his LIAM American
Express Card, and LIAM subsequently paid the American Express card
charge for the cost of the dinners. Woodward did not pay anything
toward either the March 22 or the March 23 dinner.

On March 22 and 23, 1990, Woodward was a state representative
and House Chairperson of the Insurance Committee. As a state
representative, Woodward was a state employee within the meaning of
G.L. c. 268A. He had the authority to take official action on
legislative matters which could affect the financial interests of,
among others, LIAM's members. Moreover, he exercised that authority
numerous times during the years 1989 through 1991, taking official
actions concerning legislation affecting the interests of LIAM's
members.

For example, approximately one week before the March 22 and 23
dinners, on March 14, 1990, the Insurance Committee, co- chaired by
Woodward, held a hearing on H.734 (LIAM sponsored bill permitting
insurers to value real estate at an assessed value). At the time
Carroll bought dinner for Woodward on March 22 and 23, at least 11
bills of interest to LIAM were pending in the Insurance Committee.[21]
Given that fact, Woodward's role as Chairman of that Committee
during 1990, and his duties and responsibilities in that role,
Carroll and LIAM should reasonably have expected that Woodward
would take official acts of interest to the organization and its
members subsequent to the dinners.

The record confirms that Woodward, in fact, did perform such
official acts after March 23, 1990. On March 28, 1990, LIAM
submitted testimony to the Insurance Committee regarding H.3343.[22]
In addition with regard to H.2493, H.2496, H.3559, H.3560, H.73,
H.553 and H.79, LIAM submitted testimony to the Insurance Committee
on April 2, 1990. Moreover, the record indicates that the Insurance
Committee reported out favorably H. 734 and H. 1349 on May 31,
1990 and H.5469 on June 6, 1990, all of which had been sponsored by
LIAM. Furthermore, on May 21, 1990, the Insurance Committee
reported out H.553, the LIAM-sponsored privacy bill, with a
new draft. The record indicates that no report issued from the
Insurance Committee with regard to the other above-identified bills
in which LIAM had an interest in 1990.

The March 22 and 23 dinners cost $50 or more for Woodward and
his spouse and thus, were "of substantial value" for purposes of s.
3(a).[23]

LIAM's payment for the March 22 and 23 dinners for Woodward
was not provided for by law for the proper discharge of official
duties. Moreover, the parties stipulated that none of the
expenditures referenced in the OTSC, including the March 22 and 23
dinners, was paid by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on behalf
of its member companies on matters related to insurance legislation
and regulation and that Woodward had taken numerous official acts
and reasonably could be expected to take future official acts of
interest to LIAM, we find that LIAM bought Woodward's (and his
wife's) dinners on March 22 and 23, 1990 for or because of any
official act performed or to be performed by him. In light of the
above-described evidence, we do not find credible Carroll's
testimony that he did not pay for the March 22 and 23 dinners for
or because of any official act performed or to be performed by
Woodward.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on March 22 and 23, 1990,
LIAM violated s. 3(a)

Page 893

by giving a gratuity of substantial value to Woodward, for or because
of official acts performed or to be performed by him.


4. November 24, 1990 Dinner (Stouffer Restaurant,
Orlando, FL)


The Petitioner alleges that LIAM violated s. 3(a) when it
bought dinner for Emilio and his spouse on November 24, 1990.

As, the parties have stipulated, Emilio and his wife had dinner
with Carroll and approximately seventeen other individuals at the
Stouffer Restaurant in Orlando, Florida on November 24, 1990 during
the time period of the NCOIL conference in Lake Buena Vista,
Florida. The November 24 dinner was not an official part of the
1990 NCOIL Lake Buena Vista conference. The total cost of that
dinner was $2243.97, inclusive of tax of $109.50 and a tip of
$309.52. Carroll paid the November 24 dinner bill with his LIAM
credit card, and LIAM subsequently paid the credit card charge for
the cost of the dinner. Emilio did not pay anything toward the
November 24 dinner.

On November 24, 1990, Emilio was a state representative and
member of the Insurance Committee. As a state representative,
Emilio was a state employee within the meaning of G.L. c. 268A. He
had the authority to take official action on legislative matters
which could affect the financial interests of, among others, LIAM's
members. Moreover, he exercised that authority numerous times
during the years 1989 and 1990, taking official actions concerning
legislation affecting the interests of LIAM's members.

For example, prior to the November 24 dinner, on three occasions in
1988 and 1989, Emilio filed proposed legislation for LIAM.
Specifically, H.553, the LIAM-sponsored privacy bill pending before
the Insurance Committee in 1990 had been filed by Emilio. Furthermore,
as described above in relation to the March 22 and 23, 1990 dinner,
there were numerous other bills of interest to LIAM pending in the
Insurance Committee during 1990.[24]

The November 24 dinner for Emilio and his spouse cost $50 or more
per person and thus, was "of substantial value" for purposes of s.
3(a)." [25]

LIAM's payment for the November 24 dinner for Emilio was not
provided for by law for the proper discharge of official duties.
Moreover, the parties stipulated that none of the expenditures
referenced in the OTSC, including the November 24 dinner, was paid
by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on
behalf of its member companies on matters related to insurance
legislation and regulation and that, at the time of the dinner,
Emilio had taken numerous official acts of interest to LIAM, we
find that LIAM bought Emilio's (and his wife's) dinner on November
24, 1990 for or because of any official act performed by him. In
light of the above-described evidence, we do not find credible
Carroll's testimony that he did not pay for the November 24 dinner
for or because of any official act performed by Emilio.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on November 24, 1990, LIAM
violated s. 3(a) by giving a gratuity of substantial value to Emilio, for
or because of official acts performed by him.


5. January 8, 1991 Retirement Dinner (Joe Tecce's
Restaurant, Boston, MA)


The Petitioner alleges that LIAM violated s. 3(a) when it
contributed $127.62 towards the cost of a testimonial dinner and a
gift set of golf clubs given to Emilio on January 5, 1991.

As the parties have stipulated, Emilio, a former aide and seven
other people attended a dinner on January 8, 1991, at which time,
Emilio was given a set of golf clubs. The total cost of the January
8 dinner was $541.24, inclusive of tax of $21.00 and a tip of
$90.00. The total cost of the golf clubs was $404.25, inclusive of
$19.25 of sales tax.

The record indicates that the January 8 dinner (and gift of
golf clubs) was organized by Sawyer. In advance of the dinner,
Carroll had agreed to contribute to the event and the gift. Carroll
did not attend the January 8 dinner. However, the record indicates
that of the seven people, other than Emilio and his former aide,
who attended the January 8 dinner, one was a representative of
LIAM, one represented the American Insurance Association, and all
of the others were from three of LIAM's member insurance companies.[26]
Subsequent to the dinner, Carroll received a memorandum from
Sawyer dated January 11, 1991, detailing LIAM's share of the cost
of the dinner and gift of golf clubs. Carroll paid Sawyer LIAM's
share of $127.62 by check dated January 21, 1991. In addition

Page 894

to LIAM, by paying Sawyer or reimbursing their legislative agents who
had paid Sawyer, four LIAM member insurance companies and one
insurance association contributed to the cost of either the January
8 dinner and/or the gift to Emilio.

As of January 8, 1991, Emilio no longer was a state
representative. However, during 1990, Emilio was a state
representative and member of the Insurance Committee. As a state
representative, Emilio was a state employee within the meaning of
G.L. c. 268A and on January 8, 1991, he was a "former state
employee" as that term is used in G.L. c. 268A, s. 3(a). He, while
a state representative, had the authority to take official action
on legislative matters which could affect the financial interests of,
among others, LIAM's members. Moreover, he exercised that authority
numerous times during the years 1989 and 1990, taking official actions
concerning legislation affecting the interests of LIAM's members.

For example, as discussed in relation to the November 24
dinner, on three occasions in 1988 and 1989, Emilio filed proposed
legislation for LIAM. Furthermore, as described above in relation
to the March 22 and 23, 1990 dinner, there were numerous other
bills of interest to LIAM pending in the Insurance Committee during
1990.

LIAM's share of the January 8 dinner for Emilio and gift of
golf clubs cost $50 or more and thus, was "of substantial value"
for purposes of s. 3(a).[27]

LIAM's payment of a share of the January 8 dinner for Emilio
and gift of golf clubs was not provided for by law for the proper
discharge of official duties. Moreover, the parties stipulated that
none of the expenditures referenced in the OTSC, including the
January 8 dinner and gift of golf clubs, was paid by LIAM because
of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on
behalf of its member companies on matters related to insurance
legislation and regulation and that Emilio had taken numerous
official acts of interest to LIAM, we find that LIAM bought a
portion of Emilio's dinner and paid a portion of the cost of the
golf clubs given to him on January 8, 1991 for or because of any
official act performed by him.[28] In light of the above described
evidence, we do not find credible Carroll's testimony that he did
not pay for a portion of the cost of the January 8 dinner and gift
of golf clubs for or because of any official act performed by
Emilio.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on January 8, 1991, LIAM
violated s. 3(a) by giving a gratuity of substantial value to Emilio,
for or because of official acts performed or to be performed by him.


6. November 16, 1991 Dinner (Avand Restaurant,
Scottsdale, AZ)


The Petitioner alleges that LIAM violated s. 3(a) when it
bought dinner for at least four Massachusetts state
representatives, including Woodward, and their respective
spouses/guests on November 16, 1991.

As the parties have stipulated, about 20 persons,
including Massachusetts legislators Woodward and his
wife, Havern and his wife, Pacheco, Ranieri and his wife and John
Hancock lobbyists Sawyer and his wife and Ralph Scott had dinner
with Carroll and his wife at the Avanti of Scottsdale Restaurant,
in Scottsdale, Arizona on November 16, 1991 during the time period
of the NCOIL conference in Scottsdale, Arizona. The November 16
dinner was not an official part of the 1991 NCOIL Scottsdale
conference. The total cost of the November 16 dinner was $1170.00,
inclusive of tax of $62.79 and a tip of $170. Carroll paid the
November 16 dinner bill with his LIAM American Express Card, and
LIAM subsequently paid the American Express card charge for the
cost of the dinner. None of the Massachusetts legislators present
paid anything toward the November 16 dinner.

On November 16, 1991, Woodward was a state representative,
Havern was state senator, a member of the Taxation Committee, and
Senate Chairperson of the Public Service Committee, Pacheco was a
state representative and member of both the Government Regulations
Committee and the Insurance Committee, and Ranieri was a state
representative and member of the Government Regulations Committee.
As members of the Massachusetts Legislature, Woodward, Havern,
Pacheco and Ranieri were each state employees within the meaning of
G.L. c. 268A. The Massachusetts legislators present at the November
16 dinner had the authority to take official action on legislative
matters which could affect the financial interests of, among
others, LIAM's members. Moreover, the legislators attending the
November 16 dinner exercised that authority numerous times during
1991, taking official actions concerning legislation affecting the
interests of LIAM's members.

For example, prior to the November 16 dinner, on February 13,
1991, the Insurance Committee, of which Pacheco was a member, held
a hearing in relation to S.597 (establishing a Medex study
committee of which LIAM would be a member). Dillon was scheduled to
testify in support of the legislation. On February 14, 1991, the
Insurance Committee held hearings in relation to H. 1346
(increasing mental illness mandated benefits), H. 1343 (allowing
the substitution of outpatient mental illness treatment for
inpatient mental illness treatment) and H.391 (LIAM-sponsored bill
allowing exchange of policies between affiliated companies. Dillon
was scheduled to testify in opposition to H. 1346 and in favor of
H. 1343 and H.391. In addition, on March 20, 1991, LIAM
representatives, including Dillon, submitted testimony in relation
to: H.390 (allowing domestic insurance companies to convert to
stock form of ownership); H.3973 (allowing certain investments in
insurance policies and annuity contracts); H.4165 (concerning
valuation of capital stock of subsidiaries of insurers); and S.568
(establishing lower insurance rates for nonsmokers). On April 3,
1991, the Insurance Committee held a hearing on S.569 (establishing
lower insurance rates for non-drinkers) and LIAM lobbyist Francis
O'Brien provided a statement against the legislation. On April 22,
1991, during a hearing on H.2342 (promoting insurance company
competition by repealing the antitrust exemption), LIAM through its
legislative agents, submitted a statement in opposition to the
legislation.

Furthermore, on March 6, 1991, the Taxation Committee, of
which Havern was a member, held a hearing in relation to H.4076
(relating to the taxation of domestic life insurance companies). At
that hearing Carroll provided testimony in support of the
legislation.

At the time Carroll bought dinner for Woodward, Havern,
Pacheco and Ranieri, on November 16, several bills of interest to
LIAM were pending in the legislature and poised to be acted upon
both branches.[29] Furthermore, H. 6206 (health care benefits for
small employers), which was sponsored by LIAM was pending before
the Insurance Committee. Given these facts and the various duties
and responsibilities of the legislators who attended the November
16 dinner, Carroll and LIAM should reasonably have expected that
the legislators attending the November 16 dinner would take
official actions of interest to the organization and its members
subsequent to the dinner.

The record confirms that each of the legislators who attended
the November 16 dinner, in fact, did perform such official acts
after November 16, 1991. On November 21, 1991, Ranieri, Pacheco and
Woodward all voted at least twice on H.6280, and all voted on
H.6307 on December 21, 1991. On December 12, 1991 Havern voted on
H.6307. Moreover, on December 4, 1991, the Insurance Committee held
a hearing on H.6206, a LIAM-sponsored bill which was on December 5,
1991 reported out with a study order. Finally, by the end of the
1991 legislative year, several bills affecting the financial
interests of LIAM's members had been put to a floor vote of the
full House and certain of those bills had also been acted upon by
the full Senate.[30]

The November 16 dinner for Woodward and his wife, Havern and
his wife, Pacheco, and Ranieri and his wife cost $50 or more per
person and thus, was "of substantial value" for purposes of s.
3(a).[31]

LIAM's payment for the November 16 dinner for Woodward,
Havern, Pacheco and Ranieri was not provided for by law for the
proper discharge of official duties. Moreover, the parties
stipulated that none of the expenditures referenced in the OTSC,
including the November 16 dinner, was paid by LIAM because of
personal friendship.

Given that LIAM's sole purpose for existing is to lobby on
behalf of its member companies on matters related to insurance
legislation and regulation and that Woodward, Havern, Pacheco and
Ranieri had taken official acts and reasonably could be expected to
take future official acts of interest to LIAM, we find that LIAM
bought Woodward (and his wife), Havern (and his wife), Pacheco and
Ranieri (and his wife) dinner on November 16, 1991 for or because
of any official act performed or to be performed by each
legislator. In light of the above-described evidence, we do not
find credible Carroll's testimony that he did not pay for the
November 16 dinner for or because of any official act performed or
to be performed by Woodward, Havern, Pacheco or Ranieri.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on November 16, 1991, LIAM
violated s. 3(a) by giving gratuities of substantial value to
Woodward, Havern, Pacheco and Ranieri, for or because of official
acts performed or to be performed by each of them.


7. May 13, 1992 Dinner (Four Seasons Restaurant,
Boston, MA)


The Petitioner alleges that LIAM violated s. 3(a) when it
bought dinner for Massachusetts Commissioner of Insurance
Doughty on May 13, 1992.

As the parties have stipulated, Doughty had dinner with
Carroll and Dillon at the Four Seasons Restaurant in Boston,
Massachusetts on May 13, 1992. The total cost of the May 13 dinner
was $337.46, inclusive of tax of $13.21 and a tip of $60. Carroll
paid the May 13 dinner bill with his LIAM credit card, and LIAM
subsequently paid the credit card bill charge for the cost of the
dinner. Doughty did not pay anything toward the May 13 dinner.

On May 13, 1992, as Commissioner of Insurance, Doughty
headed the Massachusetts Division of Insurance. Because she held
an office in a state agency, Doughty was a state employee within the
meaning of G.L. c. 268A. She had the authority to take official action on
regulatory matters which could affect the financial interests of,
among others, LIAM's members. Moreover, she exercised that
authority numerous times during the years 1992 and 1993, taking
official actions on regulatory matters affecting the interests of
LIAM's members.

For example, prior to the May 13 dinner, beginning in January,
1992, LIAM representatives met with Division of Insurance employees
regarding NAIC accreditation.[32] The record demonstrates that in
1992, LIAM supported NAIC accreditation of the Insurance Division.
Without such accreditation, LIAM took the position that
Massachusetts insurance companies would suffer substantial
competitive disadvantages when doing business in other states. In
early 1992, LIAM representatives believed that Doughty was "not
paying careful attention" to the management aspects of NAIC
accreditation. On April 29, 1992, Carroll contacted Insurance
Division staff member Cindy Martin seeking to meet with her and
Doughty on that part of the accreditation process relating to
"restructuring the Insurance Division, including funding, staffing,
etc." The record demonstrates that prior to May 13 dinner,
Carroll's attempts to discuss accreditation issues with Doughty in
an office setting had not been successful. Carroll therefore
desired to meet with Doughty in an "informal" or "easier setting"
to discuss issues relating to the management of the Insurance
Division in anticipation of an NAIC accreditation examination visit
expected to occur in 1993.

At the time Carroll bought dinner for Doughty on May 13,
several issues relating to the NAIC accreditation were pending at
the Division of insurance.[33] Given that fact, Doughty's role as
Insurance Commissioner during 1992, and her duties and
responsibilities in that role, Carroll and LIAM should reasonably
have expected that Doughty would take official acts of interest to
the organization and its members subsequent to the May 13 dinner.

The record confirms that Doughty, in fact, did perform such
official acts after May 13, 1992. In July, 1992, while LIAM and the
Insurance Division were reviewing drafts of legislation needed for
NAIC accreditation, LIAM lobbyist O'Brien was in frequent contact
with the Insurance Division. By July 29, 1992, the Insurance Division
filed the legislative packet necessary for NAIC accreditation. By
March of 1993, LIAM and the Division of Insurance had devised a
joint strategy for seeking legislative approval of the legislation
necessary for NAIC accreditation (H.53). That strategy involved
Doughty meeting individually with each member of the Insurance
Committee and insurance industry representatives.

The May 13 dinner for Doughty cost $50 or more and, thus, was "of
substantial value" for purposes of § 3(a). 34 /

LIAM's payment for the May 13 dinner for Doughty was not provided
for by law for the proper discharge of official duties. Moreover, the parties
stipulated that none of the expenditures referenced in the OTSC, including
the May 13 dinner, was paid by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on behalf of
its member companies on matters related to insurance legislation
and regulation and that at the time of the May 13 dinner, Doughty had
taken official acts and reasonably could be expected to take future
official acts of interest to LIAM, we find that LIAM bought Doughty's
dinner on May 13, 1992 for or because of any official act performed
or to be performed by her. In light of the above-described evidence,
we do not find credible Carroll's testimony that he did not pay for the
May 13 dinner for or because of any official act performed or to be
performed by Doughty.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on May 13, 1992, LIAM violated
§ 3(a) by giving a gratuity of substantial value to Doughty, for or

Page 897

because of official acts performed or to be performed by her.

8. March 12, 1993 Dinner (Ritz Carlton/The Grill
Restaurant, Amelia Island, FL)


The Petitioner alleges that LIAM violated § 3(a) when it bought dinner
for at least seven Massachusetts state representatives, at least six of
whom were accompanied by guests, on March 12, 1993.

As the parties have stipulated, about 24 persons, including Mara and
his wife, T. Walsh and his wife, Cass, M. Walsh and his wife, Honan and
his guest, Scaccia, Cox and his wife and Poirier had dinner with Carroll
at The Grill Restaurant, Ritz Carlson Hotel, on Amelia Island, Florida on
March 12, 1993 during the time period of the NCOIL conference at Amelia
Island Plantation, Amelia Island, Florida. Also present at the March 12
dinner were Dillon, Sawyer and his wife, registered legislative agent Arthur
Lewis and his wife, Massachusetts Medical Society registered legislative
agent Andrew Hunt, BlueCross and BlueShield registered legislative
agent Marcy McManus, Health Association of America and Massachusetts
Association of Life Underwriters registered legislative agent Donald Flanagan,
and Francis Carroll of the Small Business Service Bureau, Inc. The March 12
dinner was not an official part of the 1993 NCOIL Amelia Island conference.
The total cost of the March 12 dinner was $3089.16, inclusive of tax of
$146.94 and a tip of $493.22. Carroll paid the March 12 dinner bill with
his LIAM credit card, and LIAM subsequently paid the credit card charge
for the cost of the dinner. None of the Massachusetts legislators present
paid anything toward the March 12 dinner.

On March 12, 1993, Mara was a state representative and the House
Chairperson of the Insurance Committee; T. Walsh was a state representative
and the House Vice-Chairperson of the Insurance Committee; Cass
was a state representative and a member of both the Insurance Committee
and the Health Care Committee; M. Walsh was a state representative
and the House Chairperson of the Joint Government Regulations
Committee (Government Regulations Committee); Honan was a
state representative and the House Vice-Chairperson of the Government
Regulations Committee and a member of the Taxation Committee;
Scaccia was a state representative and the House Chairperson of
the Taxation Committee; Cox was a state representative and the Chairperson
of the House Committee on Bills in Third Reading and Poirier was a state representative an a member of the House Ways and Means Committee.
As members of the Massachusetts Legislature, Mara, T. Walsh, Cass,
M. Walsh, Honan, Scaccia, Cox and Poirier were state employees within
the meaning of G.L. c. 268A. The Massachusetts legislators present at
the March 12 dinner had authority to take official action on legislative matters
which could affect the financial interests of, among others, LIAM's members.
Moreover, the legislators attending the March 12 dinner exercised that authority numerous times during the years 1992 and 1993, taking official actions
concerning legislation affecting the interests of LIAM's members.

The parties have also stipulated that prior to and during 1993, LIAM,
through its legislative agents, engaged in legislative activity in connection
with certain insurance and taxation issues. Specifically, as early as
March 6, 1991, Carroll testified before the Taxation Committee, of which,
at that time, Scaccia served as House Chairperson. Subsequently, in
a letter dated March 31, 1992, and addressed to Scaccia as Co-Chairman
of the Taxation Committee, Carroll submitted written testimony on behalf
of LIAM supporting H.3466 (reforming the taxation of domestic life insurance companies). In a second letter to Scaccia as Co-Chairman of the Taxation
Committee, also dated March 31, 1992, Carroll filed written testimony
on behalf of LIAM opposing H.2378 and H.2568 (both relative to bank
taxation and competitive equality) and H. 2912 (relating to the taxation
of banks and bank-like entities).

For example, as of January 25, 1993, H.53 (relating to NAIC accreditation
of the Division of Insurance) was pending in the Insurance Committee, of
which Mara served as House Chairperson, T. Walsh served as House Vice-Chairperson and of which Cass was a member. At that time, LIAM was
engaged in drafting certain language (relating to an extraordinary dividends
provision in H.53) which it intended to present to the Insurance Committee.
In January, 1993, LIAM was also engaged in an effort to have H.53 heard
by the Insurance Committee at the earliest possible opportunity. As of
February 4, 1993, Dillon had met with members of the Insurance Committee concerning a hearing date for H. 53, which by February 25, 1993 had been
scheduled for March 22, 1993. The record also demonstrates that,
prior to the March 12 dinner, both Carroll and Dillon had spoken to T. Walsh
regarding H.53. By March 8, 1993, LIAM and the Insurance Division
had developed a joint strategy for the March 22, 1993 Insurance Committee
hearing, which in

Page 898

part, involved Doughty meeting individually with each member of the Insurance Committee.

On March 8, 1993, four days prior to the March 12 dinner, the Insurance
Committee held hearings in relation to eight bills which sought to mandate
that insurers provide new health insurance benefits. 35 / LIAM submitted
a statement in opposition to all of these bills.

The record also demonstrates that, as of February 19, 1993, Cox, who
then served as Chairperson of the House Committee on Bills in Third
Reading, had been identified to LIAM as a "key legislator" in relation to
the legislature's consideration of H.53. Also, as of February 4, 1993,
Dillon had met with the staff of the House Ways and Means Committee,
of which Poirier was a member, concerning NAIC-related funding for
the Division of Insurance. 36 /

Furthermore, on March 9, 1993, the Health Care Committee, of which
Honan was the House Chairperson and Cass was a member, held a
hearing in relation to H.1818 (relating to coverage by certain health care
insurance plans and policies of costs arising from speech and language disorders). At that hearing LIAM submitted a statement in opposition
to the legislation. Additionally, on March 9, 1993, the Health Care Committee
held hearings in relation to H.506, H.1812, H.2571 and S.487 (regulating
entities performing utilization review) at which time a statement in opposition
to all four bills was jointly submitted by LIAM and the Health Insurance
Association of America.

At the time Carroll paid for the March 12 dinner, several bills of interest
to LIAM were pending in the Insurance Committee, 37 / the Taxation
Committee, 38 / the Health Care Committee 39 / and the legislature as a
whole. Given that fact and the various duties and responsibilities of
the legislators who attended the March 12 dinner, Carroll and LIAM should
reasonably have expected that the legislators attending the March 12 dinner
would take official actions of interest to the organization and its members
subsequent to the dinner.

The record confirms that each of the legislators who attended the March 12
dinner, in fact, did perform such official acts after March 12, 1993. For
example, on March 22, 1993, the Insurance Committee held a hearing
on H.1846 (exempting life, health and accident insurance benefits from
seizure under process). In connection therewith, LIAM provided a statement
in support of H.1846. 40 / On April 5, 7 and 12, 1993, the Insurance Committee
held hearings in relation to 14 bills which mandated additional insurance
benefits. In connection with those hearings, LIAM submitted a statement
opposing all 14 bills.

Moreover, the record demonstrates that subsequent to the March 12
dinner, on March 25, 1993, LIAM submitted its recommendation on 14
bills 41 / for which the Health Care Committee held hearings on March 24, 1993. Additionally, by letter dated March 30, 1993, addressed to Scaccia
as Co-Chairperson of the Taxation Committee, Carroll filed written testimony
on behalf of LIAM supporting H.4434. The Taxation Committee conducted
a hearing regarding H.4434 on March 24, 1993.

Finally, on March 22, 1993, the Insurance Committee held a hearing
in relation to H.53 (NAIC accreditation bill), discussed above. At that hearing
Carroll testified in support of the bill. On June 16, 1993, the Insurance
Committee reported out H.53, with a new draft and H.5220, which was
reported out favorably. Thereafter, H.5220 was referred to the House Ways
and Means Committee which reported out the bill on September 20, 1993
with a recommendation that the bill "ought to pass with certain amendments."
Also on September 20, 1993, H.5220 was reported out by the House
Committee on Bills in Third Reading "to be correctly drawn." A third
reading of the H.5220 followed and the bill was passed to be engrossed.
Following action by the Senate and concurrence by the House in Senate
proposed amendments, on November 6, 1993, H.5220 was enacted
and presented to the Governor, who signed the bill into law on
November 9, 1993.

The March 12 dinner for Mara and his wife, T. Walsh and his wife,
Cass, M. Walsh and his wife, Honan and his guest, Scaccia, Cox and
his wife and Poirier cost $50 or more per person and thus, was "of
substantial value" for purposes of § 3(a). 42 /

LIAM's payment for the March 12 dinner for Mara, T. Walsh, Cass,
M. Walsh, Honan, Scaccia, Cox and Poirier was not provided for by
law for the proper discharge of official duties. Moreover, the parties
stipulated that none of the expenditures referenced in the OTSC, including
the March 12 dinner, was paid by LIAM because of personal friendship.

Given that LIAM's sole purpose for existing is to lobby on behalf of
its member companies on matters related to insurance legislation and
regulation and that

Page 899

Mara, T. Walsh, Cass, M. Walsh, Honan, Scaccia, Cox and Poirier
had taken official acts and reasonably could be expected
to take future official acts of interest to LIAM, we find that LIAM bought
Mara's (and his wife's), T. Walsh's (and his wife's), Cass', M. Walsh's
(and his wife's), Honan's (and his guest's), Scaccia's, Cox's (and his
wife's) and Poirier's dinners on March 12, 1993 for or because of any
official act performed or to be performed by them. In light of the
above-described evidence, we do not find credible Carroll's testimony
that he did not pay for the March 12 dinner for or because of any official
act performed or to be performed by Mara, T. Walsh, Cass, M. Walsh,
Honan, Scaccia, Cox and Poirier.

Consequently, we conclude that the Petitioner has demonstrated
by a preponderance of the evidence that on March 12, 1993, LIAM
violated § 3(a) by giving gratuities of substantial value to Mara, T. Walsh,
Cass, M. Walsh, Honan, Scaccia, Cox and Poirier, for or because of official
acts performed or to be performed by each of them. 43 /

V. Order


Pursuant to the authority granted it by G.L. c. 268B, § 4(j), the State
Ethics Commission hereby orders the Life Insurance Association of
Massachusetts to pay the following civil penalty for violating G.L. c. 268A,
§ 3(a). We order the Life Insurance Association of Massachusetts
to pay $13,500.00 (thirteen thousand five hundred dollars) to the
State Ethics Commission within 30 days of its receipt of this Decision
and Order.

DATE: December 16, 1997

1 / LIAM's original Answer was filed on July 11, 1995.

2 / That statute provides:

[A]ctions of tort . . . shall be commenced only within three years next
after the cause of action accrues
.

G.L. c. 260, § 2A (emphasis added).

3 / Such a disinterested person may be the Petitioner, the Attorney General
or the appropriate District Attorney. The latter two offices are the law
enforcement agencies authorized to enforce G.L. c. 268A criminally.

4 / The Respondent appears to assume mistakenly that Commission
proceedings necessarily result in punitive relief and that the Petitioner
sought only the imposition of civil fines. However, the remedies available
to the Commission include issuing an order requiring the violator to (i)
cease and desist the violation; (ii) file any report, statement or other
information required by law; or (iii) pay a civil penalty of not more than
two thousand dollars for each violation. G. L. c. 268B, § 4(j). The Petitioner
requested in its OTSC that the Commission "levy such fines, issue such
orders and grant such other relief as it deems appropriate." OTSC, p. 8.
It is impossible to determine which remedy, if any, the Commission will
apply before it determines whether and what type of a violation has occurred.

5 / Since at least 1974, the Supreme Judicial Court has "interpreted accrual
language in c. 260 to incorporate the discovery rule." Pobieglo v. Monsanto
Co.,
402 Mass. 112, 116 (1988).

6 / That subsection of the regulation reads, in relevant part:

When a statute of limitations defense has been asserted, the petitioner will have the burden of showing that a disinterested person learned of the violation no more than three (3) years before the order was issued. The burden will be satisfied by:

1. an affidavit from the investigator currently responsible for the case that the Enforcement Division's complaint files have been reviewed and no complaint relating to the violation was received more than three (3) years before the order was issued; and

2. with respect to any violation of M.G.L. c. 268A other than § 23, affidavits from the Department of the Attorney General and the appropriate Office of the District Attorney that, respectively, each office has reviewed its files and no complaint relating to the violation was received more than three (3) years before the order was issued; . . .

930 C.M.R. § 1.02(c)

7 / The OTSC in this case issued on June 20, 1995.

8 / The Attorney General and the District Attorneys may refer possible
violations to the Commission for civil enforcement. We note that five
of the nine gratuities were given by the Respondent to state officials
outside Massachusetts, thus making the Petitioner's discovery of those
violations all the more difficult.

9 / This case is distinguishable from the situation in In re Saccone
and Delprete,
1982 SEC 82, cited by Respondent. In that decision,
issued prior to the promulgation of 930 C.M.R. § 1.02 , the Commission
concluded that the Petitioner had failed to demonstrate that it was unable
to discover the violations earlier. Accordingly, the running of the statute
of limitations was not tolled.

10 / In ascertaining value, the Commission applies an objective test
of substantial value, rather than the subjective consideration of the
personal value placed on an item or event by the individual receiving
the gratuity, at least where the gratuity is an item of tangible value.
EC-COI-92-32; See In re Flanagan, 1996 SEC 757 (no reliable or
objective evidence from which Commission could ascertain value
of car). Beyond cash gifts, the Commission has determined various
types of gratuities to be of substantial value, including: entertainment
(See e.g. , In re Mara, 1994 SEC 673); meals and golf (See e.g. , In
re United States Trust Company
, 1988 SEC 356; In re Scaccia, 1996
SEC 838).

11 / Prior to issuing EC-COI-93-14, the Commission invited legal
arguments from interested parties, including the Office of the Governor's
Legal Counsel, Counsels for the Massachusetts House of Representatives
and Senate, Common Cause and the Massachusetts Municipal
Association. The Commission received no responses to its invitation.

12 / "State employee," a person performing services for or holding an
office, position, employment, or membership in a state agency, whether
by election, appointment, contract of hire or engagement, whether serving
with or without compensation, on a full, regular, part-time, intermittent
or consultant basis, including members of the general court and executive
council. G.L. c. 268A, § 1(q).

13 / Those bills included: H.609, the LIAM-sponsored Privacy Bill
(establishing standards for the collection, use and disclosure and
privacy of information concerning insurance transactions); H.4901,
opposed by LIAM (regulating HIV testing in determining eligibility
for health care insurance); S.2099 Health Emergency Alleviation
(freezing rates for individual and small group products).

14 / Based on the testimony of Dr. Allen Michel, a professor at Boston
University, and relying on the Consumer Price Index for Urban Consumers,
the Respondent urges the Commission to value the meals provided
to the state employees identified in the OTSC (and the golf clubs given
to Emilio) in "1972 dollars" (the year in which the events which are the
subject of the Famigletti decision occurred). As explained earlier, in
determining whether the $50 "substantial value" threshold has been
met, we seek to employ a workable and consistent measure which
public employees and private parties may use to guide their conduct.
Consequently, we will continue to determine the value of a gratuity based
on the actual dollars at the time the gratuity was given. See also
EC-COI-93-14 and footnote 10.

15 / We reach this conclusion based on Woodward's and his spouse's
pro rata shares of the total cost of the July 21 dinner. We have calculated
the pro rata share by dividing the total cost of the dinner ($302.53) by the
number of participants (four people) to reach a per person cost of $75.63.
See In re Scaccia, 1996 SEC 838, 840 (Findings of Fact No. 23, 30, 43, 54,
using same methodology) ; In re United States Trust Company, 1988
at 360, n. 5. We note that the Respondent views the pro rata methodology
as an inappropriate means of allocating an expenditure to a public official.
In particular, the Respondent argues that the Petitioner's approach is
flawed because it includes amounts attributable to tax and tip. We, however,
do not find this argument persuasive where applicable taxes are an
unavoidable cost associated with a restaurant meal and where the tip
may be viewed as payment for the quality of the service associated
with the meal and therefore may reasonably be included as a benefit
provided to those consuming the meal.

16 / Members of the Massachusetts Legislature receive compensation
pursuant to G.L. c. 3, §9, which does not provide that members are
entitled to gifts of free meals as part of their compensation package.

17 / The Commission attributes the value of the donor's payment for
the spouse's/guest's expenses to the public official. See In re United
States Trust Company
, 1988 SEC at 360, n. 5. This is because the
public official indirectly receives something of value for himself, including
the financial benefit of not paying for his companion.

18 / S.2099 Health Emergency Alleviation (freezing rates for individual
and small group products).

19 / Those bills included: H.553, the LIAM- sponsored Privacy bill; H.734,
permitting insurers to value real estate at assessed value; H.1349,
permitting life insurance companies to exchange policies with their
affiliates; H.2157, concerning valuation of capital stock of insurers
and subsidiaries; H.5649, concerning investments of insurance
companies; H.3343, regulating access to health care; H.2493, H.2496,
H.3560, concerning gender neutral insurance; H.3559, concerning
reduced insurance rates for non-smokers; H.79, concerning
discrimination against the handicapped.

20 / We reach this conclusion by calculating Mara's and Smith's pro
rata shares of the total cost of the December 20 dinner. We have
calculated the pro rata share by dividing the total cost of the dinner
($150.53) by the number of participants (three people) to reach a per
person cost of $50.18.

21 / In addition to H.734 described above, those bills included: H.553,
the LIAM-sponsored Privacy bill; H.1349, permitting life insurance
companies to exchange policies with their affiliates; H.2157, concerning
valuation of capital stock of insurers and subsidiaries; H.5649, concerning
investments of insurance companies; H.3343, regulating access to
health care; H.2493, H.2496, H.3560, concerning gender neutral insurance;
H.3559, concerning reduced insurance rates for non-smokers; H.79,
concerning discrimination against the handicapped.

22 / The record indicates that because this bill had been previously
considered by the Insurance Committee, no oral arguments were heard.
However, interested parties were permitted to file written statements.

23 / We reach this conclusion based on Woodward's and his spouse's
pro rata shares of the total cost of the March 22 and 23 dinners. In each
case, we have calculated the pro rata share by dividing the total cost of
the dinners ($171.42 for March 22) ($199.28 for March 23) by the number
of participants (five people on March 22) (six people on March 23) to reach
a per person cost of $34.29 for March 22 and $33.21 for March 23.

24 / Indeed, the Insurance Committee reported out favorably H.734 and
H.1349 on May 31, 1990 and H.5469 on June 6, 1990, all of which had
been sponsored by LIAM. Furthermore, on May 21, 1990, the Insurance
Committee reported out H.553, the LIAM-sponsored privacy bill, with a
new draft.

25 / We reach this conclusion based on Emilio's and his spouse's pro
rata shares of the total cost of the November 24 dinner. We have calculated
the pro rata share by dividing the total cost of the dinner ($2243.97) by the
number of participants (20 people) to reach a per person cost of $112.20.

26 / The companies were John Hancock, The New England and Mass Mutual.

27 / We reach this conclusion based on LIAM's share of the cost of the
January 8 dinner and its contribution towards the gift of golf clubs. LIAM
contributed $77.32 towards the dinner and $67.38 for the golf clubs which
were given to Emilio.

28 / Carroll's testimony that people at the State House genuinely liked
Emilio and that he was a former insurance agent does not alter our
conclusion on this point.

29 / Those bills included: H.6280 and H.6307 (both relating to health
care access and financing).

30 / These included H.6307 (an amended version of H.6280), signed
into law, St.1991,c. 495; H.1667, signed into law, St.1991, c. 516; H.391,
returned by Governor; H.6015 (an amended version of H.390), signed
into law, St.1991, c. 339; H.3973, signed into law, St.1991, c. 347; and
H.4165, approved and engrossed by House, but died in Senate Third
Reading Committee.

31 / We reach this conclusion based on each legislator's and his spouse's
pro rata shares of the total cost of the November 16 dinner. We have
calculated the pro rata share by dividing the total cost of the dinner
($1170.00) by the number of participants (20 people) to reach a per
person cost of $58.50.

32 / By the standards of the NAIC, a state division of insurance is deemed
qualified to regulate the industry in its state. NAIC accreditation in
substantial part depends on the state division of insurance being properly
funded, staffed, organized and managed, as well as the passage of
certain legislation.

33 / Including the filing of necessary legislation and securing an
appropriation to allow for increased staffing at the Division of Insurance.

34 / We reach this conclusion based on Doughty's pro rata share of the
total cost of the May 13 dinner. We have calculated the pro rata share
by dividing the total cost of the dinner ($337.46) by the number of
participants (three people) to reach a per person cost of $112.49.

35 / S.615 (insurance coverage for mental illness), S.624 (access to
educational psychologists services), S.626 (access to mental health
services), S.658 (mandating insurance coverage for bone densitometry),
H.313 (requiring insurance payments for the toxin Botulinum), H.716
(providing for home care services for certain children), H.1320 (improving
mental health services), H.2039 (reimbursement by health insurers for
bone marrow transplants for breast cancer patients).

36 / The parties have stipulated that in 1992 and 1993, LIAM supported
increased funding for the Division of Insurance.

37 / In addition to those bills listed in footnote 35, at least 17 other bills
of interest to LIAM were pending in the Insurance Committee.

38 / Including H.4434 which concerned the taxation of domestic life insurance companies.

39 / In addition to H.1818, H.506, H.1812, H.2571 and S.487, discussed
above, pending before the Committee were a series of bills relating to
a single payor system (S.478, H.1082, H.2796, H.3555), health care
financing (S.489, H.505, H.2018), determination of need (S.455, H.504,
H.2210), uncompensated care pool (H.1660, H.1652, H. 2205), and
competition (H.1656).

40 / On March 22, 1993, Carroll provided a statement in opposition to H.1110
and H.2821 (both entitled an Act Creating an Insurance Community
Reinvestment Act), during a hearing before the Insurance Committee
on those bills.

41 / See Footnote 39.

42 / We reach this conclusion based on each legislator's and his
spouse's/guest's pro rata shares of the total cost of the March 12
dinner. We have calculated the pro rata share by dividing the total
cost of the dinner ($3089.16) by the number of participants (25 people)
to reach a per person cost of $123.57. The fact that in April 1993, LIAM
received contributions in the amount of $1100 towards its expenditure
for the March 12 dinner does not alter our conclusion that the meals paid
for by LIAM on March 12, 1993 were of substantial value. This is especially
the case where, even if we were to subtract the post-event contributions
from LIAM's expenditure, the pro rata share of the March 12 dinner would
be $79.57. Moreover, we are not persuaded by the Respondent's argument
that the cost of cognac, which it did not specifically authorize, should be
excluded from the cost of the March 12 dinner. We find no basis for excluding
the cost of the cognac where LIAM paid for that expense and the record
contains no evidence that LIAM made any arrangement to limit the ordering
of alcoholic beverages before or during the March 12 event. In addition,
the record reflects that LIAM neither sought, nor received, reimbursement
for the cost of the cognac from the state legislator recipients.

43 / The OTSC also contained an allegation that LIAM provided Red Sox
tickets to Representative Woodward on July 21, 1989. In its post-hearing
Brief, the Petitioner notes that it is not pursuing this allegation "due to
lack of evidence." Consequently, with regard to this charge, we find that
the Petitioner has not met its burden.

End of Decision